* Takes non-cash charge of $42.4 mln in 3rd qtr
* Sale should result in modest pickup in oper margin – CEO
* 3rd-qtr earnings per share from cont ops $0.61 vs $0.46
last year
Oct 31 (Reuters) – Asset manager Waddell & Reed Financial
Inc said it agreed to sell its Legend investment unit to
broker dealer First Allied Holdings Inc to focus on its core
asset management business.
The company took a non-cash charge of $42.4 million in the
third quarter related to the write-down of Legend and said the
sale should result in a modest pickup in margins.
“We did add somewhat to the margin. And that will be the
case going forward as that’s (Legend) a broker-dealer business
that operates at a lower margin than our main investment
business,” Chief Executive Hank Herrmann said on a post-earnings
conference call with analysts.
Waddell & Reed acquired the Legend Group, a mutual fund
distribution and retirement planning company held privately
earlier, for about $75 million in February 2000.
First Allied said Legend will continue to operate under its
current brand as a stand-alone company, and the combined entity
will have nearly 1,400 advisors and $28 billion in assets under
administration.
MARGIN IMPROVES
The sale was announced as Waddell & Reed reported a net
income from continuing operations, excluding Legend, of $52.1
million, or 61 cents per share, up from $39.4 million, or 46
cents per share, a year earlier.
Operating margin increased to 27.2 percent from 23.3 percent
in the second quarter.
Net income, including the loss from Legend, fell to $8.5
million, or 10 cents per share, from $39.8 million, or 46 cents
per share, a year earlier.
Total operating revenue rose 5 percent to $293.4 million.
Waddell & Reed, known for its Ivy fund family, ended the
quarter with $95 billion in assets under management, up 6
percent from June 30.
Fellow money manager, Affiliated Managers Group Inc’s
quarterly profit grew and beat analysts’ estimates as it
managed to maintain the inflow of new client money.
Net income grew to $54.9 million, or $1.04 per share, in the
third quarter from $40.1 million, or 76 cents per share, a year
earlier.
Shares of the Overland Park, Kansas-based Waddell & Reed,
valued at about $2.8 billion, were down 1 percent at $32.28 on
Wednesday on the New York Stock Exchange.
The stock gained about 14 percent in the last three months,
while the S&P; 500 Index rose 4 percent in the same
period.
