SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
MAY 3, 1999
(Date of Report)
EATON VANCE CORP.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
MARYLAND 1-8100 04-2718215
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
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255 STATE STREET, BOSTON, MASSACHUSETTS 02109
(Address of principal executive offices) (Zip Code)
(617) 482-8260
Registrant's telephone number, including area code
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INFORMATION INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
Registrant's financial statements will be affected by an
accounting change in the treatment of sales commissions and other offering costs
paid with respect to certain funds sponsored by the Registrant.
The nature and effect of the accounting change is described in
registrant's news release of May 3, 1999, a copy of which is filed herewith as
Exhibit 99.1 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) The exhibit is furnished in accordance with the provisions
of Item 601 of Regulation S-K and is set forth in the Exhibit Index and
incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EATON VANCE CORP.
(Registrant)
Date: May 3, 1999 /s/ William M. Steul
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William M. Steul, Chief Financial Officer
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EXHIBIT INDEX
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 part of this report:
EXHIBIT NO. DESCRIPTION
99.1 Copy of registrant's news release dated May 3, 1999.
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NEWS RELEASE
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[LOGO] EATON VANCE CORP.
The Eaton Vance Building
255 State Street, Boston, MA 02109
(617) 482-8260
Contact: William M. Steul
MAY 3, 1999
FOR IMMEDIATE RELEASE
EATON VANCE CORP. RESUMES AMORTIZING SALES COMMISSIONS
FOR ITS INTERVAL FUNDS
BOSTON, MA - Eaton Vance Corp. announced today that beginning May 1, the start
of the Company's third fiscal quarter, it resumed capitalizing and amortizing
sales commissions it pays to broker-dealers for sales of its interval funds,
Eaton Vance Prime Rate Reserves and EV Classic Senior Floating-Rate Fund. The
interval funds, which invest in senior bank loans, are continuously offered,
closed-end funds that offer to repurchase their shares quarterly. This
accounting change is likely to have a significant positive impact on Eaton
Vance's reported earnings for the balance of its current fiscal year and future
reporting periods, although the market and other factors will primarily
determine earnings. The change will not affect the Company's cash flow.
Eaton Vance capitalized and amortized sales commissions for the interval funds
from their inception until July 24, 1998, when an October 1998 Financial
Accounting Standards Board's staff announcement took effect. That announcement
required investment advisers to expense, as incurred, sales commissions and
other offering costs they pay for funds that do not have both Rule 12b-1
distribution fees and contingent deferred sales charges (CDSCs). The Eaton Vance
interval funds have CDSCs, but did not charge distribution fees. Expensing sales
commissions paid from July 24, 1998, as required, significantly reduced Eaton
Vance's reported earnings in the fourth quarter of fiscal 1998 and in the first
two quarters of fiscal 1999 (although cash flow was not affected).
In April the interval funds received shareholder approvals and an SEC exemptive
order permitting them, beginning May 1, 1999, to implement Rule 12b-1 equivalent
distribution fees. (The distribution fees will not change overall expenses to
fund shareholders, because Eaton Vance is correspondingly reducing its advisory
and administration fees.) With the implementation of the distribution fees on
May 1, the SEC agreed that Eaton Vance may resume capitalizing and amortizing
sales commissions for the interval funds.
Because the resumption of this accounting treatment will be effective only from
May 1, 1999, Eaton Vance will not restate its earnings for fiscal 1998 or for
the first two quarters of fiscal 1999. Further, the Company will not reverse the
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one-time, "below-the-line" $36.6 million reduction in its net income for the
first quarter of fiscal 1999 (commencing November 1, 1998), which was required
by the FASB staff announcement. That adjustment reflected the expensing of sales
commissions that Eaton Vance paid and capitalized before July 24, 1998, shown in
the financial statements for that quarter as a "cumulative effect of a change in
accounting principle."
The resumption of capitalizing and amortizing sales commissions paid for the
interval funds is expected to have a significant positive effect on Eaton
Vance's reported net income for the third and fourth quarters of fiscal 1999
(May 1 through October 31, 1999) and for future reporting periods, compared to
the fourth quarter of fiscal 1998 and the first two quarters of fiscal 1999.
This is because sales commissions will no longer be expensed as incurred, which
reduces net income in the short term, but rather will be capitalized and
amortized. The precise impact of resuming this accounting treatment cannot be
accurately estimated, as it will depend upon the volume of interval fund sales
and other market factors. Moreover, the Company's earnings are determined
primarily by the revenues from assets under management, sales and redemptions of
Eaton Vance funds, expenses, and other factors besides the impact of interval
fund sales commissions.
Eaton Vance believes that capitalizing and amortizing interval fund sales
commissions, which is consistent with the accounting treatment of sales
commissions for open-end mutual funds with similar distribution structures, will
provide a more accurate picture of the Company's financial performance.
Eaton Vance Corp., a Boston-based investment management firm, is traded on the
New York Stock Exchange under the symbol EV.
This news release contains statements, which are not historical facts, referred
to as "forward-looking statements." The Company's actual future results may
differ significantly from those stated in any forward-looking statements,
depending upon factors such as volume of sales and repurchases of fund shares,
and the continuation of fund investment advisory, administration, distribution,
and service contracts.
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