EX-99.1 2 a07-3018_1ex99d1.htm EX-99.1

Exhibit 99.1

News Release

 

Waddell & Reed Financial, Inc. Reports Fourth Quarter Results and
Announces a 13% Increase in its Quarterly Dividend

Overland Park, KS, January 30, 2007 — Waddell & Reed Financial, Inc. (NYSE: WDR) reported fourth quarter net income of $30.0 million, or $0.36 per diluted share. This compares to net income of $24.6 million, or $0.30 per diluted share in this year’s third quarter and net income of $19.9 million, or $0.24 per diluted share in the fourth quarter of 2005. Last year’s fourth quarter results included a pre-tax charge of $6.1 million to general and administrative expenses ($3.8 million net of taxes, or $0.05 per diluted share) related to the settlement of an arbitration case with a former financial advisor. Excluding this charge, net income was $23.8 million, or $0.29 per diluted share. We believe adjusting our results to exclude this non-recurring charge provides stockholders with a more comparable basis for evaluating our operating results and financial performance to other periods. A schedule reconciling adjusted results to GAAP is provided on the bottom of our Schedule of Selected Operating Data on page 5.

The Board of Directors approved an increase in the quarterly dividend on our common stock to $0.17 per share beginning with our regularly scheduled second quarter dividend, payable on May 1, 2007. This change represents a 13% increase over our previous $0.15 dividend per share rate. We remain committed to using our free cash flow in a manner consistent with enhancing stockholder value. We continue to use a portion of our free cash flow for share buybacks sufficient to manage dilution created by our annual restricted stock grants.

Business Discussion

Advisors channel

Early in 2005, we initiated action to improve the performance of our Advisors channel. Beginning with the appointment of a new executive leadership team, we instituted a number of changes designed to improve sales volume and advisor productivity, and provide greater home office support for our advisors and our Managing Principals (formerly “Division Managers”). These changes appear to be having the desired effect.

Sales improved 8% for the year ended December 31, 2005 compared to 2004 and an impressive 34% for the year ended December 31, 2006 compared to 2005. Net sales also improved significantly; outflows of $109 million in 2006 are a marked improvement over outflows of $654 million in 2005 and $1,186 million in 2004.

Advisor productivity has also improved, showing sustained progress throughout the year. Improvements were particularly noteworthy with our newer advisors, a testament to the effectiveness of the changes we have implemented and the support we are providing. The following table provides a report of our progress:

1



 

 

 

Year ended December 31,

 

 

 

 

 

 

 

(amounts in thousands)

 

 

 

 

 

 

 

2006

 

2005

 

2004

 

% ‘06/’05

 

% ‘05/’04

 

Gross Sales

 

$

3,215,500

 

$

2,406,100

 

$

2,218,800

 

33.6

%

8.4

%

Sales per Advisor

 

$

994.0

 

$

776.0

 

$

709.0

 

28.1

%

9.4

%

Advisor 0-2 years

 

$

228.9

 

$

173.9

 

$

137.3

 

31.6

%

26.7

%

Gross Production per Advisor

 

$

61.8

 

$

53.5

 

$

52.8

 

15.5

%

1.3

%

 

 

Wholesale channel

The progress we have made in our Wholesale channel is even more pronounced. Annual sales of $4.5 billion increased 94% over 2005 while net sales of $2.6 billion increased 119% over 2005. Quarterly gross and net sales remained strong. Gross sales of $1.1 billion during the quarter improved 4% from the previous quarter and 69% from last year’s fourth quarter. Net sales of $578 million reflected a similar trend with a 1% improvement sequential quarterly and a 52% improvement over the fourth quarter of 2005.

The sales mix between Waddell & Reed-managed and subadvised funds remains almost unchanged sequential quarterly, but declined substantially compared to last year’s fourth quarter. During the current quarter, subadvised sales as a percentage of total sales in this channel were 40%, compared to 38% in the third quarter of 2006 and 60% in the fourth quarter of 2005. Sales of our subadvised Global Natural Resources fund have picked up pace after the summer slowdown. A shift between Waddell & Reed-managed and subadvised sales impacts our operating margins.

During 2006, we made significant progress at a number of leading distribution firms, with gross sales volume ranking among the top 25 at the five largest national wirehouses.

Institutional channel

Outflows of $296 million during the quarter were up from outflows of $59 million during the third quarter of 2006, but improved from outflows of $355 million during the same period in 2005. The current quarter was impacted by two redemptions which, when combined, exceeded $300 million.

Management commentary

“We have made good progress over the past two years, and are very focused on sustaining it,” said Hank Herrmann, Chief Executive Officer of Waddell & Reed Financial, Inc. “We will work hard to maintain the investment performance and sales activity to make that possible.”

Management Fee Revenue Analysis

On a sequential quarter basis, revenues increased at a lower rate than average assets under management due to a fee reduction (effective October 1, 2006) related to a regulatory settlement.

2



Compared to last year’s fourth quarter, the fee reduction on certain mutual funds was offset by a mix shift in assets under management. This mix shift occurred as sales in certain funds with higher management fee rates outpaced sales of our other mutual funds. As a result, the overall management fee rate remained nearly unchanged.

Underwriting and Distribution Analysis

Advisors channel

On a sequential quarterly basis, revenues increased due almost equally to higher financial planning fee and asset-based Rule 12b-1 service fee revenues. Direct expenses, which are usually correlated with revenues, increased at a lower rate than corresponding revenues due to revised estimates related to compensation tied to production. Indirect expenses rose as a result of higher business meeting and travel expenses.

Compared to last year’s fourth quarter, revenues increased in part from higher asset-based Rule 12b-1 service fee revenues and higher variable annuity sales volume. The increase in expenses is due in equal parts to higher direct expenses, which rose primarily on higher variable annuity sales volume and higher indirect expenses. The increase in indirect expenses stems from higher technology costs, and to a lesser extent from higher compensation costs.

Wholesale channel

Sequentially, approximately two-thirds of the increase in revenues is attributable to higher asset-based Rule 12b-1 service and distribution fees, driven by higher average assets under management. The remainder of the increase is due to higher sales volume at Legend. The increase in expenses is split almost equally between direct and indirect expenses. Direct expenses increased on higher sales volume while indirect expenses rose due to higher travel, advertising and sales collateral costs.

Compared to last year’s fourth quarter, approximately 75% of the increase in revenues is due to higher Rule 12b-1 service and distribution fees, driven by higher average assets under management. Higher sales volume at Legend also contributed to the increase. The increase in expenses is largely due to higher direct expenses, which were driven by higher sales volume, and to a lesser extent by higher asset-based Rule 12b-1 service and distribution fee expenses. Higher travel and technology costs were responsible for most of the increase in indirect expenses.

Operating Expense Analysis

On a sequential quarterly basis, operating expenses increased slightly. Higher underwriting and distribution expenses, discussed above, and higher compensation and related expenses were offset by lower general and administrative expenses. Compensation expenses increased sequentially due to revision of the estimates for bonus payments, while general and administrative expenses declined due to lower legal expenses. Legal expenses were higher in the third quarter due to the resolution of certain legal and regulatory matters as previously disclosed.

Compared to last year’s fourth quarter, operating expenses increased on a combination of higher underwriting and distribution expenses, and to a lesser extent, on higher compensation and related expenses and higher subadvisory expenses. These higher costs were partially offset by a decline in general and administrative expenses. Last year’s fourth quarter included the previously referenced arbitration settlement. Compensation and related expenses increased due to higher employee headcount,

3



salary increases and equity compensation, while subadvisory expenses rose on higher asset levels in our subadvised funds. At December 31, 2006, subadvised assets were $8.4 billion, compared to $7.4 billion and $5.3 billion on September 30, 2006 and on December 31, 2005, respectively.

Other

The current quarter’s increase in investment and other income is due to both gains on sales and distributions of capital gains and dividends related to our mutual fund investment portfolio.

Our effective income tax rate during the quarter declined to 34.6% compared to 35.8% during the third quarter and 37.0% during last year’s fourth quarter. This lower rate is attributable to both a change in our estimated state effective tax rate for 2006, and state tax incentives tied to our capital expenditures.

Balance Sheet Information

Cash and cash equivalents and investment securities are $245 million (including $33 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 $245 million and there are 84.7 million shares outstanding. During the quarter, we repurchased 205,000 shares of common stock at an aggregate cost, including commissions, of $5.1 million. During the year ended December 31, 2006, we repurchased 1.1 million shares of common stock at an aggregate cost, including commissions, of $27.6 million.

4



WADDELL & REED FINANCIAL, INC.
Unaudited Schedule of Selected Operating Data
(Amounts in thousands, except for per share data)

 

 

Three Months Ended

 

 

 

 

 

Three Months
Ended

 

 

 

 

 

 

 

December 31,

 

Change

 

September 30,

 

Change

 

 

 

2006

 

2005

 

$

 

%

 

2006

 

$

 

%

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

$

81,331

 

$

70,709

 

10,622

 

15.0

 

$

77,955

 

3,376

 

4.3

 

Underwriting & distribution fees

 

82,044

 

71,342

 

10,702

 

15.0

 

77,908

 

4,136

 

5.3

 

Shareholder service fees

 

22,317

 

21,092

 

1,225

 

5.8

 

22,719

 

(402

)

-1.8

 

Total operating revenues

 

185,692

 

163,143

 

22,549

 

13.8

 

178,582

 

7,110

 

4.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting and distribution

 

92,313

 

79,663

 

12,650

 

15.9

 

87,927

 

4,386

 

5.0

 

Compensation and related costs (1)

 

28,315

 

25,329

 

2,986

 

11.8

 

25,767

 

2,548

 

9.9

 

General and administrative

 

9,839

 

16,820

 

(6,981

)

-41.5

 

15,539

 

(5,700

)

-36.7

 

Subadvisory

 

8,650

 

5,599

 

3,051

 

54.5

 

7,960

 

690

 

8.7

 

Depreciation

 

2,945

 

2,840

 

105

 

3.7

 

2,970

 

(25

)

-0.8

 

Total operating expense

 

142,062

 

130,251

 

11,811

 

9.1

 

140,163

 

1,899

 

1.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

43,630

 

32,892

 

10,738

 

32.6

 

38,419

 

5,211

 

13.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment & other income

 

5,131

 

2,411

 

2,720

 

112.8

 

2,960

 

2,171

 

73.3

 

Interest expense

 

(2,941

)

(3,680

)

739

 

20.1

 

(3,048

)

107

 

3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

45,820

 

31,623

 

14,197

 

44.9

 

38,331

 

7,489

 

19.5

 

Provision for taxes

 

15,869

 

11,698

 

4,171

 

35.7

 

13,740

 

2,129

 

15.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

29,951

 

19,925

 

10,026

 

50.3

 

24,591

 

5,360

 

21.8

 

Net income per share - diluted

 

0.36

 

0.24

 

0.12

 

50.0

 

0.30

 

0.06

 

20.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (2)

 

29,951

 

23,773

 

6,178

 

26.0

 

24,591

 

5,360

 

21.8

 

Adjusted net income per share - diluted (2)

 

0.36

 

0.29

 

0.07

 

24.1

 

0.30

 

0.06

 

20.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

83,169

 

82,338

 

 

 

 

 

83,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

23.5

%

20.2

%

 

 

 

 

21.5

%

 

 

 

 

Adjusted operating margin (2)

 

23.5

%

23.9

%

 

 

 

 

21.5

%

 

 

 

 

Waddell & Reed Advisors U&D margin (3)

 

-3.9

%

-5.7

%

 

 

 

 

-5.2

%

 

 

 

 

(1)             Includes equity compensation of $5,679, $4,470 and $4,890 million, respectively

(2)             Reconciliation to GAAP provided below

(3)             Excludes our wholesale underwriting and distribution activities

Net income, as reported

 

 

 

$

19,925

 

 

 

 

 

 

 

 

 

 

 

Adjustments (net of taxes)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arbitration case settlement

 

 

 

3,848

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

 

 

$

23,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per diluted share, as reported

 

 

 

$

0.24

 

 

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arbitration case settlement

 

 

 

0.05

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

5



WADDELL & REED FINANCIAL, INC.
Underwriting and Distribution
For the quarter ended
(Amounts in thousands)

 

 

 

 

Wholesale

 

 

 

 

 

Advisors

 

Third-Party

 

Legend

 

Total

 

December 31, 2006

 

 

 

 

 

 

 

 

 

Revenues

 

$

56,911

 

$

11,446

 

$

13,687

 

$

82,044

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Direct

 

38,053

 

15,671

 

9,181

 

62,905

 

Indirect

 

21,050

 

5,295

 

3,063

 

29,408

 

Total Expenses

 

59,103

 

20,966

 

12,244

 

92,313

 

 

 

 

 

 

 

 

 

 

 

Net U&D

 

$

(2,192

)

$

(9,520

)

$

1,443

 

$

(10,269

)

 

 

 

 

 

 

 

 

 

 

Margin

 

-3.9

%

n/m

 

10.5

%

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2005

 

 

 

 

 

 

 

 

 

Revenues

 

$

53,017

 

$

6,232

 

$

12,093

 

$

71,342

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Direct

 

36,729

 

9,029

 

8,214

 

53,972

 

Indirect

 

19,319

 

3,623

 

2,749

 

25,691

 

Total Expenses

 

56,048

 

12,652

 

10,963

 

79,663

 

 

 

 

 

 

 

 

 

 

 

Net U&D

 

$

(3,031

)

$

(6,420

)

$

1,130

 

$

(8,321

)

 

 

 

 

 

 

 

 

 

 

Margin

 

-5.7

%

n/m

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2006

 

 

 

 

 

 

 

 

 

Revenues

 

$

54,398

 

$

10,465

 

$

13,045

 

$

77,908

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Direct

 

37,323

 

14,722

 

8,855

 

60,900

 

Indirect

 

19,899

 

4,222

 

2,906

 

27,027

 

Total Expenses

 

57,222

 

18,944

 

11,761

 

87,927

 

 

 

 

 

 

 

 

 

 

 

Net U&D

 

$

(2,824

)

$

(8,479

)

$

1,284

 

$

(10,019

)

 

 

 

 

 

 

 

 

 

 

Margin

 

-5.2

%

n/m

 

9.8

%

 

 

 

6



WADDELL & REED FINANCIAL, INC.
Changes in Assets Under Management
For the quarter ended
(Amounts in millions)

 

 

Advisors

 

Wholesale

 

Institutional

 

Total

 

December 31, 2006

 

 

 

 

 

 

 

 

 

Beginning Assets

 

$

28,552

 

$

9,483

 

$

7,578

 

$

45,613

 

 

 

 

 

 

 

 

 

 

 

Sales

 

767

 

1,127

 

229

 

2,123

 

Redemptions

 

(860

)

(549

)

(525

)

(1,934

)

Net Sales

 

(93

)

578

 

(296

)

189

 

 

 

 

 

 

 

 

 

 

 

Net Exchanges and Adjustments

 

(52

)

50

 

0

 

(2

)

Reinvested Dividends and Capital Gains

 

8

 

(29

)

24

 

3

 

Net Flows

 

(137

)

599

 

(272

)

190

 

 

 

 

 

 

 

 

 

 

 

Market Appreciation

 

1,490

 

737

 

371

 

2,598

 

Ending Assets

 

$

29,905

 

$

10,819

 

$

7,677

 

$

48,401

 

 

 

 

 

 

 

 

 

 

 

December 31, 2005

 

 

 

 

 

 

 

 

 

Beginning Assets

 

$

26,579

 

$

6,138

 

$

8,004

 

$

40,721

 

 

 

 

 

 

 

 

 

 

 

Sales

 

637

 

668

 

166

 

1,471

 

Redemptions

 

(757

)

(287

)

(521

)

(1,565

)

Net Sales

 

(120

)

381

 

(355

)

(94

)

 

 

 

 

 

 

 

 

 

 

Net Exchanges and Adjustments

 

(31

)

29

 

0

 

(2

)

Reinvested Dividends and Capital Gains

 

33

 

(7

)

23

 

49

 

Net Flows

 

(118

)

403

 

(332

)

(47

)

 

 

 

 

 

 

 

 

 

 

Market Appreciation

 

727

 

188

 

274

 

1,189

 

Ending Assets

 

$

27,188

 

$

6,729

 

$

7,946

 

$

41,863

 

 

 

 

 

 

 

 

 

 

 

September 30, 2006

 

 

 

 

 

 

 

 

 

Beginning Assets

 

$

28,361

 

$

8,952

 

$

7,688

 

$

45,001

 

 

 

 

 

 

 

 

 

 

 

Sales

 

759

 

1,088

 

345

 

2,192

 

Redemptions

 

(806

)

(513

)

(404

)

(1,723

)

Net Sales

 

(47

)

575

 

(59

)

469

 

 

 

 

 

 

 

 

 

 

 

Net Exchanges and Adjustments

 

(38

)

37

 

0

 

(1

)

Reinvested Dividends and Capital Gains

 

64

 

10

 

28

 

102

 

Net Flows

 

(21

)

622

 

(31

)

570

 

 

 

 

 

 

 

 

 

 

 

Market Appreciation/(Depreciation)

 

212

 

(91

)

(79

)

42

 

Ending Assets

 

$

28,552

 

$

9,483

 

$

7,578

 

$

45,613

 

 

7



WADDELL & REED FINANCIAL, INC.

Supplemental Information

Other Items

 

 

 

4Q 06

 

4Q 05

 

% change

 

 

3Q 06

 

% change

 

Redemption rates - long-term assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisors

 

 

9.2

%

9.1

%

 

 

 

9.0

%

 

 

Wholesale

 

 

21.0

%

17.5

%

 

 

 

21.5

%

 

 

Institutional

 

 

27.2

%

26.1

%

 

 

 

21.4

%

 

 

Total

 

 

14.8

%

13.7

%

 

 

 

13.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales per advisor (000s) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

234

 

205

 

14.1

%

 

233

 

0.4

%

2+ Years

 

 

336

 

307

 

9.4

%

 

327

 

2.8

%

0 to 2 Years

 

 

73

 

56

 

30.4

%

 

72

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross production per advisor (000s) (2)

 

 

15.5

 

13.8

 

12.3

%

 

14.8

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of advisors (3)

 

 

2,255

 

2,409

 

-6.4

%

 

2,276

 

-0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shareholder accounts (000s)

 

 

2,899

 

2,639

 

9.9

%

 

2,833

 

2.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shareholders

 

 

656,949

 

640,357

 

2.6

%

 

653,810

 

0.5

%

(1)             Average commissionable sales per Waddell & Reed Advisor

(2)             Average gross commission generated per Waddell & Reed Advisor

(3)             Excludes Legend retirement advisors

Lipper Ranking

 

 

 

 

 

 

 

Percentage of funds

 

1 Year

 

3 Years

 

5 Years

 

Equity Funds

 

 

 

 

 

 

 

Top Quartile

 

23

%

43

%

41

%

Top Half

 

43

%

73

%

76

%

All Funds

 

 

 

 

 

 

 

Top Quartile

 

19

%

36

%

33

%

Top Half

 

46

%

64

%

65

%

 

MorningStar Ranking

 

 

 

 

 

 

 

Percentage of funds with 4 or 5 stars

 

Overall

 

3 Years

 

5 Years

 

Equity Funds

 

33

%

30

%

30

%

All Funds

 

25

%

22

%

24

%

 

 

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Earnings Conference Call

Stockholders, members of the investment community and the general public are invited to listen to a live webcast of our earnings release conference call today, January 30, 2007 at 10:00 a.m. Eastern. During this call, Henry J. Herrmann, CEO, will review our fourth quarter results. Live access to the teleconference will be available on the “Corporate” section of our website at www.waddell.com. A webcast replay will be made available shortly after the call through February 6th.

Website Resources

We invite you to visit the “Corporate” section of our website 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 distribution effort (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.

 

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