EX-99.1 2 a09-19778_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

News Release

 

Waddell & Reed Financial, Inc. Reports Second Quarter Results

 

Overland Park, KS, Jul. 28, 2009 – Waddell & Reed Financial, Inc. (NYSE: WDR) today reported second quarter net income of $23.4 million, or $0.27 per diluted share, which includes a charge to general and administrative costs of $548 thousand for severance and other costs related to the sale of our subsidiary, Austin, Calvert & Flavin, Inc. (“ACF”).  Net income during the first quarter of 2009 was $15.5 million, or $0.18 per diluted share and included a non-cash charge of $3.7 million for other-than-temporary impairments of certain of the Company’s investments in affiliated mutual funds.  Excluding the charges for the sale of ACF and other-than-temporary impairments, net income would have been $23.7 million, or $0.28 per diluted share and $17.8 million, or $0.21 per diluted share for the second and first quarters of 2009, respectively.  Management believes adjusting results to exclude these charges provides investors with a more comparable basis for evaluating results and financial performance to other periods.

 

Net income during the second quarter of 2008 was $35.2 million, or $0.40 per diluted share after the retroactive adoption of a new accounting standard (EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities”) on January 1, 2009.  The change increased the number of diluted weighted average shares outstanding during the second quarter of 2008 to 86.9 million from 84.6 million and resulted in a decrease in earnings per diluted share of $0.02 compared with the results we reported in July 2008.  Non-vested stock awards are now included in the share count for the calculation of earnings per share.

 

On July 15, 2009, we sold ACF to TTC Holdings, Inc.  As of a result of the sale, we will record additional sale related costs in the third quarter of approximately $540 thousand.  For tax purposes, the sale resulted in a capital loss, which will generate future tax benefits by offsetting potential future and prior period capital gains.    We expect to record tax benefits in the third quarter of $1.1 million to recover capital gains taxes paid in prior periods.  Assets under management at ACF were $483 million at the end of June 2009.

 

Business Discussion

 

Management commentary

 

“Helped by better market conditions, gross sales and net flows have rebounded nicely compared to the previous quarter and redemption pressure has eased,” said Hank Herrmann, Chief Executive Officer of Waddell & Reed Financial, Inc.  “Assets under management benefited from stronger flows and rising markets, which in turn improved our operating margin to 19.0% from 17.4% during the first quarter of 2009.”

 

1


 

Advisors channel

 

Gross sales of $783 million in our Advisors channel were up 13% during the quarter and net flows of $140 million turned positive after two quarters of outflows.  However, sales and net flows were below the comparable period in 2008.  This channel continues to enjoy an industry-low redemption rate of around 8%.

 

Wholesale channel

 

Our Wholesale channel experienced strong sales volume during the quarter.  Gross sales of $4.1 billion improved 72% compared to the previous quarter and were only 10% lower than last year’s comparable period.  The comparison to last year’s second quarter is especially notable given the strength of the market during the first half of 2008.

 

While the Ivy Asset Strategy and Ivy Global Natural Resources funds remain sales leaders, numerous other products in the Ivy family are receiving meaningful daily flows.  Additionally, the Ivy funds’ brand ranked third (after the American Funds and IShares) in the FA Vision survey by respected industry consultants, kasina and Horsesmouth.  This survey gathered responses nationwide from 3,129 financial advisors to rank mutual fund companies for positive brand attributes including consistency, innovation and ease of doing business with the company.  This ranking further attests to the progress we have made in penetrating third party distribution with our Ivy funds.

 

Institutional channel

 

Gross sales of $526 million improved 33% compared to the first quarter, but declined 21% compared to last year’s second quarter.  Net flows remain positive at $92 million.  The increase in redemption activity during the quarter was largely due to reallocations by clients of Pictet & Cie.

 

As a result of the sale of ACF, beginning in the third quarter of 2009 we will no longer include ACF’s assets under management in our Institutional channel.

 

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 increased 15% on a sequential quarter basis and declined 24% compared to last year’s second quarter.  The effective management fee rate during the second quarter was 62.5 basis points compared to 62.2 basis points during the first quarter of 2009 and 65.1 basis points during the second quarter of 2008.  Compared to the previous quarter, management fees benefited from one additional day.  Compared to last year’s second quarter, a shift in the mix of assets under management towards lower fee products pressured the effective fee rate.

 

2


 

Underwriting and Distribution Revenue and Expense Analysis

 

Advisors channel

 

On a sequential basis, revenues increased on a combination of higher sales of Class A mutual funds and variable annuities, asset-based service fees and asset allocation product fees.  This increase was partly offset by lower insurance sales volume.  Direct expenses rose in correlation with higher sales volume and asset levels.  Lower technology costs resulted in a small decline in indirect costs.

 

Compared to last year’s second quarter, revenues declined partly due to lower asset-based fees and lower front-load (Class A mutual funds) sales volume.  Direct expenses declined in correlation with lower asset and sales levels.  Indirect expenses declined on a combination of lower compensation and related costs and lower sales convention costs.

 

Wholesale channel

 

Sequentially, revenues increased primarily on higher asset-based service and distribution fees.  Higher sales volume by Legend advisors also contributed to the revenue variance.  Direct expenses increased on a combination of higher asset-based service and distribution fees, and higher sales levels and wholesaler commissions.  Indirect expenses increased on a combination of marketing costs and IT costs relating to the Ivy Web site.

 

Compared to the same period last year, the decline in assets under management led to lower asset-based service and distribution fees and, to a lesser degree, lower commission revenues by Legend advisors.  Direct expenses declined due to lower asset-based service and distribution costs as well as lower sales volume by Legend advisors.  Indirect expenses declined primarily on lower compensation and related costs at Legend.

 

Compensation and Related Expense Analysis

 

Compensation and related costs rose on a sequential quarter basis due to the April 2009 incentive share grants and deferred compensation expenses.  Compared to last year’s second quarter, expenses fell due to lower incentive compensation and, to a lesser degree, lower compensation and related costs as a result of our Voluntary Separation Program, which was effective in late December 2008.

 

General and Administrative Expense Analysis

 

Sequentially, general and administrative costs rose due mostly to severance of employees at ACF.  Costs were largely unchanged compared to the second quarter of 2008.

 

Subadvisory Fees

 

Subadvisory fees, which are paid on average asset levels in subadvised funds, rose compared to the first quarter of 2009, but fell compared to the second quarter of 2008.  These variances are largely due to the fluctuation of assets in the Ivy Global Natural Resources fund.  Subadvised average assets under management were $5.3 billion in the current quarter, compared to $4.4 billion during the first quarter of 2009 and $12.8 billion during last year’s second quarter.

 

3


 

During the second quarter, we brought the management of the Ivy International Balanced and the Ivy VIP International Value funds in-house and, on July 1st, the management of the Ivy European Opportunities fund.  Combined, these funds have assets under management of $0.9 billion and based on current asset values, represent an annual saving of subadvisory costs of approximately $3.9 million.

 

Investment and Other Income

 

Investment and other income rose compared to the first quarter due to a combination of the non-cash charge of $3.7 million taken in the first quarter of 2009 to reflect other-than-temporary impairments on certain of the Company’s investments in affiliated mutual funds and increased investment income of $1.7 million recorded in the current period.

 

Balance Sheet Information

 

As of June 30, 2009, cash and cash equivalents and investment securities were $263 million (excluding $63 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 $333 million and there were 85.9 million shares outstanding.  During the quarter, we repurchased 658,700 shares on the open market or privately at an aggregate cost of $15 million.

 

4


 

Unaudited Schedule of Operating Data

(Amounts in thousands, except for per share data)

 

 

 

2008

 

2009

 

 

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

$

102,972

 

$

112,583

 

$

107,911

 

$

76,397

 

$

70,981

 

$

82,566

 

 

 

 

 

Underwriting and distribution fees

 

106,111

 

114,254

 

107,054

 

89,343

 

80,715

 

91,105

 

 

 

 

 

Shareholder service fees

 

24,986

 

25,946

 

26,259

 

25,304

 

24,976

 

25,957

 

 

 

 

 

Total operating revenues

 

234,069

 

252,783

 

241,224

 

191,044

 

176,672

 

199,628

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting and distribution

 

124,777

 

132,292

 

125,589

 

114,164

 

98,718

 

110,781

 

 

 

 

 

Compensation and related costs

 

34,346

 

32,870

 

30,701

 

21,140

 

25,699

 

27,399

 

 

 

 

 

General and administrative

 

13,833

 

14,731

 

14,912

 

32,894

 

13,413

 

14,503

 

 

 

 

 

Subadvisory fees

 

11,834

 

13,037

 

10,866

 

5,385

 

4,703

 

5,485

 

 

 

 

 

Depreciation

 

3,140

 

3,188

 

3,389

 

3,481

 

3,312

 

3,444

 

 

 

 

 

Goodwill impairment

 

0

 

0

 

0

 

7,222

 

0

 

0

 

 

 

 

 

Total operating expenses

 

187,930

 

196,118

 

185,457

 

184,286

 

145,845

 

161,612

 

 

 

 

 

Operating Income:

 

46,139

 

56,665

 

55,767

 

6,758

 

30,827

 

38,016

 

 

 

 

 

Investment and other income

 

2,186

 

1,817

 

(530

)

(295

)

(3,092

)

2,161

 

 

 

 

 

Interest expense

 

(2,978

)

(2,982

)

(2,984

)

(3,143

)

(3,149

)

(3,150

)

 

 

 

 

Income before taxes

 

45,347

 

55,500

 

52,253

 

3,320

 

24,586

 

37,027

 

 

 

 

 

Provision for taxes

 

17,006

 

20,313

 

18,888

 

4,050

 

9,120

 

13,653

 

 

 

 

 

Net Income

 

$

28,341

 

$

35,187

 

$

33,365

 

$

(730

)

$

15,466

 

$

23,374

 

 

 

 

 

Net income per share*

 

0.33

 

0.40

 

0.39

 

(0.01

)

0.18

 

0.27

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

 

 

 

 

 

84,716

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

86,807

 

86,928

 

86,007

 

 

 

84,910

 

86,001

 

 

 

 

 

Operating margin

 

19.7

%

22.4

%

23.1

%

3.5

%

17.4

%

19.0

%

 

 

 

 

 

* The Company adopted FSP EITF 03-6-1 effective January 1, 2009.  Accordingly, basic and diluted earnings per share for all periods presented have been adjusted.

 

Underwriting and Distribution

(Amounts in thousands)

 

 

 

2008

 

2009

 

 

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

Advisors Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

61,677

 

$

63,812

 

$

57,968

 

$

51,886

 

$

47,413

 

$

52,262

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

42,712

 

44,872

 

40,106

 

35,493

 

33,309

 

36,281

 

 

 

 

 

Indirect

 

22,616

 

23,588

 

23,428

 

22,752

 

21,719

 

20,938

 

 

 

 

 

Total expenses

 

$

65,328

 

$

68,460

 

$

63,534

 

$

58,245

 

$

55,028

 

$

57,219

 

 

 

 

 

Margin

 

-5.9

%

-7.3

%

-9.6

%

-12.3

%

-16.1

%

-9.5

%

 

 

 

 

Wholesale Channel (Third-Party)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

30,345

 

$

35,905

 

$

36,242

 

$

26,156

 

$

23,075

 

$

27,222

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

39,595

 

43,307

 

41,520

 

38,133

 

28,012

 

35,915

 

 

 

 

 

Indirect

 

7,252

 

7,372

 

8,539

 

7,011

 

6,382

 

7,214

 

 

 

 

 

Total expenses

 

$

46,847

 

$

50,679

 

$

50,059

 

$

45,144

 

$

34,394

 

$

43,129

 

 

 

 

 

Wholesale Channel (Legend)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

14,089

 

$

14,537

 

$

12,844

 

$

11,301

 

$

10,227

 

$

11,621

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

9,423

 

9,695

 

8,526

 

7,623

 

6,466

 

7,547

 

 

 

 

 

Indirect

 

3,179

 

3,458

 

3,470

 

3,152

 

2,830

 

2,886

 

 

 

 

 

Total expenses

 

$

12,602

 

$

13,153

 

$

11,996

 

$

10,775

 

$

9,296

 

$

10,433

 

 

 

 

 

Consolidated Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

106,111

 

$

114,254

 

$

107,054

 

$

89,343

 

$

80,715

 

$

91,105

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

91,730

 

97,874

 

90,152

 

81,249

 

67,787

 

79,743

 

 

 

 

 

Indirect

 

33,047

 

34,418

 

35,437

 

32,915

 

30,931

 

31,038

 

 

 

 

 

Total expenses

 

$

124,777

 

$

132,292

 

$

125,589

 

$

114,164

 

$

98,718

 

$

110,781

 

 

 

 

 

 

5


 

Changes in Assets Under Management

(Amounts in millions)

 

 

 

2008

 

2009

 

 

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

Advisors Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

34,562

 

$

32,075

 

$

32,687

 

$

28,505

 

$

23,472

 

$

22,643

 

 

 

 

 

Sales (net of commissions)

 

1,048

 

1,100

 

871

 

705

 

695

 

783

 

 

 

 

 

Redemptions

 

(917

)

(914

)

(904

)

(1,036

)

(823

)

(724

)

 

 

 

 

Net sales

 

131

 

186

 

(33

)

(331

)

(128

)

59

 

 

 

 

 

Net exchanges

 

(67

)

(36

)

(27

)

(20

)

(27

)

(26

)

 

 

 

 

Reinvested dividends & capital gains

 

69

 

93

 

66

 

97

 

73

 

107

 

 

 

 

 

Net flows

 

133

 

243

 

6

 

(254

)

(82

)

140

 

 

 

 

 

Market action

 

(2,620

)

369

 

(4,188

)

(4,779

)

(747

)

2,422

 

 

 

 

 

Ending assets

 

$

32,075

 

$

32,687

 

$

28,505

 

$

23,472

 

$

22,643

 

$

25,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

21,537

 

$

24,532

 

$

28,948

 

$

23,353

 

$

17,489

 

$

18,635

 

 

 

 

 

Sales (net of commissions)

 

5,413

 

4,574

 

3,743

 

1,869

 

2,389

 

4,104

 

 

 

 

 

Redemptions

 

(1,171

)

(1,243

)

(2,714

)

(3,413

)

(1,467

)

(1,249

)

 

 

 

 

Net sales

 

4,242

 

3,331

 

1,029

 

(1,544

)

922

 

2,855

 

 

 

 

 

Net exchanges

 

65

 

35

 

24

 

21

 

26

 

(1

)

 

 

 

 

Reinvested dividends & capital gains

 

6

 

31

 

(9

)

(299

)

6

 

78

 

 

 

 

 

Net flows

 

4,313

 

3,397

 

1,044

 

(1,822

)

954

 

2,932

 

 

 

 

 

Market action

 

(1,318

)

1,019

 

(6,639

)

(4,042

)

192

 

1,646

 

 

 

 

 

Ending assets

 

$

24,532

 

$

28,948

 

$

23,353

 

$

17,489

 

$

18,635

 

$

23,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Institutional Channel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

8,769

 

$

8,285

 

$

8,489

 

$

7,926

 

$

6,523

 

$

6,298

 

 

 

 

 

Sales (net of commissions)

 

696

 

664

 

560

 

439

 

395

 

526

 

 

 

 

 

Redemptions

 

(365

)

(497

)

(303

)

(396

)

(301

)

(488

)

 

 

 

 

Net sales

 

331

 

167

 

257

 

43

 

94

 

38

 

 

 

 

 

Net exchanges

 

0

 

0

 

0

 

0

 

0

 

26

 

 

 

 

 

Reinvested dividends & capital gains

 

27

 

29

 

26

 

37

 

24

 

28

 

 

 

 

 

Net flows

 

358

 

196

 

283

 

80

 

118

 

92

 

 

 

 

 

Market action

 

(842

)

8

 

(846

)

(1,483

)

(343

)

803

 

 

 

 

 

Ending assets

 

$

8,285

 

$

8,489

 

$

7,926

 

$

6,523

 

$

6,298

 

$

7,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

64,868

 

$

64,892

 

$

70,124

 

$

59,784

 

$

47,484

 

$

47,576

 

 

 

 

 

Sales (net of commissions)

 

7,157

 

6,338

 

5,174

 

3,013

 

3,479

 

5,413

 

 

 

 

 

Redemptions

 

(2,453

)

(2,654

)

(3,921

)

(4,845

)

(2,591

)

(2,461

)

 

 

 

 

Net sales

 

4,704

 

3,684

 

1,253

 

(1,832

)

888

 

2,952

 

 

 

 

 

Net exchanges

 

(2

)

(1

)

(3

)

1

 

(1

)

(1

)

 

 

 

 

Reinvested dividends & capital gains

 

102

 

153

 

83

 

(165

)

103

 

213

 

 

 

 

 

Net flows

 

4,804

 

3,836

 

1,333

 

(1,996

)

990

 

3,164

 

 

 

 

 

Market action

 

(4,780

)

1,396

 

(11,673

)

(10,304

)

(898

)

4,871

 

 

 

 

 

Ending assets

 

$

64,892

 

$

70,124

 

$

59,784

 

$

47,484

 

$

47,576

 

$

55,611

 

 

 

 

 

 

6


 

Supplemental Information

 

 

 

2008

 

2009

 

 

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

1st Qtr.

 

2nd Qtr.

 

3rd Qtr.

 

4th Qtr.

 

Redemption rates - long term assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisors

 

8.4

%

7.7

%

8.2

%

12.2

%

10.5

%

8.2

%

 

 

 

 

Wholesale

 

20.6

%

18.0

%

39.3

%

75.2

%

33.3

%

22.4

%

 

 

 

 

Institutional

 

17.5

%

23.4

%

14.3

%

22.9

%

19.6

%

28.2

%

 

 

 

 

Total

 

14.0

%

13.8

%

21.9

%

37.7

%

20.6

%

16.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales per advisor (000s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

351

 

357

 

272

 

199

 

169

 

249

 

 

 

 

 

2+ Years

 

548

 

538

 

412

 

309

 

312

 

346

 

 

 

 

 

0 to 2 Years

 

100

 

105

 

84

 

56

 

55

 

73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross production per advisor (000s)

 

17.2

 

17.4

 

15.0

 

14.6

 

13.9

 

15.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of advisors

 

2,235

 

2,285

 

2,357

 

2,366

 

2,277

 

2,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shareholder accounts (000s)

 

3,432

 

3,638

 

3,736

 

3,662

 

3,666

 

3,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shareholders (000s)

 

757

 

850

 

878

 

863

 

869

 

850

 

 

 

 

 

 

Fund Rankings

 

 

 

1 Year

 

3 Years

 

5 Years

 

Lipper

 

 

 

 

 

 

 

Equity funds

 

 

 

 

 

 

 

Top quartile

 

47

%

61

%

68

%

Top half

 

61

%

86

%

86

%

 

 

 

 

 

 

 

 

Equity assets

 

 

 

 

 

 

 

Top quartile

 

20

%

70

%

80

%

Top half

 

28

%

87

%

86

%

 

 

 

 

 

 

 

 

Fixed income funds

 

 

 

 

 

 

 

Top quartile

 

47

%

43

%

43

%

Top half

 

73

%

79

%

79

%

 

 

 

 

 

 

 

 

Fixed income assets

 

 

 

 

 

 

 

Top quartile

 

57

%

57

%

49

%

Top half

 

88

%

95

%

95

%

 

 

 

 

 

 

 

 

All funds

 

 

 

 

 

 

 

Top quartile

 

47

%

57

%

62

%

Top half

 

64

%

84

%

84

%

 

 

 

 

 

 

 

 

All assets

 

 

 

 

 

 

 

Top quartile

 

25

%

68

%

76

%

Top half

 

37

%

88

%

88

%

 

 

 

 

 

 

 

 

MorningStar

 

 

 

 

 

 

 

% of funds with 4 or 5 stars

 

 

 

 

 

 

 

Equity funds

 

68

%

61

%

68

%

All funds

 

58

%

53

%

58

%

 

 

 

 

 

 

 

 

% of assets with 4 or 5 stars

 

 

 

 

 

 

 

Equity funds

 

88

%

83

%

88

%

All funds

 

78

%

74

%

78

%

 

7


 

Earnings Conference Call

 

Stockholders, members of the investment community and the general public are invited to listen to a live Web cast of our earnings release conference call today, July 28, 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 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 words 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

 

8


 

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 from our expectations are disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2008, which include, without limitation:

 

·                                          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;

 

·                                          A decrease in, or the elimination of, any future quarterly dividend paid to stockholders;

 

·                                          The 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;

 

·                                          The introduction of legislative, judicial or regulatory proposals that change the independent contractor classification of our financial advisors;

 

·                                          Our inability to hire and retain senior executive management and other key personnel;

 

·                                          The impairment of goodwill or other intangible assets on our balance sheet; and

 

·                                          Investors’ failure to renew our investment management or subadvisory agreements, or the terms of any such renewals being on unfavorable terms.

 

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, 2008 and as updated in our quarterly reports on Form 10-Q for the year ending December 31, 2009.  All forward-looking statements speak only as 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.

 

9