Federated Investors, Inc. Reports Third Quarter 2009 Earnings
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- Federated Investors, Inc. Reports Third Quarter 2009 Earnings
PITTSBURGH, Oct. 22 /PRNewswire-FirstCall/ -- Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment managers, today reported earnings per diluted share from continuing operations (EPS) of $0.56 for the quarter ended Sept. 30, 2009 compared to $0.52 for the same quarter last year. Income from continuing operations was $57.0 million for Q3 2009 compared to $56.2 million for Q3 2008.
Federated reported YTD 2009 EPS of $1.42 compared to $1.62 for the same period in 2008. For the nine months ended Sept. 30, 2009, income from continuing operations was $145.4 million compared to $167.2 million for the same period in 2008. Earnings for YTD 2009 included $20.8 million in non-cash impairment charges recognized primarily in Q1 2009.
Federated's total managed assets were $392.3 billion at Sept. 30, 2009, up $48.3 billion or 14 percent from $344.0 billion at Sept. 30, 2008 and down $9.5 billion or 2 percent from $401.8 billion reported at June 30, 2009. Average managed assets for Q3 2009 were $408.1 billion, up $73.0 billion or 22 percent from $335.1 billion reported for Q3 2008 and down $6.3 billion or 2 percent from $414.4 billion reported for Q2 2009.
"Federated's fluctuating fund sales have increased more than 50 percent from the same time last year," said J. Christopher Donahue, president and chief executive officer. "Investors continue to recognize Federated's reputation for managing a broad line of stock, bond and alternative strategies that can help them meet their investing needs."
Federated's board of directors declared a quarterly dividend of $0.24 per share. The dividend is payable on Nov. 13, 2009 to shareholders of record as of Nov. 9, 2009. During Q3 2009, Federated purchased 470,581 shares of Federated class B common stock for $12.0 million.
Federated's fixed-income assets were $32.0 billion at Sept. 30, 2009, up $9.3 billion or 41 percent from $22.7 billion at Sept. 30, 2008 and up $3.3 billion or 11 percent from $28.7 billion at June 30, 2009. Federated experienced continued strong net positive flows into its bond funds with $1.8 billion during Q3 2009, bringing total bond fund inflows to $5.6 billion so far in 2009, an increase of $4.0 billion over the first nine months of 2008. Net sales were driven by strong flows into ultrashort bond funds and intermediate-term bond funds including Federated Total Return Bond Fund.
Federated's equity assets were $29.1 billion at Sept. 30, 2009, down $2.6 billion or 8 percent from $31.7 billion at Sept. 30, 2008 and up $2.9 billion or 11 percent from $26.2 billion at June 30, 2009. During Q3 2009, Federated's net flows into equity funds were $126 million. Net sales were led by Federated Prudent Bear Fund and Federated Market Opportunity Fund, both of which invest in alternative-asset classes, and Federated Kaufmann Small Cap Fund, a growth fund.
Money market assets in both funds and separate accounts were $318.1 billion at Sept. 30, 2009, up $30.3 billion or 11 percent from $287.8 billion at Sept. 30, 2008 and down $28.3 billion or 8 percent from $346.4 billion at June 30, 2009. Money market mutual fund assets were $287.6 billion at Sept. 30, 2009, up $28.4 billion or 11 percent from $259.2 billion at Sept. 30, 2008 and down $25.2 billion or 8 percent from $312.8 billion at June 30, 2009.
Financial Summary
Q3 2009 vs. Q3 2008
For Q3 2009, revenue decreased by $12.3 million or 4 percent from the same quarter last year. The decrease in revenue primarily reflects $36.5 million in voluntary fee waivers related to certain money market funds in order to maintain positive or zero net yields. The fee waivers were partially offset by a related reduction in marketing and distribution expenses of $27.9 million such that the net impact on operating income was a decrease of $8.6 million. Lower average equity managed assets also contributed to decreased revenue. These decreases were partially offset by increased revenue from higher average money market and fixed-income managed assets.
Fee waivers to produce positive or zero net yields may increase and such increases could be significant. The amount of these waivers will be determined by a variety of factors including available yields on instruments held by the money market funds, changes in assets within money market funds, actions by the Federal Reserve and the U.S. Department of the Treasury, changes in the mix of money market customer assets, changes in expenses of the money market funds and Federated's willingness to continue these waivers.
For Q3 2009, Federated derived 63 percent of its revenue from money market assets, 24 percent from equity assets, 12 percent from fixed-income assets and 1 percent from other products and services.
Operating expenses for Q3 2009 were $198.9 million compared to $212.7 million for Q3 2008. Marketing and distribution expenses decreased because of the aforementioned fee-waiver-related reductions, partially offset by the impact of increases in average money market managed assets.
Q3 2009 vs. Q2 2009
Compared to the prior quarter, revenue decreased by $13.3 million or 4 percent. The decrease in revenue primarily reflects a $19.6 million increase in voluntary fee waivers on certain money market funds in order to maintain positive or zero net yields. The fee waivers were offset by a related decrease in marketing and distribution expenses of $16.5 million such that the net impact on operating income was a decrease of $3.1 million compared to the prior quarter. In addition, revenue decreased due to lower average money market managed assets. These decreases were partially offset by the impact of increased average equity and fixed-income managed assets.
Compared to Q2 2009, operating expenses decreased by $20.0 million or 9 percent. Changes from the prior period include a decrease in marketing and distribution expenses primarily related to the aforementioned fee-waiver-related reductions.
YTD 2009 vs. YTD 2008
Revenue for the first nine months of 2009 decreased by $10.8 million or 1 percent compared to the same period last year. The decrease in revenue primarily reflects voluntary fee waivers of $63.1 million on certain money market funds in order to maintain positive or zero net yields. The fee waivers were partially offset by a related reduction in marketing and distribution expenses of $43.8 million such that the net impact on operating income was a decrease of $19.3 million. In addition, revenue decreased due to lower average equity managed assets. These decreases were partially offset by the impact of increased average money market and fixed-income managed assets.
For YTD 2009, Federated derived 67 percent of its revenue from money market assets, 21 percent from equity assets, 11 percent from fixed-income assets and 1 percent from other products and services.
Operating expenses for the first nine months of 2009 increased by $21.8 million or 3 percent compared to the same period of last year primarily due to $20.8 million in non-cash impairment charges recorded primarily in Q1 2009.
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.
Federated will host an earnings conference call at 9 a.m. Eastern on Friday, Oct. 23, 2009. 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 for the teleconference. The call may also be accessed in real time on the Internet via the About Us section of FederatedInvestors.com. A replay will be available after 12:30 p.m. and until Oct. 30, 2009 by calling 877-660-6853 (domestic) or 201-612-7415 (international) and entering codes 286 and 334400.
Federated Investors, Inc. is one of the largest investment managers in the United States, managing $392.3 billion in assets as of Sept. 30, 2009. With 150 funds and a variety of separately managed account options, Federated provides comprehensive investment management to nearly 5,300 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Federated ranks in the top 2 percent of money market fund managers in the industry, the top 6 percent of fixed-income fund managers and the top 8 percent of equity fund managers(1). For more information, visit FederatedInvestors.com.
(1) Strategic Insight, August 31, 2009. 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 advisor.
Certain statements in this press release, such as those related to the level of fee waivers incurred by the company, 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 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(1)
(in thousands, except per share data)
Quarter Ended %Change Quarter %Change
Sept. 30, Q3 2008 Ended Q2 2009
------------------- to Q3 June 30, to Q3
2009 2008 2009 2009 2009
Revenue
Investment advisory
fees, net $190,012 $194,653 (2)% $193,757 (2)%
Administrative service
fees, net 65,267 53,551 22 67,514 (3)
Other service fees, net 36,957 56,007 (34) 44,586 (17)
Other, net 1,367 1,702 (20) 1,037 32
---------- ----- ----- --- ----- --
Total Revenue 293,603 305,913 (4) 306,894 (4)
------------- ------- ------- -- ------- --
Operating Expenses
Compensation and related 62,232 60,482 3 63,609 (2)
General and
administrative
Marketing and
distribution 95,452 106,742 (11) 114,138 (16)
Professional service
fees 10,089 10,259 (2) 9,777 3
Systems and
communications 6,517 5,996 9 6,331 3
Office and occupancy 6,001 5,619 7 5,647 6
Advertising and
promotional 2,529 3,787 (33) 3,059 (17)
Travel and related 2,316 3,228 (28) 2,872 (19)
Other 4,677 4,409 6 4,455 5
----- ----- ----- - ----- -
Total general and
administrative 127,581 140,040 (9) 146,279 (13)
Amortization of deferred
sales commissions 5,104 7,762 (34) 4,960 3
Intangible asset
amortization and
impairment 3,953 4,369 (10) 3,981 (1)
----------------- ----- ----- --- ----- --
Total Operating Expenses 198,870 212,653 (6) 218,829 (9)
------------------------ ------- ------- -- ------- --
Operating Income 94,733 93,260 2 88,065 8
---------------- ------ ------ - ------ -
Nonoperating Income
(Expenses)
Investment income, net 1,685 190 787 1,210 39
Debt expense--recourse (1,112) (757) 47 (1,146) (3)
Debt
expense--nonrecourse (314) (622) (50) (368) (15)
Other, net (101) (152) (34) 34 (397)
---------- ---- ---- --- -- ----
Total Nonoperating
Income (Expenses), net 158 (1,341) (112) (270) (159)
----------------------- --- ------ ---- ---- ----
Income before income
taxes 94,891 91,919 3 87,795 8
Income tax provision 34,604 33,253 4 31,712 9
-------------------- ------ ------ - ------ -
Net income including
noncontrolling
interests in
subsidiaries 60,287 58,666 3 56,083 7
Less: Net income
attributable to
noncontrolling
interests in
subsidiaries 3,301 2,455 34 2,809 18
---------------- ----- ----- -- ----- --
Net Income $56,986 $56,211 1 % $53,274 7%
---------- ------- ------- -- ------- -
Amounts Attributable to
Federated
Earnings Per Share
Basic(2) $0.56 $0.53 6% $0.52 8%
Diluted(2) $0.56 $0.52 8% $0.52 8%
---------------- ----- ----- - ----- -
Weighted-average shares
outstanding
Basic 99,958 99,367 100,041
Diluted 100,086 100,036 100,164
------- ------- ------- -------
Dividends declared per
share $0.24 $3.00 $0.24
---------------------- ----- ----- -----
1) Provisions of a new accounting standard adopted on Jan. 1, 2009 require
that minority interest be renamed noncontrolling interest and that
companies present a consolidated net income that includes the amount
attributable to noncontrolling interests for all periods presented.
2) Under a new accounting standard adopted on Jan. 1, 2009, unvested
share-based payment awards that receive non-forfeitable dividend rights
are considered participating securities and are now required to be
included in the computation of earnings per share under the "two-class
method." As a result current and prior periods have been adjusted to
reflect this new standard. Total income available to participating
restricted shareholders was $1.4 million, $4.0 million and $1.3 million
for the quarterly periods ended Sept. 30, 2009, Sept. 30, 2008 and June
30, 2009, respectively.
Unaudited Condensed Consolidated Statements of Income(1)
(in thousands, except per share data)
Nine Months Ended
Sept. 30,
-------------------
2009 2008
---- ---- % Change
Revenue
Investment advisory fees, net $574,238 $587,697 (2)%
Administrative service fees, net 199,726 157,828 27
Other service fees, net 132,874 170,438 (22)
Other, net 4,302 5,949 (28)
---------- ----- ----- ---
Total Revenue 911,140 921,912 (1)
------------- ------- ------- --
Operating Expenses
Compensation and related 192,068 180,967 6
General and administrative
Marketing and distribution 331,897 324,799 2
Professional service fees 29,873 30,356 (2)
Systems and communications 19,275 17,927 8
Office and occupancy 18,315 18,067 1
Advertising and promotional 8,238 11,495 (28)
Travel and related 7,631 10,166 (25)
Other 17,396 13,121 33
----- ------ ------ --
Total general and administrative 432,625 425,931 2
Amortization of deferred sales
commissions 14,936 25,923 (42)
Intangible asset amortization and
impairment 28,665 13,673 110
--------------------------------- ------ ------ ---
Total Operating Expenses 668,294 646,494 3
------------------------ ------- ------- -
Operating Income 242,846 275,418 (12)
---------------- ------- ------- ---
Nonoperating Income (Expenses)
Investment income, net 2,493 2,365 5
Debt expense--recourse (3,370) (961) 251
Debt expense--nonrecourse (1,114) (2,232) (50)
Other, net (47) (356) (87)
---------- --- ---- ---
Total Nonoperating Expenses, net (2,038) (1,184) 72
-------------------------------- ------ ------ --
Income from continuing operations
before income taxes 240,808 274,234 (12)
Income tax provision 86,970 101,126 (14)
-------------------- ------ ------- ---
Income from continuing operations
including noncontrolling interests
in subsidiaries 153,838 173,108 (11)
Discontinued operations, net of tax - 2,808 (100)
----------------------------------- - ----- ----
Net Income including noncontrolling
interests in subsidiaries 153,838 175,916 (13)
Less: Net income attributable to the
noncontrolling interest in
subsidiaries 8,444 5,861 44
------------------------------------ ----- ----- --
Net income $145,394 $170,055 (15)%
---------- -------- -------- -----
Amounts Attributable to Federated
Income from continuing operations $145,394 $167,247 (13)%
Discontinued operations, net of tax - 2,808 (100)
----------------------------------- - ----- ----
Net Income $145,394 $170,055 (15)%
---------- -------- -------- ----
Earnings Per Share-Basic(2)
Income from continuing operations $1.42 $1.64 (13)%
Income from discontinued operations - 0.03 (100)
----------------------------------- - ---- ----
Net income(3) $1.42 $1.66 (14)%
------------------- ----- ----- ----
Earnings Per Share-Diluted(2)
Income from continuing operations $1.42 $1.62 (12)%
Income from discontinued operations - 0.03 (100)
----------------------------------- - ---- ----
Net income $1.42 $1.65 (14)%
---------- ----- ----- ----
Weighted-average shares outstanding
Basic 99,976 99,508
Diluted 100,096 100,518
------- ------- -------
Dividends declared per share $0.72 $3.45
---------------------------- ----- -----
1) Provisions of a new accounting standard adopted on Jan. 1, 2009 require
that minority interest be renamed noncontrolling interest and that
companies present a consolidated net income that includes the amount
attributable to noncontrolling interests for all periods presented.
2) Under a new accounting standard adopted on Jan. 1, 2009, unvested
share-based payment awards that receive non-forfeitable dividend rights
are considered participating securities and are now required to be
included in the computation of earnings per share under the "two-class
method." As a result current and prior periods have been adjusted to
reflect this new standard. Total income available to participating
restricted shareholders was $3.4 million and $4.6 million for the
year-to-date periods ended Sept. 30, 2009 and Sept. 30, 2008 respectively.
3) May not sum due to rounding.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Sept. 30, Dec. 31,
2009 2008
---- ----
Assets
Cash and other short-term investments $87,274 $58,647
Other current assets 47,443 58,185
Deferred sales commissions, net 17,607 30,261
Intangible assets, net and goodwill 656,807 657,321
Other long-term assets 40,110 42,196
---------------------- ------ ------
Total Assets $849,241 $846,610
------------ -------- --------
Liabilities and Equity
Current liabilities $182,676 $217,838
Long-term debt--recourse 110,250 126,000
Long-term debt--nonrecourse 15,803 30,497
Other long-term liabilities 35,452 47,705
Equity excluding treasury stock(1) 1,310,359 1,229,051
Treasury stock (805,299) (804,481)
-------------- -------- --------
Total Liabilities and Equity $849,241 $846,610
---------------------------- -------- --------
1) Provisions of a new accounting standard adopted on Jan. 1, 2009 require
that minority interest be renamed noncontrolling interest and companies
present it as a component of equity for all periods presented.
Noncontrolling interest was previously included in other long-term
liabilities, but is now included in Equity excluding treasury stock.
Changes in Equity and Fixed-Income Fund Managed Assets
(in millions)
Quarter Ended Nine Months Ended
------------- -----------------
Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30,
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Equity Funds
Beginning assets $17,966 $25,569 $15,902 $17,562 $29,145
---------------- ------- ------- ------- ------- -------
Sales 1,503 1,060 1,177 4,005 4,009
Redemptions (1,377) (2,031) (1,151) (4,119) (5,453)
----------- ------ ------ ------ ------ ------
Net sales
(redemptions) 126 (971) 26 (114) (1,444)
Net exchanges (12) (68) 8 (79) (163)
Acquisition related 257 0 0 257 42
Market gains
and losses/
reinvestments(1) 2,013 (2,947) 2,030 2,724 (5,997)
--------------------- ----- ------ ----- ----- ------
Ending assets $20,350 $21,583 $17,966 $20,350 $21,583
------------- ------- ------- ------- ------- -------
Fixed-Income Funds
Beginning assets $24,100 $19,065 $20,752 $19,321 $17,943
---------------- ------- ------- ------- ------- -------
Sales 4,789 2,354 4,597 12,537 6,509
Redemptions (2,971) (1,826) (1,997) (6,978) (4,911)
----------- ------ ------ ------ ------ ------
Net sales 1,818 528 2,600 5,559 1,598
Net exchanges 53 26 6 101 80
Market gains
and losses/
reinvestments(1) 989 (483) 742 1,979 (485)
------------------ --- ---- --- ----- ----
Ending assets $26,960 $19,136 $24,100 $26,960 $19,136
------------- ------- ------- ------- ------- -------
1) Reflects changes in the market value of the securities held by the
funds and, to a lesser extent, reinvested dividends, distributions, net
investment income and the impact of changes in foreign exchange rates.
Changes in Equity and Fixed-Income Separate Account Assets(2)
(in millions)
Quarter Ended Nine Months Ended
------------- -----------------
Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30,
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Equity Separate Accounts
Beginning assets $8,245 $11,712 $7,509 $9,099 $13,017
---------------- ------ ------- ------ ------ -------
Net customer flows(3) (261) (426) (204) (1,026) (621)
Acquisition
related(4) (257) 0 0 (257) 0
Market gains and
losses/reinvestments(5) 1,047 (1,218) 940 958 (2,328)
--------------------------- ----- ------ --- --- ------
Ending assets $8,774 $10,068 $8,245 $8,774 $10,068
------------- ------ ------- ------ ------ -------
Fixed-Income Separate
Accounts
Beginning assets $4,583 $3,924 $4,219 $4,165 $3,754
---------------- ------ ------ ------ ------ ------
Net customer
flows(3) 188 (150) 74 269 (93)
Market gains and
losses/reinvestments(5) 308 (172) 290 645 (59)
--------------------------- --- ---- --- --- ---
Ending assets $5,079 $3,602 $4,583 $5,079 $3,602
------------- ------ ------ ------ ------ ------
2) Includes separately managed accounts, institutional accounts and
sub-advised funds (both variable annuity and other) and other managed
products. Flows for liquidation portfolios have been removed from Changes
in Equity and Fixed-Income Separate Account Assets and are detailed on the
following page.
3) For certain accounts, Net customer flows are calculated as the
remaining difference between beginning and ending assets after the
calculation of Market gains and losses/reinvestments.
4) Includes assets that were reclassified from Equity Separate Accounts to
Equity Funds as a result of the transaction with the Touchstone Funds,
which was completed during Q3 2009. See related press release dated Aug.
31, 2009 for more information about the Touchstone transaction.
5) Reflects the approximate changes in the market value of the securities
held in the portfolios, and, to a lesser extent, reinvested dividends,
distributions, net investment income and the impact of changes in foreign
exchange rates.
Changes in Liquidation Portfolios(1)
(in millions)
Quarter Ended Nine Months Ended
------------- -----------------
Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30,
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Liquidation Portfolios
Beginning assets $556 $2,083 $700 $1,505 $1,127
---------------- ---- ------ ---- ------ ------
Net customer
flows(2) 12,516 (222) (151) 11,563 856
Market gains and
losses/reinvestments(3) 1 (84) 7 5 (206)
--------------------------- - --- - - ----
Ending assets $13,073 $1,777 $556 $13,073 $1,777
------------- ------- ------ ---- ------- ------
1) Federated added liquidation portfolios as an asset category beginning
in Q1 2009. Liquidation portfolios include portfolios of distressed
fixed-income securities and liquidating collateralized debt obligation
(CDO) products. In the distressed security category, 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.
In the case of liquidating CDOs, the CDO structure has unwound earlier
than expected due to events of default related to certain distressed
securities in the portfolio. The new category was established because
management fee rates earned from these portfolios are significantly
different than those of traditional separate account mandates.
2) For certain accounts, Net customer flows are calculated as the
remaining difference between beginning and ending assets after the
calculation of Market gains and losses/reinvestments.
3) Reflects the approximate changes in the market value of the securities
held in the portfolios, and, to a lesser extent, reinvested dividends,
distributions, net investment income and the impact of changes in foreign
exchange rates.
(in millions)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
MANAGED ASSETS 2009 2009 2009 2008 2008
-------- -------- -------- -------- ---------
By Asset Class
--------------
Equity $29,124 $26,211 $23,411 $26,661 $31,651
Fixed-income 32,039 28,683 24,971 23,486 22,738
Money market 318,064 346,354 360,127 355,658 287,836
Liquidation
portfolios(1) 13,073 556 700 1,505 1,777
------------------ ------ --- --- ----- -----
Total Managed Assets $392,300 $401,804 $409,209 $407,310 $344,002
-------------------- -------- -------- -------- -------- --------
By Product Type
---------------
Mutual Funds:
Equity $20,350 $17,966 $15,902 $17,562 $21,583
Fixed-income 26,960 24,100 20,752 19,321 19,136
Money market 287,634 312,808 328,780 327,267 259,172
------------ ------- ------- ------- ------- -------
Total Fund Assets $334,944 $354,874 $365,434 $364,150 $299,891
----------------- -------- -------- -------- -------- --------
Separate Accounts:
Equity $8,774 $8,245 $7,509 $9,099 $10,068
Fixed-income 5,079 4,583 4,219 4,165 3,602
Money market 30,430 33,546 31,347 28,391 28,664
------------ ------ ------ ------ ------ ------
Total Separate Accounts $44,283 $46,374 $43,075 $41,655 $42,334
----------------------- ------- ------- ------- ------- -------
Total Liquidation
Portfolios(1) $13,073 $556 $700 $1,505 $1,777
-------------------------- ------- ---- ---- ------ ------
Total Managed Assets $392,300 $401,804 $409,209 $407,310 $344,002
-------------------- -------- -------- -------- -------- --------
AVERAGE MANAGED ASSETS Quarter Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
-------- --------- -------- -------- ---------
By Asset Class
--------------
Equity $27,872 $25,287 $24,219 $24,870 $35,136
Fixed-income 30,376 26,978 24,218 22,546 23,143
Money market 336,530 361,502 362,269 320,684 274,840
Liquidation
portfolios(1) 13,370 637 975 1,650 1,944
------------------ ------ --- --- ----- -----
Total Avg. Assets $408,148 $414,404 $411,681 $369,750 $335,063
----------------- -------- -------- -------- -------- --------
By Product Type
---------------
Mutual Funds:
Equity $19,215 $17,220 $16,240 $16,904 $24,180
Fixed-income 25,499 22,545 20,009 18,674 19,347
Money market 304,959 326,280 330,294 293,428 245,304
------------ ------- ------- ------- ------- -------
Total Avg. Fund Assets $349,673 $366,045 $366,543 $329,006 $288,831
---------------------- -------- -------- -------- -------- --------
Separate Accounts:
Equity $8,657 $8,067 $7,979 $7,966 $10,956
Fixed-income 4,877 4,433 4,209 3,872 3,796
Money market 31,571 35,222 31,975 27,256 29,536
------------ ------ ------ ------ ------ ------
Total Avg. Separate
Accts. $45,105 $47,722 $44,163 $39,094 $44,288
------------------- ------- ------- ------- ------- -------
Total Avg.
Liquidation
Portfolios(1) $13,370 $637 $975 $1,650 $1,944
------------------- ------- ---- ---- ------ ------
Total Avg. Assets $408,148 $414,404 $411,681 $369,750 $335,063
----------------- -------- -------- -------- -------- --------
1) Federated added liquidation portfolios as an asset category beginning
in Q1 2009. Liquidation portfolios include portfolios of distressed
fixed-income securities and liquidating collateralized debt obligation
(CDO) products. In the distressed security category, 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.
In the case of liquidating CDOs, the CDO structure has unwound earlier
than expected due to events of default related to certain distressed
securities in the portfolio. The new category was established because the
management fee rates earned from these portfolios are significantly
different than those of traditional separate account mandates.
Federated discontinued reporting administered assets as of June 30, 2009
as they are no longer a material source of revenue for the firm.
SOURCE Federated Investors, Inc.
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