Exhibit 99.1
News Release
Waddell & Reed Financial, Inc. Reports Fourth Quarter Results
Overland Park, KS, Jan. 27, 2009 – Waddell & Reed Financial, Inc. (NYSE: WDR) today reported financial results for the fourth quarter of 2008, which include significant restructuring, impairment and special charges due to the recent crisis in the financial markets, resulting in a 21% sequential decline in assets under management. Management believes these charges are highly unusual and a direct result of the above mentioned market action.
For the fourth quarter of 2008, the Company reported a net loss of $0.7 million, or ($0.01) per share. Excluding unusual and non-recurring charges, fourth quarter net income would have been $17.4 million, or $0.21 per diluted share compared to net income of $33.4 million, or $0.40 per diluted share during the third quarter. The comparative fourth quarter of 2007 had net income of $35.1 million, or $0.42 per diluted share. In addition to reporting results in accordance with generally accepted accounting principles (“GAAP”), management believes adjusting results to exclude unusual charges provides investors with important data for evaluating results and financial performance compared to other periods. A schedule reconciling GAAP net income and earnings per share to adjust results is provided on page 6.
Restructuring, Impairment and Special Charges
The last five months of 2008 were among the most difficult in the history of the financial markets. As a direct result of the financial crisis, we have experienced a severe decline in assets under management and associated revenues. Lower asset levels and forecasted revenues, and maintaining an acceptable level of profitability were largely the factors that lead to the following charges:
· $16.5 million restructuring charge consisting primarily of severance costs associated with our voluntary separation program.
· $7.9 million of bonus accrual reversal to reflect lower bonus awards in 2008.
· $6.5 million impairment charge reducing our deferred acquisition cost asset due to lower level of assets under management.
· $7.2 million goodwill impairment charge for our subsidiary Austin Calvert and Flavin.
· $2.1 million charge related to the settlement of miscellaneous litigation and other matters.
1
The following table provides after-tax and per-share information on each item:
| | In thousands | | Per share | |
GAAP Net Loss | | $ | (730 | ) | $ | (0.01 | ) |
Restructuring, impairment and special charges (net of taxes) | | | | | |
Restructuring | | 10,524 | | 0.12 | |
Bonus adjustment | | (5,052 | ) | (0.06 | ) |
Write down of DAC | | 4,114 | | 0.05 | |
Impairment charge | | 7,222 | | 0.09 | |
Miscellanous charge | | 1,354 | | 0.02 | |
Adjusted Net Income | | $ | 17,432 | | $ | 0.21 | |
Weighted average shares outstanding - diluted | | | | 82,218 | |
Business Discussion
Management commentary
“The ongoing financial crisis provided the backdrop for an extremely difficult quarter,” said Hank Herrmann, Chief Executive Officer of Waddell & Reed Financial, Inc. “Market action impacting our operating results was the most severe I’ve observed in my career and probably marks the most acute sequential quarterly decline in assets under management in our Company’s 70 year history. The steps we took during the quarter position us to deal more effectively with the market environment and the management of our business.”
Advisors channel
Gross sales during the quarter were $705 million, a 19% decline compared to the third quarter and a 30% decline compared to the same period last year. Net outflows were $254 million compared to inflows of $6 million during the third quarter of 2008 and outflows of $2 million during the fourth quarter of 2007.
Wholesale channel
Gross sales were $1.9 billion during the quarter compared to $3.7 billion and $4.0 billion during the third quarter of 2008 and fourth quarter of 2007, respectively. Net outflows of $1.8 billion compared to inflows of $1.0 billion during the third quarter of 2008 and $3.0 billion during the fourth quarter of 2007.
Institutional channel
Gross sales during the quarter were $439 million, a 22% decline compared to the third quarter of 2008 and a 60% decline compared to the fourth quarter of 2007. Flows were positive in each comparative period with net inflows of $80 million in the current period, $283 million during the third quarter of 2008 and $768 million during the fourth quarter of 2007.
2
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 influenced by asset composition, sales, redemptions, and financial market conditions.
Average assets under management declined 28% on a sequential quarter basis and 23% compared to last year’s fourth quarter. A lower effective management fee rate also impacted revenues. The effective management fee rate declined to 62.8 basis points in the current quarter compared to 64.2 basis points and 66.9 basis points in the third quarter of 2008 and fourth quarter of 2007, respectively. The decline in rate is due to a mix-shift in assets under management to lower fee products, including money market and fixed income products that now equate to 15.3% of average assets under management compared to 10.5% during the fourth quarter of 2007.
Underwriting and Distribution Revenue and Expense Analysis
Advisors channel
On a sequential basis, the decline in revenues was largely due to lower asset-based fees as average assets under management declined 25% since September 30th. Partly offsetting this decline were higher sales of insurance products and, to a lesser degree, higher financial planning fees. Direct expenses dropped in correlation with lower levels of assets under management, while lower sales convention and management bonus costs led to a slight decline in indirect expenses, despite an increase in health care costs.
Compared to last year’s fourth quarter, revenues declined on a combination of lower asset-based fees and lower front-load sales volume. Slightly offsetting this decline were higher asset-based fees in our asset allocation products and higher sales of insurance products. Direct expenses were lower due to a decline in sales volume and lower assets under management. Indirect expenses remained largely unchanged.
Wholesale channel
Sequentially, the decline in revenue was largely due to lower asset-based service and distribution fees. Higher contingent deferred sales charges collected on early redemptions of mutual fund assets partially offset this decline in revenues. Direct expenses declined due to lower asset-based service and distribution costs and largely offset by the write down of deferred acquisition costs in this year’s fourth quarter. Indirect expenses declined due to lower meeting and travel costs.
Compared to the same period last year, revenues increased slightly as lower front-load sales commission revenues partially offset higher contingent deferred sales charges collected on early withdrawal of mutual fund assets. Direct expenses were relatively unchanged. Lower asset-based service and distribution costs were almost entirely offset by the write down of deferred acquisition costs during the current quarter. Indirect expenses were largely unchanged.
Compensation and Related Expense Analysis
Compensation and related costs were lower compared to both the third quarter of 2008 and the fourth quarter of 2007 due to a reversal of previously accrued bonuses and an overall lower bonus pool this year to reflect market and economic conditions that developed during the second half of 2008.
3
General and Administrative Expense Analysis
The increase in general and administrative costs, compared to both the third quarter of 2008 and the fourth quarter of 2007, was due primarily to the restructuring charge associated with our voluntary separation program. A total of 169 employees accepted the voluntary separation program, which for most was effective by December 31, 2008. While the cost of this restructuring was recorded in general and administrative expense, the savings in future periods will primarily be in compensation expense and indirect underwriting and distribution expense. We also experienced higher costs in the Wholesale channel, including charges for expense limitation on certain smaller funds and higher fees to distribution partners.
Subadvisory Fees
Subadvisory fees declined compared to both the third quarter of 2008 and the fourth quarter of 2007 due to the decline in subadvised assets under management. Subadvised average assets under management were $5.0 billion in the current quarter, compared to $10.6 billion during the third quarter of 2008 and $12.0 billion during the fourth quarter of 2007.
Investment and Other Income/Loss
During the current quarter, we recorded an investment and other income loss of $0.3 million due primarily to mark-to-market adjustments in our mutual fund trading portfolios. These losses were substantially offset by dividends and capital gains and to a lesser extent, interest income.
Tax Rate
During the quarter, our effective tax rate increased to 121.6%, compared to 36.2% in the previous quarter, and 36.8% during last year’s comparable period. This increase was primarily the result of the ACF goodwill impairment charge recorded during the quarter, which is non-deductible for tax purposes.
Balance Sheet Information
Cash and cash equivalents and investment securities were $269 million (excluding $49 million held for the benefit of customers segregated in compliance with federal and other regulations). We have no short-term borrowings against our $175 million credit facility.
Stockholders’ equity was $320 million and there were 84.9 million shares outstanding. During the quarter, we repurchased 0.6 million shares on the open market or privately at an aggregate cost of $9.1 million for an annual total of 3.3 million shares and total aggregate cost of $93.0 million.
4
Unaudited Schedule of Operating Data
| | 2007 | | 2008 | |
(Amounts in thousands, except for per share data) | | 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 | | $ | 76,397 | |
Underwriting and distribution fees | | 84,016 | | 88,556 | | 92,168 | | 106,345 | | 106,111 | | 114,254 | | 107,054 | | 89,343 | |
Shareholder service fees | | 22,623 | | 23,347 | | 23,678 | | 24,476 | | 24,986 | | 25,946 | | 26,259 | | 25,304 | |
Total operating revenues | | 189,499 | | 201,286 | | 210,652 | | 236,117 | | 234,069 | | 252,783 | | 241,224 | | 191,044 | |
Operating Expenses: | | | | | | | | | | | | | | | | | |
Underwriting and distribution | | 94,397 | | 99,528 | | 105,604 | | 122,745 | | 124,777 | | 132,292 | | 125,589 | | 114,164 | |
Compensation and related costs | | 26,932 | | 28,312 | | 28,760 | | 31,901 | | 34,346 | | 32,870 | | 30,701 | | 21,140 | |
General and administrative | | 10,083 | | 11,840 | | 12,745 | | 13,819 | | 13,833 | | 14,731 | | 14,912 | | 32,894 | |
Subadvisory fees | | 9,215 | | 10,638 | | 11,459 | | 12,532 | | 11,834 | | 13,037 | | 10,866 | | 5,385 | |
Depreciation | | 3,043 | | 3,062 | | 3,167 | | 3,140 | | 3,140 | | 3,188 | | 3,389 | | 3,481 | |
Goodwill impairment | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 7,222 | |
Total operating expenses | | 143,670 | | 153,380 | | 161,735 | | 184,137 | | 187,930 | | 196,118 | | 185,457 | | 184,286 | |
Operating Income: | | 45,829 | | 47,906 | | 48,917 | | 51,980 | | 46,139 | | 56,665 | | 55,767 | | 6,758 | |
Investment and other income | | 2,480 | | 2,609 | | 4,831 | | 6,532 | | 2,186 | | 1,817 | | (530 | ) | (295 | ) |
Interest expense | | (2,984 | ) | (2,982 | ) | (2,984 | ) | (2,974 | ) | (2,978 | ) | (2,982 | ) | (2,984 | ) | (3,143 | ) |
Income before taxes | | 45,325 | | 47,533 | | 50,764 | | 55,538 | | 45,347 | | 55,500 | | 52,253 | | 3,320 | |
Provision for taxes | | 16,598 | | 17,827 | | 18,797 | | 20,441 | | 17,006 | | 20,313 | | 18,888 | | 4,050 | |
Net Income | | $ | 28,727 | | $ | 29,706 | | $ | 31,967 | | $ | 35,097 | | $ | 28,341 | | $ | 35,187 | | $ | 33,365 | | $ | (730 | ) |
Net income per share | | 0.35 | | 0.36 | | 0.39 | | 0.42 | | 0.33 | | 0.42 | | 0.40 | | (0.01 | ) |
Weighted average shares outstanding - basic | | | | | | | | | | | | | | | | 81,320 | |
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 | % | 3.5 | % |
Underwriting and Distribution
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2007 | | 2008 | |
(Amounts in thousands) | | 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 | | $ | 51,886 | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 39,340 | | 40,173 | | 39,539 | | 44,461 | | 42,712 | | 44,872 | | 40,106 | | 35,493 | |
Indirect | | 20,775 | | 20,057 | | 21,145 | | 22,800 | | 22,616 | | 23,588 | | 23,428 | | 22,752 | |
Total expenses | | $ | 60,115 | | $ | 60,230 | | $ | 60,684 | | $ | 67,261 | | $ | 65,328 | | $ | 68,460 | | $ | 63,534 | | $ | 58,245 | |
Margin | | -5.8 | % | -4.1 | % | -5.1 | % | -2.2 | % | -5.9 | % | -7.3 | % | -9.6 | % | -12.3 | % |
Wholesale Channel (Third-Party) | | | | | | | | | | | | | | | | | |
Revenues | | $ | 12,968 | | $ | 15,609 | | $ | 19,271 | | $ | 25,343 | | $ | 30,345 | | $ | 35,905 | | $ | 36,242 | | $ | 26,156 | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 16,951 | | 20,025 | | 25,340 | | 35,253 | | 39,595 | | 43,307 | | 41,520 | | 38,133 | |
Indirect | | 5,001 | | 6,158 | | 6,304 | | 6,820 | | 7,252 | | 7,372 | | 8,539 | | 7,011 | |
Total expenses | | $ | 21,952 | | $ | 26,183 | | $ | 31,644 | | $ | 42,073 | | $ | 46,847 | | $ | 50,679 | | $ | 50,059 | | $ | 45,144 | |
Wholesale Channel (Legend) | | | | | | | | | | | | | | | | | |
Revenues | | $ | 14,241 | | $ | 15,108 | | $ | 15,169 | | $ | 15,166 | | $ | 14,089 | | $ | 14,537 | | $ | 12,844 | | $ | 11,301 | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 9,478 | | 10,165 | | 10,158 | | 10,046 | | 9,423 | | 9,695 | | 8,526 | | 7,623 | |
Indirect | | 2,852 | | 2,950 | | 3,118 | | 3,365 | | 3,179 | | 3,458 | | 3,470 | | 3,152 | |
Total expenses | | $ | 12,330 | | $ | 13,115 | | $ | 13,276 | | $ | 13,411 | | $ | 12,602 | | $ | 13,153 | | $ | 11,996 | | $ | 10,775 | |
Consolidated Total | | | | | | | | | | | | | | | | | |
Revenues | | $ | 84,016 | | $ | 88,556 | | $ | 92,168 | | $ | 106,345 | | $ | 106,111 | | $ | 114,254 | | $ | 107,054 | | $ | 89,343 | |
Expenses | | | | | | | | | | | | | | | | | |
Direct | | 65,769 | | 70,363 | | 75,037 | | 89,760 | | 91,730 | | 97,874 | | 90,152 | | 81,249 | |
Indirect | | 28,628 | | 29,165 | | 30,567 | | 32,985 | | 33,047 | | 34,418 | | 35,437 | | 32,915 | |
Total expenses | | $ | 94,397 | | $ | 99,528 | | $ | 105,604 | | $ | 122,745 | | $ | 124,777 | | $ | 132,292 | | $ | 125,589 | | $ | 114,164 | |
5
Adjusted Results
Reconciliation to GAAP
(Amounts in thousands except for per share data)
| | Three Months Ended December 31, 2008 | |
| | GAAP | | Adjustments | | Adjusted | |
Operating Revenues: | | | | | | | |
Investment management fees | | $ | 76,397 | | $ | — | | $ | 76,397 | |
Underwriting and distribution fees | | 89,343 | | — | | 89,343 | |
Shareholder service fees | | 25,304 | | — | | 25,304 | |
Total operating revenues | | 191,044 | | — | | 191,044 | |
Operating Expenses: | | | | | | | |
Underwriting and distribution | | 114,164 | | (6,567 | ) | 107,597 | |
Compensation and related costs | | 21,140 | | 7,463 | | 28,603 | |
General and administrative | | 32,894 | | (18,098 | ) | 14,796 | |
Subadvisory fees | | 5,385 | | — | | 5,385 | |
Depreciation | | 3,481 | | — | | 3,481 | |
Goodwill impairment | | 7,222 | | (7,222 | ) | — | |
Total operating expense | | 184,286 | | (24,424 | ) | 159,862 | |
Operating Income | | 6,758 | | 24,424 | | 31,182 | |
Investment and other income | | (295 | ) | — | | (295 | ) |
Interest expense | | (3,143 | ) | — | | (3,143 | ) |
Income before provision for income taxes | | 3,320 | | 24,424 | | 27,744 | |
Provision for income taxes | | 4,050 | | 6,262 | | 10,312 | |
Net Income | | (730 | ) | 18,162 | | 17,432 | |
Net income per share | | (0.01 | ) | 0.22 | | 0.21 | |
Weighted average shares outstanding - basic | | 81,320 | | | | | |
Weighted average shares outstanding - diluted | | | | 82,218 | | 82,218 | |
| | | | | | | | | | |
6
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 | | $ | 28,505 | |
Sales (net of commissions) | | 783 | | 866 | | 902 | | 1,000 | | 1,048 | | 1,100 | | 871 | | 705 | |
Redemptions | | (915 | ) | (1,027 | ) | (922 | ) | (965 | ) | (917 | ) | (914 | ) | (904 | ) | (1,036 | ) |
Net sales | | (132 | ) | (161 | ) | (20 | ) | 35 | | 131 | | 186 | | (33 | ) | (331 | ) |
Net exchanges | | (39 | ) | (46 | ) | (67 | ) | (29 | ) | (67 | ) | (36 | ) | (27 | ) | (20 | ) |
Reinvested dividends & capital gains | | 65 | | 108 | | 80 | | (8 | ) | 69 | | 93 | | 66 | | 97 | |
Net flows | | (106 | ) | (99 | ) | (7 | ) | (2 | ) | 133 | | 243 | | 6 | | (254 | ) |
Market action | | 628 | | 1,825 | | 1,923 | | 495 | | (2,620 | ) | 369 | | (4,188 | ) | (4,779 | ) |
Ending assets | | $ | 30,427 | | $ | 32,153 | | $ | 34,069 | | $ | 34,562 | | $ | 32,075 | | $ | 32,687 | | $ | 28,505 | | $ | 23,472 | |
| | | | | | | | | | | | | | | | | |
Wholesale Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 10,819 | | $ | 11,996 | | $ | 14,247 | | $ | 17,405 | | $ | 21,537 | | $ | 24,532 | | $ | 28,948 | | $ | 23,353 | |
Sales (net of commissions) | | 1,300 | | 1,703 | | 2,500 | | 3,967 | | 5,413 | | 4,574 | | 3,743 | | 1,869 | |
Redemptions | | (596 | ) | (635 | ) | (701 | ) | (863 | ) | (1,171 | ) | (1,243 | ) | (2,714 | ) | (3,413 | ) |
Net sales | | 704 | | 1,068 | | 1,799 | | 3,104 | | 4,242 | | 3,331 | | 1,029 | | (1,544 | ) |
Net exchanges | | 37 | | 45 | | 65 | | 27 | | 65 | | 35 | | 24 | | 21 | |
Reinvested dividends & capital gains | | 12 | | 35 | | 18 | | (89 | ) | 6 | | 31 | | (9 | ) | (299 | ) |
Net flows | | 753 | | 1,148 | | 1,882 | | 3,042 | | 4,313 | | 3,397 | | 1,044 | | (1,822 | ) |
Market action | | 424 | | 1,103 | | 1,276 | | 1,090 | | (1,318 | ) | 1,019 | | (6,639 | ) | (4,042 | ) |
Ending assets | | $ | 11,996 | | $ | 14,247 | | $ | 17,405 | | $ | 21,537 | | $ | 24,532 | | $ | 28,948 | | $ | 23,353 | | $ | 17,489 | |
| | | | | | | | | | | | | | | | | |
Institutional Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 7,677 | | $ | 7,315 | | $ | 7,564 | | $ | 7,908 | | $ | 8,769 | | $ | 8,285 | | $ | 8,489 | | $ | 7,926 | |
Sales (net of commissions) | | 353 | | 137 | | 282 | | 1,111 | | 696 | | 664 | | 560 | | 439 | |
Redemptions | | (899 | ) | (319 | ) | (542 | ) | (368 | ) | (365 | ) | (497 | ) | (303 | ) | (396 | ) |
Net sales | | (546 | ) | (182 | ) | (260 | ) | 743 | | 331 | | 167 | | 257 | | 43 | |
Net exchanges | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | |
Reinvested dividends & capital gains | | 28 | | 28 | | 24 | | 25 | | 27 | | 29 | | 26 | | 37 | |
Net flows | | (518 | ) | (154 | ) | (236 | ) | 768 | | 358 | | 196 | | 283 | | 80 | |
Market action | | 156 | | 403 | | 580 | | 93 | | (842 | ) | 8 | | (846 | ) | (1,483 | ) |
Ending assets | | $ | 7,315 | | $ | 7,564 | | $ | 7,908 | | $ | 8,769 | | $ | 8,285 | | $ | 8,489 | | $ | 7,926 | | $ | 6,523 | |
| | | | | | | | | | | | | | | | | |
Consolidated Total | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 48,401 | | $ | 49,738 | | $ | 53,964 | | $ | 59,382 | | $ | 64,868 | | $ | 64,892 | | $ | 70,124 | | $ | 59,784 | |
Sales (net of commissions) | | 2,436 | | 2,706 | | 3,684 | | 6,078 | | 7,157 | | 6,338 | | 5,174 | | 3,013 | |
Redemptions | | (2,410 | ) | (1,981 | ) | (2,165 | ) | (2,196 | ) | (2,453 | ) | (2,654 | ) | (3,921 | ) | (4,845 | ) |
Net sales | | 26 | | 725 | | 1,519 | | 3,882 | | 4,704 | | 3,684 | | 1,253 | | (1,832 | ) |
Net exchanges | | (2 | ) | (1 | ) | (2 | ) | (2 | ) | (2 | ) | (1 | ) | (3 | ) | 1 | |
Reinvested dividends & capital gains | | 105 | | 171 | | 122 | | (72 | ) | 102 | | 153 | | 83 | | (165 | ) |
Net flows | | 129 | | 895 | | 1,639 | | 3,808 | | 4,804 | | 3,836 | | 1,333 | | (1,996 | ) |
Market action | | 1,208 | | 3,331 | | 3,779 | | 1,678 | | (4,780 | ) | 1,396 | | (11,673 | ) | (10,304 | ) |
Ending assets | | $ | 49,738 | | $ | 53,964 | | $ | 59,382 | | $ | 64,868 | | $ | 64,892 | | $ | 70,124 | | $ | 59,784 | | $ | 47,484 | |
7
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 | % | 12.2 | % |
Wholesale | | 21.0 | % | 18.8 | % | 17.9 | % | 17.3 | % | 20.6 | % | 18.0 | % | 39.3 | % | 75.2 | % |
Institutional | | 48.0 | % | 17.0 | % | 28.4 | % | 17.4 | % | 17.5 | % | 23.4 | % | 14.3 | % | 22.9 | % |
Total | | 18.4 | % | 13.3 | % | 14.1 | % | 12.2 | % | 14.0 | % | 13.8 | % | 21.9 | % | 37.7 | % |
| | | | | | | | | | | | | | | | | |
Sales per advisor (000s) | | | | | | | | | | | | | | | | | |
Total | | 252 | | 305 | | 296 | | 334 | | 351 | | 357 | | 272 | | 199 | |
2+ Years | | 371 | | 434 | | 439 | | 505 | | 548 | | 538 | | 412 | | 309 | |
0 to 2 Years | | 77 | | 102 | | 91 | | 94 | | 100 | | 105 | | 84 | | 56 | |
| | | | | | | | | | | | | | | | | |
Gross production per advisor (000s) | | 16.1 | | 15.9 | | 15.2 | | 17.4 | | 17.2 | | 17.4 | | 15.0 | | 14.6 | |
| | | | | | | | | | | | | | | | | |
Number of advisors | | 2,171 | | 2,175 | | 2,273 | | 2,293 | | 2,235 | | 2,285 | | 2,357 | | 2,366 | |
| | | | | | | | | | | | | | | | | |
Number of shareholder accounts (000s) | | 2,969 | | 3,047 | | 3,142 | | 3,275 | | 3,432 | | 3,638 | | 3,736 | | 3,662 | |
| | | | | | | | | | | | | | | | | |
Number of shareholders (000s) | | 663 | | 688 | | 696 | | 720 | | 757 | | 850 | | 878 | | 863 | |
Fund Rankings | | | | | | | | | | | |
| | 1 Year | | | | 3 Years | | | | 5 Years | |
Lipper | | | | | | | | | | | |
Equity funds | | | | | | | | | | | |
Top quartile | | 52 | % | | | 53 | % | | | 64 | % |
Top half | | 70 | % | | | 87 | % | | | 93 | % |
| | | | | | | | | | | |
Equity assets | | | | | | | | | | | |
Top quartile | | 33 | % | | | 74 | % | | | 78 | % |
Top half | | 79 | % | | | 89 | % | | | 91 | % |
| | | | | | | | | | | |
Fixed income funds | | | | | | | | | | | |
Top quartile | | 50 | % | | | 50 | % | | | 38 | % |
Top half | | 71 | % | | | 71 | % | | | 85 | % |
| | | | | | | | | | | |
Fixed income funds | | | | | | | | | | | |
Top quartile | | 58 | % | | | 64 | % | | | 32 | % |
Top half | | 83 | % | | | 83 | % | | | 94 | % |
| | | | | | | | | | | |
All funds | | | | | | | | | | | |
Top quartile | | 52 | % | | | 52 | % | | | 58 | % |
Top half | | 70 | % | | | 84 | % | | | 91 | % |
| | | | | | | | | | | |
All assets | | | | | | | | | | | |
Top quartile | | 36 | % | | | 72 | % | | | 72 | % |
Top half | | 79 | % | | | 88 | % | | | 92 | % |
| | | | | | | | | | | |
MorningStar | | | | | | | | | | | |
% of funds with 4 or 5 stars | | | | | | | | | | | |
Equity funds | | 56 | % | | | 56 | % | | | 63 | % |
All funds | | 49 | % | | | 49 | % | | | 55 | % |
| | | | | | | | | | | |
% of assets with 4 or 5 stars | | | | | | | | | | | |
Equity funds | | 75 | % | | | 73 | % | | | 78 | % |
All funds | | 67 | % | | | 65 | % | | | 70 | % |
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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, January 27, 2009 at 10:00 a.m. Eastern. During this call, Henry J. Herrmann, CEO, will review our quarterly 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, Ivy Funds Variable Insurance Portfolios, 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, Ivy Funds Variable Insurance Portfolio, 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; |
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· | 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; |
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· | Investors’ failure to renew our investment management or subadvisory agreements, or the terms of any such renewals being on unfavorable terms; |
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· | 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; |
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· | The unsuccessful implementation of new systems or business technology platforms, or such implementations not being timely or cost effective; and |
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· | 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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