Edgar Filing: WADDELL & REED FINANCIAL INC

As filed with the Securities and Exchange Commission on July 27, 2001.
Registration No. 333-65827
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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POST EFFECTIVE AMENDMENT NO. 3 TO
FORM S-8

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

WADDELL & REED FINANCIAL, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware 51-0261715
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

6300 Lamar Avenue
OVERLAND PARK, KANSAS
66202
(913) 236-2000

(Address of Principal Executive Offices, including Zip Code)

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1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN, AS
AMENDED AND RESTATED,
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND
1998 STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED

(Full Title of the Plans)

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DANIEL C. SCHULTE COPY TO:
SECRETARY GLEN J. HETTINGER
WADDELL & REED FINANCIAL, INC. HUGHES & LUCE, L.L.P.
6300 LAMAR AVENUE 1717 MAIN STREET, SUITE 2800
OVERLAND PARK, KANSAS 66202 DALLAS, TEXAS 75201
(913) 236-2000 (214) 939-5500

(Name, Address, and Telephone Number,
including Area Code, of Agent for Service)

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11,989,750 SHARES

WADDELL & REED FINANCIAL, INC.

CLASS A COMMON STOCK

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PROSPECTUS

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TABLE OF CONTENTS

PAGE
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Available Information..........................................................2
Documents Incorporated by Reference............................................3
The Company....................................................................3
Risk Factors...................................................................4
Selling Stockholders...........................................................9
Plan of Distribution..........................................................16
Use of Proceeds...............................................................16
Legal Matters.................................................................16
Experts.......................................................................16
Indemnification...............................................................16

July 27, 2001

PROSPECTUS

WADDELL & REED FINANCIAL, INC.
11,989,750 SHARES
CLASS A COMMON STOCK, $.01 PAR VALUE
ACQUIRED PURSUANT TO THE WADDELL & REED FINANCIAL, INC.
1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN, AS AMENDED AND RESTATED,
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND
1998 STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED

Our stockholders identified below under the caption "Selling Stockholders"
may offer to sell up to 11,989,750 shares of our Class A common stock.

We have already issued to the selling stockholders the shares being offered
by the selling stockholders, or we will issue the shares being offered by the
selling stockholders prior to the sale of the shares. This offering is not part
of the original issuance of the shares of Class A common stock. We will not
receive any of the proceeds from the selling stockholders' sale of their shares.
The selling stockholders may offer the shares in transactions on the New York
Stock Exchange (the "NYSE"), in negotiated transactions, or through a
combination of these methods. The selling stockholders may offer the shares at
prices relating to the prevailing market prices or at negotiated prices.

The Class A common stock is quoted on the NYSE under the symbol WDR. On
June 25, 2001 the last sale price of the Class A common stock, as reported on
the NYSE, was $31.54 per share. Our principal executive offices are located at
6300 Lamar Ave., Overland Park, Kansas 66202 (telephone number: (913) 236-2000).

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INVESTING IN THE CLASS A COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD PURCHASE ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.

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The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if the prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

------------------------------------

You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different from that contained in this Prospectus. The
selling stockholders may offer to sell, and seek offers to buy, shares of Class
A common stock only in jurisdictions where offers and sales are permitted. The
information contained in this Prospectus is accurate only as of the date of this
Prospectus, regardless of the time of delivery of this Prospectus or of any sale
of the Class A common stock.

This Prospectus is dated July 27, 2001.

AVAILABLE INFORMATION

We are subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance with that Act, file reports and other information with the Securities
and Exchange Commission (the "SEC"). Reports, proxy statements, information
statements, and other information may be inspected without charge at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549-1004 and at the
following regional offices of the SEC: New York Regional Office, Seven World
Trade Center, Suite 1300, New York, New York 10048; and Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60606. Copies of these filing materials may be obtained from the Public
Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Information on the operation of the Public Reference Section
is available by calling the SEC at 1-800-SEC-0330. Reports, proxy statements,
information statements, and other information can also be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005. The SEC
maintains a Web site that contains information filed with the SEC. The SEC's Web
site address is http://www.sec.gov.

In addition, our Annual Report on Form 10-K for the year ended December
31, 2000 (without exhibits) is available via the Internet at our Web site
(http://www.waddell.com). We intend to furnish our stockholders with annual
reports containing audited financial statements and such other periodic reports
as we may determine to furnish or as may be required by law.

We have filed with the SEC a Registration Statement on Form S-8, with
exhibits thereto, under the Securities Act of 1933, as amended (the "Securities
Act") with respect to the shares of Class A common stock offered by this
Prospectus. This Prospectus does not contain all information set forth in the
Registration Statement. Certain parts of the Registration Statement have been
omitted in accordance with the rules and regulations of the SEC. For further
information, reference is made to the Registration Statement which can be
inspected at the public reference rooms at the offices of the SEC.

DOCUMENTS INCORPORATED BY REFERENCE

We will provide, without charge, to each person to whom a copy of this
Prospectus is delivered, including any beneficial owner, upon the written or
oral request of that person, a copy of any or all of the documents incorporated
by reference into this Prospectus (other than exhibits to those documents,
unless the exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests should be directed to:

Waddell & Reed Financial, Inc.
6300 Lamar Avenue
Overland Park, Kansas 66202
Attn: Secretary
(913) 236-2000

The following documents previously filed with the SEC pursuant to the
Securities Act and the Exchange Act are incorporated into this Prospectus by
reference and are deemed a part of this Prospectus:

(a) Our Annual Report on Form 10-K for the year ended December 31,
2000;

(b) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2001;

(d) The description of our Class A common stock contained in our
Registration Statement on Form 8-A, filed with the SEC on February 27, 1998,
including any amendment or report filed for the purpose of updating such
description; and

(e) All reports filed by us pursuant to Sections 13(a) or 15(d) of the
Exchange Act, since the filing of the above referenced Form 8-A on February 27,
1998.

All documents filed with the SEC by us pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering relating to this Prospectus will be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of those documents. Any statement
incorporated or deemed to be incorporated by reference into this Prospectus will
be deemed to be modified, replaced, or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document, that also is or is deemed to be incorporated
by reference into this Prospectus modifies, replaces, or supersedes that
statement. Any statement so modified, replaced, or superseded will be deemed,
except as so modified, replaced or superseded, to constitute a part of this
Prospectus.

THE COMPANY

We were founded in 1937 and are the third oldest mutual fund complex in
the United States, having introduced the United family of funds (now the Waddell
& Reed Advisors Funds) in 1940. We focus on selling investment products to
middle income Americans through our sales force. We are the exclusive
underwriter and distributor of 43 mutual fund portfolios. Twenty of these funds
make up the Waddell & Reed Advisors Group of Mutual Funds, twelve make up W&R
Funds, Inc., and eleven make up W&R Target Funds, Inc. (collectively, the
"Funds"). We also distribute underwritten variable annuities and life insurance
issued by Nationwide Financial Services, Inc. to our customers. We sell
front-end loaded and contingent deferred sales charge mutual fund products.

We are a Delaware corporation with our principal offices located at
6300 Lamar Avenue, Overland Park, Kansas 66202 (telephone number 913-236-2000).

RISK FACTORS

You should carefully consider the following risk factors and warnings
before making an investment decision. The risks described below are not the only
ones that we face. Additional risks of which we do not yet know or that we
currently think are immaterial may also impair our business operations. If any
of the following risks actually occur, our business, financial condition, or
results of operations could be materially adversely affected. In such case, the
trading price of our Class A common stock could decline, and you may lose all or
part of your investment. You should also refer to the other information set
forth in this Prospectus.

This Prospectus contains or incorporates by reference certain
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our or our industry's actual
results, levels of activity, performance, or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by such forward-looking statements. Those
risks include, among others, those listed under the risk factors set forth
below. In evaluating forward-looking statements, you should specifically
consider various factors, including the risks outlined below. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, these statements are only predictions and we cannot guarantee future
results, levels of activity, performance, or achievements. Actual events or
results may differ materially.

In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "anticipates," "plans,"
"believes," "estimates," "predicts," "potential," or "continue" or the negative
of such terms or other comparable terminology.

Moreover, neither we nor any other person assumes responsibility for
the accuracy and completeness of any forward-looking statements. We are under no
duty to update any of the forward-looking statements after the date of this
Prospectus in order to conform such statements to actual results.

THERE MAY BE ADVERSE EFFECTS ON OUR REVENUES, EARNINGS, AND PROSPECTS IF THE
SECURITIES MARKETS DECLINE.

Our results of operations are affected by certain economic factors,
including the level of the securities markets. We have benefited from the
favorable performance of the securities markets in recent years that has
attracted a substantial increase in the investments in the securities markets. A
decline in the securities markets, failure of the securities markets to sustain
their historical levels of growth or short-term volatility in the securities
markets could result in investors withdrawing from the markets or decreasing
their rate of investment, either of which could adversely affect our revenues,
earnings, and growth prospects. Because our revenues are, to a large extent,
based on the value of assets under management, a decline in the value of these
assets would adversely affect our revenues. Our growth is dependent to a
significant degree upon our ability to attract and retain mutual fund assets and
in an adverse economic environment, this may prove difficult. Our growth rate
has varied from year to year and there can be no assurance that the average
growth rates sustained in the recent past will continue. The combination of
adverse markets affecting sales and investment management fees could compound on
each other and materially affect earnings. Adverse conditions in the U.S.
domestic stock market are particularly material to us due to the high
concentration of assets under management in that market.

THERE MAY BE ADVERSE EFFECTS ON OUR REVENUES AND EARNINGS IF OUR FUNDS'
PERFORMANCE DECLINES.

Success in the investment management and mutual fund businesses is
dependent on the investment performance of client accounts. Good relative
performance stimulates sales of the Funds' shares and tends to keep redemptions
low. In turn, sales of the Funds' shares generate higher management fees and
distribution revenues. Good relative performance also attracts private
institutional accounts. Conversely, poor relative performance results in
decreased sales, increased redemptions of the Funds' shares, and the loss of
private institutional accounts, resulting in decreases in revenues. Failure of
our Funds to perform well could, therefore, have a material adverse effect on
our revenues and earnings.

THERE MAY BE AN ADVERSE EFFECT ON OUR BUSINESS IF OUR INVESTORS REMOVE THE
ASSETS WE MANAGE ON SHORT NOTICE.

A majority of our revenues are derived from investment management
agreements with our Funds that are terminable on 60 days' notice. Each
investment management agreement must be approved and renewed annually by the
disinterested members of each Fund's board or its shareholders. Some of these
investment management agreements may not be renewed or may be terminated, and
new agreements may be unavailable. In addition, mutual fund investors may redeem
their investments in the Funds at any time without any prior notice. Investors
can terminate their relationship with us, reduce the aggregate amount of assets
under management, or shift their funds to other types of accounts with different
rate structures for any number of reasons, including investment performance,
changes in prevailing interest rates, and financial market performance. The
decrease in revenues that could result from any such event could have a material
adverse effect on our business.

WE FACE INCREASED COMPETITION IN HIRING AND RETAINING KEY PERSONNEL AND
FINANCIAL ADVISORS.

Our continued success depends to a substantial degree on our ability to
attract and retain qualified personnel to conduct our fund management and
investment advisory business. The market for qualified fund managers, investment
analysts, and financial advisors is extremely competitive and has grown more so
in recent periods because of the growth in the industry. We are dependent on our
sales force to sell our mutual funds and other investment products. Our growth
prospects will be directly affected by the quality and quantity of financial
advisors we are able to successfully recruit and retain. There can be no
assurances that we will be successful in our efforts to recruit and retain the
required personnel.

WE FACE STRONG COMPETITION FROM NUMEROUS AND SOMETIMES LARGER COMPANIES.

We compete with stock brokerage and investment banking firms, insurance
companies, banks, online and Internet investment sites, and other financial
institutions. Many of these companies not only offer mutual fund investments and
services but also offer other financial products and services. Many of our
competitors have more products and product lines, services, and may also have
substantially greater assets under management. Many larger mutual fund complexes
have developed relationships with brokerage houses with large distribution
networks, which may enable those fund complexes to reach broader client bases.
In recent years, there has been a trend of consolidation in the mutual fund
industry resulting in stronger competitors with greater financial resources than
us. There has also been a trend toward online Internet financial services. If
existing customers stop investing with us and instead invest with our
competitors, or if potential customers decide to invest with our competitors, it
would cause our market share, revenues, and income to decline.

POTENTIAL MISUSE OF FUNDS AND INFORMATION IN THE POSSESSION OF OUR ADVISORS
COULD RESULT IN LIABILITY TO OUR CLIENTS.

Our financial advisors handle a significant amount of funds and
financial and personal information for our clients. Although we have implemented
a system of controls to minimize the risk of fraudulent taking or misuse of
funds and information, there can be no assurance that our controls will be
adequate or that a taking or misuse by our employees can be prevented. We could
have liability in the event of a taking or misuse by our employees and we could
also be subject to regulatory sanctions. Although we believe that we have
adequately insured against these risks, there can be no assurance that our
insurance will be maintained or that it will be adequate to meet any future
liability.

THERE ARE NO ASSURANCES THAT WE WILL PAY FUTURE DIVIDENDS.

Our Board of Directors currently intends to continue to declare
quarterly dividends on our Class A common stock. The declaration and payment of
dividends is subject to the discretion of our Board of

Directors. Any determination as to the payment of dividends, as well as the
level of such dividends, will depend on, among other things:

o general economic and business conditions;
o our strategic plans;
o our financial results and condition;
o contractual, legal, and regulatory restrictions on the payment of
dividends by us or our subsidiaries; and
o such other factors as our Board of Directors may consider to be
relevant.

We are a holding company and, as such, our ability to pay dividends is
subject to the ability of our subsidiaries to provide us with cash. There can be
no assurance that the current quarterly dividend level will be maintained or
that we will pay any dividends in any future period.

REGULATORY RISK IS SUBSTANTIAL IN OUR BUSINESS.

Our investment management business is heavily regulated. Noncompliance
with applicable laws or regulations could result in sanctions being levied
against us, including fines and censures, suspension, or expulsion from a
certain jurisdiction or market or the revocation of licenses. Noncompliance with
applicable laws or regulations would adversely effect our reputation, prospects,
revenues, and earnings. In addition, changes in current laws or regulations or
in governmental policies could adversely affect our operations, revenues, and
earnings.

PROVISIONS OF OUR ORGANIZATIONAL DOCUMENTS COULD DETER TAKEOVER ATTEMPTS.

Under our certificate of incorporation, our Board of Directors has the
authority, without action by our stockholders, to fix certain terms and issue
shares of our Preferred Stock, par value $1.00 per share. Actions of our Board
of Directors pursuant to this authority may have the effect of delaying,
deterring, or preventing a change in control of the Company. Other provisions in
our certificate of incorporation and in our bylaws impose procedural and other
requirements that could be deemed to have anti-takeover effects, including
replacing incumbent directors. In addition, our Board of Directors is divided
into three classes, each of which is to serve for a staggered three-year term
after the initial classification and election and, incumbent directors may not
be removed without cause, all of which may make it more difficult for a third
party to gain control of our Board of Directors. In addition, as a Delaware
corporation we are subject to Section 203 of the Delaware General Corporation
Law. With certain exceptions, Section 203 imposes restrictions on mergers and
other business combinations between us and any holder of 15% or more of our
voting stock.

THERE ARE NO ASSURANCES THAT THE EXPECTED EFFECTS OF THE COMBINATION OF OUR TWO
CLASSES OF COMMON STOCK WILL OCCUR.

On April 25, 2001, our stockholders voted on and approved a proposal to
merge the Company and a wholly-owned subsidiary that effected the combination of
our Class A and Class B common stock into a single class of Class A common
stock. We anticipate that (1) the combination of our two classes of common stock
will have no effect on our business or operations as conducted prior to, or
after, the merger; (2) neither we nor the stockholders will recognize taxable
gain or loss upon the conversion of the Class B common stock and the aggregate
tax basis in, and the holding period of, the newly issued shares of Class A
common stock will be the same as the shares of Class B common stock exchanged;
(3) the merger will not have any material impact on our stock option plans,
other benefit plans or our stockholders rights agreement, except for technical
amendments to the agreement to eliminate any references to the Class B common
stock; (4) there will not be any effect on earnings per share or book value per
share; (5) the analysis and valuation of a single class of stock will be
facilitated; and (6) it will enhance interest in our stock and increase
liquidity and trading efficiency. However, we cannot guarantee or insure that
any of the anticipated effects, including an increase in liquidity and trading
efficiency of the single class of common stock, will occur.

OUR STOCKHOLDERS RIGHTS PLAN COULD DETER TAKEOVER ATTEMPTS.

In 1999 we adopted a stockholders rights plan pursuant to which rights
attached to each share of our then outstanding Class A common stock and our then
existing outstanding Class B common stock. Generally, the rights are exercisable
only if a person or group acquires 15% or more of the voting power as now
represented by our Class A common stock. Under certain conditions, the rights
entitle the holders to receive shares of our Class A common stock having a value
equal to two times the exercise price of the right. Our stockholders rights plan
could impede the completion of a merger, tender offer, or other takeover attempt
even though some or a majority of our stockholders might believe that a merger,
tender offer, or takeover is in their best interests and even if such
transactions could result in our stockholders receiving a premium for their
shares of our stock over the then current market price of our stock.

THE TERMS OF OUR CREDIT FACILITY IMPOSE RESTRICTIONS ON OUR OPERATIONS. THERE
ARE NO ASSURANCES WE WILL BE ABLE TO RAISE ADDITIONAL CAPITAL.

We have entered into a loan agreement for a $220 million, 364-day
revolving line of credit facility with various lenders. The facility is
expandable to $330 million, whereby the banks could, at their option upon our
request, increase the loans by $110 million. At June 25, 2001, there was no
balance outstanding under this line of credit. In August 2000, we also began
utilizing a money market loan program, which functions similar to commercial
paper. At June 25, 2001, the outstanding balance was $33 million. The terms and
conditions of the revolving credit facility and the money market loan program
impose restrictions that affect, among other things, our ability to incur debt,
make capital expenditures, merge, sell assets, make distributions, or create or
incur liens. Availability of our credit facility is also subject to certain
financial covenants. Our ability to comply with the covenants can be affected by
events beyond our control and there can be no assurance that we will achieve
operating results that comply with the provisions of the credit agreement. A
breach of any of these covenants could result in a default under our credit
facility. In the event of a default, the banks could elect to declare the
outstanding principal amount of our credit facility, all interest thereon, and
all other amounts payable under our credit facility to be immediately due and
payable.

Our ability to satisfy our debt obligations will depend upon our future
operating performance, which will be affected by prevailing economic, financial,
and business conditions and other factors, some of which are beyond our control.
We anticipate that borrowings from our existing revolving credit facility, or
the refinancing of our revolving credit facility, and/or cash provided by
operating activities, will provide sufficient funds to finance anticipated
development plans, meet our operating expenses, and service our debt
requirements as they become due. However, in the event that we require
additional capital, there can be no assurance that we will be able to raise such
capital when needed or on satisfactory terms, if at all. Also, there can be no
assurance that we will be able to refinance our current credit facility upon its
maturity or on favorable terms.

SYSTEMS FAILURE MAY DISRUPT OUR BUSINESS.

Our business is highly dependent on communications and information
systems, including our mutual fund transfer agency system maintained by a
third-party service provider. We are highly dependent on our ability to process
a large number of transactions on a daily basis and also on the proper
functioning of computer systems of third parties. We rely heavily on financial,
accounting, and other data processing systems. If any of these do not function
properly, we could suffer financial loss, business disruption, liability to
clients, regulatory intervention, or damage to our reputation. If our systems
are unable to accommodate an increasing volume of transactions, our ability to
expand could be affected. Although we have back-up systems in place, we cannot
be sure that any systems failure or interruption, whether caused by a fire,
other natural disaster, power or telecommunications failure, act of war, or
otherwise will not occur, or that back-up procedures and capabilities in the
event of any failure or interruption will be adequate.

WE MAY HAVE DIFFICULTY EXECUTING OUR ACQUISITION STRATEGY.

We have adopted a strategy to selectively pursue acquisitions and
alliances that will add new products or alternative distribution systems. There
can be no assurance that we will find suitable acquisition candidates at
acceptable prices, have sufficient capital resources to realize our acquisition
strategy, or be successful in entering into definitive agreements for desired
acquisitions. In addition, we have limited experience in finding, acquiring, and
integrating other companies and we may not be successful in the integration of
acquired companies. An acquisition may not prove to add new products or
distribution systems or otherwise be advantageous to us.

THE RESTRUCTURING OF OUR MUTUAL FUND PRODUCTS TO ENHANCE OUR COMPETITIVENESS AND
DISTRIBUTION CHANNELS MAY NOT BE SUCCESSFUL.

In October 1999, we restructured our mutual fund products by offering
additional classes of mutual fund shares and closing non-industry standard
classes in an effort to enhance our competitiveness and strategic distribution
alternatives and favorably impact our distribution margin. We anticipate that
the product restructuring will result in our product line (1) being more
consistent with the industry, (2) providing our clients with more choices and
greater value, and (3) accommodating additional changes for strategic
distribution flexibility. There can be no assurances that the restructuring of
our mutual fund products will enhance our competitiveness and distribution
channels or that it will favorably impact our distribution margin.

OUR HOLDING COMPANY STRUCTURE RESULTS IN STRUCTURAL SUBORDINATION AND MAY AFFECT
OUR ABILITY TO MAKE PAYMENTS ON OUR SENIOR UNSECURED NOTES.

On January 18, 2001, we completed a universal shelf offering of $200.0
million principal amount 7.5% senior notes due 2006. The notes represent senior
unsecured obligations exclusively of Waddell & Reed Financial, Inc. We are a
holding company and, accordingly, substantially all of our operations are
conducted through our subsidiaries. As a result, our cash flow and our ability
to service our debt, including the notes, is dependent upon the earnings of our
subsidiaries. In addition, we are dependent on the distribution of earnings,
loans or other payments by our subsidiaries to us. Our subsidiaries are separate
and distinct legal entities. Our subsidiaries have no obligation to pay any
amounts due on the notes or provide us with funds for our payment obligations,
whether by dividends, distributions, loans or other payments. In addition, any
payment of dividends, distributions, loans or advances to by our subsidiaries
could be subject to statutory or contractual restrictions. Payments to us by our
subsidiaries will also be contingent upon our subsidiaries' earnings and
business considerations. Our right to receive any assets of any of our
subsidiaries upon their liquidation or reorganization, and therefore the right
of the holders of the notes to participate in those assets, would be effectively
subordinated to the claims of that subsidiary's creditors, including trade
creditors. In addition, even if we were a creditor of any of our subsidiaries,
our rights as a creditor would be subordinate to any security interest in the
assets of our subsidiaries and any indebtedness of our subsidiaries senior to
that held by us.

SELLING STOCKHOLDERS

The table below sets forth information with respect to the beneficial
ownership of the Class A common stock of Waddell & Reed Financial, Inc. by the
selling stockholders immediately prior to this offering. Of the selling
stockholders, only Keith A. Tucker, Henry J. Herrmann and Robert L. Hechler own
or have the right to acquire through exercise of stock options, on the date
hereof, in excess of one percent of the outstanding Class A common stock. All
information with respect to the beneficial ownership has been furnished by the
selling stockholders. The number of shares which may be sold by each selling
stockholder from time to time will be updated in supplements to this Prospectus,
which will be filed with the SEC in accordance with Rule 424(b) of the
Securities Act.

CLASS A COMMON
RELATIONSHIP TO WADDELL & REED STOCK OWNED AS OF SHARES TO BE SOLD(2)
NAME FINANCIAL, INC. JUNE 25, 2001 (1)

Keith A. Tucker Chairman of the Board, Chief 2,892,132 270,000 (3)
Executive Officer and Director 197,604 (4)
828,611 (5)
406,488 (6)
511,212 (7)
698,534 (8)
246,150 (9)
139,500(10)
431,665(11)
216,000(12)
107,913(13)
54,744(26)
103,821(27)
222,000(28)
891,430(29)

Keith A. Tucker Children's 139,282 168,650(11)
Trust Agreement dated 96,306(14)
February 21, 2000 54,118(29)

Henry J. Herrmann President, Chief Investment 1,588,418 516,900 (3)
Officer and Director 49,401 (4)
198,554 (5)
112,566 (6)
389,603 (8)
184,650 (9)
209,250(10)
377,501(11)
162,000(12)
80,934(13)
19,640(27)
195,000(28)
487,008(29)

CLASS A COMMON
RELATIONSHIP TO WADDELL & REED STOCK OWNED AS OF SHARES TO BE SOLD(2)
NAME FINANCIAL, INC. JUNE 25, 2001 (1)

Robert L. Hechler Executive Vice President and 930,533 438,300 (3)
Director (Chief Operating 49,401 (4)
Officer March 3, 1998 to April 75,044 (5)
25, 2001) 50,030 (6)
217,314 (8)
153,900 (9)
139,500(10)
246,668(11)
135,000(12)
67,446(13)
45,620(26)
15,223(27)
139,000(28)
281,317(29)

William L. Rogers Director 39,574 4,500(15)
4,500(16)
16,400(17)
13,998(19)
12,420(20)
15,000(21)
8,920(29)
9,575(30)
2,422(31)
5,500(32)

James M. Raines Director 19,879 4,500(15)
4,500(16)
14,220(18)
12,072(19)
15,000(22)
18,461(23)
1,052(29)
8,245(30)
1,200(31)
5,500(32)

Ronald C. Reimer Director 0 15,000(35)
8,574(37)

Jerry W. Walton Director 10,056 15,000(24)
5,500(32)
5,556(33)
9,490(34)
253(36)

CLASS A COMMON
RELATIONSHIP TO WADDELL & REED STOCK OWNED AS OF SHARES TO BE SOLD(2)
NAME FINANCIAL, INC. JUNE 25, 2001 (1)

John E. Sundeen, Jr. Senior Vice President, Chief 146,721 87,150 (3)
Financial Officer and Treasurer 25,014 (6)
11,256 (8)
60,000 (9)
12,698(11)
60,000(12)
18,761(25)
18,248(26)
45,000(28)
37,098(29)

Thomas W. Butch Senior Vice President and Chief 7,593 15,000(12)
Marketing Officer 13,686(26)
45,000(28)

Michael D. Strohm Senior Vice President and Chief 54,915 25,200 (3)
Operations Officer (April 25, 15,635 (6)
2001 to present) 2,189 (8)
11,250 (9)
1,517(11)
45,000(12)
15,635(25)
18,248(26)
45,000(28)
4,577(29)

Robert J. Williams, Jr. Senior Vice President and 105,564 92,700 (3)
National Sales Manager 25,014 (6)
40,500 (9)
1,145(11)
40,500(12)
36,952(26)
45,000(28)
12,791(29)

D. Tyler Towery Vice President and Controller 56,518 8,130 (5)
8,130 (6)
26,265 (8)
5,250 (9)
16,538(11)
5,250(12)
6,000(28)
25,946(29)

Daniel C. Schulte Vice President, General Counsel 1,106 2,250 (9)
and Secretary 3,000(12)
7,603(26)
25,000(28)

Wendy J. Hills Assistant Secretary 300 750 (9)
3,000(28)

-------------------------------------------------

(1) In each case, the indicated number of shares of Class A common stock include
both the number of shares held on the date indicated and the number of shares
issuable upon exercise of stock options held by the selling stockholder within
the next sixty days. Indirect beneficial ownership includes shares (a) owned by
the director, executive officer or spouse as trustee of a trust or executor of
an estate, (b) held in a trust in which the director, executive officer or a
family member living in his home has a beneficial interest, or (c) owned by the
director or executive officer in a personal corporation. Indirect beneficial
ownership excludes 14,987 and 456 shares held in the account of Messrs. Keith A.
Tucker and Thomas W. Butch, respectively, in our 401(k) and Thrift Plan as of
June 25, 2001. Indirect beneficial ownership for Mr. Tucker includes 1,423,166
shares owned by personal corporations, 1,294,284 shares subject to currently
exercisable options owned by a revocable trust, 139,282 shares subject to
currently exercisable options owned by Mr. Tucker's children's trust for which
Mr. Tucker's wife serves as a co-trustee and 35,400 shares in Mr. Tucker's IRA.
Indirect beneficial ownership for Mr. Herrmann includes 139,282 shares subject
to currently exercisable options owned by Mr. Tucker's children's trust for
which Mr. Herrmann serves as a co-trustee. Messrs. Tucker and Herrmann disclaim
beneficial ownership as to the shares owned by Mr. Tucker's children's trust.

(2) Assumes all the shares of Class A common stock that may be offered are sold.

(3) All these options were granted on March 4, 1998 pursuant to the 1998 Stock
Incentive Plan. These options are exercisable in three increments of 33.33% each
commencing on March 4, 2000 and on each of the two anniversaries thereafter and
expire on March 5, 2008. Of these options, Messrs. Tucker, Herrmann, Hechler,
Sundeen and Williams exercised options to purchase 90,000; 172,300; 146,100;
20,148 and 515 shares, respectively, on August 1, 2000.

(4) All these options were granted on March 4, 1998 pursuant to the 1998
Executive Deferred Compensation Stock Option Plan. These options are exercisable
in ten increments of 10% each commencing on March 4, 1999 and on each of the
nine anniversaries thereafter and expire on March 3, 2009. Of these options,
Messrs. Tucker, Herrmann and Hechler exercised options to purchase 39,522; 9,881
and 9,881 shares, respectively, on August 1, 2000.

(5) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark Corporation
and were exercised on August 2, 1999.

(6) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark
Corporation, are immediately exercisable and expire on December 17, 2006. Of
these options, Messrs. Tucker, Herrmann, Hechler, Williams and Towery exercised
options to purchase 25,511; 56,283; 25,016; 1,580 and 4,065 shares,
respectively, on August 2, 1999. Further, of these options, Messrs. Tucker,
Herrmann, Hechler, Sundeen, Williams and Towery exercised options to purchase
380,977; 56,283; 25,014; 25,014; 23,434 and 4,065 shares, respectively, on
August 1, 2000.

(7) All these options were granted on November 6, 1998 pursuant to the 1998
Executive Deferred Compensation Plan in connection with our spin-off from
Torchmark Corporation. These options are exercisable in ten increments of 10%
each commencing on January 31, 1998 and on each of the nine anniversaries
thereafter and expire on January 30, 2008. Of these options, options to purchase
153,356 shares were exercised on August 1, 2000.

(8) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in connection with our spin-off from Torchmark Corporation,
are immediately exercisable and expire on September 26, 2007. Of these options,
Messrs. Herrmann, Hechler and Towery exercised options to purchase 233,183;
203,708 and 9,182 shares, respectively, on August 2, 1999. Further, of these
options, Messrs. Tucker, Herrmann, Hechler, Sundeen and Towery exercised options
to purchase 698,534; 156,420; 13,606; 11,256 and 17,083 shares, respectively, on
August 1, 2000.

(9) All these options were granted on December 16, 1998 pursuant to the 1998
Stock Incentive Plan. These options are exercisable in three increments of
33.33% each commencing on December 16, 2000 and on the two anniversaries
thereafter and expire on December 17, 2008.

(10) All these options were granted on December 16, 1998 pursuant to the 1998
Executive Deferred Compensation Stock Option Plan. These options are exercisable
in ten increments of 10% each commencing on December 16, 1999 and on each of the
nine anniversaries thereafter and expire on December 15, 2009. Of these options,
Messrs. Tucker, Herrmann and Hechler exercised options to purchase 13,950;
20,925 and 13,950; shares, respectively, on August 1, 2000.

(11) All these options were granted on August 2, 1999 pursuant to the 1998 Stock
Incentive Plan, became exercisable on February 2, 2000 and expire on August 3,
2009. Of these options, the Keith A. Tucker Children's Trust and Messrs. Tucker,
Herrmann, Hechler and Towery exercised options to purchase 83,486; 400,306;
377,501; 246,668 and 16,538 shares, respectively, on August 1, 2000.

(12) All these options were granted on December 10, 1999 pursuant to the 1998
Stock Incentive Plan. These options are exercisable in three increments of
33.33% each commencing on December 10, 2001 and on each of the two anniversaries
thereafter and expire on December 11, 2009.

(13) All these options were granted on December 10, 1999 pursuant to the 1998
Stock Incentive Plan. These options are exercisable in ten increments of 10%
each commencing on December 10, 2000 and on each of the nine anniversaries
thereafter and expire on December 9, 2010.

(14) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in connection with our spin-off from Torchmark Corporation,
are immediately exercisable and expire on September 26, 2007. Of these options,
options to purchase 60,279 shares were exercised on August 2, 1999. Further, of
these options, options to purchase 36,027 shares were exercised on August 1,
2000.

(15) All these options were granted on January 4, 1999 pursuant to the 1998
Stock Incentive Plan, became exercisable on July 4, 1999 and expire on January
5, 2009. Of these options, Mr. Rogers exercised options to purchase 4,500 shares
on August 1, 2000 and Mr. Raines exercised options to purchase 1,279; 1,000 and
2,221 shares on December 6, 2000, December 12, 2000 and December 18, 2000,
respectively.

(16) All these options were granted on January 3, 2000 pursuant to the 1998
Stock Incentive Plan, became exercisable on July 3, 2000 and expire on January
4, 2010. Of these options, Mr. Rogers exercised options to purchase 2,571 shares
on August 1, 2000 and Mr. Raines exercised options to purchase 1,000; 2,000 and
1,500 shares on December 12, 2000, December 15, 2000 and December 18, 2000,
respectively.

(17) All these options were granted on April 23, 1998 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on April 23, 1999 and on each of the
nine anniversaries thereafter and expire on April 22, 2009. Of these options,
options to purchase 3,280 shares were exercised on August 1, 2000.

(18) All these options were granted on January 4, 1999 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on January 4, 2000 and on each of the
nine anniversaries thereafter and expire on January 3, 2010. Options to purchase
1,422 shares were exercised on December 6, 2000.

(19) All these options were granted on January 3, 2000 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on January 3, 2001 and on each of the
nine anniversaries thereafter and expire on January 2, 2011.

(20) All these options were granted on December 23, 1999 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on December 23, 2000 and on each of the
nine anniversaries thereafter and expire on December 22, 2010.

(21) All these options were granted on April 15, 1998 pursuant to the 1998
Stock Incentive Plan. These options are exercisable in three increments of
33.33% each commencing on March 4, 2000 and on each of the two anniversaries
thereafter and expire on April 16, 2008. Of these options, options to
purchase 5,000 shares were exercised on August 1, 2000.

(22) All these options were granted on July 22, 1998 pursuant to the 1998 Stock
Incentive Plan. These options are exercisable in three increments of 33.33% each
commencing on March 4, 2000 and on each of the two anniversaries thereafter and
expire on July 23, 2008. Of these options, options to purchase 1,547 and 3,453
shares were exercised on August 1, 2000 and December 6, 2000, respectively.

(23) All these options were granted on August 5, 1998 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on August 5, 1999 and on each of the
nine anniversaries thereafter and expire on August 4, 2009. Of these options,
options to purchase 1,847 and 1,846 shares were exercised on August 1, 2000 and
December 6, 2000, respectively.

(24) All these options were granted on May 1, 2000 pursuant to the 1998 Stock
Incentive Plan. The options are exercisable in three increments of 33.33% each
commencing on May 1, 2002 and on each of the two anniversaries thereafter and
expire on May 2, 2010.

(25) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark
Corporation, are immediately exercisable and expire on December 21, 2005. Of
these options, Messrs. Sundeen and Strohm each exercised options to purchase
18,342 and 2,186 shares, respectively, on August 2, 1999. Further, of these
options, Messrs. Sundeen and Strohm exercised options to purchase 419 and 7,763
shares, respectively, on August 1, 2000.

(26) All these options were granted December 6, 2000 pursuant to the 1998
Executive Deferred Compensation Stock Option Plan. These options are exercisable
in ten increments of 10% each commencing on December 6, 2001 and on each of the
nine anniversaries thereafter and expire on December 5, 2011.

(27) All these options were granted August 1, 2000 pursuant to the 1998
Executive Deferred Compensation Stock Option Plan, became exercisable on
February 1, 2001 and expire August 2, 2010.

(28) All these options were granted December 6, 2000 pursuant to the 1998 Stock
Incentive Plan. These options are exercisable in three increments of 33.33% each
commencing on December 6, 2002 and on each of the two anniversaries thereafter
and expire on December 7, 2010.

(29) All these options were granted August 1, 2000 pursuant to the 1998 Stock
Incentive Plan, became exercisable February 1, 2001 and expire on August 2,
2010.

(30) All these options were granted January 2, 2001 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on January 2, 2002 and on each of the
nine anniversaries thereafter and expire on January 1, 2012.

(31) All these options were granted August 1, 2000 pursuant to the 1998
Non-Employee Director Stock Option Plan, became exercisable February 1, 2001 and
expire on August 2, 2010.

(32) All these options were granted on January 2, 2001 pursuant to the 1998
Stock Incentive Plan, become exercisable on July 2, 2001 and expire on January
3, 2011.

(33) All these options were granted on July 13, 2000 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on July 13, 2001 and on each of the
nine anniversaries thereafter and expire on July 12, 2011.

(34) All these options were granted on January 16, 2001 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on January 16, 2002 and on each of the
nine anniversaries thereafter and expire on January 15, 2012.

(35) All these options were granted on March 5, 2001 pursuant to the 1998 Stock
Incentive Plan. These options are exercisable in three increments of 33.33% each
commencing on March 5, 2003 and on each of the two anniversaries thereafter and
expire on March 6, 2011.

(36) All these options were granted March 27, 2001 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on March 27, 2002 and on each of the
nine anniversaries thereafter and expire on March 26, 2012.

(37) All these options were granted June 18, 2001 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on June 18, 2002 and on each of the
nine anniversaries thereafter and expire on June 17, 2012.

PLAN OF DISTRIBUTION

The Class A common stock being offered by the selling stockholders
pursuant to this Prospectus may be sold from time to time by the selling
stockholders, or by pledgees, donees, transferees, or other successors in
interest, regardless of whether such successors in interest are successors in
interest with respect to the shares being offered. Such sales may be made on one
or more exchanges, in the over-the-counter markets, or otherwise, at prices and
on terms then prevailing, at prices related to the then-current market price of
the Class A common stock, or in negotiated transactions. In addition, any
securities covered by this Prospectus which qualify for sale pursuant to Rule
144 under the Act may be sold under such rule rather than pursuant to this
Prospectus.

In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from selling stockholders in
amounts to be negotiated immediately prior to the sale. The selling stockholders
and agents who execute orders on their behalf may be deemed to be underwriters
as that term is defined in Section 2(11) of the Securities Act and a portion of
any proceeds or sales discounts, commissions, or other compensation may be
deemed to be underwriting compensation for purposes of that Act.

USE OF PROCEEDS

We will not receive any proceeds from this offering.

LEGAL MATTERS

The validity of the shares of Class A common stock offered by this
Prospectus has been passed upon for us by Hughes & Luce, L.L.P., Dallas, Texas.

EXPERTS

Our Consolidated Financial Statements as of December 31, 1999 and 2000,
and for each of the years in the three-year period ended December 31, 2000
incorporated by reference into this Prospectus have been so included in reliance
on the report of KPMG LLP, independent certified public accountants,
incorporated by reference elsewhere in this Prospectus, and upon the authority
of said firm as experts in accounting and auditing.

INDEMNIFICATION

Our certificate of incorporation provides that each person who was or
is threatened to be made a party to or is involved in any action, suit or
proceeding by reason of the fact that he or she, or a person of whom he or she
is the legal representative, is or was one of our directors or officers or is or
was serving at our request as a director or officer of another company,
partnership, joint venture, trust, or other enterprise, will be indemnified and
held harmless by us to the fullest extent authorized by the Delaware General
Corporation Law as the same exists or may be amended after the date of this
Prospectus (but, in the case of any amendment, only to the extent that amendment
permits us to provide broader indemnification rights than the Delaware General
Corporation Law permitted us to provide prior to that amendment), against all
expense, liability, and loss reasonably incurred or suffered by that person in
connection therewith and that indemnification will continue as to a person who
has ceased to be a director or officer and will inure to the benefit of his or
her heirs, executors, and administrators.

misconduct or known violations of law; (iii) for the payment of unlawful
dividends or unlawful stock purchases or redemptions; or (iv) for transactions
in which the director received an improper personal benefit. In addition,
directors and officers are insured, at our expense, against certain liabilities
which might arise out of their employment.

Under Section 145 of the Delaware General Corporation Law, a
corporation may indemnify a director, officer, employee, or agent of the
corporation against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him or her if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. In the case of an action brought by or in the right of a
corporation, the corporation may indemnify a director, officer, employee, or
agent of the corporation against expenses (including attorneys' fees) actually
and reasonably incurred by him or her if he or she acted in good faith and in a
manner he or she reasonably believed to be in the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue, or matter as to which that person has been adjudged to be liable to the
corporation unless a court finds that, in view of all the circumstances of the
case, that person is fairly and reasonably entitled to indemnity for those
expenses as the court deems proper.

Insofar as indemnification for liability arising under the Securities
Act may be permitted to our directors or officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC such indemnification is against public policy as expressed in that
Act and is therefore unenforceable.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

The following documents heretofore filed with the Securities and
Exchange Commission (the "SEC") by Waddell & Reed Financial, Inc. (the
"Registrant," the "Company" or "we") are incorporated by reference into this
Registration Statement:

(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000;

(b) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001;

(d) The description of the Registrant's Class A common stock contained
in our Registration Statement on Form 8-A, filed with the SEC on February 27,
1998, including any amendment or report filed for the purpose of updating such
description; and

(e) All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, after the date of the
filing of the initial Registration Statement and any amendments thereto and
prior to the filing of a post-effective amendment to this Registration Statement
which indicates that all of the shares of common stock offered have been sold or
which deregisters all of such shares then remaining unsold, shall be deemed to
be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents (such documents, and the
documents enumerated above, being hereinafter referred to as "Incorporated
Documents").

Any statement contained in an Incorporated Document shall be deemed to
be modified, replaced or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed Incorporated Document modifies, replaces or supersedes such statement. Any
statement so modified, replaced or superseded shall not be deemed, except as so
modified, replaced or superseded, to constitute a part of this Registration
Statement.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

II-1

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Delaware General Corporation Law permits Delaware corporations to
include in their certificates of incorporation a provision eliminating or
limiting director liability for monetary damages arising from breaches of their
fiduciary duty. The only limitations imposed under the statute are that the
provision may not eliminate or limit a director's liability: (i) for breaches of
the director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or involving intentional misconduct or known
violations of law; (iii) for the payment of unlawful dividends or unlawful stock
purchases or redemptions; or (iv) for transactions in which the director
received an improper personal benefit. In addition, directors and officers are
insured, at the Registrant's expense, against certain liabilities which might
arise out of their employment.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

Not applicable.

ITEM 8. EXHIBITS.

Exhibit
Number Description

II-2

4.3 Form of Option Exchange Mailing Documents (filed as Exhibit
4.5 to the Company's Registration Statement on Form S-8
(Commission File No. 333-65827) and incorporated herein by
reference).
4.4 1998 Executive Deferred Compensation Stock Option Plan, as
Amended and Restated (filed as Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2000 and incorporated herein by reference).
4.5 1998 Stock Incentive Plan, as Amended and Restated (filed as
Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000 and incorporated herein
by reference).
4.6 Rights Agreement, dated as of April 28, 1999, by and between
Waddell & Reed Financial, Inc. and First Chicago Trust Company
of New York, which includes the Certificate of Designation,
Preferences and Rights of Series A Junior Participating
Preferred Stock of the Company, as filed on May 13, 1999 with
the Secretary of State of Delaware, as Exhibit A and the form
of Rights Certificate as Exhibit B (filed as Exhibit 4 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 and incorporated herein by reference).
4.7 First Amendment to Rights Agreement, dated as of February 14,
2001, by and between Waddell & Reed Financial, Inc. and First
Chicago Trust Company of New York (filed as Exhibit 4.4 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2000 and incorporated herein by reference).
5.1 Opinion of Hughes & Luce, L.L.P. (filed as Exhibit 5.1 to the
Company's Registration Statement on Form S-8 (Commission File
No. 333-65827) and incorporated herein by reference).
23.1 Consent of Hughes & Luce, L.L.P. (contained in Exhibit 5.1
hereto).
23.2* Consent of KPMG LLP.
24.1 Powers of Attorney (filed as Exhibit 24.1 to the Company's
Registration Statement on Form S-8 (Commission File No.
333-65827) and incorporated herein by reference).

----------------------
* Filed herewith

ITEM 9. UNDERTAKINGS.

(a) We hereby undertake:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by us pursuant to Section 13(a) or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

II-3

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(b) We hereby undertake that, for purposes of determining any liability under
the Securities Act, each filing of our annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) We hereby undertake to deliver or cause to be delivered with the prospectus,
to each person to whom the prospectus is sent or given, the latest annual report
to security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.

(d) Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons, we have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by one of our directors, officers or controlling persons in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Post Effective Amendment No. 3 to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Overland
Park, State of Kansas, on July 3, 2001.

WADDELL & REED FINANCIAL, INC.

/s/ JOHN E. SUNDEEN, JR.
-----------------------------------
John E. Sundeen, Jr.
Senior Vice President, Chief Financial
Officer and Treasurer

POWER OF ATTORNEY

We, the undersigned officers and directors of Waddell & Reed Financial,
Inc., hereby severally constitute and appoint John E. Sundeen, Jr. and Daniel C.
Schulte, and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for each of us in our name,
place and stead, in any and all capacities, to sign Waddell & Reed Financial,
Inc.'s Registration Statement on Form S-8, and any other Registration Statement
relating to the same offering, and any and all amendments thereto (including
post-effective amendments), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grant to such attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as each
of us might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or his or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ KEITH A. TUCKER Chairman of the Board, Chief July 3, 2001
----------------------------------------------------- Executive Officer and Director
Keith A. Tucker

/s/ HENRY J. HERRMANN President, Chief Investment Officer July 3, 2001
----------------------------------------------------- and Director
Henry J. Herrmann

/s/ ROBERT L. HECHLER Executive Vice President and Director July 3, 2001
-----------------------------------------------------
Robert L. Hechler

/s/ JOHN E. SUNDEEN, JR. Senior Vice President, Chief July 3, 2001
----------------------------------------------------- Financial Officer and Treasurer
John E. Sundeen, Jr. (Principal Financial Officer)

/s/ D. TYLER TOWERY Vice President and Controller July 3, 2001
----------------------------------------------------- (Principal Accounting Officer)
D. Tyler Towery

II-5

* Director July 3, 2001
-----------------------------------------------------
James M. Raines

* Director July 3, 2001
-----------------------------------------------------
William L. Rogers

*By:/s/ DANIEL C. SCHULTE July 3, 2001
----------------------
Daniel C. Schulte
Attorney-in-fact

II-6

INDEX TO EXHIBITS

Exhibit
Number Description

4.1 Specimen of Stock Certificate (filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (Commission File
No. 333-43687) and incorporated herein by reference).
4.2 1998 Non-Employee Director Stock Option Plan (filed as Exhibit
10.9 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 and incorporated herein by
reference).
4.3 Form of Option Exchange Mailing Documents (filed as Exhibit
4.5 to the Company's Registration Statement on Form S-8
(Commission File No. 333-65827) and incorporated herein by
reference).
4.4 1998 Executive Deferred Compensation Stock Option Plan, as
Amended and Restated (filed as Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2000 and incorporated herein by reference).
4.5 1998 Stock Incentive Plan, as Amended and Restated (filed as
Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000 and incorporated herein
by reference).
4.6 Rights Agreement, dated as of April 28, 1999, by and between
Waddell & Reed Financial, Inc. and First Chicago Trust Company
of New York, which includes the Certificate of Designation,
Preferences and Rights of Series A Junior Participating
Preferred Stock of the Company, as filed on May 13, 1999 with
the Secretary of State of Delaware, as Exhibit A and the form
of Rights Certificate as Exhibit B (filed as Exhibit 4 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 and incorporated herein by reference).
4.7 First Amendment to Rights Agreement, dated as of February 14,
2001, by and between Waddell & Reed Financial, Inc. and First
Chicago Trust Company of New York (filed as Exhibit 4.4 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2000 and incorporated herein by reference).
5.1 Opinion of Hughes & Luce, L.L.P. (filed as Exhibit 5.1 to the
Company's Registration Statement on Form S-8 (Commission File
No. 333-65827) and incorporated herein by reference).
23.1 Consent of Hughes & Luce, L.L.P. (contained in Exhibit 5.1
hereto).
23.2* Consent of KPMG LLP.
24.1 Powers of Attorney (filed as Exhibit 24.1 to the Company's
Registration Statement on Form S-8 (Commission File No.
333-65827) and incorporated herein by reference).

----------------------
* Filed herewith