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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.
The following information was filed by Waddell Reed Financial Inc (WDR) on Tuesday, January 27, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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