WADDELL & REED FINANCIAL INC - FORM 10-Q

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EX-31.1 - EX-31.1 - WADDELL & REED FINANCIAL INC	wdr-20170630ex311cb932a.htm
EX-32.2 - EX-32.2 - WADDELL & REED FINANCIAL INC	wdr-20170630ex32277af12.htm
EX-32.1 - EX-32.1 - WADDELL & REED FINANCIAL INC	wdr-20170630ex32195ed41.htm
EX-31.2 - EX-31.2 - WADDELL & REED FINANCIAL INC	wdr-20170630ex312804aa7.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-13913

WADDELL & REED FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		51-0261715
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

6300 Lamar Avenue

Overland Park, Kansas 66202

(Address, including zip code, of Registrant’s principal executive offices)

(913) 236-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐
(Do not check if a smaller reporting company)
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date:


Class		Outstanding as of July 28, 2017
Class A common stock, $.01 par value		83,591,353

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WADDELL & REED FINANCIAL, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

Quarter Ended June 30, 2017

			Page No.

Part I.	Financial Information

Item 1.		Financial Statements (unaudited)

		Consolidated Balance Sheets at June 30, 2017 and December 31, 2016	3

		Consolidated Statements of Income for the three and six months ended June 30, 2017 and June 30, 2016	4

		Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and June 30, 2016	5

		Consolidated Statement of Stockholders’ Equity and redeemable noncontrolling interests for the six months ended June 30, 2017	6

		Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and June 30, 2016	7

		Notes to the Unaudited Consolidated Financial Statements	8

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.		Controls and Procedures	37

Part II.	Other Information

Item 1.		Legal Proceedings	38

Item 1A.		Risk Factors	38

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 6.		Exhibits	39

		Signatures	40

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WADDELL & REED FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)


	June 30,
	2017		December 31,
	(Unaudited)		2016
Assets:
Cash and cash equivalents	$	427,939	555,102
Cash and cash equivalents - restricted		38,298	31,137
Investment securities		501,827	328,750
Receivables:
Funds and separate accounts		21,187	27,181
Customers and other		99,272	128,095
Prepaid expenses and other current assets		23,810	21,574
Total current assets		1,112,333	1,091,839

Property and equipment, net		95,455	102,449
Goodwill and identifiable intangible assets		147,069	148,569
Deferred income taxes		32,928	31,430
Other non-current assets		24,541	31,985
Total assets	$	1,412,326	1,406,272

Liabilities:
Accounts payable	$	28,590	28,023
Payable to investment companies for securities		63,967	53,691
Payable to third party brokers		24,363	31,735
Payable to customers		38,699	82,918
Short-term notes payable		94,945	—
Accrued compensation		40,198	41,672
Other current liabilities		96,133	58,939
Total current liabilities		386,895	296,978

Long-term debt		94,747	189,605
Accrued pension and postretirement costs		31,959	38,379
Other non-current liabilities		25,839	26,655
Total liabilities		539,440	551,617

Commitments and contingencies

Redeemable noncontrolling interests		28,718	10,653

Stockholders’ equity:
Preferred stock—$1.00 par value: 5,000 shares authorized; none issued		—	—
Class A Common stock—$0.01 par value: 250,000 shares authorized; 99,701 shares issued; 83,598 shares outstanding (83,118 at December 31, 2016)		997	997
Additional paid-in capital		282,576	291,908
Retained earnings		1,112,697	1,135,694
Cost of 16,103 common shares in treasury (16,583 at December 31, 2016)		(505,120)	(531,268)
Accumulated other comprehensive loss		(46,982)	(53,329)
Total stockholders’ equity		844,168	844,002

Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	1,412,326	1,406,272

See accompanying notes to the unaudited consolidated financial statements.

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WADDELL & REED FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited, in thousands, except for per share data)


	For the three months ended June 30,				For the six months ended June 30,
	2017		2016		2017		2016

Revenues:
Investment management fees	$	130,878		140,880	$	261,314		285,658
Underwriting and distribution fees		128,776		146,312		257,607		292,970
Shareholder service fees		27,003		32,016		54,300		64,396
Total		286,657		319,208		573,221		643,024

Operating expenses:
Underwriting and distribution		151,119		181,245		301,443		355,081
Compensation and related costs (including share-based compensation of $14,054, $12,625, $28,239 and $26,147, respectively)		47,224		58,341		96,630		111,281
General and administrative		28,153		19,276		53,877		38,428
Subadvisory fees		3,194		2,325		5,891		4,418
Depreciation		5,175		4,260		10,396		8,622
Intangible asset impairment		900		—		1,500		—
Total		235,765		265,447		469,737		517,830

Operating income		50,892		53,761		103,484		125,194
Investment and other income (loss)		2,021		687		4,150		(9,531)
Interest expense		(2,788)		(2,776)		(5,574)		(5,544)

Income before provision for income taxes		50,125		51,672		102,060		110,119
Provision for income taxes		26,162		18,101		44,561		39,079
Net income		23,963		33,571		57,499		71,040
Net income (loss) attributable to redeemable noncontrolling interests		656		(124)		1,136		377
Net income attributable to Waddell & Reed Financial, Inc.	$	23,307		33,695	$	56,363		70,663

Net income per share attributable to Waddell and Reed Financial, Inc. common shareholders, basic and diluted:	$	0.28		0.41	$	0.67		0.86

Weighted average shares outstanding, basic and diluted:		83,611		82,947		83,843		82,526

See accompanying notes to the unaudited consolidated financial statements.

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WADDELL & REED FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited, in thousands)


	For the three months ended June 30,				For the six months ended June 30,
	2017		2016		2017		2016

Net income	$	23,963		33,571	$	57,499		71,040

Other comprehensive income:

Unrealized appreciation of available for sale investment securities during the period, net of income tax benefit of $192, $0, $1,673, and $0, respectively		1,235		1,884		4,834		1,960

Pension and postretirement benefit, net of income tax expense of $429, $566, $894, and $1,185, respectively		727		960		1,513		2,037

Comprehensive income		25,925		36,415		63,846		75,037
Comprehensive income (loss) attributable to redeemable noncontrolling interests		656		(124)		1,136		377
Comprehensive income attributable to Waddell & Reed Financial, Inc.	$	25,269		36,539	$	62,710		74,660

See accompanying notes to the unaudited consolidated financial statements.

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WADDELL & REED FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity and Redeemable Noncontrolling Interests

For the Six Months Ended June 30, 2017

(Unaudited, in thousands)


							Accumulated		Redeemable
				Additional			Other	Total	Non
	Common Stock			Paid-In	Retained	Treasury	Comprehensive	Stockholders’	Controlling
	Shares	Amount		Capital	Earnings	Stock	Income (Loss)	Equity	interest
Balance at December 31, 2016	99,701	$	997	291,908	1,135,694	(531,268)	(53,329)	844,002	10,653
Adoption of share-based compensation guidance on January 1, 2017	—		—	3,504	(2,200)	—	—	1,304	—
Net income	—		—	—	56,363	—	—	56,363	1,136
Net subscription of redeemable noncontrolling interests in sponsored funds	—		—	—	—	—	—	—	16,929
Recognition of equity compensation	—		—	25,325	297	—	—	25,622	—
Net issuance/forfeiture of nonvested shares	—		—	(38,161)		38,161		—	—
Dividends accrued, $0.92 per share	—		—	—	(77,457)	—	—	(77,457)	—
Repurchase of common stock	—		—	—	—	(12,013)	—	(12,013)	—
Other comprehensive income	—		—	—	—	—	6,347	6,347	—
Balance at June 30, 2017	99,701	$	997	282,576	1,112,697	(505,120)	(46,982)	844,168	28,718

See accompanying notes to the unaudited consolidated financial statements.

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WADDELL & REED FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	For the six months ended June 30,
	2017		2016

Cash flows from operating activities:
Net income	$	57,499		71,040
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,396		8,627
Amortization of deferred sales commissions		2,675		19,661
Share-based compensation		25,622		26,147
Investments gain, net		(4,662)		(8,560)
Net purchases of trading securities		(15,613)		(24,996)
Net change in trading securities held by consolidated sponsored funds		(114,407)		(45,455)
Other		2,388		(908)
Changes in assets and liabilities:
Cash and cash equivalents - restricted		(7,161)		33,680
Customer and other receivables		28,823		54,004
Payable to investment companies for securities and payable to customers		(33,943)		(100,595)
Receivables from funds and separate accounts		5,994		8,309
Other assets		1,600		6,560
Accounts payable and payable to third party brokers		(6,805)		(22,852)
Other liabilities		10,332		(6,216)
Net cash provided by operating activities	$	(37,262)		18,446

Cash flows from investing activities:
Purchases of available for sale and equity method securities		(28,881)		(104)
Proceeds from sales of available for sale and equity method securities		14,917		17,986
Additions to property and equipment		(3,704)		(9,265)
Net cash of sponsored funds on consolidation		—		6,887
Other		—		(196)
Net cash (used in) provided by investing activities	$	(17,668)		15,308

Cash flows from financing activities:
Dividends paid		(77,236)		(76,616)
Repurchase of common stock		(12,013)		(47,461)
Net subscriptions, (redemptions, distributions and deconsolidations) of redeemable noncontrolling interests in sponsored funds		16,929		(2,224)
Other		87		1,510
Net cash used in financing activities	$	(72,233)		(124,791)

Net decrease in cash and cash equivalents		(127,163)		(91,037)
Cash and cash equivalents at beginning of period		555,102		558,495
Cash and cash equivalents at end of period	$	427,939		467,458

See accompanying notes to the unaudited consolidated financial statements.

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WADDELL & REED FINANCIAL, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.Description of Business and Significant Accounting Policies

Waddell & Reed Financial, Inc. and Subsidiaries

Waddell & Reed Financial, Inc. (hereinafter referred to as the “Company,” “we,” “our” or “us”) is a holding company, incorporated in the state of Delaware in 1981, that conducts business through its subsidiaries. Founded in 1937, we are one of the oldest mutual fund complexes in the United States, having introduced the Waddell & Reed Advisors group of mutual funds (the “Advisors Funds”) in 1940. Over time, we added additional mutual funds: Ivy Funds (the “Ivy Funds”); Ivy Variable Insurance Portfolios, our variable product offering (“Ivy VIP”); InvestEd Portfolios, our 529 college savings plan (“InvestEd”); Ivy High Income Opportunities Fund, a closed-end mutual fund (“IVH”); and the Ivy Global Investors Société d’Investissement à Capital Variable (the “SICAV”) and its Ivy Global Investors sub‑funds (the “IGI Funds”), an undertaking for the collective investment in transferable securities (“UCITS”). In 2016, we introduced the Ivy NextShares® exchange-traded managed funds (“Ivy NextShares”). In April of 2017, we launched index funds in partnership with ProShares® Advisors LLC (“Ivy ProShares”) (collectively, the Advisors Funds, Ivy Funds, Ivy VIP, InvestEd, IVH, Ivy NextShares and Ivy ProShares are referred to as the “Funds”). As of June 30, 2017, we had $80.4 billion in assets under management.

We derive our revenues from providing investment management, investment advisory, investment product underwriting and distribution, and shareholder services administration to the Funds, the IGI Funds, and institutional and separately managed accounts. Investment management fees are based on the amount of average assets under management and are affected by sales levels, financial market conditions, redemptions and the composition of assets. Our underwriting and distribution revenues consist of fees earned on fee‑based asset allocation products and related advisory services, asset‑based service and distribution fees promulgated under Rule 12b-1 of the Investment Company Act of 1940, as amended (“Rule 12b-1”), commissions derived from sales of investment and insurance products, and distribution fees on certain variable products. The products sold have various commission structures and the revenues received from those sales vary based on the type and dollar amount sold. Shareholder service fee revenue includes transfer agency fees, custodian fees from retirement plan accounts, and portfolio accounting and administration fees, and is earned based on assets under management or number of client accounts.

Basis of Presentation

We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to enable a reasonable understanding of the information presented. The information in this Quarterly Report on Form 10-Q should be read in conjunction with Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”). Certain amounts in the prior year’s financial statements have been reclassified for consistent presentation.

The accompanying unaudited consolidated financial statements are prepared consistent with the accounting policies described in Note 1 to the consolidated financial statements included in our 2016 Form 10-K with the exception of the adoption of Accounting Standards Update (“ASU”) 2016-09, “Improvements to Employee Share-Based Payment Accounting,” effective January 1, 2017. As required by this ASU, excess tax benefits and tax shortfalls resulting from share-based compensation are recognized as income tax benefit or expense in the income statement on a prospective basis. Additionally, excess tax benefits or shortfalls recognized on share-based compensation are classified as an operating activity in the statement of cash flows. The Company has applied this provision prospectively, and thus, the prior period presented in the statement of cash flows has not been adjusted. This ASU allows entities to withhold shares issued during the settlement of a stock award or option, as a means of meeting minimum tax withholding due by the employee, in an amount up to the employees’ maximum individual tax rate in the relevant jurisdiction without resulting in a liability classification of the award. The value of the withheld shares is then remitted by the Company in cash to the taxing authorities on the employees’ behalf. The Company’s historical policy to withhold shares equivalent to the minimum

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individual tax rate is consistent with the thresholds meeting the classification of an equity award and, therefore, a retrospective classification adjustment was not required. This ASU requires that all cash payments made to taxing authorities on the employees’ behalf for withheld shares be presented as financing activities on the statement of cash flows. As this requirement is consistent with the Company’s historical accounting policy, a retrospective adjustment to presentation of the statement of cash flows was not required. This standard also allows for the option to account for forfeitures as they occur when determining the amount of share-based compensation expense to be recognized, rather than estimating expected forfeitures over the course of a vesting period. The Company elected to account for forfeitures as they occur. The net cumulative effect to the Company from the adoption of this ASU was an increase to additional paid-in capital of $3.5 million, a reduction to retained earnings of $2.2 million and an increase to the non-current deferred tax asset of $1.3 million as of January 1, 2017.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only a normal and recurring nature) necessary to present fairly our financial position at June 30, 2017, and the results of operations and cash flows for the six months ended June 30, 2017 and 2016 in conformity with accounting principles generally accepted in the United States.

2.New Accounting Guidance

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This standard also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. This ASU will supersede much of the existing revenue recognition guidance in accounting principles generally accepted in the United States and is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period; early application is permitted for the first interim period within annual reporting periods, beginning after December 15, 2016. This ASU permits the use of either the retrospective or cumulative effect transition method. The Company has assessed its revenue streams to identify contracts that are subject to the requirements of the new standard. The Company plans to review the identified contracts and while we have not identified material changes in the timing of revenue recognition, we continue to evaluate the quantitative impact the ASU will have on the consolidated financial statements and related disclosures.

In February 2016, FASB issued ASU 2016-02, “Leases,” which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU will be presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Although the Company is evaluating the estimated impact the adoption of this ASU will have on our consolidated financial statements and related disclosures, the Company currently believes the most significant changes will be related to the recognition of new right-of-use assets and lease liabilities on the Company’s consolidated balance sheet for real estate operating leases.

In August 2016, FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” This ASU eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. This ASU designates the appropriate cash flow classification, including requirements to allocate certain components of these cash receipts and payments among operating, investing and financing activities. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We are evaluating the estimated impact the adoption of this ASU will have on our consolidated financial statements and related disclosures.

In November 2016, FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash.” This ASU is intended to reduce diversity in practice by adding or clarifying guidance on classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The amendments in this ASU should be applied retrospectively to all periods presented. We are evaluating the estimated impact the adoption of this ASU will have on our consolidated financial statements and related disclosures.

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In March 2017, FASB issued ASU 2017-07, “Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU changes the income statement presentation of defined benefit plan expense by requiring separation between operating expense (service cost component) and non-operating expense (all other components, including interest cost, amortization of prior service cost, curtailments and settlements, etc.). The operating expense component is reported with similar compensation costs while the non-operating components are reported in a separate line item outside of operating items. In addition, only the service cost component is eligible for capitalization as part of an asset. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We are evaluating the estimated impact the adoption of this ASU will have on our consolidated financial statements and related disclosures.

In May 2017, FASB issued ASU 2017-09, “Compensation-Stock Compensation: Scope of Modification Accounting.” This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC 718, “Compensation – Stock Compensation Topic.” This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We are evaluating the estimated impact the adoption of this ASU will have on our consolidated financial statements and related disclosures.

3.Investment Securities

Investment securities at June 30, 2017 and December 31, 2016 are as follows:


	June 30,		December 31,
	2017		2016
		(in thousands)
Available for sale securities:
Certificates of deposit	$	10,001	—
Commercial paper		4,985	—
Corporate bonds		34,147	—
Sponsored funds		145,937	122,806
Sponsored privately offered funds		—	570
Total available for sale securities		195,070	123,376
Trading securities:
Mortgage-backed securities		12	13
Corporate bonds		16,098	—
Common stock		110	101
Consolidated sponsored funds		215,116	145,710
Sponsored funds		30,945	29,541
Sponsored privately offered funds		631	—
Total trading securities		262,912	175,365
Equity method securities:
Sponsored funds		40,154	26,775
Sponsored privately offered funds		3,691	3,234
Total equity method securities		43,845	30,009
Total securities	$	501,827	328,750

Certificates of deposit, commercial paper and corporate bonds accounted for as available for sale and held as of June 30, 2017 mature as follows:


		Amortized
		cost	Fair value
		(in thousands)
Within one year	$	24,008	24,007
After one year but within five years		20,140	20,126
After 10 years		5,000	5,000
	$	49,148	49,133

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Mortgage-backed securities and corporate bonds accounted for as trading and held as of June 30, 2017 mature as follows:


		Fair value
		(in thousands)
Within one year	$	6,014
After one year but within five years		10,089
After five years but within 10 years		7
	$	16,110

The following is a summary of the gross unrealized gains (losses) related to securities classified as available for sale at June 30, 2017:


	Amortized		Unrealized	Unrealized
	cost		gains	losses	Fair value
	(in thousands)
Available for sale securities:
Certificates of deposit	$	10,000	2	(1)	10,001
Commercial paper		4,981	4	—	4,985
Corporate bonds		34,166	1	(20)	34,147
Sponsored funds		149,078	1,630	(4,771)	145,937
	$	198,225	1,637	(4,792)	195,070

The following is a summary of the gross unrealized gains (losses) related to securities classified as available for sale at December 31, 2016:


	Amortized		Unrealized	Unrealized
	cost		gains	losses	Fair value
	(in thousands)
Available for sale securities:
Sponsored funds	$	129,427	828	(7,449)	122,806
Sponsored privately offered funds		265	305	—	570
	$	129,692	1,133	(7,449)	123,376

A summary of available for sale investment securities with fair values below carrying values at June 30, 2017 and December 31, 2016 is as follows:


	Less than 12 months			12 months or longer		Total
			Unrealized		Unrealized		Unrealized
June 30, 2017	Fair value		losses	Fair value	losses	Fair value	losses
	(in thousands)
Certificates of deposit	$	4,999	(1)	—	—	4,999	(1)
Corporate bonds		24,146	(20)	—	—	24,146	(20)
Sponsored funds		33,506	(1,190)	35,900	(3,581)	69,406	(4,771)
	$	62,651	(1,211)	35,900	(3,581)	98,551	(4,792)

Less than 12 months

12 months or longer

Total

Unrealized

December 31, 2016

Fair value

losses

Fair value

losses

Fair value

losses

(in thousands)


June 30, 2017	Level 1		Level 2	Level 3	Other Assets Not Held at Fair Value	Total
	(in thousands)
Available for sale securities:
Certificates of deposit	$	—	10,001	—	—	10,001
Commercial paper		—	4,985	—	—	4,985

WADDELL & REED FINANCIAL INC - FORM 10-Q - August 4, 2017

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