SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended April 30,1997 Commission File No. 1-8100
EATON VANCE CORP.
(Exact name of registrant as specified in its charter)
MARYLAND 04-2718215
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices) (Zip Code)
(617) 482-8260
(Registrant's telephone number, including area code)
NONE
(Former name, address and former fiscal year,
if changed since last record)
Indicate by check-mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Shares outstanding as of April 30, 1997:
Voting Common Stock - 38,720 shares
Non-Voting Common Stock - 18,567,186 shares
Page 1 of 47 pages
PART I
FINANCIAL INFORMATION
-2-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Consolidated Balance Sheets (unaudited)
April 30, October 31,
1997 1996
ASSETS: (in thousands)
CURRENT ASSETS:
<S> <C> <C>
Cash and equivalents $ 41,892 $ 55,583
Short-term investments 77,081 60,792
Investment adviser fees and other receivables 7,759 7,650
Assets held for sale 5,531 2,500
Other current assets 3,843 3,547
Total current assets 136,106 130,072
OTHER ASSETS:
Investments:
Real estate 21,798 18,541
Investments in affiliates 8,976 9,565
Investment companies 9,849 8,965
Other investments 4,240 5,763
Receivable for income taxes 5,817 -
Notes receivable and receivables from affiliates 1,968 1,241
Deferred sales commissions 169,673 180,283
Equipment and leasehold improvements, net of
accumulated depreciation and amortization of
$4,951 and $4,713, respectively 2,685 2,828
Goodwill, net of accumulated amortization of $3,241
and $2,924, respectively 2,774 3,004
Total other assets 227,780 230,190
Total assets $ 363,886 $ 360,262
See notes to consolidated financial statements
</TABLE>
-3-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
Consolidated Balance Sheets (unaudited) (continued)
April 30, October 31,
1997 1996
LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands, except share figures)
CURRENT LIABILITIES:
<S> <C> <C>
Accrued compensation $ 5,623 $ 10,981
Accounts payable and accrued expenses 8,035 7,839
Dividend payable 1,865 1,881
Current portion of long-term debt 8,715 1,545
Other current liabilities 920 1,835
Total current liabilities 25,158 24,081
OTHER LIABILITIES:
6.22% Senior Note 42,857 50,000
Mortgage notes payable 10,292 4,549
Total other liabilities 53,149 54,549
Deferred income taxes 66,814 70,852
Commitments and contingencies - -
SHAREHOLDERS' EQUITY:
Common stock, par value $.03125 per share-
Authorized, 160,000 shares,
Issued, 38,720 shares 1 1
Non-voting common stock, par value $.03125
per share-Authorized, 23,840,000 shares
Issued, 18,567,186 and 18,729,576 shares,
respectivley 580 585
Additional paid-in capital 29,588 36,788
Notes receivable from stock option exercises (3,327) (3,221)
Unrealized gain on investments 3,160 3,598
Retained earnings 188,763 173,029
Total shareholders' equity 218,765 210,780
Total liabilities and shareholders' equity $ 363,886 $ 360,262
See notes to consolidated financial statements
</TABLE>
-4-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
Consolidated Statements of Income (unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
1997 1996 1997 1996
REVENUE: (in thousands, except per share figures)
<S> <C> <C> <C> <C>
Investment adviser and
administration fees $ 28,079 $ 24,758 $ 55,551 $ 48,459
Distribution income 17,733 19,078 36,236 38,508
Income from real estate activities 1,074 1,042 1,837 1,943
Other income 551 583 1,405 1,049
Total revenue 47,437 45,461 95,029 89,959
EXPENSES:
Compensation of officers and
employees 10,406 10,173 21,894 20,645
Amortization of deferred sales
commissions 13,507 13,423 26,827 26,060
Other expenses 7,333 7,162 14,678 14,923
Total expenses 31,246 30,758 63,399 61,628
OPERATING INCOME 16,191 14,703 31,630 28,331
OTHER INCOME (EXPENSE):
Interest income 839 825 1,679 1,796
Interest expense (984) (938) (1,886) (1,879)
Gain (loss) on sale of investments (152) 482 1,150 1,057
Equity in net income (loss) of
affiliates (70) 101 33 1,768
Income before income taxes and
extraordinary item 15,824 15,173 32,606 31,073
INCOME TAXES 6,361 6,362 13,116 12,464
Income before extraordinary item 9,463 8,811 19,490 18,609
Extraordinary gain on early
retirement of debt, net of income
taxes - 1,590 - 1,590
NET INCOME $ 9,463 $ 10,401 $ 19,490 $ 20,199
See notes to consolidated financial statements
</TABLE>
-5-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
Consolidated Statements of Income (unaudited) (continued)
Three Months Ended Six Months Ended
April 30, April 30,
1997 1996 1997 1996
EARNINGS PER SHARE: (in thousands, except per share figures)
<S> <C> <C> <C> <C>
Earnings per share before $ 0.49 $ 0.47 $ 1.01 $ 0.99
extraordinary item
Extraordinary gain on early
retirement of debt, net of income - 0.08 - 0.08
taxes, per share
Earnings per share $ 0.49 $ 0.55 $ 1.01 $ 1.07
Dividends declared, per share $ 0.10 $ 0.09 $ 0.20 $ 0.17
Average common shares 19,219 18,861 19,357 18,846
outstanding
See notes to consolidated financial statements
</TABLE>
-6-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
Consolidated Statements of Cash Flows (unaudited)
Six Months Ended
April 30,
1997 1996
(in thousands)
<S> <C> <C>
Cash and equivalents, beginning of period $ 55,583 $ 67,650
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 19,490 20,199
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary gain on early retirement - (1,590)
of debt
Equity in net income of affiliates (33) (1,768)
Deferred income taxes (3,708) (2,125)
Amortization of deferred sales 26,827 26,060
commissions
Depreciation and other 1,280 1,175
amortization
Payment of sales commissions (31,312) (30,621)
Capitalized sales charges received 15,229 16,505
Gain on sale of investments (1,150) (1,057)
Change in income taxes receivable (7,272) (2,316)
Change in accrued compensation (5,358) (4,053)
Changes in other assets and 414 (1,265)
liabilities
Net cash provided by operating activities 14,407 19,144
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate, equipment
and leasehold improvements (955) (424)
Net increase in notes and
receivable from affiliates (833) (122)
Net increase in investment
companies and other investments (224) (659)
Dividends received from affiliate 621 497
Acquisition of real estate partnership (600) -
Proceeds from sale of investments 61,240 12,792
Purchase of short-term investments (76,240) (19,939)
Net cash used for investing acticities (16,991) (7,855)
See notes to consolidated financial statements
</TABLE>
-7-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
Consolidated Statements of Cash Flows (unaudited) (continued)
Six Months Ended
April 30,
1997 1996
(in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
<S> <C> <C>
Payments on notes payable $ (131) $ (1,370)
Proceeds from the issuance of non-voting
common stock 2,410 1,718
Dividends paid (3,772) (3,197)
Repurchase of non-voting common stock (9,614) (1,412)
Net cash used for financing activities (11,107) (4,261)
Net (decrease) increase in cash and equivalents (13,691) 7,028
Cash and equivalents, end of period $ 41,892 $ 74,678
SUPPLEMENTAL INFORMATION:
Interest paid $ 1,886 $ 1,877
Income taxes paid $ 24,381 $ 17,191
See notes to consolidated financial statements
</TABLE>
-8-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited interim
consolidated financial statements of Eaton Vance Corp. (the
"Company") include all adjustments, consisting of normal
recurring adjustments, necessary to present fairly the results
for the interim periods in accordance with generally accepted
accounting principles. Such financial statements have been
prepared in accordance with the instructions to Form 10-Q
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures have been omitted pursuant to such rules and
regulations. As a result, these financial statements should be
read in conjunction with the audited consolidated financial
statements and related notes included in the Company's latest
annual report on Form 10-K.
The number of shares used for purposes of calculating earnings
per share and all other per share data has been adjusted for all
periods presented to reflect a two-for-one stock split effective
May 15, 1997.
(2) Investments in Affiliates
The Company has a 22 percent investment in Lloyd George
Management (BVI) Limited (LGM), an independent investment
management company based in Hong Kong that manages a series of
emerging market mutual funds sponsored by the Company. The
Company's investment in LGM was $7.9 million and $8.4 million at
April 30, 1997 and October 31, 1996, respectively. At April 30,
1997, the Company's investment exceeded its share of the
underlying net assets of LGM by $6.5 million. This excess is
being amortized over a twenty-year period.
The Company also maintains an 82 percent general partnership
interest in Fulcrum Management Partners II, L.P. (FMPII), a
Delaware limited partnership of which a principal officer of the
Company is the other general partner. FMPII is a 20 percent
general partner of VenturesTrident II, L.P. (VTII), a Delaware
limited partnership formed to invest in equity securities of
public and private gold mining ventures. In addition to its
general partnership interest in FMPII, the Company maintains a 3
percent limited partnership interest in VTII. The Company's
investment in VTII was $1.1 million and $1.2 million at April 30,
1997 and October 31, 1996, respectively. VTII will complete its
tenth and final year in 1997 and is scheduled for termination
effective December 31, 1997.
In the first six months of fiscal 1996, the Company received gold
mining securities with a value of approximately $0.3 million
resulting from the termination of a second gold mining
partnership (VenturesTrident, L.P.) and the subsequent
distribution of that partnership's assets. The Company also
received gold mining securities with a value of approximately
$1.8 million in settlement of notes receivable for management
services provided to the partnership.
-9-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(3) Stock Option Plans
Outstanding options to subscribe to shares of non-voting common
stock issued under the Company's stock option plans are
summarized as follows:
<TABLE>
Shares Under option Option Price Range
<S> <C> <C>
Balance, October 31, 1995 1,339,442 $ 4.38 - 17.00
Adjustment for distribution of
IB&T 278,816
Adjusted balance 1,618,258 3.62 - 14.07
Exercised (332,720) 3.62 - 14.07
Granted 282,540 14.13 - 15.54
Cancelled/Expired (134,784) 11.28 - 14.13
Balance, October 31, 1996 1,433,294 6.52 - 15.54
Exercised (244,492) 6.52 - 14.13
Granted 496,396 20.88 - 22.96
Cancelled/Expired (112,702) 11.28 - 20.88
Balance, April 30, 1997 1,572,496 $11.28 - 22.96
</TABLE>
At April 30, 1997, options to purchase 890,858 shares were
exercisable. Options to purchase 681,638 additional shares will
become exercisable over the next four years.
(4) Common Stock Repurchases
In the first six months of fiscal 1997 the Company purchased
439,000 shares of its non-voting common stock under its current
share repurchase authorization. The total cost of this
repurchase was $9.6 million.
(5) Regulatory Requirements
A subsidiary of the Company is subject to the Securities and
Exchange Commission uniform net capital rule (Rule 15c3-1) which
requires the maintenance of minimum net capital. For purposes of
this rule the subsidiary had net capital of $22.2 million at
April 30, 1997, which exceeded the net capital requirement of
$0.3 million as of that date. The ratio of aggregate
indebtedness to net capital at April 30, 1997 was 0.22 to 1.
-10-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
(6) Real Estate Investments
Real estate investments held at April 30, 1997 and October 31,
1996 follow:
<TABLE>
April 30, October 31,
1997 1996
(in thousands)
<S> <C> <C>
Buildings $ 25,528 $ 24,632
Land 2,602 1,721
Total 28,130 26,353
Less: Accumulated depreciation 6,332 7,534
Net book value 21,798 18,819
Share of accumulated losses in
excess of partnership interest - (278)
Total $ 21,798 $ 18,541
</TABLE>
In the second quarter of 1997, the Company committed to a plan to
sell two industrial warehouse buildings located in Springfield,
MA and Colonie, NY. The estimated net realizable values of the
buildings exceeds their respective carrying values of $1.6
million and $1.4 million., as a result no impairment loss has
been recognized. The Company expects the sale of the properties
to be completed by December 31, 1997.
On March 7, 1997, the Company's real estate subsidiary acquired
the remaining 50 percent interest in the Post Office Square
Building Company, L.P. (the "partnership") which owns an office
building in Boston, Massachusetts for $0.6 million in cash. The
acquisition was accounted for using the purchase method of
accounting and, accordingly, the purchase price was allocated to
assets acquired and liabilities assumed based on their estimated
fair values on the date of acquisition. The cost in excess of
net assets acquired of $88,000 is being amortized on a straight-
line basis over a twenty-year period. The operating results of
the remaining 50 percent partnership interest have been included
in the consolidated financial statements since the date of
acquisition. The acquisition did not have a material pro forma
impact on operations.
-11-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
(7) Unrealized Securities Holding Gains and Losses
The Company has classified as available-for-sale securities
having an aggregate fair value of approximately $90.3 million and
$74.4 million at April 30, 1997 and October 31, 1996,
respectively. These securities are classified as "Short-term
investments," "Investments in investment companies," and "Other
investments" on the Company's consolidated balance sheets. Gross
unrealized gains of approximately $5.8 million and $5.6 million
at April 30, 1997 and October 31, 1996, respectively, and gross
unrealized losses of approximately $999,000 and $44,000 at April
30, 1997 and October 31, 1996, respectively, have been excluded
from earnings and reported as a separate component of
shareholders' equity, net of deferred taxes.
(8) Income Taxes
The Massachusetts Department of Revenue (MDOR) has examined the
tax returns for the Company and its subsidiaries for fiscal years
1993 through 1995. In connection with this examination the MDOR
has assessed additional taxes and interest of $5.8 million. In
the opinion of management, after consultation with outside tax
and legal counsel, there is significant merit to the positions
claimed on the tax returns as filed and the adjustments proposed
by the MDOR are inappropriate. The Company intends to vigorously
contest the assessment procedurally through the MDOR and before
the Appellate Tax Board if necessary. However, Massachusetts
General Laws require the Company to pay the assessment in
advance. At April 30, 1997, the payment has been recorded as a
"Receivable for Income Taxes" on the Company's consolidated
balance sheet.
(9) Earnings Per Common and Common Equivalent Share
Earnings per share for the three and six months ended April 30,
1997 are based upon the weighted average number of common, non-
voting common and non-voting common equivalent shares outstanding
of 19,219,000 and 19,357,000, respectively. Earnings per share
assuming full dilution have not been presented because the
dilutive effect is immaterial.
Earnings per share for the three and six months ended April 30,
1996 are based upon the weighted average number of common and non-
voting common shares outstanding of 18,861,000 and 18,846,000,
respectively. Earnings per share assuming primary and full
dilution have not been presented because the dilutive effect is
immaterial.
In February 1997, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share." SFAS No. 128 establishes standards for
computing and presenting earnings per share (EPS) and will
require a dual presentation of basic and diluted EPS on the face
of the consolidated statement of income for all periods presented
beginning with the Company's fiscal quarter ending January 31,
1998. Neither basic nor diluted EPS as calculated in accordance
with SFAS No. 128 would be materially different from EPS as
presented in these financial statements.
-12-
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
(10) Stock-Based Compensation
Effective November 1, 1996, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." SFAS No. 123 encourages, but does not
require, the recognition of compensation expense for the fair
value of stock options and other equity instruments issued to
employees. The Company does not intend to adopt the fair-value
provisions of SFAS No. 123. The Company will provide footnote
disclosure in its 1997 annual report presenting pro forma net
income and earnings per share amounts as if the fair value of
employee stock options, determined on the date of grant, had been
included in compensation expense.
(11) Reclassifications
Certain prior year amounts have been reclassified to conform to
current year presentation.
-13-
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's primary sources of revenue are investment adviser
fees and distribution fees received from the Eaton Vance funds
and adviser fees received from separately managed accounts.
These fees are generally based on the net asset value of the
investment portfolios managed by the Company and fluctuate with
changes in the total value of the assets under management. The
Company's major expenses, other than the amortization of deferred
sales commissions, include employee compensation, occupancy
costs, service fees and other marketing costs.
Results of Operations
Quarter Ended April 30, 1997 Compared to Quarter Ended April 30,
1996
The Company earned $9.5 million or $0.49 per share in the second
quarter of 1997 compared to $10.4 million or $0.55 per share in
the second quarter of 1996. Operating results for the second
quarter of 1996 include an extraordinary gain of $1.6 million or
$0.08 per share, net of income taxes, related to the early
retirement of a mortgage owed by the Company's real estate
subsidiary. The per share data for all periods presented
reflects the two-for-one stock split declared on April 9, 1997
for shareholders of record on May 15, 1997.
Assets under management increased 8 percent to $18.0 billion on
April 30, 1997 from $16.7 billion on April 30, 1996 as a result
of net sales of new fund shares and appreciation in the market
value of managed assets. Mutual fund sales of $0.8 billion in the
second quarter of fiscal 1997 were 14 percent higher than the
$0.7 billion reported in the second quarter of fiscal 1996. The
sales gain was led primarily by the Company's floating-rate bank
loan and equity funds. As a result of continued sales growth,
floating-rate bank loan funds increased to 19 percent of total
assets under management on April 30, 1997 from 13 percent on
April 30, 1996. Equity funds (both domestic and international)
experienced similar growth, increasing to 19 percent of total
assets under management on April 30, 1997 from 17 percent a year
ago. Taxable and non-taxable fixed income funds decreased to 50
percent of total mutual fund assets under management on April 30,
1997 from 58 percent a year ago.
Total revenue increased $1.9 million to $47.4 million in the
second quarter of 1997 from $45.5 million in the second quarter
of 1996. Investment adviser and administration fees increased by
13 percent to $28.1 million in the second quarter of fiscal 1997
from $24.8 million in the second quarter of fiscal 1996 primarily
as a result of the growth in total assets under management and
the change in the Company's product mix. Distribution income,
however, decreased by $1.4 million or 7 percent to $17.7 million
in the second quarter of 1997 from $19.1 million a year earlier
due to a decrease in spread-commission fund assets under
management.
Total operating expenses of $31.2 million in the second quarter
of 1997 were little changed from the $30.8 million recorded in
the second quarter of 1996.
In fiscal 1997, the Company will be required to adopt Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." In accordance with the statement, the
Company will provide new footnote disclosures in its 1997 annual
report presenting pro forma net income and earnings per share
amounts as if stock options had been expensed based on their
estimated fair value on the grant date, determined by using
certain option pricing models.
-14-
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share." SFAS No. 128 establishes standards for computing and
presenting earnings per share and will require the Company to
change its presentation of earnings per share from primary
earnings per share to basic and diluted earnings per share for
its fiscal year ending October 31, 1998. At that time, all prior
period earnings per share data will be restated. Neither basic
nor diluted earnings per share as calculated in accordance with
SFAS No. 128 would be materially different from earnings per
share as presented in these financial statements.
Six Months Ended April 30, 1997 Compared to Six Months Ended
April 30, 1996
The Company earned $19.5 million or $1.01 per share in the first
half of 1997 compared to $20.2 million or $1.07 per share in the
first half of 1996. As noted above, operating results for the
first half of 1996 include an extraordinary gain of $1.6 million
or $0.08 per share, net of income taxes, related to the early
retirement of a mortgage owed by the Company's real estate
subsidiary.
Total revenue increased $5.0 million to $95.0 million in the
first half of 1997 from $90.0 million in the first half of 1996.
Investment adviser and administration fees increased to $55.6
million from $48.5 million, primarily as a result of the increase
in total assets under management and a change in the Company's
product mix. Distribution income, however, decreased by $2.3
million in the first half of 1997 to $36.2 million from $38.5
million a year earlier primarily due to a decrease in spread-
commission fund assets under management.
Total operating expenses increased by $1.8 million to $63.4
million in the first half of 1997. Compensation expense
increased by $1.2 million to $21.9 million, primarily as a result
of an increase in sales incentives associated with the increase
in mutual fund sales. Amortization expense increased by $0.7
million, or 3 percent, to $26.8 million primarily as a result of
the increase in gross sales of Eaton Vance Prime Rate Reserves, a
spread-commission fund which invests in the Company's Senior Debt
Portfolio.
The Company's gold mining partnership, VenturesTrident II, L.P.,
contributed income of $111,000 in the first half of 1997 compared
to $1.5 million in the first half of 1996. The income in both
periods resulted primarily from increases in portfolio valuations
of the partnership.
Liquidity and Capital Resources
Cash, cash equivalents and short-term investments aggregated
$119.0 million at April 30, 1997, an increase of $2.6 million
from October 31, 1996.
-15-
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Operating activities generated cash of $14.4 million in the first
half of 1997 compared to $19.1 million in the first half of 1996.
The decrease in cash provided by operating activities can
primarily be attributed to the payment of $5.8 million associated
with an assessment made by the Massachusetts Department of
Revenue (MDOR) in the second quarter of 1997. The assessment was
made in conjunction with the MDOR's examination of the Company's
state tax returns for fiscal years 1993 through 1995. The
Company, on the basis of the opinion of legal counsel, believes
that any adjustments to the tax returns as filed would be
inappropriate and intends to vigorously contest the assessment.
Massachusetts General Laws, however, require payment of the
amount assessed prior to the resolution of the issues and the
Company has made such payment as required. However, the Company
believes, on the opinion of legal counsel, that the adjustments
proposed by the MDOR are inappropriate and the payment of
additional taxes and interest has therefore been recorded as a
"Receivable for Income Taxes" on the Company's consolidated
balance sheet.
Investing activities for the Company reduced cash and cash
equivalents by $17.0 million in the first half of 1997 compared
to $7.9 million in the first half of 1996. The primary use of
cash in the first half of 1997 was the purchase of $76.2 million
in short-term investments following the sale of certain short-
term marketable securities.
Significant financing activities during the first half of 1997
included the repurchase of 439,000 shares of the Company's non-
voting common stock under its authorized repurchase program. On
April 9, 1997, the Board of Directors approved a new repurchase
program which authorizes the Company to repurchase up to 1
million shares of its outstanding non-voting common stock.
At April 30, 1997, the Company had no borrowings under its $50.0
million senior unsecured revolving credit facility.
The Company anticipates that cash flows from operations and
available debt will be sufficient to meet the Company's
foreseeable cash requirements and provide the Company with the
financial resources to take advantage of strategic growth
opportunities.
Certain Factors That May Affect Future Results
From time to time, information provided by the Company or
information included in its filings with the Securities and
Exchange Commission may contain statements which are not
historical facts, for this purpose referred to as "forward-
looking statements." The Company's actual future results may
differ significantly from those stated in any forward-looking
statements (including this Quarterly Report on Form 10-Q).
Important factors that could cause actual results to differ
materially from those indicated by such forward-looking
statements include, but are not limited to, the factors discussed
below.
The Company is subject to substantial competition in all aspects
of its business. The Company's ability to market investment
products is highly dependent on access to the retail distribution
systems of national and regional securities dealer firms, which
generally offer competing internally and externally managed
investment products. Although the Company has historically been
successful in gaining access to these channels, there can be no
assurance that it will continue to do so. The inability to have
such access could have a material adverse effect on the Company's
business.
-16-
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
There are few barriers to entry by new investment management
firms. The Company's funds compete against an ever increasing
number of investment products sold to the public by investment
dealers, banks, insurance companies and others that sell tax-free
investments, taxable income funds, equity funds and other
investment products. Many institutions competing with the
Company have greater resources than the Company. The Company
competes with other providers of investment products offered, the
investment performance of such products, quality of service, fees
charged, the level and type of sales representative compensation,
the manner in which such products are marketed and distributed
and the services provided to investors.
The Company derives almost all of its revenues from investment
adviser and administration fees and distribution income received
from the Eaton Vance funds and separately managed accounts. As a
result, the Company is dependent upon the contractual
relationships it maintains with these funds and separately
managed accounts. In the event that any of the management
contracts, administration contracts, underwriting contracts or
service agreements are not renewed pursuant to the terms of these
contracts or agreements, the Company's financial results may be
adversely affected.
The major sources of revenue for the Company - i.e., investment
adviser fees, administration fees and distribution fees - are
calculated as percentages of assets under management. A decline
in securities prices in general would reduce fee income. If, as
a result of inflation, expenses rise and assets under management
decline, lower fee income and higher expenses will reduce or
eliminate profits. If expenses rise and assets rise, bringing
increased fees to offset the increased expenses, profits may not
be affected by inflation. There is no predictable relationship
between changes in financial assets under management and the rate
of inflation. If inflation leads to increases in the price of
gold or in the price of real estate, the value of the Company's
investments in gold mining securities or real estate may be
increased.
-17-
PART II
OTHER INFORMATION
-18-
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of Eaton Vance Corp. was held at the principal
office of the corporation on April 9, 1997. All of the
outstanding Voting Common Stock, namely 38,720 shares, was
represented in person or by proxy at the meeting.
The following matters received the affirmative vote of all of the
outstanding Voting Common Stock.
1)The Articles of Amendment to the corporation's Charter
effecting the two-for-one stock split were approved.
2)The 1995 Stock Option Plan, Restatement No. 1, adopted by
the Board of Directors on April 9, 1997,
providing for automatic vesting in the event of a change of
control of the Company, was approved.
3)The 1992 Stock Option Plan, Restatement No. 1, adopted by the
Board of Directors on April 9, 1997, providing for automatic
vesting in the event of a change in control of the Company,
was approved.
4)The 1992 Incentive Plan - Stock Alternative, Restatement No.
2, adopted by the Board of Directors on April 9, 1997,
reflecting certain technical changes, was approved.
-19-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Each Exhibit is listed in this index according to the number
assigned to it in the exhibit table set forth in Item 601 of
Regulation S-K. The following Exhibits are filed as a part
of this Report or incorporated herein by reference pursuant
to Rule 12b-32 under the Securities Exchange Act of 1934:
Exhibit No. Description
3.1 Copy of Eaton Vance Corp. Articles of Amendment
(filed herewith).
10.1 Copy of 1992 Stock Option Plan - Restatement No. 1
(filed herewith).
10.2 Copy of 1995 Stock Option Plan - Restatement No. 1
(filed herewith).
10.3 Copy of 1992 Incentive Plan - Stock Alternative -
Restatement No. 2 (filed herewith).
11.1 Statement of Computation of Average Number of
Shares Outstanding (filed herewith).
27.1 Financial Data Schedule as of April 30, 1997
(filed herewith - electronic filing only).
(b) Reports on Form 8-K
None.
-20-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
EATON VANCE CORP.
(Registrant)
DATE: June 13, 1997
(Signature)
William M. Steul
Chief Financial Officer
DATE: June 13, 1997
(Signature)
John P. Rynne
Corporate Controller
-21-
EXHIBIT 3.1
EATON VANCE CORP.
ARTICLES OF AMENDMENT
EATON VANCE CORP., a Maryland corporation, having its
principal offices in Baltimore City, Maryland and Boston,
Massachusetts (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The Charter of the Corporation is hereby
amended by:
(a) Changing and reclassifying each of the shares
of Common Stock (par value $.0625 per share) and Non-Voting
Common Stock (par value $.0625 per share) of the Corporation,
which is issued and outstanding at the close of business on the
effective date of this amendment, into two shares of such Common
Stock or Non-Voting Common Stock, respectively, and by reducing
the par value of each share of Common Stock and Non-Voting Common
Stock as changed and reclassified to $.03125 per share, such
change and reclassification to be made without increasing or
reducing the aggregate amount of stated capital of the
Corporation represented by such issued shares but as a two-for-
one split of the issued shares and not as a stock dividend; and
in connection therewith there shall be issued one additional
share of Common Stock or Non-Voting Common Stock, as the case may
be, for each such share thereof which is issued at such effective
time; and
(b) Striking out Article SIXTH of the Charter in
its entirety, and inserting in lieu thereof, the following:
SIXTH: The total number of shares of
stock of all classes which the Corporation has the
authority to issue is 24,000,000 shares, having an
aggregate par value of $750,000.00, of which
160,000 shares of the par value of $.03125 per
share amounting in aggregate par value to
$5,000.00 shall be Common Stock, and 23,840,000
shares of the par value of $.03125 per share
amounting in aggregate par value to $745,000.00
shall be Non-Voting Common Stock.
SECOND: (a) As of immediately before the amendment the
total number of shares of stock of all classes which the
Corporation has authority to issue is 12,000,000 shares, of which
80,000 shares are Common Stock (par value $.0625 per share) and
11,920,000 shares are Non-Voting Common Stock (par value $.0625
per share).
(b) As amended the total number of shares of
stock of all classes which the Corporation has authority to issue
is 24,000,000 shares, of which 160,000 shares are Common Stock
(par value $.03125 per share) and 23,840,000 shares are Non-
Voting Common Stock (par value $.03125 per share).
(c) The aggregate par value of all shares having
a par value before the amendment and as amended is $750,000.
(d) The descriptions of each class of stock of
the Corporation are not changed by the amendment, except for the
change in par value effected hereby.
-22-
THIRD: (a) The board of directors on April 9, 1997 duly
adopted a resolution in which was set forth the foregoing
amendment to the Charter, declaring that the said amendment of
the Charter as proposed was advisable and directing that such
amendment be submitted for action thereon by the stockholders of
the Corporation entitled to vote thereon at a special meeting of
stockholders to be subsequently held on April 9, 1997.
(b) All of the stockholders of the Corporation
entitled to vote thereon waived, in writing, notice of the time,
place and purpose of the special meeting of stockholders
subsequently held on April 9, 1997, at which special meeting the
foregoing amendment to the Charter of the Corporation was duly
approved by the stockholders of the Corporation by the
affirmative vote of all the votes entitled to be cast on the
matter.
(c) The foregoing amendment to the Charter of the
Corporation was advised by the board of directors and approved by
the stockholders of the Corporation.
FOURTH: These Articles of Amendment shall become effective
at the close of business on May 15, 1997.
IN WITNESS WHEREOF, Eaton Vance Corp. has caused these
presents to be signed in its name and on its behalf by its
President and witnessed by its Secretary on April 9, 1997.
WITNESS: EATON VANCE CORP.
/s/Thomas Otis /s/James B. Hawkes
Secretary President
THE UNDERSIGNED, President of Eaton Vance Corp., who
executed on behalf of the Corporation the foregoing Articles of
Amendment of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the
foregoing Articles of Amendment to be the corporate act of said
Corporation and hereby certifies that to the best of his
knowledge, information, and belief the matters and facts set
forth herein with respect to the authorization and approval
thereof are true in all material respects under the penalties of
perjury.
/s/James B. Hawkes
President
-23-
EXHIBIT 10.1
1992 STOCK OPTION PLAN - RESTATEMENT NO. 1
1. Definitions. As used in this Eaton Vance Corp. 1992
Stock Option Plan - Restatement No. 1, the following terms
shall have the following meaning:
Board means the Company's Board of Directors.
Code means the Internal Revenue Code of 1986, as amended.
Committee means a committee comprised of one or more
directors of the Company, appointed by the Board of Directors of
the Company, responsible for the administration of the Plan, as
provided in Section 5.
Company means Eaton Vance Corp., a Maryland corporation.
Director Option means a nonstatutory stock option granted to
a director pursuant to Section 8.
Grant Date means the date on which an Option is granted.
Incentive Option means an Option that satisfies the
requirements of Section 422 of the Code.
Market Value means the composite closing price for the
Shares for any date.
Nonstatutory Option means an Option other than an Incentive
Option granted to an employee.
Option means an option to purchase Shares granted under the
Plan.
Option Agreement means an agreement between the Company and
an Optionee, setting forth the terms and conditions of an
Option.
Option Price means the price to be paid by an Optionee upon
exercise of an Option.
Optionee means a person eligible to receive an Option to
whom an Option shall have been granted under the Plan.
Plan means this 1992 Stock Option Plan.
Shares means shares of Non-Voting Common Stock of the
Company.
Subsidiary means a subsidiary of the Company, as defined in
Section 424(f) of the Code.
-24-
2. Purpose. The purpose of the Plan is to advance the
interests of the Company by strengthening the ability of the
Company and its Subsidiaries to attract, retain and motivate
directors and key employees by providing them with an
opportunity to purchase non-voting common stock of the
Company and thus participate in its ownership, including the
opportunity to share in any appreciation in the value of
that stock. It is intended that some of the Options to be
granted will be Incentive Options and others will not be.
It is further intended that this Plan will satisfy all of
the conditions of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended.
3. Effective Date. The original Plan became effective on
April 8, 1992, the date it was adopted by the Board, and was
approved by the stockholders of the Company on May 15, 1992.
This Restatement No. 1 was approved by the Board and such
stockholders on April 9, 1997.
4. Stock Subject to the Plan. The Shares with respect to
which Options may be granted under this Plan shall not
exceed 300,000 Shares. Any Shares subject to an Option
which for any reason expires or is terminated unexercised as
to such Shares may again be the subject of an Option. In
addition, any Shares purchased by an Optionee upon exercise
of an Option which are subsequently repurchased by the
Company pursuant to the terms of that Option may again be
made the subject of an Option. The Shares delivered upon
exercise of Options may be either authorized but unissued
Shares or issued Shares reacquired by the Company.
5. Administration. The Board shall appoint a Committee
consisting exclusively of at least two directors who are not
employees of the Company or any of its Subsidiaries and who
have not, within twelve months preceding any action by the
Committee, received any option (other than a Director
Option) granted by the Company or any Subsidiary. The Plan
shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee shall have full power
to construe and interpret the Plan and to establish, amend
and rescind rules and regulations for its administration.
Any decision made with respect thereto shall be final and
binding on the Company, the Optionees and all other persons.
6. Duration of the Plan. This Plan shall terminate ten
years from the original effective date hereof, unless terminated
earlier pursuant to Section 14, and no Options may be granted
thereafter.
7. Options for Employees.
(a) Eligible Employees. Options may be granted to key
employees of the Company or of any of its Subsidiaries
selected by the Committee.
(b) Restrictions on Incentive Options. Incentive Options
shall be subject to the following restrictions:
(i) Limitation on Number of Shares. To the extent
that the aggregate Market Value on the Grant Date of
the Shares with respect to which an Option that would
otherwise constitute an Incentive Option (when
aggregated, if appropriate, with incentive stock
options granted before the Option under this Plan or
any other plan maintained by the Company or any
Subsidiary of the Company) is exercisable for the first
time by the Optionee during any calendar year exceeds
$100,000, the Option shall be treated as a Nonstatutory
Option.
-25-
(ii) 10% Stockholder. If any Optionee to whom an
Incentive Option is granted is on the Grant Date the
owner of stock (as determined under Section 424(d) of
the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the
Company or any of its Subsidiaries, then the following
special provisions shall be applicable to that
Incentive Option:
(A)The Option Price per Share shall not be less than
110% of the Market Value on the Grant Date; and
(B)The Incentive Option shall expire not more than
five years after the Grant Date.
(c) Price. Subject to the conditions on certain Incentive
Options in Section 7(b), the Option Price per Share payable
upon the exercise of each Incentive Option shall be not less
than 100% of the Market Value on the Grant Date. The Option
Price per Share of stock payable upon exercise of each
Nonstatutory Option shall be determined by the Committee,
provided that the Option Price shall not be less than 50% of
the Market Value on the Grant Date.
(d) Number of Shares. Each Option Agreement shall specify
the number of Shares to which it pertains.
(e) Exercise of Options. Subject to the conditions on
Incentive Options in Section 7(b), each Option shall be
exercisable for the full amount or for any part thereof and
at such intervals or in such installments as the Committee
may determine at the time it grants the Option; provided,
however, that no Option shall be exercisable with respect to
any Shares later than ten years after the Grant Date.
8. Options for Directors. On the third Friday of December
in each year, each director who is not an employee of the
Company and its Subsidiaries shall receive a Director Option
to purchase the number of Shares calculated by dividing
$25,000 by the Market Value of the Shares on the Grant
Date. In the event that on the third Friday of any
December, there is not a sufficient number of Shares
available to implement fully the preceding sentence, then
each such director shall receive a pro rata portion of the
Director Option contemplated by the preceding sentence. The
Option Price for each Director Option shall be the Market
Value on the Grant Date or, in the event there is no Market
Value available on the Grant Date, on the date next
following the Grant Date for which a Market Value is
available. Each Director Option shall become exercisable in
four equal installments upon each of the first four
anniversaries of the Grant Date. No Director Option shall
be exercisable later than ten years after the Grant Date.
9. Terms and Condition Applicable to All Options.
(a) Non-Transferability. No Option shall be transferable
by the Optionee otherwise than by will or the laws of
descent and distribution, and each Option shall be
exercisable during the Optionee's lifetime only by him or
her.
-26-
(b) Notice of Exercise and Payment. An Option shall be
exercisable only by delivery of a written notice to the
Company's Treasurer or any other officer of the Company
designated by the Committee to accept such notices on its
behalf, specifying the number of Shares for which it is
exercised. If the Shares are not at that time effectively
registered under the Securities Act of 1933, as amended, the
Optionee shall include with such notice a letter, in form
and substance satisfactory to the Company, confirming that
the Shares are being purchased for the Optionee's own
account for investment and not with a view to distribution.
Payment shall be made in full at the time the Option is
exercised. Payment shall be made by (i) cash or check, (ii)
if approved by the Committee at the time of exercise,
delivery and assignment to the Company of Shares having a
Market Value as of the date of exercise equal to the
exercise price, (iii) if approved by the Committee at the
time of exercise, delivery of the Optionee's promissory note
for the exercise price, or (iv) any combination of (i), (ii)
or (iii) above.
(c) Rights as Shareholder. No Optionee shall have any
rights as a shareholder or any claim to dividends paid with
respect to any Shares to which the Option relates until the
date such Shares are issued to him or her.
10. Termination of Options. Each Option shall terminate
and may no longer be exercised if the Optionee ceases to
perform services for the Company or a Subsidiary, in
accordance with the following provisions:
(i) if the Optionee's services shall have been
terminated by resignation or other voluntary action, or
if such services shall have been terminated
involuntarily for cause, all of the Optionee's Options
shall terminate and may no longer be exercised;
(ii) if the Optionee's services shall have been
terminated for any reason other than cause, resignation
or other voluntary action before his or her eligibility
to retire, and before his or her disability or death,
he or she may at any time within a period of fifteen
(15) months after such termination of service exercise
his or her Options to the extent that the Options were
exercisable on the date of termination of service;
(iii) if the Optionee's service shall have been
terminated because of disability within the meaning of
Section 22(e)(3) of the Code, he or she may at any time
within a period of fifteen (15) months after such
termination of service exercise his or her Options to
the extent that such Options were exercisable on the
date of termination of service; and
(iv) if the Optionee dies at a time when he or she
might have exercised an Option, then his or her estate,
personal representative or beneficiary to whom it has
been transferred pursuant to Section 9(a) hereof may at
any time within a period of fifteen (15) months after
the Optionee's death exercise the Option to the extent
the Optionee might have exercised it at the time of
death;
provided, however, that the Committee may, at its sole
discretion, provide specifically in an Option Agreement for
such other period of time during which an Optionee may
exercise an Option after termination of the Optionee's
services as the Committee may approve, subject to the
overriding limitation that no Option may be exercised to any
extent by anyone after the date of expiration of the Option.
-27-
11. Withholding Taxes; Delivery of Shares. The Company's
obligation to deliver Shares upon exercise of an Option
shall be subject to the Optionee's satisfaction of all
applicable federal, state and local income and employment
tax withholding obligations. The Optionee may satisfy the
obligations by electing (a) to make a cash payment to the
Company, or (b) to have the Company withhold Shares, or (c)
to deliver to the Company already-owned Shares with a value
equal to the amount required to be withheld. The value of
Shares to be withheld or delivered shall be based on the
Market Value on the date the amount of tax to be withheld is
to be determined. The Optionee's election to have Shares
withheld for this purpose will be subject to the following
restrictions: (1) the election must be made prior to the
date the amount of tax is to be determined, (2) the election
must be irrevocable, and (3) the election will be subject to
the disapproval of the Committee.
12. Stock Dividends; Stock Splits: Stock Combinations;
Recapitalizations. Appropriate adjustment shall be made in
the maximum number of Shares subject to the Plan to give
effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in
the capital structure of the Company. Appropriate
adjustment shall be made in the number, kind, and price of
Shares covered by any outstanding Option hereunder to give
effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in
the capital structure of the Company after the date the
Option is granted.
13. Merger; Sale of Assets; Dissolution. In the event of a
change of the Company's Non-Voting Common Stock resulting
from a merger or similar reorganization as to which the
Company is the surviving corporation, the number and kind of
shares which thereafter may be optioned and sold under the
Plan and the number and kind of shares then subject to
options granted hereunder and the price per share thereof
shall be appropriately adjusted in such manner as the Board
may deem equitable to prevent substantial dilution or
enlargement of the rights available or granted hereunder.
If the Board, in its discretion, determines that the Company
will undergo a merger or similar reorganization which it
will not survive or a sale of all or substantially all it
assets, the Board may accelerate, in whole or in part, the
vesting and/or exercisability of any outstanding Option
granted under this Plan. Except as otherwise determined by
the Board, a merger or a similar reorganization which the
Company does not survive, or a sale of all or substantially
all of the assets of the Company, shall cause every Option
outstanding hereunder to terminate, to the extent not then
exercised, unless any surviving entity agrees to assume the
obligations thereof.
14. Termination or Amendment of Plan. The Board may at any
time terminate the Plan or make such changes in or additions
to the Plan as it deems advisable without further action on
the part of the shareholders of the Company, provided:
(a) that no such termination or amendment shall adversely
affect or impair any then outstanding Option without the
consent of the Optionee holding that Option; and
(b) that any such amendment which:
(i) increases the maximum number of Shares subject to
this Plan,
(ii) changes the class of persons eligible to
participate in this Plan, or
-28-
(iii) materially increases the benefits accruing to
participants under this Plan
shall be subject to approval by the shareholders of the
Company within one year from the effective date of such
amendment and shall be null and void if such approval is not
obtained.
15. Change of Control - Automatic Vesting of Options.
Notwithstanding anything to the contrary herein, the Board
or the Committee shall include in the Option Agreement for
each unvested Option granted under this Plan the following
provision (which shall be added by amendment to each
existing Option Agreement for an unvested Option granted
prior to April 9, 1997, and such amendment may incorporate
said provision by reference to this Section 15), and such
inclusion may be effected by incorporating said provision by
reference to this Section 15:
This Option shall be immediately exercisable and the
Optionee shall become eligible to purchase any and all
shares covered by each Option at any time or from time to
time after the occurrence of a Change of Control of the
Company. A "Change of Control" shall mean:
(a) The acquisition, other than from the Company, by
any individual, entity or group (within the meaning of
Section 13(d) (3) or 14(d) (2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of either (i) the then outstanding
non-voting common stock of the Company (the "Non-Voting
Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled
to vote generally in the election of directors (the
"Company Voting Securities"); provided, that any
acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of
its subsidiaries or (y) any Person that is eligible,
pursuant to Rule 13d-1(b) under the Exchange Act, to
file a statement on Schedule 13G with respect to its
beneficial ownership of Company Voting Securities,
whether or not such Person shall have filed a statement
on Schedule 13G, unless such Person shall have filed a
statement on Schedule 13D with respect to beneficial
ownership of 25% or more of the Company Voting
Securities, shall not constitute a Change of Control;
and provided, further, that the provisions of this
subsection (a) shall apply whether or not the Company
Voting Securities or the Non-Voting Stock is registered
or required to be registered under the Exchange Act; or
(b) Individuals who, as of the date hereof, constitute
the Company's Board of Directors (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board, provided, that any individual
becoming a director of the Company ("Director")
subsequent to the date of the Option whose election or
nomination for election by the Company's shareholders,
was approved by at least a majority of the Directors
then comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office is
in connection with an actual or threatened election
contest relating to the election of the Directors of
the Company (as such terms are used in Rule 14a-11 of
the Regulation 14A promulgated under the Exchange Act);
or
-29-
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business
Combination"), in each case with respect to which all
or substantially all of the individuals and entities
who were the respective beneficial owners of the Non-
Voting Stock and of the Company Voting Securities
immediately prior to such Business Combination will
not, following such Business Combination, beneficially
own, directly or indirectly, more than 60% of,
respectively, the then outstanding non-voting stock and
the combined voting power of the then outstanding
voting securities entitled to vote generally in the
election of directors of the corporation or other
entity resulting from the Business Combination in
substantially the same proportion as their ownership
immediately prior to such Business Combination of the
Non-Voting Stock and Company Voting Securities, as the
case may be; or
(d) Approval by the shareholders of the Company of (i)
a complete liquidation or dissolution of the Company,
or (ii) a sale or other disposition of all or
substantially all of the assets of the Company, or
(iii) a sale or disposition of Eaton Vance Management
(or any successor thereto) or of all or substantially
all of the assets of Eaton Vance Management (or any
successor thereto), or (iv) an assignment by any direct
or indirect investment adviser subsidiary of the
Company of investment advisory agreements pertaining to
more than 50% of the aggregate assets under management
of all such subsidiaries of the Company, in the case of
(ii), (iii) or (iv) other than to a corporation or
other entity with respect to which, following such sale
or disposition or assignment, more than 60% of,
respectively, the outstanding non-voting stock and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election
of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners
of the Non-Voting Stock and Company Voting Securities
immediately prior to such sale, disposition or
assignment in substantially the same proportion as
their ownership of the Non-Voting Stock and Company
Voting Securities, as the case may be, immediately
prior to such sale, disposition or assignment.
Notwithstanding the foregoing, the following events
shall not cause, or be deemed to cause, and shall not
constitute, or be deemed to constitute, a Change of Control:
(1) The acquisition, holding or disposition of Company
Voting Securities deposited under the Voting Trust
Agreement dated as of December 31, 1996 or of the
voting trust receipts issued therefor, or any change in
the persons who are voting trustees thereunder, or the
acquisition, holding or disposition of Company Voting
Securities deposited under any subsequent replacement
voting trust agreement or of the voting trust receipts
issued therefor, or any change in the persons who are
voting trustees under any such subsequent replacement
voting trust agreement; provided, that any such
acquisition, disposition or change shall have resulted
solely by reason of the death, incapacity, retirement,
resignation, election or replacement of one or more
voting trustees.
-30-
(2) Any termination or expiration of a voting trust
agreement under which Company Voting Securities have
been deposited or the withdrawal therefrom of any
Company Voting Securities deposited thereunder, if all
Company Voting Securities and/or the voting trust
receipts issued therefor continue to be held thereafter
by the same persons in the same amounts, or if
contemporaneously there shall be a Business Combination
or change in the capitalization of the Company as
described in clause (3) below.
(3) A Business Combination or change in the
capitalization of the Company pursuant to which the
holders of the Non-Voting Stock of the Company become
holders of voting securities of the Company or of the
corporation or other entity resulting from such
Business Combination, in substantially the same
proportion as their ownership of Non-Voting Stock
immediately prior to such Business Combination or
change in capitalization.
16. No additional Options shall be granted under this Plan
on or after April 9, 1997.
-31-
EXHIBIT 10.2
1995 STOCK OPTION PLAN - RESTATEMENT NO. 1
1. Definitions. As used in this Eaton Vance Corp. 1995
Stock Option Plan - Restatement No. 1, the following terms
shall have the following meaning:
Board means the Company's Board of Directors.
Code means the Internal Revenue Code of 1986, as amended.
Committee means a committee comprised of one or more
directors of the Company, appointed by the Board of
Directors of the Company, responsible for the administration
of the Plan, as provided in Section 5.
Company means Eaton Vance Corp., a Maryland corporation.
Director Option means a nonqualified stock option granted to
a director pursuant to Section 8.
Grant Date means the date on which an Option is granted.
Incentive Option means an Option that satisfies the
requirements of Section 422 of the Code.
Market Value means the closing price on the New York Stock
Exchange for the Shares for any date.
Nonqualified Option means an Option other than an Incentive
Option granted to an employee.
Option means an option to purchase Shares granted under the
Plan.
Option Agreement means an agreement between the Company and
an Optionee, setting forth the terms and conditions of an
Option.
Option Price means the price to be paid by an Optionee upon
exercise of an Option.
Optionee means a person eligible to receive an Option to
whom an Option shall have been granted under the Plan.
Plan means this 1995 Stock Option Plan.
Shares means shares of Non-Voting Common Stock of the
Company.
Subsidiary means a subsidiary of the Company, as defined in
Section 424(f) of the Code.
-32-
2. Purpose. The purpose of the Plan is to advance the
interests of the Company by strengthening the ability of the
Company and its Subsidiaries to attract, retain and motivate
directors and key employees by providing them with an
opportunity to purchase non-voting common stock of the
Company and thus participate in its ownership, including the
opportunity to share in any appreciation in the value of
that stock. It is intended that some of the Options to be
granted will be Incentive Options and others will not be.
3. Effective Date. The Plan originally became effective
on October 12, 1995, the date it was adopted by the Board,
and was approved by the stockholders of the Company on April
10, 1996. This Restatement No. 1 was approved by the Board
and such stockholders on April 9, 1997.
4. Stock Subject to the Plan. The Shares with respect to
which Options may be granted under this Plan shall not
exceed 600,000 Shares (which number shall on May 15, 1997 be
increased to 1,200,000 Shares to reflect the two-for-one
stock split effective on that date). Any Shares subject to
an Option which for any reason expires or is terminated
unexercised as to such Shares may again be the subject of an
Option. In addition, any Shares purchased by an Optionee
upon exercise of an Option which are subsequently
repurchased by the Company pursuant to the terms of that
Option may again be made the subject of an Option. The
Shares delivered upon exercise of Options may be either
authorized but unissued Shares or issued Shares reacquired
by the Company.
5. Administration. The Board shall appoint a Committee
consisting exclusively of two or more directors who are
"outside directors" within the meaning of 162(m) of the Code
and the regulations thereunder and "non-employee directors"
within the meaning of Regulation 16b-3(b)(3) under the
Securities Exchange Act of 1934. Each Option granted to a
"covered employee" within the meaning of 162(m) of the Code
and the regulations thereunder shall be granted by the
Committee. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall
have full power to construe and interpret the Plan and to
establish, amend and rescind rules and regulations for its
administration. Any decision made with respect thereto
shall be final and binding on the Company, the Optionees and
all other persons.
6. Duration of the Plan. This Plan shall terminate ten
years from the original effective date hereof, unless
terminated earlier pursuant to Section 14, and no Options
may be granted thereafter.
7. Options for Employees.
(a) Eligible Employees. Options may be granted to key
employees of the Company or of any of its Subsidiaries
selected by the Committee.
(b) Restrictions on Incentive Options. Incentive Options
shall be subject to the following restrictions:
-33-
(i) Limitation on Number of Shares. To the extent
that the aggregate Market Value on the Grant Date of
the Shares with respect to which an Option that would
otherwise constitute an Incentive Option (when
aggregated, if appropriate, with incentive stock
options granted before the Option under this Plan or
any other plan maintained by the Company or any
Subsidiary of the Company) is exercisable for the first
time by the Optionee during any calendar year exceeds
$100,000, the Option shall be treated as a Nonqualified
Option.
(ii) 10% Stockholder. If any Optionee to whom an
Incentive Option is granted is on the Grant Date the
owner of stock (as determined under Section 424(d) of
the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the
Company or any of its Subsidiaries, then the following
special provisions shall be applicable to that
Incentive Option:
(A)The Option Price per Share shall not be less than
110% of the Market Value on the Grant Date; and
(B)The Incentive Option shall expire not more than
five years after the Grant Date.
(c) Price. Subject to the conditions on certain Incentive
Options in Section 7(b), the Option Price per Share payable
upon the exercise of each Incentive Option shall be not less
than 100% of the Market Value on the Grant Date. The Option
Price per Share of stock payable upon exercise of each
Nonstatutory Option shall be determined by the Committee,
provided that the Option Price shall not be less than 50% of
the Market Value on the Grant Date.
(d) Number of Shares. Each Option Agreement shall specify
the number of Shares to which it pertains. No Optionee may
receive, during any three year period, Options to purchase
more than 300,000 Shares (which number shall on May 15, 1997
be increased to 600,000 Shares to reflect the two-for-one
stock split effective on that date).
(e) Exercise of Options. Subject to the conditions on
Incentive Options in Section 7(b), each Option shall be
exercisable for the full amount or for any part thereof and
at such intervals or in such installments as the Committee
may determine at the time it grants the Option; provided,
however, that no Option shall be exercisable with respect to
any Shares later than ten years after the Grant Date.
8. Options for Directors. On the third Friday of December
in each year, each director who is not an employee of the
Company and its Subsidiaries shall receive a Director Option
to purchase the number of Shares calculated by dividing
$25,000 by the Market Value of the Shares on the Grant
Date. In the event that on the third Friday of any
December, there is not a sufficient number of Shares
available to implement fully the preceding sentence, then
each such director shall receive a pro rata portion of the
Director Option contemplated by the preceding sentence. The
Option Price for each Director Option shall be the Market
Value on the Grant Date or, in the event there is no Market
Value available on the Grant Date, on the date next
following the Grant Date for which a Market Value is
available. Each Director Option shall become exercisable in
four equal installments upon each of the first four
anniversaries of the Grant Date. No Director Option shall
be exercisable later than ten years after the Grant Date.
-34-
9. Terms and Condition Applicable to All Options.
(a) Non-Transferability. No Option shall be transferable
by the Optionee otherwise than by will or the laws of
descent and distribution, and each Option shall be
exercisable during the Optionee's lifetime only by him or
her.
(b) Notice of Exercise and Payment. An Option shall be
exercisable only by delivery of a written notice to the
Company's Treasurer or any other officer of the Company
designated by the Committee to accept such notices on its
behalf, specifying the number of Shares for which it is
exercised. If the Shares are not at that time effectively
registered under the Securities Act of 1933, as amended, the
Optionee shall include with such notice a letter, in form
and substance satisfactory to the Company, confirming that
the Shares are being purchased for the Optionee's own
account for investment and not with a view to distribution.
Payment shall be made in full at the time the Option is
exercised. Payment shall be made by (i) cash or check, (ii)
if approved by the Committee at the time of exercise,
delivery and assignment to the Company of Shares having a
Market Value as of the date of exercise equal to the
exercise price, (iii) if approved by the Committee at the
time of exercise, delivery of the Optionee's promissory note
for the exercise price, or (iv) any combination of (i), (ii)
or (iii) above.
(c) Rights as Shareholder. No Optionee shall have any
rights as a shareholder or any claim to dividends paid with
respect to any Shares to which the Option relates until the
date such Shares are issued to him or her.
10. Termination of Options. Each Option shall terminate
and may no longer be exercised if the Optionee ceases to
perform services for the Company or a Subsidiary, in
accordance with the following provisions:
(i) if the Optionee's services shall have been terminated
by resignation or other voluntary action, or if such
services shall have been terminated involuntarily for cause,
all of the Optionee's Options shall terminate and may no
longer be exercised;
(ii) if the Optionee's services shall have been terminated
for any reason other than cause, resignation or other
voluntary action before his or her eligibility to retire,
and before his or her disability or death, he or she may at
any time within a period of fifteen (15) months after such
termination of service exercise his or her Options to the
extent that the Options were exercisable on the date of
termination of service;
(iii) if the Optionee's service shall have been
terminated because of disability within the meaning of
Section 22(e)(3) of the Code, he or she may at any time
within a period of fifteen (15) months after such
termination of service exercise his or her Options to the
extent that such Options were exercisable on the date of
termination of service; and
-35-
(iv) if the Optionee dies at a time when he or she might
have exercised an Option, then his or her estate, personal
representative or beneficiary to whom it has been
transferred pursuant to Section 9(a) hereof may at any time
within a period of fifteen (15) months after the Optionee's
death exercise the Option to the extent the Optionee might
have exercised it at the time of death; provided, however,
that the Committee may, at its sole discretion, provide
specifically in an Option Agreement for such other period of
time during which an Optionee may exercise an Option after
termination of the Optionee's services as the Committee may
approve, subject to the overriding limitation that no Option
may be exercised to any extent by anyone after the date of
expiration of the Option.
11. Withholding Taxes; Delivery of Shares. The Company's
obligation to deliver Shares upon exercise of an Option
shall be subject to the Optionee's satisfaction of all
applicable federal, state and local income and employment
tax withholding obligations. The Optionee may satisfy the
obligations by electing (a) to make a cash payment to the
Company, or (b) to have the Company withhold Shares, or (c)
to deliver to the Company already-owned Shares with a value
equal to the amount required to be withheld. The value of
Shares to be withheld or delivered shall be based on the
Market Value on the date the amount of tax to be withheld is
to be determined. The Optionee's election to have Shares
withheld for this purpose will be subject to the following
restrictions: (1) the election must be made prior to the
date the amount of tax is to be determined, (2) the election
must be irrevocable, and (3) the election will be subject to
the disapproval of the Committee.
12. Stock Dividends; Stock Splits: Stock Combinations;
Recapitalizations. Appropriate adjustment shall be made in
the maximum number of Shares subject to the Plan to give
effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in
the capital structure of the Company. Appropriate
adjustment shall be made in the number, kind, and price of
Shares covered by any outstanding Option hereunder to give
effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in
the capital structure of the Company after the date the
Option is granted.
13. Merger; Sale of Assets; Dissolution. In the event of a
change of the Company's Non-Voting Common Stock resulting
from a merger or similar reorganization as to which the
Company is the surviving corporation, the number and kind of
shares which thereafter may be optioned and sold under the
Plan and the number and kind of shares then subject to
options granted hereunder and the price per share thereof
shall be appropriately adjusted in such manner as the Board
may deem equitable to prevent substantial dilution or
enlargement of the rights available or granted hereunder.
If the Board, in its discretion, determines that the Company
will undergo a merger or similar reorganization which it
will not survive or a sale of all or substantially all it
assets, the Board may accelerate, in whole or in part, the
vesting and/or exercisability of any outstanding Option
granted under this Plan. Except as otherwise determined by
the Board, a merger or a similar reorganization which the
Company does not survive, or a sale of all or substantially
all of the assets of the Company, shall cause every Option
outstanding hereunder to terminate, to the extent not then
exercised, unless any surviving entity agrees to assume the
obligations thereof.
14. Termination or Amendment of Plan. The Board may at any
time terminate the Plan or make such changes in or additions
to the Plan as it deems advisable without further action on
the part of the shareholders of the Company, provided:
-36-
(a) that no such termination or amendment shall adversely
affect or impair any then outstanding Option without the
consent of the Optionee holding that Option; and
(b) that any such amendment which:
(i) increases the maximum number of Shares subject to
this Plan,
(ii) changes the class of persons eligible to
participate in this Plan, or
(iii) materially increases the benefits accruing to
participants under this Plan
shall be subject to approval by the shareholders of the
Company within one year from the effective date of such
amendment and shall be null and void if such approval is not
obtained.
15. Change of Control - Automatic Vesting of Options.
Notwithstanding anything to the contrary herein, the Board
or the Committee shall include in the Option Agreement for
each unvested Option granted under this Plan the following
provision (which shall be added by amendment to each
existing Option Agreement for an unvested Option granted
prior to April 9, 1997, and such amendment may incorporate
said provision by reference to this Section 15), and such
inclusion may be effected by incorporating said provision by
reference to this Section 15:
This Option shall be immediately exercisable and the
Optionee shall become eligible to purchase any and all
shares covered by each Option at any time or from time to
time after the occurrence of a Change of Control of the
Company. A "Change of Control" shall mean:
(a) The acquisition, other than from the Company, by
any individual, entity or group (within the meaning of
Section 13(d) (3) or 14(d) (2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of either (i) the then outstanding
non-voting common stock of the Company (the "Non-Voting
Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled
to vote generally in the election of directors (the
"Company Voting Securities"); provided, that any
acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of
its subsidiaries or (y) any Person that is eligible,
pursuant to Rule 13d-1(b) under the Exchange Act, to
file a statement on Schedule 13G with respect to its
beneficial ownership of Company Voting Securities,
whether or not such Person shall have filed a statement
on Schedule 13G, unless such Person shall have filed a
statement on Schedule 13D with respect to beneficial
ownership of 25% or more of the Company Voting
Securities, shall not constitute a Change of Control;
and provided, further, that the provisions of this
subsection (a) shall apply whether or not the Company
Voting Securities or the Non-Voting Stock is registered
or required to be registered under the Exchange Act; or
-37-
(b) Individuals who, as of the date hereof, constitute
the Company's Board of Directors (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board, provided, that any individual
becoming a director of the Company ("Director")
subsequent to the date of the Option whose election or
nomination for election by the Company's shareholders,
was approved by at least a majority of the Directors
then comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office is
in connection with an actual or threatened election
contest relating to the election of the Directors of
the Company (as such terms are used in Rule 14a-11 of
the Regulation 14A promulgated under the Exchange Act);
or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business
Combination"), in each case with respect to which all
or substantially all of the individuals and entities
who were the respective beneficial owners of the Non-
Voting Stock and of the Company Voting Securities
immediately prior to such Business Combination will
not, following such Business Combination, beneficially
own, directly or indirectly, more than 60% of,
respectively, the then outstanding non-voting stock and
the combined voting power of the then outstanding
voting securities entitled to vote generally in the
election of directors of the corporation or other
entity resulting from the Business Combination in
substantially the same proportion as their ownership
immediately prior to such Business Combination of the
Non-Voting Stock and Company Voting Securities, as the
case may be; or
(d) Approval by the shareholders of the Company of (i)
a complete liquidation or dissolution of the Company,
or (ii) a sale or other disposition of all or
substantially all of the assets of the Company, or
(iii) a sale or disposition of Eaton Vance Management
(or any successor thereto) or of all or substantially
all of the assets of Eaton Vance Management (or any
successor thereto), or (iv) an assignment by any direct
or indirect investment adviser subsidiary of the
Company of investment advisory agreements pertaining to
more than 50% of the aggregate assets under management
of all such subsidiaries of the Company, in the case of
(ii), (iii) or (iv) other than to a corporation or
other entity with respect to which, following such sale
or disposition or assignment, more than 60% of,
respectively, the outstanding non-voting stock and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election
of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners
of the Non-Voting Stock and Company Voting Securities
immediately prior to such sale, disposition or
assignment in substantially the same proportion as
their ownership of the Non-Voting Stock and Company
Voting Securities, as the case may be, immediately
prior to such sale, disposition or assignment.
Notwithstanding the foregoing, the following events
shall not cause, or be deemed to cause, and shall not
constitute, or be deemed to constitute, a Change of Control:
-38-
(1) The acquisition, holding or disposition of Company
Voting Securities deposited under the Voting Trust
Agreement dated as of December 31, 1996 or of the
voting trust receipts issued therefor, or any change in
the persons who are voting trustees thereunder, or the
acquisition, holding or disposition of Company Voting
Securities deposited under any subsequent replacement
voting trust agreement or of the voting trust receipts
issued therefor, or any change in the persons who are
voting trustees under any such subsequent replacement
voting trust agreement; provided, that any such
acquisition, disposition or change shall have resulted
solely by reason of the death, incapacity, retirement,
resignation, election or replacement of one or more
voting trustees.
(2) Any termination or expiration of a voting trust
agreement under which Company Voting Securities have
been deposited or the withdrawal therefrom of any
Company Voting Securities deposited thereunder, if all
Company Voting Securities and/or the voting trust
receipts issued therefor continue to be held thereafter
by the same persons in the same amounts, or if
contemporaneously there shall be a Business Combination
or change in the capitalization of the Company as
described in clause (3) below.
(3) A Business Combination or change in the
capitalization of the Company pursuant to which the
holders of the Non-Voting Stock of the Company become
holders of voting securities of the Company or of the
corporation or other entity resulting from such
Business Combination, in substantially the same
proportion as their ownership of Non-Voting Stock
immediately prior to such Business Combination or
change in capitalization.
-39-
EATON VANCE CORP
AMENDMENT TO INCENTIVE STOCK OPTION AGREEMENT
Under 1995 Stock Option Plan - Restatement No. 1
The Incentive Option Agreement effective ___________, 1996,
between Eaton Vance Corp. (the "Company") and the undersigned
Optionee granting an incentive stock option to purchase Non-
Voting Common Stock of the Company is hereby amended to add
thereto the provision for automatic vesting after a Change of
Control of the Company, as set forth in Section 15 of the
Company's 1995 Stock Option Plan - Restatement No. 1, which
provision is incorporated herein by reference thereto as if fully
stated herein.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Amendment to be duly executed as of April 9, 1997.
EATON VANCE CORP
____________________________ By:_____________________________
Optionee Vice President and Treasurer
-40-
EATON VANCE CORP
AMENDMENT TO NONQUALIFIED STOCK OPTION AGREEMENT
Under 1995 Stock Option Plan - Restatement No. 1
The Nonqualified Option Agreement effective ___________,
1996, between Eaton Vance Corp. (the "Company") and the
undersigned Optionee granting a nonqualified stock option to
purchase Non-Voting Common Stock of the Company is hereby amended
to add thereto the provision for automatic vesting after a Change
of Control of the Company, as set forth in Section 15 of the
Company's 1995 Stock Option Plan - Restatement No. 1, which
provision is incorporated herein by reference thereto as if fully
stated herein.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Amendment to be duly executed as of April 9, 1997.
EATON VANCE CORP
____________________________ By:_____________________________
Optionee Vice President and Treasurer
-41-
EATON VANCE CORP
AMENDMENT TO DIRECTOR STOCK OPTION AGREEMENT
Under 1995 Stock Option Plan - Restatement No. 1
The Director Option Agreement effective ___________, 1996,
between Eaton Vance Corp. (the "Company") and the undersigned
Optionee granting a director stock option to purchase Non-Voting
Common Stock of the Company is hereby amended to add thereto the
provision for automatic vesting after a Change of Control of the
Company, as set forth in Section 15 of the Company's 1995 Stock
Option Plan - Restatement No. 1, which provision is incorporated
herein by reference thereto as if fully stated herein.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Amendment to be duly executed as of April 9, 1997.
EATON VANCE CORP
____________________________ By:_____________________________
Optionee Vice President and Treasurer
-42-
EXHIBIT 10.3
EATON VANCE CORP.
1992 Incentive Plan - Stock Alternative - Restatement No. 2
1. Definitions. As used in this Eaton Vance Corp. 1992
Incentive Plan - Stock Alternative, the following terms
shall have the following meaning:
Administrator means the Board of Directors or any committee
or persons to whom it delegates its authority.
Annual Incentive means an annual cash incentive awarded by
the Company, including without limitation thereto the
bonuses known as PIB and PROP.
Annual Incentive Recipient means any employee who receives
an Annual Incentive.
Board means the Company's Board of Directors.
Company means Eaton Vance Corp., a Maryland corporation, and
its subsidiaries.
Hardship means an immediate and heavy financial need which
may be met only by the sale of Shares as determined by the
Administrator in accordance with nondiscriminatory
standards.
Monthly Incentive means a monthly cash incentive bonus
awarded by the Company.
Monthly Incentive Recipient means any employee who receives
a Monthly Incentive.
Option means an option to convert a percentage of Annual
Incentive or Monthly Incentive into Shares pursuant to this
Plan.
Participant means an Annual Incentive Recipient or a Monthly
Incentive Recipient who has elected to participate in the
Plan.
Plan means this 1992 Incentive Plan - Stock Alternative.
Shares means shares of Non-Voting Common Stock of Eaton
Vance Corp.
2. Purpose. The purpose of the Plan is to provide
employees of the Company who are entitled to receive cash
incentives the opportunity to apply up to half their
incentives to the purchase of Shares.
3. Effective Date. The Plan shall become effective July
17, 1992.
-43-
4. Shares Subject to the Plan. The number of Shares that
may be made subject to the Plan shall not exceed 300,000
(which number shall on May 15, 1997 be increased to 600,000
to reflect the two-for-one stock split effective on that
date), in the aggregate. The Shares to be delivered
pursuant to a purchase under the Plan may consist, in whole
or in part, of authorized but unissued Shares or treasury
Shares not reserved for any other purpose.
5. Options for Annual Incentive Recipients.
(a) Persons Eligible. Each Annual Incentive Recipient
(including, without limitation, an officer or director of
Eaton Vance Corp.) shall be eligible to participate in the
Plan.
(b) Price. The price per share shall be 90% of the average
closing price of a Share during the first five trading days
following the tenth of November.
(c) Exercise of Options.
(1) Each Annual Incentive Recipient may elect to apply
any whole percentage of his or her Annual Incentive, from
a minimum of 5% to a maximum of 50%, to the purchase of
Shares.
(2) The election must be made by November tenth.
Failure to make a timely election shall be deemed to be
an election not to participate for that year.
(3) The Company shall apply each Participant's elected
amount of Annual Incentive to the purchase of Shares at
the specified price and shall deliver to the Participant
notice of issuance of the Shares before the end of
November.
6. Options for Monthly Incentive Recipients.
(a) Persons Eligible. Each Monthly Incentive Recipient
(including, without limitation, an officer or director of
Eaton Vance Corp.) shall be eligible to participate in the
Plan.
(b) Price.
(1) For incentives withheld during the November 1 to
April 30 fiscal half year, the price per Share shall be
90% of the average closing price of a Share during the
first five trading days following May tenth.
(2) For incentives withheld during the May 1 to October
31 fiscal half year, the price per Share shall be 90% of
the average closing price of a Share during the first
five trading days following November tenth.
(c) Exercise of Options.
(1) Each Monthly Incentive Recipient may elect to have
any whole percentage of his or her Monthly Incentive,
from a minimum of 5% to a maximum of 50%, withheld and
applied to the purchase of Shares.
-44-
(2) The election must be made on or before the last
business day of April for the fiscal half year beginning
May 1 and ending October 31 and on or before the last
business day of October for the fiscal half year
beginning November 1 and ending April 30. Failure to
make a timely election shall be deemed an election not to
participate for that fiscal half year.
(3) The Company will hold the money and in May and
November apply each Participant's elected amount to the
purchase of Shares at the specified price and shall
deliver notice to the Participant of issuance of the
Shares before the end of May and November.
(d) Opt Out. A Monthly Incentive Recipient (except an
officer or director of Eaton Vance Corp. who has made an
irrevocable election in the form of Schedule B hereto) who
has elected to participate under the Plan may opt out as to
all (but not part) of the bonuses withheld for the purchase
of Shares by giving written notice to the Administrator
prior to the last business day of the fiscal half year. Any
amounts withheld from a Participant's Monthly Incentive
through deductions for the purchase of Shares and not used
for the purchase of Shares shall be returned without
interest.
7. Terms and Conditions Applicable to All Options.
(a) Holding Period. Except in the case of Hardship, no
Participant may sell the Shares for a period of one year
from the date such Shares are issued to him or her. The
Company will withhold certificates for one year from the
date of issuance, at which time the Company shall cause to
be delivered to the Participant a certificate or
certificates for the number of Shares purchased by the
Participant.
(b) Hardship. If a participant demonstrates to the
Administrator that he or she has incurred a Hardship, the
Administrator may in its discretion deliver, before the
expiration of one year after purchase, certificates
representing shares purchased by the Participant sufficient
in value to meet the Hardship; provided that no certificates
will be delivered to an officer or director of Eaton Vance
Corp. before the expiration of six months after purchase.
(c) Whole Shares. The Company will purchase the maximum
number of whole Shares with the bonuses to be applied. Any
amounts representing fractional share interests shall be
returned without interest.
(d) Limitation on Participation. Participation shall be
limited to Participants who comply with such administrative
procedures as the Administrator shall establish.
(e) Purchase for Investment. Each Participant may be
required to sign such agreement as the Administrator may
require to the effect the Participant is purchasing for
investment and not with a view to resale or other
distribution.
(f) Options Not Transferable. Options under the Plan are
not assignable or transferable by a Participant and are
exercisable only by the Participant.
-45-
8. Administration. The Plan shall be administered by the
Administrator. The Administrator shall have authority to
interpret and apply all provisions of the Plan and to
prescribe, amend and rescind rules and regulations relating
to the Plan. Nothing in this section shall be deemed to
authorize the Administrator to alter or administer the
provisions of the Plan in a manner inconsistent with the
terms of the Plan.
9. Amendments to or Discontinuation of the Plan. The
Board shall have the right to amend, modify or terminate the
Plan at any time without notice, provided, however, that the
then existing rights of all Participants shall not be
adversely affected thereby.
-46-
EXHIBIT 11.1
Computation of average number of shares outstanding in accordance
with Securities and Exchange Commission Act of 1934, Release No.
9083.
<TABLE>
Three Months Six Months
Ended April 30, Ended
April 30,
1997 1996 1997 1996
Primary:
<S> <C> <C> <C> <C>
Weighted average number of
voting and non-voting common
shares outstanding 18,656,824 18,860,524 18,760,592 18,845,922
Assumed exercise of certain
non-voting stock options
based on average market
value and shares reserved
for issuance under employee
stock purchase plan 562,516 - 596,260 -
Weighted average number of
shares used in primary per
share computations 19,219,340 18,860,524 19,356,852 18,845,922
Fully diluted:
Weighted average number of
voting and non-voting common
shares outstanding 18,656,824 18,860,524 18,760,592 18,845,922
Assumed exercise of certain
non-voting stock options
based on higher of average
or closing market value and
shares reserved for issuance
under employee stock
purchase plan 562,521 - 604,550 -
Weighted average number of
shares used in fully diluted
per share computations 19,219,345 18,860,524 19,365,142 18,845,922
</TABLE>
All share amounts reflect a two-for-one stock split effective May 15, 1997.
-47-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000350797
<NAME> EATON VANCE CORP.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 41892
<SECURITIES> 77081
<RECEIVABLES> 7759
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 136106
<PP&E> 2685
<DEPRECIATION> 0
<TOTAL-ASSETS> 363886
<CURRENT-LIABILITIES> 25158
<BONDS> 0
<COMMON> 581
0
0
<OTHER-SE> 218184
<TOTAL-LIABILITY-AND-EQUITY> 363886
<SALES> 0
<TOTAL-REVENUES> 95029
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 63399
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1886
<INCOME-PRETAX> 32606
<INCOME-TAX> 13116
<INCOME-CONTINUING> 19490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19490
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
