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Waddell & Reed Financial, Inc. Reports Fourth Quarter Results
Overland Park, KS, Feb. 2, 2016 Waddell & Reed Financial, Inc. (NYSE: WDR) today reported fourth quarter 2015 net income of $62.9 million, or $0.76 per diluted share, compared to net income of $48.1 million, or $0.58 per diluted share, during the previous quarter and net income of $80.9 million, or $0.97 per diluted share, during the fourth quarter of 2014.
Operating income of $91.4 million declined 16% sequentially and 23% compared to the same quarter in 2014. Sequentially, operating revenues fell by 4% while expenses rose 1%. Compared to the same period last year, operating revenues declined by 9% and expenses declined 3%. The operating margin during the quarter was 25.3% compared to 29.0% and 30.0% for the third quarter of 2015 and the fourth quarter of 2014, respectively.
Assets under management ended the year at $104 billion; down 2% during the quarter as market appreciation partly offset the impact of net outflows. Compared to December 31, 2014, assets under management declined 16% due to a combination of net outflows and market erosion.
Heightened market volatility has been a consistent theme throughout 2015, challenging performance and causing anxiety with investors, said Hank Herrmann, Chairman and Chief Executive Officer of Waddell & Reed Financial, Inc. In addition to market challenges, we have had to manage increased redemption pressure and weaker sales in some of our key strategies due in part to underperformance in these funds. In light of lower levels of assets under management, we are evaluating operating expenses to align our cost structure with revenues.
We are focused on broad strategic initiatives across our distribution channels that will secure our success in the future, continued Herrmann. Our Advisors channel will undergo a major upgrade to introduce a state-of-the-art brokerage platform and initiate important changes within our product offerings and share classes, including a shift to I-shares in our advisory programs, to ensure that our broker/dealer remains competitive. Now more than ever, it is critical that our products remain responsive to rapid changes in investor sentiment, and as such, we will continue to adapt and bring solutions to our distribution partners.
Management Fee Revenue Analysis
Management fees declined 5% sequentially in correlation with lower average assets under management. Compared to the same quarter last year, management fees declined 12% compared to a 14% decline in average assets under management. Average assets under management were $108.9 billion during the current quarter compared to $114.8 billion during the prior quarter and $126.9 billion during the fourth quarter of 2014. The effective fee rate for the current quarter was 60.6 basis points compared to 60.5 basis points and 59.0 basis points during the third quarter of 2015 and fourth quarter of 2014,
The following information was filed by Waddell Reed Financial Inc (WDR) on Tuesday, February 2, 2016 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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