Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 24, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2020 | |
Entity File Number | 001-13913 | |
Entity Registrant Name | WADDELL & REED FINANCIAL INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0261715 | |
Entity Address, Address Line One | 6300 Lamar Avenue | |
Entity Address, City or Town | Overland Park | |
Entity Address, State or Province | KS | |
Entity Address, Postal Zip Code | 66202 | |
City Area Code | 913 | |
Local Phone Number | 236-2000 | |
Title of 12(b) Security | Class A Common Stock, $.01 par value | |
Trading Symbol | WDR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 65,163,673 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001052100 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash and cash equivalents | $ 156,710 | $ 151,815 |
Cash and cash equivalents - restricted | 44,810 | 74,325 |
Investment securities | 619,052 | 688,346 |
Receivables: | ||
Funds and separate accounts | 14,428 | 15,167 |
Customers and other | 81,971 | 80,089 |
Prepaid expenses and other current assets | 28,369 | 31,655 |
Total current assets | 945,340 | 1,041,397 |
Property and equipment, net | 31,928 | 34,726 |
Goodwill and identifiable intangible assets | 145,869 | 145,869 |
Deferred income taxes | 17,454 | 14,418 |
Other non-current assets | 25,411 | 29,918 |
Total assets | 1,166,002 | 1,266,328 |
Liabilities: | ||
Accounts payable | 19,909 | 20,123 |
Payable to investment companies for securities | 37,403 | 36,883 |
Payable to third party brokers | 14,367 | 17,123 |
Payable to customers | 65,748 | 84,558 |
Short-term notes payable | 94,962 | |
Accrued compensation | 49,076 | 79,507 |
Other current liabilities | 61,789 | 71,001 |
Total current liabilities | 343,254 | 309,195 |
Long-term debt | 94,926 | |
Accrued pension and postretirement costs | 3,541 | 3,145 |
Other non-current liabilities | 26,647 | 30,960 |
Total liabilities | 373,442 | 438,226 |
Redeemable noncontrolling interests | 25,857 | 19,205 |
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; 65,174 shares outstanding (68,847 at December 31, 2019) | 997 | 997 |
Additional paid-in capital | 289,439 | 312,693 |
Retained earnings | 1,255,770 | 1,241,598 |
Cost of 34,527 common shares in treasury (30,854 at December 31, 2019) | (783,990) | (749,625) |
Accumulated other comprehensive income | 4,487 | 3,234 |
Total stockholders' equity | 766,703 | 808,897 |
Total liabilities, redeemable noncontrolling interests and stockholders' equity | $ 1,166,002 | $ 1,266,328 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | ||
Preferred stock-par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock-shares authorized | 5,000 | 5,000 |
Preferred stock-shares issued | 0 | 0 |
Class A Common stock-par value (in dollars per share) | $ 0.01 | $ 0.01 |
Class A Common stock-shares authorized | 250,000 | 250,000 |
Class A Common stock-shares issued | 99,701 | 99,701 |
Class A Common stock-shares outstanding | 65,174 | 68,847 |
Common shares in treasury | 34,527 | 30,854 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Total Revenues | $ 240,034 | $ 270,154 | $ 503,767 | $ 529,564 |
Operating expenses: | ||||
Distribution | 107,876 | 116,477 | 227,909 | 226,271 |
Compensation and benefits (including share-based compensation of $12,532, $11,199, $22,515 and $23,892, respectively) | 61,863 | 61,876 | 120,288 | 126,719 |
General and administrative | 20,524 | 16,037 | 39,122 | 30,741 |
Technology | 14,237 | 16,442 | 27,739 | 32,750 |
Occupancy | 4,291 | 6,701 | 9,000 | 13,416 |
Marketing and advertising | 1,119 | 2,399 | 3,015 | 4,363 |
Depreciation | 3,209 | 5,228 | 6,722 | 11,229 |
Subadvisory fees | 3,288 | 3,715 | 6,954 | 7,272 |
Total | 216,407 | 228,875 | 440,749 | 452,761 |
Operating income | 23,627 | 41,279 | 63,018 | 76,803 |
Investment and other income | 15,148 | 9,025 | 7,403 | 18,478 |
Interest expense | (1,539) | (1,552) | (3,088) | (3,100) |
Income before provision for income taxes | 37,236 | 48,752 | 67,333 | 92,181 |
Provision for income taxes | 9,412 | 14,190 | 19,045 | 24,861 |
Net income | 27,824 | 34,562 | 48,288 | 67,320 |
Net income attributable to redeemable noncontrolling interests | 3,000 | 614 | 1,478 | 1,318 |
Net income attributable to Waddell & Reed Financial, Inc. | $ 24,824 | $ 33,948 | $ 46,810 | $ 66,002 |
Net income per share attributable to Waddell and Reed Financial, Inc. common shareholders, basic and diluted: | $ 0.38 | $ 0.45 | $ 0.70 | $ 0.87 |
Weighted average shares outstanding, basic and diluted: | 65,488 | 74,694 | 66,581 | 75,492 |
Investment management fees | ||||
Revenues: | ||||
Total Revenues | $ 95,824 | $ 112,870 | $ 201,043 | $ 222,632 |
Underwriting and distribution fees | ||||
Revenues: | ||||
Total Revenues | 123,633 | 133,495 | 260,576 | 259,740 |
Shareholder service fees | ||||
Revenues: | ||||
Total Revenues | $ 20,577 | $ 23,789 | $ 42,148 | $ 47,192 |
Consolidated Statements of In_2
Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidated Statements of Income | ||||
Compensation and benefits, share-based compensation | $ 12,532 | $ 11,199 | $ 22,515 | $ 23,892 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 27,824 | $ 34,562 | $ 48,288 | $ 67,320 |
Other comprehensive income: | ||||
Unrealized gain on available for sale investment securities during the period, net of income tax expense of $1,195, $402, $435 and $919, respectively | 3,783 | 1,281 | 1,353 | 2,939 |
Postretirement benefit, net of income tax benefit of $(16), $(28), $(34) and $(58), respectively | (51) | (95) | (100) | (189) |
Comprehensive income | 31,556 | 35,748 | 49,541 | 70,070 |
Comprehensive income attributable to redeemable noncontrolling interests | 3,000 | 614 | 1,478 | 1,318 |
Comprehensive income attributable to Waddell & Reed Financial, Inc. | $ 28,556 | $ 35,134 | $ 48,063 | $ 68,752 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidated Statements of Comprehensive Income | ||||
Unrealized (loss) gain on available for sale investment securities during the period, income tax expense (benefit) | $ 1,195 | $ 402 | $ 435 | $ 919 |
Postretirement benefit, income tax (benefit) expense | $ (16) | $ (28) | $ (34) | $ (58) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interests - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income | Total |
Balance at the beginning of the period at Dec. 31, 2018 | $ 997 | $ 311,264 | $ 1,198,445 | $ (627,587) | $ 331 | $ 883,450 |
Balance (in shares) at Dec. 31, 2018 | 99,701 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 66,002 | 66,002 | ||||
Recognition of equity compensation | 17,549 | 240 | 17,789 | |||
Net issuance/forfeiture of nonvested shares | (34,326) | 34,326 | ||||
Dividends accrued | (37,373) | (37,373) | ||||
Repurchase of common stock | (75,962) | (75,962) | ||||
Other comprehensive income | 2,750 | 2,750 | ||||
Balance at the end of the period at Jun. 30, 2019 | $ 997 | 294,487 | 1,227,314 | (669,223) | 3,081 | 856,656 |
Balance (in shares) at Jun. 30, 2019 | 99,701 | |||||
Balance at the beginning of the period at Dec. 31, 2018 | 11,463 | |||||
Increase (Decrease) in Redeemable Noncontrolling Interest | ||||||
Net income | 1,318 | |||||
Net subscription of redeemable noncontrolling interests in sponsored funds | 2,334 | |||||
Balance at the end of the period at Jun. 30, 2019 | 15,115 | |||||
Balance at the beginning of the period at Mar. 31, 2019 | $ 997 | 290,872 | 1,211,566 | (636,726) | 1,895 | 868,604 |
Balance (in shares) at Mar. 31, 2019 | 99,701 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 33,948 | 33,948 | ||||
Recognition of equity compensation | 7,941 | 148 | 8,089 | |||
Net issuance/forfeiture of nonvested shares | (4,326) | 4,326 | ||||
Dividends accrued | (18,348) | (18,348) | ||||
Repurchase of common stock | (36,823) | (36,823) | ||||
Other comprehensive income | 1,186 | 1,186 | ||||
Balance at the end of the period at Jun. 30, 2019 | $ 997 | 294,487 | 1,227,314 | (669,223) | 3,081 | 856,656 |
Balance (in shares) at Jun. 30, 2019 | 99,701 | |||||
Balance at the beginning of the period at Mar. 31, 2019 | 12,936 | |||||
Increase (Decrease) in Redeemable Noncontrolling Interest | ||||||
Net income | 614 | |||||
Net subscription of redeemable noncontrolling interests in sponsored funds | 1,565 | |||||
Balance at the end of the period at Jun. 30, 2019 | 15,115 | |||||
Balance at the beginning of the period at Dec. 31, 2019 | $ 997 | 312,693 | 1,241,598 | (749,625) | 3,234 | 808,897 |
Balance (in shares) at Dec. 31, 2019 | 99,701 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 46,810 | 46,810 | ||||
Recognition of equity compensation | 14,381 | 90 | 14,471 | |||
Net issuance/forfeiture of nonvested shares | (37,635) | 37,635 | ||||
Dividends accrued | (32,728) | (32,728) | ||||
Repurchase of common stock | (72,000) | (72,000) | ||||
Other comprehensive income | 1,253 | 1,253 | ||||
Balance at the end of the period at Jun. 30, 2020 | $ 997 | 289,439 | 1,255,770 | (783,990) | 4,487 | 766,703 |
Balance (in shares) at Jun. 30, 2020 | 99,701 | |||||
Balance at the beginning of the period at Dec. 31, 2019 | 19,205 | |||||
Increase (Decrease) in Redeemable Noncontrolling Interest | ||||||
Net income | 1,478 | |||||
Net subscription of redeemable noncontrolling interests in sponsored funds | 5,174 | |||||
Balance at the end of the period at Jun. 30, 2020 | 25,857 | |||||
Balance at the beginning of the period at Mar. 31, 2020 | $ 997 | 282,401 | 1,247,084 | (765,579) | 755 | 765,658 |
Balance (in shares) at Mar. 31, 2020 | 99,701 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 24,824 | 24,824 | ||||
Recognition of equity compensation | 6,688 | 19 | 6,707 | |||
Net issuance/forfeiture of nonvested shares | 350 | (350) | ||||
Dividends accrued | (16,157) | (16,157) | ||||
Repurchase of common stock | (18,061) | (18,061) | ||||
Other comprehensive income | 3,732 | 3,732 | ||||
Balance at the end of the period at Jun. 30, 2020 | $ 997 | $ 289,439 | $ 1,255,770 | $ (783,990) | $ 4,487 | 766,703 |
Balance (in shares) at Jun. 30, 2020 | 99,701 | |||||
Balance at the beginning of the period at Mar. 31, 2020 | 19,070 | |||||
Increase (Decrease) in Redeemable Noncontrolling Interest | ||||||
Net income | 3,000 | |||||
Net subscription of redeemable noncontrolling interests in sponsored funds | 3,787 | |||||
Balance at the end of the period at Jun. 30, 2020 | $ 25,857 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interests (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interests | ||||
Dividends accrued (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.50 | $ 0.50 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 48,288 | $ 67,320 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,349 | 11,543 |
Amortization of deferred sales commissions | 772 | 1,049 |
Share-based compensation | 22,515 | 23,892 |
Investments and derivatives loss (gain), net of collateral | 17,726 | (15,914) |
Net purchases, maturities, and sales of trading and equity securities | 6,057 | (13,327) |
Deferred income taxes | (3,436) | 7,088 |
Net change in equity securities and trading debt securities held by consolidated sponsored funds | (5,846) | (8,973) |
Other | 1,304 | 588 |
Changes in assets and liabilities: | ||
Customer and other receivables | (15,822) | 69,484 |
Payable to investment companies for securities and payable to customers | (18,290) | (97,464) |
Receivables from funds and separate accounts | 739 | (2,414) |
Other assets | 1,236 | 8,882 |
Accounts payable and payable to third party brokers | (6,744) | (7,434) |
Other liabilities | (26,098) | (21,173) |
Net cash provided by operating activities | 28,750 | 23,147 |
Cash flows from investing activities: | ||
Purchases of available for sale and equity method securities | (20,995) | (99,584) |
Proceeds from sales of available for sale and equity method securities | 2,366 | 19,667 |
Proceeds from maturities of available for sale securities | 73,021 | 78,678 |
Additions to property and equipment | (6,268) | (2,748) |
Net cash provided by (used in) investing activities | 48,124 | (3,987) |
Cash flows from financing activities: | ||
Dividends paid | (33,647) | (38,188) |
Repurchase of common stock | (72,924) | (77,147) |
Net subscriptions (redemptions, distributions and deconsolidations) of redeemable noncontrolling interests in sponsored funds | 5,174 | 2,334 |
Other | (97) | (117) |
Net cash used in financing activities | (101,494) | (113,118) |
Net decrease in cash, cash equivalents and restricted cash | (24,620) | (93,958) |
Cash, cash equivalents, and restricted cash at beginning of period | 226,140 | 291,555 |
Cash, cash equivalents, and restricted cash at end of period | $ 201,520 | $ 197,597 |
Description of Business and Sig
Description of Business and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Description of Business and Significant Accounting Policies | |
Description of Business and Significant Accounting Policies | 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 former 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”); and the Ivy High Income Opportunities Fund, a closed-end mutual fund (“IVH”) (collectively, Ivy Funds, Ivy VIP, InvestEd and IVH are referred to as the “Funds”). In addition to the Funds, our assets under management (“AUM”) include institutional managed accounts. As of June 30, 2020, we had $65.0 billion in AUM. We derive our revenues from providing investment management and advisory services, investment product underwriting and distribution, and shareholder services administration to the Funds and institutional accounts. We also provide wealth management services, primarily to retail clients through Waddell & Reed, Inc. (“W&R”), and independent financial advisors associated with W&R (“Advisors”), who provide financial planning and advice to their clients. Investment management and advisory fees and certain underwriting and distribution revenues are based on the level of AUM and assets under administration (“AUA”) 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 advisory programs, asset-based service and distribution fees promulgated under Rule 12b-1 of the Investment Company Act of 1940 (“Rule 12b-1”), distribution fees on certain variable products, and commissions derived from sales of investment and insurance 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, portfolio accounting and administration fees, and is earned based on client AUM or number of client accounts. Our major expenses are for distribution of our products, compensation related costs, occupancy, general and administrative, and information technology. The Company continues to proactively manage business continuity and safety considerations as circumstances of the coronavirus disease 2019 (“COVID-19’) evolve. Our leadership team’s priority is on ensuring the health and safety of all employees, clients, Advisors and communities, while also ensuring full continuity of service and access. The Company started transitioning to a work from home environment early in March 2020 and has been following the Centers for Disease Control and Prevention and local authorities’ recommendations on safe practices throughout this process. We have undertaken a number of steps to facilitate safety, security and full continuity of service, including: ● Our Enterprise Preparedness Team and COVID-19 steering committee continue to meet regularly to assess developments and determine the best action to ensure business continuity and the safety of our employees and partners. ● We have adopted interim business practices, including restricting business travel, requiring all meetings to take place via remote access tools, adopting safety protocols to limit the potential for exposure, adopting social distancing practices, implementing a clearly-defined approval process for reentry to any worksite, advising personnel on preventive measures and offering remote collaboration and productivity tools and training resources to our employees. ● We enhanced monitoring and capabilities of our systems to allow our remote workforce to function efficiently and have continued our educational and monitoring practices to ensure there are no compromises to confidentiality, privacy and cybersecurity requirements. ● The Ivy investment management and distribution teams transitioned seamlessly to remote working. Our teams have a strong heritage of active collaboration which has migrated to a virtual environment without compromise. ● Within our wealth management business, the majority of independent advisors are working from temporary locations. We are demonstrating our differentiated service and support model by continuing regular communications with Advisors as well as delivering additional advisor and client focused resources. ● We have not initiated any layoffs, furloughs or reduced hours. As we implemented our business continuity plans, we have intentionally maintained the same pay practices for all of our employees based upon their regular work schedule, paid spot bonuses to certain employees, implemented a temporary hourly wage increase to designated client services personnel, increased certain benefit coverages for specific COVID-19 related treatments through October, and are increasing our philanthropic contributions to local organizations to help support the COVID-19 responses in our community. 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, 2019 (our “2019 Form 10-K”). Certain amounts in the prior year’s financial statements have been reclassified for consistent presentation. Derivative activity was reclassified within operating activities on our consolidated statements of cash flows to provide a comprehensive view of the impact of the economic hedge program for our seed investment portfolio. 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 2019 Form 10-K with the exception of the adoption of Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract 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, 2020 and the results of operations and cash flows for the three and six months ended June 30, 2020 and 2019 in conformity with accounting principles generally accepted in the United States. Assets Held for Sale Assets held for sale included real property related to our corporate headquarters move and aviation equipment. The second quarter of 2020 included asset impairment charges of $0.9 million on assets held for sale, which were recorded in general and administrative expenses in our consolidated statements of income. As of June 30, 2020, $2.2 million of equipment, $3.8 million of buildings and $1.9 million of land that were held for sale were included in Property and equipment, net on our consolidated balance sheets. As of December 31, 2019, $3.1 million of equipment, $3.8 million of buildings and $1.9 million of land that were held for sale were included in Property and equipment, net on our consolidated balance sheets. The Company intends to actively pursue the sale of these assets at market prices as soon as reasonably possible. Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract As of June 30, 2020, the Company had $3.8 million of capitalized implementation costs for hosting arrangements with $100 thousand of accumulated amortization in prepaid and other current assets on the consolidated balance sheet. Our hosting arrangements that are service contracts include internal and external costs related to various technology additions in support of our asset management and wealth management businesses. Amortization costs are recorded on a straight-line basis over the term of the hosting arrangement agreement. |
New Accounting Guidance
New Accounting Guidance | 6 Months Ended |
Jun. 30, 2020 | |
New Accounting Guidance | |
New Accounting Guidance | 2. New Accounting Guidance Accounting Guidance Not Yet Adopted In December 2019, FASB issued ASU 2019-12 , Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which simplifies and improves the consistent application of the accounting for income taxes by removing certain exceptions to general principles and by clarifying and amending existing guidance. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are evaluating the impact the adoption of this ASU will have on our consolidated financial statements and related disclosures. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition | |
Revenue Recognition | 3. Revenue Recognition All revenue recognized in the consolidated statements of income is considered to be revenue from contracts with customers. The vast majority of revenue is determined based on average assets and is earned daily or monthly or is transactional and is earned on the trade date. As such, revenue from remaining performance obligations is not significant. The following table depicts the disaggregation of revenue by product and distribution channel: For the three months ended June 30, For the six months ended June 30, 2020 2019 2020 2019 (in thousands) Investment management fees: Funds $ 92,977 109,007 $ 195,269 214,752 Institutional 2,847 3,863 5,774 7,880 Total investment management fees $ 95,824 112,870 $ 201,043 222,632 Underwriting and distribution fees: Unaffiliated Service and distribution fees $ 13,670 16,615 $ 28,946 33,081 Sales commissions 373 493 824 935 Other revenues 91 83 226 175 Total unaffiliated distribution fees $ 14,134 17,191 $ 29,996 34,191 Wealth Management Advisory fees $ 72,534 70,220 $ 149,652 135,450 Service and distribution fees 13,600 16,041 28,189 31,445 Sales commissions 15,034 20,794 35,691 40,416 Other revenues 8,331 9,249 17,048 18,238 Total wealth management distribution fees 109,499 116,304 230,580 225,549 Total distribution fees $ 123,633 133,495 $ 260,576 259,740 Shareholder service fees: Total shareholder service fees $ 20,577 23,789 $ 42,148 47,192 Total revenues $ 240,034 270,154 $ 503,767 529,564 |
Investment Securities
Investment Securities | 6 Months Ended |
Jun. 30, 2020 | |
Investment Securities | |
Investment Securities | 4. Investment Securities Investment securities at June 30, 2020 and December 31, 2019 were as follows: June 30, December 31, 2020 2019 (in thousands) Available for sale securities: Commercial paper $ 2,728 1,977 Corporate bonds 203,799 254,291 Total available for sale securities 206,527 256,268 Trading debt securities: Commercial paper 12,502 1,977 Corporate bonds 79,136 84,920 U.S. Treasury bills 6,001 5,979 Mortgage-backed securities 2 4 Term loans 39,643 44,268 Consolidated sponsored funds 49,413 43,567 Total trading securities 186,697 180,715 Equity securities: Common stock 39,252 34,945 Sponsored funds 144,320 178,386 Sponsored privately offered funds 848 845 Total equity securities 184,420 214,176 Equity method securities: Sponsored funds 41,408 37,187 Total securities $ 619,052 688,346 Commercial paper and corporate bonds accounted for as available for sale and held as of June 30, 2020 mature as follows: Amortized cost Fair value (in thousands) Within one year $ 53,380 54,005 After one year but within five years 148,049 152,522 $ 201,429 206,527 Commercial paper, corporate bonds, U.S. Treasury bills, mortgage-backed securities and term loans accounted for as trading and held as of June 30, 2020 mature as follows: Fair value (in thousands) Within one year $ 31,322 After one year but within five years 83,599 After five years but within 10 years 21,868 After 10 years 495 $ 137,284 The following is a summary of the gross unrealized gains (losses) related to securities classified as available for sale at June 30, 2020: Amortized Unrealized Unrealized cost gains losses Fair value (in thousands) Available for sale securities: Commercial paper $ 2,728 — — 2,728 Corporate bonds 198,701 5,098 — 203,799 $ 201,429 5,098 — 206,527 The following is a summary of the gross unrealized gains (losses) related to securities classified as available for sale at December 31, 2019: Amortized Unrealized Unrealized cost gains losses Fair value (in thousands) Available for sale securities: Commercial paper $ 1,976 1 — 1,977 Corporate bonds 250,982 3,314 (5) 254,291 $ 252,958 3,315 (5) 256,268 A summary of available for sale investment securities with fair values below carrying values at June 30, 2020 is as follows: Less than 12 months 12 months or longer Total Unrealized Unrealized Unrealized Fair value losses Fair value losses Fair value losses (in thousands) Commercial paper $ 2,429 — — — 2,429 — A summary of available for sale investment securities with fair values below carrying values at December 31, 2019 is as follows: Less than 12 months 12 months or longer Total Unrealized Unrealized Unrealized Fair value losses Fair value losses Fair value losses (in thousands) Corporate bonds $ 4,538 — 8,056 (5) 12,594 (5) The Company’s investment portfolio included 1 available for sale security in an unrealized loss position at June 30, 2020. The Company evaluated available for sale securities in an unrealized loss position at June 30, 2020, including reviewing credit ratings, assessing the extent of losses, and considering the impact of market conditions for each individual security. The Company concluded no allowance for credit losses was necessary as it expects to recover the entire amortized cost basis of each security. The unrealized losses in the Company’s investment portfolio were primarily caused by changes in interest rates. At this time, the Company does not intend to sell, and does not believe it will be required to sell these securities before recovery of their amortized cost. For equity securities held at the end of the period, net unrealized gains of $28.1 million and $5.1 million were recognized for the three months ended June 30, 2020 and June 30, 2019, respectively and net unrealized losses of $7.8 million and net unrealized gains of $18.2 million were recognized for the six months ended June 30, 2020 and June 30, 2019, respectively. Sponsored Funds The Company has classified its equity investments in the Funds as equity method investments (when the Company owns between 20% and 50% of the fund) or equity securities measured at fair value through net income (when the Company owns less than 20% of the fund). These entities do not meet the criteria of a variable interest entity (“VIE”) and are considered to be voting interest entities (“VOE”). The Company has determined the Funds are VOEs because the structure of the investment products is such that the voting rights held by the equity holders provide for equality among equity investors. Sponsored Privately Offered Funds The Company holds an interest in a privately offered fund structured in the form of a limited liability company. The members of this entity have the substantive ability to remove the Company as managing member or dissolve the entity upon a simple majority vote. This entity does not meet the criteria of a VIE and is considered to be a VOE. Consolidated Sponsored Funds The following table details the balances related to consolidated sponsored funds at June 30, 2020 and December 31, 2019, as well as the Company’s net interest in these funds: June 30, December 31, 2020 2019 (in thousands) Cash $ 3,459 1,530 Investments 49,413 43,567 Other assets 1,290 483 Other liabilities (1,737) — Redeemable noncontrolling interests (25,857) (19,205) Net interest in consolidated sponsored funds $ 26,568 26,375 During the six months ended June 30, 2020, we consolidated one Ivy Fund in which we provided initial seed capital at the time of the fund’s formation. When we no longer have a controlling financial interest in a sponsored fund, it is deconsolidated from our consolidated financial statements. Fair Value Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of the asset. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset. An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs that are significant to the overall valuation. The three-level hierarchy of inputs is summarized as follows: ● Level 1 – Investments are valued using quoted prices in active markets for identical securities. ● Level 2 – Investments are valued using other significant observable inputs, including quoted prices in active markets for similar securities. ● Level 3 – Investments are valued using significant unobservable inputs, including the Company’s own assumptions in determining the fair value of investments. Assets classified as Level 2 can have a variety of observable inputs. These observable inputs are collected and utilized, primarily by an independent pricing service, in different evaluated pricing approaches depending upon the specific asset to determine a value. The carrying amounts of certificates of deposit and commercial paper are measured at amortized cost, which approximates fair value due to the short time between purchase and expected maturity of the investments. Depending on the nature of the inputs, these investments are generally classified as Level 1 or 2 within the fair value hierarchy. U.S. Treasury bills are valued upon quoted market prices for similar assets in active markets, quoted prices for identical or similar assets that are not active and inputs other than quoted prices that are observable or corroborated by observable market data. The fair value of corporate bonds is measured using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer. Term loans are valued using a price or composite price from one or more brokers or dealers as obtained from an independent pricing service. The fair value of loans is estimated using recently executed transactions, market price quotations, credit/market events, and cross-asset pricing. Inputs are generally observable market inputs obtained from independent sources. Term loans are generally categorized in Level 2 of the fair value hierarchy, unless key inputs are unobservable in which case they would be categorized as Level 3. The fair value of equity derivatives is measured based on active market broker quotes, evaluated broker quotes and evaluated prices from vendors. The following tables summarize our investment securities as of June 30, 2020 and December 31, 2019 that are recognized in our consolidated balance sheets using fair value measurements based on the differing levels of inputs. June 30, 2020 Level 1 Level 2 Level 3 Other Assets Held at Net Asset Value Total (in thousands) Cash equivalents: (1) Money market funds $ 54,598 — — — 54,598 Commercial paper — 28,503 — — 28,503 Total cash equivalents $ 54,598 28,503 — — 83,101 Available for sale securities: Commercial paper $ — 2,728 — — 2,728 Corporate bonds — 203,799 — — 203,799 Trading debt securities: Commercial paper — 12,502 — — 12,502 Corporate bonds — 79,136 — 79,136 U.S. Treasury bills — 6,001 — — 6,001 Mortgage-backed securities — 2 — — 2 Term loans — 35,990 3,653 — 39,643 Consolidated sponsored funds — 49,413 — — 49,413 Equity securities: Common stock 39,252 — — — 39,252 Sponsored funds 144,320 — — — 144,320 Sponsored privately offered funds measured at net asset value (2) — — — 848 848 Equity method securities: (3) Sponsored funds 41,408 — — — 41,408 Total investment securities $ 224,980 389,571 3,653 848 619,052 December 31, 2019 Level 1 Level 2 Level 3 Other Assets Held at Net Asset Value Total (in thousands) Cash equivalents: (1) Money market funds $ 4,203 — — — 4,203 Commercial paper — 38,143 — — 38,143 Total cash equivalents $ 4,203 38,143 — — 42,346 Available for sale securities: Commercial paper $ — 1,977 — — 1,977 Corporate bonds — 254,291 — — 254,291 Trading debt securities: Commercial paper — 1,977 — — 1,977 Corporate bonds — 84,920 — 84,920 U.S. Treasury bills — 5,979 — — 5,979 Mortgage-backed securities — 4 — — 4 Term loans — 40,368 3,900 — 44,268 Consolidated sponsored funds — 43,567 — — 43,567 Equity securities: Common stock 34,942 — 3 — 34,945 Sponsored funds 178,386 — — — 178,386 Sponsored privately offered funds measured at net asset value (2) — — — 845 845 Equity method securities: (3) Sponsored funds 37,187 — — — 37,187 Total investment securities $ 250,515 433,083 3,903 845 688,346 (1) Cash equivalents include highly liquid investments with original maturities of 90 days or less. Cash investments in actively traded money market funds are measured at net asset value and are classified as Level 1. Cash investments in commercial paper are measured at cost, which approximates fair value because of the short time between purchase of the instrument and its expected realization and are classified as Level 2. (2) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) The Company’s equity method investments are investment companies that record their underlying investments at fair value. The following table summarizes the activity of investments categorized as Level 3 for the six months ended June 30, 2020: For the six months ended June 30, 2020 (in thousands) Level 3 assets at December 31, 2019 $ 3,903 Additions 6,501 Transfers in to level 3 9,877 Transfers out of level 3 (12,395) Losses in Investment and other income (1,127) Redemptions/Paydowns (3,106) Level 3 assets at June 30, 2020 $ 3,653 Change in unrealized gains for Level 3 assets held at $ 43 |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 5. Derivative Financial Instruments The Company has in place an economic hedge program that uses total return swap contracts to hedge market risk related to its investments in certain sponsored funds. Certain of the consolidated sponsored funds may utilize derivative financial instruments within their portfolios in pursuit of their stated investment objectives. We do not hedge for speculative purposes. The Company was party to 11 total return swap contracts with a combined notional value of $221.8 million and 14 total return swap contracts with a combined notional value of $228.2 million as of June 30, 2020 and December 31, 2019, respectively. These derivative financial instruments are not designated as hedges for accounting purposes. Changes in fair value of the total return swap contracts are recognized in Investment and other (loss) income in the Company’s consolidated statements of income. The counterparties of the total return swap contracts posted $3.8 million in cash collateral with the Company as of June 30, 2020, which is included in accounts payable in the Company’s consolidated balance sheet. The Company posted $3.7 million in cash collateral with the counterparties of the total return swap contracts as of December 31, 2019, which The following table presents the fair value of the derivative financial instruments as of June 30, 2020 and December 31, 2019 and is calculated based on Level 2 inputs: June 30, December 31, Balance sheet 2020 2019 location Fair value Fair value (in thousands) Total return swap contracts Prepaid expenses and other current assets $ 2,145 — Total return swap contracts Other current liabilities — 3,990 Net total return swap asset (liability) $ 2,145 (3,990) The following is a summary of net (losses) gains recognized in income for the three and six months ended June 30, 2020 and June 30, 2019: Three months ended Six months ended Income statement June 30, June 30, location 2020 2019 2020 2019 (in thousands) (in thousands) Total return swap contracts Investment and other income $ (30,449) (5,241) $ 11,620 (25,863) |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Identifiable Intangible Assets | |
Goodwill and Identifiable Intangible Assets | 6. Goodwill and Identifiable Intangible Assets Goodwill represents the excess of purchase price over the tangible assets and identifiable intangible assets of an acquired business. Our goodwill is not deductible for tax purposes. The Company performs an annual goodwill impairment assessment during the second quarter of each year. Goodwill and identifiable intangible assets (all considered indefinite lived) at June 30, 2020 and December 31, 2019 are as follows: June 30, December 31, 2020 2019 (in thousands) Goodwill $ 106,970 106,970 Mutual fund management advisory contracts 38,699 38,699 Other 200 200 Total identifiable intangible assets 38,899 38,899 Total $ 145,869 145,869 |
Indebtedness
Indebtedness | 6 Months Ended |
Jun. 30, 2020 | |
Indebtedness | |
Indebtedness | 7. Indebtedness Debt is reported at its carrying amount in the consolidated balance sheets. The fair value, calculated based on Level 2 inputs, of the Company’s senior unsecured notes maturing January 13, 2021 was $97.1 million at June 30, 2020 compared to the carrying value net of debt issuance costs of $95.0 million, which is listed under short-term notes payable in the consolidated balance sheet. |
Income Tax Uncertainties
Income Tax Uncertainties | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Uncertainties | |
Income Tax Uncertainties | 8. Income Tax Uncertainties In the accompanying consolidated balance sheets, unrecognized tax benefits that are not expected to be settled within the next 12 months are included in other liabilities; unrecognized tax benefits that are expected to be settled within the next 12 months are included in other current liabilities; unrecognized tax benefits that reduce a net operating loss, similar tax loss, or tax credit carryforward are presented as a reduction to non-current deferred income taxes. As of June 30, 2020 and December 31, 2019, the Company’s consolidated balance sheets included unrecognized tax benefits, including penalties and interest, of $2.1 million ($1.8 million net of federal benefit) and $2.0 million ($1.7 million net of federal benefit), respectively, that if recognized, would impact the Company’s effective tax rate. In the ordinary course of business, many transactions occur for which the ultimate tax outcome is uncertain. In addition, respective tax authorities periodically audit our income tax returns. These audits examine our significant tax filing positions, including the timing and amounts of deductions and the allocation of income among tax jurisdictions. The Company does not expect the resolution or settlement of any open audits, federal or state, to materially impact the consolidated financial statements. Our 2016-2019 federal income tax returns are open tax years that remain subject to potential future audit. Our state income tax returns for all years after 2015 and, in certain states, income tax returns for 2015, are subject to potential future audit by tax authorities in the Company’s major state tax jurisdictions. |
Pension Plan and Postretirement
Pension Plan and Postretirement Benefits Other Than Pension | 6 Months Ended |
Jun. 30, 2020 | |
Pension Plan and Postretirement Benefits Other Than Pension | |
Pension Plan and Postretirement Benefits Other Than Pension | 9. Pension Plan and Postretirement Benefits Other Than Pension Benefits payable under our noncontributory retirement plan that covers substantially all employees and certain vested employees of our former parent company (the “Pension Plan”) were based on employees’ years of service and compensation during the final 10 years of employment. On July 26, 2017, the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) approved an amendment to freeze the Pension Plan, effective September 30, 2017. After September 30, 2017, participants in the Pension Plan ceased accruing additional benefits for future service or compensation. Participants retain benefits accumulated as of September 30, 2017 in accordance with the terms of the Pension Plan. The Compensation Committee approved the termination of the Pension Plan, effective June 1, 2019, and the Company intends to terminate the Pension Plan in a standard termination, as defined by the Pension Benefit Guaranty Corporation. The Company is currently performing the administrative actions required to carry out the termination, including payments in July 2020 to participants, beneficiaries and alternate payees that elected to receive a lump sum distribution and to the selected annuity provider that has assumed the liabilities of the Pension Plan. We also sponsor an unfunded defined benefit postretirement medical plan that previously covered substantially all employees, as well as Advisors. The medical plan is contributory with participant contributions adjusted annually. The medical plan does not provide for benefits after age 65 with the exception of a small group of employees that were grandfathered when this plan was established. During the third quarter of 2016, the Company amended this plan to discontinue the availability of coverage for any individuals who retire after December 31, 2016. The components of net periodic pension costs and other postretirement costs related to these plans are reflected in the table below. Net periodic pension costs are recorded in investment and other income on the Company’s consolidated statements of income. Other Other Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits Three months ended June 30, Three months ended June 30, Six months ended June 30, Six months ended June 30, 2020 2019 2020 2019 2020 2019 2020 2019 (in thousands) (in thousands) Components of net periodic benefit cost: Interest cost $ 1,316 1,545 $ 4 8 $ 2,632 3,073 $ 8 16 Expected return on plan assets (1,122) (1,567) — — (2,244) (3,157) — — Actuarial gain amortization — — (67) (123) — — (134) (247) Total $ 194 (22) $ (63) (115) $ 388 (84) $ (126) (231) |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Earnings per Share The components of basic and diluted earnings per share were as follows: Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 (in thousands, except per share amounts) Net income attributable to Waddell & Reed Financial, Inc. $ 24,824 33,948 $ 46,810 66,002 Weighted average shares outstanding, basic and diluted 65,488 74,694 66,581 75,492 Earnings per share, basic and diluted $ 0.38 0.45 $ 0.70 0.87 Dividends During the quarter, the Board of Directors declared a quarterly dividend on our Class A common stock in the amount of $0.25 per share with an August 3, 2020 payment date and a July 13, 2020 record date. The total dividend to be paid on August 3, 2020 is $16.3 million. Common Stock Repurchases The Board of Directors has authorized the repurchase of our Class A common stock in the open market and/or private purchases. The acquired shares may be used for corporate purposes, including issuing shares to employees in our stock-based compensation programs. There were 1,468,367 shares and 2,142,894 shares repurchased in the open market or privately during the three months ended June 30, 2020 and 2019, respectively, which includes 219,852 shares and 290,910 shares, respectively, repurchased from employees who tendered shares to cover income tax withholdings with respect to vesting of stock awards during these two reporting periods. There were 5,275,805 shares and 4,369,219 shares repurchased in the open market or privately during the six months ended June 30, 2020 and 2019, respectively, which includes 451,245 shares and 439,983 shares, respectively, repurchased from employees who tendered shares to cover income tax withholdings with respect to vesting of stock awards during these two reporting periods. Accumulated Other Comprehensive Income The following tables summarize accumulated other comprehensive income activity for the three and six months ended June 30, 2020 and June 30, 2019. For the three months ended June 30, Total Unrealized Postretirement accumulated gains (losses) on benefits other AFS investment unrealized comprehensive securities gains (losses) income (loss) (in thousands) Balance at March 31, 2020 $ 91 664 755 Other comprehensive income before reclassification 3,943 — 3,943 Amount reclassified from accumulated other comprehensive income (160) (51) (211) Net current period other comprehensive income (loss) 3,783 (51) 3,732 Balance at June 30, 2020 $ 3,874 613 4,487 Balance at March 31, 2019 $ 861 1,034 1,895 Other comprehensive income before reclassification 1,281 — 1,281 Amount reclassified from accumulated other comprehensive income — (95) (95) Net current period other comprehensive income (loss) 1,281 (95) 1,186 Balance at June 30, 2019 $ 2,142 939 3,081 For the six months ended June 30, Total Unrealized Postretirement accumulated gains (losses) on benefits other AFS investment unrealized comprehensive securities gains (losses) income (loss) (in thousands) Balance at December 31, 2019 $ 2,521 713 3,234 Other comprehensive income before reclassification 1,716 — 1,716 Amount reclassified from accumulated other comprehensive income (363) (100) (463) Net current period other comprehensive income (loss) 1,353 (100) 1,253 Balance at June 30, 2020 $ 3,874 613 4,487 Balance at December 31, 2018 $ (797) 1,128 331 Other comprehensive income before reclassification 3,034 — 3,034 Amount reclassified from accumulated other comprehensive income (95) (189) (284) Net current period other comprehensive income (loss) 2,939 (189) 2,750 Balance at June 30, 2019 $ 2,142 939 3,081 Reclassifications from accumulated other comprehensive income (loss) and included in net income are summarized in the tables that follow. Tax For the three months ended June 30, 2020 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Gains on available for sale debt securities $ 211 (51) 160 Investment and other income Amortization of postretirement benefits 67 (16) 51 Compensation and benefits Total $ 278 (67) 211 Tax For the three months ended June 30, 2019 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Amortization of postretirement benefits $ 123 (28) 95 Compensation and benefits Total $ 123 (28) 95 Tax For the six months ended June 30, 2020 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Gains on available for sale debt securities $ 477 (114) 363 Investment and other income Amortization of postretirement benefits 134 (34) 100 Compensation and benefits Total $ 611 (148) 463 Tax For the six months ended June 30, 2019 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Gains on available for sale debt securities $ 125 (30) 95 Investment and other income Amortization of postretirement benefits 247 (58) 189 Compensation and benefits Total $ 372 (88) 284 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | 11. Leases The Company has operating and finance leases for corporate office space and equipment. Our leases have remaining lease terms of less than one year to six years , some of which include options to extend leases for up to 20 years , and some of which include options to terminate the leases within one year . Certain leases include variable lease payments in future periods based on a market index or rate. We determine if an arrangement is a lease at inception (or the effective date of ASU 2016-02, Leases ). Operating lease assets and liabilities are included in other non-current assets, other current liabilities, and other non-current liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, net, other current liabilities, and other non-current liabilities in our consolidated balance sheets. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date (or the effective date of ASU 2016-02, Leases , Leases During January 2020, we signed a fifteen-year lease, which we expect to commence during 2022, relating to the development of a new 260,000 square foot innovative, distinctive and sustainably-designed corporate headquarters building in the heart of downtown Kansas City, Missouri. The lease will be recognized in the Company’s consolidated financial statements during the period that includes the lease’s commencement date. The components of lease expense were as follows: Three months ended June 30, 2020 2019 (in thousands) Operating Lease Cost $ 3,028 $ 4,965 Finance Lease Cost: Amortization of ROU assets $ 52 $ 61 Interest on lease liabilities 4 7 Total $ 56 $ 68 Six months ended June 30, 2020 2019 (in thousands) Operating Lease Cost $ 6,261 $ 10,283 Finance Lease Cost: Amortization of ROU assets $ 107 $ 144 Interest on lease liabilities 13 15 Total $ 120 $ 159 Supplemental cash flow information related to leases was as follows: Six months ended June 30, 2020 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,280 $ 9,867 Operating cash flows from finance leases 13 15 Financing cash flows from finance leases 133 153 ROU assets obtained in exchange for lease obligations: Operating leases 7 — Finance leases 10 40 Supplemental balance sheet information related to leases was as follows: June 30, 2020 December 31, 2019 (in thousands, except lease term and discount rate) Operating Leases: Operating lease ROU assets (Other non-current assets) $ 17,493 $ 23,457 Other current liabilities $ 8,373 $ 10,479 Other non-current liabilities 10,843 14,694 Total operating lease liabilities $ 19,216 $ 25,173 Finance Leases: Property and equipment, gross $ 801 $ 985 Accumulated depreciation (661) (737) Property and equipment, net $ 140 $ 248 Other current liabilities $ 112 $ 203 Other non-current liabilities 19 55 Total finance lease liabilities $ 131 $ 258 Weighted average remaining lease term: Operating leases 4 years 4 years Finance leases 1 year 1 year Weighted average discount rate: Operating leases 4.28% 4.32% Finance leases 6.00% 6.00% Maturities of lease liabilities are as follows: Operating Finance Leases Leases (in thousands) Year ended December 31, 2020 (excluding the six months ended June 30, 2020) $ 5,130 83 2021 6,493 47 2022 2,415 8 2023 2,122 — 2024 2,090 — Thereafter 2,613 — Total lease payments 20,863 138 Less imputed interest (1,647) (7) Total $ 19,216 131 |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Contingencies | |
Contingencies | 12. Contingencies The Company is involved from time to time in various legal proceedings, regulatory investigations and claims incident to the normal conduct of business, which may include proceedings that are specific to us and others generally applicable to business practices within the industries in which we operate. A substantial legal liability or a significant regulatory action against us could have an adverse effect on our business, financial condition and on the results of operations in a particular quarter or year. The Company establishes reserves for litigation and similar matters when those matters present material loss contingencies that management determines to be both probable and reasonably estimable in accordance with ASC 450, “Contingencies.” |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events In connection with the termination of the Pension Plan, in July 2020, the Company contributed $3.7 million dollars to the Pension Plan. Payments were made in July 2020 to participants, beneficiaries and alternate payees that elected to receive a lump sum distribution and to the selected annuity provider that has assumed the liabilities of the Pension Plan. As part of the assumption of Pension Plan liabilities by the annuity provider, the Company relieved the pension liability on its balance sheet and recorded a preliminary settlement loss in the amount of $0.6 million. |
Description of Business and S_2
Description of Business and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Description of Business and Significant Accounting Policies | |
Basis of Presentation | 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, 2019 (our “2019 Form 10-K”). Certain amounts in the prior year’s financial statements have been reclassified for consistent presentation. Derivative activity was reclassified within operating activities on our consolidated statements of cash flows to provide a comprehensive view of the impact of the economic hedge program for our seed investment portfolio. 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 2019 Form 10-K with the exception of the adoption of Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract 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, 2020 and the results of operations and cash flows for the three and six months ended June 30, 2020 and 2019 in conformity with accounting principles generally accepted in the United States. |
Assets Held for Sale | Assets Held for Sale Assets held for sale included real property related to our corporate headquarters move and aviation equipment. The second quarter of 2020 included asset impairment charges of $0.9 million on assets held for sale, which were recorded in general and administrative expenses in our consolidated statements of income. As of June 30, 2020, $2.2 million of equipment, $3.8 million of buildings and $1.9 million of land that were held for sale were included in Property and equipment, net on our consolidated balance sheets. As of December 31, 2019, $3.1 million of equipment, $3.8 million of buildings and $1.9 million of land that were held for sale were included in Property and equipment, net on our consolidated balance sheets. The Company intends to actively pursue the sale of these assets at market prices as soon as reasonably possible. |
Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract | Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract As of June 30, 2020, the Company had $3.8 million of capitalized implementation costs for hosting arrangements with $100 thousand of accumulated amortization in prepaid and other current assets on the consolidated balance sheet. Our hosting arrangements that are service contracts include internal and external costs related to various technology additions in support of our asset management and wealth management businesses. Amortization costs are recorded on a straight-line basis over the term of the hosting arrangement agreement. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition | |
Summary of disaggregation of revenue | All revenue recognized in the consolidated statements of income is considered to be revenue from contracts with customers. The vast majority of revenue is determined based on average assets and is earned daily or monthly or is transactional and is earned on the trade date. As such, revenue from remaining performance obligations is not significant. The following table depicts the disaggregation of revenue by product and distribution channel: For the three months ended June 30, For the six months ended June 30, 2020 2019 2020 2019 (in thousands) Investment management fees: Funds $ 92,977 109,007 $ 195,269 214,752 Institutional 2,847 3,863 5,774 7,880 Total investment management fees $ 95,824 112,870 $ 201,043 222,632 Underwriting and distribution fees: Unaffiliated Service and distribution fees $ 13,670 16,615 $ 28,946 33,081 Sales commissions 373 493 824 935 Other revenues 91 83 226 175 Total unaffiliated distribution fees $ 14,134 17,191 $ 29,996 34,191 Wealth Management Advisory fees $ 72,534 70,220 $ 149,652 135,450 Service and distribution fees 13,600 16,041 28,189 31,445 Sales commissions 15,034 20,794 35,691 40,416 Other revenues 8,331 9,249 17,048 18,238 Total wealth management distribution fees 109,499 116,304 230,580 225,549 Total distribution fees $ 123,633 133,495 $ 260,576 259,740 Shareholder service fees: Total shareholder service fees $ 20,577 23,789 $ 42,148 47,192 Total revenues $ 240,034 270,154 $ 503,767 529,564 |
Investment Securities (Tables)
Investment Securities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investment Securities | |
Schedule of investment securities | Investment securities at June 30, 2020 and December 31, 2019 were as follows: June 30, December 31, 2020 2019 (in thousands) Available for sale securities: Commercial paper $ 2,728 1,977 Corporate bonds 203,799 254,291 Total available for sale securities 206,527 256,268 Trading debt securities: Commercial paper 12,502 1,977 Corporate bonds 79,136 84,920 U.S. Treasury bills 6,001 5,979 Mortgage-backed securities 2 4 Term loans 39,643 44,268 Consolidated sponsored funds 49,413 43,567 Total trading securities 186,697 180,715 Equity securities: Common stock 39,252 34,945 Sponsored funds 144,320 178,386 Sponsored privately offered funds 848 845 Total equity securities 184,420 214,176 Equity method securities: Sponsored funds 41,408 37,187 Total securities $ 619,052 688,346 |
Summary of maturities of securities held | Commercial paper and corporate bonds accounted for as available for sale and held as of June 30, 2020 mature as follows: Amortized cost Fair value (in thousands) Within one year $ 53,380 54,005 After one year but within five years 148,049 152,522 $ 201,429 206,527 Commercial paper, corporate bonds, U.S. Treasury bills, mortgage-backed securities and term loans accounted for as trading and held as of June 30, 2020 mature as follows: Fair value (in thousands) Within one year $ 31,322 After one year but within five years 83,599 After five years but within 10 years 21,868 After 10 years 495 $ 137,284 |
Summary of the gross unrealized gains (losses) related to securities | The following is a summary of the gross unrealized gains (losses) related to securities classified as available for sale at June 30, 2020: Amortized Unrealized Unrealized cost gains losses Fair value (in thousands) Available for sale securities: Commercial paper $ 2,728 — — 2,728 Corporate bonds 198,701 5,098 — 203,799 $ 201,429 5,098 — 206,527 The following is a summary of the gross unrealized gains (losses) related to securities classified as available for sale at December 31, 2019: Amortized Unrealized Unrealized cost gains losses Fair value (in thousands) Available for sale securities: Commercial paper $ 1,976 1 — 1,977 Corporate bonds 250,982 3,314 (5) 254,291 $ 252,958 3,315 (5) 256,268 |
Summary of available for sale sponsored funds with fair values below carrying values | A summary of available for sale investment securities with fair values below carrying values at June 30, 2020 is as follows: Less than 12 months 12 months or longer Total Unrealized Unrealized Unrealized Fair value losses Fair value losses Fair value losses (in thousands) Commercial paper $ 2,429 — — — 2,429 — A summary of available for sale investment securities with fair values below carrying values at December 31, 2019 is as follows: Less than 12 months 12 months or longer Total Unrealized Unrealized Unrealized Fair value losses Fair value losses Fair value losses (in thousands) Corporate bonds $ 4,538 — 8,056 (5) 12,594 (5) |
Summary of balances related to consolidated sponsored funds as well the company's net interest in these funds | The following table details the balances related to consolidated sponsored funds at June 30, 2020 and December 31, 2019, as well as the Company’s net interest in these funds: June 30, December 31, 2020 2019 (in thousands) Cash $ 3,459 1,530 Investments 49,413 43,567 Other assets 1,290 483 Other liabilities (1,737) — Redeemable noncontrolling interests (25,857) (19,205) Net interest in consolidated sponsored funds $ 26,568 26,375 |
Schedule of fair value of investment securities | The following tables summarize our investment securities as of June 30, 2020 and December 31, 2019 that are recognized in our consolidated balance sheets using fair value measurements based on the differing levels of inputs. June 30, 2020 Level 1 Level 2 Level 3 Other Assets Held at Net Asset Value Total (in thousands) Cash equivalents: (1) Money market funds $ 54,598 — — — 54,598 Commercial paper — 28,503 — — 28,503 Total cash equivalents $ 54,598 28,503 — — 83,101 Available for sale securities: Commercial paper $ — 2,728 — — 2,728 Corporate bonds — 203,799 — — 203,799 Trading debt securities: Commercial paper — 12,502 — — 12,502 Corporate bonds — 79,136 — 79,136 U.S. Treasury bills — 6,001 — — 6,001 Mortgage-backed securities — 2 — — 2 Term loans — 35,990 3,653 — 39,643 Consolidated sponsored funds — 49,413 — — 49,413 Equity securities: Common stock 39,252 — — — 39,252 Sponsored funds 144,320 — — — 144,320 Sponsored privately offered funds measured at net asset value (2) — — — 848 848 Equity method securities: (3) Sponsored funds 41,408 — — — 41,408 Total investment securities $ 224,980 389,571 3,653 848 619,052 December 31, 2019 Level 1 Level 2 Level 3 Other Assets Held at Net Asset Value Total (in thousands) Cash equivalents: (1) Money market funds $ 4,203 — — — 4,203 Commercial paper — 38,143 — — 38,143 Total cash equivalents $ 4,203 38,143 — — 42,346 Available for sale securities: Commercial paper $ — 1,977 — — 1,977 Corporate bonds — 254,291 — — 254,291 Trading debt securities: Commercial paper — 1,977 — — 1,977 Corporate bonds — 84,920 — 84,920 U.S. Treasury bills — 5,979 — — 5,979 Mortgage-backed securities — 4 — — 4 Term loans — 40,368 3,900 — 44,268 Consolidated sponsored funds — 43,567 — — 43,567 Equity securities: Common stock 34,942 — 3 — 34,945 Sponsored funds 178,386 — — — 178,386 Sponsored privately offered funds measured at net asset value (2) — — — 845 845 Equity method securities: (3) Sponsored funds 37,187 — — — 37,187 Total investment securities $ 250,515 433,083 3,903 845 688,346 (1) Cash equivalents include highly liquid investments with original maturities of 90 days or less. Cash investments in actively traded money market funds are measured at net asset value and are classified as Level 1. Cash investments in commercial paper are measured at cost, which approximates fair value because of the short time between purchase of the instrument and its expected realization and are classified as Level 2. (2) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) The Company’s equity method investments are investment companies that record their underlying investments at fair value. |
Schedule of activity of investments categorized as Level 3 | The following table summarizes the activity of investments categorized as Level 3 for the six months ended June 30, 2020: For the six months ended June 30, 2020 (in thousands) Level 3 assets at December 31, 2019 $ 3,903 Additions 6,501 Transfers in to level 3 9,877 Transfers out of level 3 (12,395) Losses in Investment and other income (1,127) Redemptions/Paydowns (3,106) Level 3 assets at June 30, 2020 $ 3,653 Change in unrealized gains for Level 3 assets held at $ 43 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Financial Instruments | |
Schedule of fair value of derivative financial instruments, excluding derivative financial instruments held in certain consolidated sponsored funds | The following table presents the fair value of the derivative financial instruments as of June 30, 2020 and December 31, 2019 and is calculated based on Level 2 inputs: June 30, December 31, Balance sheet 2020 2019 location Fair value Fair value (in thousands) Total return swap contracts Prepaid expenses and other current assets $ 2,145 — Total return swap contracts Other current liabilities — 3,990 Net total return swap asset (liability) $ 2,145 (3,990) |
Schedule of net (losses) gains recognized in income of derivative financial instrument | The following is a summary of net (losses) gains recognized in income for the three and six months ended June 30, 2020 and June 30, 2019: Three months ended Six months ended Income statement June 30, June 30, location 2020 2019 2020 2019 (in thousands) (in thousands) Total return swap contracts Investment and other income $ (30,449) (5,241) $ 11,620 (25,863) |
Goodwill and Identifiable Int_2
Goodwill and Identifiable Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Identifiable Intangible Assets | |
Schedule of goodwill and identifiable intangible assets | Goodwill represents the excess of purchase price over the tangible assets and identifiable intangible assets of an acquired business. Our goodwill is not deductible for tax purposes. The Company performs an annual goodwill impairment assessment during the second quarter of each year. Goodwill and identifiable intangible assets (all considered indefinite lived) at June 30, 2020 and December 31, 2019 are as follows: June 30, December 31, 2020 2019 (in thousands) Goodwill $ 106,970 106,970 Mutual fund management advisory contracts 38,699 38,699 Other 200 200 Total identifiable intangible assets 38,899 38,899 Total $ 145,869 145,869 |
Pension Plan and Postretireme_2
Pension Plan and Postretirement Benefits Other Than Pension (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Pension Plan and Postretirement Benefits Other Than Pension | |
Schedule of components of net periodic pension and other postretirement costs | The components of net periodic pension costs and other postretirement costs related to these plans are reflected in the table below. Net periodic pension costs are recorded in investment and other income on the Company’s consolidated statements of income. Other Other Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits Three months ended June 30, Three months ended June 30, Six months ended June 30, Six months ended June 30, 2020 2019 2020 2019 2020 2019 2020 2019 (in thousands) (in thousands) Components of net periodic benefit cost: Interest cost $ 1,316 1,545 $ 4 8 $ 2,632 3,073 $ 8 16 Expected return on plan assets (1,122) (1,567) — — (2,244) (3,157) — — Actuarial gain amortization — — (67) (123) — — (134) (247) Total $ 194 (22) $ (63) (115) $ 388 (84) $ (126) (231) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity | |
Components of basic and diluted earnings per share | The components of basic and diluted earnings per share were as follows: Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 (in thousands, except per share amounts) Net income attributable to Waddell & Reed Financial, Inc. $ 24,824 33,948 $ 46,810 66,002 Weighted average shares outstanding, basic and diluted 65,488 74,694 66,581 75,492 Earnings per share, basic and diluted $ 0.38 0.45 $ 0.70 0.87 |
Summary of accumulated other comprehensive income (loss) activity | The following tables summarize accumulated other comprehensive income activity for the three and six months ended June 30, 2020 and June 30, 2019. For the three months ended June 30, Total Unrealized Postretirement accumulated gains (losses) on benefits other AFS investment unrealized comprehensive securities gains (losses) income (loss) (in thousands) Balance at March 31, 2020 $ 91 664 755 Other comprehensive income before reclassification 3,943 — 3,943 Amount reclassified from accumulated other comprehensive income (160) (51) (211) Net current period other comprehensive income (loss) 3,783 (51) 3,732 Balance at June 30, 2020 $ 3,874 613 4,487 Balance at March 31, 2019 $ 861 1,034 1,895 Other comprehensive income before reclassification 1,281 — 1,281 Amount reclassified from accumulated other comprehensive income — (95) (95) Net current period other comprehensive income (loss) 1,281 (95) 1,186 Balance at June 30, 2019 $ 2,142 939 3,081 For the six months ended June 30, Total Unrealized Postretirement accumulated gains (losses) on benefits other AFS investment unrealized comprehensive securities gains (losses) income (loss) (in thousands) Balance at December 31, 2019 $ 2,521 713 3,234 Other comprehensive income before reclassification 1,716 — 1,716 Amount reclassified from accumulated other comprehensive income (363) (100) (463) Net current period other comprehensive income (loss) 1,353 (100) 1,253 Balance at June 30, 2020 $ 3,874 613 4,487 Balance at December 31, 2018 $ (797) 1,128 331 Other comprehensive income before reclassification 3,034 — 3,034 Amount reclassified from accumulated other comprehensive income (95) (189) (284) Net current period other comprehensive income (loss) 2,939 (189) 2,750 Balance at June 30, 2019 $ 2,142 939 3,081 |
Summary of reclassifications from accumulated other comprehensive income (loss) and included in net income | Reclassifications from accumulated other comprehensive income (loss) and included in net income are summarized in the tables that follow. Tax For the three months ended June 30, 2020 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Gains on available for sale debt securities $ 211 (51) 160 Investment and other income Amortization of postretirement benefits 67 (16) 51 Compensation and benefits Total $ 278 (67) 211 Tax For the three months ended June 30, 2019 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Amortization of postretirement benefits $ 123 (28) 95 Compensation and benefits Total $ 123 (28) 95 Tax For the six months ended June 30, 2020 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Gains on available for sale debt securities $ 477 (114) 363 Investment and other income Amortization of postretirement benefits 134 (34) 100 Compensation and benefits Total $ 611 (148) 463 Tax For the six months ended June 30, 2019 Pre-tax expense Net of tax Statement of income line item (in thousands) Reclassifications included in net income: Gains on available for sale debt securities $ 125 (30) 95 Investment and other income Amortization of postretirement benefits 247 (58) 189 Compensation and benefits Total $ 372 (88) 284 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of components of lease expense | The components of lease expense were as follows: Three months ended June 30, 2020 2019 (in thousands) Operating Lease Cost $ 3,028 $ 4,965 Finance Lease Cost: Amortization of ROU assets $ 52 $ 61 Interest on lease liabilities 4 7 Total $ 56 $ 68 Six months ended June 30, 2020 2019 (in thousands) Operating Lease Cost $ 6,261 $ 10,283 Finance Lease Cost: Amortization of ROU assets $ 107 $ 144 Interest on lease liabilities 13 15 Total $ 120 $ 159 |
Schedule of supplemental cash flow information | Supplemental cash flow information related to leases was as follows: Six months ended June 30, 2020 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,280 $ 9,867 Operating cash flows from finance leases 13 15 Financing cash flows from finance leases 133 153 ROU assets obtained in exchange for lease obligations: Operating leases 7 — Finance leases 10 40 |
Schedule of supplemental balance sheet information | Supplemental balance sheet information related to leases was as follows: June 30, 2020 December 31, 2019 (in thousands, except lease term and discount rate) Operating Leases: Operating lease ROU assets (Other non-current assets) $ 17,493 $ 23,457 Other current liabilities $ 8,373 $ 10,479 Other non-current liabilities 10,843 14,694 Total operating lease liabilities $ 19,216 $ 25,173 Finance Leases: Property and equipment, gross $ 801 $ 985 Accumulated depreciation (661) (737) Property and equipment, net $ 140 $ 248 Other current liabilities $ 112 $ 203 Other non-current liabilities 19 55 Total finance lease liabilities $ 131 $ 258 Weighted average remaining lease term: Operating leases 4 years 4 years Finance leases 1 year 1 year Weighted average discount rate: Operating leases 4.28% 4.32% Finance leases 6.00% 6.00% |
Schedule of maturities of operating leases | Maturities of lease liabilities are as follows: Operating Finance Leases Leases (in thousands) Year ended December 31, 2020 (excluding the six months ended June 30, 2020) $ 5,130 83 2021 6,493 47 2022 2,415 8 2023 2,122 — 2024 2,090 — Thereafter 2,613 — Total lease payments 20,863 138 Less imputed interest (1,647) (7) Total $ 19,216 131 |
Schedule of maturities of finance leases | Maturities of lease liabilities are as follows: Operating Finance Leases Leases (in thousands) Year ended December 31, 2020 (excluding the six months ended June 30, 2020) $ 5,130 83 2021 6,493 47 2022 2,415 8 2023 2,122 — 2024 2,090 — Thereafter 2,613 — Total lease payments 20,863 138 Less imputed interest (1,647) (7) Total $ 19,216 131 |
Description of Business and S_3
Description of Business and Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Assets under management | $ 65,000,000 | |
Impairment on assets held for sale | 900 | |
Assets held for sale | 31,928 | $ 34,726 |
Capitalized implementation costs for hosting arrangements | 3,800 | |
Accumulated amortization of hosting arrangement | 100 | |
Equipment | ||
Assets held for sale | 2,200 | 3,100 |
Buildings | ||
Assets held for sale | 3,800 | 3,800 |
Land | ||
Assets held for sale | $ 1,900 | $ 1,900 |
New Accounting Guidance (Detail
New Accounting Guidance (Details) | Jun. 30, 2020 |
ASU 2019-12 | |
New Accounting Guidance | |
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | false |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue Recognition | ||||
Total Revenues | $ 240,034 | $ 270,154 | $ 503,767 | $ 529,564 |
Investment management fees | ||||
Revenue Recognition | ||||
Total Revenues | 95,824 | 112,870 | 201,043 | 222,632 |
Funds | ||||
Revenue Recognition | ||||
Total Revenues | 92,977 | 109,007 | 195,269 | 214,752 |
Institutional | ||||
Revenue Recognition | ||||
Total Revenues | 2,847 | 3,863 | 5,774 | 7,880 |
Underwriting and distribution fees | ||||
Revenue Recognition | ||||
Total Revenues | 123,633 | 133,495 | 260,576 | 259,740 |
Unaffiliated | ||||
Revenue Recognition | ||||
Total Revenues | 14,134 | 17,191 | 29,996 | 34,191 |
Unaffiliated Rule 12b-1 service and distribution fees | ||||
Revenue Recognition | ||||
Total Revenues | 13,670 | 16,615 | 28,946 | 33,081 |
Unaffiliated sales commissions on front-end load mutual fund and variable annuity sales | ||||
Revenue Recognition | ||||
Total Revenues | 373 | 493 | 824 | 935 |
Unaffiliated Other Revenues [Member] | ||||
Revenue Recognition | ||||
Total Revenues | 91 | 83 | 226 | 175 |
Wealth Management | ||||
Revenue Recognition | ||||
Total Revenues | 109,499 | 116,304 | 230,580 | 225,549 |
Wealth Management, Fee-based asset allocation product revenues | ||||
Revenue Recognition | ||||
Total Revenues | 72,534 | 70,220 | 149,652 | 135,450 |
Wealth Management, Rule 12b-1 service and distribution fees | ||||
Revenue Recognition | ||||
Total Revenues | 13,600 | 16,041 | 28,189 | 31,445 |
Wealth Management, sales commissions on other products | ||||
Revenue Recognition | ||||
Total Revenues | 15,034 | 20,794 | 35,691 | 40,416 |
Wealth Management, other revenues | ||||
Revenue Recognition | ||||
Total Revenues | 8,331 | 9,249 | 17,048 | 18,238 |
Shareholder service fees | ||||
Revenue Recognition | ||||
Total Revenues | $ 20,577 | $ 23,789 | $ 42,148 | $ 47,192 |
Investment Securities - Investm
Investment Securities - Investment securities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Available for sale securities: | ||
Available for sale securities | $ 206,527 | $ 256,268 |
Trading debt securities: | ||
Trading debt securities | 186,697 | 180,715 |
Equity securities: | ||
Equity securities | 184,420 | 214,176 |
Equity method securities: | ||
Total investment securities | 619,052 | 688,346 |
Commercial paper | ||
Available for sale securities: | ||
Available for sale securities | 2,728 | 1,977 |
Trading debt securities: | ||
Trading debt securities | 12,502 | 1,977 |
Corporate bonds | ||
Available for sale securities: | ||
Available for sale securities | 203,799 | 254,291 |
Trading debt securities: | ||
Trading debt securities | 79,136 | 84,920 |
U.S. treasury bills | ||
Trading debt securities: | ||
Trading debt securities | 6,001 | 5,979 |
Mortgage-backed securities | ||
Trading debt securities: | ||
Trading debt securities | 2 | 4 |
Term loans | ||
Trading debt securities: | ||
Trading debt securities | 39,643 | 44,268 |
Consolidated Sponsored Funds | ||
Trading debt securities: | ||
Trading debt securities | 49,413 | 43,567 |
Common Stock | ||
Equity securities: | ||
Equity securities | 39,252 | 34,945 |
Sponsored funds | ||
Equity securities: | ||
Equity securities | 144,320 | 178,386 |
Equity method securities: | ||
Equity method securities | 41,408 | 37,187 |
Sponsored privately offered funds | ||
Equity securities: | ||
Equity securities | $ 848 | $ 845 |
Investment Securities - Maturit
Investment Securities - Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Within one year | $ 53,380 | |
After one year but within five years | 148,049 | |
Amortized Cost | 201,429 | $ 252,958 |
Fair value | ||
Within one year | 54,005 | |
After one year but within five years | 152,522 | |
Total fair value | 206,527 | $ 256,268 |
Fair value | ||
Within one year | 31,322 | |
After one year but within five years | 83,599 | |
After five years but within 10 years | 21,868 | |
After 10 years | 495 | |
Total fair value | $ 137,284 |
Investment Securities - Inves_2
Investment Securities - Investment securities and summary of the gains (losses) related to securities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Available for sale securities: | ||
Amortized Cost | $ 201,429 | $ 252,958 |
Unrealized gains | 5,098 | 3,315 |
Unrealized losses | (5) | |
Fair value | 206,527 | 256,268 |
Commercial paper | ||
Available for sale securities: | ||
Amortized Cost | 2,728 | 1,976 |
Unrealized gains | 1 | |
Fair value | 2,728 | 1,977 |
Corporate bonds | ||
Available for sale securities: | ||
Amortized Cost | 198,701 | 250,982 |
Unrealized gains | 5,098 | 3,314 |
Unrealized losses | (5) | |
Fair value | $ 203,799 | $ 254,291 |
Investment Securities - Availab
Investment Securities - Available for sale sponsored funds with fair values below carrying values (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($)security | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)security | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Unrealized losses | |||||
Securities in an unrealized loss position | security | 1 | 1 | |||
Net unrealized gains (losses) on equity securities | $ 28,100 | $ 5,100 | $ (7,800) | $ 18,200 | |
Commercial paper | |||||
Fair value | |||||
Less than 12 months | 2,429 | 2,429 | |||
Total fair value | $ 2,429 | $ 2,429 | |||
Corporate bonds | |||||
Fair value | |||||
Less than 12 months | $ 4,538 | ||||
12 months or longer | 8,056 | ||||
Total fair value | 12,594 | ||||
Unrealized losses | |||||
12 months or longer | (5) | ||||
Total unrealized losses | $ (5) |
Investment Securities - Consoli
Investment Securities - Consolidated Sponsored Funds (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Investment Securities | ||
Cash | $ 156,710 | $ 151,815 |
Redeemable noncontrolling interests | (25,857) | (19,205) |
Consolidated Sponsored Funds | ||
Investment Securities | ||
Cash | 3,459 | 1,530 |
Investments | 49,413 | 43,567 |
Other assets | 1,290 | 483 |
Other liabilities | (1,737) | |
Redeemable noncontrolling interests | (25,857) | (19,205) |
Net interest in consolidated sponsored funds | $ 26,568 | $ 26,375 |
Investment Securities - Fair va
Investment Securities - Fair value of investment securities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Fair value of investments | ||
Cash equivalents | $ 83,101 | $ 42,346 |
Available for sale securities | 206,527 | 256,268 |
Trading debt securities | 186,697 | 180,715 |
Equity securities | 184,420 | 214,176 |
Total investment securities | 619,052 | 688,346 |
Money market funds | ||
Fair value of investments | ||
Cash equivalents | 54,598 | 4,203 |
Commercial paper | ||
Fair value of investments | ||
Cash equivalents | 28,503 | 38,143 |
Available for sale securities | 2,728 | 1,977 |
Trading debt securities | 12,502 | 1,977 |
Corporate bonds | ||
Fair value of investments | ||
Available for sale securities | 203,799 | 254,291 |
Trading debt securities | 79,136 | 84,920 |
U.S. treasury bills | ||
Fair value of investments | ||
Trading debt securities | 6,001 | 5,979 |
Mortgage-backed securities | ||
Fair value of investments | ||
Trading debt securities | 2 | 4 |
Term loans | ||
Fair value of investments | ||
Trading debt securities | 39,643 | 44,268 |
Consolidated Sponsored Funds | ||
Fair value of investments | ||
Trading debt securities | 49,413 | 43,567 |
Common Stock | ||
Fair value of investments | ||
Equity securities | 39,252 | 34,945 |
Sponsored funds | ||
Fair value of investments | ||
Equity securities | 144,320 | 178,386 |
Equity method securities | 41,408 | 37,187 |
Sponsored privately offered funds | ||
Fair value of investments | ||
Equity securities | 848 | 845 |
Level 1 | ||
Fair value of investments | ||
Cash equivalents | 54,598 | 4,203 |
Total investment securities | 224,980 | 250,515 |
Level 1 | Money market funds | ||
Fair value of investments | ||
Cash equivalents | 54,598 | 4,203 |
Level 1 | Common Stock | ||
Fair value of investments | ||
Equity securities | 39,252 | 34,942 |
Level 1 | Sponsored funds | ||
Fair value of investments | ||
Equity securities | 144,320 | 178,386 |
Equity method securities | 41,408 | 37,187 |
Level 2 | ||
Fair value of investments | ||
Cash equivalents | 28,503 | 38,143 |
Total investment securities | 389,571 | 433,083 |
Level 2 | Commercial paper | ||
Fair value of investments | ||
Cash equivalents | 28,503 | 38,143 |
Available for sale securities | 2,728 | 1,977 |
Trading debt securities | 12,502 | 1,977 |
Level 2 | Corporate bonds | ||
Fair value of investments | ||
Available for sale securities | 203,799 | 254,291 |
Trading debt securities | 79,136 | 84,920 |
Level 2 | U.S. treasury bills | ||
Fair value of investments | ||
Trading debt securities | 6,001 | 5,979 |
Level 2 | Mortgage-backed securities | ||
Fair value of investments | ||
Trading debt securities | 2 | 4 |
Level 2 | Term loans | ||
Fair value of investments | ||
Trading debt securities | 35,990 | 40,368 |
Level 2 | Consolidated Sponsored Funds | ||
Fair value of investments | ||
Trading debt securities | 49,413 | 43,567 |
Level 3 | ||
Fair value of investments | ||
Total investment securities | 3,653 | 3,903 |
Level 3 | Term loans | ||
Fair value of investments | ||
Trading debt securities | 3,653 | 3,900 |
Level 3 | Common Stock | ||
Fair value of investments | ||
Equity securities | 3 | |
Other Assets Held at Net Value | ||
Fair value of investments | ||
Total investment securities | 848 | 845 |
Other Assets Held at Net Value | Sponsored privately offered funds | ||
Fair value of investments | ||
Equity securities | $ 848 | $ 845 |
Investment Securities - Inves_3
Investment Securities - Investment category (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Level 3 assets at beginning of period | $ 3,903 |
Additions | 6,501 |
Transfers in to level 3 | 9,877 |
Transfers out of level 3 | (12,395) |
Losses in Investment and other income | $ (1,127) |
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Asset, Gain (Loss), Statement of Other Comprehensive Income [Extensible List] | Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax |
Redemptions / Paydowns | $ (3,106) |
Level 3 assets at end of period | 3,653 |
Change in unrealized gains (losses) for Level 3 assets held | $ 43 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - Not designated as a hedge - Total return swap contracts $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($)contract | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)contract | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)contract | |
Derivative Financial Instruments | |||||
Number of contracts | contract | 11 | 11 | 14 | ||
Notional value | $ 221,800 | $ 221,800 | $ 228,200 | ||
Cash collateral posted by counterparties | 3,800 | 3,800 | |||
Cash collateral with the counterparties | 3,700 | ||||
Level 2 | |||||
Derivative Financial Instruments | |||||
Net total return swap (liability) asset | 2,145 | 2,145 | (3,990) | ||
Investment and other income (loss) | Level 2 | |||||
Derivative Financial Instruments | |||||
Net (losses) gains recognized in income | (30,449) | $ (5,241) | 11,620 | $ (25,863) | |
Prepaid expenses and other current assets | Level 2 | |||||
Derivative Financial Instruments | |||||
Fair value - assets | $ 2,145 | $ 2,145 | |||
Other current liabilities | Level 2 | |||||
Derivative Financial Instruments | |||||
Fair value - liabilities | $ 3,990 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Goodwill and Identifiable Intangible Assets | ||
Goodwill | $ 106,970 | $ 106,970 |
Mutual fund management advisory contracts | 38,699 | 38,699 |
Other | 200 | 200 |
Total identifiable intangible assets | 38,899 | 38,899 |
Total goodwill and identifiable intangible assets | $ 145,869 | $ 145,869 |
Indebtedness (Details)
Indebtedness (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Indebtedness | |
Short-term notes payable | $ 94,962 |
Senior 5.75% unsecured notes due, 2021 ("Series B Notes") | |
Indebtedness | |
Fair value of outstanding indebtedness | 97,100 |
Short-term notes payable | $ 95,000 |
Income Tax Uncertainties (Detai
Income Tax Uncertainties (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Income Tax Uncertainties | ||
Unrecognized tax benefits, including penalties and interest that if recognized would impact effective tax rate | $ 2.1 | $ 2 |
Unrecognized tax benefits, including penalties and interest, net of federal tax benefit that if recognized would affect effective tax rate | $ 1.8 | $ 1.7 |
Pension Plan and Postretireme_3
Pension Plan and Postretirement Benefits Other Than Pension (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Pension Benefits | ||||
Pension Plan and Postretirement Benefits Other than Pension | ||||
Final number of years of employee's compensation to determine the benefits payable | 10 years | |||
Components of net periodic benefit cost: | ||||
Interest cost | $ 1,316 | $ 1,545 | $ 2,632 | $ 3,073 |
Expected return on plan assets | (1,122) | (1,567) | (2,244) | (3,157) |
Total | 194 | (22) | $ 388 | (84) |
Other Postretirement Benefits | ||||
Pension Plan and Postretirement Benefits Other than Pension | ||||
Age of employees after which the plan does not provide benefits | 65 years | |||
Components of net periodic benefit cost: | ||||
Interest cost | 4 | 8 | $ 8 | 16 |
Actuarial gain amortization | (67) | (123) | (134) | (247) |
Total | $ (63) | $ (115) | $ (126) | $ (231) |
Stockholders' Equity - Earnings
Stockholders' Equity - Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Components of basic and diluted earnings per share | ||||
Net income attributable to Waddell & Reed Financial, Inc. | $ 24,824 | $ 33,948 | $ 46,810 | $ 66,002 |
Weighted average shares outstanding - basic and diluted | 65,488,000 | 74,694,000 | 66,581,000 | 75,492,000 |
Earnings per share: | ||||
Earnings per share, basic and diluted (in dollars per share) | $ 0.38 | $ 0.45 | $ 0.70 | $ 0.87 |
Dividends | ||||
Dividends declared (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.50 | $ 0.50 |
Dividends payable to stockholders | $ 16,300 | $ 16,300 | ||
Common stock repurchases | ||||
Shares repurchased in the open market or privately | 1,468,367 | 2,142,894 | 5,275,805 | 4,369,219 |
Shares repurchased from employees to cover income tax withholdings | 219,852 | 290,910 | 451,245 | 439,983 |
Stockholders' Equity - Accumula
Stockholders' Equity - Accumulated other comprehensive income (loss) activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
AOCI Attributable to Parent, Net of Tax | ||||
Balance at the beginning of the period | $ 765,658 | $ 868,604 | $ 808,897 | $ 883,450 |
Balance at the end of the period | 766,703 | 856,656 | 766,703 | 856,656 |
Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax | ||||
Balance at the beginning of the period | 755 | 1,895 | 3,234 | 331 |
Other comprehensive income (loss) before reclassification | 3,943 | 1,281 | 1,716 | 3,034 |
Amount reclassified from accumulated other comprehensive income (loss) | (211) | (95) | (463) | (284) |
Net current period other comprehensive income (loss) | 3,732 | 1,186 | 1,253 | 2,750 |
Balance at the end of the period | 4,487 | 3,081 | 4,487 | 3,081 |
Unrealized gains (losses) on AFS investment securities | ||||
AOCI Attributable to Parent, Net of Tax | ||||
Balance at the beginning of the period | 91 | 861 | 2,521 | (797) |
Other comprehensive income (loss) before reclassification | 3,943 | 1,281 | 1,716 | 3,034 |
Amount reclassified from accumulated other comprehensive income (loss) | (160) | (363) | (95) | |
Net current period other comprehensive income (loss) | 3,783 | 1,281 | 1,353 | 2,939 |
Balance at the end of the period | 3,874 | 2,142 | 3,874 | 2,142 |
Postretirement benefits unrealized gains (losses) | ||||
AOCI Attributable to Parent, Net of Tax | ||||
Balance at the beginning of the period | 664 | 1,034 | 713 | 1,128 |
Amount reclassified from accumulated other comprehensive income (loss) | (51) | (95) | (100) | (189) |
Net current period other comprehensive income (loss) | (51) | (95) | (100) | (189) |
Balance at the end of the period | $ 613 | $ 939 | $ 613 | $ 939 |
Stockholders' Equity - Reclassi
Stockholders' Equity - Reclassifications from accumulated other comprehensive income (loss) and included in net income (Details) - Reclassifications from accumulated other comprehensive income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Reclassifications included in net income: | ||||
Pre-tax | $ 278 | $ 123 | $ 611 | $ 372 |
Tax (expense) benefit | (67) | (28) | (148) | (88) |
Net of tax | 211 | 95 | 463 | 284 |
Gains (losses) on available for sale debt securities | Investment and other income (loss) | ||||
Reclassifications included in net income: | ||||
Pre-tax | 211 | 477 | 125 | |
Tax (expense) benefit | (51) | (114) | (30) | |
Net of tax | 160 | 363 | 95 | |
Postretirement benefits unrealized gains (losses) | Compensation and benefits | ||||
Reclassifications included in net income: | ||||
Pre-tax | 67 | 123 | 134 | 247 |
Tax (expense) benefit | (16) | (28) | (34) | (58) |
Net of tax | $ 51 | $ 95 | $ 100 | $ 189 |
Leases - Narrative (Details)
Leases - Narrative (Details) - ft² | 6 Months Ended | |
Jun. 30, 2020 | Jan. 31, 2020 | |
Leases | ||
Option to extend - Operating | true | |
Option to extend - Finance | true | |
Option to terminate - Operating | true | |
Option to terminate - Finance | true | |
Minimum | ||
Leases | ||
Lease term - Operating | 1 year | |
Lease term - Finance | 1 year | |
Maximum | ||
Leases | ||
Lease term - Operating | 6 years | |
Lease term - Finance | 6 years | |
Option to extend period - Operating | 20 years | |
Option to extend period - Finance | 20 years | |
Option to terminate period - Operating | 1 year | |
Option to terminate period - Finance | 1 year | |
Corporate Headquarters | ||
Leases | ||
Lease term - Finance | 15 years | |
Square footage | 260,000 |
Leases - Components of Lease (D
Leases - Components of Lease (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Components of lease expense | ||||
Operating Lease Cost | $ 3,028 | $ 4,965 | $ 6,261 | $ 10,283 |
Amortization of ROU assets | 52 | 61 | 107 | 144 |
Interest on lease liabilities | 4 | 7 | 13 | 15 |
Total | $ 56 | $ 68 | $ 120 | $ 159 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Leases | ||
Operating cash flows from operating leases | $ 6,280 | $ 9,867 |
Operating cash flows from finance leases | 13 | 15 |
Financing cash flows from finance leases | 133 | 153 |
ROU assets obtained in exchange for lease obligations - Operating leases | 7 | |
ROU assets obtained in exchange for lease obligations - Finance leases | $ 10 | $ 40 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Leases | ||
Operating lease ROU assets | $ 17,493 | $ 23,457 |
Financial position | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Operating lease liabilities - current | $ 8,373 | $ 10,479 |
Financial position | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Operating lease liabilities - noncurrent | $ 10,843 | $ 14,694 |
Financial position | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Total Operating lease liabilities | $ 19,216 | $ 25,173 |
Financing Lease ROU assets | $ 140 | $ 248 |
Financial position | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Finance lease liabilities - current | $ 112 | $ 203 |
Financial position | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Finance lease liabilities - noncurrent | $ 19 | $ 55 |
Financial position | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Finance lease liabilities | $ 131 | $ 258 |
Weighted average remaining lease term - Operating leases | 4 years | 4 years |
Weighted average remaining lease term - Financing leases | 1 year | 1 year |
Weighted average discount rate - Operating leases | 4.28% | 4.32% |
Weighted average discount rate - Financing leases | 6.00% | 6.00% |
Finance lease assets | ||
Leases | ||
Property and equipment, gross | $ 801 | $ 985 |
Accumulated depreciation | $ (661) | $ (737) |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Operating Leases maturities: | ||
2020 (excluding the six months ended June 30, 2020) | $ 5,130 | |
2021 | 6,493 | |
2022 | 2,415 | |
2023 | 2,122 | |
2024 | 2,090 | |
Thereafter | 2,613 | |
Total lease payments | 20,863 | |
Less imputed interest | (1,647) | |
Total | 19,216 | $ 25,173 |
Finance Leases maturities: | ||
2020 (excluding the three months ended March 31, 2020) | 83 | |
2021 | 47 | |
2022 | 8 | |
Total lease payments | 138 | |
Less imputed interest | (7) | |
Total | $ 131 | $ 258 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - Pension Benefits $ in Millions | 1 Months Ended |
Jul. 31, 2020USD ($) | |
Subsequent Events | |
Employer contributions | $ 3.7 |
Settlement loss | $ 0.6 |