Operator: My name is Christie and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions).
I would now like to hand the program over to Hank Herrmann, Chairman and Chief Executive Officer of Waddell & Reed.
Henry J. Herrmann - CEO and Chairman of the Board: Thank you, Christie. Good morning, everyone. 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 Assistant Vice President of Investor Relations.
Nicole, would you read the forward-looking statements please?
Nicole McIntosh - AVP, IR: 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 Securities and Exchange Commission.
We assume no duty to update any forward-looking statements. Materials relevant to today’s call including a copy of today’s press release as well as supplemental schedules have been posted on our website at waddell.com under the corporate tab.
Henry J. Herrmann - CEO and Chairman of the Board: Thank you, Nicole. Good morning again. Earlier today, we announced our first quarter results. The highlights of the quarter included 8% sequential growth in income per diluted share, operating margin of 23.3% despite the influence of a number of restraining factors including two fewer days of management revenues and three fewer days of sales versus the fourth quarter, the trading error of $1.3 million, the annual reset of FICA payroll taxes, and the reinstatement of the company’s 401(k) match.
Gross sales and net flows increased. Gross sales of $6.1 billion increased 9% sequential quarterly. This level of sales has been exceeded only twice during the Company’s history during the first and second quarters of 2008, just prior to the market’s decline. Net flows of $2.8 billion represent yet again, likely an industry-leading organic growth rate of 16%. These achievements are all of the more notable when compared to the industries’ weak equity flows. Long-term investment performance remained solid.
Now looking at the individual parts of our business, net flows in the Advisors channel were positive at $146 million, comparing favorably to the previous year and year ago quarters and amongst the best in the channel’s recent history. Sales of $886 million was 4% below the sales volume in previous quarter and 27% above the same period last year.
As you went through our release, you might have noted a larger than usual decline in Advisor headcount for the fourth to the first quarter. Our annual process of terminating licenses of the advisors who did not meet the annual productivity requirement was accentuated this year by a new internal process. We now include only fully licensed financial advisors in our headcount figure versus the previous inclusion upon receipt of their first license. This change has been incorporated in our calculation for productivity.