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Executives

Hank Herrmann - CEO

Tom Butch - Chief Marketing Officer

Mike Strohm - COO

Dan Connealy - CFO

Nicole McIntosh - Director of IR

Mike Avery - Chief Investment Officer

Analysts

Jeff Hopson - Stifel Nicolaus

Marc Irizarry - Goldman Sachs

William Katz - Buckingham Research

Cynthia Mayer - Merrill Lynch

Bob Glasspiegel - Langen McAlenney

Robert Lee - KBW

Waddell & Reed Financial Inc. (WDR) Q1 2008 Earnings Call April 22, 2008 10:00 AM ET

Operator

Welcome to the Waddell & Reed first quarter Earnings Call. (Operator Instructions). This conference is been recorded today April 22, 2008.

I would now like to turn the conference over to Mr. Hank Herrmann, Chief Executive Officer of Waddell & Reed. Please go ahead, sir.

Hank Herrmann

Good morning. With me today are Tom Butch, our Chief Marketing Officer; Mike Strohm, our Chief Operations Officer; Dan Connealy, our Chief Financial Officer; Mike Avery, our Chief Investment Officer and Nicole McIntosh, our Director of Investor Relations.

Nicole, would you read the forward-looking statements, please?

Nicole McIntosh

During this call, some of our comments and responses will include forward-looking statements. While we believe these statements to be reasonable based on information that is currently available to us, actual results could materially differ from those expressed or implied due to a number of factors including but not limited to those referenced in our public filing with the SEC. We assume no duty to update any forward-looking statement. Material relevant to today's call including a copy of today's press release as well as supplemental schedule have been posted on our website at waddell.com under the corporate tab.

Dan Connealy

Thank you, Nicole. Today we reported our results for the first quarter that ended in March. Our earnings per diluted share of $0.33 fell short of consensus expectation of $0.39 due to several factors.

First, the market environment experienced during the first quarter was one of the most challenging in recent years, with most of the pressure as measured by the investment performance of the S&P 500 occurring in January.

As you know the S&P declined 6% in January and 10% for the quarter approximately. As we earn management fees on a daily average asset under management basis, a decline in January obviously penalizes the entire period. Recall also that approximately 85% of our assets under management are in equities.

Additionally, effective management fee rate declined as our Asset Strategy fund became a larger share of total assets under management. On a first quarter year-over-year basis, Asset Strategy has risen from about 14% of equities to 31% at the end of March.

This mix shift plus market action accounts for approximately one-third of the earnings per share shortfall relative to Street expectations. Second, compensation and related costs explain approximately $2.5 million by bonus payments to portfolio managers reflecting our funds outstanding returns in 2007. This variance also accounted for about one-third of the mix versus consensus.

The remaining one-third arises primarily from higher U&D expense which reflects the very substantial inflow seen in the quarter. As to this last point, our business momentum remains strong, although at a somewhat softer rate than the first quarter.

Each distribution channel continues to turn in outstanding results especially given the turbulence in financial markets. Our advisory channel once again delivered improvements in sales and productivity gross sales in excess of $1 billion during the quarter were near record high levels.

Gross sales improved 4% sequential quarterly and 32% compared to the same period in 2002, net inflows of a $133 million represents one of the best quarterly results on record, positive flows in this channel in such a poor equity environment is unprecedented. Sales trends remained solid in April. These results speak to the multi-faceted effort in recent years to strengthen the channel.

Gross sales volume in the wholesale channel surpassed all previous high watermarks at $5.4 billion gross sales in the quarter far exceeded first quarter year ago. Net inflows of $4.3 billion represent an 80% organic growth rate. Over the past few weeks, we have begun to experience some softening of sales, but results are still very strongly positive.

Our operating margin was 19.7% during the first quarter compared to 22% during the pervious quarter and 24.2% during the same period in 2007. The pressure on our margins due primarily to robust sales volumes experienced in our wholesale channel and as already noted, higher incentive compensation cost and somewhat lower management fee revenues.

The sequential improvement in wholesale sales was approximately $1.5 billion. This resulted in additional underwriting and distribution expense in the neighborhood $7 million or $0.05 per share sequentially. This observation is a reminder of the short-term cost of gathering assets in this channel.

Finally, as to our institutional business, it is also faire and well. Our relationship with Pictet & Cie brought in almost $600 million in new assets during the quarter. Flows remained positive so far in April. Institutional pipeline continues to improve for our traditional define benefit business beyond just our large cap growth funds.

In sum, we maintained exceptional business momentum in the phase of material equity market headwinds, while our growth particularly in the wholesale side carried with it a short-term margin penalty. We could not be more encouraged with the strength and resilience of our business.

Joshua, at this time, I'd like to open the call for questions.

Question-and-Answer Session

Operator

Ladies and Gentlemen, at this time, we will now begin the question-and-answer session. (Operator Instructions) Our first question comes from the line of Jeff Hopson, Stifel Nicolaus. Please go ahead.

Jeff Hopson - Stifel Nicolaus

Hi, good morning. I was wondering, if you could talk a little bit about the pipeline on the institutional side. Can you identify which products are starting to see some further interest and then I am not sure if Mike Avery but I was wondering if you could give an update on the investment strategy within the asset strategy? I know it's been relatively defensive, but any updates would be appreciated.

Hank Herrmann

I'll let Mike go first and talk about the funds and then I will come back again.

Mike Avery

Well, thanks for the question. I hope after asking you're going to shareholders, but I don't think we have had any major changes in the strategy of the funds, but some times as you know as you know, this is a flexible fund where we can invest 100% in any of the major asset classes. We've been relatively defensive for well over a year now and that served our shareholders pretty well.

Year-to-date, the fund is flat in an environment where US market is down to 5.5% year-to-date and where most of the markets that we play in are down, multiples of that. The way we've been able to mitigate to downside on behalf of our shareholders despite using derivatives inward to our hedge our positions and that's went pretty well.

Since January 22, about then, we've been slowly reducing our hedges and increasing our equity positions despite (inaudible) and where we find effective areas include wherever they're merging middle classes globally, specifically South Asia, Eastern Asia, the Middle East and parts of Europe and that's where we're continuing to concentrate the equity portions of funds.

So I think, long-term, we're very optimistic about the growth opportunities for that people group emerging middle class. Short-term, we're maintaining our defensive posture even though it looks like there are some signs in the market could be improving. I think, it's little too early to call all clear.

Jeff Hopson - Stifel Nicolaus

Okay, thank you

Mike Strohm

I think in applications, Jeff, we don't have one.

Hank Herrmann

In response to the first part, we've also been winding some business in the Asset Strategy class and in our core product and then it shifted around a little bit, we're also winning some business in the defined contribution channel as opposed to the DV channel which is also been helpful and that's occurring in core and large cap growth.

Jeff Hopson - Stifel Nicolaus

Okay, great. Thank you.

Operator

Our next question comes from the line of Marc Irizarry, Goldman Sachs. Please go ahead.

Marc Irizarry - Goldman Sachs

Great, thanks. Hi everybody.

Hank Herrmann

Good morning Marc.

Marc Irizarry - Goldman Sachs

Good morning. Hopefully this question, I think it will depend a little bit on the mix of channels et, cetera, but can you sort of give your expectations or what we should sort of think in terms of the comp ratio going forward obviously it's spiked up a bit here and it seems like some of this is the result of very strong sales, but do you expect that on a sort of longer-term basis the comp ratio to make its way up to the mid-30s? Thanks.

Dan Connealy

Now this is Dan Connealy. We are looking at comp run rate in the second quarter of around $32 million compared to the $34.3 million that we experienced in first quarter, now the mix there is that equity comp will go up about $0.5 million because we had grants in early April and the balance is in our core cash comp, so beyond the second quarter, I think it will depend a little bit on the investment results and we always have to monitor whether we are accruing properly for incentive bonuses.

Hank Herrmann

Marc, if you went back and looked at the material in the quarterly, you will see the rankings of our funds by equity under management and also the number of funds, but the point is that I believe something like 75% of our equity funds assets were in the top quartile, and probably 50% were in the top 10%, and that's for one and three-year basis, and that one and three is how we pay our portfolio managers.

And when you have 10%, and when you have that larger percentage of your asset in the top 10%, you really have people who are ringing the bell and when they ring the bell they have to be compensated. The ratio is extraordinarily good, and was extraordinarily good for the year '07.

I always hope that that will continue, but history suggests that, it's awfully difficult to be that good persistently, or I would guess that based on performance, you'll see somewhat lower bonuses paid out, but I got surprised last year by a stronger than my wise and windage led to me to think it would be appropriate and if it happens again, it happens again I guess I'll be smiling.

Marc Irizarry - Goldman Sachs

It seems like a good problem to have. In terms of the advisors channel, Hank, you mentioned that obviously the sales are strong, inflows are strong, advisors and it's unprecedented given the environment that we are in. How sustainable do you think the trends that you are seeing are in that channel, and how much further is there to go in terms of productivity?

Hank Herrmann

Alright, I'm going to comment and then I'm going to ask Tom to comment. What I can tell you is that, April continues to see positive flows in the channel. And when I say unprecedented, I'd like to put that in context kind of dreary market we experienced in the first quarter, my experience that goes way back as you know.

I would guess, we would have had a couple hundreds million of outflows, not the case, in part is because the product would also in part is because of all the things that Tom has been doing and I'm going to use that as a segue to let him speak.

Tom Butch

Thank you Hank, I would say that one measure in potential sustainability is a trend line, which continues to move in the right direction. The potential to increase productivity, I think, exists most in sort of a middle-third of the sales force. If you were to look at the production of, say, the top third of the sales force, certainly, it's competitive within the industry, and the next third is where have the opportunity to most make continuous stride in productivity.

I think the sustainability is there. I think it's really a function of a lot of things that have gone on in the channel over the last couple of years by way of better selection and training, better support for the advisors, infusion of new products that give me new opportunities in fee base and financial planning-oriented practices and a whole span of new tools that we've given them and so we're certainly encouraged that the first quarter results are very strong and as Hank suggested are continuing into April and we're encouraged that we sustain that momentum.

Marc Irizarry - Goldman Sachs

And then just one more in terms of the expenses in the wholesale channel. It looks like it's the growth in expenses, sort of, if I thought a little, I mean, do you expect that, when sort of the point that we should expect that it's a sort of like we're reaching a new expense level here in terms of the amount of cost to fill the channel if you will?

Dan Connealy

This is Dan again. I think you will notice that the indirect cost not related directly to the sales level is growing lot less rapidly than the direct cost. We already have seen the negative margin from the wholesale distribution beginning to come down. It's not very apparent in the total numbers because the sales were simply that strong, but we have reached to the point where we should be seeing the margins begin to pick up even at fairly elevated sales levels.

Marc Irizarry - Goldman Sachs

Okay, great. Thanks.

Operator

Our next question comes from the line of William Katz, Buckingham Research. Please go ahead.

William Katz - Buckingham Research

Okay, thank you, good morning. Dan, I just have a clarifying comment, you said that the run rate on comp would be $32 million. Is that before or after the impacts of the restricted stock ramp?

Dan Connealy

That includes the impact.

William Katz - Buckingham Research

So, all has been equal in the first quarter at about $4 million of unusual expenses if you will relative to '07?

Dan Connealy

Well, I don't know if it's quite that amount, but if you analyzed all of '07 maybe so, not certainly compare to the fourth quarter of '07.

William Katz - Buckingham Research

Okay, relative to '07, okay, that's helpful. And then just stepping back for a second, following upon our last question. Your gross sales were up 35% sequentially and your margins improved or less negative by almost 1200 basis points. What's the best way to model the direct expense growth? It seems like that's a function of distribution trailer plus payout to the wholesaler, but that seems to be still somewhat a volatile line. Is that where you could see some of the incremental leverage on a go forward basis?

Dan Connealy

Yes it is and it is difficult to forecast because with all of our partners they each have different ways to be compensated, some are more point of sale and some are more platform fees based on AUM over the year. But it basically cost us somewhere around 65 to 75, depending on where the sale occurs, basis points to add those assets, all in, in the quarter when we gathered it. So, that's the sort of thing that I would be modeling.

William Katz - Buckingham Research

Okay, and then just as I think about the revenue yield, what struck me was the sequential change in the third-party of wholesale equity as well as the institutional. And I'm just trying to get a sense of mix here versus yield and given what seem to be very strong lead indicators for growth, would you expect that the yields in both those parts of the portfolio would continue to trend lower?

Dan Connealy

Well, obviously it's going to depend a bit on where the sales are coming from, and they remain strong in Asset Strategy, so there will be some pressure there, but if the other products improve, that would help quite a bit too.

William Katz - Buckingham Research

Which products could potentially offset that?

Dan Connealy

Broadly speaking, the equities recover some, the other equity products will rise as a percentage of the total and that will help with the fee mix change.

Hank Herrmann

Right.

William Katz - Buckingham Research

And then, Hank just lastly, thanks for taking all the questions here, you mentioned a little bit about some success in the defined contribution channel, could you talk a little bit more broadly about the strategy to grow the institutional business?

Hank Herrmann

It's been the same pretty much all along. If we have a product that we think the market is interested in and it exists in the retail channel, we clone it and introduce it into the institutional Channel. We are presently increasing the size of the marketing staff, we are attempting to, I should add. So that we'll have more feet on the ground but you are talking about still a rather modest marketing organization that sells primarily through consultants.

Present time, we're hopeful that we can find enough available horsepower in the management team of the Asset Strategy fund that'll help us build that business in the defined benefit world, but the extreme growth that we experienced in the broker/dealer channel, probably demands a lot of the senior people's attention.

William Katz - Buckingham Research

Okay, thank you very much.

Operator

Our next question comes from the line of Cynthia Mayer, Merrill Lynch. Please go ahead.

Cynthia Mayer - Merrill Lynch

Hi, I apologize if you hit on this already, but can you talk a little bit about how sticky you think the assets and Asset Strategy fund will be, if the markets improve and what patterns we'll be seeing in terms of, when people redeem, do they move to other house products or did they move outside the complex?

Hank Herrmann

Cynthia, I don't have any reason to think that normal experience wouldn't be applicable here. And given the organization you work for, you may have a better feel than I. My impression is however that because of the flexibility of this portfolio, we wouldn't be as exposed as typical in a grumpy environment and it's the grumpy environment that usually accelerates redemptions. Case in point, in the rough markets we've had over past four, five months, I have not seen an acceleration and redemption either as a percentage of assets or dollars.

Cynthia Mayer - Merrill Lynch

So when the markets began to improve, you also then see more redemption?

Hank Herrmann

Ask me again, I'm sorry.

Cynthia Mayer - Merrill Lynch

When the markets improved, did you see any increase in redemptions since Asset Strategy has been relatively defensive?

Hank Herrmann

No.

Cynthia Mayer - Merrill Lynch

Okay. And then just another on distribution. I am wondering for instance with your own wholesalers, how stepping stone those agreements are? Should we just assume that the cost that you have for selling are going to remain exactly the same and it's just the function of sales or are those ever re-negotiated?

Hank Herrmann

Okay. I am going to backup and let Tom respond to the previous question you asked because he had a point I think he even wanted to make, and in addition to that I am going to ask him to respond to your next question.

Tom Butch

Yeah, and just as an addendum to the Asset Strategy conversation, the fund has been incredibly adept historically at participating in the markets upside as well, and so I don't think there is anything that suggests that there will be a reflexive movements away from it the equity markets to turn positive, anything that might provide a an halo to other products, and that category becomes more important generally. There is obviously an appetite for the kind of product that can maneuver around different market situations.

Back to your second question as it relates to broker dealer agreements, they are not necessarily cast in stone. There are tweaks from time to time within the relationships and within the overall pricing models and methodologies of the various partners, so those happen from time-to-time none of them has in my opinion over the last couple of years been particularly material but they often we think the way that they want to price their distribution relationships and those are points of negotiations when that happen.

Cynthia Mayer - Merrill Lynch

And what about with your own wholesalers?

Tom Butch

Our wholesaler compensation programs are set annually with the potential win necessary to adjust them into our year. And it's a mix of cash compensation and equity in the firm.

Cynthia Mayer - Merrill Lynch

Do you anticipate any changes to that coming up?

Tom Butch

We initiated a change to that recently, yes.

Cynthia Mayer - Merrill Lynch

Okay. Is that going to have any impact do you think on costs?

Tom Butch

Yes.

Cynthia Mayer - Merrill Lynch

Can you give any more color on that?

Tom Butch

It's pretty difficult when you don’t know the level of sales to measure it.

Cynthia Mayer - Merrill Lynch

Well, if it had been implemented retroactively for the first quarter, do you have a sense of what impact it would have?

Tom Butch

It's not the way we chose to go about it. No.

Cynthia Mayer - Merrill Lynch

Okay. Moving on, I guess just a question about variable annuity. It just looked like the sales fell off there and I’m wondering what are the drivers you think for that and what are your expectations for that since they seem to carry such a nice front load?

Tom Butch

Well I think they fell off sequentially, but year-over-year they were up very healthily. So I wouldn’t interpret that as being anything particularly meaningful, and in fact they are ahead of plan for the year. And so, we’ve seen a resurgence of the product among our advisors, particularly as it relates to the many income guarantees and other living benefit features that those provide. In the financial planning context, they are going to be very important part of what we are doing going forward.

Cynthia Mayer - Merrill Lynch

Do you happen to have a variable annuity version of asset strategy?

Tom Butch

We have a variable annuity sub-account, if that’s what you mean, of the asset strategy fund, yes. And it is in the annuities that are sold through our Waddell & Reed advisors and we are seeking to market it to other variable annuity providers as a sub-account as well.

Cynthia Mayer - Merrill Lynch

Okay. And one last clarification just on the comp discussion before, if you are expecting a $32 million run rate, then does that mean basically you expect that for a second, third quarter and then you true-up in the fourth quarter and if necessary again in 1Q '09?

Dan Connealy

We may true up earlier than that if the performance numbers suggest that we need to do that. We did some of that truing up in the third quarter and fourth quarter last year as the year is truly didn't true it up enough and when we looked at the annual results early in March, it was obviously needed to do more, so we caught up.

Cynthia Mayer - Merrill Lynch

Okay. And last question on Pictet, are you still the, sort of, exclusive provider of the U.S. growth equity to them?

Dan Connealy

Yes, large camp.

Cynthia Mayer - Merrill Lynch

To that large camp. All right. Okay, great, thanks

Operator

Our next question comes from the line of Bob Glasspiegel, Langen McAlenney. Please go ahead.

Bob Glasspiegel - Langen McAlenney

Good Morning everyone. Can you just quantify the extra incentive comp in the quarter?

Dan Connealy

I think we have in the press release noted that it was $2.5 million greater than in the fourth quarter.

Bob Glasspiegel - Langen McAlenney

Okay. So that would be the number that we should take care of just for run rate, now which is for under accruing it in the prior quarters?

Dan Connealy

Yeah.

Hank Herrmann

Bob, bear in mind that the question you're asking also contains some consideration, or should contain some consideration reflecting on the answer I gave just prior to your question. In other words, I said, we trued up some in the third quarter and the fourth quarter as well. And so, therefore you need to be cognizant of the fact that with such exceptional performance that we needed to pump the number for three quarters. And could you just regress back to normal, it might be a little bit more than the number suggested in the release in aggregate.

Bob Glasspiegel - Langen McAlenney

I got you. That's helpful. Was proxy solicitation at all an item in the quarter?

Hank Herrmann

No, didn't really affect us.

Bob Glasspiegel - Langen McAlenney

Okay. And do you target an operating margin that you want to get to booking out a year or two?

Dan Connealy

We do Bob, why are you asking me this question is because my skills at archery obviously are not as good as they should be. I never hit the damn number.

Bob Glasspiegel - Langen McAlenney

Right. What is the number?

Dan Connealy

Bob, we don’t articulate what our budget is, so we don’t give guidance. But obviously we are expecting to see improvements in our margin as the year continues.

Bob Glasspiegel - Langen McAlenney

Okay. Is that sort of a factor that drives compensation or it's more just earnings per share?

Dan Connealy

Compensation has got three parts. One of them is performance of our portfolio managers.

Bob Glasspiegel - Langen McAlenney

Right.

Dan Connealy

(inaudible). Then it's head count growth we provided you information in this release about head count growth and I think it’s a kind of like a 5% number last year year-over-year first quarter, something like that. And then, what we recall annual increases, which this year were a little bit maybe above trend line just because performance of the company as a whole was just as good as it was and then also equity compensation was also a little bit more generous than it might have been mostly because we had such a great year.

Bob Glasspiegel - Langen McAlenney

Thank you. Very helpful.

Operator

(Operator Instructions). Our next question comes from the line of Robert Lee, KBW. Please go ahead.

Robert Lee - KBW

Thanks. Good morning everyone.

Hank Herrmann

Good morning.

Robert Lee - KBT

Couple of quick questions. First one, just looking at the sub-advisory fees, it looks like that the rate -- the sub-advisory expense, the rate pay on that has been declining somewhat. Is that, since I’m assuming that it's still driven predominantly by the Natural Resource fund, is there kind of breakpoint that you are hitting in that, that’s kind of causing a downward trend in the fee rate?

Hank Herrmann

No. We had a period of time when there has been a lot of questions about whether or not the places that Natural Resources invest in is the right place to be looking forward, we happened to think it is. But retail had some doubts and so new sales there had slowed and assets growth therefore has slowed. And that’s led to a lot less growth in the sub-advised fees. That was an important part of the consideration here.

In addition to that we have had some outflows on our Trundle fund, which is a Deep Value fund that’s sub-advised and Deep Value has not been all that popular place lately and performance there has lagged the peer group some. We are in the process of -- there has been some changes in the way that’s been managed by the sub-advisor and the relative performance has improved a lot and so it may be that we’ll go back into positive flows again, but the outflows have been moderating some.

Robert Lee - KBT

Okay. And you actually, you sort of answered by next question, but I’ll ask it anyway. If I think back, Hank, this is actually a question for you I guess, Mike, if I think back to the tech bubble, if I remember correctly you had at some point decided that, funds has had too much exposure and somewhat uncharacteristically made a stepped in and kind of had a lot of the PMs held back their tech exposures, which has kind of saved you from a lot of the damage. I mean, do you at all feel when you look around the commodities market, the energy market, anything similar from your investment experience or you're kind of not concerned about it?

Mike Strohm

I think the way to look at commodities is there's a global rebalancing occurring that is resulting in urbanization infrastructure phase of growth in many parts of the world, whether it is Eastern Asia, Southern Asia or the Middle-East. And when large numbers of people groups move from rural areas to urban settings, infrastructure urbanization occurs, all of which is very energy and very natural resource intensive. And I think that the secular outlook for many commodities is positive from an investment perspective because of rising demand as people move from rural areas to urban areas and their quality of life improves. All in all that's a good thing. And as a percent of total costs, commodities are still relatively low.

So, yes I'm not worried, I'm probably maybe even too more optimistic than most people but I think the secular demand for commodity is based on what I just said, is very positive.

Robert Lee - KBT

Okay. Thanks. And just one last quick question. Maybe I'm missed in the press release but what was the non-cash compensation expense in the quarter?

Dan Connealy

(inaudible). The equity compensation in this quarter was 6.9 million.

Robert Lee - KBT

Okay. And you expect that, that will go up about 500 million next quarter -- 500,000, sorry.

Dan Connealy

7.5.

Robert Lee - KBT

All right.

Dan Connealy

Because we have a grant in April.

Robert Lee - KBT

All right. Thanks a lot guys.

Operator

Our next question is a follow-up question from the line of William Katz. Please go ahead.

William Katz - Buckingham Research

Okay. Thank you very much. Just couple of things. On the advisor channel, you look at the yield, if you will, revenues relative to sales. That has gone down pretty steadily last few quarters and had a bigger step down sequentially into the first quarter. Just sort of curious, if you can give us a little more color about what’s going on there maybe it's just a variable annuity discussion, but would like a little more clarity on that?

And then Dan just sort of coming back to the discussion on the cost originate in the wholesale channel, I am not getting anything close to the 80 some odd basis points -- 65-70 basis points you had mentioned before, I was just wondering how you are thinking about that calculation? Thank you.

Dan Connealy

Well the annuity versus the fourth quarter was down. So that did have an effect on the revenues. We also are selling a lot of our MAP product. MAP product is a RAP product that doesn’t have an upfront sales load, over time has higher earnings for us. That’s about 19% of sales right now. Those are the contributing factors to the revenue being down.

With regard to the cost to gather the assets that 65 basis points was really an all-in cost including what we pay our wholesalers. It overrides for the management staff, some of the support costs for that organization plus what we paid for point of sale fees to partners and platform fees to partners. So it varies every quarter because of where the sales occur. That does add up to that amount. So maybe offline we can discuss that further.

William Katz - Buckingham Research

Okay, and that’s helpful. Thanks very much.

Hank Herrmann

Well, in the supplemental information we gave you in the release you can see the level of MAP sales and the progression over the last six quarters I guess.

William Katz - Buckingham Research

That’s helpful. Thank you so much.

Operator

Ladies and gentlemen, that does conclude our question-and-answer session for today. I will turn the conference back to the management for closing remarks. Please go ahead.

Hank Herrmann

We appreciate very much your calling in, listening to our remarks. We look forward to visiting with you again at the end of next quarter. Thanks for your time. Bye, bye.

Operator

Ladies and gentlemen this does conclude today’s Waddell & Reed first quarter earnings conference call. If f you would like to listen to a replay of today's conference, please dial 1-800-405-2236 or 303-590-3000. The pass code today’s conference is 11109792#. Thank you for your participation for using ACT conferencing. You may now disconnect, and have a pleasant day.

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