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
|
|
|
|
|
|
|
Emerging growth company
|
o
|
|
|
|||
|
Item 1.
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
Item 2.
|
||
|
Item 3.
|
||
|
Item 4.
|
||
|
|||
|
Item 1
|
||
|
Item 1A.
|
||
|
Item 2.
|
||
|
Item 5.
|
Other Information
|
|
|
Item 6.
|
||
Special Note Regarding Forward-Looking Information
|
Consolidated Balance Sheets
|
|
|
|
||||
(dollars in thousands)
|
|
|
|
||||
(unaudited)
|
|
|
|
||||
|
September 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
116,943
|
|
|
$
|
316,264
|
|
Investments—Consolidated Investment Companies
|
31,737
|
|
|
45,411
|
|
||
Investments—Affiliates and Other
|
8,379
|
|
|
7,863
|
|
||
Receivables, net of reserve of $11 and $60, respectively
|
94,852
|
|
|
53,482
|
|
||
Prepaid Expenses
|
18,177
|
|
|
11,747
|
|
||
Other Current Assets
|
1,534
|
|
|
2,507
|
|
||
Total Current Assets
|
271,622
|
|
|
437,274
|
|
||
Long-Term Assets
|
|
|
|
||||
Goodwill
|
819,069
|
|
|
660,040
|
|
||
Intangible Assets, net of accumulated amortization of $8,370 and $5,202, respectively
|
341,755
|
|
|
76,875
|
|
||
Property and Equipment, net of accumulated depreciation of $86,546 and $70,561, respectively
|
52,644
|
|
|
37,670
|
|
||
Other Long-Term Assets
|
38,567
|
|
|
19,551
|
|
||
Total Long-Term Assets
|
1,252,035
|
|
|
794,136
|
|
||
Total Assets
|
$
|
1,523,657
|
|
|
$
|
1,231,410
|
|
LIABILITIES
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts Payable and Accrued Expenses
|
$
|
57,160
|
|
|
$
|
47,595
|
|
Accrued Compensation and Benefits
|
90,973
|
|
|
74,572
|
|
||
Other Current Liabilities
|
16,168
|
|
|
6,682
|
|
||
Total Current Liabilities
|
164,301
|
|
|
128,849
|
|
||
Long-Term Liabilities
|
|
|
|
||||
Long-Term Debt
|
160,000
|
|
|
170,000
|
|
||
Long-Term Deferred Tax Liability, net
|
143,651
|
|
|
117,620
|
|
||
Other Long-Term Liabilities
|
35,597
|
|
|
23,563
|
|
||
Total Long-Term Liabilities
|
339,248
|
|
|
311,183
|
|
||
Total Liabilities
|
503,549
|
|
|
440,032
|
|
||
Commitments and Contingencies (Note (15))
|
|
|
|
||||
TEMPORARY EQUITY
|
|
|
|
||||
Redeemable Noncontrolling Interest in Subsidiaries
|
192,744
|
|
|
30,163
|
|
||
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, 109,505,456 Shares Issued
|
361,405
|
|
|
343,189
|
|
||
Additional Paid-In Capital from Treasury Stock Transactions
|
15
|
|
|
0
|
|
||
Retained Earnings
|
765,176
|
|
|
697,359
|
|
||
Treasury Stock, at Cost, 9,014,276 and 8,405,003 Shares Class B Common Stock, respectively
|
(294,154
|
)
|
|
(278,732
|
)
|
||
Accumulated Other Comprehensive Loss, net of tax
|
(5,267
|
)
|
|
(790
|
)
|
||
Total Permanent Equity
|
827,364
|
|
|
761,215
|
|
||
Total Liabilities, Temporary Equity and Permanent Equity
|
$
|
1,523,657
|
|
|
$
|
1,231,410
|
|
Consolidated Statements of Income
|
||||||||||||||||
(dollars in thousands, except per share data)
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
Investment Advisory Fees, net—Affiliates
|
|
$
|
159,527
|
|
|
$
|
149,412
|
|
|
$
|
425,288
|
|
|
$
|
442,536
|
|
Investment Advisory Fees, net—Other
|
|
57,509
|
|
|
35,474
|
|
|
134,141
|
|
|
102,989
|
|
||||
Administrative Service Fees, net—Affiliates
|
|
49,855
|
|
|
47,461
|
|
|
147,248
|
|
|
139,763
|
|
||||
Other Service Fees, net—Affiliates
|
|
39,046
|
|
|
44,539
|
|
|
119,105
|
|
|
134,911
|
|
||||
Other Service Fees, net—Other
|
|
2,679
|
|
|
1,429
|
|
|
2,679
|
|
|
4,413
|
|
||||
Total Revenue
|
|
308,616
|
|
|
278,315
|
|
|
828,461
|
|
|
824,612
|
|
||||
Operating Expenses
|
|
|
|
|
|
|
|
|
||||||||
Compensation and Related
|
|
103,092
|
|
|
72,454
|
|
|
255,613
|
|
|
217,226
|
|
||||
Distribution
|
|
72,153
|
|
|
84,838
|
|
|
214,098
|
|
|
262,371
|
|
||||
Professional Service Fees
|
|
13,535
|
|
|
6,948
|
|
|
32,443
|
|
|
20,141
|
|
||||
Systems and Communications
|
|
12,213
|
|
|
7,992
|
|
|
28,397
|
|
|
24,258
|
|
||||
Office and Occupancy
|
|
9,332
|
|
|
7,293
|
|
|
24,238
|
|
|
21,805
|
|
||||
Travel and Related
|
|
4,622
|
|
|
3,258
|
|
|
10,967
|
|
|
9,150
|
|
||||
Advertising and Promotional
|
|
4,502
|
|
|
2,345
|
|
|
10,967
|
|
|
8,396
|
|
||||
Other
|
|
7,269
|
|
|
4,497
|
|
|
9,412
|
|
|
10,591
|
|
||||
Total Operating Expenses
|
|
226,718
|
|
|
189,625
|
|
|
586,135
|
|
|
573,938
|
|
||||
Operating Income
|
|
81,898
|
|
|
88,690
|
|
|
242,326
|
|
|
250,674
|
|
||||
Nonoperating Income (Expenses)
|
|
|
|
|
|
|
|
|
||||||||
Investment Income, net
|
|
938
|
|
|
1,889
|
|
|
5,030
|
|
|
5,244
|
|
||||
Gain (Loss) on Securities, net
|
|
261
|
|
|
1,667
|
|
|
(1,736
|
)
|
|
6,463
|
|
||||
Debt Expense
|
|
(1,602
|
)
|
|
(1,250
|
)
|
|
(4,363
|
)
|
|
(3,534
|
)
|
||||
Other, net
|
|
2,240
|
|
|
1
|
|
|
(26,877
|
)
|
|
(32
|
)
|
||||
Total Nonoperating Income (Expenses), net
|
|
1,837
|
|
|
2,307
|
|
|
(27,946
|
)
|
|
8,141
|
|
||||
Income Before Income Taxes
|
|
83,735
|
|
|
90,997
|
|
|
214,380
|
|
|
258,815
|
|
||||
Income Tax Provision
|
|
21,741
|
|
|
33,756
|
|
|
53,713
|
|
|
95,888
|
|
||||
Net Income Including the Noncontrolling Interests in Subsidiaries
|
|
61,994
|
|
|
57,241
|
|
|
160,667
|
|
|
162,927
|
|
||||
Less: Net Income Attributable to the Noncontrolling Interests in Subsidiaries
|
|
2,386
|
|
|
802
|
|
|
1,906
|
|
|
3,396
|
|
||||
Net Income
|
|
$
|
59,608
|
|
|
$
|
56,439
|
|
|
$
|
158,761
|
|
|
$
|
159,531
|
|
Amounts Attributable to Federated Investors, Inc.
|
|
|
|
|
|
|
|
|||||||||
Earnings Per Common Share—Basic and Diluted
|
|
$
|
0.59
|
|
|
$
|
0.56
|
|
|
$
|
1.57
|
|
|
$
|
1.57
|
|
Cash Dividends Per Share
|
|
$
|
0.27
|
|
|
$
|
0.25
|
|
|
$
|
0.79
|
|
|
$
|
0.75
|
|
Consolidated Statements of Comprehensive Income
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Net Income Including the Noncontrolling Interests in Subsidiaries
|
|
$
|
61,994
|
|
|
$
|
57,241
|
|
|
$
|
160,667
|
|
|
$
|
162,927
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other Comprehensive (Loss) Income, net of tax
|
|
|
|
|
|
|
|
|
||||||||
Permanent Equity
|
|
|
|
|
|
|
|
|
||||||||
Foreign Currency Items
|
|
(3,778
|
)
|
|
191
|
|
|
(4,257
|
)
|
|
554
|
|
||||
Reclassification Adjustment Related to Foreign Currency Items
|
|
0
|
|
|
0
|
|
|
(191
|
)
|
|
0
|
|
||||
Unrealized (Loss) Gain on Equity Securities
|
|
0
|
|
|
(43
|
)
|
|
0
|
|
|
1,350
|
|
||||
Reclassification Adjustment Related to Equity Securities
|
|
0
|
|
|
(58
|
)
|
|
(29
|
)
|
|
(1,215
|
)
|
||||
Temporary Equity
|
|
|
|
|
|
|
|
|
||||||||
Foreign Currency Translation Loss
|
|
(1,781
|
)
|
|
0
|
|
|
(1,781
|
)
|
|
0
|
|
||||
Other Comprehensive (Loss) Income, net of tax
|
|
(5,559
|
)
|
|
90
|
|
|
(6,258
|
)
|
|
689
|
|
||||
Comprehensive Income Including the Noncontrolling Interests in Subsidiaries
|
|
56,435
|
|
|
57,331
|
|
|
154,409
|
|
|
163,616
|
|
||||
Less: Comprehensive Income Attributable to Redeemable Noncontrolling Interest in Subsidiaries
|
|
605
|
|
|
802
|
|
|
125
|
|
|
2,920
|
|
||||
Less: Comprehensive Income Attributable to Nonredeemable Noncontrolling Interest in Subsidiary
|
|
0
|
|
|
0
|
|
|
0
|
|
|
476
|
|
||||
Comprehensive Income Attributable to Federated Investors, Inc.
|
|
$
|
55,830
|
|
|
$
|
56,529
|
|
|
$
|
154,284
|
|
|
$
|
160,220
|
|
Consolidated Statements of Changes in Equity
|
||||||||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||||||||||
|
|
Federated Investors, Inc. Shareholders' Equity
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
Common
Stock |
|
Additional
Paid-in Capital from Treasury Stock Transactions |
|
Retained
Earnings |
|
Treasury
Stock |
|
Accumulated
Other Comprehensive (Loss) Income, 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, 2016
|
|
$
|
320,982
|
|
|
$
|
0
|
|
|
$
|
529,749
|
|
|
$
|
(255,382
|
)
|
|
$
|
(523
|
)
|
|
$
|
594,826
|
|
|
$
|
958
|
|
|
$
|
595,784
|
|
|
$
|
31,362
|
|
Net Income
|
|
0
|
|
|
0
|
|
|
159,531
|
|
|
0
|
|
|
0
|
|
|
159,531
|
|
|
476
|
|
|
160,007
|
|
|
2,920
|
|
|||||||||
Other Comprehensive Income, net of tax
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
689
|
|
|
689
|
|
|
0
|
|
|
689
|
|
|
0
|
|
|||||||||
Subscriptions—Redeemable Noncontrolling Interest Holders
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
4,095
|
|
|||||||||
Deconsolidation
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,891
|
)
|
|||||||||
Stock Award Activity
|
|
17,230
|
|
|
0
|
|
|
(14,131
|
)
|
|
14,221
|
|
|
0
|
|
|
17,320
|
|
|
0
|
|
|
17,320
|
|
|
0
|
|
|||||||||
Dividends Declared
|
|
0
|
|
|
0
|
|
|
(76,248
|
)
|
|
0
|
|
|
0
|
|
|
(76,248
|
)
|
|
0
|
|
|
(76,248
|
)
|
|
0
|
|
|||||||||
Distributions to Noncontrolling Interest in Subsidiaries
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,434
|
)
|
|
(1,434
|
)
|
|
(7,495
|
)
|
|||||||||
Purchases of Treasury Stock
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(42,321
|
)
|
|
0
|
|
|
(42,321
|
)
|
|
0
|
|
|
(42,321
|
)
|
|
0
|
|
|||||||||
Balance at September 30, 2017
|
|
$
|
338,212
|
|
|
$
|
0
|
|
|
$
|
598,901
|
|
|
$
|
(283,482
|
)
|
|
$
|
166
|
|
|
$
|
653,797
|
|
|
$
|
0
|
|
|
$
|
653,797
|
|
|
$
|
28,991
|
|
Balance at December 31, 2017
|
|
$
|
343,378
|
|
|
$
|
0
|
|
|
$
|
697,359
|
|
|
$
|
(278,732
|
)
|
|
$
|
(790
|
)
|
|
$
|
761,215
|
|
|
$
|
0
|
|
|
$
|
761,215
|
|
|
$
|
30,163
|
|
Adoption of New Accounting Pronouncements
|
|
0
|
|
|
0
|
|
|
125
|
|
|
0
|
|
|
(254
|
)
|
|
(129
|
)
|
|
0
|
|
|
(129
|
)
|
|
0
|
|
|||||||||
Net Income
|
|
0
|
|
|
0
|
|
|
158,761
|
|
|
0
|
|
|
0
|
|
|
158,761
|
|
|
0
|
|
|
158,761
|
|
|
1,906
|
|
|||||||||
Other Comprehensive Loss, net of tax
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(4,223
|
)
|
|
(4,223
|
)
|
|
0
|
|
|
(4,223
|
)
|
|
(1,781
|
)
|
|||||||||
Subscriptions—Redeemable Noncontrolling Interest Holders
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
4,425
|
|
|||||||||
Deconsolidation
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,751
|
)
|
|||||||||
Stock Award Activity
|
|
18,216
|
|
|
15
|
|
|
(11,288
|
)
|
|
11,495
|
|
|
0
|
|
|
18,438
|
|
|
0
|
|
|
18,438
|
|
|
0
|
|
|||||||||
Dividends Declared
|
|
0
|
|
|
0
|
|
|
(79,781
|
)
|
|
0
|
|
|
0
|
|
|
(79,781
|
)
|
|
0
|
|
|
(79,781
|
)
|
|
0
|
|
|||||||||
Distributions to Noncontrolling Interest in Subsidiaries
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(9,778
|
)
|
|||||||||
Business Acquisition
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
169,560
|
|
|||||||||
Purchases of Treasury Stock
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(26,917
|
)
|
|
0
|
|
|
(26,917
|
)
|
|
0
|
|
|
(26,917
|
)
|
|
0
|
|
|||||||||
Balance at September 30, 2018
|
|
$
|
361,594
|
|
|
$
|
15
|
|
|
$
|
765,176
|
|
|
$
|
(294,154
|
)
|
|
$
|
(5,267
|
)
|
|
$
|
827,364
|
|
|
$
|
0
|
|
|
$
|
827,364
|
|
|
$
|
192,744
|
|
Consolidated Statements of Cash Flows
|
||||||||
(dollars in thousands)
|
||||||||
(unaudited)
|
||||||||
|
|
Nine Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2018
|
|
|
2017
|
|
||
Operating Activities
|
|
|
|
|
||||
Net Income Including the Noncontrolling Interests in Subsidiaries
|
|
$
|
160,667
|
|
|
$
|
162,927
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
|
|
|
|
|
||||
Amortization of Deferred Sales Commissions
|
|
2,319
|
|
|
6,580
|
|
||
Depreciation and Other Amortization
|
|
10,767
|
|
|
7,788
|
|
||
Share-Based Compensation Expense
|
|
18,244
|
|
|
17,290
|
|
||
Gain on Disposal of Assets
|
|
(7
|
)
|
|
(5,358
|
)
|
||
Provision for Deferred Income Taxes
|
|
7,813
|
|
|
8,226
|
|
||
Fair-Value Adjustments for Contingent Liabilities
|
|
97
|
|
|
0
|
|
||
Net Unrealized Loss (Gain) on Investments
|
|
1,801
|
|
|
(1,019
|
)
|
||
Net Sales of Investments—Consolidated Investment Companies
|
|
9,302
|
|
|
21,314
|
|
||
Deferred Sales Commissions Paid
|
|
(43
|
)
|
|
(3,737
|
)
|
||
Contingent Deferred Sales Charges Received
|
|
0
|
|
|
1,484
|
|
||
Other Changes in Assets and Liabilities:
|
|
|
|
|
||||
Increase in Receivables, net
|
|
(9,462
|
)
|
|
(303
|
)
|
||
(Increase) Decrease in Prepaid Expenses and Other Assets
|
|
(1,009
|
)
|
|
1,477
|
|
||
Decrease in Accounts Payable and Accrued Expenses
|
|
(121,611
|
)
|
|
(23,360
|
)
|
||
Increase in Other Liabilities
|
|
7,492
|
|
|
4,054
|
|
||
Net Cash Provided by Operating Activities
|
|
86,370
|
|
|
197,363
|
|
||
Investing Activities
|
|
|
|
|
||||
Purchases of Investments—Affiliates and Other
|
|
(3,081
|
)
|
|
(4,730
|
)
|
||
Cash Paid for Business Acquisitions, Net of Cash Acquired
|
|
(168,430
|
)
|
|
(4,352
|
)
|
||
Proceeds from Redemptions of Investments—Affiliates and Other
|
|
19,986
|
|
|
17,235
|
|
||
Cash Paid for Property and Equipment
|
|
(11,900
|
)
|
|
(6,791
|
)
|
||
Net Cash (Used) Provided by Investing Activities
|
|
(163,425
|
)
|
|
1,362
|
|
||
Financing Activities
|
|
|
|
|
||||
Dividends Paid
|
|
(79,808
|
)
|
|
(76,286
|
)
|
||
Purchases of Treasury Stock
|
|
(27,064
|
)
|
|
(44,152
|
)
|
||
Distributions to Noncontrolling Interest in Subsidiaries
|
|
(9,778
|
)
|
|
(8,929
|
)
|
||
Contributions from Noncontrolling Interest in Subsidiaries
|
|
4,425
|
|
|
4,095
|
|
||
Cash Paid for Amended and Restated Credit Agreement
|
|
0
|
|
|
(483
|
)
|
||
Proceeds from Shareholders for Share-Based Compensation
|
|
222
|
|
|
90
|
|
||
Proceeds from New Borrowings
|
|
79,150
|
|
|
0
|
|
||
Payments on Contingent Consideration Liabilities
|
|
(228
|
)
|
|
(210
|
)
|
||
Payments on Debt
|
|
(89,150
|
)
|
|
(16,250
|
)
|
||
Net Cash Used by Financing Activities
|
|
(122,231
|
)
|
|
(142,125
|
)
|
||
Net (Decrease) Increase in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
|
|
(199,286
|
)
|
|
56,600
|
|
||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning of Period
|
|
316,809
|
|
|
105,355
|
|
||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period
|
|
117,523
|
|
|
161,955
|
|
||
Less: Restricted Cash and Restricted Cash Equivalents Recorded in Other Long-Term Assets
|
|
580
|
|
|
545
|
|
||
Cash and Cash Equivalents
|
|
$
|
116,943
|
|
|
$
|
161,410
|
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
1
|
Includes
$31.9 million
of receivables, substantially all of which has been collected as of
September 30, 2018
.
|
2
|
The goodwill recognized is attributable to enhanced revenue and AUM growth opportunities from future investors and the assembled workforce of Hermes. In this instance, goodwill is not deductible for tax purposes.
|
3
|
Includes
$92.4 million
for customer relationships with a weighted-average useful life of
8.4
years,
$130.2 million
for indefinite-lived renewable investment advisory contracts and
$49.1 million
for an indefinite-lived trade name, all of which are recorded in Intangible Assets, net on the
Consolidated Balance Sheets
.
|
4
|
Includes
$11.2 million
of property and equipment.
|
5
|
Includes
$130.3 million
related to accrued compensation and benefits.
|
6
|
The fair value of the noncontrolling interest was determined utilizing the market approach and consideration of the overall business enterprise value.
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
(in millions)
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Revenue
|
$
|
308.6
|
|
|
$
|
317.1
|
|
|
$
|
923.3
|
|
|
$
|
951.5
|
|
Net Income
1
|
$
|
59.6
|
|
|
$
|
76.5
|
|
|
$
|
179.9
|
|
|
$
|
229.6
|
|
1
|
The
nine
months ended
September 30, 2018
excludes a
$29.0 million
loss on foreign currency forward transactions entered into in order to hedge against foreign exchange rate fluctuations associated with the payment for the
Hermes Acquisition
.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
(in thousands)
|
September 30, 2018
|
|
September 30, 2018
|
||||
Equity
|
$
|
138,624
|
|
|
$
|
344,323
|
|
Money Market
|
101,257
|
|
|
304,662
|
|
||
Fixed-Income
|
45,897
|
|
|
135,442
|
|
||
Other
1
|
22,838
|
|
|
44,034
|
|
||
Total Revenue
|
$
|
308,616
|
|
|
$
|
828,461
|
|
1
|
Includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), Multi-Asset and
stewardship services
revenue.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
(in thousands)
|
September 30, 2018
|
|
September 30, 2018
|
||||
Asset Management
1
|
$
|
217,036
|
|
|
$
|
559,429
|
|
Administrative Services
|
49,855
|
|
|
147,248
|
|
||
Distribution
2
|
36,226
|
|
|
111,206
|
|
||
Other
3
|
5,499
|
|
|
10,578
|
|
||
Total Revenue
|
$
|
308,616
|
|
|
$
|
828,461
|
|
1
|
The performance obligation may include administrative, distribution and other services recorded as a single asset management fee under
Topic 606
, as it is part of a unitary fee arrangement with a single performance obligation.
|
2
|
The performance obligation is satisfied at a point in time and may include CDSC's and upfront commissions. A portion of this revenue relates to a performance obligation that has been satisfied in a prior period.
|
3
|
Includes shareholder service fees and
stewardship services
revenue.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
(in thousands)
|
September 30, 2018
|
|
September 30, 2018
|
||||
Domestic
|
$
|
251,683
|
|
|
$
|
756,647
|
|
Foreign
1
|
56,933
|
|
|
71,814
|
|
||
Total Revenue
|
$
|
308,616
|
|
|
$
|
828,461
|
|
1
|
This represents revenue earned by non-U.S. domiciled subsidiaries.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
(in thousands)
|
September 30, 2018
|
|
September 30, 2018
|
||||
Federated Funds
|
$
|
248,428
|
|
|
$
|
691,641
|
|
Separate Accounts
|
57,508
|
|
|
134,140
|
|
||
Other
1
|
2,680
|
|
|
2,680
|
|
||
Total Revenue
|
$
|
308,616
|
|
|
$
|
828,461
|
|
1
|
Includes
stewardship services
revenue.
|
|
|
Nine Months Ended
|
||||
|
|
September 30,
|
||||
|
|
2018
|
|
|
2017
|
|
Equity Assets
|
|
42
|
%
|
|
38
|
%
|
Money Market Assets
|
|
37
|
%
|
|
41
|
%
|
Fixed-Income Assets
|
|
16
|
%
|
|
17
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Federated Strategic Value Dividend strategy
1
|
13
|
%
|
|
18
|
%
|
|
15
|
%
|
|
18
|
%
|
Federated Kaufmann Mid-Cap Growth strategy
2
|
10
|
%
|
|
9
|
%
|
|
10
|
%
|
|
9
|
%
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
(in millions)
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
||
Cash and Cash Equivalents
|
|
$
|
0.0
|
|
|
$
|
0.1
|
|
Investments—Consolidated Investment Companies
|
|
29.9
|
|
|
39.7
|
|
||
Receivables
|
|
0.7
|
|
|
1.0
|
|
||
Less: Liabilities
|
|
0.5
|
|
|
0.4
|
|
||
Less: Redeemable Noncontrolling Interest in Subsidiaries
|
|
19.7
|
|
|
27.7
|
|
||
Federated's Net Interest in Federated Fund VIEs
|
|
$
|
10.4
|
|
|
$
|
12.7
|
|
|
||
Notes to the Consolidated Financial Statements (continued)
|
||
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
(in thousands)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Investments—Consolidated Investment Companies
|
|
|
|
|
|
|
|
|
||||||||
Unrealized Gains (Losses)
|
|
$
|
606
|
|
|
$
|
(437
|
)
|
|
$
|
(1,737
|
)
|
|
$
|
659
|
|
Realized Gains
1
|
|
99
|
|
|
1,110
|
|
|
1,424
|
|
|
3,184
|
|
||||
Realized Losses
1
|
|
(623
|
)
|
|
(66
|
)
|
|
(1,521
|
)
|
|
(765
|
)
|
||||
Net Gains (Losses) on Investments—Consolidated Investment Companies
|
|
82
|
|
|
607
|
|
|
(1,834
|
)
|
|
3,078
|
|
||||
Investments—Affiliates and Other
|
|
|
|
|
|
|
|
|
||||||||
Unrealized Gains (Losses) Recognized on Securities Still Held
|
|
142
|
|
|
89
|
|
|
(64
|
)
|
|
360
|
|
||||
Net Realized Gains Recognized on Securities Sold
1
|
|
37
|
|
|
971
|
|
|
162
|
|
|
3,025
|
|
||||
Net Gains on Investments—Affiliates and Other
|
|
179
|
|
|
1,060
|
|
|
98
|
|
|
3,385
|
|
||||
Gain (Loss) on Securities, net
|
|
$
|
261
|
|
|
$
|
1,667
|
|
|
$
|
(1,736
|
)
|
|
$
|
6,463
|
|
1
|
Realized gains and losses are computed on a specific-identification basis.
|
(in thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
NAV Practical Expedient
|
|
Total
|
||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
|
$
|
116,943
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
116,943
|
|
Investments—Consolidated Investment Companies
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity Securities
|
|
1,382
|
|
|
719
|
|
|
0
|
|
|
0
|
|
|
2,101
|
|
|||||
Debt Securities
|
|
0
|
|
|
29,636
|
|
|
0
|
|
|
0
|
|
|
29,636
|
|
|||||
Investments—Affiliates and Other
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity Securities
|
|
5,092
|
|
|
0
|
|
|
39
|
|
|
288
|
|
|
5,419
|
|
|||||
Debt Securities
|
|
0
|
|
|
2,960
|
|
|
0
|
|
|
0
|
|
|
2,960
|
|
|||||
Other
1
|
|
592
|
|
|
113
|
|
|
70
|
|
|
0
|
|
|
775
|
|
|||||
Total Financial Assets
|
|
$
|
124,009
|
|
|
$
|
33,428
|
|
|
$
|
109
|
|
|
$
|
288
|
|
|
$
|
157,834
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Financial Liabilities
2
|
|
$
|
7
|
|
|
$
|
3,815
|
|
|
$
|
734
|
|
|
$
|
0
|
|
|
$
|
4,556
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
|
$
|
205,364
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
110,900
|
|
|
$
|
316,264
|
|
Investments—Consolidated Investment Companies
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity Securities
|
|
5,424
|
|
|
746
|
|
|
0
|
|
|
0
|
|
|
6,170
|
|
|||||
Debt Securities
|
|
0
|
|
|
39,241
|
|
|
0
|
|
|
0
|
|
|
39,241
|
|
|||||
Investments—Affiliates and Other
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity Securities
|
|
4,564
|
|
|
0
|
|
|
0
|
|
|
302
|
|
|
4,866
|
|
|||||
Debt Securities
|
|
0
|
|
|
2,997
|
|
|
0
|
|
|
0
|
|
|
2,997
|
|
|||||
Other
1
|
|
123
|
|
|
357
|
|
|
760
|
|
|
0
|
|
|
1,240
|
|
|||||
Total Financial Assets
|
|
$
|
215,475
|
|
|
$
|
43,341
|
|
|
$
|
760
|
|
|
$
|
111,202
|
|
|
$
|
370,778
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Financial Liabilities
2
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,203
|
|
|
$
|
0
|
|
|
$
|
1,203
|
|
1
|
Amounts include restricted cash, structured trade finance loans held by Federated as well as futures contracts and/or foreign currency forward contracts held within certain consolidated
Federated Funds
.
|
2
|
Amounts include derivative liabilities, acquisition-related future contingent consideration liabilities as well as certain liabilities attributable to structured trade finance loans held by Federated and may include foreign currency forward contracts and/or futures contracts held within certain consolidated
Federated Funds
.
|
|
||
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 thousands, except per share data)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Numerator – Basic and Diluted
|
|
|
|
|
|
|
|
|
||||||||
Net Income Attributable to Federated Investors, Inc.
|
|
$
|
59,608
|
|
|
$
|
56,439
|
|
|
$
|
158,761
|
|
|
$
|
159,531
|
|
Less: Total Net Income Available to Participating Unvested Restricted Shareholders
1
|
|
(2,835
|
)
|
|
(2,220
|
)
|
|
(6,741
|
)
|
|
(6,342
|
)
|
||||
Total Net Income Attributable to Federated Common Stock
2
|
|
$
|
56,773
|
|
|
$
|
54,219
|
|
|
$
|
152,020
|
|
|
$
|
153,189
|
|
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Basic Weighted-Average Federated Common Stock
2
|
|
96,664
|
|
|
97,128
|
|
|
97,013
|
|
|
97,521
|
|
||||
Dilutive Potential Shares from Stock Options
|
|
0
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Diluted Weighted-Average Federated Common Stock
2
|
|
96,664
|
|
|
97,129
|
|
|
97,014
|
|
|
97,522
|
|
||||
Earnings Per Share
|
|
|
|
|
|
|
|
|
||||||||
Net Income Attributable to Federated Common Stock – Basic and Diluted
2
|
|
$
|
0.59
|
|
|
$
|
0.56
|
|
|
$
|
1.57
|
|
|
$
|
1.57
|
|
1
|
Net Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings attributable to Federated shareholders (
$2.4 million
and
$6.3 million
for the
three and nine
months ended
September 30, 2018
, respectively) and unvested shareholders of a nonpublic consolidated subsidiary beginning July 1, 2018.
|
2
|
Federated Common Stock excludes unvested restricted shares 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)
|
|
|
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)
|
|
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)
|
|
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)
|
|
2018
|
|
|
2017
|
|
|
||||
By Asset Class
|
|
|
|
|
|
|
|||||
Equity
|
|
$
|
84,143
|
|
|
$
|
61,721
|
|
|
36
|
%
|
Fixed-Income
|
|
65,369
|
|
|
52,701
|
|
|
24
|
|
||
Alternative / Private Markets
1
|
|
18,621
|
|
|
407
|
|
|
NM
|
|
||
Multi-Asset
|
|
4,790
|
|
|
4,998
|
|
|
(4
|
)
|
||
Total Long-Term Assets
|
|
172,923
|
|
|
119,827
|
|
|
44
|
|
||
Money Market
|
|
264,233
|
|
|
243,840
|
|
|
8
|
|
||
Total Managed Assets
|
|
$
|
437,156
|
|
|
$
|
363,667
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|||||
By Product Type
|
|
|
|
|
|
|
|||||
Funds:
|
|
|
|
|
|
|
|||||
Equity
|
|
$
|
43,578
|
|
|
$
|
32,637
|
|
|
34
|
%
|
Fixed-Income
|
|
41,817
|
|
|
41,142
|
|
|
2
|
|
||
Alternative / Private Markets
1
|
|
11,457
|
|
|
407
|
|
|
NM
|
|
||
Multi-Asset
|
|
4,585
|
|
|
4,769
|
|
|
(4
|
)
|
||
Total Long-Term Assets
|
|
101,437
|
|
|
78,955
|
|
|
28
|
|
||
Money Market
|
|
182,966
|
|
|
177,865
|
|
|
3
|
|
||
Total Fund Assets
|
|
284,403
|
|
|
256,820
|
|
|
11
|
|
||
Separate Accounts:
|
|
|
|
|
|
|
|||||
Equity
|
|
40,565
|
|
|
29,084
|
|
|
39
|
|
||
Fixed-Income
|
|
23,552
|
|
|
11,559
|
|
|
104
|
|
||
Alternative / Private Markets
|
|
7,164
|
|
|
0
|
|
|
NM
|
|
||
Multi-Asset
|
|
205
|
|
|
229
|
|
|
(10
|
)
|
||
Total Long-Term Assets
|
|
71,486
|
|
|
40,872
|
|
|
75
|
|
||
Money Market
|
|
81,267
|
|
|
65,975
|
|
|
23
|
|
||
Total Separate Account Assets
|
|
152,753
|
|
|
106,847
|
|
|
43
|
|
||
Total Managed Assets
|
|
$
|
437,156
|
|
|
$
|
363,667
|
|
|
20
|
%
|
1
|
Alternative/Private Markets at
September 30, 2018
includes
$8.4 billion
of fund assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
|
Management's Discussion and Analysis (continued)
|
||
of Financial Condition and Results of Operations (unaudited)
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||||
|
|
September 30,
|
|
Percent Change
|
|
September 30,
|
|
Percent Change
|
||||||||||||||
(in millions)
|
|
2018
|
|
|
2017
|
|
|
|
2018
|
|
|
2017
|
|
|
||||||||
By Asset Class
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity
|
|
$
|
84,262
|
|
|
$
|
60,782
|
|
|
39
|
%
|
|
$
|
68,212
|
|
|
$
|
59,627
|
|
|
14
|
%
|
Fixed-Income
|
|
64,750
|
|
|
52,559
|
|
|
23
|
|
|
63,312
|
|
|
52,178
|
|
|
21
|
|
||||
Alternative / Private Markets
1
|
|
18,504
|
|
|
425
|
|
|
NM
|
|
|
6,393
|
|
|
456
|
|
|
NM
|
|
||||
Multi-Asset
|
|
4,805
|
|
|
4,992
|
|
|
(4
|
)
|
|
4,869
|
|
|
5,083
|
|
|
(4
|
)
|
||||
Total Long-Term Assets
|
|
172,321
|
|
|
118,758
|
|
|
45
|
|
|
142,786
|
|
|
117,344
|
|
|
22
|
|
||||
Money Market
|
|
261,571
|
|
|
241,749
|
|
|
8
|
|
|
263,162
|
|
|
243,879
|
|
|
8
|
|
||||
Total Average Managed Assets
|
|
$
|
433,892
|
|
|
$
|
360,507
|
|
|
20
|
%
|
|
$
|
405,948
|
|
|
$
|
361,223
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
By Product Type
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity
|
|
$
|
43,473
|
|
|
$
|
32,179
|
|
|
35
|
%
|
|
$
|
36,022
|
|
|
$
|
31,938
|
|
|
13
|
%
|
Fixed-Income
|
|
41,501
|
|
|
40,896
|
|
|
1
|
|
|
40,907
|
|
|
40,511
|
|
|
1
|
|
||||
Alternative / Private Markets
1
|
|
11,109
|
|
|
425
|
|
|
NM
|
|
|
3,928
|
|
|
456
|
|
|
NM
|
|
||||
Multi-Asset
|
|
4,598
|
|
|
4,768
|
|
|
(4
|
)
|
|
4,650
|
|
|
4,864
|
|
|
(4
|
)
|
||||
Total Long-Term Assets
|
|
100,681
|
|
|
78,268
|
|
|
29
|
|
|
85,507
|
|
|
77,769
|
|
|
10
|
|
||||
Money Market
|
|
179,562
|
|
|
174,358
|
|
|
3
|
|
|
179,100
|
|
|
176,467
|
|
|
1
|
|
||||
Total Average Fund Assets
|
|
280,243
|
|
|
252,626
|
|
|
11
|
|
|
264,607
|
|
|
254,236
|
|
|
4
|
|
||||
Separate Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity
|
|
40,789
|
|
|
28,603
|
|
|
43
|
|
|
32,190
|
|
|
27,689
|
|
|
16
|
|
||||
Fixed-Income
|
|
23,249
|
|
|
11,663
|
|
|
99
|
|
|
22,405
|
|
|
11,667
|
|
|
92
|
|
||||
Alternative / Private Markets
|
|
7,395
|
|
|
0
|
|
|
NM
|
|
|
2,465
|
|
|
0
|
|
|
NM
|
|
||||
Multi-Asset
|
|
207
|
|
|
224
|
|
|
(8
|
)
|
|
219
|
|
|
219
|
|
|
0
|
|
||||
Total Long-Term Assets
|
|
71,640
|
|
|
40,490
|
|
|
77
|
|
|
57,279
|
|
|
39,575
|
|
|
45
|
|
||||
Money Market
|
|
82,009
|
|
|
67,391
|
|
|
22
|
|
|
84,062
|
|
|
67,412
|
|
|
25
|
|
||||
Total Average Separate Account Assets
|
|
153,649
|
|
|
107,881
|
|
|
42
|
|
|
141,341
|
|
|
106,987
|
|
|
32
|
|
||||
Total Average Managed Assets
|
|
$
|
433,892
|
|
|
$
|
360,507
|
|
|
20
|
%
|
|
$
|
405,948
|
|
|
$
|
361,223
|
|
|
12
|
%
|
1
|
Alternative/Private Markets for the
three and nine
months ended
September 30, 2018
includes
$8.2 billion
and
$2.7 billion
, respectively, of fund assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
|
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)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Equity Funds
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
31,699
|
|
|
$
|
32,064
|
|
|
$
|
33,008
|
|
|
$
|
30,816
|
|
Sales
|
|
2,447
|
|
|
1,144
|
|
|
5,763
|
|
|
3,943
|
|
||||
Redemptions
|
|
(3,047
|
)
|
|
(1,743
|
)
|
|
(8,283
|
)
|
|
(6,438
|
)
|
||||
Net Redemptions
|
|
(600
|
)
|
|
(599
|
)
|
|
(2,520
|
)
|
|
(2,495
|
)
|
||||
Net Exchanges
|
|
(9
|
)
|
|
(52
|
)
|
|
65
|
|
|
(53
|
)
|
||||
Acquisition-Related
|
|
11,131
|
|
|
0
|
|
|
11,131
|
|
|
287
|
|
||||
Market Gains and Losses
1
|
|
1,357
|
|
|
1,224
|
|
|
1,894
|
|
|
4,082
|
|
||||
Ending Assets
|
|
$
|
43,578
|
|
|
$
|
32,637
|
|
|
$
|
43,578
|
|
|
$
|
32,637
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity Separate Accounts
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
26,274
|
|
|
$
|
28,340
|
|
|
$
|
29,808
|
|
|
$
|
25,943
|
|
Sales
3
|
|
1,310
|
|
|
1,426
|
|
|
3,918
|
|
|
5,188
|
|
||||
Redemptions
3
|
|
(2,241
|
)
|
|
(1,335
|
)
|
|
(7,341
|
)
|
|
(5,148
|
)
|
||||
Net (Redemptions) Sales
3
|
|
(931
|
)
|
|
91
|
|
|
(3,423
|
)
|
|
40
|
|
||||
Net Exchanges
|
|
(2
|
)
|
|
0
|
|
|
(1
|
)
|
|
0
|
|
||||
Acquisition-Related
|
|
13,569
|
|
|
0
|
|
|
13,569
|
|
|
0
|
|
||||
Market Gains and Losses
1
|
|
1,655
|
|
|
653
|
|
|
612
|
|
|
3,101
|
|
||||
Ending Assets
|
|
$
|
40,565
|
|
|
$
|
29,084
|
|
|
$
|
40,565
|
|
|
$
|
29,084
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Equity
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
57,973
|
|
|
$
|
60,404
|
|
|
$
|
62,816
|
|
|
$
|
56,759
|
|
Sales
3
|
|
3,757
|
|
|
2,570
|
|
|
9,681
|
|
|
9,131
|
|
||||
Redemptions
3
|
|
(5,288
|
)
|
|
(3,078
|
)
|
|
(15,624
|
)
|
|
(11,586
|
)
|
||||
Net Redemptions
3
|
|
(1,531
|
)
|
|
(508
|
)
|
|
(5,943
|
)
|
|
(2,455
|
)
|
||||
Net Exchanges
|
|
(11
|
)
|
|
(52
|
)
|
|
64
|
|
|
(53
|
)
|
||||
Acquisition-Related
|
|
24,700
|
|
|
0
|
|
|
24,700
|
|
|
287
|
|
||||
Market Gains and Losses
1
|
|
3,012
|
|
|
1,877
|
|
|
2,506
|
|
|
7,183
|
|
||||
Ending Assets
|
|
$
|
84,143
|
|
|
$
|
61,721
|
|
|
$
|
84,143
|
|
|
$
|
61,721
|
|
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, 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 total investment return.
|
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)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Fixed-Income Funds
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
39,877
|
|
|
$
|
40,808
|
|
|
$
|
41,144
|
|
|
$
|
39,434
|
|
Sales
|
|
3,878
|
|
|
3,424
|
|
|
11,817
|
|
|
11,124
|
|
||||
Redemptions
|
|
(3,883
|
)
|
|
(3,508
|
)
|
|
(12,668
|
)
|
|
(10,930
|
)
|
||||
Net (Redemptions) Sales
|
|
(5
|
)
|
|
(84
|
)
|
|
(851
|
)
|
|
194
|
|
||||
Net Exchanges
|
|
3
|
|
|
53
|
|
|
(77
|
)
|
|
(17
|
)
|
||||
Acquisition-Related
|
|
1,565
|
|
|
0
|
|
|
1,565
|
|
|
148
|
|
||||
Market Gains and Losses
1
|
|
377
|
|
|
365
|
|
|
36
|
|
|
1,383
|
|
||||
Ending Assets
|
|
$
|
41,817
|
|
|
$
|
41,142
|
|
|
$
|
41,817
|
|
|
$
|
41,142
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed-Income Separate Accounts
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
21,558
|
|
|
$
|
11,628
|
|
|
$
|
23,016
|
|
|
$
|
11,880
|
|
Sales
3
|
|
1,285
|
|
|
163
|
|
|
3,009
|
|
|
654
|
|
||||
Redemptions
3
|
|
(535
|
)
|
|
(389
|
)
|
|
(3,278
|
)
|
|
(1,485
|
)
|
||||
Net Sales (Redemptions)
3
|
|
750
|
|
|
(226
|
)
|
|
(269
|
)
|
|
(831
|
)
|
||||
Net Exchanges
|
|
(1
|
)
|
|
0
|
|
|
(1
|
)
|
|
(56
|
)
|
||||
Acquisition-Related
|
|
1,167
|
|
|
0
|
|
|
1,167
|
|
|
0
|
|
||||
Market Gains and Losses
1
|
|
78
|
|
|
157
|
|
|
(361
|
)
|
|
566
|
|
||||
Ending Assets
|
|
$
|
23,552
|
|
|
$
|
11,559
|
|
|
$
|
23,552
|
|
|
$
|
11,559
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Fixed-Income
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
61,435
|
|
|
$
|
52,436
|
|
|
$
|
64,160
|
|
|
$
|
51,314
|
|
Sales
3
|
|
5,163
|
|
|
3,587
|
|
|
14,826
|
|
|
11,778
|
|
||||
Redemptions
3
|
|
(4,418
|
)
|
|
(3,897
|
)
|
|
(15,946
|
)
|
|
(12,415
|
)
|
||||
Net Sales (Redemptions)
3
|
|
745
|
|
|
(310
|
)
|
|
(1,120
|
)
|
|
(637
|
)
|
||||
Net Exchanges
|
|
2
|
|
|
53
|
|
|
(78
|
)
|
|
(73
|
)
|
||||
Acquisition-Related
|
|
2,732
|
|
|
0
|
|
|
2,732
|
|
|
148
|
|
||||
Market Gains and Losses
1
|
|
455
|
|
|
522
|
|
|
(325
|
)
|
|
1,949
|
|
||||
Ending Assets
|
|
$
|
65,369
|
|
|
$
|
52,701
|
|
|
$
|
65,369
|
|
|
$
|
52,701
|
|
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, 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 total investment return.
|
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)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Alternative / Private Markets Funds
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
292
|
|
|
$
|
443
|
|
|
$
|
366
|
|
|
$
|
458
|
|
Sales
|
|
723
|
|
|
22
|
|
|
779
|
|
|
94
|
|
||||
Redemptions
|
|
(270
|
)
|
|
(49
|
)
|
|
(381
|
)
|
|
(177
|
)
|
||||
Net Sales (Redemptions)
|
|
453
|
|
|
(27
|
)
|
|
398
|
|
|
(83
|
)
|
||||
Net Exchanges
|
|
(2
|
)
|
|
1
|
|
|
(3
|
)
|
|
58
|
|
||||
Acquisition-Related
1
|
|
10,823
|
|
|
0
|
|
|
10,823
|
|
|
0
|
|
||||
Market Gains and Losses
2
|
|
(109
|
)
|
|
(10
|
)
|
|
(127
|
)
|
|
(26
|
)
|
||||
Ending Assets
|
|
$
|
11,457
|
|
|
$
|
407
|
|
|
$
|
11,457
|
|
|
$
|
407
|
|
|
|
|
|
|
|
|
|
|
||||||||
Alternative / Private Markets Separate Accounts
3
|
|
|
|
|
|
|
||||||||||
Beginning Assets
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Sales
4
|
|
34
|
|
|
0
|
|
|
34
|
|
|
0
|
|
||||
Redemptions
4
|
|
(404
|
)
|
|
0
|
|
|
(404
|
)
|
|
0
|
|
||||
Net Redemptions
4
|
|
(370
|
)
|
|
0
|
|
|
(370
|
)
|
|
0
|
|
||||
Acquisition-Related
|
|
7,686
|
|
|
0
|
|
|
7,686
|
|
|
0
|
|
||||
Market Gains and Losses
2
|
|
(152
|
)
|
|
0
|
|
|
(152
|
)
|
|
0
|
|
||||
Ending Assets
|
|
$
|
7,164
|
|
|
$
|
0
|
|
|
$
|
7,164
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Alternative / Private Markets
3
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
292
|
|
|
$
|
443
|
|
|
$
|
366
|
|
|
$
|
458
|
|
Sales
4
|
|
757
|
|
|
22
|
|
|
813
|
|
|
94
|
|
||||
Redemptions
4
|
|
(674
|
)
|
|
(49
|
)
|
|
(785
|
)
|
|
(177
|
)
|
||||
Net Sales (Redemptions)
4
|
|
83
|
|
|
(27
|
)
|
|
28
|
|
|
(83
|
)
|
||||
Net Exchanges
|
|
(2
|
)
|
|
1
|
|
|
(3
|
)
|
|
58
|
|
||||
Acquisition-Related
1
|
|
18,509
|
|
|
0
|
|
|
18,509
|
|
|
0
|
|
||||
Market Gains and Losses
2
|
|
(261
|
)
|
|
(10
|
)
|
|
(279
|
)
|
|
(26
|
)
|
||||
Ending Assets
|
|
$
|
18,621
|
|
|
$
|
407
|
|
|
$
|
18,621
|
|
|
$
|
407
|
|
1
|
Acquisition-related for the
three and nine
months ended
September 30, 2018
includes
$8.4 billion
of assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
|
2
|
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.
|
3
|
Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products.
|
4
|
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
|
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)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Multi-Asset Funds
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
4,521
|
|
|
$
|
4,790
|
|
|
$
|
4,783
|
|
|
$
|
4,957
|
|
Sales
|
|
120
|
|
|
109
|
|
|
374
|
|
|
368
|
|
||||
Redemptions
|
|
(205
|
)
|
|
(266
|
)
|
|
(654
|
)
|
|
(885
|
)
|
||||
Net Redemptions
|
|
(85
|
)
|
|
(157
|
)
|
|
(280
|
)
|
|
(517
|
)
|
||||
Net Exchanges
|
|
4
|
|
|
(8
|
)
|
|
2
|
|
|
(21
|
)
|
||||
Acquisition-Related
|
|
45
|
|
|
0
|
|
|
45
|
|
|
0
|
|
||||
Market Gains and Losses
1
|
|
100
|
|
|
144
|
|
|
35
|
|
|
350
|
|
||||
Ending Assets
|
|
$
|
4,585
|
|
|
$
|
4,769
|
|
|
$
|
4,585
|
|
|
$
|
4,769
|
|
|
|
|
|
|
|
|
|
|
||||||||
Multi-Asset Separate Accounts
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
209
|
|
|
$
|
221
|
|
|
$
|
231
|
|
|
$
|
207
|
|
Sales
3
|
|
0
|
|
|
1
|
|
|
0
|
|
|
3
|
|
||||
Redemptions
3
|
|
(6
|
)
|
|
(8
|
)
|
|
(21
|
)
|
|
(24
|
)
|
||||
Net Redemptions
3
|
|
(6
|
)
|
|
(7
|
)
|
|
(21
|
)
|
|
(21
|
)
|
||||
Market Gains and Losses
1
|
|
2
|
|
|
15
|
|
|
(5
|
)
|
|
43
|
|
||||
Ending Assets
|
|
$
|
205
|
|
|
$
|
229
|
|
|
$
|
205
|
|
|
$
|
229
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Multi-Asset
2
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
4,730
|
|
|
$
|
5,011
|
|
|
$
|
5,014
|
|
|
$
|
5,164
|
|
Sales
3
|
|
120
|
|
|
110
|
|
|
374
|
|
|
371
|
|
||||
Redemptions
3
|
|
(211
|
)
|
|
(274
|
)
|
|
(675
|
)
|
|
(909
|
)
|
||||
Net Redemptions
3
|
|
(91
|
)
|
|
(164
|
)
|
|
(301
|
)
|
|
(538
|
)
|
||||
Net Exchanges
|
|
4
|
|
|
(8
|
)
|
|
2
|
|
|
(21
|
)
|
||||
Acquisition-Related
|
|
45
|
|
|
0
|
|
|
45
|
|
|
0
|
|
||||
Market Gains and Losses
1
|
|
102
|
|
|
159
|
|
|
30
|
|
|
393
|
|
||||
Ending Assets
|
|
$
|
4,790
|
|
|
$
|
4,998
|
|
|
$
|
4,790
|
|
|
$
|
4,998
|
|
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, 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 total investment return.
|
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)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Total Fund Assets
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
76,389
|
|
|
$
|
78,105
|
|
|
$
|
79,301
|
|
|
$
|
75,665
|
|
Sales
|
|
7,168
|
|
|
4,699
|
|
|
18,733
|
|
|
15,529
|
|
||||
Redemptions
|
|
(7,405
|
)
|
|
(5,566
|
)
|
|
(21,986
|
)
|
|
(18,430
|
)
|
||||
Net Redemptions
|
|
(237
|
)
|
|
(867
|
)
|
|
(3,253
|
)
|
|
(2,901
|
)
|
||||
Net Exchanges
|
|
(4
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|
(33
|
)
|
||||
Acquisition-Related
1
|
|
23,564
|
|
|
0
|
|
|
23,564
|
|
|
435
|
|
||||
Market Gains and Losses
2
|
|
1,725
|
|
|
1,723
|
|
|
1,838
|
|
|
5,789
|
|
||||
Ending Assets
|
|
$
|
101,437
|
|
|
$
|
78,955
|
|
|
$
|
101,437
|
|
|
$
|
78,955
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Separate Accounts Assets
3
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
48,041
|
|
|
$
|
40,189
|
|
|
$
|
53,055
|
|
|
$
|
38,030
|
|
Sales
4
|
|
2,629
|
|
|
1,590
|
|
|
6,961
|
|
|
5,845
|
|
||||
Redemptions
4
|
|
(3,186
|
)
|
|
(1,732
|
)
|
|
(11,044
|
)
|
|
(6,657
|
)
|
||||
Net Redemptions
4
|
|
(557
|
)
|
|
(142
|
)
|
|
(4,083
|
)
|
|
(812
|
)
|
||||
Net Exchanges
|
|
(3
|
)
|
|
0
|
|
|
(2
|
)
|
|
(56
|
)
|
||||
Acquisition-Related
|
|
22,422
|
|
|
0
|
|
|
22,422
|
|
|
0
|
|
||||
Market Gains and Losses
2
|
|
1,583
|
|
|
825
|
|
|
94
|
|
|
3,710
|
|
||||
Ending Assets
|
|
$
|
71,486
|
|
|
$
|
40,872
|
|
|
$
|
71,486
|
|
|
$
|
40,872
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Long-Term Assets
3
|
|
|
|
|
|
|
|
|
||||||||
Beginning Assets
|
|
$
|
124,430
|
|
|
$
|
118,294
|
|
|
$
|
132,356
|
|
|
$
|
113,695
|
|
Sales
4
|
|
9,797
|
|
|
6,289
|
|
|
25,694
|
|
|
21,374
|
|
||||
Redemptions
4
|
|
(10,591
|
)
|
|
(7,298
|
)
|
|
(33,030
|
)
|
|
(25,087
|
)
|
||||
Net Redemptions
4
|
|
(794
|
)
|
|
(1,009
|
)
|
|
(7,336
|
)
|
|
(3,713
|
)
|
||||
Net Exchanges
|
|
(7
|
)
|
|
(6
|
)
|
|
(15
|
)
|
|
(89
|
)
|
||||
Acquisition-Related
1
|
|
45,986
|
|
|
0
|
|
|
45,986
|
|
|
435
|
|
||||
Market Gains and Losses
2
|
|
3,308
|
|
|
2,548
|
|
|
1,932
|
|
|
9,499
|
|
||||
Ending Assets
|
|
$
|
172,923
|
|
|
$
|
119,827
|
|
|
$
|
172,923
|
|
|
$
|
119,827
|
|
1
|
Acquisition-related for the
three and nine
months ended
September 30, 2018
includes
$8.4 billion
of assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
|
2
|
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.
|
3
|
Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products.
|
4
|
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
|
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,
|
||||||||
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
By Asset Class
|
|
|
|
|
|
|
|
|
||||
Money Market
|
|
65
|
%
|
|
68
|
%
|
|
37
|
%
|
|
41
|
%
|
Equity
|
|
17
|
%
|
|
17
|
%
|
|
42
|
%
|
|
38
|
%
|
Fixed-Income
|
|
16
|
%
|
|
14
|
%
|
|
16
|
%
|
|
17
|
%
|
Alternative / Private Markets
|
|
1
|
%
|
|
0
|
%
|
|
1
|
%
|
|
0
|
%
|
Multi-Asset
|
|
1
|
%
|
|
1
|
%
|
|
4
|
%
|
|
4
|
%
|
By Product Type
|
|
|
|
|
|
|
|
|
||||
Funds:
|
|
|
|
|
|
|
|
|
||||
Money Market
|
|
44
|
%
|
|
49
|
%
|
|
34
|
%
|
|
38
|
%
|
Equity
|
|
9
|
%
|
|
9
|
%
|
|
32
|
%
|
|
30
|
%
|
Fixed-Income
|
|
10
|
%
|
|
11
|
%
|
|
14
|
%
|
|
15
|
%
|
Alternative / Private Markets
|
|
1
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Multi-Asset
|
|
1
|
%
|
|
1
|
%
|
|
4
|
%
|
|
4
|
%
|
Separate Accounts:
|
|
|
|
|
|
|
|
|
||||
Money Market
|
|
21
|
%
|
|
19
|
%
|
|
3
|
%
|
|
3
|
%
|
Equity
|
|
8
|
%
|
|
8
|
%
|
|
10
|
%
|
|
8
|
%
|
Fixed-Income
|
|
6
|
%
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
Alternative / Private Markets
|
|
0
|
%
|
|
0
|
%
|
|
1
|
%
|
|
0
|
%
|
Multi-Asset
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
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, 2018
. Federated completed the
Hermes Acquisition
during the three months ended
September 30, 2018
. As such, the scope of Federated's assessment of the effectiveness of its disclosure controls and procedures did not include the internal controls over financial reporting at
Hermes
.
Hermes
represented approximately 13% and 12% of Federated's total and net assets, respectively, as of
September 30, 2018
and approximately 16% and 11% of Federated's total revenue and net income, respectively, for the three months ended
September 30, 2018
. This exclusion is consistent with the SEC Staff's guidance that an assessment of a recently acquired business may be omitted from the scope of Federated's assessment of the effectiveness of disclosure controls and procedures that are also part of internal control over financial reporting in the year of acquisition. 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, 2018
.
|
(b)
|
There has been no change in Federated's internal control over financial reporting that occurred during the quarter ended
September 30, 2018
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
|
|
0
|
|
|
$
|
0.00
|
|
|
0
|
|
|
1,356,899
|
|
August
2
|
|
152,506
|
|
|
20.49
|
|
|
135,000
|
|
|
1,221,899
|
|
|
September
2
|
|
124,476
|
|
|
22.11
|
|
|
115,000
|
|
|
1,106,899
|
|
|
Total
|
|
276,982
|
|
|
$
|
21.22
|
|
|
250,000
|
|
|
1,106,899
|
|
1
|
In October 2016
,
the board of directors authorized a share repurchase program with no stated expiration date that allows Federated to buy back up to
4.0 million
shares of Federated Class B common stock. No other programs existed as of September 30, 2018.
See
Note (13)
to the Consolidated Financial Statements for additional information on this program.
|
2
|
In August and September of
2018
, 17,506 and 9,476 shares, respectively, of restricted stock with a weighted-average price of $2.00 and $2.23 per share, respectively, were repurchased as employees forfeited restricted stock.
|
|
|
|
|
|
|
Federated Investors, Inc.
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
Date
|
|
October 30, 2018
|
|
By:
|
|
/s/ J. Christopher Donahue
|
|
|
|
|
|
|
J. Christopher Donahue
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
October 30, 2018
|
|
By:
|
|
/s/ Thomas R. Donahue
|
|
|
|
|
|
|
Thomas R. Donahue
|
|
|
|
|
|
|
Chief Financial Officer
|
1.
|
The purpose of this Sub-Plan is to provide incentives for UK Participants (as defined below) through the grant of Awards over shares of Class B Common Stock of Federated Investors Inc. (the “
Company
”).
|
2.
|
This Sub-Plan shall apply to all UK Participants. In the event that a Participant becomes a UK Participant subsequent to the grant of an Award under the Plan, then such Award shall immediately and automatically be amended in a manner consistent with this Sub-Plan unless otherwise determined by the Board Committee.
|
3.
|
Capitalized terms used in this Sub-Plan are defined in the Plan, subject to the provisions of this Sub-Plan.
|
4.
|
References to Incentive Stock Options and Non-qualified Stock Options shall not apply to Options granted under the Sub-Plan.
|
5.
|
Any Options granted under this Sub-Plan shall be designated as Non-tax advantaged Options.
|
6.
|
This Sub-Plan is governed by the Plan and all its provisions shall be identical to those of the Plan SAVE THAT (i) “Sub-Plan” shall be substituted for “Plan” where applicable and (ii) the following provisions shall be as stated in this Sub-Plan in order to accommodate the specific requirements of the laws of England and Wales:
|
7.
|
SECTION 2.
Definitions
.
|
8.
|
SECTION 4.2
Designation of Participants
.
|
9.
|
SECTION 5.4
Transferability of Options
.
|
10.
|
SECTION 6.5
Transferability of SARs
.
|
11.
|
SECTION 12.1
Rights of Employees
.
|
12.
|
SECTION 12.2
Tax Withholding
.
|
13.
|
SECTION 12.10
Transferability of Awards
.
|
14.
|
SECTION 12.
Miscellaneous
.
|
15.
|
SECTION 13.
Malus and Clawback
.
|
16.
|
SECTION 14.
Operation of Malus and Clawback
.
|
Date
|
Portion Vested
|
Cumulative Percentage
|
November 17, 2023
|
100%
|
100% (restrictions lapse)
|
1.
|
Between
|
2.
|
Purpose of Election
|
3.
|
Application
|
4.
|
Extent of Application
|
5.
|
Declaration
|
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 30, 2018
|
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 30, 2018
|
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 30, 2018
|
By:
|
/s/ J. Christopher Donahue
|
|
|
|
|
|
J. Christopher Donahue
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
October 30, 2018
|
By:
|
/s/ Thomas R. Donahue
|
|
|
|
|
|
Thomas R. Donahue
|
|
|
|
|
|
Chief Financial Officer
|
|