| Exhibit 99.1 |
News Release
Waddell & Reed Financial, Inc. Reports Third Quarter Results
Overland Park, KS, Oct. 23, 2007 — Waddell & Reed Financial, Inc. (NYSE: WDR) reported third quarter net income of $32.0 million, or $0.39 per diluted share compared to net income of $29.7 million, or $0.36 per diluted share in the second quarter and net income of $24.6 million, or $0.30 per diluted share in last year’s third quarter.
Operating revenues of $211 million increased 5% sequential quarterly and 18% compared to last year’s third quarter. The operating margin was 23.2% during the quarter, compared to 23.8% during the second quarter and 21.5% during last year’s comparable period. The 60 basis point sequential decline in operating margin was largely due to exceptional sales growth in our Wholesale channel. Although we experience cost pressure at the point-of-sale, over the life of these assets, the incremental management fees earned should more than offset their acquisition cost. Compared to the same quarter in 2006, the operating margin improved by 170 basis points as higher management fee revenues provided operating leverage and the absence of a charge taken in last year’s third quarter to resolve the remainder of our legal and regulatory matters. A line-item discussion of our operating results is included below.
Business Discussion
Investment performance, always competitive, has been strong this year. Year-to-date, 51% of our equity assets and 40% of our equity funds ranked in the top decile of their Lipper universe while 80% of our equity assets and 60% of our equity funds ranked in the top quartile. On a three-year basis, 47% of our equity assets and 38% of our equity funds ranked in the top decile while 62% of our equity assets and 56% of our equity funds ranked in the top quartile. Our strong investment performance record is supporting record sales.
Sales during the quarter — gross and net — were the highest for any three-month period in our history. Company-wide, gross sales of $3.7 billion increased 36% sequentially and 68% compared to last year’s third quarter. Net sales of $1.5 billion were twice as high as the previous quarter and more than three times higher than the third quarter of 2006. Net flows during the quarter represented an annualized organic growth rate of 13%. At the end of September, assets under management were $59.4 billion, also an all-time high.
Advisors channel
Our Advisors channel continues to experience steady progress. Quarterly gross sales of $902 million were 4% higher than the second quarter and 19% higher than those of the same period in 2006. Net sales
1
saw considerable improvement during the quarter as outflows were reduced to $20 million compared to $161 million during the previous quarter and $47 million during the third quarter of 2006.
As a result of greater emphasis on recruiting, we added a net of 98 advisors to our sales force during the quarter. At 2,273, our advisor headcount is now up from the beginning of the year.
Advisor productivity fell slightly compared to the second quarter of 2007 due largely to the increase in headcount. Compared to last year’s third quarter, productivity improved as a result of our continued focus on this important metric.
Wholesale channel
Our Wholesale channel posted very significant growth. Gross sales of $2.5 billion during the quarter rose 47% and 130% compared to the second quarter of 2007 and third quarter of 2006, respectively. Net sales of $1.8 billion were 68% and 213% higher than those of the second quarter of 2007 and third quarter of 2006, respectively. The daily sales run rate is accelerating and the proportion of sales going to Waddell & Reed-managed products continues to increase.
Institutional channel
Gross sales of $282 million during the quarter increased 106% compared to the second quarter but 18% lower when compared to the same period in 2006. Net outflows were $260 million. During our second quarter’s earnings call, we announced that we had received a notice of withdrawal from one of our institutional clients. We expected a liquidation of approximately $300 million; however, the actual redemption was for $133 million.
Management commentary
“Never during our company’s 70-year history have we experienced a period of growth equal to that of this past quarter,” said Hank Herrmann, Chief Executive Officer of Waddell & Reed Financial, Inc. “Our Wholesale channel is garnering assets at an unprecedented pace. This rate of growth is gratifying and has accelerated further in October.”
Management Fee Revenue Analysis
On a sequential quarter basis, revenues had the benefit of one extra day. The effective management fee fell slightly to 68.0 basis points compared to 68.4 basis points earned during the second quarter.
Compared to last year’s third quarter, revenue growth lagged the growth in average assets under management as a result of the fee reduction mandated on certain mutual funds by a regulatory settlement that became effective on October 1, 2006. The effective management fee rate during last year’s third quarter was 69.2 basis points.
Underwriting and Distribution Analysis
Advisors channel
The product sales mix-shift continues from our new MAP and MAP Plus products that were introduced in the second quarter. On a sequential quarter basis, revenues remained almost unchanged as higher variable annuity sales volume and asset-based fees were offset by lower front-load mutual fund sales. Direct
2
expenses dropped slightly on lower front-load mutual fund sales volume while indirect expenses rose slightly due to higher sales program and healthcare-related costs. The second quarter included adjustments for favorable healthcare claims experience.
Compared to last year’s third quarter, revenues increased on a combination of higher asset-based fees and variable annuity sales volume. This increase was partially offset by lower front-load mutual fund sales volume. Direct expenses rose in close correlation to the increase in sales volume while the increase in indirect expenses can be attributed to compensation costs for support personnel.
Wholesale channel
Sequentially, the increase in revenues is attributable largely to higher asset-based service and distribution fees, driven by higher average assets under management. Direct expenses increased on higher sales volume while indirect expenses remained unchanged.
Compared to last year’s third quarter, revenues increased largely on higher service and distribution fees and to a lesser extent, higher sales volume at Legend. Direct expenses increased on higher sales volume while indirect expenses increased on higher marketing, business travel and compensation costs.
Operating Expense Analysis
On a sequential quarterly basis, the increase in operating expenses is attributable largely to higher underwriting and distribution costs (discussed above). The increase in general and administrative expenses was due to higher legal costs and fund-related expenses. Subadvisory costs rose on higher levels of subdavised assets under management.
Compared to last year’s third quarter, operating expenses rose on higher underwriting and distribution costs (discussed above) and to a lesser extent, higher subadvisory and compensation and related costs. Subadvisory costs increased on higher levels of subadvised assets under management while compensation and related costs rose due to a combination of higher headcount, annual compensation increases and higher incentive and share-based compensation costs. Last year’s third quarter included an adjustment which lowered share-based compensation. Partially offsetting these increases were lower general and administrative costs.
For the quarter ended September 30, 2007, subadvised average assets under management were $10.9 billion, compared to $10.1 billion and $7.3 billion for the second quarter of 2007 and third quarter of 2006, respectively.
Other
Investment and other income rose compared to both the second quarter and last year’s third quarter. Compared to the second quarter, the increase is largely due to a gain on the sale of available-for-sale mutual funds investments and higher earnings on trading securities. Compared to last year’s third quarter, the increase is due to a write down of other investment in 2006, higher earnings on trading securities and increased gains on the sale of securities. These were partially offset by lower earnings from lower average balances on our commercial paper holdings.
3
Balance Sheet Information
Cash and cash equivalents and investment securities are $299 million (including $93 million held for the exclusive benefit of customers in compliance with federal securities industry regulations). We have no short-term outstanding borrowings against our money market loan program or our $200 million credit facility.
Stockholders’ equity is $259 million and there are 83.4 million shares outstanding. During the quarter, we repurchased 524,600 shares of common stock in the open market at an aggregate cost of $12.5 million. During the first nine months of 2007, we repurchased a total of 2.2 million shares at an aggregate cost of $54.4 million.
4
Unaudited Schedule of Operating Data
(Amounts in thousands, except for per share data) |
| 2006 |
| 2007 |
| |||||||||||||||||||
|
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
| |||||||
Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Investment management fees |
| $ | 74,049 |
| $ | 78,190 |
| $ | 77,955 |
| $ | 81,331 |
| $ | 82,860 |
| $ | 89,383 |
| $ | 94,806 |
|
|
|
Underwriting and distribution fees |
| 77,012 |
| 80,494 |
| 77,908 |
| 82,044 |
| 84,016 |
| 88,556 |
| 92,168 |
|
|
| |||||||
Shareholder service fees |
| 22,009 |
| 22,627 |
| 22,719 |
| 22,317 |
| 22,623 |
| 23,347 |
| 23,678 |
|
|
| |||||||
Total operating revenues |
| 173,070 |
| 181,311 |
| 178,582 |
| 185,692 |
| 189,499 |
| 201,286 |
| 210,652 |
|
|
| |||||||
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Underwriting and distribution |
| 84,754 |
| 91,545 |
| 87,927 |
| 92,313 |
| 94,397 |
| 99,528 |
| 105,604 |
|
|
| |||||||
Compensation and related costs |
| 28,942 |
| 27,076 |
| 25,767 |
| 28,315 |
| 26,932 |
| 28,312 |
| 28,760 |
|
|
| |||||||
General and administrative |
| 10,246 |
| 64,982 |
| 15,539 |
| 9,839 |
| 10,083 |
| 11,840 |
| 12,745 |
|
|
| |||||||
Subadvisory fees |
| 6,549 |
| 7,599 |
| 7,960 |
| 8,650 |
| 9,215 |
| 10,638 |
| 11,459 |
|
|
| |||||||
Depreciation |
| 2,853 |
| 2,956 |
| 2,970 |
| 2,945 |
| 3,043 |
| 3,062 |
| 3,167 |
|
|
| |||||||
Goodwill impairment |
| - |
| 20,000 |
| - |
| - |
| - |
| - |
| - |
|
|
| |||||||
Total operating expenses |
| 133,344 |
| 214,158 |
| 140,163 |
| 142,062 |
| 143,670 |
| 153,380 |
| 161,735 |
|
|
| |||||||
Operating Income: |
| 39,726 |
| (32,847 | ) | 38,419 |
| 43,630 |
| 45,829 |
| 47,906 |
| 48,917 |
|
|
| |||||||
Investment and other income |
| 2,264 |
| 2,144 |
| 2,960 |
| 5,131 |
| 2,480 |
| 2,609 |
| 4,831 |
|
|
| |||||||
Interest expense |
| (3,254 | ) | (2,984 | ) | (3,048 | ) | (2,941 | ) | (2,984 | ) | (2,982 | ) | (2,984 | ) |
|
| |||||||
Income before taxes |
| 38,736 |
| (33,687 | ) | 38,331 |
| 45,820 |
| 45,325 |
| 47,533 |
| 50,764 |
|
|
| |||||||
Provision for taxes |
| 14,144 |
| (665 | ) | 13,740 |
| 15,869 |
| 16,598 |
| 17,827 |
| 18,797 |
|
|
| |||||||
Net Income |
| $ | 24,592 |
| $ | (33,022 | ) | $ | 24,591 |
| $ | 29,951 |
| $ | 28,727 |
| $ | 29,706 |
| $ | 31,967 |
|
|
|
Net income per share- diluted |
| 0.30 |
| (0.40 | ) | 0.30 |
| 0.36 |
| 0.35 |
| 0.36 |
| 0.39 |
|
|
| |||||||
Weighted average shares outstanding - diluted |
| 82,943 |
| 81,570 |
| 83,171 |
| 83,169 |
| 82,803 |
| 82,323 |
| 82,099 |
|
|
| |||||||
Operating margin |
| 23.0 | % | -18.1 | % | 21.5 | % | 23.5 | % | 24.2 | % | 23.8 | % | 23.2 | % |
|
| |||||||
Underwriting and Distribution
(Amounts in thousands) |
| 2006 |
| 2007 |
| |||||||||||||||||||
|
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
| |||||||
Advisors Channel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Revenues |
| $ | 56,280 |
| $ | 57,724 |
| $ | 54,398 |
| $ | 56,911 |
| $ | 56,807 |
| $ | 57,839 |
| $ | 57,728 |
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Direct |
| 38,468 |
| 40,736 |
| 37,323 |
| 38,053 |
| 39,340 |
| 40,173 |
| 39,539 |
|
|
| |||||||
Indirect |
| 19,866 |
| 21,523 |
| 19,899 |
| 21,050 |
| 20,775 |
| 20,057 |
| 21,145 |
|
|
| |||||||
Total expenses |
| $ | 58,334 |
| $ | 62,259 |
| $ | 57,222 |
| $ | 59,103 |
| $ | 60,115 |
| $ | 60,230 |
| $ | 60,684 |
|
|
|
Margin |
| -3.6 | % | -7.9 | % | -5.2 | % | -3.9 | % | -5.8 | % | -4.1 | % | -5.1 | % |
|
| |||||||
Wholesale Channel (Third-Party) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Revenues |
| $ | 7,909 |
| $ | 9,468 |
| $ | 10,465 |
| $ | 11,446 |
| $ | 12,968 |
| $ | 15,609 |
| $ | 19,271 |
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Direct |
| 11,091 |
| 12,708 |
| 14,722 |
| 15,671 |
| 16,951 |
| 20,025 |
| 25,340 |
|
|
| |||||||
Indirect |
| 3,832 |
| 4,917 |
| 4,222 |
| 5,295 |
| 5,001 |
| 6,158 |
| 6,304 |
|
|
| |||||||
Total expenses |
| $ | 14,923 |
| $ | 17,625 |
| $ | 18,944 |
| $ | 20,966 |
| $ | 21,952 |
| $ | 26,183 |
| $ | 31,644 |
|
|
|
Wholesale Channel (Legend) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Revenues |
| $ | 12,823 |
| $ | 13,302 |
| $ | 13,045 |
| $ | 13,687 |
| $ | 14,241 |
| $ | 15,108 |
| $ | 15,169 |
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Direct |
| 8,654 |
| 8,992 |
| 8,855 |
| 9,181 |
| 9,478 |
| 10,165 |
| 10,158 |
|
|
| |||||||
Indirect |
| 2,843 |
| 2,669 |
| 2,906 |
| 3,063 |
| 2,852 |
| 2,950 |
| 3,118 |
|
|
| |||||||
Total expenses |
| $ | 11,497 |
| $ | 11,661 |
| $ | 11,761 |
| $ | 12,244 |
| $ | 12,330 |
| $ | 13,115 |
| $ | 13,276 |
|
|
|
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Revenues |
| $ | 77,012 |
| $ | 80,494 |
| $ | 77,908 |
| $ | 82,044 |
| $ | 84,016 |
| $ | 88,556 |
| $ | 92,168 |
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Direct |
| 58,213 |
| 62,436 |
| 60,900 |
| 62,905 |
| 65,769 |
| 70,363 |
| 75,037 |
|
|
| |||||||
Indirect |
| 26,541 |
| 29,109 |
| 27,027 |
| 29,408 |
| 28,628 |
| 29,165 |
| 30,567 |
|
|
| |||||||
Total expenses |
| $ | 84,754 |
| $ | 91,545 |
| $ | 87,927 |
| $ | 92,313 |
| $ | 94,397 |
| $ | 99,528 |
| $ | 105,604 |
|
|
|
5
Changes in Assets Under Management
|
| 2006 |
| 2007 |
| |||||||||||||||||||
(Amounts in millions) |
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
| |||||||
Advisors Channel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Beginning assets |
| $ | 27,188 |
| $ | 28,630 |
| $ | 28,361 |
| $ | 28,552 |
| $ | 29,905 |
| $ | 30,427 |
| $ | 32,153 |
|
|
|
Sales (net of commissions) |
| 843 |
| 847 |
| 759 |
| 767 |
| 783 |
| 866 |
| 902 |
|
|
| |||||||
Redemptions |
| (849 | ) | (810 | ) | (806 | ) | (860 | ) | (915 | ) | (1,027 | ) | (922 | ) |
|
| |||||||
Net sales |
| (6 | ) | 37 |
| (47 | ) | (93 | ) | (132 | ) | (161 | ) | (20 | ) |
|
| |||||||
Net exchanges |
| (64 | ) | (40 | ) | (38 | ) | (52 | ) | (39 | ) | (46 | ) | (67 | ) |
|
| |||||||
Reinvested dividends & capital gains |
| 48 |
| 112 |
| 64 |
| 8 |
| 65 |
| 108 |
| 80 |
|
|
| |||||||
Net flows |
| (22 | ) | 109 |
| (21 | ) | (137 | ) | (106 | ) | (99 | ) | (7 | ) |
|
| |||||||
Market action |
| 1,464 |
| (378 | ) | 212 |
| 1,490 |
| 628 |
| 1,825 |
| 1,923 |
|
|
| |||||||
Ending assets |
| $ | 28,630 |
| $ | 28,361 |
| $ | 28,552 |
| $ | 29,905 |
| $ | 30,427 |
| $ | 32,153 |
| $ | 34,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Wholesale Channel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Beginning assets |
| $ | 6,729 |
| $ | 8,227 |
| $ | 8,952 |
| $ | 9,483 |
| $ | 10,819 |
| $ | 11,996 |
| $ | 14,247 |
|
|
|
Sales (net of commissions) |
| 1,151 |
| 1,175 |
| 1,088 |
| 1,127 |
| 1,300 |
| 1,703 |
| 2,500 |
|
|
| |||||||
Redemptions |
| (348 | ) | (505 | ) | (513 | ) | (549 | ) | (596 | ) | (635 | ) | (701 | ) |
|
| |||||||
Net sales |
| 803 |
| 670 |
| 575 |
| 578 |
| 704 |
| 1,068 |
| 1,799 |
|
|
| |||||||
Net exchanges |
| 60 |
| 38 |
| 37 |
| 50 |
| 37 |
| 45 |
| 65 |
|
|
| |||||||
Reinvested dividends & capital gains |
| 10 |
| 25 |
| 10 |
| (29 | ) | 12 |
| 35 |
| 18 |
|
|
| |||||||
Net flows |
| 873 |
| 733 |
| 622 |
| 599 |
| 753 |
| 1,148 |
| 1,882 |
|
|
| |||||||
Market action |
| 625 |
| (8 | ) | (91 | ) | 737 |
| 424 |
| 1,103 |
| 1,276 |
|
|
| |||||||
Ending assets |
| $ | 8,227 |
| $ | 8,952 |
| $ | 9,483 |
| $ | 10,819 |
| $ | 11,996 |
| $ | 14,247 |
| $ | 17,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Institutional Channel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Beginning assets |
| $ | 7,946 |
| $ | 7,995 |
| $ | 7,688 |
| $ | 7,578 |
| $ | 7,677 |
| $ | 7,315 |
| $ | 7,564 |
|
|
|
Sales (net of commissions) |
| 172 |
| 222 |
| 345 |
| 229 |
| 353 |
| 137 |
| 282 |
|
|
| |||||||
Redemptions |
| (450 | ) | (369 | ) | (404 | ) | (525 | ) | (899 | ) | (319 | ) | (542 | ) |
|
| |||||||
Net sales |
| (278 | ) | (147 | ) | (59 | ) | (296 | ) | (546 | ) | (182 | ) | (260 | ) |
|
| |||||||
Net exchanges |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
|
|
| |||||||
Reinvested dividends & capital gains |
| 29 |
| 30 |
| 28 |
| 24 |
| 28 |
| 28 |
| 24 |
|
|
| |||||||
Net flows |
| (249 | ) | (117 | ) | (31 | ) | (272 | ) | (518 | ) | (154 | ) | (236 | ) |
|
| |||||||
Market action |
| 298 |
| (190 | ) | (79 | ) | 371 |
| 156 |
| 403 |
| 580 |
|
|
| |||||||
Ending assets |
| $ | 7,995 |
| $ | 7,688 |
| $ | 7,578 |
| $ | 7,677 |
| $ | 7,315 |
| $ | 7,564 |
| $ | 7,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Beginning assets |
| $ | 41,863 |
| $ | 44,852 |
| $ | 45,001 |
| $ | 45,613 |
| $ | 48,401 |
| $ | 49,738 |
| $ | 53,964 |
|
|
|
Sales (net of commissions) |
| 2,166 |
| 2,244 |
| 2,192 |
| 2,123 |
| 2,436 |
| 2,706 |
| 3,684 |
|
|
| |||||||
Redemptions |
| (1,647 | ) | (1,684 | ) | (1,723 | ) | (1,934 | ) | (2,410 | ) | (1,981 | ) | (2,165 | ) |
|
| |||||||
Net sales |
| 519 |
| 560 |
| 469 |
| 189 |
| 26 |
| 725 |
| 1,519 |
|
|
| |||||||
Net exchanges |
| (4 | ) | (2 | ) | (1 | ) | (2 | ) | (2 | ) | (1 | ) | (2 | ) |
|
| |||||||
Reinvested dividends & capital gains |
| 87 |
| 167 |
| 102 |
| 3 |
| 105 |
| 171 |
| 122 |
|
|
| |||||||
Net flows |
| 602 |
| 725 |
| 570 |
| 190 |
| 129 |
| 895 |
| 1,639 |
|
|
| |||||||
Market action |
| 2,387 |
| (576 | ) | 42 |
| 2,598 |
| 1,208 |
| 3,331 |
| 3,779 |
|
|
| |||||||
Ending assets |
| $ | 44,852 |
| $ | 45,001 |
| $ | 45,613 |
| $ | 48,401 |
| $ | 49,738 |
| $ | 53,964 |
| $ | 59,382 |
|
|
|
6
Supplemental Information
|
| 2006 |
| 2007 |
| ||||||||||||
|
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
| 1st Qtr. |
| 2nd Qtr. |
| 3rd Qtr. |
| 4th Qtr. |
|
Redemption rates - long term assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisors |
| 9.8 | % | 8.9 | % | 9.0 | % | 9.2 | % | 9.8 | % | 10.0 | % | 8.8 | % |
|
|
Wholesale |
| 18.3 | % | 23.1 | % | 21.5 | % | 21.0 | % | 21.0 | % | 18.8 | % | 17.9 | % |
|
|
Institutional |
| 22.7 | % | 19.1 | % | 21.4 | % | 27.2 | % | 48.0 | % | 17.0 | % | 28.4 | % |
|
|
Total |
| 13.7 | % | 13.4 | % | 13.7 | % | 14.8 | % | 18.4 | % | 13.3 | % | 14.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales per advisor (000s) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| 259 |
| 269 |
| 233 |
| 234 |
| 252 |
| 305 |
| 296 |
|
|
|
2+ Years |
| 395 |
| 396 |
| 327 |
| 336 |
| 371 |
| 434 |
| 439 |
|
|
|
0 to 2 Years |
| 71 |
| 83 |
| 72 |
| 73 |
| 77 |
| 102 |
| 91 |
|
|
|
Gross production per advisor (000s) |
| 15.9 |
| 15.9 |
| 14.8 |
| 15.5 |
| 16.1 |
| 15.9 |
| 15.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of advisors |
| 2,299 |
| 2,273 |
| 2,276 |
| 2,255 |
| 2,171 |
| 2,175 |
| 2,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shareholder accounts (000s) |
| 2,733 |
| 2,833 |
| 2,833 |
| 2,899 |
| 2,969 |
| 3,047 |
| 3,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shareholder (000s) |
| 646 |
| 652 |
| 654 |
| 657 |
| 663 |
| 688 |
| 696 |
|
|
|
(1) 1Q 07 figures for sales per advisors were adjusted to be more complete and comparable to 2Q 07
Fund Rankings
|
| 1 Year |
| 3 Years |
| 5 Years |
|
Lipper |
|
|
|
|
|
|
|
Equity funds |
|
|
|
|
|
|
|
Top quartile |
| 48 | % | 56 | % | 37 | % |
Top half |
| 74 | % | 76 | % | 63 | % |
|
|
|
|
|
|
|
|
Equity assets |
|
|
|
|
|
|
|
Top quartile |
| 71 | % | 62 | % | 49 | % |
Top half |
| 89 | % | 89 | % | 73 | % |
|
|
|
|
|
|
|
|
All funds |
|
|
|
|
|
|
|
Top quartile |
| 46 | % | 47 | % | 29 | % |
Top half |
| 75 | % | 67 | % | 56 | % |
|
|
|
|
|
|
|
|
All assets |
|
|
|
|
|
|
|
Top quartile |
| 78 | % | 59 | % | 46 | % |
Top half |
| 90 | % | 85 | % | 71 | % |
|
|
|
|
|
|
|
|
MorningStar |
|
|
|
|
|
|
|
% of funds with 4 or 5 stars |
|
|
|
|
|
|
|
Equity funds |
| 44 | % | 54 | % | 20 | % |
All funds |
| 35 | % | 44 | % | 17 | % |
|
|
|
|
|
|
|
|
% of assets with 4 or 5 stars |
|
|
|
|
|
|
|
Equity funds |
| 54 | % | 61 | % | 35 | % |
All funds |
| 50 | % | 56 | % | 32 | % |
7
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, Oct. 23, 2007 at 10:00 a.m. Eastern. During this call, Henry J. Herrmann, CEO, will review our third quarter results. Live access to the teleconference will be available on the “Corporate” section of our Web site at www.waddell.com. A Web cast replay will be made available shortly after the call through October 31st.
Website Resources
We invite you to visit the “Corporate” section of our Web site at www.waddell.com under the caption “Data Tables” to review supplemental information schedules.
Contacts
Investor Contact:
Nicole McIntosh, Director of Investor Relations, (913) 236-1880, nmcintosh@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 Waddell & Reed Advisors channel (our network of financial advisors), our Wholesale channel (encompassing broker/dealer, retirement, registered investment advisors as well as the activities of our Legend subsidiary), and our Institutional channel (including defined benefit plans, pension plans and endowments, as well as the activities of ACF 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. Waddell & Reed Investment Management Company serves as investment advisor to the Waddell & Reed Advisors Group of Mutual Funds, W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc., while Ivy Investment Management Company serves as investment advisor to Ivy Funds, Inc. and the Ivy Funds portfolios. Waddell & Reed, Inc. serves as principal underwriter and distributor to the Waddell & Reed Advisors Group of Mutual Funds, W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc., while Ivy Funds Distributor, Inc. serves as principal underwriter and distributor to Ivy Funds, Inc. and the Ivy Funds portfolios.
Forward-Looking Statements
The statements in this press release relating to matters that are not historical facts are forward-looking statements based on management’s belief and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Such differences could be caused by a number of factors including, but not limited to, a risk that the expected benefits from the expansion of our distribution channels may not be as beneficial as anticipated, a drop off in sales or a reduction in net asset flows, increased expenses, unexpected and adverse results of litigation or regulation, governmental investigation, settlements of such investigations and regulatory investigations of the Company, acts of terrorism and/or war, less favorable economic and market conditions including our cost to finance the Company, the risk that the intended results of our changes to long-term incentive compensation may not meet our expectations, and other risks as set out in the reports we have filed with the SEC. Should one or more of these risks materialize or should the underlying assumptions prove incorrect, actual results could differ materially from those forecasted or expected. We assume no duty to publicly update or revise such statements, whether as a result of new information, future events or otherwise.
8