Waddell & Reed Financial, Inc. (NYSE: WDR) today reported third quarter income from continuing operations of $52.1 million, or $0.61 per diluted share, compared to $41.2 million, or $0.48 per diluted share, during the second quarter of 2012 and $39.4 million, or $0.46 per diluted share, during the same period last year.
On October 29 of this year, the Company entered into a definitive agreement to sell its Legend group of subsidiaries to First Allied Holdings Inc. As a result of this transaction, Legend’s operations are now classified as discontinued operations in current and prior periods presented. Results from discontinued operations in the current quarter include a non-cash charge of $42.4 million related to the write-down of Legend as a result of the sale. We expect the transaction to close in January 2013, subject to regulatory approval customary for transactions of this type.
“The sale of Legend reflects our desire to emphasize our core business,” said Hank Herrmann, Chairman and Chief Executive Officer of Waddell & Reed Financial, Inc. “We appreciate the efforts of the Legend team over the past 12 years and wish them continued success in their new alliance with First Allied.”
Net income, including the loss from discontinued operations, was $8.5 million, or $0.10 per diluted share, during the quarter compared to net income of $41.7 million, or $0.48 per diluted share, during the previous quarter and $39.8 million, or $0.46 per diluted share, during the third quarter of 2011. Unless stated otherwise, any reference to income statement items in this release refers to results from continuing operations.Operating income was $79.7 million during the quarter, an 18% increase compared to the previous quarter and 8% increase compared to the same period last year. Our operating margin reached 27.2%, compared to 23.3% during the previous quarter and 26.4% during the same period last year.