8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934

Date of Report (Date of earliest event reported):

January 12, 2006 (January 10, 2006)

WADDELL & REED FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-13913	51-0261715
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6300 Lamar Avenue

Overland Park, Kansas 66202

(Address of Principal Executive Offices) (Zip Code)

(913) 236-2000

(Registrant’s telephone number, including area code)

(Registrant’s Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.02: TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT

On January 10, 2006, Waddell & Reed Financial, Inc. (the “Company”) terminated its forward interest rate swap agreements previously entered into (i) on July 28, 2005 with JPMorgan Chase Bank, N.A. (“JPM”) for a notional principal amount of $100 million, and (ii) on August 8, 2005 with The Bank of Nova Scotia (“Scotia”) for a notional principal amount of $100 million (collectively, the “Swap Agreements”).  The Company entered into the Swap Agreements in order to hedge the variability of future interest rates in anticipation of the refinancing of the Company’s $200 million 7 ½% senior notes due January 2006.

Pursuant to the Swap Agreements, the Company agreed to pay a fixed rate of 4.84% to Scotia and a fixed rate of 4.565% to JPM on each notional amount of $100 million, beginning on January 18, 2006 through January 18, 2011, in exchange for receiving floating rate payments based on three-month LIBOR on the same notional amounts for the same five-year period, with each agreement being cash settled, in accordance with its terms, on or before January 18, 2006.  The description of the Swap Agreements contained herein is not purported to be complete and is qualified in its entirety by the full text of the Scotia Confirmation, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 11, 2005 and incorporated herein by reference, and the full text of the ISDA Master Agreement, dated March 12, 2002 by and between the Company and JPM, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 and incorporate herein by reference.

The Swap Agreements were terminated upon the completion on January 10, 2006 of the Company’s new offering of $200,000,000 5.60% senior notes due January 2011.  In connection with the termination of the Swap Agreements, the Company received a net cash settlement of $1.1 million.  As a result of the terminations, effective January 10, 2006, the parties released each other from all obligations under the Swap Agreements, including, without limitation, the obligation to make periodic payments thereunder, and the Swap Agreements were cancelled and terminated.  No early termination payments or penalties were incurred by the Company.

Scotia and/or their affiliates and JPM and/or their affiliates have performed, and may perform in the future, various commercial banking, investment banking or other financial advisory services in the ordinary course of business for the Company and its affiliates, for which they have received, and will receive, customary fees and commissions.

ITEM 8.01OTHER EVENTS

On January 10, 2006, the Company issued a press release announcing that it has priced a public offering of $200 million aggregate principal amount 5.60% notes due 2011.  A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS.

(c)Exhibits.

12.1Computation of ratio of earnings to fixed charges.

99.1Press Release dated January 10, 2006 titled “Waddell & Reed Financial, Inc. Announces Pricing of Public Offering of 5.60% Notes Due 2011.”

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WADDELL & REED FINANCIAL, INC.
Date: January 12, 2006	By:	/s/ Daniel P. Connealy
		Senior Vice President and
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
12.1	Computation of ratio of earnings to fixed charges.
99.1	Press Release dated January 10, 2006 titled “Waddell & Reed Financial, Inc. Announces Pricing of Public Offering of 5.60% Notes Due 2011.”

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EX-12.1

Exhibit 12.1

WADDELL & REED FINANCIAL, INC.

Computation of Ratio of Earnings to Fixed Charges

(in thousands)

	Nine Months Ended September 30,		Year Ended December 31,
	2005		2004		2003		2002		2001		2000
Earnings:
Income from continuing operations before provision for income taxes	$	64,326	$	158,210	$	84,934	$	132,598	$	171,120	$	227,946
Fixed charges	15,115		16,403		15,801		18,035		23,355		17,999
Total earnings	$	79,441	$	174,613	$	100,735	$	150,633	$	194,475	$	245,945
Fixed Charges:
Interest expense	$	10,598	$	10,724	$	9,759	$	12,298	$	18,286	$	14,590
Portion of rentals representative of interest factor	4,517		5,679		6,042		5,737		5,069		3,409
Total fixed charges	$	15,115	$	16,403	$	15,801	$	18,035	$	23,355	$	17,999
Ratio of earnings to fixed changes	5.26		10.65		6.38		8.35		8.33		13.66

EX-99.1

Exhibit 99.1

News Release

Waddell & Reed Financial, Inc. Announces Pricing of Public Offering of 5.60% Notes Due 2011

OVERLAND PARK, Kan., January 10, 2006 /PRNewswire/ — Waddell & Reed Financial, Inc. (NYSE: WDR) today announced that it has priced a public offering of $200 million aggregate principal amount of 5.60% notes due 2011.  The Company expects the offering to close on January 13, 2006.

The Company intends to use the net proceeds of the offering, together with cash on hand, to repay all of the $200 million principal amount outstanding of the Company’s 7 1/2 % senior notes due January 18, 2006.

Banc of America Securities LLC and JPMorgan Securities Inc. are acting as joint book-running managers for the offering. Copies of the prospectus supplement and accompanying base prospectus relating to the offering may be obtained from the offices of Waddell & Reed Financial, Inc., Attn: Investor Relations, 6300 Lamar Avenue, Overland Park, Kansas 66202, (913) 236-2000. An electronic copy of the prospectus supplement and accompanying base prospectus will be available on the website of the Securities and Exchange Commission at http://www.sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state.

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, adverse changes in the securities and capital markets; the risk that the expected benefits from the expansion of our distribution channels may not be as beneficial as anticipated; adverse results of litigation or administrative proceedings; governmental and regulatory investigations, as well as settlements of any investigations;acts of terrorism and/or war; less favorable economic and market conditions including our cost to finance our business; failure to renew our investment management contracts; new regulatory requirements, or changes in the applications or interpretations of existing regulatory requirements; the risk that the intended results of our changes to long-term incentive compensation may not meet our expectations; and other factors discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2004 and in the reports we file from time to time 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.

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.

SOURCE: Waddell & Reed Financial, Inc./ CONTACT: Nicole McIntosh, Investor Relations Manager of Waddell & Reed Financial, Inc., +1-913-236-1880/ WEBSITE: http://www.waddell.com /(WDR)