WDR » Topics » Investment and Other Income, Interest Expense and Taxes

This excerpt taken from the WDR 10-Q filed Jul 29, 2008.

Investment and Other Income, Interest Expense and Taxes

 

Investment and other income decreased $800 thousand from last year’s second quarter to $1.8 million for the second quarter of 2008.  The decrease was due to lower earnings of $400 thousand from mutual funds in the trading portfolio compared to 2007, and lower earnings in commercial paper and money markets of $400 thousand.

 

For the six months ended June 30, 2008, investment and other income decreased $1.1 million to $4.0 million compared to the same period in the prior year.  The decrease was due to lower earnings of $1.4 million from mutual funds in the trading portfolio compared to 2007, offset by increased earnings from higher average balances of commercial paper holdings of $300 thousand.

 

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Interest expense was $3.0 million for the second quarter of 2008 and 2007, respectively, and $6.0 million for the first six months of 2008 and 2007, respectively.

 

Our effective tax rate was 36.6% for the second quarter of 2008 and 37.0% for the six months ended June 30, 2008.  The decrease to our effective tax rate in the second quarter of 2008 was primarily due to state tax incentives related to capital expenditures made by the Company.  This decrease was partially offset by an increase to our state effective tax rate resulting from new state tax legislation passed during the second quarter of 2008.  The various legislative changes become effective for tax years ranging between January 1, 2008 and January 1, 2010.  The enacted legislation includes changes to the statutory tax rate in certain jurisdictions in which the Company operates, as well as the adoption of a market based approach for sourcing income in other jurisdictions in which the Company operates.  The Company expects its future effective tax rate, exclusive of any state tax incentives, unanticipated state tax legislative changes, and the impact of state tax audit settlements, to range from 36.9% to 37.5%.

 

This excerpt taken from the WDR 10-Q filed Apr 22, 2008.

Investment and Other Income, Interest Expense and Taxes

 

Investment and other income decreased $300 thousand from last year’s first quarter to $2.2 million for the first quarter of 2008. The decrease was due to lower earnings of $900 thousand from mutual funds in the trading portfolio compared to 2007, offset by increased earnings from higher average balances of commercial paper holdings of $700 thousand.

 

Interest expense was $3.0 million for the first quarter of both 2008 and 2007.

 

Our effective tax rate was 37.5% for the first quarter of 2008, as compared to 36.6% in the first quarter of 2007. The increase to our effective tax rate in the first quarter of 2008 was primarily due to an increase in the Company’s state effective tax rate resulting from new state tax legislation passed during 2007 that became effective for tax years beginning January 1, 2008. These legislative changes require the Company to file returns in certain state tax jurisdictions on a combined basis using a market based approach. The Company expects its future effective tax rate, exclusive of any state tax incentives, unanticipated state tax legislative changes, and the impact of state tax audit settlements, to range from 36.9% to 37.5%.

 

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This excerpt taken from the WDR 10-Q filed Oct 23, 2007.

Investment and Other Income, Interest Expense and Taxes

 

Investment and other income increased 63% from last year’s third quarter to $4.8 million for the third quarter of 2007.  The increase was due to a write-down of other investments in 2006 of $1.0 million, higher earnings of $600 thousand from mutual funds in the trading portfolio compared to 2006, and increased gains from the sale of available-for-sale securities of $400 thousand, offset by decreased earnings from lower average balances of commercial paper holdings of $400 thousand. 

 

For the nine months ended September 30, 2007, investment and other income increased 35% to $9.9 million compared to the same period in the prior year.  The increase was due to a write-down of other investments in 2006 of $1.0 million, higher earnings of $1.0 million from mutual funds in the trading portfolio compared to 2006, and higher interest earned on cash balances of $600 thousand, offset by decreased gains from the sale of available-for-sale securities of $700 thousand.

 

Interest expense was $3.0 million for the third quarter of both 2007 and 2006.  Interest expense for the nine months ended September 30, 2007 decreased 4% to $9.0 million compared to the same period in the prior year primarily due to refinancing our senior notes in January 2006 at a lower effective interest rate.

 

Our effective tax rate was 37.0% for the third quarter of 2007 and 37.1% for the nine months ended September 30, 2007.  The decrease to our effective tax rate in the third quarter of 2007 was primarily due to the release of Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”), liability related to a tax year where the statute of limitations closed during the quarter.  This decrease was partly offset by an increase in the Company’s state effective tax rate resulting from new state tax legislation passed during the quarter that requires the Company to file future returns in certain state tax jurisdictions on a combined basis and using a market based approach.  The Company expects its future effective tax rate, exclusive of any state tax incentives, unanticipated state tax legislative changes and the impact of state tax audit settlements, to range from 36.9% to 37.4%. 

 

The higher effective tax rate in 2006 reflects the impact of non-deductible charges recorded in connection with a portion of the settlement of litigation with the SEC and state regulators and a non-deductible goodwill impairment charge for ACF.  

 

This excerpt taken from the WDR 10-Q filed Jul 24, 2007.

Investment and Other Income, Interest Expense and Taxes

Investment and other income increased 22% from last year’s second quarter to $2.6 million for the second quarter of 2007 primarily due to higher gains of $564 thousand from mutual funds in the trading portfolio and increased interest earned on cash balances of $337 thousand in the current year’s second quarter, offset by interest earned on tax refunds of $278 thousand in 2006.  For the six months ended June 30, 2007, investment and other income increased 15% to $5.1 million compared to the same period in the prior year.  Interest earned on cash balances of $616 thousand in the first six months of 2007 and higher earnings of $437 thousand from mutual funds in the trading portfolio compared to 2006, as well as a $750 thousand write-down for an other-than-temporary decline in the fair value of a municipal bond investment in 2006 were offset by gains from the sale of available-for-sale securities of $1.0 million in 2006 and interest earned on tax refunds of $278 thousand in 2006.

Interest expense was $3.0 million for the second quarter of both 2007 and 2006.  Interest expense for the six months ended June 30, 2007 decreased 4% to $6.0 million compared to the same period in the prior year primarily due to refinancing our senior notes in January 2006 at a lower effective interest rate.

Our effective tax rate was 37.5% for the second quarter of 2007 and 37.1% for the six months ended June 30, 2007.  The increase to our effective tax rate in the second quarter of 2007 resulted from new state tax legislation passed during the quarter that requires the Company to file future returns in this state tax jurisdiction on a combined basis.  In addition, the filing of amended state returns to report changes made to federal taxable income upon settlement of federal examinations, as well as refinement of positions taken for tax years currently under state audit also impacted the Company’s state tax rate.  The impact of these increases was somewhat offset by state tax incentives the Company qualified for in this same period.  The Company expects its future effective tax rate, exclusive of any state tax incentives and the impact of state tax audit settlements, to range from 36.7% to 37.3%.

The higher effective tax rate in 2006 reflects the impact of non-deductible charges recorded in connection with a portion of the settlement of litigation with the SEC and state regulators and a non-deductible goodwill impairment charge for ACF.

This excerpt taken from the WDR 10-Q filed Apr 25, 2007.

Investment and Other Income, Interest Expense and Taxes

Investment and other income increased 10% from last year’s first quarter to $2.5 million for the first quarter of 2007, mainly due to higher earnings on cash balances.  The first quarter of 2006 included gains of $1.4 million related to sales of mutual funds in the available-for-sale and trading portfolios, as well as a $750 thousand write-down for an other-than-temporary decline in the fair value of a municipal bond investment.

Interest expense decreased 8% to $3.0 million compared to last year’s first quarter primarily due to refinancing our senior notes in January 2006 at a lower effective interest rate.

In this year’s first quarter, our effective tax rate was 36.6%, as compared to 36.5% for the first quarter of 2006.

This excerpt taken from the WDR 10-Q filed Oct 24, 2006.

Investment and Other Income, Interest Expense and Taxes

Investment and other income increased $1.5 million from last year’s third quarter to $3.0 million for the third quarter of 2006.  The increase was due to gains from the sale of available-for-sale securities of $1.5 million and increased earnings from higher average balances and interest rates on commercial paper holdings of $900 thousand, offset by a write-down of other investments in the current quarter and a decrease in mutual fund trading portfolio returns.  Investment and other income increased $3.1 million to $7.4 million for the nine months ended September 30, 2006 compared to the same period in the prior year. The increase was due to increased earnings from higher average balances and interest rates on commercial paper holdings of $2.9 million and gains from the sale of available-for-sale securities of $2.5 million.  Offsetting these increases was a decrease in mutual fund trading portfolio returns and write-downs on investments in the current year.

Interest expense decreased $600 thousand to $3.0 million compared to last year’s third quarter.  The decrease was due to interest incurred on short-term borrowings in the prior year.  There have been no outstanding short-term borrowings during the current year. We also refinanced $200 million in senior notes that matured in January 2006 (described below) at a rate of 5.6% and therefore accrued interest at a lower rate on our senior notes during the current quarter compared to last year.  Interest expense decreased $1.3 million to $9.3 million for the nine months ended September 30, 2006 compared to the same period in the prior year due primarily to interest paid on short-term borrowings in the prior year.

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The lower effective tax rate of 35.8% for the third quarter of 2006 is due to state incentives recognized in the quarter.  The higher effective tax rate in the current year reflects the impact of non-deductible charges recorded in connection with a portion of the settlement of litigation with the SEC and state regulators and a non-deductible goodwill impairment charge for ACF.  In 2005, the effective tax rate reflects non-deductible charges recorded in connection with the settlement of litigation with the NASD and a consortium of states related to variable annuity sales practices in 2005.  We expect our normalized effective income tax rate to be approximately 36.5%.

This excerpt taken from the WDR 10-Q filed Jul 25, 2006.

Investment and Other Income, Interest Expense and Taxes

Investment and other income increased $700 thousand from last year’s second quarter to $2.1 million for the second quarter of 2006. The increase was due to increased earnings from higher average balances and interest rates on commercial paper holdings of $1.0 million, offset by a decrease in mutual fund trading portfolio returns of approximately $400 thousand. Investment and Other Income increased $1.6 million to $4.4 million for the six months ended June 30, 2006 compared to the same period in the prior year. The increase was due to increased earnings from higher average balances and interest rates on commercial paper holdings of $2.1 million and gains from the sale of available-for-sale securities of $1.0 million. Offsetting these increases was a decrease in mutual fund trading portfolio returns of approximately $950 thousand and a $750 thousand write-down for other-than-temporary decline in the market value of a municipal bond investment.

Interest expense decreased $700 thousand to $3.0 million compared to last year’s second quarter. The majority of the decrease was due to interest incurred on short-term borrowings in the prior year. There have been no outstanding short-term borrowings during the current year. We also refinanced $200 million in senior notes that matured in January 2006 (described below) at a rate of 5.6% and therefore accrued interest at a lower rate on our senior notes during the current quarter compared to last year. Interest expense also decreased $700 thousand to $6.2 million for the six months ended June 30, 2006 compared to the same period in the prior year due primarily to interest paid on short-term borrowings in the prior year.

The higher effective tax rate in the current year reflects the impact of non-deductible charges recorded in connection with a portion of the settlement of litigation with the SEC and state regulators and a non-deductible goodwill impairment charge for ACF. In 2005, the effective tax rate reflects non-deductible charges recorded in connection with the settlement of litigation with the NASD and consortium of states related to variable annuity sales practices in 2005. We expect our normalized effective income tax rate to be in the range of 36.2% to 36.5%.

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This excerpt taken from the WDR 10-Q filed Apr 25, 2006.

Investment and Other Income, Interest Expense and Taxes

 

Investment and other income increased $900 thousand from last year’s first quarter to $2.3 million for the first quarter of 2006. The increase was partially due to increased earnings from higher average balances and interest rates on commercial paper holdings of $1.1 million. This year’s first quarter also included an increase in mutual fund trading portfolio returns of approximately $475 thousand. Offsetting these increases was a $750 thousand write-down for other-than-temporary decline in the market value of a municipal bond investment.

 

Interest expense remained level at $3.3 million compared to last year’s first quarter. We refinanced $200 million in senior notes that matured in January 2006 (described below) at a rate of 5.6%. Although we accrued interest at a lower rate on our senior notes during first quarter 2005 compared to the current quarter, interest we incurred on short-term borrowing during the prior year quarter offset the difference in rates.

 

In this year’s first quarter, our effective tax rate was 36.5%, unchanged from the first quarter of 2005.

 

This excerpt taken from the WDR 10-Q filed Nov 1, 2005.

Investment and Other Income, Interest Expense and Taxes

 

Investment and other income increased $0.7 million, or 21%, to $4.3 in the current year.  Last year’s comparative nine month period included a realized gain on trading securities of $1.9 million which resulted from the change in classification for certain mutual fund holdings from available-for-sale to trading.  The change in classification was made to hedge our exposure to market volatility created by our deferred compensation liabilities.  In the current period, we had a $1.0 million gain on the sale of available-for-sale securities and increased interest earned on short-term commercial paper investments of $1.4 million due to

 

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higher average balances and rates, 3.09% compared to 1.18%.  Also, in the current period we earned $0.5 million more in interest from a cash appeal bond deposit that was returned to us on June 8, 2005 as part of resolution of outstanding legal matters with Torchmark Corporation.

 

Interest expense increased $3.1 million, or 41%, from last year due to a decrease in the benefit received from the interest rate swap on our senior notes compared to the nine month period last year and to higher money market loan borrowing rates in the current period.  In the current year, we incurred $2.8 million higher interest expense on our 7.5% senior notes between periods as a result of higher variable rates paid on the interest rate swap.  As of September 30, 2005, the floating rate being paid was 6.31% compared to 4.29% as of September 30, 2004.  Lower average money market loan borrowings in the current year coupled with higher average interest rates, 3.04% compared to 1.51%, also resulted in higher interest expense of $0.3 million.

 

Our effective income tax rate for the nine months ended September 30, 2005 was 37.5% compared to 36.0% last year.  The higher effective tax rate in the current year reflects the impact of non-deductible charges recorded in connection with the settlement of litigation with a consortium of states related to variable annuity sales practices.  We expect our normalized effective income tax rate to be in the range of 36.5% to 36.7%.

 

This excerpt taken from the WDR 10-Q filed Jul 27, 2005.

Investment and Other Income, Interest Expense and Taxes

 

Investment and other income decreased $0.3 million, or 9%, to $2.8 million from last year.  Last year’s comparative six month period included a realized gain on trading securities of  $1.9 million which resulted from the change in classification for certain mutual fund holdings from available-for-sale to trading.  The change in classification was made to hedge our exposure to market volatility created by our deferred compensation liabilities.  In the current period, we had a $1.0 million gain on the sale of available-for-sale securities and increased interest earned on short-term investments of $0.7 million due to higher average balances and rates.   In the current period, we also earned interest of $0.6 million from a cash appeal bond deposit that was returned to us on June 8, 2005 as part of resolution of outstanding legal matters with Torchmark Corporation.

 

Interest expense increased $2.2 million, or 47%, from last year due to a combination of higher average short-term borrowings and rates, and a decrease in the benefit from the interest rate swap on our senior notes compared to the first six months last year.  Higher average short-term borrowings in the current year coupled with higher average interest rates, 2.94% compared to 1.33%, resulted in higher interest of $0.4 million on short-term loans.  The remainder of the increase was attributed to higher interest expense of $1.8 million on our 7.5% senior notes between periods as a result of higher variable rates paid on the interest rate swap.  As of June 30, 2005, the floating rate being paid was 5.79% compared to 3.81% as of June 30, 2004.

 

Our effective income tax rate for the first six months of 2005 was 44.8% compared to 35.9% last year.    The higher effective tax rate in the current year reflects the impact of non-deductible charges recorded in connection with the settlement of litigation with the NASD and consortium of states related to variable annuity sales practices.  We expect our normalized effective income tax rate to be in the range of 36.5% to 36.7%.

 

This excerpt taken from the WDR 10-Q filed Apr 26, 2005.

Investment and Other Income, Interest Expense and Taxes

Investment and other income increased $0.8 million from last year's first quarter to $1.4 million for the first quarter of 2005.  This year’s increase included a realized gain of $1.1 million from the sale of available-for-sale mutual fund investments.  This gain was offset by losses on trading securities of $0.2 million during the quarter.  These securities were not classified as trading securities during the first quarter of 2004.

 

Interest expense increased $0.9 million, or 41%, from last year's first quarter due to a combination of higher average short-term borrowings and rates on money market loans, and a decrease in the benefit from the interest rate swap on our senior notes compared to last year’s first quarter.  Higher average borrowings on money market loans in the current year coupled with higher average interest rates, 2.64% compared to 1.31%, resulted in higher interest of $0.2 million on short-term loans.  The remainder of the increase was attributed to higher interest expense paid on our 7.5% senior notes between periods as a result of higher variable rates paid on the interest rate swap.  As of March 31, 2005, the floating rate being paid was 5.32% compared to 3.54% as of March 31, 2004.

 

Our effective income tax rate for the first quarter of 2005 was 36.5% compared to 35.5% for the first quarter of 2004.  The lower effective rate in last year’s first quarter was due to favorable resolution of certain prior year tax liabilities.

 

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