Exhibit 99.1
News Release
Waddell & Reed Financial, Inc. Reports Third Quarter Results
Overland Park, KS, Oct. 28, 2008 – Waddell & Reed Financial, Inc. (NYSE: WDR) reported third quarter net income of $33.4 million, or $0.40 per diluted share compared to net income of $35.2 million, or $0.42 per diluted share during the second quarter and net income of $32.0 million, or $0.39 per diluted share in last year’s third quarter.
Business Discussion
Management commentary
“To state the obvious, the third quarter and October-to-date have been the most difficult period in the markets in our 10 years as a public company, and perhaps the most difficult in our firm’s 71-year history,” said Hank Herrmann, Chief Executive Officer of Waddell & Reed Financial, Inc. “Fear spiked in September as concerns about the financial crisis erupted and investors, seeking to protect capital, left the debt and equity markets at a frenzied pace.
“Despite unprecedented risk aversion by investors, our balanced distribution model fared relatively well. Our Advisors channel, with its low redemption rate relative to peers, served as a stabilizing force for our assets and contributed $6 million of net inflows during the quarter. Our Wholesale channel slowed, yet provided positive flows of $1.0 billion during the quarter,” continued Herrmann. “The virtues of our combined Advisor/Wholesale models were again manifest against this challenging market.”
Advisors channel
Gross sales during the quarter were $0.9 billion, a 21% decline compared to the second quarter and a 3% decline compared to the same period last year. Net flows remained positive at $6 million. This compares to $243 million during the second quarter and outflows of $7 million during the same period last year. Weaker sales volume, as opposed to higher redemptions, was the reason for the deceleration of flows. Despite investors’ fears and broad-based flight to cash, redemptions in our Advisors channel fell slightly on a sequential basis. The increase in our redemption rate to 8.2% during the quarter compared to 7.7% during the second quarter was entirely due to a 7% decline in average assets, not accelerated withdrawals by our clients. We believe the redemption experience in our Advisors channel is among the lowest in the industry. This ability to retain assets leads to superior profitability while the relative stability of our asset base makes our Advisors’ business more predictable.
Wholesale channel
Gross sales of $3.7 billion during the quarter decreased 18% compared to the previous quarter but were 50% higher compared to last year’s third quarter. Net flows remain positive at $1.0 billion; however, the monthly trend decelerated throughout the quarter and September net outflows were $378 million.
The deceleration of sales during the quarter is attributable to the current market environment and its affect on investor appetite for investment products, including our Ivy Asset Strategy and Ivy Global Natural Resources funds, the key funds which had been garnering a meaningful proportion of sales in our Wholesale channel.
Institutional channel
Gross sales during the quarter were $560 million, a 16% decline on a sequential quarter basis, but nearly twice the volume in last year’s third quarter. Sales continue to be largely driven by our subadvisory relationship with Pictet & Cie. Net inflows of $283 million during the quarter compare favorably to inflows of $196 million last quarter and outflows of $236 million during the comparable quarter in 2007.
Management Fee Revenue Analysis
We earn management fee revenues by providing investment management services to our retail funds and institutional clients. These revenues are based on the amount of average assets under management and are influenced by asset composition, sales, redemptions, and financial market conditions.
Average assets under management declined by 4% on a sequential quarter basis and increased 21% compared to last year’s third quarter.
The effective management fee rate declined slightly to 64.2 basis points in the current quarter compared to 65.1 basis points in the previous quarter and 68.0 basis points in last year’s third quarter. The decline is due to a mix-shift in assets under management.
Underwriting and Distribution Revenue and Expense Analysis
Advisors channel
On a sequential basis, the decline in revenues was mostly due to weaker sales volume on front-load products (Class A and variable annuities), and to a lesser degree, lower asset-based service fee revenues; a result of lower assets under management. Direct expenses dropped in correlation with lower sales volume and lower asset levels. Indirect expenses remained almost unchanged.
Compared to last year’s third quarter, revenues increased slightly as lower sales volume on front-load products were offset by higher revenues in our asset allocation products. Direct expenses declined slightly as commissions paid on front-load products decreased, and to a less significant degree, lower asset-based service fee costs. These were offset by higher costs from higher asset levels in our asset allocation products. Indirect expenses increased on higher marketing, support and sales reward costs.
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Wholesale channel
Sequentially, revenues declined on lower sales volume by Legend advisors whose activities are included in our Wholesale efforts. In third-party distribution, we observed an increase in back-end load fees due to redemptions in the quarter. Direct expenses declined on lower sales volume while indirect expenses rose due to higher meeting and travel costs.
Compared to the same period last year, most of the increase in revenues was due to higher asset levels, which resulted in higher asset-based service and distribution fees. Direct revenues rose as asset levels increased, resulting in higher asset-based service and distribution costs to our distributors. Higher commission costs in third-party distribution were offset by lower sales volume by Legend advisors. Indirect expenses increased due to higher meeting and travel costs, and to a lesser extent, higher marketing and compensation costs.
Operating Expense Analysis
On a sequential quarter basis, the decline in operating costs is due to a combination of lower underwriting and distribution costs (discussed above), lower compensation costs and lower subadvisory expenses. The decline in compensation expenses was largely due to adjustments to our deferred compensation costs while subadvisory expenses declined on lower asset levels in our subadvised mutual funds.
Compared to the same period last year, expenses rose mostly due to higher underwriting and distribution costs (discussed above). Higher compensation and general and administrative expenses contributed marginally to the increase. Compensation and related expenses increased on a combination of higher headcount and base compensation and was partially offset by adjustments to our deferred compensation costs in the current quarter. General and administrative expenses rose on a combination of higher information technology and fund-related costs.
Subadvised average assets under management were $10.6 billion in the current quarter, compared to $12.8 billion during the second quarter of 2008 and $10.9 billion during the third quarter of 2007.
Margin Discussion
On a sequential quarter basis, our operating margin improved to 23.1% compared to 22.4% in the second quarter. A combination of softer sales volume in our Wholesale channel, and to a lesser degree, lower incentive compensation accruals and lower levels of subadvised assets under management resulted in an improvement to our operating margin.
Compared to last year’s third quarter, the operating margin remained almost unchanged.
Other
Investment and other income/(loss) was lower in the current quarter compared to the second quarter primarily due to mark-to-market adjustments to our mutual fund trading portfolios and, to a lesser degree lower effective interest rates and a slight decline in average balances for cash and short-term investments. Compared to last year’s third quarter, investment and other income/(loss) was lower on a combination of mark-to-market adjustments to our mutual fund trading portfolios, recognition of a loss on our trading portfolios and lower effective interest rates. Last year’s third quarter also included investment gains on the sale of our available-for-sale mutual fund holdings.
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During the quarter, our effective tax rate declined to 36.1% compared to 36.6% in the previous quarter and 37.0% during last year’s comparable period. This decline was largely due to a change in a state tax law that allowed for the recognition of a tax benefit related to previous losses, which, until the law changed, had a full valuation allowance recorded against it. We expect our effective tax rate to be 36.9% to 37.5% exclusive of any law changes or state tax credits.
Balance Sheet Information
We negotiated a renewal of our credit facility effective October 6th to a 364-day revolver with various lenders for a total of $175 million, whereby the lenders could, at their option upon our request, expand the facility to $200 million.
Cash and cash equivalents and investment securities were $262 million (excluding $67 million held for the benefit of customers segregated in compliance with federal and other regulations). We have no short-term borrowings against our money market loan program or our previous $200 million credit facility, which expired in early October.
Stockholders’ equity was $368 million and there were 85.2 million shares outstanding. During the quarter, we repurchased 1.1 million shares on the open market or privately at an aggregate cost of $32.5 million.
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Unaudited Schedule of Operating Data
(Amounts in thousands, except for per share data) | | 2007 | | 2008 | |
| | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Operating Revenues: | | | | | | | | | | | | | | | | | |
Investment management fees | | $ | 82,860 | | $ | 89,383 | | $ | 94,806 | | $ | 105,296 | | $ | 102,972 | | $ | 112,583 | | $ | 107,911 | | | |
Underwriting and distribution fees | | 84,016 | | 88,556 | | 92,168 | | 106,345 | | 106,111 | | 114,254 | | 107,054 | | | |
Shareholder service fees | | 22,623 | | 23,347 | | 23,678 | | 24,476 | | 24,986 | | 25,946 | | 26,259 | | | |
Total operating revenues | | 189,499 | | 201,286 | | 210,652 | | 236,117 | | 234,069 | | 252,783 | | 241,224 | | | |
Operating Expenses: | | | | | | | | | | | | | | | | | |
Underwriting and distribution | | 94,397 | | 99,528 | | 105,604 | | 122,745 | | 124,777 | | 132,292 | | 125,589 | | | |
Compensation and related costs | | 26,932 | | 28,312 | | 28,760 | | 31,901 | | 34,346 | | 32,870 | | 30,701 | | | |
General and administrative | | 10,083 | | 11,840 | | 12,745 | | 13,819 | | 13,833 | | 14,731 | | 14,912 | | | |
Subadvisory fees | | 9,215 | | 10,638 | | 11,459 | | 12,532 | | 11,834 | | 13,037 | | 10,866 | | | |
Depreciation | | 3,043 | | 3,062 | | 3,167 | | 3,140 | | 3,140 | | 3,188 | | 3,389 | | | |
Total operating expenses | | 143,670 | | 153,380 | | 161,735 | | 184,137 | | 187,930 | | 196,118 | | 185,457 | | | |
Operating Income: | | 45,829 | | 47,906 | | 48,917 | | 51,980 | | 46,139 | | 56,665 | | 55,767 | | | |
Investment and other income | | 2,480 | | 2,609 | | 4,831 | | 6,532 | | 2,186 | | 1,817 | | (530 | ) | | |
Interest expense | | (2,984 | ) | (2,982 | ) | (2,984 | ) | (2,974 | ) | (2,978 | ) | (2,982 | ) | (2,984 | ) | | |
Income before taxes | | 45,325 | | 47,533 | | 50,764 | | 55,538 | | 45,347 | | 55,500 | | 52,253 | | | |
Provision for taxes | | 16,598 | | 17,827 | | 18,797 | | 20,441 | | 17,006 | | 20,313 | | 18,888 | | | |
Net Income | | $ | 28,727 | | $ | 29,706 | | $ | 31,967 | | $ | 35,097 | | $ | 28,341 | | $ | 35,187 | | $ | 33,365 | | | |
Net income per share- diluted | | 0.35 | | 0.36 | | 0.39 | | 0.42 | | 0.33 | | 0.42 | | 0.40 | | | |
Weighted average shares outstanding - diluted | | 82,803 | | 82,323 | | 82,099 | | 83,676 | | 84,964 | | 84,594 | | 83,611 | | | |
Operating margin | | 24.2 | % | 23.8 | % | 23.2 | % | 22.0 | % | 19.7 | % | 22.4 | % | 23.1 | % | | |
Underwriting and Distribution
(Amounts in thousands) | | 2007 | | 2008 | |
| | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Advisors Channel | | | | | | | | | | | | | | | | | |
Revenues | | $ | 56,807 | | $ | 57,839 | | $ | 57,728 | | $ | 65,836 | | $ | 61,677 | | $ | 63,812 | | $ | 57,968 | | | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 39,340 | | 40,173 | | 39,539 | | 44,461 | | 42,712 | | 44,872 | | 40,106 | | | |
Indirect | | 20,775 | | 20,057 | | 21,145 | | 22,800 | | 22,616 | | 23,588 | | 23,428 | | | |
Total expenses | | $ | 60,115 | | $ | 60,230 | | $ | 60,684 | | $ | 67,261 | | $ | 65,328 | | $ | 68,460 | | $ | 63,534 | | | |
Margin | | -5.8 | % | -4.1 | % | -5.1 | % | -2.2 | % | -5.9 | % | -7.3 | % | -9.6 | % | | |
Wholesale Channel (Third-Party) | | | | | | | | | | | | | | | | | |
Revenues | | $ | 12,968 | | $ | 15,609 | | $ | 19,271 | | $ | 25,343 | | $ | 30,345 | | $ | 35,905 | | $ | 36,242 | | | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 16,951 | | 20,025 | | 25,340 | | 35,253 | | 39,595 | | 43,307 | | 41,520 | | | |
Indirect | | 5,001 | | 6,158 | | 6,304 | | 6,820 | | 7,252 | | 7,372 | | 8,539 | | | |
Total expenses | | $ | 21,952 | | $ | 26,183 | | $ | 31,644 | | $ | 42,073 | | $ | 46,847 | | $ | 50,679 | | $ | 50,059 | | | |
Wholesale Channel (Legend) | | | | | | | | | | | | | | | | | |
Revenues | | $ | 14,241 | | $ | 15,108 | | $ | 15,169 | | $ | 15,166 | | $ | 14,089 | | $ | 14,537 | | $ | 12,844 | | | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 9,478 | | 10,165 | | 10,158 | | 10,046 | | 9,423 | | 9,695 | | 8,526 | | | |
Indirect | | 2,852 | | 2,950 | | 3,118 | | 3,365 | | 3,179 | | 3,458 | | 3,470 | | | |
Total expenses | | $ | 12,330 | | $ | 13,115 | | $ | 13,276 | | $ | 13,411 | | $ | 12,602 | | $ | 13,153 | | $ | 11,996 | | | |
Consolidated Total | | | | | | | | | | | | | | | | | |
Revenues | | $ | 84,016 | | $ | 88,556 | | $ | 92,168 | | $ | 106,345 | | $ | 106,111 | | $ | 114,254 | | $ | 107,054 | | | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 65,769 | | 70,363 | | 75,037 | | 89,760 | | 91,730 | | 97,874 | | 90,152 | | | |
Indirect | | 28,628 | | 29,165 | | 30,567 | | 32,985 | | 33,047 | | 34,418 | | 35,437 | | | |
Total expenses | | $ | 94,397 | | $ | 99,528 | | $ | 105,604 | | $ | 122,745 | | $ | 124,777 | | $ | 132,292 | | $ | 125,589 | | | |
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Changes in Assets Under Management
| | 2007 | | 2008 | |
(Amounts in millions) | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Advisors Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 29,905 | | $ | 30,427 | | $ | 32,153 | | $ | 34,069 | | $ | 34,562 | | $ | 32,075 | | $ | 32,687 | | | |
Sales (net of commissions) | | 783 | | 866 | | 902 | | 1,000 | | 1,048 | | 1,100 | | 871 | | | |
Redemptions | | (915 | ) | (1,027 | ) | (922 | ) | (965 | ) | (917 | ) | (914 | ) | (904 | ) | | |
Net sales | | (132 | ) | (161 | ) | (20 | ) | 35 | | 131 | | 186 | | (33 | ) | | |
Net exchanges | | (39 | ) | (46 | ) | (67 | ) | (29 | ) | (67 | ) | (36 | ) | (27 | ) | | |
Reinvested dividends & capital gains | | 65 | | 108 | | 80 | | (8 | ) | 69 | | 93 | | 66 | | | |
Net flows | | (106 | ) | (99 | ) | (7 | ) | (2 | ) | 133 | | 243 | | 6 | | | |
Market action | | 628 | | 1,825 | | 1,923 | | 495 | | (2,620 | ) | 369 | | (4,188 | ) | | |
Ending assets | | $ | 30,427 | | $ | 32,153 | | $ | 34,069 | | $ | 34,562 | | $ | 32,075 | | $ | 32,687 | | $ | 28,505 | | | |
| | | | | | | | | | | | | | | | | |
Wholesale Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 10,819 | | $ | 11,996 | | $ | 14,247 | | $ | 17,405 | | $ | 21,537 | | $ | 24,532 | | $ | 28,948 | | | |
Sales (net of commissions) | | 1,300 | | 1,703 | | 2,500 | | 3,967 | | 5,413 | | 4,574 | | 3,743 | | | |
Redemptions | | (596 | ) | (635 | ) | (701 | ) | (863 | ) | (1,171 | ) | (1,243 | ) | (2,714 | ) | | |
Net sales | | 704 | | 1,068 | | 1,799 | | 3,104 | | 4,242 | | 3,331 | | 1,029 | | | |
Net exchanges | | 37 | | 45 | | 65 | | 27 | | 65 | | 35 | | 24 | | | |
Reinvested dividends & capital gains | | 12 | | 35 | | 18 | | (89 | ) | 6 | | 31 | | (9 | ) | | |
Net flows | | 753 | | 1,148 | | 1,882 | | 3,042 | | 4,313 | | 3,397 | | 1,044 | | | |
Market action | | 424 | | 1,103 | | 1,276 | | 1,090 | | (1,318 | ) | 1,019 | | (6,639 | ) | | |
Ending assets | | $ | 11,996 | | $ | 14,247 | | $ | 17,405 | | $ | 21,537 | | $ | 24,532 | | $ | 28,948 | | $ | 23,353 | | | |
| | | | | | | | | | | | | | | | | |
Institutional Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 7,677 | | $ | 7,315 | | $ | 7,564 | | $ | 7,908 | | $ | 8,769 | | $ | 8,285 | | $ | 8,489 | | | |
Sales (net of commissions) | | 353 | | 137 | | 282 | | 1,111 | | 696 | | 664 | | 560 | | | |
Redemptions | | (899 | ) | (319 | ) | (542 | ) | (368 | ) | (365 | ) | (497 | ) | (303 | ) | | |
Net sales | | (546 | ) | (182 | ) | (260 | ) | 743 | | 331 | | 167 | | 257 | | | |
Net exchanges | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | | |
Reinvested dividends & capital gains | | 28 | | 28 | | 24 | | 25 | | 27 | | 29 | | 26 | | | |
Net flows | | (518 | ) | (154 | ) | (236 | ) | 768 | | 358 | | 196 | | 283 | | | |
Market action | | 156 | | 403 | | 580 | | 93 | | (842 | ) | 8 | | (846 | ) | | |
Ending assets | | $ | 7,315 | | $ | 7,564 | | $ | 7,908 | | $ | 8,769 | | $ | 8,285 | | $ | 8,489 | | $ | 7,926 | | | |
Consolidated Total | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 48,401 | | $ | 49,738 | | $ | 53,964 | | $ | 59,382 | | $ | 64,868 | | $ | 64,892 | | $ | 70,124 | | | |
Sales (net of commissions) | | 2,436 | | 2,706 | | 3,684 | | 6,078 | | 7,157 | | 6,338 | | 5,174 | | | |
Redemptions | | (2,410 | ) | (1,981 | ) | (2,165 | ) | (2,196 | ) | (2,453 | ) | (2,654 | ) | (3,921 | ) | | |
Net sales | | 26 | | 725 | | 1,519 | | 3,882 | | 4,704 | | 3,684 | | 1,253 | | | |
Net exchanges | | (2 | ) | (1 | ) | (2 | ) | (2 | ) | (2 | ) | (1 | ) | (3 | ) | | |
Reinvested dividends & capital gains | | 105 | | 171 | | 122 | | (72 | ) | 102 | | 153 | | 83 | | | |
Net flows | | 129 | | 895 | | 1,639 | | 3,808 | | 4,804 | | 3,836 | | 1,333 | | | |
Market action | | 1,208 | | 3,331 | | 3,779 | | 1,678 | | (4,780 | ) | 1,396 | | (11,673 | ) | | |
Ending assets | | $ | 49,738 | | $ | 53,964 | | $ | 59,382 | | $ | 64,868 | | $ | 64,892 | | $ | 70,124 | | $ | 59,784 | | | |
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Supplemental Information
| | 2007 | | 2008 | |
| | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Redemption rates - long term assets | | | | | | | | | | | | | | | | | |
Advisors | | 9.8 | % | 10.0 | % | 8.8 | % | 8.0 | % | 8.4 | % | 7.7 | % | 8.2 | % | | |
Wholesale | | 21.0 | % | 18.8 | % | 17.9 | % | 17.3 | % | 20.6 | % | 18.0 | % | 39.3 | % | | |
Institutional | | 48.0 | % | 17.0 | % | 28.4 | % | 17.4 | % | 17.5 | % | 23.4 | % | 14.3 | % | | |
Total | | 18.4 | % | 13.3 | % | 14.1 | % | 12.2 | % | 14.0 | % | 13.8 | % | 21.9 | % | | |
| | | | | | | | | | | | | | | | | |
Sales per advisor (000s) | | | | | | | | | | | | | | | | | |
Total | | 252 | | 305 | | 296 | | 334 | | 351 | | 357 | | 272 | | | |
2+ Years | | 371 | | 434 | | 439 | | 505 | | 548 | | 538 | | 412 | | | |
0 to 2 Years | | 77 | | 102 | | 91 | | 94 | | 100 | | 105 | | 84 | | | |
| | | | | | | | | | | | | | | | | |
Gross production per advisor (000s) | | 16.1 | | 15.9 | | 15.2 | | 17.4 | | 17.2 | | 17.4 | | 15.0 | | | |
| | | | | | | | | | | | | | | | | |
Number of advisors | | 2,171 | | 2,175 | | 2,273 | | 2,293 | | 2,235 | | 2,285 | | 2,357 | | | |
| | | | | | | | | | | | | | | | | |
Number of shareholder accounts (000s) | | 2,969 | | 3,047 | | 3,142 | | 3,275 | | 3,432 | | 3,638 | | 3,736 | | | |
| | | | | | | | | | | | | | | | | |
Number of shareholders (000s) | | 663 | | 688 | | 696 | | 720 | | 757 | | 850 | | 878 | | | |
| | | | | | | | | | | | | | | | | |
Fund Rankings
| | 1 Year | | 3 Years | | 5 Years | |
Lipper | | | | | | | |
Equity funds | | | | | | | |
Top quartile | | 42 | % | 51 | % | 56 | % |
Top half | | 74 | % | 68 | % | 79 | % |
| | | | | | | |
Equity assets | | | | | | | |
Top quartile | | 32 | % | 72 | % | 72 | % |
Top half | | 78 | % | 90 | % | 82 | % |
| | | | | | | |
All funds | | | | | | | |
Top quartile | | 44 | % | 51 | % | 50 | % |
Top half | | 75 | % | 70 | % | 80 | % |
| | | | | | | |
All assets | | | | | | | |
Top quartile | | 35 | % | 70 | % | 67 | % |
Top half | | 80 | % | 90 | % | 83 | % |
| | | | | | | |
MorningStar | | | | | | | |
% of funds with 4 or 5 stars | | | | | | | |
Equity funds | | 46 | % | 46 | % | 50 | % |
All funds | | 38 | % | 40 | % | 39 | % |
| | | | | | | |
% of assets with 4 or 5 stars | | | | | | | |
Equity funds | | 70 | % | 67 | % | 72 | % |
All funds | | 63 | % | 61 | % | 65 | % |
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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, October 28, 2008 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 conclusion of the call and accessible for 7 days.
Web site 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
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 wo rds 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 or on behalf of the Company 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 f rom our expectations are disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2007, which include, without limitation:
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· 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;
· Investors’ failure to renew our investment management or subadvisory agreements, or the terms of any such renewals being on unfavorable terms;
· 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 unsuccessful implementation of new systems or business technology platforms, or such implementations not being timely or cost effective; and
· Changes in, or non-compliance with, laws, regulations or legal, regulatory, accounting, tax or compliance requirements or governmental policies applicable to the investment management and broker/dealer industries.
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, 2007 and as updated in our quarterly reports on Form 10-Q for the year ending December 31, 2008. 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.
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