Market Overview

Waddell & Reed Financial, Inc. Reports Second Quarter Results

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Waddell & Reed Financial, Inc. (NYSE:WDR) today reported second quarter
2018 net income1 of $44.5 million, or $0.55 per diluted
share, compared to net income of $46.3 million, or $0.56 per diluted
share, during the prior quarter and net income of $24.1 million, or
$0.29 per diluted share, during the second quarter of 2017.

Revenues of $295.3 million during the quarter declined 1% sequentially
and increased 3% compared to the second quarter of 2017. Operating
expenses of $237.1 million during the quarter remained largely unchanged
compared to the prior quarter and increased less than 1% compared to the
same quarter in 2017. The operating margin was 19.7% during the current
quarter, compared to 20.1% and 17.8% during the first quarter of 2018
and the second quarter of 2017, respectively.

Assets under management ended the quarter at $78.7 billion, declining 2%
compared to the prior quarter and 2% compared to the second quarter of
2017. Sales of $2.9 billion during the current quarter declined 23%
compared to the first quarter of 2018 and were 11% lower than the second
quarter of 2017. Net outflows were $3.1 billion during the current
quarter, compared to net outflows of $1.5 billion during the prior
quarter and $2.5 billion during the second quarter of 2017, with the
current quarter redemption increase driven primarily by the
Institutional channel. A sequential improvement in market return helped
offset some of the outflows during the current quarter.

Broker-dealer assets under administration ended the quarter at $57.1
billion, increasing 1% compared to the first quarter of 2018 and 6%
compared to the second quarter of 2017. Average productivity per
advisor, as measured by average trailing twelve-month revenue per
advisor, was $314 thousand for the twelve-month period ended June 30,
2018; improving 10% compared to the twelve-month period ended March 31,
2018. Average productivity per advisor continues to rise as we focus our
programs and support on high-performing financial advisors.

"We continue to be focused on managing our product line to ensure its
competitiveness. Strengthening our investment performance and
dynamically managing our products and their distribution are key steps
in our progress," said Philip J. Sanders, Chief Executive Officer of
Waddell & Reed Financial, Inc. "We believe in the value we provide as
active managers, and our recent results have borne that out, with
performance improvement across a majority of our key strategies."

_____________________
1 Net income represents net income
attributable to Waddell & Reed Financial, Inc.

Revenues Analysis

Investment management fee revenues decreased $3.3 million, or 2%,
sequentially, or slightly less than the decrease in average assets under
management due to an additional day in the current quarter. Compared to
the second quarter of 2017, fees declined less than 1%. During the
current quarter, the effective management fee rate was 65.4 basis
points, compared to 65.8 basis points during the first quarter of 2018
and 65.1 basis points during the second quarter of 2017. Average assets
under management were $80.0 billion during the current quarter, compared
to $82.4 billion during the prior quarter and $80.6 billion during the
second quarter of 2017.

Underwriting and distribution fees decreased $0.2 million, or less than
1%, sequentially. A decrease in distribution fees due to lower assets in
unaffiliated distribution was partially offset by higher asset-based
advisory fee revenues in the broker-dealer. Compared to the second
quarter of 2017, fees increased $9.1 million, or 7% due to higher
asset-based advisory fees in the broker-dealer and new revenues from
independent financial advisors for services, which were partially offset
by lower distribution fees.

Operating Expenses Analysis

Distribution expenses decreased $0.2 million, or less than 1%
sequentially, in correlation with the decrease in underwriting and
distribution revenues. Compared to the second quarter of 2017,
distribution expenses increased $5.3 million, or 5% due to higher
commissions paid to independent financial advisors under the new
commission structure that became effective on January 1, 2018 and higher
commissions on our asset-based advisory products due to advisory asset
growth. The increase was partly offset by lower commissions paid to
third-party distributors.

Compensation and benefits expenses declined $3.0 million, or 4%
sequentially, due to lower payroll taxes, savings plan costs and equity
compensation, which were partially offset by severance costs of $4.4
million during the current quarter. Compared to the second quarter of
2017, expenses rose $0.5 million, or less than 1%, as severance costs
and the annual merit increase were partly offset by lower pension costs
due to the prior year plan freeze.

General and administrative expenses declined $0.4 million, or 2%,
sequentially due to lower usage of consultants following the completion
of various projects and lower fund waiver costs. Compared to the second
quarter of 2017, expenses declined $4.1 million, or 18%, due to a
combination of lower usage of consultants during the current quarter,
primarily for Project E, the Department of Labor fiduciary rule, and to
fund merger costs in 2017.

Technology expenses increased $0.6 million, or 4%, sequentially due to a
combination of higher data service costs and consulting costs. Compared
to the second quarter of 2017, expenses declined $0.5 million, or 3% due
to lower software licensing costs.

The current quarter includes an intangible impairment charge of $1.2
million related to a terminated subadvisory agreement.

Income Taxes

During the second quarter, we resolved and closed an outstanding state
tax liability resulting in a benefit of $6.4 million, which was largely
offset by the tax shortfall on restricted stock vesting.

 
Assets Under Management

(in millions)

 
    Three Months Ended
Jun. 30,     Sep. 30,     Dec. 31,     Mar. 31,     Jun. 30,
2017 2018
Unaffiliated 1
Beginning assets $ 30,182 $ 30,307 $ 31,062 $ 31,133 $ 31,055
Sales 2 2,080 1,790 1,577 2,245 1,779
Redemptions (2,886 ) (2,486 ) (2,912 ) (2,692 ) (2,646 )
Net exchanges   235     213     316     247     284  
Net Flows (571 ) (483 ) (1,019 ) (200 ) (583 )
Market action   696     1,238     1,090     122     310  
Ending assets $ 30,307 $ 31,062 $ 31,133 $ 31,055 $ 30,782
Annualized organic growth rate

(7.6

)%

(6.4

)%

(13.1

)%

(2.6

)%

(7.5

)%

Annualized redemption rate 3

39.2

%

33.0

%

37.9

%

35.8

%

34.9

%

Institutional
Beginning assets $ 7,792 $ 7,036 $ 6,365 $ 6,289 $ 6,449
Sales 2 78 68 66 552 153
Redemptions (1,057 ) (1,139 ) (521 ) (604 ) (1,652 )
Net exchanges   6                  
Net Flows (973 ) (1,071 ) (455 ) (52 ) (1,499 )
Market action   217     400     379     212     300  
Ending assets $ 7,036 $ 6,365 $ 6,289 $ 6,449 $ 5,250
Annualized organic growth rate

(49.9

)%

(60.9

)%

(28.6

)%

(3.3

)%

(93.0

)%

Annualized redemption rate 3

58.7

%

67.3

%

32.2

%

37.8

%

115.4

%

Broker-Dealer
Beginning assets $ 43,110 $ 43,084 $ 43,472 $ 43,660 $ 42,707
Sales 2 1,142 1,024 1,077 1,001 1,002
Redemptions (1,812 ) (2,049 ) (2,026 ) (1,958 ) (1,770 )
Net exchanges   (241 )   (213 )   (316 )   (247 )   (284 )
Net Flows (911 ) (1,238 ) (1,265 ) (1,204 ) (1,052 )
Market action   885     1,626     1,453     251     964  
Ending assets $ 43,084 $ 43,472 $ 43,660 $ 42,707 $ 42,619
Annualized organic growth rate

(8.5

)%

(11.5

)%

(11.6

)%

(11.0

)%

(9.9

)%

Annualized redemption rate 3

14.7

%

16.4

%

16.1

%

15.1

%

14.4

%

Consolidated Total
Beginning assets $ 81,084 $ 80,427 $ 80,899 $ 81,082 $ 80,211
Sales 2 3,300 2,882 2,720 3,798 2,934
Redemptions (5,755 ) (5,674 ) (5,459 ) (5,254 ) (6,068 )
Net exchanges                    
Net Flows (2,455 ) (2,792 ) (2,739 ) (1,456 ) (3,134 )
Market action   1,798     3,264     2,922     585     1,574  
Ending assets $ 80,427 $ 80,899 $ 81,082 $ 80,211 $ 78,651
Annualized organic growth rate

(12.1

)%

(13.9

)%

(13.5

)%

(7.2

)%

(15.6

)%

Annualized redemption rate 3

27.9

%

27.1

%

25.7

%

24.8

%

29.8

%

_____________________

(1)  

Unaffiliated includes National channel (home office and
wholesale), Defined Contribution Investment Only "DCIO,"
Registered Investment Advisor "RIA" and Variable Annuity "VA."

(2) Sales is primarily gross sales (net of sales commissions). This
amount also includes net reinvested dividends & capital gains and
investment income.
(3) Excluding Money Market.
 
 
Fund Rankings     1 Year     3 Years     5 Years
Lipper
Funds ranked in top half 55 % 36 % 51 %
Assets ranked in top half 50 % 47 % 60 %
MorningStar
Funds ranked in top half 48 % 35 % 49 %
Assets ranked in top half 47 % 36 % 58 %
 
MorningStar Ratings Overall 3 Years 5 Years
Funds with 4/5 stars 38 % 19 % 29 %
Assets with 4/5 stars 52 % 25 % 47 %

Based on class I share, which reflects sales and asset concentrations.

 
    Three Months Ended
Broker-Dealer Jun. 30,     Sep. 30,     Dec. 31,     Mar. 31,     Jun. 30,
(in millions) 2017 2018
Assets under administration (AUA)
Advisory assets $ 19,535 $ 20,734 $ 21,613 $ 22,050 $ 22,868
Non-advisory assets   34,373     34,856     35,073     34,216     34,210  
Total assets under administration 53,908 55,590 56,686 56,266 57,078
 
Net new advisory assets 1 $ 22 $ 420 $ 129 $ 392 $ 315
Net new non-advisory assets 1, 2   (693 )   (965 )   (1,047 )   (983 )   (916 )
Total net new AUA 1 (671 ) (545 ) (918 ) (591 ) (601 )
 
Annualized advisory AUA growth 3

0.5

%

8.6

%

2.5

%

7.3

%

5.7

%

Annualized AUA growth 3

(5.0

)%

(4.0

)%

(6.6

)%

(4.2

)%

(4.3

)%

 
Advisor headcount 1,581 1,481 1,367 1,170 1,130
Avg. trailing 12-month revenue per advisor 4 (in
thousands)
$ 232 $ 240 $ 256 $ 285 $ 314
Advisor associates 254 262 265 327 339

_____________________

(1)   Net new assets is calculated by taking total client deposits and net
transfers less client withdrawals.
(2) Excludes activity related to products held outside of our platform.
These assets represent less than 10% of total AUA.
(3) Annualized growth is calculated by annualizing the quarterly net new
assets divided by beginning assets under administration.
(4)

Production per advisor is calculated as trailing 12-month total
underwriting and distribution fees less "other" underwriting and
distribution fees divided by the average number of financial
advisors. "Other" underwriting and distribution fees predominantly
include fees paid by advisors for programs and services.

 
 
Unaudited Consolidated Statements of Income

(in thousands, except per share data and margin)

 
    Three Months Ended    
Jun. 30,   Mar. 31,   Jun. 30, Sequential Qtr.   Year-over-Year Qtr.
2018 2018 2017 Change   % Change   %
Revenues:
Investment management fees $ 130,391 $ 133,692 $ 130,878 $ (3,301 ) (2.5 ) % $ (487 ) (0.4 ) %
Underwriting and distribution fees 137,873 138,041 128,776 (168 ) (0.1 ) % 9,097 7.1 %
Shareholder service fees   27,074       25,882       27,003       1,192   4.6 %   71   0.3 %
Total   295,338       297,615       286,657       (2,277 ) (0.8 ) %   8,681   3.0 %
Operating expenses:
Distribution 1 114,315 114,470 109,060 (155 ) (0.1 ) % 5,255 4.8 %
Compensation and benefits 65,828 68,785 65,332 (2,957 ) (4.3 ) % 496 0.8 %
General and administrative 19,143 19,538 23,287 (395 ) (2.0 ) % (4,144 ) (17.8 ) %
Technology 17,235 16,644 17,780 591 3.6 % (545 ) (3.1 ) %
Occupancy 6,969 6,964 7,548 5 0.1 % (579 ) (7.7 ) %
Marketing and advertising 2,896 2,281 3,264 615 27.0 % (368 ) (11.3 ) %
Depreciation 5,819 5,302 5,175 517 9.8 % 644 12.4 %
Subadvisory fees 3,683 3,708 3,194 (25 ) (0.7 ) % 489 15.3 %
Intangible asset impairment   1,200             900       1,200   N/M   300   33.3 %
Total   237,088       237,692       235,540       (604 ) (0.3 ) %   1,548   0.7 %
Operating income 58,250 59,923 51,117 (1,673 ) (2.8 ) % 7,133 14.0 %
Investment and other income (loss) 841 2,816 2,997 (1,975 ) (70.1 ) % (2,156 ) (71.9 ) %
Interest expense   (1,551 )     (1,802 )     (2,788 )     251   13.9 %   1,237   44.4 %
Income before provision for income taxes 57,540 60,937 51,326 (3,397 ) (5.6 ) % 6,214 12.1 %
Provision for income taxes   13,284       14,966       26,608       (1,682 ) (11.2 ) %   (13,324 ) (50.1 ) %
Net income   44,256       45,971       24,718       (1,715 ) (3.7 ) %   19,538   79.0 %
Net income (loss) attributable to redeemable noncontrolling interests   (222 )     (366 )     656       144   39.3 %   (878 ) (133.8 ) %
Net income attributable to Waddell & Reed Financial, Inc. $ 44,478     $ 46,337     $ 24,062     $ (1,859 ) (4.0 ) % $ 20,416   84.8 %
Net income per share, basic and diluted: $ 0.55 $ 0.56 $ 0.29
Weighted average shares outstanding - basic and diluted   81,449       83,111       83,611    
Operating margin 19.7 % 20.1 % 17.8 %
 
(1) Distribution expense
Unaffiliated 28,686 30,354 32,998
Broker-dealer   85,629       84,116       76,062    
$ 114,315     $ 114,470     $ 109,060    
 
 
Unaudited Consolidated Statements of Income

(in thousands, except per share data and margin)

 
    Six Months Ended    
Jun. 30,     Jun. 30,  
2018 2017 Change     %
Revenues:
Investment management fees $ 264,083 $ 261,314 $ 2,769 1.1 %
Underwriting and distribution fees 275,914 257,607 18,307 7.1 %
Shareholder service fees   52,956     54,300     (1,344 ) (2.5 ) %
Total   592,953     573,221     19,732   3.4 %
Operating expenses:
Distribution 1 228,785 217,497 11,288 5.2 %
Compensation and benefits 134,613 132,367 2,246 1.7 %
General and administrative 38,681 45,482 (6,801 ) (15.0 ) %
Technology 33,879 34,757 (878 ) (2.5 ) %
Occupancy 13,933 15,333 (1,400 ) (9.1 ) %
Marketing and advertising 5,177 5,875 (698 ) (11.9 ) %
Depreciation 11,121 10,396 725 7.0 %
Subadvisory fees 7,391 5,891 1,500 25.5 %
Intangible asset impairment   1,200     1,500     (300 ) (20.0 ) %
Total   474,780     469,098     5,682   1.2 %
Operating income 118,173 104,123 14,050 13.5 %
Investment and other income (loss) 3,657 6,009 (2,352 ) (39.1 ) %
Interest expense   (3,353 )   (5,574 )   2,221   39.8 %
Income before provision for income taxes 118,477 104,558 13,919 13.3 %
Provision for income taxes   28,250     45,489     (17,239 ) (37.9 ) %
Net income   90,227     59,069     31,158   52.7 %
Net income attributable to redeemable noncontrolling interests   (588 )   1,136     (1,724 ) (151.8 ) %
Net income attributable to Waddell & Reed Financial, Inc. $ 90,815   $ 57,933   $ 32,882   56.8 %
Net income per share, basic and diluted: $ 1.10 $ 0.69
Weighted average shares outstanding - basic and diluted   82,275     83,843  
Operating margin

19.9

%

18.2

%

 
(1) Distribution expense
Unaffiliated 59,039 66,906
Broker-dealer   169,746     150,591  
$ 228,785   $ 217,497  
 
 
Underwriting and distribution fees

(in thousands)

 
    For the three months ended Jun. 30, 2018
Unaffiliated     Broker-Dealer     Total
Fee-based asset allocation product revenues $ $ 66,580 $ 66,580
Rule 12b-1 service and distribution fees 20,051 18,109 38,160
Sales commissions on front-end load mutual funds and variable
annuity products
507 13,823 14,330
Sales commissions on other products 9,065 9,065
Other revenues   148   9,590   9,738
Total underwriting and distribution fees $ 20,706 $ 117,167 $ 137,873
 
    For the three months ended Mar. 31, 2018
Unaffiliated     Broker-Dealer     Total
Fee-based asset allocation product revenues $ $ 65,516 $ 65,516
Rule 12b-1 service and distribution fees 20,976 18,377 39,353
Sales commissions on front-end load mutual funds and variable
annuity products
470 14,427 14,897
Sales commissions on other products 8,422 8,422
Other revenues   185   9,668   9,853
Total underwriting and distribution fees $ 21,631 $ 116,410 $ 138,041
 
    For the three months ended Jun. 30, 2017
Unaffiliated     Broker-Dealer     Total
Fee-based asset allocation product revenues $ $ 58,313 $ 58,313
Rule 12b-1 service and distribution fees 22,852 18,863 41,715
Sales commissions on front-end load mutual funds and variable
annuity products
319 14,529 14,848
Sales commissions on other products 8,460 8,460
Other revenues   353   5,087   5,440
Total underwriting and distribution fees $ 23,524 $ 105,252 $ 128,776
 
   

For the six months ended Jun. 30, 2018   

Unaffiliated     Broker-Dealer     Total
Fee-based asset allocation product revenues $ $ 132,097 $ 132,097
Rule 12b-1 service and distribution fees 41,027 36,486 77,513
Sales commissions on front-end load mutual funds and variable
annuity products
977 28,249 29,226
Sales commissions on other products 17,487 17,487
Other revenues   333   19,258   19,591
Total underwriting and distribution fees $ 42,337 $ 233,577 $ 275,914
 
   

For the six months ended Jun. 30, 2017   

Unaffiliated     Broker-Dealer     Total
Fee-based asset allocation product revenues $ $ 115,069 $ 115,069
Rule 12b-1 service and distribution fees 46,869 37,518 84,387
Sales commissions on front-end load mutual funds and variable
annuity products
765 28,855 29,620
Sales commissions on other products 15,697 15,697
Other revenues   779   12,055   12,834
Total underwriting and distribution fees $ 48,413 $ 209,194 $ 257,607
 
 
Unaudited Condensed Balance Sheet

(in thousands)

 
    Jun. 30,     Dec. 31,
2018 2017
Assets
Cash & cash equivalents (unrestricted) $ 240,420 $ 207,829
Investment securities 584,769 700,492
Other assets 239,570 241,305
Property and equipment, net 77,154 87,667
Goodwill and intangible assets   145,869   147,069
 
Total assets $ 1,287,782 $ 1,384,362
Liabilities, redeemable noncontrolling interests and equity
Short-term notes payable $ $ 94,996
Long-term debt 94,819 94,783
Other liabilities 290,193 307,190
Redeemable noncontrolling interests 17,052 14,509
Total stockholders' equity   885,718   872,884
 
Liabilities, redeemable noncontrolling interests and equity $ 1,287,782 $ 1,384,362
Shares outstanding (in millions) 80.4 82.7
 
 
Unaudited Condensed Cash Flow

(in thousands)

 
    Three Months Ended     Six Months Ended
Jun. 30,     Mar. 31,     Jun. 30, June 30,     June 30,
2018 2018 2017 2018 2017

Cash provided by (used in):   

Operating activities $ 122,816 $ 50,265 $ (93,666 ) $ 173,081 $ (30,101 )
Investing activities (6,541 ) 56,272 (27,888 ) 49,731 (17,668 )
 
Financing activities   (60,557 )   (131,948 )   (22,913 )   (192,505 )   (72,233 )
 
Net change during period $ 55,718   $ (25,411 ) $ (144,467 ) $ 30,307   $ (120,002 )
 
    Three Months Ended     Six Months Ended
Jun. 30,     Mar. 31,     Jun. 30, June 30,     June 30,
(in thousands) 2018 2018 2017 2018 2017
Shares repurchased
Number of shares 2,098,625 996,309 237,472 3,094,934 714,354
Total cost $ 40,142 $ 20,507 $ 4,037 $ 60,649 $ 12,013
Dividend paid
Rate per share $ 0.25 $ 0.25 $ 0.46 $ 0.25 $ 0.46
Total paid $ 20,591 $ 20,890 $ 38,465 $ 41,481 $ 77,236
Capital returned to stockholders $ 60,733 $ 41,397 $ 42,502 $ 102,130 $ 89,249
 

Earnings Conference Call

Stockholders, members of the investment community and the general public
are invited to listen to a live Web cast of our earnings release
conference call today at 10:00 a.m. Eastern. During this call, Philip J.
Sanders, CEO and CIO, will review our quarterly results. Live access to
the teleconference will be available on the "Investor Relations" section
of our Web site at ir.waddell.com.
A Web cast replay will be made available shortly after the conclusion of
the call and accessible for seven days.

Web Site Resources

We invite you to visit the Investor Relations section of our Web site at ir.waddell.com.
Under the "Investor Information" tab you will find a link to
presentations as well as to data tables, which include supplemental
information schedules.

Past performance is no guarantee of future results. Please invest
carefully.

About the Company

Through its subsidiaries, Waddell & Reed Financial, Inc. has provided
investment management and financial planning services to clients
throughout the United States since 1937.
Today, we distribute our
investment products through the unaffiliated channel (encompassing
broker/dealer, retirement, and registered investment advisors), our
broker-dealer channel (through independent financial advisors), and our
Institutional channel (including defined benefit plans, pension plans,
endowments and subadvisory relationships).
For more information,
visit
ir.waddell.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which
reflect the current views and assumptions of management with respect to
future events regarding our business and industry in general. These
forward-looking statements include all statements, other than statements
of historical fact, regarding our financial position, business strategy
and other plans and objectives for future operations, including
statements with respect to revenues and earnings, the amount and
composition of assets under management, distribution sources, expense
levels, redemption rates, stock repurchases and the financial markets
and other conditions. These statements are generally identified by the
use of such words as "may," "could," "should," "would," "believe,"
"anticipate," "forecast," "estimate," "expect," "intend," "plan,"
"project," "outlook," "will," "potential" and similar statements of a
future or forward-looking nature. Readers are cautioned that any
forward-looking information provided by us or on our behalf is not a
guarantee of future performance. Actual results may differ materially
from those contained in these forward-looking statements as a result of
various factors, including but not limited to those discussed below. If
one or more events related to these or other risks, contingencies or
uncertainties materialize, or if our underlying assumptions prove to be
incorrect, actual results may differ materially from those forecasted or
expected. Certain important factors that could cause actual results to
differ materially from our expectations are disclosed in the "Risk
Factors" section of our Annual Report on Form 10-K for the year ended
December 31, 2017, which include, without limitation:

  • The loss of existing distribution relationships or inability to access
    new distribution relationships;
  • A reduction in assets under our management on short notice, through
    increased redemptions in our distribution channels or our Funds,
    particularly those Funds with a high concentration of assets, or
    investors terminating their relationship with us or shifting their
    funds to other types of accounts with different rate structures;
  • The adverse ruling or resolution of any litigation, regulatory
    investigations and proceedings, or securities arbitrations by a
    federal or state court or regulatory body;
  • Changes in our business model, operations and procedures, including
    our methods of distributing our proprietary products, as a result of
    evolving fiduciary standards;
  • The introduction of legislative or regulatory proposals or judicial
    rulings that change the independent contractor classification of our
    financial advisors at the federal or state level for employment tax or
    other employee benefit purposes;
  • A decline in the securities markets or in the relative investment
    performance of our Funds and other investment portfolios and products
    as compared to competing funds;
  • Our inability to reduce expenses rapidly enough to align with declines
    in our revenues due to various factors, including fee pressure, the
    level of our assets under management or our business environment.
  • Non-compliance with applicable laws or regulations and changes in
    current legal, regulatory, accounting, tax or compliance requirements
    or governmental policies;
  • Our inability to attract and retain senior executive management and
    other key personnel to conduct our broker-dealer, fund management and
    investment advisory business;
  • A failure in, or breach of, our operational or security systems or our
    technology infrastructure, or those of third parties on which we rely;
    and
  • Our inability to implement new information technology and systems, or
    our inability to complete such implementation in a timely or cost
    effective manner.

The foregoing factors should not be construed as exhaustive and
should be read together with other cautionary statements included in
this and other reports and filings we make with the Securities and
Exchange Commission, including the information in Item 1 "Business" and
Item 1A "Risk Factors" of Part I and Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of Part II to
our Annual Report on Form 10-K for the year ended December 31, 2017 and
as updated in our quarterly reports on Form 10-Q for the year ending
December 31, 2018. All forward-looking statements speak only as of the
date on which they are made and we undertake no duty to update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise, except to the extent required by law.

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