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Waddell & Reed Financial, Inc. Reports Fourth Quarter Results
Overland Park, KS, Feb. 3, 2015 Waddell & Reed Financial, Inc. (NYSE: WDR) today reported fourth quarter 2014 net income of $80.9 million, or $0.97 per diluted share, compared to net income of $74.6 million, or $0.89 per diluted share, during the previous quarter and net income of $78.8 million, or $0.92 per diluted share, during the fourth quarter of 2013. The third quarter of 2014 included a charge of $7.9 million ($5.0 million net of taxes, or $0.06 per diluted share) to recognize the impairment of an intangible asset.
Operating revenues of $397.2 million declined 3% sequentially, driven by lower management fee revenues as average assets under management declined during the fourth quarter. When compared to the same period last year, operating revenues rose 6%. The increase was due to higher average assets under management during the current quarter compared to the same quarter in 2013, which resulted in higher underwriting and distribution fees and management fee revenues. The operating margin during the quarter was 30.0% compared to 30.6% during the previous quarter and 30.2% during the same period last year.
On December 31, 2014, assets under management were $123.7 billion, down 4% during the quarter due to outflows, which were partially offset by positive market action. Compared to December 31, 2013, assets under management declined 2%. Average assets under management were $126.9 billion in the quarter.
The second half of 2014 was unusually challenging for Waddell & Reed, said Hank Herrmann, Chairman and Chief Executive Officer of Waddell & Reed Financial, Inc. Sales momentum meaningfully decelerated while redemptions rose. Much of this reversal in trends can be attributed to weakness in performance in one of our key funds and the loss of investors appetite for high yield products.
The investment team is working to address performance issues while the distribution staff is focused on keeping clients alert to the attractiveness of our products and their superior long-term performance records.
The fourth quarter of 2014 included $8.9 billion in capital gain and dividend distributions by our funds, approximately $1.0 billion of which were not reinvested by clients. The net capital gain not reinvested in our funds was recorded as a reduction to sales. We reported fourth quarter sales of $4.0 billion; however, adjusting for the impact of the un-reinvested portion of capital gains, sales were $5.0 billion.
The following information was filed by Waddell Reed Financial Inc (WDR) on Tuesday, February 3, 2015 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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