Waddell & Reed Financial, Inc. (NYSE: WDR) today reported
third quarter 2016 net income1 of $53.8 million, or $0.65 per
diluted share, compared to net income of $33.7 million, or $0.41
per diluted share, during the prior quarter and net income of $48.1
million, or $0.58 per diluted share, during the third quarter of
2015. Operating income was $73.8 million during the current quarter
and the operating margin was 24.3%, compared to $53.8 million and
16.8%, respectively, during the prior quarter and $109.0 million
and 29.0%, respectively, during the same quarter in 2015.
The third quarter of 2016 included a curtailment gain of $8.5
million associated with an amendment to our post-retirement medical
benefit plan that discontinues coverage for individuals who retire
after December 31, 2016, a charge of $5.7 million for the
impairment of an intangible asset related to a sub-advisory
relationship, implementation costs of $1.3 million related to
Project E and costs of $0.7 million related to the Department of
Labor’s fiduciary rule. The second quarter of 2016 included charges
related to severance, the accelerated amortization of deferred
acquisition costs (“DAC”) and the implementation of Project E. A
schedule of how each of these items impacted our financial
statements can be found in the financial tables at the end of this
release.
Business Discussion
Assets under management were $85 billion at September 30, 2016,
declining less than 2% from the prior quarter. Outflows of $4.9
billion were partially offset by market appreciation of $3.5
billion. Despite improvement in investment performance
year-to-date, sales volume remains weak.
The impact of our cost reduction initiative is becoming more
visible. The current quarter included the full benefit of our
recent workforce reductions, and we continue to carefully manage
costs. Additionally, the amendment of our post-retirement medical
benefit plan is expected to lower future medical claims costs.
“Our industry is undergoing a period of transformational change
and we understand that in order to remain competitive our business
needs to evolve,” said Philip J. Sanders, Chief Executive Officer
of Waddell & Reed Financial, Inc. “While we have made progress
in addressing the areas of our business that require attention, we
realize a lot of work still remains to be done.”
Management Fee Revenue Analysis
Management fees declined 2% sequentially, while average assets
under management declined 4%. Fees declined at a lesser rate than
average assets under management due to an increase in the effective
fee rate, which resulted from the combination of lower
institutional assets and a mix-shift within the retail asset base.
Compared to the same quarter last year, management fees declined
21% due to a 24% decline in average assets under management, which
was partly offset by a mix-shift within the asset base that
increased the average fee rate.
Average assets under management were $87 billion during the
current quarter, compared to $91 billion during the prior quarter
and $115 billion during the third quarter of 2015. The effective
fee rate for the current quarter was 63.6 basis points compared to
62.4 basis points and 60.5 basis points during the second quarter
of 2016 and third quarter of 2015, respectively.
Underwriting and Distribution Analysis
Underwriting and Distribution Revenues
Revenues declined 7% sequentially due in large part to a share
class conversion in our retail broker-dealer channel. Revenues also
declined due to lower asset-based Rule 12b-1 service and
distribution fees in our retail unaffiliated channel resulting from
the decline in asset levels. Compared to the same period last year,
revenues declined 18% due to lower asset-based Rule 12b-1 fees in
our retail unaffiliated channel as well as the impact of a share
class conversion in our retail broker-dealer channel.
Underwriting and Distribution Costs
Direct costs declined 14% compared to the second quarter of
2016. Several items contributed to the decrease, including a charge
recorded in the prior quarter for the accelerated amortization of
DAC, a share-class conversion affecting our retail broker-dealer in
July that reduced asset-based Rule 12b-1 service and distribution
fee payouts to financial advisors, and lower Rule 12b-1 service and
distribution fee payments in our retail unaffiliated channel.
Indirect costs declined 19% due to charges for severance recorded
during the prior period, a gain due to the amendment to our
post-retirement medical plan during the current quarter, and to a
lesser degree, lower compensation, incentive award and marketing
costs during the current quarter.
Compared to the third quarter of 2015, costs declined 19%.
Direct costs declined due to lower asset levels, which resulted in
lower asset-based Rule 12b-1 service and distribution fees and to a
lesser degree, lower sales commissions and lower wholesaler
commissions. Indirect costs in our retail broker-dealer declined
primarily as a result of the gain due to the amendment to our
post-retirement medical plan, which was partly offset by higher
costs associated with the implementation of Project E.
Compensation and Related Expense Analysis
Costs declined 31% sequentially, with the majority of the change
due to a severance charge recorded in the previous quarter and a
gain due to the amendment of our post-retirement medical benefit
plan during the current quarter. The remainder of the decrease was
due to lower salaries and benefits due to workforce reductions.
Compared to the same period in 2015, the 13% decline is due to a
combination of the gain resulting from the amendment of our
post-retirement medical plan and lower headcount.
General and Administrative Expense Analysis
Costs rose 21% compared to the prior quarter due in part to the
planned transition to contractor labor in our IT department and
higher costs related to our preparation for the implementation of
the Department of Labor’s new fiduciary rule. Compared to the same
quarter in 2015, costs declined 9% due to lower dealer service
costs, and to a lesser degree, a decline in advertising costs.
Investment and Other Income
Compared to the second quarter of 2016, investment and other
income rose due to a combination of realized gains across our
trading portfolios, available for sale securities and our sponsored
funds. Last year’s third quarter included sizable losses on
investments compared to gains in the current year from the sale of
available for sale securities and net mark-to-market gains from our
investments in sponsored funds.
Unaudited Consolidated Statement of Income
(Amounts in thousands, except for per
share data)
2015 2016 1st Qtr. 2nd
Qtr. 3rd Qtr. 4th Qtr. 1st
Qtr. 2nd Qtr. 3rd Qtr.
4th Qtr. Operating Revenues:
Investment management fees $ 182,105 $ 185,914
$ 175,218 $ 166,325 $ 144,778 $ 140,880 $ 138,745 Underwriting and
distribution fees 166,978 171,508 165,130 160,382 146,658 146,312
135,778 Shareholder service fees 36,375
36,568 35,761
34,367 32,380 32,016
28,563 Total operating revenues
385,458 393,990
376,109 361,074 323,816
319,208 303,086
Operating Expenses: Underwriting and
distribution 195,420 195,762 189,065 189,534 173,836 181,245
152,999 Compensation and related costs 53,495 52,829 46,157 48,271
52,940 58,341 40,214 General and administrative 25,678 27,897
25,458 26,033 19,152 19,276 23,280 Subadvisory fees 2,387 2,394
2,305 2,048 2,093 2,325 2,566 Depreciation 4,034 4,064 4,117 3,831
4,362 4,260 4,541 Goodwill impairment -
- - -
- - 5,700
Total operating expenses 281,014
282,946 267,102
269,717 252,383 265,447
229,300
Operating
Income 104,444 111,044 109,007 91,357 71,433 53,761 73,786
Investment and other income/(loss) 3,972 9 (16,872 ) 7,647 (10,218
) 687 7,878 Interest expense (2,766 )
(2,765 ) (2,765 ) (2,772 )
(2,768 ) (2,776 ) (2,792 )
Income before taxes 105,650 108,288 89,370 96,232 58,447
51,672 78,872 Provision for taxes 38,537
40,843 41,312
33,312 20,978 18,101
24,067
Net Income
$ 67,113 $ 67,445 $ 48,058
$ 62,920 $ 37,469 $ 33,571
$ 54,805 Noncontrolling
interests - -
- - 501
(124 ) 978
Net Income
Attributable to Waddell & Reed Financial, Inc. $
67,113 $ 67,445 $ 48,058
$ 62,920 $ 36,968 $ 33,695 $
53,827 Net income per share, basic and
diluted: 0.80 0.80
0.58 0.76 0.45
0.41 0.65
Weighted average shares outstanding - basic and diluted
83,581 84,079
83,469 82,873 82,104
82,947 82,834
Operating margin 27.1 % 28.2 %
29.0 % 25.3 % 22.1 %
16.8 % 24.3 %
Net Distribution Cost Analysis
(Amounts in thousands)
Retail Unaffiliated
Distribution1 1st Qtr. 2nd Qtr.
3rd Qtr. 4th Qtr. 1st Qtr.
2nd Qtr. 3rd Qtr. 4th
Qtr. U&D Revenues $ 52,142 $ 51,768 $ 47,040 $ 43,091 $
35,923 $ 32,510 $ 29,991 U&D Expenses - Direct (68,595 )
(66,947 ) (62,117 ) (57,119 ) (46,846 ) (42,452 ) (39,489 ) U&D
Expenses - Indirect (14,029 ) (13,972 )
(13,329 ) (14,614 ) (13,349 )
(14,939 ) (10,643 ) Net
Distribution (Costs) ($30,482 ) ($29,151 )
($28,406 ) ($28,642 ) ($24,272 )
($24,881 ) ($20,141 )
Retail Broker-Dealer2 U&D Revenues $
114,836 $ 119,740 $ 118,090 $ 117,291 $ 110,735 $ 113,802 $ 105,787
U&D Expenses - Direct (82,022 ) (85,177 ) (84,420 ) (83,413 )
(80,277 ) (87,740 ) (72,276 ) U&D Expenses - Indirect
(30,774 ) (29,666 ) (29,199 )
(34,388 ) (33,364 ) (36,114 )
(30,591 ) Net Distribution Excess/(Costs) $
2,040 $ 4,897 $ 4,471
($510 ) ($2,906 ) ($10,052 )
$ 2,920 1 Retail
Unaffiliated Distribution was previously referred to as the
"Wholesale channel" 2 Retail Broker-Dealer was previously referred
to as the "Advisors channel"
Changes
in Assets Under Management 2015
2016
(Amounts in millions)
1st Qtr. 2nd Qtr. 3rd Qtr.
4th Qtr. 1st Qtr. 2nd Qtr.
3rd Qtr. 4th Qtr. Retail
Unaffiliated Distribution
Beginning assets $ 60,335 $ 59,412 $ 57,545 $ 49,320 $
45,641 $ 38,623 $ 35,197 Sales* 3,870 3,239 2,768 2,341 2,144 1,526
1,320 Redemptions (6,259 ) (4,558 ) (5,569 ) (7,300 ) (7,680 )
(5,543 ) (4,824 ) Net Exchanges 224 144
265 176 158
127 161
Net flows (2,165 ) (1,175 ) (2,536 ) (4,783 ) (5,378
) (3,890 ) (3,343 ) Market action 1,242
(692 ) (5,689 ) 1,104
(1,640 ) 464 1,436
Ending assets $ 59,412 $ 57,545
$ 49,320 $ 45,641 $ 38,623 $
35,197 $ 33,290
Retail
Broker-Dealer Beginning assets $ 45,517 $ 46,385 $ 45,947 $
42,215 $ 43,344 $ 42,142 $ 42,261 Sales* 1,270 1,347 1,238 1,218
1,068 1,094 1,024 Redemptions (1,279 ) (1,279 ) (1,242 ) (1,245 )
(1,197 ) (1,329 ) (1,542 ) Net Exchanges (224 )
(144 ) (265 ) (176 ) (172
) (163 ) (194 )
Net
flows (233 ) (76 ) (269 ) (203 ) (301 ) (398 ) (712 ) Market
action 1,101 (362 )
(3,463 ) 1,332 (901 ) 517
1,621 Ending assets $
46,385 $ 45,947 $ 42,215
$ 43,344 $ 42,142 $ 42,261 $
43,170
Institutional Beginning
assets $ 17,798 $ 17,097 $ 17,214 $ 14,657 $ 15,414 $ 14,426 $
8,993 Sales* 300 1,203 465 773 453 190 180 Redemptions (1,460 )
(1,003 ) (1,817 ) (799 ) (1,068 ) (5,699 ) (1,051 ) Net Exchanges
- - -
- 14 36
33
Net flows (1,160 ) 200
(1,352 ) (26 ) (601 ) (5,473 ) (838 ) Market action 459
(83 ) (1,205 ) 783
(387 ) 40 440
Ending assets $ 17,097 $ 17,214
$ 14,657 $ 15,414 $ 14,426
$ 8,993 $ 8,595
Consolidated Total Beginning assets $ 123,650 $
122,894 $ 120,706 $ 106,192 $ 104,399 $ 95,191 $ 86,451 Sales*
5,440 5,789 4,471 4,332 3,665 2,810 2,524 Redemptions (8,998 )
(6,840 ) (8,628 ) (9,344 ) (9,945 ) (12,571 ) (7,417 ) Net
Exchanges - - -
- - -
-
Net flows (3,558
) (1,051 ) (4,157 ) (5,012 ) (6,280 ) (9,761 ) (4,893 ) Market
action 2,802 (1,137 )
(10,357 ) 3,219 (2,928 )
1,021 3,497 Ending assets
$ 122,894 $ 120,706 $ 106,192
$ 104,399 $ 95,191 $ 86,451
$ 85,055
* Sales is primarily gross sales (net of
sales commissions). This amount also includes net reinvested
dividends & capital gains and investment income.
Supplemental Information
Asset Manager 2015 2016
($ in millions)
1st Qtr. 2nd Qtr. 3rd Qtr.
4th Qtr. 1st Qtr. 2nd Qtr.
3rd Qtr. 4th Qtr. Retail
Unaffiliated Distribution AUM $ 59,412 $ 57,545 $ 49,320 $
45,641 $ 38,623 $ 35,197 $ 33,290 Net flows $ (2,165 ) $ (1,175 ) $
(2,536 ) $ (4,783 ) $ (5,378 ) $ (3,890 ) $ (3,343 ) Organic growth
-14.4 % -7.9 % -17.6 % -38.8 % -47.1 % -40.3 % -38.0 % Redemption
Rate 42.9 % 31.0 % 41.2 % 59.3 % 77.7 % 61.3 % 56.2 %
Retail
Broker-Dealer AUM $ 46,385 $ 45,947 $ 42,215 $ 43,344 $ 42,142
$ 42,261 $ 43,170 Net flows $ (233 ) $ (76 ) $ (269 ) $ (203 ) $
(301 ) $ (398 ) $ (712 ) Organic growth -2.0 % -0.7 % -2.3 % -1.9 %
-2.8 % -3.8 % -6.7 % Redemption Rate 9.0 % 9.0 % 8.9 % 9.3 % 9.3 %
10.5 % 12.1 %
Institutional AUM $ 17,097 $ 17,214 $ 14,657 $
15,414 $ 14,426 $ 8,993 $ 8,595 Net flows $ (1,160 ) $ 200 $ (1,352
) $ (26 ) $ (601 ) $ (5,473 ) $ (838 ) Organic growth -26.1 % 4.7 %
-31.4 % -0.7 % -15.6 % -151.8 % -37.3 % Redemption Rate 33.7
% 23.2 % 45.4 % 20.5 %
29.9 % 198.9 % 46.4 %
Fund
Rankings 1 Year 3 Years 5
Years Lipper Funds ranked in top half 36 % 38 % 42 %
Assets ranked in top half 28 % 28 % 46 %
MorningStar Funds
with 4/5 stars 18 % 9 % 10 % Assets with 4/5 stars 15 %
5 % 5 %
2015 2016
Broker-Dealer 1st Qtr. 2nd Qtr.
3rd Qtr. 4th Qtr. 1st Qtr.
2nd Qtr. 3rd Qtr. 4th Qtr. AUA*
(in billions) $ 53.7 $ 53.6 $ 49.4 $ 51.0 $ 49.9 $ 50.5 $ 52.1 AUA*
fee based accounts (in billions) $ 18.0 $ 18.3 $ 17.0 $ 17.6 $ 17.4
$ 17.8 $ 18.5 # Advisors 1,745 1,780 1,795 1,819 1,803 1,799 1,796
Advisor productivity (in thousands) $ 65.9 $ 67.9 $ 66.3 $ 64.9 $
61.3 $ 63.1 $ 59.0 U&D revenues (in thousands) $ 114,836
$ 119,740 $ 118,090 $ 117,291
$ 110,735 $ 113,802 $
105,787 * AUA represent Assets Under
Administration
Unaudited Balance Sheet Information
Schedule of Selected Items
Sept. 30, 2016
(Amounts in millions)
Cash & cash equivalents (unrestricted) $ 529.8 Investment
securities 319.2
Total assets 1,398.6 Long-term debt
189.6
Total liabilities 542.8 Redeemable
noncontrolling interests 10.4 Stockholders'
equity 845.4 Shares outstanding
82.8 million shares Quarter ended
Year-to-Date Sept. 30, 2016 Sept. 30, 2016
($ in thousands)
Shares repurchased Number of shares 28,537 2,230,034 Total
cost $ 522 $ 47,984
Dividend paid Rate per share $
0.46 $ 1.38 Total paid $ 38,120 $ 114,736
Capital
returned to stockholders $ 38,642 $
162,720
Unaudited Supplemental Information
In addition to reporting results in accordance with U.S.
generally accepted accounting principles (“GAAP”), management
believes adjusting results to exclude certain items provides
investors with financial measures that better reflect the company’s
core operating performance and allow for more appropriate
comparisons to prior periods. However, non-GAAP financial measures
should not be considered a substitute for performance measures
calculated in accordance with GAAP.
Adjusted ResultsReconciliation
to GAAP
(Amounts in thousands, except for per
share data)
GAAP Adjusted GAAP
Adjusted 3Q 16
Adj. 3Q 16 2Q 16 Adj.
2Q 16 Operating Revenues: Investment
management fees $138,745 - $138,745 $140,880 - $140,880
Underwriting and distribution fees 135,778 - 135,778 146,312 -
146,312 Shareholder service fees 28,563 -
28,563 32,016 - 32,016 Total operating
revenues 303,086 - 303,086 319,208
- 319,208
Operating Expenses: Underwriting and
distribution 152,999 3,470 156,469 181,245 (14,285) 166,960
Compensation and related costs 40,214 3,752 43,966 58,341 (9,818)
48,523 General and administrative 23,280 (662) 22,618 19,276 -
19,276 Subadvisory fees 2,566 - 2,566 2,325 - 2,325 Depreciation
4,541 - 4,541 4,260 - 4,260 Goodwill impairment 5,700
(5,700) - - - - Total operating
expenses 229,300 860 230,160 265,447
(24,103) 241,344
Operating Income 73,786 860
72,926 53,761 (24,103) 77,864 Investment and other income/(loss)
7,878 - 7,878 687 - 687 Interest expense (2,792) -
(2,792) (2,776) - (2,776) Income before
taxes 78,872 860 78,012 51,672 (24,103) 75,775 Provision for taxes
24,067 (316) 23,751 18,101 8,937
27,038
Net Income $ 54,805 544 $
54,261 $ 33,571 (15,166) $ 48,737
Noncontrolling interests 978 - 978
(124) - (124)
Net Income Attributable to Waddell
& Reed Financial, Inc. $ 53,827 544 $
53,283 $ 33,695 (15,166) $ 48,861 Net income
per share, basic and diluted: 0.65 0.01 0.64
0.41 (0.18) 0.59 Weighted average shares
outstanding - basic and diluted 82,834 82,834
82,834 82,947 82,947 82,947
Adjustments during the third quarter were:
- $8.5 million related to a curtailment
gain ($4.7 million in U&D indirect and $3.8 million in
compensation);
- $5.7 million charge related to the
impairment of an intangible asset;
- $1.3 million charge related to the
implementation of Project E to U&D indirect costs; and
- $0.7 million charge related to DOL
preparation to G&A costs.
Adjustments during the second quarter were:
- $7.1 million for severance and related
charges to U&D indirect costs (unaffiliated distribution $2.2
million; broker-dealer $4.9 million);
- $9.8 million for severance and related
charges to compensation and related costs;
- $5.9 million related to the accelerated
amortization of DAC to U&D direct costs (broker-dealer) due to
a share class conversion; and
- $1.3 million related to costs
associated with the implementation of technology to Project E to
U&D indirect costs (broker-dealer).
Unaudited Consolidated Statement of
Income
(Amounts in thousands, except for per
share data)
Nine Months Ended Sep-15 Sep-16
% Change Operating Revenues: Investment management
fees $ 543,237 $ 424,403 -21.9 % Underwriting and distribution fees
503,616 428,748 -14.9 % Shareholder service fees
108,704 92,959 -14.5 % Total
operating revenues 1,155,557
946,110 -18.1 %
Operating Expenses:
Underwriting and distribution 580,247 508,080 -12.4 % Compensation
and related costs 152,481 151,495 -0.6 % General and administrative
79,033 61,708 -21.9 % Subadvisory fees 7,086 6,984 -1.4 %
Depreciation 12,215 13,163 7.8 % Goodwill impairment
- 5,700 Total operating
expenses 831,062 747,130
-10.1 %
Operating Income 324,495 198,980 -38.7 %
Investment and other income (12,891 ) (1,653 ) -87.2 % Interest
expense (8,296 ) (8,336 ) 0.5 %
Income before taxes 303,308 188,991 -37.7 % Provision for taxes
120,692 63,146
-47.7 %
Net Income $ 182,616 $ 125,845
-31.1 % Noncontrolling interests -
1,355 N/A
Net Income
Attributable to Waddell & Reed Financial, Inc. $
182,616 $ 124,490 -31.8 % Net income
per share, basic and diluted 2.18
1.51 -30.9 % Weighted average shares
outstanding - basic and diluted 83,709
82,629 Operating margin
28.1 % 21.0 %
Net Distribution Cost Analysis
(Amounts in thousands)
Nine Months Ended Retail Unaffiliated
Distribution1 Sep-15 Sep-16
% Change U&D Revenues $ 150,950 $ 98,424 -34.8 % U&D
Expenses - Direct (197,659 ) (128,787 ) -34.8 % U&D Expenses -
Indirect (41,330 ) (38,931 ) -5.8 % Net
Distribution (Costs) ($88,039 ) ($69,294 )
-21.3 %
Retail Broker-Dealer2 U&D
Revenues $ 352,666 $ 330,324 -6.3 % U&D Expenses - Direct
(251,619 ) (240,293 ) -4.5 % U&D Expenses - Indirect
(89,639 ) (100,069 ) 11.6 % Net Distribution
Excess/(Costs) $ 11,408 ($10,038 )
-188.0 % 1 Retail Unaffiliated Distribution was
previously referred to as the "Wholesale channel" 2 Retail
Broker-Dealer was previously referred to as the "Advisors channel"
Changes in Assets Under Management
Nine Months Ended
(Amounts in millions)
Sep-15 Sep-16 % Change Retail
Unaffiliated Distribution Beginning assets $
60,335 $ 45,641 -24.4 % Sales* 9,877 4,990 -49.5 % Redemptions
(16,386 ) (18,047 ) 10.1 % Net Exchanges 633
446 N/M
Net flows (5,876 )
(12,611 ) 114.6 % Market action (5,139 ) 260
-105.1 % Ending assets $ 49,320 $
33,290 -32.5 %
Retail Broker-Dealer
Beginning assets $ 45,517 $ 43,344 -4.8 % Sales* 3,856 3,186 -17.4
% Redemptions (3,800 ) (4,068 ) 7.1 % Net Exchanges (633 )
(529 ) N/M
Net flows (577 )
(1,411 ) 144.5 % Market action (2,725 ) 1,237
-145.4 % Ending assets $ 42,215 $
43,170 2.3 %
Institutional Channel
Beginning assets $ 17,798 $ 15,414 -13.4 % Sales* 1,968 823 -58.2 %
Redemptions (4,280 ) (7,818 ) 82.7 % Net Exchanges 0
83 N/M
Net flows (2,312 )
(6,912 ) 199.0 % Market action (829 ) 93
-111.2 % Ending assets $ 14,657 $ 8,595
-41.4 %
Consolidated Total Beginning
assets $ 123,650 $ 104,399 -15.6 % Sales* 15,701 8,999 -42.7 %
Redemptions (24,466 ) (29,933 ) 22.3 % Net Exchanges -
- N/M
Net flows
(8,765 ) (20,934 ) 138.8 % Market action (8,693 )
1,590 -118.3 % Ending assets $ 106,192
$ 85,055 -19.9 %
* Sales is primarily gross sales (net of
sales commissions). This amount also includesnet reinvested
dividends & capital gains and investment income.
Earnings Conference Call
Stockholders, members of the investment community and the
general public are invited to listen to a live Web cast of
our earnings release conference call today at 10:00 a.m.
Eastern. During this call, Philip J. Sanders, CEO and CIO, will
review our quarterly results. Live access to the teleconference
will be available on the “Investor Relations” section of our Web
site at www.waddell.com. A Web cast replay will be made
available shortly after the conclusion of the call and accessible
for seven days.
Web Site Resources
We invite you to visit the Investor Relations section of our Web
site at www.waddell.com. Under the “Investor Info” tab you will
find a link to presentations as well as to data tables which
include supplemental information schedules.
Contacts
Investor Contact:Nicole Russell,
VP, Investor Relations, (913) 236-1880, nrussell@waddell.com
Mutual Fund Investor Contact:Call
(888) WADDELL, or visit www.waddell.com or www.ivyfunds.com.Past
performance is no guarantee of future results. Please invest
carefully.
About the Company
Waddell & Reed, Inc., founded in 1937, is one of the oldest
mutual fund complexes in the United States, having introduced the
Waddell & Reed Advisors Group of Mutual Funds in 1940. Today,
we distribute our investment products through the retail
unaffiliated distribution channel (encompassing broker/dealer,
retirement, and registered investment advisors), our retail
broker-dealer channel (our network of financial advisors), and our
Institutional channel (including defined benefit plans, pension
plans and endowments, and our subadvisory partnership with
Mackenzie in Canada).
Through its subsidiaries, Waddell & Reed Financial, Inc.
provides investment management and financial planning services to
clients throughout the United States and internationally. Waddell
& Reed Investment Management Company serves as investment
advisor to the Waddell & Reed Advisors Group of Mutual Funds,
Ivy Funds Variable Insurance Portfolios and InvestEd Portfolios,
while Ivy Investment Management Company serves as investment
advisor to Ivy Funds and investment advisor and global distributor
to the Ivy Global Investors SICAV, an umbrella UCITS fund range
domiciled in Luxembourg. Waddell & Reed, Inc. serves as
principal underwriter and distributor to the Waddell & Reed
Advisors Group of Mutual Funds, Ivy Funds Variable Insurance
Portfolios and InvestEd Portfolios, while Ivy Distributors, Inc.
serves as principal underwriter and distributor to Ivy Funds.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which reflect the current views and assumptions of
management with respect to future events regarding our business and
industry in general. These forward-looking statements include all
statements, other than statements of historical fact, regarding our
financial position, business strategy and other plans and
objectives for future operations, including statements with respect
to revenues and earnings, the amount and composition of assets
under management, distribution sources, expense levels, redemption
rates and the financial markets and other conditions. These
statements are generally identified by the use of such words as
"may," "could," "should," "would," "believe," "anticipate,"
"forecast," "estimate," "expect," "intend," "plan," "project,"
"outlook," "will," "potential" and similar statements of a future
or forward-looking nature. Readers are cautioned that any
forward-looking information provided by us or on our behalf is not
a guarantee of future performance. Actual results may differ
materially from those contained in these forward-looking statements
as a result of various factors, including but not limited to those
discussed below. If one or more events related to these or other
risks, contingencies or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may
differ materially from those forecasted or expected. Certain
important factors that could cause actual results to differ
materially from our expectations are disclosed in the "Risk
Factors" section of our Annual Report on Form 10-K for the year
ended December 31, 2015, which include, without limitation:
- The loss of existing distribution
channels or inability to access new distribution channels;
- A reduction in assets under our
management on short notice, through increased redemptions in our
distribution channels or our Funds, particularly those Funds with a
high concentration of assets, or investors terminating their
relationship with us or shifting their funds to other types of
accounts with different rate structures;
- The adverse ruling or resolution of any
litigation, regulatory investigations and proceedings, or
securities arbitrations by a federal or state court or regulatory
body;
- The introduction of legislative or
regulatory proposals or judicial rulings that change the
independent contractor classification of our financial advisors at
the federal or state level for employment tax or other employee
benefit purposes;
- A decline in the securities markets or
in the relative investment performance of our Funds and other
investment portfolios and products as compared to competing
funds;
- The ability of mutual fund and other
investors to redeem their investments without prior notice or on
short notice;
- Our inability to reduce expenses
rapidly enough to align with declines in our revenues, the level of
our assets under management or our business environment.
- Non-compliance with applicable laws or
regulations and changes in current legal, regulatory, accounting,
tax or compliance requirements or governmental policies;
- Our inability to attract and retain
senior executive management and other key personnel to conduct our
broker-dealer, fund management and investment advisory
business;
- A failure in, or breach of, our
operational or security systems or our technology infrastructure,
or those of third parties on which we rely; and
- Our inability to implement new
information technology and systems, or our inability to complete
such implementation in a timely or cost effective manner.
The foregoing factors should not be construed as exhaustive and
should be read together with other cautionary statements included
in this and other reports and filings we make with the Securities
and Exchange Commission, including the information in Item 1
"Business" and Item 1A "Risk Factors" of Part I and Item 7
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" of Part II to our Annual Report on Form 10-K
for the year ended December 31, 2015 and as updated in our
quarterly reports on Form 10-Q for the year ending December 31,
2016. All forward-looking statements speak only as of the date on
which they are made and we undertake no duty to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent
required by law.
__________________________________
1 Net income represents net income attributable to Waddell &
Reed Financial, Inc.
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Waddell & Reed Financial, Inc.Investor Contact:Nicole Russell, 913-236-1880VP,
Investor Relationsnrussell@waddell.comorMutual
Fund Investor Contact:(888)
WADDELLwww.waddell.comwww.ivyfunds.com
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