x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Pennsylvania
(State or other jurisdiction of incorporation or organization)
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25-1111467
(I.R.S. Employer Identification No.)
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Federated Investors Tower
Pittsburgh, Pennsylvania
(Address of principal executive offices)
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15222-3779
(zip code)
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Class B Common Stock, no par value
(Title of each class)
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New York Stock Exchange
(Name of each exchange on which registered)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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Part I
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Part II
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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Part III
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Item 10
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Item 11
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Item 12
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13
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Item 14
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Part IV
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Item 15
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As of December 31,
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2018
vs. 2017 |
|
||||||
dollars in millions
|
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2018
|
|
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2017
|
|
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||||
Equity
|
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$
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72,497
|
|
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$
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62,816
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|
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15
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%
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Fixed-Income
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63,158
|
|
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64,160
|
|
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(2
|
)
|
||
Alternative / Private Markets
1
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18,318
|
|
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366
|
|
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NM
|
|
||
Multi-Asset
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4,093
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|
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5,014
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|
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(18
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)
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||
Total Long-Term Assets
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158,066
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|
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132,356
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|
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19
|
|
||
Money Market
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301,794
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|
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265,214
|
|
|
14
|
|
||
Total Managed Assets
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|
$
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459,860
|
|
|
$
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397,570
|
|
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16
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%
|
1
|
Alternative/Private Markets at December 31, 2018 includes
$8.3 billion
of fund assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
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Year Ended December 31,
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2018
vs. 201 7 |
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2017
vs. 201 6 |
|
||||||||||
dollars in millions
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2018
|
|
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2017
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|
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2016
|
|
|
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|||||||
Equity
|
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$
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70,680
|
|
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$
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60,255
|
|
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$
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53,492
|
|
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17
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%
|
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13
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%
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Fixed-Income
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63,454
|
|
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55,204
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|
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51,161
|
|
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15
|
|
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8
|
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|||
Alternative / Private Markets
1
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9,397
|
|
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441
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|
|
650
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NM
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(32
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)
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|||
Multi-Asset
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4,764
|
|
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5,062
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|
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5,289
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(6
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)
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(4
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)
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|||
Total Long-Term Assets
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148,295
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120,962
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110,592
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|
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23
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|
|
9
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|||
Money Market
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267,093
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245,459
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252,346
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9
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(3
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)
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Total Average Managed Assets
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$
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415,388
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$
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366,421
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$
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362,938
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|
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13
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%
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1
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%
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1
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Alternative/Private Markets for the year ended December 31, 2018 includes
$4.1 billion
of average fund assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
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Year Ended December 31,
|
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2018
vs. 2017 |
|
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2017
vs. 2016 |
|
||||||||||
dollars in thousands
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2018
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|
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2017
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|
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2016
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|
|
|
|||||||
Investment Advisory Fees, net
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$
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773,418
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$
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731,670
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$
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766,825
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|
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6
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%
|
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(5
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)%
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Administrative Service Fees, net
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199,269
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188,814
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211,646
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6
|
|
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(11
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)
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|||
Other Service Fees, net
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162,990
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182,440
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164,900
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(11
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)
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11
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|||
Total Revenue
|
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$
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1,135,677
|
|
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$
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1,102,924
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|
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$
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1,143,371
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|
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3
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%
|
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(4
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)%
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•
|
On December 19, 2018, the SEC proposed rule 12d1-4, and amendments, under the
1940 Act
, designed to streamline and enhance the regulatory framework for funds that invest in other funds (or "fund of funds" arrangements), and rescinded rule 12d1-2 under the
1940 Act
and most related exemptive orders granted by the SEC to provide relief from Sections 12(d)(1)(A), (B), (C) and (G) of the
1940 Act
. The SEC also proposed related amendments to rule 12d-1 under the
1940 Act
and Form N-CEN. The proposed rule would, under certain specified conditions, permit a fund to acquire shares of another fund in excess of the limits of section 12(d)(1) of the
1940 Act
without obtaining an exemptive order from the SEC. Specifically, proposed rule 12d1-4 would: (1) prohibit an acquiring fund, except one that is part of the same group of investment companies as the acquired fund or one that has a sub-advisor that acts as advisor to the acquired fund, from controlling an acquired fund and requires an applicable acquiring fund that holds more than 3% of an acquired fund's outstanding voting securities to vote those securities in a prescribed manner in order to minimize influence over the acquired fund; (2) prohibit an acquiring fund that acquires more than 3% of an acquired fund's outstanding voting securities from redeeming more than 3% of the acquired fund's total outstanding securities in any 30-day period; (3) impose conditions designed to prevent duplicative and excessive fees in fund of funds arrangements by requiring an evaluation of aggregate fees associated with the investment in the acquired fund and the complexity of the fund of funds arrangement; and (4) prohibit funds from creating three-tier fund of fund structures, except in certain limited circumstances. Rule 12d1-2, which is proposed to be rescinded, permits funds that primarily invest in funds within the same group of investment companies to invest in unaffiliated funds and certain non-fund assets. The proposed amendments to rule 12d1-1 would allow funds that primarily invest in funds within the same group of investment companies to continue to invest in unaffiliated money market funds. Finally, the amendments to Form N-CEN would require funds to report whether they relied on rule 12d1-4 or the statutory exception in Section 12(d)(1)(G) of the
1940 Act
during the applicable reporting period. The public comment period on the proposed rule ends 90 days after the proposed rule is published in the Federal Register. Federated is analyzing the potential impact that the proposed rule, if adopted as proposed, would have on Federated's fund of fund arrangements and relevant products and, as of December 31, 2018, Federated is unable to determine the impact on its business, results of operations, financial condition and/or cash flows.
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•
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On November 30, 2018, the SEC adopted a new rule under the
1933 Act
to establish, subject to certain conditions, a non-exclusive safe harbor for an unaffiliated broker or dealer participating in a securities offering of a covered investment fund to publish or distribute a covered investment fund research report. The rule was first proposed by the SEC on May 23, 2018. Under the new rule, a broker-dealer's publication or distribution of research reports that satisfy the conditions in the rule would be deemed, for purposes of Sections 2(a)(10) and 5(c) of the 1933 Act, not to constitute an offer for sale or offer to sell a covered investment fund's securities. The new rule generally became effective on January 14, 2019.
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•
|
Three new SEC proposals were issued on April 18, 2018, including Regulation Best Interest, clarifications on an investment advisor's fiduciary duty and a short client or customer relationship summary report (Form CRS). In a December 6, 2018 speech, SEC Chairman Jay Clayton indicated that a key priority for the SEC in 2019 is to finalize Regulation Best Interest, which, if adopted as proposed, would require broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities and to put the retail customer's interests ahead of the broker-dealer's interests when making recommendations. Moreover, until Regulation Best Interest is finalized, it remains uncertain whether, and to what degree, broker-dealers or other intermediaries will roll-back or continue changes made prior to the Department of Labor's rule imposing a modified fiduciary standard for retirement plan advisors (DOL Fiduciary Rule) having been vacated in its entirety in mid-2018, such as eliminating commission-based compensation arrangements, reducing the number of mutual funds offered on their platforms or requiring "clean shares" or other product fee structure changes based on SEC guidance. It is also uncertain to what degree a final Regulation Best Interest may impact the types of products that intermediaries, such as broker-dealers, may offer to their customers, and to what degree, if any, such an impact may have on demand for Federated's products and services or how they are offered and sold.
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•
|
An SEC request for comment was issued on June 5, 2018 seeking public input on enhancing mutual fund, ETF and other investment fund disclosures to improve the investor experience and help investors to make informed investment decisions.
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•
|
Rule 30e-3 under the
1940 Act
(
Rule 30e-3
), adopted by the SEC on June 6, 2018, creates an optional "notice and access" method for delivering shareholder reports through website posting in lieu of mailing. Subject to certain accessibility, quarterly holdings availability, formatting, notice, print upon request, and paper copy election conditions in the rule, the rule will allow funds to deliver their shareholder reports by making them publicly accessible on a website, free of charge, and sending investors a paper notice of each report's availability by mail. Federated intends to rely on
Rule 30e-3
and the
Federated Funds
registered under the
1940 Act
began including the required notice to shareholders in annual reports to fund shareholders and fund prospectuses beginning January 1, 2019.
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•
|
In light of the adoption of
Rule 30e-3
, the SEC also issued on June 5, 2018, a request for public comment and additional data on the current processing fee framework intermediaries charge for forwarding fund materials, such as shareholder reports and prospectuses, to beneficial shareholders under current rules of the New York Stock Exchange (
NYSE
) and other self-regulatory organizations, to better understand the potential effects on funds and their investors. The public comment period ended on October 31, 2018.
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•
|
The SEC adopted amendments on June 28, 2018 to the public liquidity-related disclosure requirements for open-end mutual funds to assist in providing investors with accessible and useful information about the liquidity risk management practices of the funds in which they invest. Under the amendments, funds will be required to discuss in their annual or semi-annual shareholder reports the operation and effectiveness of their liquidity risk management program, replacing a pending requirement that funds publicly provide the aggregate liquidity classification profile of their portfolios on Form N-PORT. This rule became effective on September 10, 2018, with a compliance date for the Form N-PORT amendments being June 1, 2019, and a compliance date for the shareholder report disclosure requirements of December 1, 2019, for larger fund complexes.
|
•
|
The SEC proposed rule 6c-11 under the
1940 Act
(
Rule 6c-11
) on June 28, 2018, which would permit ETFs that satisfy certain conditions to operate without the expense and delay of obtaining an exemptive order, impose certain enhanced disclosure requirements regarding ETF trading costs, and amend Form N-CEN to require ETFs to report whether they rely on
Rule 6c-11
and to report additional information to allow the SEC to confirm compliance with
Rule 6c-11
. The public comment period on the proposed rule ended on October 1, 2018.
|
•
|
The SEC issued on June 28, 2018, a final rule that requires, among other things, the use of the Inline eXtensible Business Reporting Language (iXBRL) format for the submission of operating company financial statement information and fund risk/return summary information. The new rule became effective on September 17, 2018, and must be complied with by large mutual fund complexes, such as the
Federated Funds
, beginning September 17, 2020, and for public companies, such as Federated, with respect to fiscal periods ending on or after June 15, 2019.
|
•
|
While the SEC's proposed derivatives rule, which was issued on December 11, 2015 and would increase the regulation of the use of derivatives by investment companies, remains on the SEC's 2019 regulatory agenda, the SEC is considering issuing a new proposed derivatives rule later in 2019, which signals that this proposed rule will be modified from the SEC's original proposal. Among other recommendations on derivatives regulation, the
Treasury Asset Management Report
recommended that the SEC consider a derivatives rule that would include a derivatives risk management program and an asset segregation requirement, but reconsider what, if any, portfolio limits should be part of the rule.
|
•
|
The SEC adopted rules on October 13, 2016 relating to the modernization of investment company reporting and disclosure, the enhancement of liquidity risk management by open-end investment companies and the permitted use of "swing pricing" by open-end investment companies. Under the reporting modernization rules, the Federated Funds that are registered under the
1940 Act
were required to report on Form N-CEN beginning in June 2018. For larger fund complexes, such as Federated's, required information for Form N-PORT was required to be compiled, maintained and made available to the SEC from and after June 1, 2018 and filing of Form N-PORT will be required beginning April 30, 2019. Regarding the liquidity management rules, compliance with disclosure and certain other elements of the rules was required by June 1, 2017. Federated established its liquidity risk management program by December 1, 2018, as required for larger fund complexes. The rules' limitation of illiquid investments to 15% of net assets also took effect on December 1, 2018. The SEC postponed the requirement to report on Form N-LIQUID until April 1, 2019, in light of the cyber incident disclosed by the SEC in September 2017, and the implementation of the liquidity bucketing requirement until June 1, 2019. Based on comments from certain SEC Commissioners, industry participants, including Federated, requested that the SEC consider eliminating the bucketing requirements because, among other reasons, they are highly burdensome, defective and costly,
|
•
|
On April 5, 2017, European Parliament passed EU money market fund reforms (Money Market Fund Regulation or MMFR). The MMFR provides for the following types of money market funds in the EU: (1) Government constant NAV (
CNAV
) funds; (2) Low volatility NAV (
LVNAV
) funds; (3) Short-term variable NAV (
VNAV
) funds; and (4) standard
|
•
|
A European
FTT
also continues to be discussed without the
FTT
being adopted. Notwithstanding challenges to its legality, these discussions continue to involve, among other topics, the scope, application and allocation of the
FTT
, although any agreement on the
FTT
may be delayed until the Brexit negotiations are completed. Since the European Commission first proposed a European
FTT
in 2011, proponents of the
FTT
have sought the widest possible application of the
FTT
with low tax rates. On December 3, 2018, Germany and France discussed with other EU Member States, including Austria, Belgium, Greece, Italy, Portugal, Slovakia, Slovenia and Spain, at a finance ministers' meeting in Brussels, a renewed proposal for a European
FTT
based on an existing French
FTT
on stock trades involving domestically issued shares by companies with a market capitalization over one billion euros. It has been reported that the Belgian Finance Minister indicated that the German-French initiative is a positive evolution in the discussions, and that the Austrian Finance Minister indicated that more information is needed to assess the proposal, that an
FTT
with the scope limited to domestically issued shares would not be a real
FTT
, and that the finance ministers will consider it as a possible alternative. This new German-French initiative is narrower than prior proposals for a European
FTT
, which involved a broader, more substantial
FTT
applicable to securities transactions, including derivatives. For example, prior proposals would have imposed a 0.1% tax on equity and bond trades and a 0.01% tax on derivative transactions. The exact time needed to reach resolution, implement any agreement and enact legislation is not known at this time. As noted above, Brexit could delay agreement on, and implementation of, the
FTT
in Europe. The Labour Party in the UK has also separately proposed a UK
FTT
, but with the Brexit uncertainty, it is uncertain whether a UK
FTT
will be advanced in 2019.
|
•
|
On July 4, 2018, the
FCA
released near final rules extending the Senior Managers and Certification Regime (SMCR) to insurers and all other firms offering financial services in the UK, intended to increase accountability for senior personnel and key staff. The
FCA
designates certain "senior management functions" and "certification functions." Under the SMCR, personnel conducting senior management functions (called Senior Managers) will need to be approved by the
FCA
and, those approved, will be listed in a Financial Services Register. Personnel that do not perform senior management functions but whose role could cause significant harm to customers or the firm are considered to perform certification functions (called Certification Staff). As such, firms are required to certify that such personnel are fit and proper to perform their roles. Both Senior Managers and Certification Staff must be identified and trained by December 9, 2019. Firms will have an additional twelve months to complete the certification process for Certification Staff. All staff (other than ancillary staff) will be subject to certain conduct rules set forth by the
FCA
.
|
Name
|
|
Position
|
|
Age
|
|
J. Christopher Donahue
|
|
President, Chief Executive Officer, Chairman and Director of Federated Investors, Inc.
|
|
69
|
|
|
|
|
|
|
|
Gordon J. Ceresino
|
|
Vice Chairman of Federated Investors, Inc. and President of Federated International Management Limited and Federated International Securities Corp.
|
|
61
|
|
|
|
|
|
|
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Thomas R. Donahue
|
|
Vice President, Treasurer, Chief Financial Officer and Director of Federated Investors, Inc. and President of FII Holdings, Inc.
|
|
60
|
|
|
|
|
|
|
|
John B. Fisher
|
|
Vice President and Director of Federated Investors, Inc. and President and Chief Executive Officer of Federated Advisory Companies*
|
|
62
|
|
|
|
|
|
|
|
Peter J. Germain
|
|
Executive Vice President, Chief Legal Officer, General Counsel and Secretary of Federated Investors, Inc.
|
|
59
|
|
|
|
|
|
|
|
Eugene F. Maloney
|
|
Executive Vice President of Federated Investors, Inc. and Executive Vice President of Federated Investors Management Company
|
|
73
|
|
|
|
|
|
|
|
Richard A. Novak
|
|
Vice President, Assistant Treasurer and Principal Accounting Officer of Federated Investors, Inc.
|
|
55
|
|
|
|
|
|
|
|
Saker A. Nusseibeh
|
|
Chief Executive Officer, Hermes Fund Managers Limited
|
|
57
|
|
|
|
|
|
|
|
Paul A. Uhlman
|
|
Vice President of Federated Investors, Inc. and President of Federated Securities Corp.
|
|
52
|
|
|
|
|
|
|
|
Stephen P. Van Meter
|
|
Vice President and Chief Compliance Officer of Federated Investors, Inc.
|
|
43
|
|
|
|
|
|
|
*
|
Federated Advisory Companies include the following: Federated Advisory Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, Federated Investment Management Company and Federated MDTA LLC, each wholly owned by Federated.
|
in millions
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Revenue
|
|
$
|
0.0
|
|
|
$
|
(4.4
|
)
|
|
$
|
(87.8
|
)
|
Less: Reduction in Distribution expense
|
|
0.0
|
|
|
3.6
|
|
|
65.8
|
|
|||
Operating income
|
|
0.0
|
|
|
(0.8
|
)
|
|
(22.0
|
)
|
|||
Less: Reduction in Noncontrolling interest
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|||
Pre-tax impact
|
|
$
|
0.0
|
|
|
$
|
(0.8
|
)
|
|
$
|
(22.0
|
)
|
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
||||
2018
|
|
$
|
0.25
|
|
|
$
|
0.27
|
|
|
$
|
0.27
|
|
|
$
|
0.27
|
|
2017
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
|
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 |
|
|
October
|
|
0
|
|
|
$
|
0.00
|
|
|
0
|
|
|
1,106,899
|
|
November
|
|
47,245
|
|
|
24.74
|
|
|
47,245
|
|
|
1,059,654
|
|
|
December
2
|
|
48,053
|
|
|
21.11
|
|
|
40,253
|
|
|
1,019,401
|
|
|
Total
|
|
95,298
|
|
|
$
|
22.91
|
|
|
87,498
|
|
|
1,019,401
|
|
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
December 31, 2018
. See
Note (15)
to the Consolidated Financial Statements for additional information on this program.
|
2
|
In December 2018, 7,800 shares of Federated Class B restricted stock with weighted-average prices of $3.00 per share were repurchased as certain employees forfeited restricted stock.
|
|
|
12/31/2014
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
|
12/31/2017
|
|
|
12/31/2018
|
|
|||||
Federated
|
|
$
|
118.29
|
|
|
$
|
106.12
|
|
|
$
|
112.28
|
|
|
$
|
148.36
|
|
|
$
|
113.68
|
|
S&P MidCap 400 Index
|
|
$
|
109.77
|
|
|
$
|
107.38
|
|
|
$
|
129.65
|
|
|
$
|
150.71
|
|
|
$
|
134.01
|
|
S&P 1500 Asset Management & Custody Banks Index
|
|
$
|
109.58
|
|
|
$
|
98.88
|
|
|
$
|
109.72
|
|
|
$
|
141.98
|
|
|
$
|
106.29
|
|
(in thousands, except per share data and managed assets)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|||||
Statement of Income Data
1
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Revenue
|
|
$
|
1,135,677
|
|
|
$
|
1,102,924
|
|
|
$
|
1,143,371
|
|
|
$
|
926,609
|
|
|
$
|
859,250
|
|
Operating Income
|
|
330,280
|
|
|
341,508
|
|
|
335,683
|
|
|
279,446
|
|
|
237,949
|
|
|||||
Net Income Including the Noncontrolling
Interests in Subsidiaries
2,3
|
|
222,299
|
|
|
294,901
|
|
|
221,514
|
|
|
171,986
|
|
|
149,822
|
|
|||||
Net Income Attributable to Federated Investors, Inc.
2,3
|
|
220,297
|
|
|
291,341
|
|
|
208,919
|
|
|
169,807
|
|
|
149,236
|
|
|||||
Share Data Attributable to Federated Investors, Inc.
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings Per Share – Basic and Diluted
1,4
|
|
$
|
2.18
|
|
|
$
|
2.87
|
|
|
$
|
2.03
|
|
|
$
|
1.62
|
|
|
$
|
1.42
|
|
Cash Dividends Per Share
5
|
|
$
|
1.06
|
|
|
$
|
1.00
|
|
|
$
|
2.00
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
Weighted-average Shares Outstanding – Basic
|
|
96,949
|
|
|
97,411
|
|
|
99,116
|
|
|
100,475
|
|
|
100,721
|
|
|||||
Weighted-average Shares Outstanding – Diluted
|
|
96,949
|
|
|
97,412
|
|
|
99,117
|
|
|
100,477
|
|
|
100,723
|
|
|||||
Balance Sheet Data at Period End
1
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Intangible Assets, net and Goodwill
|
|
$
|
1,149,247
|
|
|
$
|
736,915
|
|
|
$
|
733,137
|
|
|
$
|
734,492
|
|
|
$
|
733,847
|
|
Total Assets
|
|
1,543,683
|
|
|
1,231,410
|
|
|
1,155,107
|
|
|
1,187,203
|
|
|
1,140,519
|
|
|||||
Long-Term Debt
6
|
|
135,000
|
|
|
170,000
|
|
|
165,750
|
|
|
191,250
|
|
|
216,750
|
|
|||||
Federated Investors, Inc. Shareholders' Equity
5
|
|
857,121
|
|
|
761,215
|
|
|
594,826
|
|
|
647,816
|
|
|
609,494
|
|
|||||
Impact of Voluntary Yield-related Fee Waivers
7
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
$
|
0
|
|
|
$
|
(4,417
|
)
|
|
$
|
(87,872
|
)
|
|
$
|
(333,605
|
)
|
|
$
|
(410,553
|
)
|
Less: Reduction in Distribution Expense
|
|
0
|
|
|
3,587
|
|
|
65,848
|
|
|
240,610
|
|
|
280,851
|
|
|||||
Operating Income
|
|
0
|
|
|
(830
|
)
|
|
(22,024
|
)
|
|
(92,995
|
)
|
|
(129,702
|
)
|
|||||
Less: Reduction in Noncontrolling Interest
|
|
0
|
|
|
0
|
|
|
0
|
|
|
7,114
|
|
|
10,699
|
|
|||||
Pre-tax Impact
|
|
0
|
|
|
(830
|
)
|
|
(22,024
|
)
|
|
(85,881
|
)
|
|
(119,003
|
)
|
|||||
Managed Assets
1
(in millions)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
As of Period End
|
|
$
|
459,860
|
|
|
$
|
397,570
|
|
|
$
|
365,908
|
|
|
$
|
361,112
|
|
|
$
|
362,905
|
|
Average for the Period
|
|
415,388
|
|
|
366,421
|
|
|
362,938
|
|
|
353,493
|
|
|
358,467
|
|
1
|
On July 2, 2018, Federated completed the
Hermes Acquisition
, effective as of July 1, 2018.
See
Note (3)
to the Consolidated Financial Statements for additional information.
|
2
|
2018
includes a
$29.0 million
loss related to two derivative financial instruments associated with the
Hermes Acquisition
. See
Note (8)
to the Consolidated Financial Statements for additional information.
|
3
|
2017
includes a
$70.4 million
reduction to the income tax provision resulting from
the revaluation of the net deferred tax liability
due to the enactment of the
Tax Act
, thereby increasing net income.
|
4
|
2017
includes a
$0.69
increase to earnings per share resulting from
the revaluation of the net deferred tax liability
due to the enactment of the
Tax Act
.
|
5
|
2016 includes a special dividend paid to shareholders of
$1.00
per share or
$102.2 million
.
|
6
|
In 2014, Federated amended and restated the 2011 credit agreement to extend the term of the loan. In 2017, Federated amended and restated the 2014 credit agreement to refinance the revolving credit facility and term loan facility, replacing both with a single revolving credit facility. See
Note (12)
to the Consolidated Financial Statements for additional information.
|
7
|
See
Item 1A
-
Risk Factors
under the caption
Potential Adverse Effects of Low Short-Term Interest Rates
for additional information on
Voluntary Yield-related Fee Waivers
.
|
in millions as of December 31,
|
|
2018
|
|
|
2017
|
|
|
2018
vs. 2017 |
|
||
By Asset Class
|
|
|
|
|
|
|
|||||
Equity
|
|
$
|
72,497
|
|
|
$
|
62,816
|
|
|
15
|
%
|
Fixed-Income
|
|
63,158
|
|
|
64,160
|
|
|
(2
|
)
|
||
Alternative / Private Markets
1
|
|
18,318
|
|
|
366
|
|
|
NM
|
|
||
Multi-Asset
|
|
4,093
|
|
|
5,014
|
|
|
(18
|
)
|
||
Total Long-Term Assets
|
|
158,066
|
|
|
132,356
|
|
|
19
|
|
||
Money Market
|
|
301,794
|
|
|
265,214
|
|
|
14
|
|
||
Total Managed Assets
|
|
$
|
459,860
|
|
|
$
|
397,570
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|||||
By Product Type
|
|
|
|
|
|
|
|||||
Funds:
|
|
|
|
|
|
|
|||||
Equity
|
|
$
|
36,584
|
|
|
$
|
33,008
|
|
|
11
|
%
|
Fixed-Income
|
|
40,490
|
|
|
41,144
|
|
|
(2
|
)
|
||
Alternative / Private Markets
1
|
|
11,365
|
|
|
366
|
|
|
NM
|
|
||
Multi-Asset
|
|
3,920
|
|
|
4,783
|
|
|
(18
|
)
|
||
Total Long-Term Assets
|
|
92,359
|
|
|
79,301
|
|
|
16
|
|
||
Money Market
|
|
208,480
|
|
|
185,536
|
|
|
12
|
|
||
Total Fund Assets
|
|
300,839
|
|
|
264,837
|
|
|
14
|
|
||
Separate Accounts:
|
|
|
|
|
|
|
|||||
Equity
|
|
35,913
|
|
|
29,808
|
|
|
20
|
|
||
Fixed-Income
|
|
22,668
|
|
|
23,016
|
|
|
(2
|
)
|
||
Alternative / Private Markets
|
|
6,953
|
|
|
0
|
|
|
0
|
|
||
Multi-Asset
|
|
173
|
|
|
231
|
|
|
(25
|
)
|
||
Total Long-Term Assets
|
|
65,707
|
|
|
53,055
|
|
|
24
|
|
||
Money Market
|
|
93,314
|
|
|
79,678
|
|
|
17
|
|
||
Total Separate Account Assets
|
|
159,021
|
|
|
132,733
|
|
|
20
|
|
||
Total Managed Assets
|
|
$
|
459,860
|
|
|
$
|
397,570
|
|
|
16
|
%
|
1
|
The balance at
December 31, 2018
includes
$8.3 billion
of
fund assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
|
in millions for the years ended December 31,
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
vs. 201 7 |
|
|
2017
vs. 201 6 |
|
|||
By Asset Class
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity
|
|
$
|
70,680
|
|
|
$
|
60,255
|
|
|
$
|
53,492
|
|
|
17
|
%
|
|
13
|
%
|
Fixed-Income
|
|
63,454
|
|
|
55,204
|
|
|
51,161
|
|
|
15
|
|
|
8
|
|
|||
Alternative / Private Markets
1
|
|
9,397
|
|
|
441
|
|
|
650
|
|
|
NM
|
|
|
(32
|
)
|
|||
Multi-Asset
|
|
4,764
|
|
|
5,062
|
|
|
5,289
|
|
|
(6
|
)
|
|
(4
|
)
|
|||
Total Long-Term Assets
|
|
148,295
|
|
|
120,962
|
|
|
110,592
|
|
|
23
|
|
|
9
|
|
|||
Money Market
|
|
267,093
|
|
|
245,459
|
|
|
252,346
|
|
|
9
|
|
|
(3
|
)
|
|||
Total Average Managed Assets
|
|
$
|
415,388
|
|
|
$
|
366,421
|
|
|
$
|
362,938
|
|
|
13
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
By Product Type
|
|
|
|
|
|
|
|
|
|
|
||||||||
Funds:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity
|
|
$
|
36,984
|
|
|
$
|
32,160
|
|
|
$
|
30,105
|
|
|
15
|
%
|
|
7
|
%
|
Fixed-Income
|
|
40,952
|
|
|
40,676
|
|
|
38,772
|
|
|
1
|
|
|
5
|
|
|||
Alternative / Private Markets
1
|
|
5,784
|
|
|
441
|
|
|
650
|
|
|
NM
|
|
|
(32
|
)
|
|||
Multi-Asset
|
|
4,554
|
|
|
4,841
|
|
|
5,091
|
|
|
(6
|
)
|
|
(5
|
)
|
|||
Total Long-Term Assets
|
|
88,274
|
|
|
78,118
|
|
|
74,618
|
|
|
13
|
|
|
5
|
|
|||
Money Market
|
|
182,828
|
|
|
176,580
|
|
|
213,906
|
|
|
4
|
|
|
(17
|
)
|
|||
Total Average Fund Assets
|
|
271,102
|
|
|
254,698
|
|
|
288,524
|
|
|
6
|
|
|
(12
|
)
|
|||
Separate Accounts:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity
|
|
33,696
|
|
|
28,095
|
|
|
23,387
|
|
|
20
|
|
|
20
|
|
|||
Fixed-Income
|
|
22,502
|
|
|
14,528
|
|
|
12,389
|
|
|
55
|
|
|
17
|
|
|||
Alternative / Private Markets
|
|
3,613
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
Multi-Asset
|
|
210
|
|
|
221
|
|
|
198
|
|
|
(5
|
)
|
|
12
|
|
|||
Total Long-Term Assets
|
|
60,021
|
|
|
42,844
|
|
|
35,974
|
|
|
40
|
|
|
19
|
|
|||
Money Market
|
|
84,265
|
|
|
68,879
|
|
|
38,440
|
|
|
22
|
|
|
79
|
|
|||
Total Average Separate Account Assets
|
|
144,286
|
|
|
111,723
|
|
|
74,414
|
|
|
29
|
|
|
50
|
|
|||
Total Average Managed Assets
|
|
$
|
415,388
|
|
|
$
|
366,421
|
|
|
$
|
362,938
|
|
|
13
|
%
|
|
1
|
%
|
1
|
The average for the year ended
December 31, 2018
includes
$4.1 billion
of average
fund assets managed by a non-consolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
|
in millions for the years ended December 31,
|
|
2018
|
|
|
2017
|
|
||
Equity Funds
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
33,008
|
|
|
$
|
30,816
|
|
Sales
|
|
8,408
|
|
|
5,169
|
|
||
Redemptions
|
|
(12,192
|
)
|
|
(8,220
|
)
|
||
Net Redemptions
|
|
(3,784
|
)
|
|
(3,051
|
)
|
||
Net Exchanges
|
|
(115
|
)
|
|
(11
|
)
|
||
Acquisition-Related
|
|
11,131
|
|
|
287
|
|
||
Market Gains and Losses
1
|
|
(3,656
|
)
|
|
4,967
|
|
||
Ending Assets
|
|
$
|
36,584
|
|
|
$
|
33,008
|
|
Equity Separate Accounts
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
29,808
|
|
|
$
|
25,943
|
|
Sales
2
|
|
5,547
|
|
|
6,445
|
|
||
Redemptions
2
|
|
(10,209
|
)
|
|
(6,586
|
)
|
||
Net Redemptions
2
|
|
(4,662
|
)
|
|
(141
|
)
|
||
Net Exchanges
|
|
(1
|
)
|
|
0
|
|
||
Acquisition-Related
|
|
13,569
|
|
|
0
|
|
||
Market Gains and Losses
1
|
|
(2,801
|
)
|
|
4,006
|
|
||
Ending Assets
|
|
$
|
35,913
|
|
|
$
|
29,808
|
|
Total Equity
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
62,816
|
|
|
$
|
56,759
|
|
Sales
2
|
|
13,955
|
|
|
11,614
|
|
||
Redemptions
2
|
|
(22,401
|
)
|
|
(14,806
|
)
|
||
Net Redemptions
2
|
|
(8,446
|
)
|
|
(3,192
|
)
|
||
Net Exchanges
|
|
(116
|
)
|
|
(11
|
)
|
||
Acquisition-Related
|
|
24,700
|
|
|
287
|
|
||
Market Gains and Losses
1
|
|
(6,457
|
)
|
|
8,973
|
|
||
Ending Assets
|
|
$
|
72,497
|
|
|
$
|
62,816
|
|
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
|
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
|
in millions for the years ended December 31,
|
|
2018
|
|
|
2017
|
|
||
Fixed-Income Funds
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
41,144
|
|
|
$
|
39,434
|
|
Sales
|
|
16,594
|
|
|
14,799
|
|
||
Redemptions
|
|
(18,366
|
)
|
|
(14,655
|
)
|
||
Net (Redemptions) Sales
|
|
(1,772
|
)
|
|
144
|
|
||
Net Exchanges
|
|
138
|
|
|
(67
|
)
|
||
Acquisition-Related
|
|
1,565
|
|
|
148
|
|
||
Market Gains and Losses
1
|
|
(585
|
)
|
|
1,485
|
|
||
Ending Assets
|
|
$
|
40,490
|
|
|
$
|
41,144
|
|
|
|
|
|
|
||||
Fixed-Income Separate Accounts
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
23,016
|
|
|
$
|
11,880
|
|
Sales
2
|
|
3,562
|
|
|
12,750
|
|
||
Redemptions
2
|
|
(5,004
|
)
|
|
(2,377
|
)
|
||
Net (Redemptions) Sales
2
|
|
(1,442
|
)
|
|
10,373
|
|
||
Net Exchanges
|
|
(2
|
)
|
|
(56
|
)
|
||
Acquisition-Related
|
|
1,167
|
|
|
0
|
|
||
Market Gains and Losses
1
|
|
(71
|
)
|
|
819
|
|
||
Ending Assets
|
|
$
|
22,668
|
|
|
$
|
23,016
|
|
|
|
|
|
|
||||
Total Fixed-Income
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
64,160
|
|
|
$
|
51,314
|
|
Sales
2
|
|
20,156
|
|
|
27,549
|
|
||
Redemptions
2
|
|
(23,370
|
)
|
|
(17,032
|
)
|
||
Net (Redemptions) Sales
2
|
|
(3,214
|
)
|
|
10,517
|
|
||
Net Exchanges
|
|
136
|
|
|
(123
|
)
|
||
Acquisition-Related
|
|
2,732
|
|
|
148
|
|
||
Market Gains and Losses
1
|
|
(656
|
)
|
|
2,304
|
|
||
Ending Assets
|
|
$
|
63,158
|
|
|
$
|
64,160
|
|
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
|
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
|
in millions for the years ended December 31,
|
|
2018
|
|
|
2017
|
|
||
Alternative / Private Markets Funds
1
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
366
|
|
|
$
|
458
|
|
Sales
|
|
1,127
|
|
|
132
|
|
||
Redemptions
|
|
(790
|
)
|
|
(251
|
)
|
||
Net Sales (Redemptions)
|
|
337
|
|
|
(119
|
)
|
||
Net Exchanges
|
|
(2
|
)
|
|
57
|
|
||
Acquisition-Related
|
|
10,823
|
|
|
0
|
|
||
Market Gains and Losses
2
|
|
(159
|
)
|
|
(30
|
)
|
||
Ending Assets
|
|
$
|
11,365
|
|
|
$
|
366
|
|
|
|
|
|
|
||||
Alternative / Private Markets Separate Accounts
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
0
|
|
|
$
|
0
|
|
Sales
3
|
|
123
|
|
|
0
|
|
||
Redemptions
3
|
|
(525
|
)
|
|
0
|
|
||
Net Redemptions
3
|
|
(402
|
)
|
|
0
|
|
||
Acquisition-Related
|
|
7,686
|
|
|
0
|
|
||
Market Gains and Losses
2
|
|
(331
|
)
|
|
0
|
|
||
Ending Assets
|
|
$
|
6,953
|
|
|
$
|
0
|
|
|
|
|
|
|
||||
Total Alternative / Private Markets
1
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
366
|
|
|
$
|
458
|
|
Sales
3
|
|
1,250
|
|
|
132
|
|
||
Redemptions
3
|
|
(1,315
|
)
|
|
(251
|
)
|
||
Net Redemptions
3
|
|
(65
|
)
|
|
(119
|
)
|
||
Net Exchanges
|
|
(2
|
)
|
|
57
|
|
||
Acquisition-Related
|
|
18,509
|
|
|
0
|
|
||
Market Gains and Losses
2
|
|
(490
|
)
|
|
(30
|
)
|
||
Ending Assets
|
|
$
|
18,318
|
|
|
$
|
366
|
|
1
|
The balance at
December 31, 2018
includes
$8.3 billion
of
fund 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
|
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
|
in millions for the years ended December 31,
|
|
2018
|
|
|
2017
|
|
||
Multi-Asset Funds
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
4,783
|
|
|
$
|
4,957
|
|
Sales
|
|
472
|
|
|
479
|
|
||
Redemptions
|
|
(1,013
|
)
|
|
(1,135
|
)
|
||
Net Redemptions
|
|
(541
|
)
|
|
(656
|
)
|
||
Net Exchanges
|
|
(21
|
)
|
|
(28
|
)
|
||
Acquisition-Related
|
|
45
|
|
|
0
|
|
||
Market Gains and Losses
1
|
|
(346
|
)
|
|
510
|
|
||
Ending Assets
|
|
$
|
3,920
|
|
|
$
|
4,783
|
|
|
|
|
|
|
||||
Multi-Asset Separate Accounts
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
231
|
|
|
$
|
207
|
|
Sales
2
|
|
21
|
|
|
4
|
|
||
Redemptions
2
|
|
(31
|
)
|
|
(31
|
)
|
||
Net Redemptions
2
|
|
(10
|
)
|
|
(27
|
)
|
||
Market Gains and Losses
1
|
|
(48
|
)
|
|
51
|
|
||
Ending Assets
|
|
$
|
173
|
|
|
$
|
231
|
|
|
|
|
|
|
||||
Total Multi-Asset
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
5,014
|
|
|
$
|
5,164
|
|
Sales
2
|
|
493
|
|
|
483
|
|
||
Redemptions
2
|
|
(1,044
|
)
|
|
(1,166
|
)
|
||
Net Redemptions
2
|
|
(551
|
)
|
|
(683
|
)
|
||
Net Exchanges
|
|
(21
|
)
|
|
(28
|
)
|
||
Acquisition-Related
|
|
45
|
|
|
0
|
|
||
Market Gains and Losses
1
|
|
(394
|
)
|
|
561
|
|
||
Ending Assets
|
|
$
|
4,093
|
|
|
$
|
5,014
|
|
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
|
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
|
in millions for the years ended December 31,
|
|
2018
|
|
|
2017
|
|
||
Total Long-Term Fund Assets
1
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
79,301
|
|
|
$
|
75,665
|
|
Sales
|
|
26,601
|
|
|
20,579
|
|
||
Redemptions
|
|
(32,361
|
)
|
|
(24,261
|
)
|
||
Net Redemptions
|
|
(5,760
|
)
|
|
(3,682
|
)
|
||
Net Exchanges
|
|
0
|
|
|
(49
|
)
|
||
Acquisition-Related
|
|
23,564
|
|
|
435
|
|
||
Market Gains and Losses
2
|
|
(4,746
|
)
|
|
6,932
|
|
||
Ending Assets
|
|
$
|
92,359
|
|
|
$
|
79,301
|
|
|
|
|
|
|
||||
Total Long-Term Separate Accounts Assets
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
53,055
|
|
|
$
|
38,030
|
|
Sales
3
|
|
9,253
|
|
|
19,199
|
|
||
Redemptions
3
|
|
(15,769
|
)
|
|
(8,994
|
)
|
||
Net (Redemptions) Sales
3
|
|
(6,516
|
)
|
|
10,205
|
|
||
Net Exchanges
|
|
(3
|
)
|
|
(56
|
)
|
||
Acquisition-Related
|
|
22,422
|
|
|
0
|
|
||
Market Gains and Losses
2
|
|
(3,251
|
)
|
|
4,876
|
|
||
Ending Assets
|
|
$
|
65,707
|
|
|
$
|
53,055
|
|
|
|
|
|
|
||||
Total Long-Term Assets
1
|
|
|
|
|
||||
Beginning Assets
|
|
$
|
132,356
|
|
|
$
|
113,695
|
|
Sales
3
|
|
35,854
|
|
|
39,778
|
|
||
Redemptions
3
|
|
(48,130
|
)
|
|
(33,255
|
)
|
||
Net (Redemptions) Sales
3
|
|
(12,276
|
)
|
|
6,523
|
|
||
Net Exchanges
|
|
(3
|
)
|
|
(105
|
)
|
||
Acquisition-Related
|
|
45,986
|
|
|
435
|
|
||
Market Gains and Losses
2
|
|
(7,997
|
)
|
|
11,808
|
|
||
Ending Assets
|
|
$
|
158,066
|
|
|
$
|
132,356
|
|
1
|
The balance at
December 31, 2018
includes
$8.3 billion
of
fund 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
|
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
|
|
|
Percent of Total Average Managed Assets
|
|
Percent of Total Revenue
|
||||||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
By Asset Class
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money Market
|
|
64
|
%
|
|
67
|
%
|
|
70
|
%
|
|
37
|
%
|
|
41
|
%
|
|
45
|
%
|
Equity
|
|
17
|
%
|
|
17
|
%
|
|
15
|
%
|
|
41
|
%
|
|
38
|
%
|
|
33
|
%
|
Fixed-Income
|
|
16
|
%
|
|
15
|
%
|
|
14
|
%
|
|
16
|
%
|
|
17
|
%
|
|
17
|
%
|
Alternative / Private Markets
|
|
2
|
%
|
|
0
|
%
|
|
0
|
%
|
|
2
|
%
|
|
0
|
%
|
|
1
|
%
|
Multi-Asset
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
3
|
%
|
|
4
|
%
|
|
4
|
%
|
Other
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
1
|
%
|
|
0
|
%
|
|
0
|
%
|
By Product Type
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money Market
|
|
44
|
%
|
|
48
|
%
|
|
59
|
%
|
|
34
|
%
|
|
38
|
%
|
|
44
|
%
|
Equity
|
|
9
|
%
|
|
9
|
%
|
|
8
|
%
|
|
31
|
%
|
|
30
|
%
|
|
26
|
%
|
Fixed-Income
|
|
10
|
%
|
|
11
|
%
|
|
11
|
%
|
|
14
|
%
|
|
15
|
%
|
|
15
|
%
|
Alternative / Private Markets
|
|
1
|
%
|
|
0
|
%
|
|
0
|
%
|
|
1
|
%
|
|
0
|
%
|
|
1
|
%
|
Multi-Asset
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
3
|
%
|
|
4
|
%
|
|
4
|
%
|
Other
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Separate Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money Market
|
|
20
|
%
|
|
19
|
%
|
|
11
|
%
|
|
3
|
%
|
|
3
|
%
|
|
1
|
%
|
Equity
|
|
8
|
%
|
|
8
|
%
|
|
7
|
%
|
|
10
|
%
|
|
8
|
%
|
|
7
|
%
|
Fixed-Income
|
|
6
|
%
|
|
4
|
%
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
Alternative / Private Markets
|
|
1
|
%
|
|
0
|
%
|
|
0
|
%
|
|
1
|
%
|
|
0
|
%
|
|
0
|
%
|
Multi-Asset
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Other
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
1
|
%
|
|
0
|
%
|
|
0
|
%
|
|
|
Payments Due in
|
|
|
||||||||||||||||
in millions
|
|
2019
|
|
|
2020-2021
|
|
|
2022-2023
|
|
|
After 2023
|
|
|
Total
|
|
|||||
Long-Term Debt Obligations
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
135.0
|
|
|
$
|
0.0
|
|
|
$
|
135.0
|
|
Operating Lease Obligations
|
|
17.1
|
|
|
35.4
|
|
|
36.5
|
|
|
72.2
|
|
|
161.2
|
|
|||||
Purchase Obligations
|
|
26.9
|
|
|
7.8
|
|
|
0.0
|
|
|
0.0
|
|
|
34.7
|
|
|||||
Other Obligations
|
|
2.1
|
|
|
0.7
|
|
|
0.0
|
|
|
0.0
|
|
|
2.8
|
|
|||||
Total
|
|
$
|
46.1
|
|
|
$
|
43.9
|
|
|
$
|
171.5
|
|
|
$
|
72.2
|
|
|
$
|
333.7
|
|
/s/ J. Christopher Donahue
|
|
/s/ Thomas R. Donahue
|
J. Christopher Donahue
|
|
Thomas R. Donahue
|
President and Chief Executive Officer
|
|
Chief Financial Officer
|
|
|
|
February 22, 2019
|
|
|
/s/ Ernst & Young LLP
|
|
/s/ Ernst & Young LLP
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
||||
(dollars in thousands)
|
|
|
|
|
||||
|
|
|
|
|
||||
December 31,
|
|
2018
|
|
|
2017
|
|
||
ASSETS
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
||||
Cash and Cash Equivalents
|
|
$
|
156,832
|
|
|
$
|
316,264
|
|
Investments—Consolidated Investment Companies
|
|
22,798
|
|
|
45,411
|
|
||
Investments—Affiliates and Other
|
|
10,860
|
|
|
7,863
|
|
||
Receivables, net of reserve of $50 and $60, respectively
|
|
60,094
|
|
|
26,033
|
|
||
Receivables—Affiliates
|
|
34,985
|
|
|
27,449
|
|
||
Prepaid Expenses
|
|
16,513
|
|
|
11,747
|
|
||
Other Current Assets
|
|
2,019
|
|
|
2,507
|
|
||
Total Current Assets
|
|
304,101
|
|
|
437,274
|
|
||
Long-Term Assets
|
|
|
|
|
||||
Goodwill
|
|
809,608
|
|
|
660,040
|
|
||
Intangible Assets, net
|
|
339,639
|
|
|
76,875
|
|
||
Property and Equipment, net
|
|
53,229
|
|
|
37,670
|
|
||
Other Long-Term Assets
|
|
37,106
|
|
|
19,551
|
|
||
Total Long-Term Assets
|
|
1,239,582
|
|
|
794,136
|
|
||
Total Assets
|
|
$
|
1,543,683
|
|
|
$
|
1,231,410
|
|
LIABILITIES
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Accounts Payable and Accrued Expenses
|
|
$
|
56,110
|
|
|
$
|
47,595
|
|
Accrued Compensation and Benefits
|
|
113,865
|
|
|
74,572
|
|
||
Other Current Liabilities
|
|
11,205
|
|
|
6,682
|
|
||
Total Current Liabilities
|
|
181,180
|
|
|
128,849
|
|
||
Long-Term Liabilities
|
|
|
|
|
||||
Long-Term Debt
|
|
135,000
|
|
|
170,000
|
|
||
Long-Term Deferred Tax Liability, net
|
|
148,164
|
|
|
117,620
|
|
||
Other Long-Term Liabilities
|
|
39,705
|
|
|
23,563
|
|
||
Total Long-Term Liabilities
|
|
322,869
|
|
|
311,183
|
|
||
Total Liabilities
|
|
504,049
|
|
|
440,032
|
|
||
Commitments and Contingencies (Note (20))
|
|
|
|
|
||||
TEMPORARY EQUITY
|
|
|
|
|
||||
Redeemable Noncontrolling Interest in Subsidiaries
|
|
182,513
|
|
|
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
|
|
367,063
|
|
|
343,189
|
|
||
Retained Earnings
|
|
791,823
|
|
|
697,359
|
|
||
Treasury Stock, at Cost, 8,702,074 and 8,405,003 Shares Class B Common Stock, respectively
|
|
(287,337
|
)
|
|
(278,732
|
)
|
||
Accumulated Other Comprehensive Loss, net of tax
|
|
(14,617
|
)
|
|
(790
|
)
|
||
Total Permanent Equity
|
|
857,121
|
|
|
761,215
|
|
||
Total Liabilities, Temporary Equity and Permanent Equity
|
|
$
|
1,543,683
|
|
|
$
|
1,231,410
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
||||||
(dollars in thousands, except per share data)
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Revenue
|
|
|
|
|
|
|
||||||
Investment Advisory Fees, net—Affiliates
|
|
$
|
585,832
|
|
|
$
|
591,112
|
|
|
$
|
654,224
|
|
Investment Advisory Fees, net—Other
|
|
187,586
|
|
|
140,558
|
|
|
112,601
|
|
|||
Administrative Service Fees, net—Affiliates
|
|
199,269
|
|
|
188,814
|
|
|
211,646
|
|
|||
Other Service Fees, net—Affiliates
|
|
156,935
|
|
|
176,397
|
|
|
160,024
|
|
|||
Other Service Fees, net—Other
|
|
6,055
|
|
|
6,043
|
|
|
4,876
|
|
|||
Total Revenue
|
|
1,135,677
|
|
|
1,102,924
|
|
|
1,143,371
|
|
|||
Operating Expenses
|
|
|
|
|
|
|
||||||
Compensation and Related
|
|
354,765
|
|
|
289,215
|
|
|
296,466
|
|
|||
Distribution
|
|
287,580
|
|
|
342,779
|
|
|
383,648
|
|
|||
Professional Service Fees
|
|
42,903
|
|
|
29,064
|
|
|
29,443
|
|
|||
Systems and Communications
|
|
39,925
|
|
|
31,971
|
|
|
31,271
|
|
|||
Office and Occupancy
|
|
34,622
|
|
|
29,258
|
|
|
27,379
|
|
|||
Advertising and Promotional
|
|
16,141
|
|
|
11,166
|
|
|
14,522
|
|
|||
Travel and Related
|
|
15,594
|
|
|
12,646
|
|
|
13,228
|
|
|||
Other
|
|
13,867
|
|
|
15,317
|
|
|
11,731
|
|
|||
Total Operating Expenses
|
|
805,397
|
|
|
761,416
|
|
|
807,688
|
|
|||
Operating Income
|
|
330,280
|
|
|
341,508
|
|
|
335,683
|
|
|||
Nonoperating (Expenses) Income
|
|
|
|
|
|
|
||||||
Investment Income, net
|
|
5,985
|
|
|
7,236
|
|
|
7,256
|
|
|||
(Loss) Gain on Securities, net
|
|
(4,357
|
)
|
|
8,072
|
|
|
2,108
|
|
|||
Debt Expense
|
|
(5,885
|
)
|
|
(4,772
|
)
|
|
(4,173
|
)
|
|||
Other, net
|
|
(29,849
|
)
|
|
(42
|
)
|
|
60
|
|
|||
Total Nonoperating (Expenses) Income, net
|
|
(34,106
|
)
|
|
10,494
|
|
|
5,251
|
|
|||
Income Before Income Taxes
|
|
296,174
|
|
|
352,002
|
|
|
340,934
|
|
|||
Income Tax Provision
|
|
73,875
|
|
|
57,101
|
|
|
119,420
|
|
|||
Net Income Including the Noncontrolling Interests in Subsidiaries
|
|
222,299
|
|
|
294,901
|
|
|
221,514
|
|
|||
Less: Net Income Attributable to the Noncontrolling Interests in Subsidiaries
|
|
2,002
|
|
|
3,560
|
|
|
12,595
|
|
|||
Net Income
|
|
$
|
220,297
|
|
|
$
|
291,341
|
|
|
$
|
208,919
|
|
Amounts Attributable to Federated Investors, Inc.
|
|
|
|
|
|
|
||||||
Earnings Per Common Share—Basic and Diluted
|
|
$
|
2.18
|
|
|
$
|
2.87
|
|
|
$
|
2.03
|
|
Cash Dividends Per Share
|
|
$
|
1.06
|
|
|
$
|
1.00
|
|
|
$
|
2.00
|
|
|
|
|
|
|
|
|
||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
||||||
(dollars in thousands)
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Net Income Including the Noncontrolling Interests in Subsidiaries
|
|
$
|
222,299
|
|
|
$
|
294,901
|
|
|
$
|
221,514
|
|
|
|
|
|
|
|
|
||||||
Other Comprehensive (Loss) Income, net of tax
|
|
|
|
|
|
|
||||||
Permanent Equity
|
|
|
|
|
|
|
||||||
Foreign Currency Translation (Loss) Gain
|
|
(13,607
|
)
|
|
612
|
|
|
(617
|
)
|
|||
Reclassification Adjustment Related to Foreign Currency Items
|
|
(191
|
)
|
|
0
|
|
|
0
|
|
|||
Unrealized Gain on Equity Securities
|
|
0
|
|
|
1,642
|
|
|
3,029
|
|
|||
Reclassification Adjustment Related to Equity Securities
|
|
(29
|
)
|
|
(2,521
|
)
|
|
1,674
|
|
|||
Temporary Equity
|
|
|
|
|
|
|
||||||
Foreign Currency Translation Loss
|
|
(6,009
|
)
|
|
0
|
|
|
(13
|
)
|
|||
Other Comprehensive (Loss) Income, net of tax
|
|
(19,836
|
)
|
|
(267
|
)
|
|
4,073
|
|
|||
Comprehensive Income Including the Noncontrolling Interests in Subsidiaries
|
|
202,463
|
|
|
294,634
|
|
|
225,587
|
|
|||
Less: Comprehensive (Loss) Income Attributable to Redeemable Noncontrolling Interest in Subsidiaries
|
|
(4,007
|
)
|
|
3,084
|
|
|
3,189
|
|
|||
Less: Comprehensive Income Attributable to Nonredeemable Noncontrolling Interest in Subsidiary
|
|
0
|
|
|
476
|
|
|
9,393
|
|
|||
Comprehensive Income Attributable to Federated Investors, Inc.
|
|
$
|
206,470
|
|
|
$
|
291,074
|
|
|
$
|
213,005
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
|
|
|
|
|
|
|
|||
(dollars in thousands)
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
|
Shares
|
|||||||
|
|
Class A
|
|
|
Class B
|
|
|
Treasury
|
|
Balance at January 1, 2016
|
|
9,000
|
|
|
104,094,027
|
|
|
5,411,429
|
|
Adoption of New Accounting Pronouncements
|
|
0
|
|
|
0
|
|
|
0
|
|
Net Income
|
|
0
|
|
|
0
|
|
|
0
|
|
Other Comprehensive Income (Loss), net of tax
|
|
0
|
|
|
0
|
|
|
0
|
|
Subscriptions – Redeemable Noncontrolling Interest Holders
|
|
0
|
|
|
0
|
|
|
0
|
|
Consolidation/(Deconsolidation)
|
|
0
|
|
|
0
|
|
|
0
|
|
Stock Award Activity
|
|
0
|
|
|
948,860
|
|
|
(948,860
|
)
|
Dividends Declared
|
|
0
|
|
|
0
|
|
|
0
|
|
Distributions to Noncontrolling Interest in Subsidiaries
|
|
0
|
|
|
0
|
|
|
0
|
|
Purchase of Treasury Stock
|
|
0
|
|
|
(3,053,204
|
)
|
|
3,053,204
|
|
Balance at December 31, 2016
|
|
9,000
|
|
|
101,989,683
|
|
|
7,515,773
|
|
Net Income
|
|
0
|
|
|
0
|
|
|
0
|
|
Other Comprehensive Loss, net of tax
|
|
0
|
|
|
0
|
|
|
0
|
|
Subscriptions – Redeemable Noncontrolling Interest Holders
|
|
0
|
|
|
0
|
|
|
0
|
|
Consolidation/(Deconsolidation)
|
|
0
|
|
|
0
|
|
|
0
|
|
Stock Award Activity
|
|
0
|
|
|
952,570
|
|
|
(952,570
|
)
|
Dividends Declared
|
|
0
|
|
|
0
|
|
|
0
|
|
Distributions to Noncontrolling Interest in Subsidiaries
|
|
0
|
|
|
0
|
|
|
0
|
|
Purchase of Treasury Stock
|
|
0
|
|
|
(1,841,800
|
)
|
|
1,841,800
|
|
Balance at December 31, 2017
|
|
9,000
|
|
|
101,100,453
|
|
|
8,405,003
|
|
Adoption of new accounting pronouncements
|
|
0
|
|
|
0
|
|
|
0
|
|
Net Income
|
|
0
|
|
|
0
|
|
|
0
|
|
Other Comprehensive Loss, net of tax
|
|
0
|
|
|
0
|
|
|
0
|
|
Subscriptions – Redeemable Noncontrolling Interest Holders
|
|
0
|
|
|
0
|
|
|
0
|
|
Consolidation/(Deconsolidation)
|
|
0
|
|
|
0
|
|
|
0
|
|
Stock Award Activity
|
|
0
|
|
|
908,719
|
|
|
(908,719
|
)
|
Dividends Declared
|
|
0
|
|
|
0
|
|
|
0
|
|
Distributions to Noncontrolling Interest in Subsidiaries
|
|
0
|
|
|
0
|
|
|
0
|
|
Business Acquisition
|
|
0
|
|
|
0
|
|
|
0
|
|
Purchase of Treasury Stock
|
|
0
|
|
|
(1,205,790
|
)
|
|
1,205,790
|
|
Balance at December 31, 2018
|
|
9,000
|
|
|
100,803,382
|
|
|
8,702,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Federated Investors, Inc. Shareholders' Equity
|
|
|
|
|
|
|
||||||||||||||||||||||||
Common Stock
|
|
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
|
||||||||||||||||
$
|
298,579
|
|
|
$
|
545,785
|
|
|
$
|
(191,939
|
)
|
|
$
|
(4,609
|
)
|
|
$
|
647,816
|
|
|
$
|
1,156
|
|
|
$
|
648,972
|
|
|
$
|
8,734
|
|
123
|
|
|
(911
|
)
|
|
0
|
|
|
831
|
|
|
43
|
|
|
0
|
|
|
43
|
|
|
14,850
|
|
||||||||
0
|
|
|
208,919
|
|
|
0
|
|
|
0
|
|
|
208,919
|
|
|
9,393
|
|
|
218,312
|
|
|
3,202
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
3,255
|
|
|
3,255
|
|
|
0
|
|
|
3,255
|
|
|
(13
|
)
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
17,868
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(4,579
|
)
|
||||||||
22,280
|
|
|
(18,715
|
)
|
|
20,150
|
|
|
0
|
|
|
23,715
|
|
|
0
|
|
|
23,715
|
|
|
0
|
|
||||||||
0
|
|
|
(205,329
|
)
|
|
0
|
|
|
0
|
|
|
(205,329
|
)
|
|
0
|
|
|
(205,329
|
)
|
|
0
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(9,591
|
)
|
|
(9,591
|
)
|
|
(8,700
|
)
|
||||||||
0
|
|
|
0
|
|
|
(83,593
|
)
|
|
0
|
|
|
(83,593
|
)
|
|
0
|
|
|
(83,593
|
)
|
|
0
|
|
||||||||
320,982
|
|
|
529,749
|
|
|
(255,382
|
)
|
|
(523
|
)
|
|
594,826
|
|
|
958
|
|
|
595,784
|
|
|
31,362
|
|
||||||||
0
|
|
|
291,341
|
|
|
0
|
|
|
0
|
|
|
291,341
|
|
|
476
|
|
|
291,817
|
|
|
3,084
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
(267
|
)
|
|
(267
|
)
|
|
0
|
|
|
(267
|
)
|
|
0
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
4,687
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(67
|
)
|
||||||||
22,396
|
|
|
(22,308
|
)
|
|
23,607
|
|
|
0
|
|
|
23,695
|
|
|
0
|
|
|
23,695
|
|
|
0
|
|
||||||||
0
|
|
|
(101,423
|
)
|
|
0
|
|
|
0
|
|
|
(101,423
|
)
|
|
0
|
|
|
(101,423
|
)
|
|
0
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,434
|
)
|
|
(1,434
|
)
|
|
(8,903
|
)
|
||||||||
0
|
|
|
0
|
|
|
(46,957
|
)
|
|
0
|
|
|
(46,957
|
)
|
|
0
|
|
|
(46,957
|
)
|
|
0
|
|
||||||||
343,378
|
|
|
697,359
|
|
|
(278,732
|
)
|
|
(790
|
)
|
|
761,215
|
|
|
0
|
|
|
761,215
|
|
|
30,163
|
|
||||||||
0
|
|
|
125
|
|
|
0
|
|
|
(254
|
)
|
|
(129
|
)
|
|
0
|
|
|
(129
|
)
|
|
0
|
|
||||||||
0
|
|
|
220,297
|
|
|
0
|
|
|
0
|
|
|
220,297
|
|
|
0
|
|
|
220,297
|
|
|
2,002
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
(13,573
|
)
|
|
(13,573
|
)
|
|
0
|
|
|
(13,573
|
)
|
|
(6,009
|
)
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
7,040
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,751
|
)
|
||||||||
23,874
|
|
|
(19,051
|
)
|
|
20,495
|
|
|
0
|
|
|
25,318
|
|
|
0
|
|
|
25,318
|
|
|
0
|
|
||||||||
0
|
|
|
(106,907
|
)
|
|
0
|
|
|
0
|
|
|
(106,907
|
)
|
|
0
|
|
|
(106,907
|
)
|
|
0
|
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(18,492
|
)
|
||||||||
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
169,560
|
|
||||||||
0
|
|
|
0
|
|
|
(29,100
|
)
|
|
0
|
|
|
(29,100
|
)
|
|
0
|
|
|
(29,100
|
)
|
|
0
|
|
||||||||
$
|
367,252
|
|
|
$
|
791,823
|
|
|
$
|
(287,337
|
)
|
|
$
|
(14,617
|
)
|
|
$
|
857,121
|
|
|
$
|
0
|
|
|
$
|
857,121
|
|
|
$
|
182,513
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
||||||
(dollars in thousands)
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Years Ended December 31,
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Operating Activities
|
|
|
|
|
|
||||||
Net Income Including the Noncontrolling Interests in Subsidiaries
|
$
|
222,299
|
|
|
$
|
294,901
|
|
|
$
|
221,514
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
|
|
|
|
|
|
||||||
Amortization of Deferred Sales Commissions
|
2,967
|
|
|
8,025
|
|
|
11,980
|
|
|||
Depreciation and Other Amortization
|
17,087
|
|
|
10,637
|
|
|
9,578
|
|
|||
Share-Based Compensation Expense
|
23,893
|
|
|
22,508
|
|
|
22,445
|
|
|||
(Gain) Loss on Disposal of Assets
|
298
|
|
|
(7,193
|
)
|
|
1,070
|
|
|||
Provision (Benefit) for Deferred Income Taxes
|
12,257
|
|
|
(59,272
|
)
|
|
17,496
|
|
|||
Net Unrealized Loss (Gain) on Investments
|
4,322
|
|
|
(889
|
)
|
|
(4,624
|
)
|
|||
Net Sales of Investments—Consolidated Investment Companies
|
16,696
|
|
|
133,992
|
|
|
4,746
|
|
|||
Adoption of New Accounting Pronouncement
|
0
|
|
|
0
|
|
|
(2,653
|
)
|
|||
Deferred Sales Commissions Paid
|
(43
|
)
|
|
(4,715
|
)
|
|
(11,801
|
)
|
|||
Contingent Deferred Sales Charges Received
|
0
|
|
|
1,785
|
|
|
2,195
|
|
|||
Distributions from Equity Investments
|
1,173
|
|
|
0
|
|
|
0
|
|
|||
Other Changes in Assets and Liabilities:
|
|
|
|
|
|
||||||
Increase in Receivables, net
|
(11,080
|
)
|
|
(7,914
|
)
|
|
(11,044
|
)
|
|||
(Increase) Decrease in Prepaid Expenses and Other Assets
|
4,029
|
|
|
(115
|
)
|
|
1,114
|
|
|||
(Decrease) Increase in Accounts Payable and Accrued Expenses
|
(96,188
|
)
|
|
(9,160
|
)
|
|
6,001
|
|
|||
Increase (Decrease) in Other Liabilities
|
8,572
|
|
|
4,785
|
|
|
(2,346
|
)
|
|||
Net Cash Provided by Operating Activities
|
206,282
|
|
|
387,375
|
|
|
265,671
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Purchases of Investments—Affiliates and Other
|
(7,267
|
)
|
|
(5,779
|
)
|
|
(24,153
|
)
|
|||
Cash Paid for Business Acquisitions, net of Cash Acquired
|
(170,392
|
)
|
|
(4,352
|
)
|
|
0
|
|
|||
Proceeds from Redemptions of Investments—Affiliates and Other
|
20,283
|
|
|
20,930
|
|
|
15,953
|
|
|||
Cash Paid for Property and Equipment
|
(17,274
|
)
|
|
(9,799
|
)
|
|
(12,839
|
)
|
|||
Distribution from Equity Investment
|
211
|
|
|
0
|
|
|
0
|
|
|||
Net Cash (Used) Provided by Investing Activities
|
(174,439
|
)
|
|
1,000
|
|
|
(21,039
|
)
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Dividends Paid
|
(106,943
|
)
|
|
(101,511
|
)
|
|
(205,468
|
)
|
|||
Purchases of Treasury Stock
|
(29,247
|
)
|
|
(48,642
|
)
|
|
(81,771
|
)
|
|||
Distributions to Noncontrolling Interests in Subsidiaries
|
(18,492
|
)
|
|
(10,337
|
)
|
|
(18,291
|
)
|
|||
Contributions from Noncontrolling Interests in Subsidiaries
|
2,801
|
|
|
4,687
|
|
|
17,868
|
|
|||
Proceeds from Shareholders for Share-Based Compensation
|
1,444
|
|
|
1,299
|
|
|
1,436
|
|
|||
Proceeds from New Borrowings
|
87,650
|
|
|
0
|
|
|
0
|
|
|||
Payments on Debt
|
(122,650
|
)
|
|
(21,250
|
)
|
|
(25,500
|
)
|
|||
Other Financing Activities
|
(678
|
)
|
|
(1,167
|
)
|
|
(640
|
)
|
|||
Net Cash Used by Financing Activities
|
(186,115
|
)
|
|
(176,921
|
)
|
|
(312,366
|
)
|
|||
Effect of Exchange Rates on Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents
|
(5,111
|
)
|
|
0
|
|
|
0
|
|
|||
Net (Decrease) Increase in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
|
(159,383
|
)
|
|
211,454
|
|
|
(67,734
|
)
|
|||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning of Period
|
316,809
|
|
|
105,355
|
|
|
173,089
|
|
|||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period
|
157,426
|
|
|
316,809
|
|
|
105,355
|
|
|||
Less: Restricted Cash and Restricted Cash Equivalents Recorded in Other Long-Term Assets
|
594
|
|
|
545
|
|
|
516
|
|
|||
Cash and Cash Equivalents
|
$
|
156,832
|
|
|
$
|
316,264
|
|
|
$
|
104,839
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Income taxes
|
$
|
61,573
|
|
|
$
|
118,412
|
|
|
$
|
104,581
|
|
Interest
|
$
|
5,320
|
|
|
$
|
4,109
|
|
|
$
|
3,487
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
||||
(December 31, 2018, 2017 and 2016)
|
1
|
Includes
$31.9 million
of receivables, substantially all of which has been collected as of
December 31, 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
$93.6 million
for customer relationships with a weighted-average useful life of
8.4 years
,
$132.7 million
for indefinite-lived renewable investment advisory contracts and
$49.9 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, net
.
|
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.
|
(in millions)
|
|
2018
|
|
|
2017
|
|
||
Revenue
|
|
$
|
1,230.5
|
|
|
$
|
1,268.6
|
|
Net Income
1
|
|
$
|
241.4
|
|
|
$
|
306.1
|
|
1
|
The year ended December 31, 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
.
|
(in thousands)
|
|
2018
|
|
|
Equity
|
|
$
|
470,436
|
|
Money Market
|
|
414,746
|
|
|
Fixed-Income
|
|
180,152
|
|
|
Other
1
|
|
70,343
|
|
|
Total Revenue
|
|
$
|
1,135,677
|
|
1
|
Includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), Multi-Asset and
stewardship services
revenue.
|
(in thousands)
|
|
2018
|
|
|
Asset Management
1
|
|
$
|
773,418
|
|
Administrative Services
|
|
199,269
|
|
|
Distribution
2
|
|
146,595
|
|
|
Other
3
|
|
16,395
|
|
|
Total Revenue
|
|
$
|
1,135,677
|
|
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.
|
(in thousands)
|
|
2018
|
|
|
Federated Funds
|
|
$
|
942,037
|
|
Separate Accounts
|
|
187,585
|
|
|
Other
1
|
|
6,055
|
|
|
Total Revenue
|
|
$
|
1,135,677
|
|
1
|
Includes stewardship services revenue.
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Equity Assets
|
|
41
|
%
|
|
38
|
%
|
|
33
|
%
|
Money Market Assets
|
|
37
|
%
|
|
41
|
%
|
|
45
|
%
|
Fixed-Income Assets
|
|
16
|
%
|
|
17
|
%
|
|
17
|
%
|
in millions
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Revenue
|
|
$
|
0.0
|
|
|
$
|
(4.4
|
)
|
|
$
|
(87.8
|
)
|
Less: Reduction in Distribution Expense
|
|
0.0
|
|
|
3.6
|
|
|
65.8
|
|
|||
Operating Income
|
|
0.0
|
|
|
(0.8
|
)
|
|
(22.0
|
)
|
|||
Less: Reduction in Noncontrolling Interest
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|||
Pre-tax Impact
|
|
$
|
0.0
|
|
|
$
|
(0.8
|
)
|
|
$
|
(22.0
|
)
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Federated Strategic Value Dividend strategy
1
|
|
15
|
%
|
|
18
|
%
|
|
15
|
%
|
Federated Kaufmann Mid-Cap Growth strategy
2
|
|
10
|
%
|
|
9
|
%
|
|
8
|
%
|
1
|
Strategy includes
Federated Funds
and
Separate Accounts
.
|
2
|
Strategy includes
Federated Funds
.
|
(in millions)
|
|
2018
|
|
|
2017
|
|
||||
Cash and Cash Equivalents
|
|
|
$
|
0.0
|
|
|
|
$
|
0.1
|
|
Investments—Consolidated Investment Companies
|
|
|
21.2
|
|
|
|
39.7
|
|
||
Receivables
|
|
|
0.4
|
|
|
|
1.0
|
|
||
Less: Liabilities
|
|
|
0.3
|
|
|
|
0.4
|
|
||
Less: Redeemable Noncontrolling Interest in Subsidiaries
|
|
|
11.2
|
|
|
|
27.7
|
|
||
Federated's Net Interest in Federated Fund VIEs
|
|
|
$
|
10.1
|
|
|
|
$
|
12.7
|
|
(in thousands)
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
NAV Practical Expedient
|
|
Total
|
|
||||||
2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
|
$
|
156,832
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
156,832
|
|
Investments—Consolidated Investment Companies
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity Securities
|
|
1,269
|
|
|
633
|
|
|
0
|
|
|
0
|
|
|
1,902
|
|
|||||
Debt Securities
|
|
0
|
|
|
20,896
|
|
|
0
|
|
|
0
|
|
|
20,896
|
|
|||||
Investments—Affiliates and Other
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity Securities
|
|
6,684
|
|
|
403
|
|
|
38
|
|
|
279
|
|
|
7,404
|
|
|||||
Debt Securities
|
|
0
|
|
|
3,456
|
|
|
0
|
|
|
0
|
|
|
3,456
|
|
|||||
Other
|
|
597
|
|
|
0
|
|
|
70
|
|
|
0
|
|
|
667
|
|
|||||
Total Financial Assets
|
|
$
|
165,382
|
|
|
$
|
25,388
|
|
|
$
|
108
|
|
|
$
|
279
|
|
|
$
|
191,157
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Financial Liabilities
1
|
|
$
|
53
|
|
|
$
|
3,852
|
|
|
$
|
385
|
|
|
$
|
0
|
|
|
$
|
4,290
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
123
|
|
|
357
|
|
|
760
|
|
|
0
|
|
|
1,240
|
|
|||||
Total Financial Assets
|
|
$
|
215,475
|
|
|
$
|
43,341
|
|
|
$
|
760
|
|
|
$
|
111,202
|
|
|
$
|
370,778
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Financial Liabilities
1
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,203
|
|
|
$
|
0
|
|
|
$
|
1,203
|
|
1
|
Amounts primarily consist of derivative liabilities and acquisition-related future contingent consideration liabilities.
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Investments—Consolidated Investment Companies
|
|
|
|
|
|
|
||||||
Unrealized (Losses) Gains
|
|
$
|
(3,142
|
)
|
|
$
|
771
|
|
|
$
|
4,232
|
|
Realized Gains
1
|
|
1,596
|
|
|
3,318
|
|
|
2,358
|
|
|||
Realized Losses
1
|
|
(1,970
|
)
|
|
(1,073
|
)
|
|
(3,678
|
)
|
|||
Net (Losses) Gains on Investments—Consolidated Investment Companies
|
|
(3,516
|
)
|
|
3,016
|
|
|
2,912
|
|
|||
Investments—Affiliates and Other
|
|
|
|
|
|
|
||||||
Unrealized (Losses) Gains Recognized on Securities Still Held
|
|
(1,180
|
)
|
|
118
|
|
|
392
|
|
|||
Net Realized Gains (Losses) Recognized on Securities Sold
1
|
|
339
|
|
|
4,938
|
|
|
(1,196
|
)
|
|||
Net (Losses) Gains on Investments—Affiliates and Other
|
|
(841
|
)
|
|
5,056
|
|
|
(804
|
)
|
|||
(Loss) Gain on Securities, net
|
|
$
|
(4,357
|
)
|
|
$
|
8,072
|
|
|
$
|
2,108
|
|
1
|
Realized gains and losses are computed on a specific-identification basis.
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
||
Cost
|
|
$
|
96,598
|
|
|
$
|
6,300
|
|
Accumulated Amortization
|
|
(11,203
|
)
|
|
(5,202
|
)
|
||
Carrying Value
|
|
$
|
85,395
|
|
|
$
|
1,098
|
|
(in thousands)
|
|
Estimated Useful Life
|
|
2018
|
|
|
2017
|
|
||||
Computer Software and Hardware
|
|
1
|
to
|
7 years
|
|
$
|
85,894
|
|
|
$
|
62,303
|
|
Leasehold Improvements
|
|
Up to term of lease
|
|
33,379
|
|
|
21,975
|
|
||||
Transportation Equipment
|
|
3
|
to
|
12 years
|
|
17,851
|
|
|
17,851
|
|
||
Office Furniture and Equipment
|
|
4
|
to
|
15 years
|
|
6,042
|
|
|
6,102
|
|
||
Total Cost
|
|
|
|
|
|
143,166
|
|
|
108,231
|
|
||
Accumulated Depreciation
|
|
|
|
|
|
(89,937
|
)
|
|
(70,561
|
)
|
||
Property and Equipment, net
|
|
|
|
|
|
$
|
53,229
|
|
|
$
|
37,670
|
|
|
|
Restricted
Shares
|
|
|
Weighted-
Average Grant-
Date Fair Value
|
|
||
Non-vested at January 1, 2018
|
|
3,978,433
|
|
|
|
$
|
24.90
|
|
Granted
1
|
|
899,269
|
|
|
|
28.30
|
|
|
Vested
|
|
(866,259
|
)
|
|
|
25.24
|
|
|
Forfeited
|
|
(50,883
|
)
|
|
|
25.54
|
|
|
Non-vested at December 31, 2018
|
|
3,960,560
|
|
|
|
$
|
25.59
|
|
1
|
During
2018
, Federated awarded
451,769
shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under
the Plan
. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a
three
-year period. Also during
2018
, Federated awarded
447,500
shares of restricted Federated Class B common stock to certain key employees. These restricted stock awards generally vest over a
ten
-year period.
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
54,447
|
|
|
$
|
106,710
|
|
|
$
|
93,538
|
|
State
|
|
7,359
|
|
|
9,446
|
|
|
8,121
|
|
|||
Foreign
|
|
(188
|
)
|
|
217
|
|
|
265
|
|
|||
Total Current
|
|
61,618
|
|
|
116,373
|
|
|
101,924
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
7,616
|
|
|
(59,517
|
)
|
|
17,057
|
|
|||
State
|
|
1,750
|
|
|
638
|
|
|
597
|
|
|||
Foreign
|
|
2,891
|
|
|
(393
|
)
|
|
(158
|
)
|
|||
Total Deferred
|
|
12,257
|
|
|
(59,272
|
)
|
|
17,496
|
|
|||
Total
|
|
$
|
73,875
|
|
|
$
|
57,101
|
|
|
$
|
119,420
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Expected Federal Statutory Income Tax Rate
|
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase/(Decrease):
|
|
|
|
|
|
|
|||
State and Local Income Taxes, net of Federal Benefit
|
|
2.4
|
|
|
1.9
|
|
|
1.7
|
|
Non-Deductible Executive Compensation
|
|
1.1
|
|
|
0.0
|
|
|
0.0
|
|
Federal Rate Adjustment to Deferred Taxes
1
|
|
0.0
|
|
|
(20.2
|
)
|
|
0.0
|
|
Other
|
|
0.4
|
|
|
(0.5
|
)
|
|
(1.7
|
)
|
Effective Tax Rate
|
|
24.9
|
%
|
|
16.2
|
%
|
|
35.0
|
%
|
1
|
Represents the impact of revaluing the net deferred tax liability
due to the enactment of the
Tax Act
, and includes the federal tax benefit of any state and local deferred taxes.
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
||
Deferred Tax Assets
|
|
|
|
|
|
|
||
Tax Net Operating Loss Carryforwards
|
|
$
|
74,213
|
|
|
$
|
48,722
|
|
Compensation Related
|
|
12,514
|
|
|
7,212
|
|
||
Other
|
|
2,553
|
|
|
2,564
|
|
||
Total Deferred Tax Assets
|
|
89,280
|
|
|
58,498
|
|
||
Valuation Allowance
|
|
(56,925
|
)
|
|
(47,955
|
)
|
||
Total Deferred Tax Asset, net of Valuation Allowance
|
|
$
|
32,355
|
|
|
$
|
10,543
|
|
Deferred Tax Liabilities
|
|
|
|
|
||||
Intangible Assets
|
|
$
|
174,812
|
|
|
$
|
119,885
|
|
Property and Equipment
|
|
4,646
|
|
|
5,601
|
|
||
Other
|
|
1,061
|
|
|
1,926
|
|
||
Total Gross Deferred Tax Liability
|
|
$
|
180,519
|
|
|
$
|
127,412
|
|
Net Deferred Tax Liability
|
|
$
|
148,164
|
|
|
$
|
116,869
|
|
(in thousands, except per share data)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
Numerator
|
|
|
|
|
|
|
||||||
Net Income Attributable to Federated Investors, Inc.
1
|
|
$
|
220,297
|
|
|
$
|
291,341
|
|
|
$
|
208,919
|
|
Less: Total Net Income Available to Participating Unvested Restricted Shareholders
2
|
|
(8,555
|
)
|
|
(11,420
|
)
|
|
(7,632
|
)
|
|||
Total Net Income Attributable to Federated Common Stock - Basic
1
|
|
$
|
211,742
|
|
|
$
|
279,921
|
|
|
$
|
201,287
|
|
Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary
|
|
(794
|
)
|
|
0
|
|
|
0
|
|
|||
Total Net Income Attributable to Federated Common Stock - Diluted
1
|
|
$
|
210,948
|
|
|
$
|
279,921
|
|
|
$
|
201,287
|
|
Denominator
|
|
|
|
|
|
|
||||||
Basic Weighted-Average Federated Common Stock
3
|
|
96,949
|
|
|
97,411
|
|
|
99,116
|
|
|||
Dilutive Potential Shares from Stock Options
|
|
0
|
|
|
1
|
|
|
1
|
|
|||
Diluted Weighted-Average Federated Common Stock
3
|
|
96,949
|
|
|
97,412
|
|
|
99,117
|
|
|||
Earnings Per Share
|
|
|
|
|
|
|
||||||
Net Income Attributable to Federated Common Stock - Basic and Diluted
3,4
|
|
$
|
2.18
|
|
|
$
|
2.87
|
|
|
$
|
2.03
|
|
1
|
2017
includes a
$70.4 million
reduction to the income tax provision resulting from
the revaluation of the net deferred tax liability
due to the enactment of the
Tax Act
, thereby increasing net income.
|
2
|
Includes dividends paid on unvested restricted Federated Class B common shares and their proportionate share of undistributed earnings attributable to Federated shareholders.
|
3
|
Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.
|
4
|
2017
includes a
$0.69
increase to earnings per share resulting from
the revaluation of the net deferred tax liability
due to the enactment of the
Tax Act
.
|
(in thousands)
|
|
Unrealized (Loss) Gain on Equity Securities
1
|
|
|
Foreign Currency
Translation
(Loss) Gain
|
|
|
Total
|
|
|||||||||
Balance at December 31, 2015
|
|
|
|
$
|
(3,795
|
)
|
|
|
|
$
|
(814
|
)
|
|
|
|
$
|
(4,609
|
)
|
Other Comprehensive Income (Loss) Before Reclassifications and Tax
|
|
|
|
4,761
|
|
|
|
|
(950
|
)
|
|
|
|
3,811
|
|
|||
Tax Impact
|
|
|
|
(1,732
|
)
|
|
|
|
333
|
|
|
|
|
(1,399
|
)
|
|||
Reclassification Adjustment, before tax
2
|
|
|
|
2,632
|
|
|
|
|
0
|
|
|
|
|
2,632
|
|
|||
Tax Impact
2
|
|
|
|
(958
|
)
|
|
|
|
0
|
|
|
|
|
(958
|
)
|
|||
Net Current-Period Other Comprehensive Income (Loss)
|
|
|
|
4,703
|
|
|
|
|
(617
|
)
|
|
|
|
4,086
|
|
|||
Balance at December 31, 2016
|
|
|
|
$
|
908
|
|
|
|
|
$
|
(1,431
|
)
|
|
|
|
$
|
(523
|
)
|
Other Comprehensive Income Before Reclassifications and Tax
|
|
|
|
2,546
|
|
|
|
|
775
|
|
|
|
|
3,321
|
|
|||
Tax Impact
|
|
|
|
(904
|
)
|
|
|
|
(163
|
)
|
|
|
|
(1,067
|
)
|
|||
Reclassification Adjustment, before tax
|
|
|
|
(3,854
|
)
|
|
|
|
0
|
|
|
|
|
(3,854
|
)
|
|||
Tax Impact
|
|
|
|
1,333
|
|
|
|
|
0
|
|
|
|
|
1,333
|
|
|||
Net Current-Period Other Comprehensive (Loss) Income
|
|
|
|
(879
|
)
|
|
|
|
612
|
|
|
|
|
(267
|
)
|
|||
Balance at December 31, 2017
|
|
|
|
$
|
29
|
|
|
|
|
$
|
(819
|
)
|
|
|
|
$
|
(790
|
)
|
Other Comprehensive Loss Before Reclassifications and Tax
|
|
|
|
0
|
|
|
|
|
(13,607
|
)
|
|
|
|
(13,607
|
)
|
|||
Reclassification Adjustment, before tax
3
|
|
|
|
(80
|
)
|
|
|
|
(242
|
)
|
|
|
|
(322
|
)
|
|||
Tax Impact
3
|
|
|
|
51
|
|
|
|
|
51
|
|
|
|
|
102
|
|
|||
Net Current-Period Other Comprehensive Loss
|
|
|
|
(29
|
)
|
|
|
|
(13,798
|
)
|
|
|
|
(13,827
|
)
|
|||
Balance at December 31, 2018
|
|
|
|
$
|
0
|
|
|
|
|
$
|
(14,617
|
)
|
|
|
|
$
|
(14,617
|
)
|
1
|
Other than described in notes two and three below, amounts reclassified from
Accumulated Other Comprehensive Loss, net of tax
were recorded in
(Loss) Gain on Securities, net
on the Consolidated Statements of Income.
|
2
|
Amount includes reclassification of
$0.8 million
, net of tax from
Accumulated Other Comprehensive Loss, net of tax
to
Retained Earnings
on the Consolidated Balance Sheets as a result of the 2016 adoption of consolidation guidance.
|
3
|
Amount represents the reclassification from
Accumulated Other Comprehensive Loss, net of tax
to
Retained Earnings
on the Consolidated Balance Sheets as a result of the adoption of
ASU 2016-01
and
ASU 2018-02
.
|
|
|
Payments due in
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
After
|
|
|
|
|||||||||||||
(in millions)
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2023
|
|
|
Total
|
|
|||||||
Purchase Obligations
1
|
|
$
|
26.9
|
|
|
$
|
6.7
|
|
|
$
|
1.1
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
34.7
|
|
Other Obligations
|
|
2.1
|
|
|
0.7
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
2.8
|
|
|||||||
Total
|
|
$
|
29.0
|
|
|
$
|
7.4
|
|
|
$
|
1.1
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
37.5
|
|
1
|
Federated is a party to various contracts pursuant to which it receives certain services, including services for marketing and information technology, access to various fund-related information systems and research databases, trade order transmission and recovery services as well as other services. These contracts contain certain minimum noncancelable payments, cancellation provisions and renewal terms.
The contracts require payments through the year 2021. Costs for such services are expensed as incurred.
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
U.S.
|
|
$
|
1,005,948
|
|
|
$
|
1,069,567
|
|
|
$
|
1,116,136
|
|
Non-U.S.
1
|
|
129,729
|
|
|
33,357
|
|
|
27,235
|
|
|||
Total Revenue
|
|
$
|
1,135,677
|
|
|
$
|
1,102,924
|
|
|
$
|
1,143,371
|
|
1
|
This represents revenue earned by non-U.S. domiciled subsidiaries, primarily in the UK.
|
(in thousands)
|
|
|
|
2018
|
|
|
2017
|
|
||
U.S.
|
|
|
|
$
|
42,666
|
|
|
$
|
37,328
|
|
Non-U.S.
1
|
|
|
|
10,563
|
|
|
342
|
|
||
Property and Equipment, net
|
|
|
|
$
|
53,229
|
|
|
$
|
37,670
|
|
1
|
This represents net property and equipment held by non-U.S. domiciled subsidiaries, primarily in the UK.
|
(in thousands, except per share data, for the quarters ended)
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
||||
2018
1
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
263,852
|
|
|
$
|
255,993
|
|
|
$
|
308,616
|
|
|
$
|
307,216
|
|
Operating Income
|
|
$
|
79,671
|
|
|
$
|
80,757
|
|
|
$
|
81,898
|
|
|
$
|
87,954
|
|
Net Income Including the Noncontrolling Interests in Subsidiaries
2
|
|
$
|
60,006
|
|
|
$
|
38,667
|
|
|
$
|
61,994
|
|
|
$
|
61,632
|
|
Amounts Attributable to Federated Investors, Inc.
|
|
|
|
|
|
|
|
|
||||||||
Net Income
2
|
|
$
|
60,331
|
|
|
$
|
38,822
|
|
|
$
|
59,608
|
|
|
$
|
61,536
|
|
Earnings Per Common Share – Basic and Diluted
|
|
$
|
0.60
|
|
|
$
|
0.38
|
|
|
$
|
0.59
|
|
|
$
|
0.61
|
|
2017
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
273,501
|
|
|
$
|
272,796
|
|
|
$
|
278,315
|
|
|
$
|
278,312
|
|
Operating Income
|
|
$
|
77,773
|
|
|
$
|
84,211
|
|
|
$
|
88,690
|
|
|
$
|
90,834
|
|
Net Income Including the Noncontrolling Interests in Subsidiaries
3
|
|
$
|
51,027
|
|
|
$
|
54,659
|
|
|
$
|
57,241
|
|
|
$
|
131,974
|
|
Amounts Attributable to Federated Investors, Inc.
|
|
|
|
|
|
|
|
|
||||||||
Net Income
3
|
|
$
|
49,641
|
|
|
$
|
53,451
|
|
|
$
|
56,439
|
|
|
$
|
131,810
|
|
Earnings Per Common Share – Basic and Diluted
4
|
|
$
|
0.49
|
|
|
$
|
0.53
|
|
|
$
|
0.56
|
|
|
$
|
1.31
|
|
1
|
The financial results of Hermes have been included in Federated's Consolidated Financial Statements from the July 1, 2018 effective date of the acquisition.
|
2
|
The quarter ended June 30, 2018
includes a
$29.0 million
loss related to two derivative financial instruments associated with the
Hermes Acquisition
(see
Note (8)
for additional information).
|
3
|
The quarter ended December 31, 2017
includes a
$70.4 million
reduction to the income tax provision resulting from
the revaluation of the net deferred tax liability
due to the enactment of the
Tax Act
, thereby increasing net income.
|
4
|
The quarter ended December 31, 2017
includes a
$0.70
increase to earnings per share resulting from
the revaluation of the net deferred tax liability
due to the enactment of the
Tax Act
.
|
Category of share-based compensation plan
|
|
Number of securities to be issued upon exercise
of outstanding options |
|
Weighted-average
exercise price of outstanding options |
|
|
Number of securities
remaining available for future issuance under equity compensation plans 1 |
|
||
Equity compensation plans approved by shareholders
|
|
6,000
|
|
|
$
|
23.56
|
|
|
4,312,833
|
|
Equity compensation plans not approved by shareholders
|
|
0
|
|
|
0
|
|
|
0
|
|
|
Total
|
|
6,000
|
|
|
$
|
23.56
|
|
|
4,312,833
|
|
1
|
Under
the Plan
, as amended, grants of other share-based awards, such as restricted stock to Federated employees and shares of Federated Class B common stock to non-management directors, may be authorized in addition to the stock options listed above.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
Agreement and Plan of Merger, dated as of February 20, 1998, between Federated Investors and Federated (incorporated by reference to Exhibit 2.01 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Asset Purchase Agreement dated as of October 20, 2000, by and among Federated Investors, Inc., Edgemont Asset Management Corporation, Lawrence Auriana and Hans P. Utsch (incorporated by reference to Exhibit 2.1 of Amendment No. 2 to the Current Report on Form 8-K dated April 20, 2001, filed with the Securities and Exchange Commission on July 3, 2001 (File No. 001-14818))
|
|
|
|
|
|
Amendment No. 1, dated April 11, 2001, to the Asset Purchase Agreement dated as of October 20, 2000, by and among Federated Investors, Inc., Edgemont Asset Management Corporation, Lawrence Auriana and Hans P. Utsch (incorporated by reference to Exhibit 2.2 of Amendment No. 2 to the Current Report on Form 8-K dated April 20, 2001, filed with the Securities and Exchange Commission on July 3, 2001 (File No. 001-14818))
|
|
|
|
|
|
Share Sale Agreement, dated April 12, 2018, among BT Pension Scheme Trustees Limited, as trustee for and on behalf of the BT Pension Scheme, and Federated Holdings (UK) II Limited and Federated Investors, Inc. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K dated April 13, 2018 (File No. 001-14818))
|
|
|
|
|
|
Management Warranty Deed, dated April 12, 2018, among certain members of management of Hermes Fund Managers Limited, Federated Holdings (UK) II Limited and Federated Investors, Inc. (incorporated by reference to Exhibit 2.2 of the Current Report on Form 8-K dated April 13, 2018 (File No. 001-14818))
|
|
|
|
|
|
Restated Articles of Incorporation of Federated (incorporated by reference to Exhibit 3.01 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Restated By-Laws of Federated (incorporated by reference to Exhibit 3.02 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Restated Bylaws of Federated Investors, Inc.(incorporated by reference to Exhibit 3.1 to the June 30, 2018 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Form of Class A Common Stock certificate (incorporated by reference to Exhibit 4.01 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Form of Class B Common Stock certificate (incorporated by reference to Exhibit 4.02 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Shareholder Rights Agreement, dated August 1, 1989, between Federated and The Standard Fire Insurance Company, as amended January 31, 1996 (incorporated by reference to Exhibit 4.06 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Voting Shares Irrevocable Trust dated May 31, 1989 (incorporated by reference to Exhibit 9.01 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Federated Investors Tower Lease dated January 1, 1993 (incorporated by reference to Exhibit 10.03 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Federated Investors Tower Lease dated February 1, 1994 (incorporated by reference to Exhibit 10.04 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Employment Agreement, dated December 28, 1990, between Federated Investors and an executive officer (incorporated by reference to Exhibit 10.08 to the Registration Statement on Form S-4 (File No. 333-48361))
|
|
|
|
|
|
Annual Stock Option Agreement dated April 24, 2002, between Federated Investors, Inc. and the independent directors (incorporated by reference to Exhibit 10.1 to the June 30, 2002 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Amendments No. 6, 5, 4, 3 and 2 to Federated Investors Tower Lease dated as of December 31, 2003; November 10, 2000; June 30, 2000; February 10, 1999; and September 19, 1996 (incorporated by reference to Exhibit 10.41 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-14818))
|
|
|
|
|
|
Federated Investors, Inc. Employee Stock Purchase Plan, amended as of October 26, 2006 (incorporated by reference to Exhibit 10.2 to the September 30, 2006 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Form of Restricted Stock Program Award Agreement (incorporated by reference to Exhibit 10.65 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (File No. 001-14818))
|
|
|
|
|
|
ISDA Master Agreement and schedule between Federated Investors, Inc. and PNC Bank National Association related to the $425,000,000 forward-starting interest rate swap, entered into on March 30, 2010 and effective April 9, 2010 (incorporated by reference to Exhibit 10.2 to the June 30, 2010 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
ISDA Master Agreement and schedule between Federated Investors, Inc. and Citibank, N.A. related to the $425,000,000 forward-starting interest rate swap, entered into on March 30, 2010 and effective April 9, 2010 (incorporated by reference to Exhibit 10.3 to the June 30, 2010 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Employment Agreement, dated July 6, 1983, between Federated Investors and an executive officer (incorporated by reference to Exhibit 10.69 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 001-14818))
|
|
|
|
|
|
Federated Investors, Inc. Stock Incentive Plan, amended as of April 28, 2011 (incorporated by reference to Exhibit 10.1 to the March 31, 2011 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Amendments No. 8 and 7 to Federated Investors Tower Lease dated as of September 9, 2011 and August 15, 2007 (incorporated by reference to Exhibit 10.1 to the September 30, 2011 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
The Second Amended and Restated Credit Agreement, dated as of June 24, 2014, by and among Federated Investors, Inc. certain subsidiaries as guarantors party thereto, the banks as lenders party thereto, and PNC Bank, National Association, PNC Bank Capital Markets LLC, Citigroup Global Markets, Inc., Citibank, N.A. and TD Bank, N.A. (incorporated by reference to Exhibit 10.1 to the June 30, 2014 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Form of Restricted Stock Program Award Agreement (incorporated by reference to Exhibit 10.1 to the September 30, 2014 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Form of Bonus Restricted Stock Program Award Agreement (incorporated by reference to Exhibit 10.77 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (File No. 001-14818))
|
|
|
|
|
|
Federated Investors, Inc. Employee Stock Purchase Plan, amended as of January 1, 2016 (incorporated by reference to Exhibit 10.78 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (File No. 001-14818))
|
|
|
|
|
|
Agreement by and among Federated Investment Management Company, Passport Research Ltd., The Jones Financial Companies, L.L.L.P. for itself and on behalf of Edward D. Jones & Co., L.P., and Passport Holdings LLC, dated as of April 27, 2016
(incorporated by reference to Exhibit 10.1 to the March 31, 2016 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Amendment No. 9 to Federated Investors Tower Lease dated as of September 9, 2016 (incorporated by reference to Exhibit 10.1 to the September 30, 2016 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Amendment No. 1 to
Agreement by and among Federated Investment Management Company, Passport Research Ltd., The Jones Financial Companies, L.L.L.P. for itself and on behalf of Edward D. Jones & Co., L.P., and Passport Holdings LLC, dated January 27, 2017
(incorporated by reference to Exhibit 10.81 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (File No. 001-14818))
|
|
|
|
|
|
Employment Agreement, dated October 22, 1990, between Federated Securities Corp. and an executive officer (incorporated by reference to Exhibit 10.82 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (File No. 001-14818))
|
|
|
|
|
|
2016 Restricted Stock Award Agreement, dated June 15, 2016, by and between Federated Investors, Inc. and an executive officer (incorporated by reference to Exhibit 10.83 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (File No. 001-14818))
|
|
|
|
|
|
Form of Bonus Restricted Stock Program Award Agreement (incorporated by reference to Exhibit 10.84 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (File No. 001-14818))
|
|
|
|
|
|
The Third Amended and Restated Credit Agreement, dated as of June 5, 2017, by and among Federated Investors, Inc. certain subsidiaries as guarantors party thereto, the banks as lenders party thereto, and PNC Bank, National Association, PNC Capital Markets LLC, Citigroup Global Markets, Inc., Citibank, N.A. and TD Bank, N.A. (incorporated by reference to Exhibit 10.1 to the June 30, 2017 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Federated Investors, Inc. Stock Incentive Plan, as amended, as approved by shareholders on April 26, 2018 (incorporated by reference to Exhibit 10.1 to the March 31, 2018 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Shareholders' Agreement, dated July 2, 2018, among Hermes Fund Managers Limited, BT Pension Scheme Trustees Limited, in its capacity as trustee for and on behalf of the BT Pension Scheme, Federated Holdings (UK) II Limited, and Federated Investors, Inc. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated July 2, 2018 (File No. 001-14818))
|
|
|
|
|
|
Put and Call Option Deed, dated July 2, 2018, among BT Pension Scheme Trustees Limited, in its capacity as trustee for and on behalf of the BT Pension Scheme, Federated Holdings (UK) II Limited, and Federated Investors, Inc.(incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated July 2, 2018 (File No. 001-14818))
|
|
|
|
|
|
Amendment No. 1 to Third Amended and Restated Credit Agreement, dated July 1, 2018, by and among Federated Investors, Inc., each of the guarantors (as defined in the Third Amended and Restated Credit Agreement, the lenders (as defined in the Third Amended and Restated Credit Agreement, and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the lenders. (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K dated July 2, 2018 (File No. 001-14818))
|
|
|
|
|
|
UK Sub-Plan to the Federated Investors, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the September 30, 2018 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Form of Restricted Stock Award Agreement for UK Sub-Plan (incorporated by reference to Exhibit 10.2 to the September 30, 2018 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Amendment No. 2 to Third Amended and Restated Credit Agreement, dated October 26, 2018, by and among Federated Investors, Inc., each of the guarantors (as defined in the Third Amended and Restated Credit Agreement), the lenders (as defined in the Third Amended and Restated Credit Agreement), and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the lenders (incorporated by reference to Exhibit 10.3 to the September 30, 2018 Quarterly Report on Form 10-Q (File No. 001-14818))
|
|
|
|
|
|
Form of Bonus Restricted Stock Program Award Agreement for Awards to Employees in the United Kingdom (filed herewith)
|
|
|
|
|
|
Federated Investors, Inc. Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14.01 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-14818))
|
|
|
|
|
|
Federated Investors, Inc. Code of Ethics for Senior Financial Officers, as amended July 1, 2018 (filed herewith)
|
|
|
|
|
|
Subsidiaries of the Registrant (filed herewith)
|
|
|
|
|
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith)
|
|
|
|
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
|
101.INS
101.SH
101.CAL
101.DEF
101.LAB
101.PRE
|
|
The following XBRL documents are filed herewith:
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
FEDERATED INVESTORS, INC.
|
|
|
|
|
By:
|
/s/ J. Christopher Donahue
|
|
|
J. Christopher Donahue
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Date:
|
February 22, 2019
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ J. Christopher Donahue
|
|
President, Chief Executive Officer, Chairman
|
|
February 22, 2019
|
J. Christopher Donahue
|
|
and Director (Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Thomas R. Donahue
|
|
Chief Financial Officer and Director
|
|
February 22, 2019
|
Thomas R. Donahue
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Richard A. Novak
|
|
Principal Accounting Officer
|
|
February 22, 2019
|
Richard A. Novak
|
|
|
|
|
|
|
|
|
|
/s/ Joseph C. Bartolacci
|
|
Director
|
|
February 22, 2019
|
Joseph C. Bartolacci
|
|
|
|
|
|
|
|
|
|
/s/ Michael J. Farrell
|
|
Director
|
|
February 22, 2019
|
Michael J. Farrell
|
|
|
|
|
|
|
|
|
|
/s/ John B. Fisher
|
|
Director
|
|
February 22, 2019
|
John B. Fisher
|
|
|
|
|
|
|
|
|
|
/s/ Marie Milie Jones
|
|
Director
|
|
February 22, 2019
|
Marie Milie Jones
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
|
Form of Bonus Restricted Stock Program Award Agreement for Awards to Employees in the United Kingdom
|
|
|
|
|
|
Federated Investors, Inc. Code of Ethics for Senior Financial Officers, as amended July 1, 2018
|
|
|
|
|
|
Subsidiaries of the Registrant
|
|
|
|
|
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
1.
|
Between
|
2.
|
Purpose of Election
|
3.
|
Application
|
4.
|
Extent of Application
|
5.
|
Declaration
|
1.
|
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
2.
|
Full, fair, accurate, timely, and understandable disclosure in reports and documents that Federated files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by Federated (“Disclosure Documents”);
|
3.
|
Compliance with applicable governmental laws, rules and regulations (“Regulations”);
|
4.
|
The prompt internal reporting to the Deputy General Counsel or Chief Audit Executive, or member of the Internal Compliance Committee at Hermes Fund Managers Limited, which committee is also known as the Hermes Risk & Compliance Executive (including its subsidiaries, “Hermes”) (which consists of Hermes’ Strategic Risk and Compliance Director, and composed of, inter alia, the Head of Legal Services, Chief Operating Officer and Head of Internal Audit), (each a “Reporting Officer”) of violations of this Code (and the Internal Compliance Committee member will promptly report to the Deputy General Counsel or Chief Audit Executive at Federated Investors, Inc.), and
|
5.
|
Accountability for adherence to this Code.
|
•
|
the parties to and terms of the contract or transaction;
|
•
|
the relationship of the contract or transaction to the Covered Officer giving rise to the Conflict of Interest;
|
•
|
any conditions or procedures imposed to regulate the Conflict of Interest or safeguard Federated’s interest; and
|
•
|
any other information the Audit Committee requests.
|
1.
|
Disclosure Documents shall fully disclose all material information, in an understandable manner, as required by Regulations;
|
2.
|
Disclosure Documents shall be accurate and fairly comply with applicable Regulations; and
|
3.
|
Disclosure Documents shall be filed with, or otherwise submitted to, the SEC, if so required, within the time required by the SEC.
|
•
|
A reprimand,
|
•
|
Disgorgement of any profit or restitution of any loss,
|
•
|
Imposition of additional controls and procedures,
|
•
|
Suspension,
|
•
|
Termination as an officer of Federated; and
|
•
|
Any other measure that the Audit Committee may decide is appropriate under the circumstances.
|
|
|
/s/ Ernst & Young LLP
|
|
1.
|
I have reviewed this annual report on Form 10-K 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;
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c)
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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
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d)
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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
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5.
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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):
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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
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b)
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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.
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February 22, 2019
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By:
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/s/ J. Christopher Donahue
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J. Christopher Donahue
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President and
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|
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Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Federated Investors, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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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;
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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
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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.
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February 22, 2019
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|
By:
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/s/ Thomas R. Donahue
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|
|
|
|
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
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2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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February 22, 2019
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|
By:
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|
/s/ J. Christopher Donahue
|
|
|
|
|
J. Christopher Donahue
|
|
|
|
|
President and
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
February 22, 2019
|
|
By:
|
|
/s/ Thomas R. Donahue
|
|
|
|
|
Thomas R. Donahue
|
|
|
|
|
Chief Financial Officer
|