x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Pennsylvania
|
|
25-1111467
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Federated Investors Tower
Pittsburgh, Pennsylvania
|
|
15222-3779
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
x
|
|
Accelerated filer
|
|
o
|
|
|
|
|
|||
Non-accelerated filer
|
|
o
|
|
Smaller reporting company
|
|
o
|
|
Table of Contents
|
|
|||
|
Item 1.
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
Item 2.
|
||
|
Item 3.
|
||
|
Item 4.
|
||
|
|||
|
Item 1
|
||
|
Item 1A.
|
||
|
Item 2.
|
||
|
Item 6.
|
||
Special Note Regarding Forward-Looking Information
|
Consolidated Balance Sheets
|
(dollars in thousands)
|
(unaudited)
|
|
|
September 30,
2014 |
|
December 31,
2013 |
||||
ASSETS
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
90,465
|
|
|
$
|
104,443
|
|
Investments—affiliates
|
|
142,157
|
|
|
129,413
|
|
||
Investments—consolidated investment companies
|
|
114,729
|
|
|
53,476
|
|
||
Investments—other
|
|
4,924
|
|
|
4,846
|
|
||
Receivables, net of reserve of $63 and $59, respectively
|
|
28,635
|
|
|
29,320
|
|
||
Prepaid expenses
|
|
8,827
|
|
|
12,860
|
|
||
Other current assets
|
|
5,450
|
|
|
4,960
|
|
||
Total current assets
|
|
395,187
|
|
|
339,318
|
|
||
Long-Term Assets
|
|
|
|
|
||||
Goodwill
|
|
658,837
|
|
|
658,743
|
|
||
Renewable investment advisory contracts
|
|
68,970
|
|
|
68,595
|
|
||
Other intangible assets, net of accumulated amortization of $39,873 and $42,453, respectively
|
|
6,493
|
|
|
8,007
|
|
||
Property and equipment, net of accumulated depreciation of $55,668 and $54,791, respectively
|
|
36,633
|
|
|
40,088
|
|
||
Other long-term assets
|
|
25,498
|
|
|
21,046
|
|
||
Total long-term assets
|
|
796,431
|
|
|
796,479
|
|
||
Total assets
|
|
$
|
1,191,618
|
|
|
$
|
1,135,797
|
|
LIABILITIES
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Short-term debt
|
|
$
|
25,500
|
|
|
$
|
77,917
|
|
Accounts payable and accrued expenses
|
|
37,683
|
|
|
36,364
|
|
||
Accrued compensation and benefits
|
|
58,459
|
|
|
70,272
|
|
||
Other current liabilities
|
|
15,939
|
|
|
29,652
|
|
||
Total current liabilities
|
|
137,581
|
|
|
214,205
|
|
||
Long-Term Liabilities
|
|
|
|
|
||||
Long-term debt
|
|
223,125
|
|
|
198,333
|
|
||
Long-term deferred tax liability, net
|
|
136,893
|
|
|
121,203
|
|
||
Other long-term liabilities
|
|
19,975
|
|
|
20,195
|
|
||
Total long-term liabilities
|
|
379,993
|
|
|
339,731
|
|
||
Total liabilities
|
|
517,574
|
|
|
553,936
|
|
||
Commitments and contingencies (Note (12))
|
|
|
|
|
||||
TEMPORARY EQUITY
|
|
|
|
|
||||
Redeemable noncontrolling interest in subsidiaries
|
|
78,795
|
|
|
15,517
|
|
||
PERMANENT EQUITY
|
|
|
|
|
||||
Federated Investors, Inc. shareholders’ equity
|
|
|
|
|
||||
Common stock:
|
|
|
|
|
||||
Class A, no par value, 20,000 shares authorized, 9,000 shares issued and outstanding
|
|
189
|
|
|
189
|
|
||
Class B, no par value, 900,000,000 shares authorized, 129,505,456 shares issued
|
|
313,988
|
|
|
295,769
|
|
||
Additional paid-in capital from treasury stock transactions
|
|
4
|
|
|
0
|
|
||
Retained earnings
|
|
1,040,354
|
|
|
1,022,608
|
|
||
Treasury stock, at cost, 24,855,859 and 24,715,473 shares Class B common stock, respectively
|
|
(758,138
|
)
|
|
(751,239
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
|
(1,325
|
)
|
|
(1,208
|
)
|
||
Total Federated Investors, Inc. shareholders’ equity
|
|
595,072
|
|
|
566,119
|
|
||
Nonredeemable noncontrolling interest in subsidiary
|
|
177
|
|
|
225
|
|
||
Total permanent equity
|
|
595,249
|
|
|
566,344
|
|
||
Total liabilities, temporary equity and permanent equity
|
|
$
|
1,191,618
|
|
|
$
|
1,135,797
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
Investment advisory fees, net—affiliates
|
|
$
|
116,122
|
|
|
$
|
112,067
|
|
|
$
|
342,752
|
|
|
$
|
371,092
|
|
Investment advisory fees, net—other
|
|
24,964
|
|
|
22,556
|
|
|
70,980
|
|
|
61,809
|
|
||||
Administrative service fees, net—affiliates
|
|
52,244
|
|
|
55,052
|
|
|
159,708
|
|
|
167,133
|
|
||||
Other service fees, net—affiliates
|
|
19,082
|
|
|
16,862
|
|
|
54,695
|
|
|
49,796
|
|
||||
Other service fees, net—other
|
|
3,167
|
|
|
3,160
|
|
|
9,783
|
|
|
9,413
|
|
||||
Other, net
|
|
1,336
|
|
|
2,169
|
|
|
3,474
|
|
|
4,400
|
|
||||
Total revenue
|
|
216,915
|
|
|
211,866
|
|
|
641,392
|
|
|
663,643
|
|
||||
Operating Expenses
|
|
|
|
|
|
|
|
|
||||||||
Compensation and related
|
|
70,724
|
|
|
65,620
|
|
|
213,176
|
|
|
200,413
|
|
||||
Distribution
|
|
50,149
|
|
|
51,051
|
|
|
147,963
|
|
|
163,099
|
|
||||
Professional service fees
|
|
7,944
|
|
|
9,704
|
|
|
24,502
|
|
|
27,841
|
|
||||
Office and occupancy
|
|
8,241
|
|
|
6,488
|
|
|
22,442
|
|
|
19,463
|
|
||||
Systems and communications
|
|
6,392
|
|
|
6,464
|
|
|
19,021
|
|
|
19,173
|
|
||||
Advertising and promotional
|
|
3,271
|
|
|
3,975
|
|
|
9,668
|
|
|
11,333
|
|
||||
Travel and related
|
|
3,028
|
|
|
3,344
|
|
|
9,427
|
|
|
9,563
|
|
||||
Other
|
|
6,338
|
|
|
7,462
|
|
|
18,878
|
|
|
20,773
|
|
||||
Total operating expenses
|
|
156,087
|
|
|
154,108
|
|
|
465,077
|
|
|
471,658
|
|
||||
Operating income
|
|
60,828
|
|
|
57,758
|
|
|
176,315
|
|
|
191,985
|
|
||||
Nonoperating (Expenses) Income
|
|
|
|
|
|
|
|
|
||||||||
Investment income, net
|
|
1,233
|
|
|
1,407
|
|
|
4,736
|
|
|
4,650
|
|
||||
(Loss) gain on securities, net
|
|
(439
|
)
|
|
5,592
|
|
|
3,983
|
|
|
10,836
|
|
||||
Debt expense
|
|
(2,162
|
)
|
|
(3,078
|
)
|
|
(7,824
|
)
|
|
(9,468
|
)
|
||||
Other, net
|
|
(4
|
)
|
|
(3,133
|
)
|
|
(14
|
)
|
|
(3,203
|
)
|
||||
Total nonoperating (expenses) income, net
|
|
(1,372
|
)
|
|
788
|
|
|
881
|
|
|
2,815
|
|
||||
Income before income taxes
|
|
59,456
|
|
|
58,546
|
|
|
177,196
|
|
|
194,800
|
|
||||
Income tax provision
|
|
22,197
|
|
|
20,917
|
|
|
66,978
|
|
|
70,621
|
|
||||
Net income including the noncontrolling interests in subsidiaries
|
|
37,259
|
|
|
37,629
|
|
|
110,218
|
|
|
124,179
|
|
||||
Less: Net (loss) income attributable to the noncontrolling interests in subsidiaries
|
|
(301
|
)
|
|
(75
|
)
|
|
595
|
|
|
3,073
|
|
||||
Net income
|
|
$
|
37,560
|
|
|
$
|
37,704
|
|
|
$
|
109,623
|
|
|
$
|
121,106
|
|
Amounts attributable to Federated Investors, Inc.
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share—Basic and Diluted
|
|
$
|
0.36
|
|
|
$
|
0.36
|
|
|
$
|
1.05
|
|
|
$
|
1.16
|
|
Cash dividends per share
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.75
|
|
|
$
|
0.73
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Net income including the noncontrolling interests in subsidiaries
|
|
$
|
37,259
|
|
|
$
|
37,629
|
|
|
$
|
110,218
|
|
|
$
|
124,179
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
|
||||||||
Permanent equity
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on interest rate swap
|
|
14
|
|
|
(179
|
)
|
|
(85
|
)
|
|
(185
|
)
|
||||
Reclassification adjustment related to interest rate swap
|
|
691
|
|
|
1,044
|
|
|
2,524
|
|
|
3,153
|
|
||||
Unrealized (loss) gain on securities available for sale
|
|
(842
|
)
|
|
2,088
|
|
|
466
|
|
|
3,692
|
|
||||
Reclassification adjustment related to securities available for sale
|
|
(780
|
)
|
|
(2,804
|
)
|
|
(2,654
|
)
|
|
(5,616
|
)
|
||||
Foreign currency items
|
|
(530
|
)
|
|
193
|
|
|
(368
|
)
|
|
(108
|
)
|
||||
Temporary equity
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation loss
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(36
|
)
|
||||
Other comprehensive (loss) income
|
|
(1,447
|
)
|
|
342
|
|
|
(117
|
)
|
|
900
|
|
||||
Comprehensive income including the noncontrolling interests in subsidiaries
|
|
35,812
|
|
|
37,971
|
|
|
110,101
|
|
|
125,079
|
|
||||
Less: Comprehensive (loss) income attributable to redeemable noncontrolling interest in subsidiaries
|
|
(195
|
)
|
|
128
|
|
|
599
|
|
|
381
|
|
||||
Less: Comprehensive (loss) income attributable to nonredeemable noncontrolling interest in subsidiary
|
|
(106
|
)
|
|
(202
|
)
|
|
(4
|
)
|
|
2,656
|
|
||||
Comprehensive income attributable to Federated Investors, Inc.
|
|
$
|
36,113
|
|
|
$
|
38,045
|
|
|
$
|
109,506
|
|
|
$
|
122,042
|
|
|
|
Federated Investors, Inc. Shareholders' Equity
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
Common
Stock |
|
Additional
Paid-in Capital from Treasury Stock Transactions |
|
Retained
Earnings |
|
Treasury
Stock |
|
Accumulated
Other Comprehensive Loss, Net of Tax |
|
Total
Shareholders’ Equity |
|
Nonredeemable
Noncontrolling Interest in Subsidiary |
|
Total
Permanent Equity |
|
Redeemable
Noncontrolling Interest in Subsidiaries/ Temporary Equity |
||||||||||||||||||
Balance at December 31, 2012
|
|
$
|
273,886
|
|
|
$
|
0
|
|
|
$
|
984,505
|
|
|
$
|
(760,022
|
)
|
|
$
|
(2,937
|
)
|
|
$
|
495,432
|
|
|
$
|
1,244
|
|
|
$
|
496,676
|
|
|
$
|
7,268
|
|
Net income
|
|
0
|
|
|
0
|
|
|
121,106
|
|
|
0
|
|
|
0
|
|
|
121,106
|
|
|
2,656
|
|
|
123,762
|
|
|
417
|
|
|||||||||
Other comprehensive income (loss), net of tax
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
936
|
|
|
936
|
|
|
0
|
|
|
936
|
|
|
(36
|
)
|
|||||||||
Subscriptions—redeemable noncontrolling interest holders
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
21,236
|
|
|||||||||
Consolidation/(deconsolidation)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
64,292
|
|
|||||||||
Stock award activity
|
|
16,323
|
|
|
45
|
|
|
(11,314
|
)
|
|
11,314
|
|
|
0
|
|
|
16,368
|
|
|
0
|
|
|
16,368
|
|
|
0
|
|
|||||||||
Dividends declared/Distributions to noncontrolling interest in subsidiaries
|
|
0
|
|
|
0
|
|
|
(76,352
|
)
|
|
0
|
|
|
0
|
|
|
(76,352
|
)
|
|
(4,139
|
)
|
|
(80,491
|
)
|
|
(2,769
|
)
|
|||||||||
Purchase of treasury stock
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(7,170
|
)
|
|
0
|
|
|
(7,170
|
)
|
|
0
|
|
|
(7,170
|
)
|
|
0
|
|
|||||||||
Other
|
|
0
|
|
|
0
|
|
|
(129
|
)
|
|
0
|
|
|
0
|
|
|
(129
|
)
|
|
0
|
|
|
(129
|
)
|
|
0
|
|
|||||||||
Balance at September 30, 2013
|
|
$
|
290,209
|
|
|
$
|
45
|
|
|
$
|
1,017,816
|
|
|
$
|
(755,878
|
)
|
|
$
|
(2,001
|
)
|
|
$
|
550,191
|
|
|
$
|
(239
|
)
|
|
$
|
549,952
|
|
|
$
|
90,408
|
|
Balance at December 31, 2013
|
|
$
|
295,958
|
|
|
$
|
0
|
|
|
$
|
1,022,608
|
|
|
$
|
(751,239
|
)
|
|
$
|
(1,208
|
)
|
|
$
|
566,119
|
|
|
$
|
225
|
|
|
$
|
566,344
|
|
|
$
|
15,517
|
|
Net income (loss)
|
|
0
|
|
|
0
|
|
|
109,623
|
|
|
0
|
|
|
0
|
|
|
109,623
|
|
|
(4
|
)
|
|
109,619
|
|
|
599
|
|
|||||||||
Other comprehensive loss, net of tax
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(117
|
)
|
|
(117
|
)
|
|
0
|
|
|
(117
|
)
|
|
0
|
|
|||||||||
Subscriptions—redeemable noncontrolling interest holders
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
11,092
|
|
|||||||||
Consolidation/(deconsolidation)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
54,690
|
|
|||||||||
Stock award activity
|
|
18,219
|
|
|
4
|
|
|
(13,192
|
)
|
|
13,766
|
|
|
0
|
|
|
18,797
|
|
|
0
|
|
|
18,797
|
|
|
0
|
|
|||||||||
Dividends declared/Distributions to noncontrolling interest in subsidiaries
|
|
0
|
|
|
0
|
|
|
(78,685
|
)
|
|
0
|
|
|
0
|
|
|
(78,685
|
)
|
|
(44
|
)
|
|
(78,729
|
)
|
|
(3,103
|
)
|
|||||||||
Purchase of treasury stock
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(20,665
|
)
|
|
0
|
|
|
(20,665
|
)
|
|
0
|
|
|
(20,665
|
)
|
|
0
|
|
|||||||||
Balance at September 30, 2014
|
|
$
|
314,177
|
|
|
$
|
4
|
|
|
$
|
1,040,354
|
|
|
$
|
(758,138
|
)
|
|
$
|
(1,325
|
)
|
|
$
|
595,072
|
|
|
$
|
177
|
|
|
$
|
595,249
|
|
|
$
|
78,795
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2014
|
|
|
2013
|
|
||
Operating Activities
|
|
|
|
|
||||
Net income including the noncontrolling interests in subsidiaries
|
|
$
|
110,218
|
|
|
$
|
124,179
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
|
|
|
|
|
||||
Amortization of deferred sales commissions
|
|
8,915
|
|
|
6,717
|
|
||
Depreciation and other amortization
|
|
8,011
|
|
|
7,696
|
|
||
Share-based compensation expense
|
|
16,620
|
|
|
15,622
|
|
||
Gain on disposal of assets
|
|
(6,754
|
)
|
|
(10,399
|
)
|
||
Provision for deferred income taxes
|
|
14,850
|
|
|
15,885
|
|
||
Fair-value adjustments for contingent liabilities
|
|
(1,196
|
)
|
|
(47
|
)
|
||
Impairment of assets
|
|
0
|
|
|
3,100
|
|
||
Consolidation/deconsolidation of investment companies
|
|
(21,484
|
)
|
|
3,782
|
|
||
Net purchases of trading securities
|
|
(1,410
|
)
|
|
(13,967
|
)
|
||
Deferred sales commissions paid
|
|
(12,577
|
)
|
|
(9,353
|
)
|
||
Contingent deferred sales charges received
|
|
1,306
|
|
|
1,408
|
|
||
Other changes in assets and liabilities:
|
|
|
|
|
||||
Decrease (increase) in receivables, net
|
|
1,152
|
|
|
(2,606
|
)
|
||
Decrease in prepaid expenses and other assets
|
|
4,592
|
|
|
1,029
|
|
||
Decrease in accounts payable and accrued expenses
|
|
(13,919
|
)
|
|
(21,436
|
)
|
||
Increase in other liabilities
|
|
3,366
|
|
|
597
|
|
||
Net cash provided by operating activities
|
|
111,690
|
|
|
122,207
|
|
||
Investing Activities
|
|
|
|
|
||||
Purchases of securities available for sale
|
|
(82,948
|
)
|
|
(87,615
|
)
|
||
Cash paid for business acquisitions
|
|
(9,697
|
)
|
|
(3,365
|
)
|
||
Proceeds from redemptions of securities available for sale
|
|
87,117
|
|
|
88,369
|
|
||
Cash paid for property and equipment
|
|
(4,251
|
)
|
|
(8,779
|
)
|
||
Net cash used by investing activities
|
|
(9,779
|
)
|
|
(11,390
|
)
|
||
Financing Activities
|
|
|
|
|
||||
Dividends paid
|
|
(78,691
|
)
|
|
(76,366
|
)
|
||
Purchases of treasury stock
|
|
(19,198
|
)
|
|
(6,897
|
)
|
||
Distributions to noncontrolling interest in subsidiaries
|
|
(3,147
|
)
|
|
(6,908
|
)
|
||
Contributions from noncontrolling interest in subsidiaries
|
|
11,092
|
|
|
21,236
|
|
||
Proceeds from shareholders for share-based compensation
|
|
577
|
|
|
45
|
|
||
Excess tax benefits from share-based compensation
|
|
1,712
|
|
|
1,111
|
|
||
Payments on debt
|
|
(27,625
|
)
|
|
(31,875
|
)
|
||
Other financing activities
|
|
(609
|
)
|
|
(486
|
)
|
||
Net cash used by financing activities
|
|
(115,889
|
)
|
|
(100,140
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(13,978
|
)
|
|
10,677
|
|
||
Cash and cash equivalents, beginning of period
|
|
104,443
|
|
|
67,585
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
90,465
|
|
|
$
|
78,262
|
|
|
|
Nine Months Ended
|
||||
|
|
September 30,
|
||||
|
|
2014
|
|
|
2013
|
|
Money market assets
|
|
32
|
%
|
|
40
|
%
|
Equity assets
|
|
44
|
%
|
|
36
|
%
|
Fixed-income assets
|
|
23
|
%
|
|
23
|
%
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in millions)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Revenue
|
|
$
|
(101.7
|
)
|
|
$
|
(105.1
|
)
|
|
$
|
(310.7
|
)
|
|
$
|
(284.4
|
)
|
Less: Reduction in Distribution expense
|
|
68.7
|
|
|
72.1
|
|
|
213.2
|
|
|
203.8
|
|
||||
Operating income
|
|
(33.0
|
)
|
|
(33.0
|
)
|
|
(97.5
|
)
|
|
(80.6
|
)
|
||||
Less: Reduction in Noncontrolling interests
|
|
2.8
|
|
|
2.7
|
|
|
8.0
|
|
|
4.8
|
|
||||
Pre-tax impact
|
|
$
|
(30.2
|
)
|
|
$
|
(30.3
|
)
|
|
$
|
(89.5
|
)
|
|
$
|
(75.8
|
)
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
(in millions)
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Cash and cash equivalents
|
|
$
|
1.9
|
|
|
$
|
1.1
|
|
Investments—consolidated investment companies
|
|
114.7
|
|
|
53.5
|
|
||
Receivables
|
|
0.2
|
|
|
0.9
|
|
||
Less: Liabilities
|
|
2.5
|
|
|
1.6
|
|
||
Less: Redeemable noncontrolling interest in subsidiaries
|
|
78.8
|
|
|
15.5
|
|
||
Federated's net interest in consolidated investment companies
|
|
$
|
35.5
|
|
|
$
|
38.4
|
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||||||||||
|
|
|
|
Gross Unrealized
|
|
Estimated
Fair
|
|
|
|
Gross Unrealized
|
|
Estimated
Fair
|
||||||||||||||||||||
(in thousands)
|
|
Cost
|
|
Gains
|
|
(Losses)
|
|
Value
|
|
Cost
|
|
Gains
|
|
(Losses)
|
|
Value
|
||||||||||||||||
Equity mutual funds
|
|
$
|
25,758
|
|
|
$
|
557
|
|
|
$
|
(238
|
)
|
|
$
|
26,077
|
|
|
$
|
24,737
|
|
|
$
|
2,423
|
|
|
$
|
0
|
|
|
$
|
27,160
|
|
Fixed-income mutual funds
|
|
117,291
|
|
|
110
|
|
|
(1,321
|
)
|
|
116,080
|
|
|
102,072
|
|
|
786
|
|
|
(605
|
)
|
|
102,253
|
|
||||||||
Total fluctuating-value mutual funds
|
|
$
|
143,049
|
|
|
$
|
667
|
|
|
$
|
(1,559
|
)
|
|
$
|
142,157
|
|
|
$
|
126,809
|
|
|
$
|
3,209
|
|
|
$
|
(605
|
)
|
|
$
|
129,413
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in thousands)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Unrealized (loss) gain
|
|
|
|
|
|
|
|
|
||||||||
Trading securities
|
|
$
|
(1,115
|
)
|
|
$
|
748
|
|
|
$
|
(2,634
|
)
|
|
$
|
516
|
|
Derivatives
1
|
|
(217
|
)
|
|
29
|
|
|
(290
|
)
|
|
(128
|
)
|
||||
Realized gains
2
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities
3
|
|
1,325
|
|
|
4,759
|
|
|
4,330
|
|
|
10,917
|
|
||||
Trading securities
|
|
348
|
|
|
457
|
|
|
4,046
|
|
|
1,075
|
|
||||
Derivatives
1
|
|
14
|
|
|
275
|
|
|
176
|
|
|
874
|
|
||||
Realized losses
2
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities
3
|
|
(91
|
)
|
|
(381
|
)
|
|
(91
|
)
|
|
(1,320
|
)
|
||||
Trading securities
|
|
(610
|
)
|
|
(267
|
)
|
|
(1,353
|
)
|
|
(754
|
)
|
||||
Derivatives
1
|
|
(93
|
)
|
|
(28
|
)
|
|
(201
|
)
|
|
(344
|
)
|
||||
(Loss) gain on securities, net
4
|
|
$
|
(439
|
)
|
|
$
|
5,592
|
|
|
$
|
3,983
|
|
|
$
|
10,836
|
|
1
|
Amounts related to economic derivatives held by certain consolidated investment companies.
|
2
|
Realized gains and losses are computed on a specific-identification basis.
|
3
|
Amounts related to redemptions of available-for-sale securities resulting in proceeds of
$45.4 million
and
$87.1 million
for the
three and nine months ended
September 30, 2014
, respectively, and
$32.6 million
and
$88.4 million
for the
three and nine months ended
September 30, 2013
, respectively.
|
4
|
Amounts related to consolidated investment companies totaled
($1.5) million
and
($0.4) million
for the
three and nine months ended
September 30, 2014
, respectively, and
$1.0 million
for both the
three and nine months ended
September 30, 2013
, respectively.
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||||||||||
|
|
Fair Value Measurements Using
|
|
Fair Value Measurements Using
|
||||||||||||||||||||||||||||
(in thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
|
$
|
90,465
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
90,465
|
|
|
$
|
104,443
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
104,443
|
|
Available-for-sale equity securities
|
|
118,510
|
|
|
23,647
|
|
|
0
|
|
|
142,157
|
|
|
81,550
|
|
|
47,863
|
|
|
0
|
|
|
129,413
|
|
||||||||
Trading securities—equity
|
|
11,369
|
|
|
9,619
|
|
|
0
|
|
|
20,988
|
|
|
11,925
|
|
|
9,906
|
|
|
0
|
|
|
21,831
|
|
||||||||
Trading securities—debt
|
|
0
|
|
|
98,665
|
|
|
0
|
|
|
98,665
|
|
|
0
|
|
|
36,491
|
|
|
0
|
|
|
36,491
|
|
||||||||
Foreign currency forward contracts
|
|
0
|
|
|
11
|
|
|
0
|
|
|
11
|
|
|
0
|
|
|
159
|
|
|
0
|
|
|
159
|
|
||||||||
Total financial assets
|
|
$
|
220,344
|
|
|
$
|
131,942
|
|
|
$
|
0
|
|
|
$
|
352,286
|
|
|
$
|
197,918
|
|
|
$
|
94,419
|
|
|
$
|
0
|
|
|
$
|
292,337
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swap
|
|
$
|
0
|
|
|
$
|
1,180
|
|
|
$
|
0
|
|
|
$
|
1,180
|
|
|
$
|
0
|
|
|
$
|
5,061
|
|
|
$
|
0
|
|
|
$
|
5,061
|
|
Acquisition-related future consideration liabilities
|
|
0
|
|
|
0
|
|
|
5,293
|
|
|
5,293
|
|
|
0
|
|
|
0
|
|
|
6,489
|
|
|
6,489
|
|
||||||||
Other
1
|
|
1,917
|
|
|
219
|
|
|
0
|
|
|
2,136
|
|
|
1,118
|
|
|
2
|
|
|
0
|
|
|
1,120
|
|
||||||||
Total financial liabilities
|
|
$
|
1,917
|
|
|
$
|
1,399
|
|
|
$
|
5,293
|
|
|
$
|
8,609
|
|
|
$
|
1,118
|
|
|
$
|
5,063
|
|
|
$
|
6,489
|
|
|
$
|
12,670
|
|
1
|
Amounts include investments sold short within one of the consolidated investment companies and foreign currency forward contracts recorded within
Other current liabilities
on the Consolidated Balance Sheets.
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in thousands)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Beginning balance
|
|
$
|
5,910
|
|
|
$
|
11,712
|
|
|
$
|
6,489
|
|
|
$
|
11,759
|
|
New acquisition/adjustment
1
|
|
0
|
|
|
330
|
|
|
0
|
|
|
330
|
|
||||
Changes in fair value
2
|
|
(617
|
)
|
|
0
|
|
|
(1,196
|
)
|
|
(47
|
)
|
||||
Ending balance
|
|
$
|
5,293
|
|
|
$
|
12,042
|
|
|
$
|
5,293
|
|
|
$
|
12,042
|
|
1
|
Amounts include the preliminary fair value estimate of the contingent payment liability recorded in connection with a new acquisition or the revision thereof upon finalization of the valuation process related to initial purchase accounting.
|
2
|
For all periods presented, the amounts were included as
Operating Expenses
-
Other
on the Consolidated Statements of Income.
|
|
|
Weighted-Average Interest Rates
|
|
|
|
|
||||||||
(dollars in thousands)
|
|
2014
1
|
|
|
2013
2
|
|
|
September 30, 2014
|
|
|
December 31, 2013
|
|
||
Term Loan
|
|
3.005
|
%
|
|
3.646
|
%
|
|
$
|
248,625
|
|
|
$
|
276,250
|
|
Less: Short-term debt
|
|
|
|
|
|
25,500
|
|
|
77,917
|
|
||||
Long-term debt
|
|
|
|
|
|
$
|
223,125
|
|
|
$
|
198,333
|
|
1
|
As of
September 30, 2014
. The weighted-average interest rate is calculated based on a fixed-rate interest swap and a variable rate for the remaining amount of the Term Loan not covered by the interest rate swap. See below for additional information regarding the interest rate.
|
2
|
As of
December 31, 2013
.
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in thousands, except per share data)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Numerator – Basic and Diluted
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Federated Investors, Inc.
|
|
$
|
37,560
|
|
|
$
|
37,704
|
|
|
$
|
109,623
|
|
|
$
|
121,106
|
|
Less: Total income available to participating unvested restricted shareholders
1
|
|
(1,467
|
)
|
|
(1,426
|
)
|
|
(4,334
|
)
|
|
(4,619
|
)
|
||||
Total net income attributable to Federated Common Stock
2
|
|
$
|
36,093
|
|
|
$
|
36,278
|
|
|
$
|
105,289
|
|
|
$
|
116,487
|
|
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares outstanding
|
|
100,729
|
|
|
100,677
|
|
|
100,748
|
|
|
100,637
|
|
||||
Dilutive potential shares from stock options
|
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Diluted weighted-average common shares outstanding
|
|
100,731
|
|
|
100,678
|
|
|
100,749
|
|
|
100,638
|
|
||||
Earnings per share
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Federated Common Stock – Basic and Diluted
2
|
|
$
|
0.36
|
|
|
$
|
0.36
|
|
|
$
|
1.05
|
|
|
$
|
1.16
|
|
1
|
Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.
|
2
|
Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
(in thousands)
|
Unrealized Loss
on Interest Rate Swap
1
|
|
Unrealized
Gain (Loss) on Securities
Available for
Sale
2
|
|
|
Foreign Currency
Translation Gain
|
|
|
Total
|
|
|||||
Balance at December 31, 2012
|
$
|
(7,071
|
)
|
|
$
|
3,644
|
|
|
$
|
490
|
|
|
$
|
(2,937
|
)
|
Other comprehensive (loss) income before reclassifications and tax
|
(290
|
)
|
|
6,308
|
|
|
(165
|
)
|
|
5,853
|
|
||||
Tax impact
|
105
|
|
|
(2,616
|
)
|
|
57
|
|
|
(2,454
|
)
|
||||
Reclassification adjustments, before tax
|
4,949
|
|
|
(9,597
|
)
|
|
0
|
|
|
(4,648
|
)
|
||||
Tax impact
|
(1,796
|
)
|
|
3,981
|
|
|
0
|
|
|
2,185
|
|
||||
Net current-period other comprehensive income (loss)
|
2,968
|
|
|
(1,924
|
)
|
|
(108
|
)
|
|
936
|
|
||||
Balance at September 30, 2013
|
$
|
(4,103
|
)
|
|
$
|
1,720
|
|
|
$
|
382
|
|
|
$
|
(2,001
|
)
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2013
|
$
|
(3,185
|
)
|
|
$
|
1,586
|
|
|
$
|
391
|
|
|
$
|
(1,208
|
)
|
Other comprehensive (loss) income before reclassifications and tax
|
(134
|
)
|
|
744
|
|
|
(568
|
)
|
|
42
|
|
||||
Tax impact
|
49
|
|
|
(278
|
)
|
|
200
|
|
|
(29
|
)
|
||||
Reclassification adjustments, before tax
|
4,015
|
|
|
(4,240
|
)
|
|
0
|
|
|
(225
|
)
|
||||
Tax impact
|
(1,491
|
)
|
|
1,586
|
|
|
0
|
|
|
95
|
|
||||
Net current-period other comprehensive income (loss)
|
2,439
|
|
|
(2,188
|
)
|
|
(368
|
)
|
|
(117
|
)
|
||||
Balance at September 30, 2014
|
$
|
(746
|
)
|
|
$
|
(602
|
)
|
|
$
|
23
|
|
|
$
|
(1,325
|
)
|
1
|
Amounts reclassified from
Accumulated other comprehensive loss, net of tax
were recorded in
Debt expense
on the Consolidated Statements of Income.
|
2
|
Amounts reclassified from
Accumulated other comprehensive loss, net of tax
were recorded in
(Loss) gain on securities, net
on the Consolidated Statements of Income.
|
Part I, Item 2. Management’s Discussion and Analysis
|
|
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
|
Three Months Ended
|
|||||||||||||||||||
|
|
September 30, 2014
|
|
June 30, 2014
|
|
March 31, 2014
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||
(in millions)
|
|
|
|
|
|
|||||||||||||||
Investment advisory fees
|
|
$
|
(69.3
|
)
|
|
$
|
(69.6
|
)
|
|
$
|
(73.1
|
)
|
|
$
|
(70.9
|
)
|
|
$
|
(70.7
|
)
|
Other service fees
|
|
(32.4
|
)
|
|
(32.7
|
)
|
|
(33.6
|
)
|
|
(33.7
|
)
|
|
(34.4
|
)
|
|||||
Total Revenue
|
|
(101.7
|
)
|
|
(102.3
|
)
|
|
(106.7
|
)
|
|
(104.6
|
)
|
|
(105.1
|
)
|
|||||
Less: Reduction in Distribution expense
|
|
68.7
|
|
|
70.2
|
|
|
74.3
|
|
|
73.3
|
|
|
72.1
|
|
|||||
Operating income
|
|
(33.0
|
)
|
|
(32.1
|
)
|
|
(32.4
|
)
|
|
(31.3
|
)
|
|
(33.0
|
)
|
|||||
Less: Reduction in Noncontrolling interests
|
|
2.8
|
|
|
2.5
|
|
|
2.7
|
|
|
2.0
|
|
|
2.7
|
|
|||||
Pre-tax impact
|
|
$
|
(30.2
|
)
|
|
$
|
(29.6
|
)
|
|
$
|
(29.7
|
)
|
|
$
|
(29.3
|
)
|
|
$
|
(30.3
|
)
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
|
|
September 30,
|
|
Percent Change
|
|||||||
(in millions)
|
|
2014
|
|
|
2013
|
|
|
||||
By Asset Class
|
|
|
|
|
|
|
|||||
Money market
|
|
$
|
245,536
|
|
|
$
|
270,293
|
|
|
(9
|
)%
|
Fixed-income
|
|
51,187
|
|
|
49,962
|
|
|
2
|
|
||
Equity
|
|
50,335
|
|
|
40,283
|
|
|
25
|
|
||
Liquidation portfolio
1
|
|
5,197
|
|
|
6,177
|
|
|
(16
|
)
|
||
Total managed assets
|
|
$
|
352,255
|
|
|
$
|
366,715
|
|
|
(4
|
)%
|
By Product Type
|
|
|
|
|
|
|
|||||
Mutual Funds:
|
|
|
|
|
|
|
|||||
Money market
|
|
$
|
215,237
|
|
|
$
|
237,949
|
|
|
(10
|
)%
|
Fixed-income
|
|
40,435
|
|
|
39,944
|
|
|
1
|
|
||
Equity
|
|
32,088
|
|
|
25,930
|
|
|
24
|
|
||
Total mutual fund assets
|
|
$
|
287,760
|
|
|
$
|
303,823
|
|
|
(5
|
)
|
Separate Accounts:
|
|
|
|
|
|
|
|||||
Money market
|
|
$
|
30,299
|
|
|
$
|
32,344
|
|
|
(6
|
)
|
Fixed-income
|
|
10,752
|
|
|
10,018
|
|
|
7
|
|
||
Equity
|
|
18,247
|
|
|
14,353
|
|
|
27
|
|
||
Total separate account assets
|
|
$
|
59,298
|
|
|
$
|
56,715
|
|
|
5
|
|
Liquidation Portfolio
1
|
|
$
|
5,197
|
|
|
$
|
6,177
|
|
|
(16
|
)
|
Total managed assets
|
|
$
|
352,255
|
|
|
$
|
366,715
|
|
|
(4
|
)%
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||||
|
|
September 30,
|
|
Percent Change
|
|
September 30,
|
|
Percent Change
|
||||||||||||||
(in millions)
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
|
|
||||||||
By Asset Class
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market
|
|
$
|
242,537
|
|
|
$
|
267,881
|
|
|
(9
|
)%
|
|
$
|
256,782
|
|
|
$
|
275,789
|
|
|
(7
|
)%
|
Fixed-income
|
|
51,115
|
|
|
49,983
|
|
|
2
|
|
|
50,850
|
|
|
51,697
|
|
|
(2
|
)
|
||||
Equity
|
|
50,207
|
|
|
39,910
|
|
|
26
|
|
|
47,455
|
|
|
38,452
|
|
|
23
|
|
||||
Liquidation portfolio
1
|
|
5,307
|
|
|
6,434
|
|
|
(18
|
)
|
|
5,555
|
|
|
6,828
|
|
|
(19
|
)
|
||||
Total average managed assets
|
|
$
|
349,166
|
|
|
$
|
364,208
|
|
|
(4
|
)%
|
|
$
|
360,642
|
|
|
$
|
372,766
|
|
|
(3
|
)%
|
By Product Type
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market
|
|
$
|
211,571
|
|
|
$
|
234,528
|
|
|
(10
|
)%
|
|
$
|
222,245
|
|
|
$
|
240,990
|
|
|
(8
|
)%
|
Fixed-income
|
|
40,275
|
|
|
39,987
|
|
|
1
|
|
|
40,131
|
|
|
41,609
|
|
|
(4
|
)
|
||||
Equity
|
|
32,060
|
|
|
25,761
|
|
|
24
|
|
|
30,243
|
|
|
24,964
|
|
|
21
|
|
||||
Total average mutual fund assets
|
|
$
|
283,906
|
|
|
$
|
300,276
|
|
|
(5
|
)
|
|
$
|
292,619
|
|
|
$
|
307,563
|
|
|
(5
|
)
|
Separate Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market
|
|
$
|
30,966
|
|
|
$
|
33,353
|
|
|
(7
|
)
|
|
$
|
34,537
|
|
|
$
|
34,799
|
|
|
(1
|
)
|
Fixed-income
|
|
10,840
|
|
|
9,996
|
|
|
8
|
|
|
10,719
|
|
|
10,088
|
|
|
6
|
|
||||
Equity
|
|
18,147
|
|
|
14,149
|
|
|
28
|
|
|
17,212
|
|
|
13,488
|
|
|
28
|
|
||||
Total average separate account assets
|
|
$
|
59,953
|
|
|
$
|
57,498
|
|
|
4
|
|
|
$
|
62,468
|
|
|
$
|
58,375
|
|
|
7
|
|
Liquidation Portfolio
1
|
|
$
|
5,307
|
|
|
$
|
6,434
|
|
|
(18
|
)
|
|
$
|
5,555
|
|
|
$
|
6,828
|
|
|
(19
|
)
|
Total average managed assets
|
|
$
|
349,166
|
|
|
$
|
364,208
|
|
|
(4
|
)%
|
|
$
|
360,642
|
|
|
$
|
372,766
|
|
|
(3
|
)%
|
1
|
Liquidation portfolio represents a portfolio of distressed bonds at cost. 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's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in millions)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Equity Funds
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
31,673
|
|
|
$
|
25,030
|
|
|
$
|
28,097
|
|
|
$
|
23,152
|
|
Sales
|
|
2,632
|
|
|
1,856
|
|
|
7,490
|
|
|
5,526
|
|
||||
Redemptions
|
|
(1,389
|
)
|
|
(2,571
|
)
|
|
(4,686
|
)
|
|
(6,588
|
)
|
||||
Net sales (redemptions)
|
|
1,243
|
|
|
(715
|
)
|
|
2,804
|
|
|
(1,062
|
)
|
||||
Net exchanges
|
|
8
|
|
|
77
|
|
|
49
|
|
|
167
|
|
||||
Market gains and losses/reinvestments
1
|
|
(836
|
)
|
|
1,538
|
|
|
1,138
|
|
|
3,673
|
|
||||
Ending assets
|
|
$
|
32,088
|
|
|
$
|
25,930
|
|
|
$
|
32,088
|
|
|
$
|
25,930
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity Separate Accounts
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
18,215
|
|
|
$
|
13,675
|
|
|
$
|
16,051
|
|
|
$
|
11,858
|
|
Sales
3
|
|
1,131
|
|
|
971
|
|
|
3,144
|
|
|
3,108
|
|
||||
Redemptions
3
|
|
(737
|
)
|
|
(798
|
)
|
|
(2,261
|
)
|
|
(2,303
|
)
|
||||
Net sales
3
|
|
394
|
|
|
173
|
|
|
883
|
|
|
805
|
|
||||
Market gains and losses
4
|
|
(362
|
)
|
|
505
|
|
|
1,313
|
|
|
1,690
|
|
||||
Ending assets
|
|
$
|
18,247
|
|
|
$
|
14,353
|
|
|
$
|
18,247
|
|
|
$
|
14,353
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Equity Assets
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
49,888
|
|
|
$
|
38,705
|
|
|
$
|
44,148
|
|
|
$
|
35,010
|
|
Sales
3
|
|
3,763
|
|
|
2,827
|
|
|
10,634
|
|
|
8,634
|
|
||||
Redemptions
3
|
|
(2,126
|
)
|
|
(3,369
|
)
|
|
(6,947
|
)
|
|
(8,891
|
)
|
||||
Net sales (redemptions)
3
|
|
1,637
|
|
|
(542
|
)
|
|
3,687
|
|
|
(257
|
)
|
||||
Net exchanges
|
|
8
|
|
|
77
|
|
|
49
|
|
|
167
|
|
||||
Market gains and losses/reinvestments
1
|
|
(1,198
|
)
|
|
2,043
|
|
|
2,451
|
|
|
5,363
|
|
||||
Ending assets
|
|
$
|
50,335
|
|
|
$
|
40,283
|
|
|
$
|
50,335
|
|
|
$
|
40,283
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed-income Funds
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
40,357
|
|
|
$
|
40,188
|
|
|
$
|
39,606
|
|
|
$
|
42,478
|
|
Sales
|
|
3,982
|
|
|
4,382
|
|
|
11,555
|
|
|
14,762
|
|
||||
Redemptions
|
|
(3,744
|
)
|
|
(4,789
|
)
|
|
(11,709
|
)
|
|
(16,675
|
)
|
||||
Net sales (redemptions)
|
|
238
|
|
|
(407
|
)
|
|
(154
|
)
|
|
(1,913
|
)
|
||||
Net exchanges
|
|
1
|
|
|
(98
|
)
|
|
(69
|
)
|
|
(220
|
)
|
||||
Acquisition-related
|
|
0
|
|
|
0
|
|
|
301
|
|
|
0
|
|
||||
Market gains and losses/reinvestments
1
|
|
(161
|
)
|
|
261
|
|
|
751
|
|
|
(401
|
)
|
||||
Ending assets
|
|
$
|
40,435
|
|
|
$
|
39,944
|
|
|
$
|
40,435
|
|
|
$
|
39,944
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed-income Separate Accounts
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
10,772
|
|
|
$
|
9,817
|
|
|
$
|
10,520
|
|
|
$
|
10,233
|
|
Sales
3
|
|
263
|
|
|
498
|
|
|
894
|
|
|
1,591
|
|
||||
Redemptions
3
|
|
(268
|
)
|
|
(412
|
)
|
|
(1,037
|
)
|
|
(1,782
|
)
|
||||
Net (redemptions) sales
3
|
|
(5
|
)
|
|
86
|
|
|
(143
|
)
|
|
(191
|
)
|
||||
Net exchanges
|
|
0
|
|
|
(10
|
)
|
|
1
|
|
|
(3
|
)
|
||||
Market gains and losses
4
|
|
(15
|
)
|
|
125
|
|
|
374
|
|
|
(21
|
)
|
||||
Ending assets
|
|
$
|
10,752
|
|
|
$
|
10,018
|
|
|
$
|
10,752
|
|
|
$
|
10,018
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Fixed-income Assets
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
51,129
|
|
|
$
|
50,005
|
|
|
$
|
50,126
|
|
|
$
|
52,711
|
|
Sales
3
|
|
4,245
|
|
|
4,880
|
|
|
12,449
|
|
|
16,353
|
|
||||
Redemptions
3
|
|
(4,012
|
)
|
|
(5,201
|
)
|
|
(12,746
|
)
|
|
(18,457
|
)
|
||||
Net sales (redemptions)
3
|
|
233
|
|
|
(321
|
)
|
|
(297
|
)
|
|
(2,104
|
)
|
||||
Net exchanges
|
|
1
|
|
|
(108
|
)
|
|
(68
|
)
|
|
(223
|
)
|
||||
Acquisition-related
|
|
0
|
|
|
0
|
|
|
301
|
|
|
0
|
|
||||
Market gains and losses/reinvestments
1
|
|
(176
|
)
|
|
386
|
|
|
1,125
|
|
|
(422
|
)
|
||||
Ending assets
|
|
$
|
51,187
|
|
|
$
|
49,962
|
|
|
$
|
51,187
|
|
|
$
|
49,962
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in millions)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Funds
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
72,030
|
|
|
$
|
65,218
|
|
|
$
|
67,703
|
|
|
$
|
65,630
|
|
Sales
|
|
6,614
|
|
|
6,238
|
|
|
19,045
|
|
|
20,288
|
|
||||
Redemptions
|
|
(5,133
|
)
|
|
(7,360
|
)
|
|
(16,395
|
)
|
|
(23,263
|
)
|
||||
Net sales (redemptions)
|
|
1,481
|
|
|
(1,122
|
)
|
|
2,650
|
|
|
(2,975
|
)
|
||||
Net exchanges
|
|
9
|
|
|
(21
|
)
|
|
(20
|
)
|
|
(53
|
)
|
||||
Acquisition-related
|
|
0
|
|
|
0
|
|
|
301
|
|
|
0
|
|
||||
Market gains and losses/reinvestments
1
|
|
(997
|
)
|
|
1,799
|
|
|
1,889
|
|
|
3,272
|
|
||||
Ending assets
|
|
$
|
72,523
|
|
|
$
|
65,874
|
|
|
$
|
72,523
|
|
|
$
|
65,874
|
|
|
|
|
|
|
|
|
|
|
||||||||
Separate Accounts
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
28,987
|
|
|
$
|
23,492
|
|
|
$
|
26,571
|
|
|
$
|
22,091
|
|
Sales
3
|
|
1,394
|
|
|
1,469
|
|
|
4,038
|
|
|
4,699
|
|
||||
Redemptions
3
|
|
(1,005
|
)
|
|
(1,210
|
)
|
|
(3,298
|
)
|
|
(4,085
|
)
|
||||
Net sales
3
|
|
389
|
|
|
259
|
|
|
740
|
|
|
614
|
|
||||
Net exchanges
|
|
0
|
|
|
(10
|
)
|
|
1
|
|
|
(3
|
)
|
||||
Market gains and losses
4
|
|
(377
|
)
|
|
630
|
|
|
1,687
|
|
|
1,669
|
|
||||
Ending assets
|
|
$
|
28,999
|
|
|
$
|
24,371
|
|
|
$
|
28,999
|
|
|
$
|
24,371
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Assets
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning assets
|
|
$
|
101,017
|
|
|
$
|
88,710
|
|
|
$
|
94,274
|
|
|
$
|
87,721
|
|
Sales
3
|
|
8,008
|
|
|
7,707
|
|
|
23,083
|
|
|
24,987
|
|
||||
Redemptions
3
|
|
(6,138
|
)
|
|
(8,570
|
)
|
|
(19,693
|
)
|
|
(27,348
|
)
|
||||
Net sales (redemptions)
3
|
|
1,870
|
|
|
(863
|
)
|
|
3,390
|
|
|
(2,361
|
)
|
||||
Net exchanges
|
|
9
|
|
|
(31
|
)
|
|
(19
|
)
|
|
(56
|
)
|
||||
Acquisition-related
|
|
0
|
|
|
0
|
|
|
301
|
|
|
0
|
|
||||
Market gains and losses/reinvestments
1
|
|
(1,374
|
)
|
|
2,429
|
|
|
3,576
|
|
|
4,941
|
|
||||
Ending assets
|
|
$
|
101,522
|
|
|
$
|
90,245
|
|
|
$
|
101,522
|
|
|
$
|
90,245
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
|
|
Percent of Total Average Managed Assets
|
|
Percent of Total Revenue
|
||||||||
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
By Asset Class
|
|
|
|
|
|
|
|
|
||||
Money market assets
|
|
71
|
%
|
|
74
|
%
|
|
32
|
%
|
|
40
|
%
|
Fixed-income assets
|
|
14
|
%
|
|
14
|
%
|
|
23
|
%
|
|
23
|
%
|
Equity assets
|
|
13
|
%
|
|
10
|
%
|
|
44
|
%
|
|
36
|
%
|
Liquidation portfolio
|
|
2
|
%
|
|
2
|
%
|
|
0
|
%
|
|
0
|
%
|
Other activities
|
|
--
|
|
|
--
|
|
|
1
|
%
|
|
1
|
%
|
By Product Type
|
|
|
|
|
|
|
|
|
||||
Mutual Funds:
|
|
|
|
|
|
|
|
|
||||
Money market assets
|
|
62
|
%
|
|
65
|
%
|
|
30
|
%
|
|
38
|
%
|
Fixed-income assets
|
|
11
|
%
|
|
11
|
%
|
|
21
|
%
|
|
21
|
%
|
Equity assets
|
|
8
|
%
|
|
7
|
%
|
|
36
|
%
|
|
30
|
%
|
Separate Accounts:
|
|
|
|
|
|
|
|
|
||||
Money market assets
|
|
9
|
%
|
|
9
|
%
|
|
2
|
%
|
|
2
|
%
|
Fixed-income assets
|
|
3
|
%
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
Equity assets
|
|
5
|
%
|
|
3
|
%
|
|
8
|
%
|
|
6
|
%
|
Liquidation Portfolio
|
|
2
|
%
|
|
2
|
%
|
|
0
|
%
|
|
0
|
%
|
Other Activities
|
|
--
|
|
|
--
|
|
|
1
|
%
|
|
1
|
%
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
|
September 30,
|
|
|
|
|
|
September 30,
|
|
|
|
|
||||||||||||||||||
(in millions)
|
|
2014
|
|
|
2013
|
|
|
Change
|
|
Percent
Change
|
|
2014
|
|
|
2013
|
|
|
Change
|
|
Percent
Change
|
||||||||||
Revenue from managed assets
|
|
$
|
214.5
|
|
|
$
|
209.0
|
|
|
$
|
5.5
|
|
|
3
|
%
|
|
$
|
634.5
|
|
|
$
|
656.3
|
|
|
$
|
(21.8
|
)
|
|
(3
|
)%
|
Revenue from sources other than managed assets
|
|
2.4
|
|
|
2.9
|
|
|
(0.5
|
)
|
|
(17
|
)
|
|
6.9
|
|
|
7.3
|
|
|
(0.4
|
)
|
|
(5
|
)
|
||||||
Total revenue
|
|
$
|
216.9
|
|
|
$
|
211.9
|
|
|
$
|
5.0
|
|
|
2
|
%
|
|
$
|
641.4
|
|
|
$
|
663.6
|
|
|
$
|
(22.2
|
)
|
|
(3
|
)%
|
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||||
|
|
September 30,
|
|
|
|
|
|
September 30,
|
|
|
|
|
||||||||||||||||||
(in millions)
|
|
2014
|
|
|
2013
|
|
|
Change
|
|
Percent
Change
|
|
2014
|
|
|
2013
|
|
|
Change
|
|
Percent
Change
|
||||||||||
Compensation and related
|
|
$
|
70.7
|
|
|
$
|
65.6
|
|
|
$
|
5.1
|
|
|
8
|
%
|
|
$
|
213.2
|
|
|
$
|
200.4
|
|
|
$
|
12.8
|
|
|
6
|
%
|
Distribution
|
|
50.1
|
|
|
51.1
|
|
|
(1.0
|
)
|
|
(2
|
)
|
|
148.0
|
|
|
163.1
|
|
|
(15.1
|
)
|
|
(9
|
)
|
||||||
Professional service fees
|
|
7.9
|
|
|
9.7
|
|
|
(1.8
|
)
|
|
(19
|
)
|
|
24.5
|
|
|
27.8
|
|
|
(3.3
|
)
|
|
(12
|
)
|
||||||
All other
|
|
27.4
|
|
|
27.7
|
|
|
(0.3
|
)
|
|
(1
|
)
|
|
79.4
|
|
|
80.4
|
|
|
(1.0
|
)
|
|
(1
|
)
|
||||||
Total operating expenses
|
|
$
|
156.1
|
|
|
$
|
154.1
|
|
|
$
|
2.0
|
|
|
1
|
%
|
|
$
|
465.1
|
|
|
$
|
471.7
|
|
|
$
|
(6.6
|
)
|
|
(1
|
)%
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
(a)
|
Federated carried out an evaluation, under the supervision and with the participation of management, including Federated’s President and Chief Executive Officer and Chief Financial Officer, of the effectiveness of Federated’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of
September 30, 2014
. Based upon that evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded that Federated’s disclosure controls and procedures were effective at
September 30, 2014
.
|
(b)
|
There has been no change in Federated’s internal control over financial reporting that occurred during the quarter ended
September 30, 2014
that has materially affected, or is reasonably likely to materially affect, Federated’s internal control over financial reporting.
|
|
|
Total Number
of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
1
|
|
Maximum Number of Shares that
May Yet Be Purchased Under the
Plans or Programs
1
|
|||||
July
|
|
4,750
|
|
|
$
|
3.00
|
|
|
0
|
|
|
854,734
|
|
August
|
|
30,000
|
|
|
29.62
|
|
|
30,000
|
|
|
824,734
|
|
|
September
|
|
213,929
|
|
|
29.56
|
|
|
210,000
|
|
|
614,734
|
|
|
Total
|
|
248,679
|
|
|
$
|
29.06
|
|
|
240,000
|
|
|
614,734
|
|
1
|
Federated’s share repurchase program was authorized in August 2008 by the board of directors and permits the purchase of up to
5.0 million
shares of Federated Class B common stock with no stated expiration date. No other plans existed as of
September 30, 2014
.
|
2
|
In July and September 2014, 4,750 and 3,929 shares, respectively, of restricted stock with a weighted-average price of $3.00 and $1.30 per share, respectively, were repurchased in connection with employee separations.
|
|
|
|
|
|
|
Federated Investors, Inc.
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
Date
|
|
October 24, 2014
|
|
By:
|
|
/s/ J. Christopher Donahue
|
|
|
|
|
|
|
J. Christopher Donahue
|
|
|
|
|
|
|
President and
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
Date
|
|
October 24, 2014
|
|
By:
|
|
/s/ Thomas R. Donahue
|
|
|
|
|
|
|
Thomas R. Donahue
|
|
|
|
|
|
|
Chief Financial Officer
|
Date
|
Portion Vested
|
Cumulative Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Federated Investors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date
|
October 24, 2014
|
By:
|
/s/ J. Christopher Donahue
|
|
|
|
|
|
J. Christopher Donahue
|
|
|
|
|
|
President and
|
|
|
|
|
|
Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Federated Investors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date
|
October 24, 2014
|
By:
|
/s/ Thomas R. Donahue
|
|
|
|
|
|
Thomas R. Donahue
|
|
|
|
|
|
Chief Financial Officer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date
|
October 24, 2014
|
By:
|
/s/ J. Christopher Donahue
|
|
|
|
|
|
J. Christopher Donahue
|
|
|
|
|
|
President and
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
October 24, 2014
|
By:
|
/s/ Thomas R. Donahue
|
|
|
|
|
|
Thomas R. Donahue
|
|
|
|
|
|
Chief Financial Officer
|
|