Waddell & Reed Financial Inc. (WDR) filed Quarterly Report for the period ended 2009-09-30.
Waddell & Reed is the exclusive underwriter and distributor of 41 mutual fund portfolios including 18 comprising Waddell & Reed Advisors Funds (formerly the United Group of Mutual Funds) and 12 comprising W&R Funds (formerly Waddell & Reed Funds Inc.). The remaining 11 portfolios comprise the W&R Target Funds which serve as the underlying investment portfolios for variable annuities and variable life insurance products underwritten by United Investors Life Insurance Company and distributed by Waddell & Reed. Waddell & Reed Financial Inc. has a market cap of $2.54 billion; its shares were traded at around $29.63 with a P/E ratio of 26.7 and P/S ratio of 2.8. The dividend yield of Waddell & Reed Financial Inc. stocks is 2.6%. Waddell & Reed Financial Inc. had an annual average earning growth of 12.1% over the past 5 years.
Highlight of Business Operations:
Second quarter results included charges for severance and other transaction costs of $548 thousand in connection with the divestiture of our investment in ACF. We recorded additional costs related to the sale in the third quarter of 2009 of $543 thousand. These charges are included in “general and administrative” in the consolidated statements of operations
For tax purposes, this sale resulted in a capital loss of $28.1 million, which will generate future tax benefits by offsetting potential future and prior period capital gains. Due to the character of the loss and the limited carryforward period permitted by law, the Company may not realize the full tax benefit of the capital loss. We recorded tax benefits in the third quarter of 2009 of $2.9 million. Of this amount, $2.3 million relates to carrying back a portion of the capital loss to fully offset capital gains generated during the applicable three-year carryback period and capital gains generated through the six months ended June 30, 2009. The remaining $600 thousand tax benefit relates to utilizing capital losses to offset capital gains generated during the third quarter of 2009.
Our balance sheet remains strong, as we ended the quarter with cash and investments of $278.8 million. We renewed our 364-day unsecured line of credit in early October with commitments from a syndicate of banks for $125.0 million, expandable to $200.0 million. We believe that our current liquidity position will allow us to manage through the market downturn for the foreseeable future.
Assets under management increased to $64.5 billion on September 30, 2009 compared to $55.6 billion on June 30, 2009 due to market appreciation of $6.9 billion and net flows of $2.4 billion. Net sales were driven by the Wholesale channel during the quarter.
Assets under management increased to $64.5 billion on September 30, 2009 compared to $47.5 billion on December 31, 2008 due to market appreciation of $10.9 billion and net flows of $6.6 billion. Net sales were driven by the Wholesale channel during the nine month period.
WDR is in the portfolios of John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management, Kenneth Fisher of Fisher Asset Management, LLC.
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