Attached files
| file | filename |
|---|---|
| 8-K - 8-K - WADDELL & REED FINANCIAL INC | a18-3940_18k.htm |
| EX-99.1 - EX-99.1 - WADDELL & REED FINANCIAL INC | a18-3940_1ex99d1.htm |
Subsequent to the freeze of the pension plan in the third quarter, we elected in the fourth quarter of 2017 to change our method of accounting to mark-to-market for the pension plan. Under the new pension accounting method, actuarial gains and losses are recognized in the year incurred rather than amortizing them over future periods. The impact of this change in accounting policy has been retrospectively applied to the financial results for all periods presented. These adjustments are non-cash and do not affect our pension liability. This change is intended to improve the transparency of underlying operating performance by recognizing the effect of current economic and interest rate trends on plan assets and assumptions.
The tables below provide pro-forma application of mark-to-market accounting by quarter for all periods retrospectively presented.
Impact of Pension Accounting Change
Unaudited Schedule of Operating Data
|
(Amounts in thousands, except for per share data) |
|
Three Months Ended Mar. 31, 2017 |
|
Three Months Ended Jun 30, 2017 |
|
Three Months Ended Sep. 30, 2017 |
|
Twelve Months Ended Dec. 31, 2017 | ||||||||||||||||||||
|
|
|
Previously |
|
Effect of |
|
Previously |
|
Effect of |
|
Previously |
|
Effect of |
|
Previously |
|
Effect of | ||||||||||||
|
|
|
Reported |
Revision |
Change |
|
Reported |
Revision |
Change |
|
Reported |
Revision |
Change |
|
Reported |
Revision |
Change | ||||||||||||
|
Total Operating Revenues |
|
286,564 |
0 |
286,564 |
|
286,657 |
0 |
286,657 |
|
289,447 |
0 |
289,447 |
|
1,157,144 |
0 |
1,157,144 | ||||||||||||
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
U&D Direct Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
Retail Unaffiliated |
|
33,908 |
0 |
33,908 |
|
32,998 |
0 |
32,998 |
|
31,779 |
0 |
31,779 |
|
130,077 |
0 |
130,077 | ||||||||||||
|
Retail Broker-Dealer |
|
70,402 |
0 |
70,402 |
|
72,110 |
0 |
72,110 |
|
71,119 |
0 |
71,119 |
|
286,306 |
0 |
286,306 | ||||||||||||
|
U&D Indirect Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
Retail Unaffiliated |
|
9,605 |
(15) |
9,590 |
|
10,123 |
(35) |
10,088 |
|
9,648 |
(1,067) |
8,581 |
|
39,295 |
(1,117) |
38,178 | ||||||||||||
|
Retail Broker-Dealer |
|
36,409 |
(446) |
35,963 |
|
35,888 |
(391) |
35,497 |
|
36,854 |
(6,503) |
30,351 |
|
146,203 |
(7,340) |
138,863 | ||||||||||||
|
Total Underwriting & Distribution Costs |
|
150,324 |
(461) |
149,863 |
|
151,119 |
(426) |
150,693 |
|
149,400 |
(7,570) |
141,830 |
|
601,881 |
(8,457) |
593,424 | ||||||||||||
|
Compensation and Related Costs |
|
49,406 |
(836) |
48,570 |
|
47,224 |
(775) |
46,449 |
|
48,340 |
(17,264) |
31,076 |
|
200,251 |
(18,875) |
181,376 | ||||||||||||
|
Other Operating Costs |
|
34,242 |
0 |
34,242 |
|
37,422 |
0 |
37,422 |
|
36,628 |
0 |
36,628 |
|
141,177 |
0 |
141,177 | ||||||||||||
|
Total Operating Expenses |
|
233,972 |
(1,297) |
232,675 |
|
235,765 |
(1,201) |
234,564 |
|
234,368 |
(24,834) |
209,534 |
|
943,309 |
(27,332) |
915,977 | ||||||||||||
|
Operating Income |
|
52,592 |
1,297 |
53,889 |
|
50,892 |
1,201 |
52,093 |
|
55,079 |
24,834 |
79,913 |
|
213,835 |
27,332 |
241,167 | ||||||||||||
|
Investment and other income |
|
2,129 |
0 |
2,129 |
|
2,021 |
0 |
2,021 |
|
7,236 |
0 |
7,236 |
|
15,689 |
0 |
15,689 | ||||||||||||
|
Interest expense |
|
(2,786) |
0 |
(2,786) |
|
(2,788) |
0 |
(2,788) |
|
(2,796) |
0 |
(2,796) |
|
(11,279) |
0 |
(11,279) | ||||||||||||
|
Income before taxes |
|
51,935 |
1,297 |
53,232 |
|
50,125 |
1,201 |
51,326 |
|
59,519 |
24,834 |
84,353 |
|
218,245 |
27,332 |
245,577 | ||||||||||||
|
Provision for taxes |
|
18,399 |
482 |
18,881 |
|
26,162 |
446 |
26,608 |
|
20,296 |
9,203 |
29,499 |
|
91,237 |
10,131 |
101,368 | ||||||||||||
|
Net income |
|
$ |
33,536 |
$ |
815 |
$ |
34,351 |
|
$ |
23,963 |
$ |
755 |
$ |
24,718 |
|
$ |
39,223 |
$ |
15,631 |
$ |
54,854 |
|
$ |
127,008 |
$ |
17,201 |
$ |
144,209 |
|
Noncontrolling Interests |
|
480 |
0 |
480 |
|
656 |
0 |
656 |
|
1,272 |
0 |
1,272 |
|
2,930 |
0 |
2,930 | ||||||||||||
|
Net income attributable to WDR |
|
$ |
33,056 |
$ |
815 |
$ |
33,871 |
|
$ |
23,307 |
$ |
755 |
$ |
24,062 |
|
$ |
37,951 |
$ |
15,631 |
$ |
53,582 |
|
$ |
124,078 |
$ |
17,201 |
$ |
141,279 |
|
Net income per share |
|
0.39 |
0.01 |
0.40 |
|
0.28 |
0.01 |
0.29 |
|
0.45 |
0.19 |
0.64 |
|
1.48 |
0.21 |
1.69 | ||||||||||||
|
Weighted average shares outstanding - diluted |
|
84,077 |
84,077 |
84,077 |
|
83,611 |
83,661 |
83,611 |
|
83,476 |
83,476 |
83,476 |
|
83,573 |
83,573 |
83,573 | ||||||||||||
|
Operating margin |
|
18.4% |
|
18.8% |
|
17.8% |
|
18.2% |
|
19.0% |
|
27.6% |
|
18.5% |
|
20.8% | ||||||||||||
Subsequent to the freeze of the pension plan in the third quarter, we elected in the fourth quarter of 2017 to change our method of accounting to mark-to-market for the pension plan. Under the new pension accounting method, actuarial gains and losses are recognized in the year incurred rather than amortizing them over future periods. The impact of this change in accounting policy has been retrospectively applied to the financial results for all periods presented. These adjustments are non-cash and do not affect our pension liability. This change is intended to improve the transparency of underlying operating performance by recognizing the effect of current economic and interest rate trends on plan assets and assumptions.
The tables below provide pro-forma application of mark-to-market accounting by quarter for all periods retrospectively presented.
Impact of Pension Accounting Change
Unaudited Schedule of Operating Data
|
(Amounts in thousands, except for per share data) |
|
Three Months Ended Mar. 31, 2016 |
|
Three Months Ended Jun 30, 2016 |
|
Three Months Ended Sep. 30, 2016 |
|
Three Months Ended Dec 31, 2016 |
|
Twelve Months Ended Dec. 31, 2016 | |||||||||||||||||||||||||
|
|
|
Previously |
|
Effect of |
|
Previously |
|
Effect of |
|
Previously |
|
Effect of |
|
Previously |
|
Effect of |
|
Previously |
|
Effect of | |||||||||||||||
|
|
|
Reported |
Revision |
Change |
|
Reported |
Revision |
Change |
|
Reported |
Revision |
Change |
|
Reported |
Revision |
Change |
|
Reported |
Revision |
Change | |||||||||||||||
|
Total Operating Revenues |
|
323,816 |
0 |
323,816 |
|
319,208 |
0 |
319,208 |
|
303,086 |
0 |
303,086 |
|
292,913 |
0 |
292,913 |
|
1,239,023 |
0 |
1,239,023 | |||||||||||||||
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
U&D Direct Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
Retail Unaffiliated |
|
46,846 |
0 |
46,846 |
|
42,452 |
0 |
42,452 |
|
39,489 |
0 |
39,489 |
|
35,854 |
0 |
35,854 |
|
164,641 |
0 |
164,641 | |||||||||||||||
|
Retail Broker-Dealer |
|
80,277 |
0 |
80,277 |
|
87,740 |
0 |
87,740 |
|
72,276 |
0 |
72,276 |
|
72,380 |
0 |
72,380 |
|
312,673 |
0 |
312,673 | |||||||||||||||
|
U&D Indirect Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
Retail Unaffiliated |
|
13,349 |
(47) |
13,302 |
|
14,939 |
(42) |
14,897 |
|
10,643 |
(44) |
10,599 |
|
13,916 |
(504) |
13,412 |
|
52,847 |
(637) |
52,210 | |||||||||||||||
|
Retail Broker-Dealer |
|
33,364 |
(592) |
32,772 |
|
36,114 |
(534) |
35,580 |
|
30,591 |
(563) |
30,028 |
|
40,875 |
(4,131) |
36,744 |
|
140,944 |
(5,820) |
135,124 | |||||||||||||||
|
Total Underwriting & Distribution Costs |
|
173,836 |
(639) |
173,197 |
|
181,245 |
(576) |
180,669 |
|
152,999 |
(607) |
152,392 |
|
163,025 |
(4,635) |
158,390 |
|
671,105 |
(6,457) |
664,648 | |||||||||||||||
|
Compensation and Related Costs |
|
52,940 |
(1,092) |
51,848 |
|
58,341 |
(990) |
57,351 |
|
40,214 |
(1,041) |
39,173 |
|
58,354 |
(5,904) |
52,450 |
|
209,849 |
(9,027) |
200,822 | |||||||||||||||
|
Other Operating Costs |
|
25,607 |
0 |
25,607 |
|
25,861 |
0 |
25,861 |
|
36,087 |
0 |
36,087 |
|
34,121 |
0 |
34,121 |
|
121,676 |
0 |
121,676 | |||||||||||||||
|
Total Operating Expenses |
|
252,383 |
(1,731) |
250,652 |
|
265,447 |
(1,566) |
263,881 |
|
229,300 |
(1,648) |
227,652 |
|
255,500 |
(10,539) |
244,961 |
|
1,002,630 |
(15,484) |
987,146 | |||||||||||||||
|
Operating Income |
|
71,433 |
1,731 |
73,164 |
|
53,761 |
1,566 |
55,327 |
|
73,786 |
1,648 |
75,434 |
|
37,413 |
10,539 |
47,952 |
|
236,393 |
15,484 |
251,877 | |||||||||||||||
|
Investment and other income |
|
(10,218) |
0 |
(10,218) |
|
687 |
0 |
687 |
|
7,878 |
0 |
7,878 |
|
890 |
0 |
890 |
|
(763) |
0 |
(763) | |||||||||||||||
|
Interest expense |
|
(2,768) |
0 |
(2,768) |
|
(2,776) |
0 |
(2,776) |
|
(2,792) |
0 |
(2,792) |
|
(2,786) |
0 |
(2,786) |
|
(11,122) |
0 |
(11,122) | |||||||||||||||
|
Income before taxes |
|
58,447 |
1,731 |
60,178 |
|
51,672 |
1,566 |
53,238 |
|
78,872 |
1,648 |
80,520 |
|
35,517 |
10,539 |
46,056 |
|
224,508 |
15,484 |
239,992 | |||||||||||||||
|
Provision for taxes |
|
20,978 |
632 |
21,610 |
|
18,101 |
581 |
18,682 |
|
24,067 |
567 |
24,634 |
|
13,041 |
3,917 |
16,958 |
|
76,187 |
5,697 |
81,884 | |||||||||||||||
|
Net income |
|
$ |
37,469 |
$ |
1,099 |
$ |
38,568 |
|
$ |
33,571 |
$ |
985 |
$ |
34,556 |
|
$ |
54,805 |
$ |
1,081 |
$ |
55,886 |
|
$ |
22,476 |
$ |
6,622 |
$ |
29,098 |
|
$ |
148,321 |
$ |
9,787 |
$ |
158,108 |
|
Noncontrolling Interests |
|
501 |
0 |
501 |
|
(124) |
0 |
(124) |
|
978 |
0 |
978 |
|
59 |
0 |
59 |
|
1,414 |
0 |
1,414 | |||||||||||||||
|
Net income attributable to WDR |
|
$ |
36,968 |
$ |
1,099 |
$ |
38,067 |
|
$ |
33,695 |
$ |
985 |
$ |
34,680 |
|
$ |
53,827 |
$ |
1,081 |
$ |
54,908 |
|
$ |
22,417 |
$ |
6,622 |
$ |
29,039 |
|
$ |
146,907 |
$ |
9,787 |
$ |
156,694 |
|
Net income per share |
|
0.45 |
0.01 |
0.46 |
|
0.41 |
0.01 |
0.42 |
|
0.65 |
0.01 |
0.66 |
|
0.27 |
0.08 |
0.35 |
|
1.78 |
0.12 |
1.90 | |||||||||||||||
|
Weighted average shares outstanding - diluted |
|
82,104 |
82,104 |
82,104 |
|
82,947 |
82,947 |
82,947 |
|
82,834 |
82,834 |
82,834 |
|
82,783 |
82,783 |
82,783 |
|
82,668 |
82,668 |
82,668 | |||||||||||||||
|
Operating margin |
|
22.1% |
|
22.6% |
|
16.8% |
|
17.3% |
|
24.3% |
|
24.9% |
|
12.8% |
|
16.4% |
|
19.1% |
|
20.3% | |||||||||||||||