Stockholders' Equity

3 Months Ended

Mar. 31, 2017

9.Stockholders’ Equity

Earnings per Share

The components of basic and diluted earnings per share were as follows:


	Three months ended
	March 31,
	2017		2016


Net income attributable to Waddell & Reed Financial, Inc.	$	33,056	36,968

Weighted average shares outstanding, basic and diluted		84,077	82,104

Earnings per share, basic and diluted	$	0.39	0.45

Dividends

On February 14, 2017, the Board of Directors approved a dividend on our common stock in the amount of $0.46 per share to stockholders of record on April 10, 2017 paid on May 1, 2017. The total dividend paid was approximately $38.5 million and was included in other current liabilities as of March 31, 2017.

Common Stock Repurchases

The Board of Directors has authorized the repurchase of our 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 476,882 shares and 1,125,671 shares repurchased in the open market or privately during the three months ended March 31, 2017 and 2016, respectively, which includes 1,882 shares and 3,671 shares, respectively, repurchased from employees who tendered shares to cover their minimum income tax withholdings with respect to vesting of stock awards during these same reporting periods.

Accumulated Other Comprehensive Loss

The following tables summarize other comprehensive loss activity for the three months ended March 31, 2017 and March 31, 2016.


			Change in
			valuation
			allowance for
			unrealized		Pension and	Total
	Unrealized		gains		postretirement	accumulated
	gains (losses)		(losses) on		benefits	other
	on investment		investment		unrealized	comprehensive
Three months ended March 31, 2017	securities		securities		gains (losses)	income (loss)
	(in thousands)
Balance at December 31, 2016	$	(3,972)		(3,388)	(45,969)	(53,329)
Other comprehensive income before reclassification		1,423		2,324	—	3,747
Amount reclassified from accumulated other comprehensive income (loss)		(92)		(56)	786	638
Net current period other comprehensive income		1,331		2,268	786	4,385
Balance at March 31, 2017	$	(2,641)	$	(1,120)	(45,183)	(48,944)


			Change in
			valuation
			allowance for
			unrealized		Pension and	Total
	Unrealized		gains		postretirement	accumulated
	gains (losses)		(losses) on		benefits	other
	on investment		investment		unrealized	comprehensive
Three months ended March 31, 2016	securities		securities		gains (losses)	income (loss)
	(in thousands)
Balance at December 31, 2015	$	(3,729)		(3,240)	(54,536)	(61,505)
Other comprehensive loss before reclassification		(4)		(1)	—	(5)
Amount reclassified from accumulated other comprehensive income		51		30	1,077	1,158
Net current period other comprehensive income		47		29	1,077	1,153
Balance at March 31, 2016	$	(3,682)	$	(3,211)	(53,459)	(60,352)

Reclassifications from accumulated other comprehensive loss and included in net income are summarized in the tables that follow.


		For the three months ended March 31, 2017
			Tax
			(expense)
	Pre-tax		benefit	Net of tax	Statement of income line item
	(in thousands)
Reclassifications included in net income:
Sponsored funds investment gains	$	148	(56)	92	Investment and other income (loss)
Valuation allowance		—	56	56	Provision for income taxes
Amortization and settlement of pension and postretirement benefits		(1,251)	465	(786)	Underwriting and distribution expense and Compensation and related costs
Total	$	(1,103)	465	(638)


	For the three months ended March 31, 2016
			Tax
			(expense)
	Pre-tax		benefit	Net of tax	Statement of income line item
	(in thousands)
Reclassifications included in net income:
Sponsored funds investment gains	$	(81)	30	(51)	Investment and other income (loss)
Valuation allowance		—	(30)	(30)	Provision for income taxes
Amortization of pension and postretirement benefits		(1,696)	619	(1,077)	Underwriting and distribution expense and Compensation and related costs
Total	$	(1,777)	619	(1,158)

- Definition

The combined disclosure used to capture the disclosure pertaining to an entity's earnings per share and disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

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