Other expenses increased 17.6% from the fourth quarter of 2017 to $2.2 million primarily due to higher
International Business segment office expenses associated with an increase in headcount from the ETFS Acquisition. These expenses were essentially unchanged from the third quarter of 2018.
Interest expense of $2.9 million was essentially unchanged from the third quarter of 2018.
We recognized a loss on revaluation of deferred consideration of ($5.4) million during the fourth quarter of 2018
as compared to a gain of $7.7 million recognized in the third quarter of 2018. The loss arose in the current quarter as the price of gold increased when compared to the price of gold on September 30, 2018, the date on which the deferred
consideration was last measured. The magnitude of any gain or loss recognized is highly correlated to the magnitude of the change in the price of gold.
Interest income was essentially unchanged from the fourth quarter of 2017 and increased 11.3% from the third
quarter of 2018 to $0.8 million primarily due to higher paid-in-kind (PIK) interest on a note receivable from AdvisorEngine.
We recognized impairment expense of $17.4 million during the fourth quarter of 2018 as further described in
the Fourth Quarter Financial Discussion above.
Other gains/(losses), net were $0.4 million, ($0.4) million and $0.1 million during the fourth quarter
of 2018, fourth quarter of 2017 and third quarter of 2018, respectively. These gains and losses generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations, securities
owned and other miscellaneous items.
Our estimated effective income tax rate benefit for the quarter ended December 31, 2018 of 8.2% resulted in an income tax benefit of $1.0 million.
Our tax rate differs from the federal statutory tax rate of 21% primarily due to the non-deductible loss on revaluation of deferred consideration and a valuation allowance applied to foreign net operating
losses and capital losses, partly offset by a lower tax rate on foreign earnings and a tax windfall associated with the exercise of stock options.
adjusted effective income tax rate was 22.6%1.
Total operating revenues increased 20.1% to $274.1 million for the year ended December 31, 2018 primarily due to the ETFS Acquisition, partly offset
by lower average AUM of our U.S. Business segment. Total operating expenses increased 18.8% to $212.8 million primarily due to expenses associated with the ETFS acquired business, higher acquisition-related costs and higher third-party
distribution fees. These expenses were partly offset by lower compensation expense in our U.S. Business segment.
Other income/(expenses) for the year
ended December 31, 2018 includes $8.0 million of interest expense, a gain on revaluation of deferred consideration of $12.2 million, interest income of $3.1 million, impairments of $17.4 million and other net losses of
$0.2 million. In addition, the prior year period includes a settlement gain of $6.9 million.
As of December 31, 2018, we had total assets of $902.6 million which consisted primarily of intangible assets and goodwill of $689.1 million,
and cash and securities owned of $106.8 million. There were approximately 153.2 million shares of our common stock outstanding as of December 31, 2018.
Our Board of Directors
declared a quarterly cash dividend of $0.03 per share of our common stock. The dividend will be paid on February 27, 2019 to stockholders of record as of the close of business on February 13, 2019.
WisdomTree will discuss its results and
operational highlights during a conference call on Friday, February 1, 2019 at 9:00 a.m. ET. The call-in number will be (877) 303-7209. Anyone outside the
U.S. or Canada should call (970) 315-0420. The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled
time, an audio replay will be available on http://ir.wisdomtree.com.