Eaton Vance announced Tuesday that its earnings in the second quarter rose 2% to $38.5 million, or 29 cents per diluted share, in the fiscal fourth quarter ended Oct. 31, and that they would have been higher, were it not for long-term debt and a 17% increase in employee compensation, Reuters reports.

A year ago, Eaton Vance earned $37.7 million, or 27 cents a share.

Paying off long-term debt reduced earnings by 6 cents a share, the company said. However, the company said that strong net flows during fiscal 2006 “should contribute meaningfully to revenue, profit and cash flow in fiscal 2007.” Investment adviser and administration fees rose 17% in the fiscal fourth quarter, boosting revenue 15% to $227.3 million.

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