Breaking News

Tweet TWEET

Federated Investors, Inc. Reports First Quarter 2013 Earnings

        Federated Investors, Inc. Reports First Quarter 2013 Earnings

--Equity and bond assets increase $2.6 billion during Q1 2013 to a record $98
billion

--Board declares $0.24 per share quarterly dividend

PR Newswire

PITTSBURGH, April 25, 2013

PITTSBURGH, April 25, 2013 /PRNewswire/ --Federated Investors, Inc. (NYSE:
FII), one of the nation's largest investment managers, today reported earnings
per diluted share (EPS) of $0.41 for the quarter ended March 31, 2013, which
was unchanged from the same quarter last year. Net income was $43.0 million
for Q1 2013 compared to $42.3 million for Q1 2012.

Federated's total managed assets were $377.3 billion at March 31, 2013, up
$13.7 billion or 4 percent from $363.6 billion at March31, 2012 and down $2.5
billion or 1 percent from $379.8 billion reported at Dec.31, 2012. Average
managed assets for Q1 2013 were $381.2 billion, up $11.1 billion or 3 percent
from $370.1 billion reported for Q1 2012 and up $12.5 billion or 3 percent
from $368.7 billion reported for Q4 2012.

"With more than 80 percent of Federated's rated equity-fund assets finishing
in the top half of their respective categories for the one-year period, we saw
strong demand for a range of strategies, including our Kaufmann large growth
portfolio, international equity funds and balanced products," said J.
Christopher Donahue, president and chief executive officer. "At the same
time, we continued to see significant sales in a variety of income-oriented
strategies, both equity and fixed income."

Federated's board of directors declared a quarterly dividend of $0.24 per
share. The dividend is payable on May 15, 2013 to shareholders of record as
of May 8, 2013. During Q1 2013, Federated purchased 131,472 shares of
Federated class B common stock for $2.7 million.

Federated's equity assets were $37.9 billion at March 31, 2013, up $3.8
billion or 11 percent from $34.1 billion at March31, 2012 and up $2.9 billion
or 8 percent from $35.0 billion at Dec.31, 2012. Top-selling equity funds
during Q1 2013 on a net basis were Federated Kaufmann Large Cap Fund,
Federated International Strategic Value Dividend Fund, Federated Capital
Income Fund, Federated International Leaders Fund and Federated Managed
Volatility FundII.

Federated's fixed-income assets were a record $52.8 billion at March 31, 2013,
up $6.6 billion or 14 percent from $46.2 billion at March31, 2012 and up $0.1
billion from $52.7 billion at Dec.31, 2012. Bond assets in the liquidation
portfolio were $7.0 billion at March 31, 2013. Fixed-income sales during Q1
2013 were driven by net sales in Federated Institutional High Yield Bond Fund,
Federated's short-duration products, Federated Floating Rate Strategic Income
Fund and Federated Bond Fund.

Money market assets in both funds and separate accounts were $279.7 billion at
March 31, 2013, up $5.0 billion or 2 percent from $274.7 billion at March31,
2012 and down $5.0 billion or 2 percent from $284.7 billion at Dec.31, 2012.
Money market mutual fund assets were $242.7 billion at March 31, 2013, down
$2.5 billion or 1 percent from $245.2 billion at March31, 2012 and down $13.0
billion or 5 percent from $255.7 billion at Dec.31, 2012.

Financial Summary

Q1 2013 vs. Q1 2012

Revenue decreased by $2.3 million or 1 percent due primarily to an increase in
voluntary fee waivers related to certain money market funds in order for these
funds to maintain positive or zero net yields. The decrease was partially
offset by an increase in revenue due to higher average fixed-income and equity
assets. See additional information about voluntary fee waivers in the table at
the end of this financial summary.

During Q1 2013, Federated derived 56 percent of its revenue from equity and
fixed-income assets (33 percent from equity assets and 23 percent from
fixed-income assets), 43 percent from money market assets and 1 percent from
other products and services.

Operating expenses were down slightly from the prior year.

Q1 2013 vs. Q4 2012

Revenue decreased by $16.9 million or 7 percent primarily due to an increase
in voluntary fee waivers and fewer days in the quarter, partially offset by an
increase in average assets.

Operating expenses decreased by $1.9 million or 1 percent. The decrease
primarily reflects lower distribution expense related to the aforementioned
increase in fee waivers. The decrease was partially offset by an increase in
compensation and related expense and an increase in professional service fees,
as Q4 2012 included the recognition of insurance proceeds.

Federated's level of business activity and financial results are dependent
upon many factors including market conditions, investment performance and
investor behavior. These factors and others including asset levels, product
sales and redemptions, market appreciation or depreciation, revenues, fee
waivers and expenses can impact Federated's activity levels and financial
results significantly. Risk factors and uncertainties that can influence
Federated's financial results are discussed in the company's annual and
quarterly reports as filed with the Securities and Exchange Commission.

Fee waivers to maintain positive or zero net yields could vary significantly
in the future as they are contingent on a number of variables including, but
not limited to, changes in assets within the money market funds, available
yields on instruments held by the money market funds, actions by the Federal
Reserve, the U.S. Department of the Treasury, the Securities and Exchange
Commission, the Financial Stability Oversight Council and other governmental
entities, changes in expenses of the money market funds, changes in the mix of
money market customer assets, Federated's willingness to continue the fee
waivers and changes in the extent to which the impact of the waivers is shared
by third parties.



Money Market Fund Yield Waiver Impact to Consolidated Statements of
Income
(in millions)
                   Quarter Ended              Change      Quarter    Change
                                              Q1 2012 to  Ended      Q4 2012
                   March 31,     March31,    Q12013     Dec.31,   to
                   2013          2012                     2012       Q12013
Investment         $  (54.9)     $  (52.9)    $  (2.0)    $ (40.0)   $ (14.9)
advisory fees
Other service fees (32.4)        (27.5)       (4.9)       (30.7)     (1.7)
Total Revenue      $  (87.3)     $  (80.4)    $  (6.9)    $ (70.7)   $ (16.6)
Less: Reduction in
distribution       64.8          57.5         7.3         54.9       9.9
expense
Operating income   $  (22.5)     $  (22.9)    $  0.4      $ (15.8)   $ (6.7)
Less: Reduction in
noncontrolling     0.8           0.6          0.2         0.3        0.5
interest
Pre-tax impact     $  (21.7)     $  (22.3)    $  0.6      $ (15.5)   $ (6.2)



Federated will host an earnings conference call at 9 a.m. Eastern on April 26,
2013. Investors are invited to listen to Federated's earnings teleconference
by calling 877-407-0782 (domestic) or 201-689-8567 (international) prior to
the 9 a.m. start time. The call may also be accessed in real time on the
Internet via the About Federated section of FederatedInvestors.com. A replay
will be available after 12:30 p.m. and through May 3, 2013 by calling
877-660-6853 (domestic) or 201-612-7415 (international) and entering access
code 411857.

Federated Investors, Inc. is one of the largest investment managers in the
United States, managing $377.3 billion in assets as ofMarch 31, 2013. With
137 funds and a variety of separately managed account options, Federated
provides comprehensive investment management to approximately 5,500
institutions and intermediaries including corporations, government entities,
insurance companies, foundations and endowments, banks and broker/dealers.
Federated ranks in the top 3 percent of money market fund managers in the
industry, the top 7 percent of equity fund managers and the top 8 percent of
fixed-income fund managers^1. For more information, visit
FederatedInvestors.com.

1 Strategic Insight, Feb. 28, 2013. Based on assets under management in
open-end funds.

Federated Securities Corp. is distributor of the Federated funds.

Separately managed accounts are made available through Federated Global
Investment Management Corp., Federated Investment Counseling and Federated
MDTA LLC, each a registered investment adviser.

Certain statements in this press release, such as those related to the level
of fee waivers incurred by the company, product demand and asset flows
constitute or may constitute forward-looking statements, which involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, levels of activity, performance or achievements of the company, or
industry results, to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such
forward-looking statements. Other risks and uncertainties include the ability
of the company to predict the level of fee waivers in future quarters, which
could vary significantly depending on a variety of factors identified above,
and include the ability of the company to sustain product demand and asset
flows, which could vary significantly depending on market conditions,
investment performance and investor behavior. Other risks and uncertainties
also include the risk factors discussed in the company's annual and quarterly
reports as filed with the Securities and Exchange Commission. As a result, no
assurance can be given as to future results, levels of activity, performance
or achievements, and neither the company nor any other person assumes
responsibility for the accuracy and completeness of such statements in the
future.





Unaudited Condensed Consolidated Statements of Income
(in thousands, except
per share data)
                                                                        %
                      Quarter Ended                          Quarter    Change
                                                  % Change   Ended      Q4
                                                  Q1 2012 to            2012
                      March 31,     March31,     Q1 2013    Dec.31,   to
                      2013          2012                     2012       Q1
                                                                        2013
Revenue
Investment advisory   $  150,763    $  149,348    1       %  $ 166,813  (10)%
fees, net
Administrative        56,828        57,292        (1)        57,372     (1)
service fees, net
Other service fees,   19,332        22,655        (15)       19,818     (2)
net
Other, net            1,049         986           6          821        28
Total Revenue         227,972       230,281       (1)        244,824    (7)
Operating Expenses
Compensation and      66,937        64,065        4          63,211     6
related
Distribution          58,240        61,693        (6)        65,278     (11)
Professional service  8,844         10,308        (14)       6,549      35
fees
Systems and           6,623         6,310         5          6,100      9
communications
Office and occupancy  6,432         6,253         3          6,349      1
Advertising and       3,422         2,928         17         3,611      (5)
promotional
Travel and related    2,686         2,751         (2)        3,837      (30)
Intangible asset      763           21            3,533      951        (20)
related
Other                 5,826         5,605         4          5,746      1
Total Operating       159,773       159,934       0          161,632    (1)
Expenses
Operating Income      68,199        70,347        (3)        83,192     (18)
Nonoperating Income
(Expenses)
Investment income,    4,428         3,346         32         4,343      2
net
Debt expense          (3,253)       (3,711)       (12)       (3,506)    (7)
Other, net            (40)          (37)          8          (3,112)    (99)
Total Nonoperating
Income (Expenses),    1,135         (402)         382        (2,275)    150
net
Income before income  69,334        69,945        (1)        80,917     (14)
taxes
Income tax provision  24,646        25,538        (3)        28,961     (15)
Net income including
noncontrolling        44,688        44,407        1          51,956     (14)
interest in
subsidiaries
Less: Net income
attributable to the
noncontrolling        1,694         2,082         (19)       2,375      (29)
interest in
subsidiaries
Net Income            $  42,994     $  42,325     2       %  $ 49,581   (13)%
Amounts Attributable
to Federated
Earnings Per Share^1
Basic and diluted     $  0.41       $  0.41       0       %  $ 0.44     (7)%
Weighted-average
shares outstanding
Basic and diluted     100,518       100,112                  100,374
Dividends declared    $  0.24       $  0.24                  $ 1.75
per share
1) Unvested share-based payment awards that receive non-forfeitable dividends
are deemed participating securities and are required to be considered in the
computation of earnings per share under the "two-class method." As such, total
net income of $1.7 million, $1.5 million and $5.7 million available to
unvested restricted shares for the quarterly periods ended March 31, 2013,
March 31, 2012 and Dec. 31, 2012, respectively, was excluded from the
computation of earnings per share.





Unaudited Condensed Consolidated Balance Sheets
(in thousands)                                  March 31, 2013 Dec. 31, 2012
Assets
Cash and other investments                      $  306,857     $  258,628
Other current assets                            39,390         41,434
Intangible assets, net and goodwill             727,163        727,857
Other long-term assets                          63,858         62,142
Total Assets                                    $  1,137,268   $  1,090,061
Liabilities and Equity
Current liabilities                             $  137,541     $  181,134
Long-term debt                                  265,625        276,250
Other long-term liabilities                     135,119        128,733
Equity excluding treasury stock                 1,350,401      1,263,966
Treasury stock                                  (751,418)      (760,022)
Total Liabilities and Equity                    $  1,137,268   $  1,090,061





Changes in Equity and Fixed-Income Fund and Separate Account Assets
(in millions)
                             Quarter Ended
                             March 31, 2013     Dec.31, 2012   March31, 2012
Equity Funds
Beginning assets             $     23,152       $    23,658     $   21,930
Sales                        1,752              1,415           1,823
Redemptions                  (2,388)            (1,866)         (2,187)
Net redemptions              (636)              (451)           (364)
Net exchanges                47                 (47)            (12)
Market gains and             1,928              (8)             2,058
losses/reinvestments^1
Ending assets                $     24,491       $    23,152     $   23,612
Equity Separate Accounts^2
Beginning assets             $     11,858       $    11,697     $   8,957
Sales^3                      1,106              893             1,461
Redemptions^3                (568)              (605)           (486)
Net sales^3                  538                288             975
Net exchanges                0                  1               0
Market gains and             965                (128)           573
losses/reinvestments^1
Ending assets                $     13,361       $    11,858     $   10,505
Total Equity^2
Beginning assets             $     35,010       $    35,355     $   30,887
Sales^3                      2,858              2,308           3,284
Redemptions^3                (2,956)            (2,471)         (2,673)
Net (redemptions) sales^3    (98)               (163)           611
Net exchanges                47                 (46)            (12)
Market gains and             2,893              (136)           2,631
losses/reinvestments^1
Ending assets                $     37,852       $    35,010     $   34,117
Fixed-Income Funds
Beginning assets             $     42,478       $    41,547     $   37,241
Sales                        5,148              4,848           4,822
Redemptions                  (5,009)            (4,268)         (3,987)
Net sales                    139                580             835
Net exchanges                (42)               141             (59)
Market gains and             37                 210             509
losses/reinvestments^1
Ending assets                $     42,612       $    42,478     $   38,526
Fixed-Income Separate
Accounts^2
Beginning assets             $     10,233       $    9,842      $   7,573
Sales^3                      531                393             220
Redemptions^3                (645)              (125)           (280)
Net (redemptions) sales^3    (114)              268             (60)
Market gains and             39                 123             182
losses/reinvestments^1
Ending assets                $     10,158       $    10,233     $   7,695
Total Fixed Income^2
Beginning assets             $     52,711       $    51,389     $   44,814
Sales^3                      5,679              5,241           5,042
Redemptions^3                (5,654)            (4,393)         (4,267)
Net sales^3                  25                 848             775
Net exchanges                (42)               141             (59)
Market gains and             76                 333             691
losses/reinvestments^1
Ending assets                $     52,770       $    52,711     $   46,221
1) Reflects the approximate changes in the fair value of the securities held
by the portfolios and, to a lesser extent, reinvested dividends,
distributions, net investment income and the impact of changes in foreign
exchange rates.
2) Includes separately managed accounts, institutional accounts and
sub-advised funds and other managed products.
3) For certain accounts, Sales and Redemptions are calculated as the remaining
difference between beginning and ending assets after the calculation of Market
gains and losses/reinvestments.





Changes in Liquidation Portfolio
(in millions)
                        Quarter Ended
                        March 31, 2013 Dec.31, 2012 March31, 2012
Liquidation Portfolio^1
Beginning assets        $   7,346      $   7,718     $   8,856
Net redemptions         (327)          (372)         (273)
Ending Assets           $   7,019      $   7,346     $   8,583

1) Liquidation portfolio represents a portfolio of distressed bonds. Federated
has been retained by a third party to manage these assets through an orderly
liquidation process that will generally occur over a multi-year period.
Management-fee rates earned from these portfolios are lower than those of
traditional separate account mandates.





MANAGED ASSETS March 31,                      Sept.30,  June30,   March31,
               2013          Dec.31, 2012    2012       2012       2012
(in millions)
By Asset Class
Equity         $  37,852     $   35,010       $ 35,355   $ 33,221   $ 34,117
Fixed-income   52,770        52,711           51,389     48,968     46,221
Money market   279,668       284,704          269,622    265,548    274,704
Liquidation    7,019         7,346            7,718      8,124      8,583
portfolio^1
Total Managed  $  377,309    $   379,771      $ 364,084  $ 355,861  $ 363,625
Assets
By Product
Type
Funds:
Equity         $  24,491     $   23,152       $ 23,658   $ 22,671   $ 23,612
Fixed-income   42,612        42,478           41,547     39,494     38,526
Money market   242,734       255,689          244,826    238,610    245,232
Total Fund     $  309,837    $   321,319      $ 310,031  $ 300,775  $ 307,370
Assets
Separate
Accounts:
Equity         $  13,361     $   11,858       $ 11,697   $ 10,550   $ 10,505
Fixed-income   10,158        10,233           9,842      9,474      7,695
Money market   36,934        29,015           24,796     26,938     29,472
Total Separate $  60,453     $   51,106       $ 46,335   $ 46,962   $ 47,672
Accounts
Total
Liquidation    $  7,019      $   7,346        $ 7,718    $ 8,124    $ 8,583
Portfolio^1
Total Managed  $  377,309    $   379,771      $ 364,084  $ 355,861  $ 363,625
Assets
AVERAGE        Quarter Ended
MANAGED ASSETS
(in millions)  March 31,     Dec.31, 2012    Sept.30,  June30,   March31,
               2013                           2012       2012       2012
By Asset Class
Equity         $  36,685     $   35,016       $ 34,429   $ 32,993   $ 32,827
Fixed-income   52,732        52,211           50,195     47,747     45,792
Money market   284,588       273,943          268,573    271,507    282,801
Liquidation    7,215         7,559            7,948      8,353      8,703
portfolio^1
Total Avg.     $  381,220    $   368,729      $ 361,145  $ 360,600  $ 370,123
Assets
By Product
Type
Funds:
Equity         $  24,037     $   23,209       $ 23,133   $ 22,642   $ 23,075
Fixed-income   42,581        42,156           40,579     38,901     38,128
Money market   250,652       248,534          243,111    243,454    251,825
Total Avg.     $  317,270    $   313,899      $ 306,823  $ 304,997  $ 313,028
Fund Assets
Separate
Accounts:
Equity         $  12,648     $   11,807       $ 11,296   $ 10,351   $ 9,752
Fixed-income   10,151        10,055           9,616      8,846      7,664
Money market   33,936        25,409           25,462     28,053     30,976
Total Avg.
Separate       $  56,735     $   47,271       $ 46,374   $ 47,250   $ 48,392
Accounts
Total Avg.
Liquidation    $  7,215      $   7,559        $ 7,948    $ 8,353    $ 8,703
Portfolio^1
Total Avg.     $  381,220    $   368,729      $ 361,145  $ 360,600  $ 370,123
Managed Assets
1) Liquidation portfolio represents a portfolio of distressed bonds. Federated
has been retained by a third party to manage these assets through an orderly
liquidation process that will generally occur over a multi-year period.
Management-fee rates earned from these portfolios are lower than those of
traditional separate account mandates.



SOURCE Federated Investors, Inc.

Website: http://FederatedInvestors.com
Contact: MEDIA: Meghan McAndrew, 412-288-8103; or J.T. Tuskan, 412-288-7895;
or ANALYSTS: Ray Hanley, 412-288-1920
 
Press spacebar to pause and continue. Press esc to stop.