Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 20, 2015 | |
Entity Registrant Name | FEDERATED INVESTORS INC /PA/ | |
Entity Central Index Key | 1056288 | |
Trading Symbol | FII | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Amendment Flag | FALSE | |
Class A [Member] | ||
Entity Common Stock, Shares Outstanding | 9,000 | |
Class B [Member] | ||
Entity Common Stock, Shares Outstanding | 104,989,515 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets | ||
Cash and cash equivalents | $91,833 | $115,267 |
Investments—affiliates | 144,908 | 143,190 |
Investments—consolidated investment companies | 35,960 | 31,853 |
Investments—other | 6,929 | 7,028 |
Receivables, net of reserve of $14 and $34, respectively | 28,611 | 27,965 |
Prepaid expenses | 11,001 | 12,931 |
Other current assets | 3,649 | 3,821 |
Total current assets | 322,891 | 342,055 |
Long-Term Assets | ||
Goodwill | 658,837 | 658,837 |
Renewable investment advisory contracts | 68,970 | 68,970 |
Other intangible assets, net of accumulated amortization of $37,660 and $40,326, respectively | 5,593 | 6,040 |
Property and equipment, net of accumulated depreciation of $57,833 and $57,430, respectively | 37,354 | 38,638 |
Other long-term assets | 25,462 | 25,979 |
Total long-term assets | 796,216 | 798,464 |
Total assets | 1,119,107 | 1,140,519 |
Current Liabilities | ||
Short-term debt | 25,500 | 25,500 |
Accounts payable and accrued expenses | 39,215 | 34,930 |
Accrued compensation and benefits | 27,786 | 75,661 |
Other current liabilities | 21,845 | 13,230 |
Total current liabilities | 114,346 | 149,321 |
Long-Term Liabilities | ||
Long-term debt | 210,375 | 216,750 |
Long-term deferred tax liability, net | 149,371 | 140,849 |
Other long-term liabilities | 16,005 | 20,250 |
Total long-term liabilities | 375,751 | 377,849 |
Total liabilities | 490,097 | 527,170 |
Commitments and contingencies (Note (12)) | ||
TEMPORARY EQUITY | ||
Redeemable noncontrolling interest in subsidiaries | 8,582 | 3,697 |
PERMANENT EQUITY | ||
Retained earnings | 503,290 | 505,394 |
Treasury stock, at cost, 4,515,941 and 4,586,809 shares Class B common stock, respectively | -162,915 | -165,258 |
Accumulated other comprehensive loss, net of tax | -1,146 | -1,662 |
Total Federated Investors, Inc. shareholders' equity | 620,074 | 609,494 |
Nonredeemable noncontrolling interest in subsidiary | 354 | 158 |
Total permanent equity | 620,428 | 609,652 |
Total liabilities, temporary equity and permanent equity | 1,119,107 | 1,140,519 |
Class A [Member] | ||
PERMANENT EQUITY | ||
Common stock | 189 | 189 |
Class B [Member] | ||
PERMANENT EQUITY | ||
Common stock | $280,656 | $270,831 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Receivables, reserve | $14 | $34 |
Other intangible assets, accumulated amortization | 37,660 | 40,326 |
Property and equipment, accumulated depreciation | $57,833 | $57,430 |
Treasury stock, shares | 4,515,941 | 4,586,809 |
Class A [Member] | ||
Common stock, no par value | $0 | $0 |
Common stock, shares authorized | 20,000 | 20,000 |
Common stock, shares issued | 9,000 | 9,000 |
Common stock, shares outstanding | 9,000 | 9,000 |
Class B [Member] | ||
Common stock, no par value | $0 | $0 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 109,505,456 | 109,505,456 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Revenue | ||||
Investment advisory fees, net—affiliates | $122,035 | $112,437 | ||
Investment advisory fees, net—other | 24,524 | 22,656 | ||
Administrative service fees, net—affiliates | 53,017 | 54,727 | ||
Other service fees, net—affiliates | 18,720 | 17,542 | ||
Other service fees, net—other | 1,067 | 3,238 | ||
Other, net | 1,159 | 896 | ||
Total revenue | 220,522 | 211,496 | ||
Operating Expenses | ||||
Compensation and related | 76,498 | 71,759 | ||
Distribution | 53,495 | 51,197 | ||
Professional service fees | 7,882 | 8,381 | ||
Systems and communications | 6,870 | 6,404 | ||
Office and occupancy | 6,853 | 6,915 | ||
Advertising and promotional | 3,471 | 3,439 | ||
Travel and related | 2,759 | 2,861 | ||
Other | 3,656 | 3,895 | ||
Total operating expenses | 161,484 | 154,851 | ||
Operating income | 59,038 | 56,645 | ||
Nonoperating (Expenses) Income | ||||
Investment income, net | 1,144 | 1,700 | ||
(Loss) gain on securities, net | -254 | [1] | 1,913 | [1] |
Debt expense | -1,373 | -2,812 | ||
Other, net | -13 | -5 | ||
Total nonoperating (expenses) income, net | -496 | 796 | ||
Income before income taxes | 58,542 | 57,441 | ||
Income tax provision | 22,124 | 21,796 | ||
Net income including the noncontrolling interests in subsidiaries | 36,418 | 35,645 | ||
Less: Net income attributable to the noncontrolling interests in subsidiaries | 111 | 451 | ||
Net income | $36,307 | $35,194 | ||
Amounts Attributable to Federated Investors, Inc. | ||||
Earnings per common share—Basic and Diluted | $0.35 | [2] | $0.34 | [2] |
Cash dividends per share | $0.25 | $0.25 | ||
[1] | Amounts related to consolidated investment companies totaled ($0.3) million and $0.3 million for the three months ended March 31, 2015 and March 31, 2014, respectively. | |||
[2] | Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share. |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Net income including the noncontrolling interests in subsidiaries | $36,418 | $35,645 |
Permanent Equity | ||
Unrealized gain (loss) on interest rate swap | 42 | -79 |
Reclassification adjustment related to interest rate swap | 227 | 921 |
Unrealized gain on securities available for sale | 687 | 419 |
Reclassification adjustment related to securities available for sale | 0 | -932 |
Foreign currency items | -440 | 91 |
Other comprehensive income | 516 | 420 |
Comprehensive income including the noncontrolling interests in subsidiaries | 36,934 | 36,065 |
Less: Comprehensive (loss) income attributable to redeemable noncontrolling interest in subsidiaries | -85 | 481 |
Less: Comprehensive income (loss) attributable to nonredeemable noncontrolling interest in subsidiary | 196 | -30 |
Comprehensive income attributable to Federated Investors, Inc. | $36,823 | $35,614 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Equity (USD $) | Total | Common Stock [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss, Net of Tax [Member] | Total Shareholders' Equity [Member] | Nonredeemable Noncontrolling Interest in Subsidiary [Member] | Redeemable Noncontrolling Interest in Subsidiaries/Temporary Equity [Member] |
In Thousands | ||||||||
Balance at Dec. 31, 2013 | $566,344 | $295,958 | $1,022,608 | ($751,239) | ($1,208) | $566,119 | $225 | $15,517 |
Net income (loss) | 35,164 | 35,194 | 35,194 | -30 | 481 | |||
Other comprehensive income, net of tax | 420 | 420 | 420 | |||||
Subscriptions—redeemable noncontrolling interest holders | 0 | 2,049 | ||||||
Stock award activity | 7,779 | 7,299 | -13,155 | 13,635 | 7,779 | |||
Dividends declared/Distributions to noncontrolling interest in subsidiaries | -26,243 | -26,199 | -26,199 | -44 | -1,474 | |||
Purchase of treasury stock | -7,517 | -7,517 | -7,517 | |||||
Balance at Mar. 31, 2014 | 575,947 | 303,257 | 1,018,448 | -745,121 | -788 | 575,796 | 151 | 16,573 |
Balance at Dec. 31, 2014 | 609,652 | 271,020 | 505,394 | -165,258 | -1,662 | 609,494 | 158 | 3,697 |
Net income (loss) | 36,503 | 36,307 | 36,307 | 196 | -85 | |||
Other comprehensive income, net of tax | 516 | 516 | 516 | |||||
Subscriptions—redeemable noncontrolling interest holders | 0 | 5,785 | ||||||
Stock award activity | 9,907 | 9,825 | -12,209 | 12,291 | 9,907 | |||
Dividends declared/Distributions to noncontrolling interest in subsidiaries | -26,202 | -26,202 | -26,202 | -815 | ||||
Purchase of treasury stock | -9,948 | -9,948 | -9,948 | |||||
Balance at Mar. 31, 2015 | $620,428 | $280,845 | $503,290 | ($162,915) | ($1,146) | $620,074 | $354 | $8,582 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating Activities | ||
Net income including the noncontrolling interests in subsidiaries | $36,418 | $35,645 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||
Amortization of deferred sales commissions | 4,018 | 2,639 |
Depreciation and other amortization | 2,507 | 2,744 |
Share-based compensation expense | 6,901 | 6,317 |
Loss (gain) on disposal of assets | 551 | -1,626 |
Provision for deferred income taxes | 8,415 | 7,655 |
Net (purchases) sales of trading securities | -3,950 | 130 |
Deferred sales commissions paid | -4,448 | -3,477 |
Contingent deferred sales charges received | 549 | 585 |
Other changes in assets and liabilities: | ||
(Increase) decrease in receivables, net | -646 | 666 |
Decrease in prepaid expenses and other assets | 1,574 | 2,801 |
Decrease in accounts payable and accrued expenses | -46,854 | -46,046 |
Increase in other liabilities | 9,628 | 9,717 |
Net cash provided by operating activities | 14,663 | 17,750 |
Investing Activities | ||
Purchases of securities available for sale | -943 | -6,017 |
Cash paid for business acquisitions | 0 | -9,229 |
Proceeds from redemptions of securities avaliable for sale | 0 | 9,371 |
Cash paid for property and equipment | -1,008 | -1,212 |
Net cash used by investing activities | -1,951 | -7,087 |
Financing Activities | ||
Dividends paid | -26,202 | -26,199 |
Purchases of treasury stock | -10,276 | -8,709 |
Distributions to noncontrolling interest in subsidiaries | -815 | -1,518 |
Contributions from noncontrolling interest in subsidiaries | 5,785 | 2,049 |
Proceeds from shareholders for share-based compensation | 81 | 480 |
Excess tax benefits from share-based compensation | 1,656 | 1,007 |
Payments on debt | -6,375 | -10,625 |
Other financing activities | 0 | -16 |
Net cash used by financing activities | -36,146 | -43,531 |
Net decrease in cash and cash equivalents | -23,434 | -32,868 |
Cash and cash equivalents, beginning of period | 115,267 | 104,443 |
Cash and cash equivalents, end of period | $91,833 | $71,575 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Accounting [Abstract] | |
Basis of Accounting | Basis of Presentation |
The interim Consolidated Financial Statements of Federated Investors, Inc. and its consolidated subsidiaries (collectively, Federated) included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented. | |
In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements. | |
These financial statements should be read in conjunction with Federated’s Annual Report on Form 10-K for the year ended December 31, 2014. Certain items previously reported have been reclassified to conform with the current period’s presentation. |
Significant_Accounting_Policie
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies |
For a listing of Federated’s significant accounting policies, please refer to Federated’s Annual Report on Form 10-K for the year ended December 31, 2014. | |
Recent Accounting Pronouncements | |
(a) Revenue Recognition | |
On May 28, 2014, the FASB issued as final, Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) which supersedes virtually all existing revenue recognition guidance under GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016 and prohibits early adoption. The update allows for the use of either the retrospective or modified retrospective approach of adoption. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements. | |
(b) Consolidation | |
On February 18, 2015, the FASB issued as final, ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which affects reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The update is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The update allows for the use of either a full retrospective or a modified retrospective adoption approach. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements. | |
(c) Accounting for Fees Paid in a Cloud Computing Arrangement | |
On April 15, 2015, the FASB issued as final, ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. The update is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The update allows for the use of either a prospective or retrospective adoption approach. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements. |
Concentration_Risk
Concentration Risk | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Risks and Uncertainties [Abstract] | |||||||||
Concentration Risk | Concentration Risk | ||||||||
(a) Revenue Concentration by Asset Class | |||||||||
The following table summarizes the percentage of total revenue earned from Federated's asset classes for the periods presented: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Money market assets | 32 | % | 34 | % | |||||
Equity assets | 46 | % | 42 | % | |||||
Fixed-income assets | 22 | % | 23 | % | |||||
The change in the relative proportion of Federated's revenue attributable to money market assets for the first three months of 2015 as compared to the same period in 2014 was primarily the result of lower average money market assets, partially offset by decreases in fee waivers for certain money market funds to maintain positive or zero net yields. The change in the relative proportion of Federated's revenue attributable to equity assets for the first three months of 2015 as compared to the same period in 2014 was primarily the result of higher average equity assets due to net sales, and to a lesser extent, market appreciation. | |||||||||
Current Regulatory Environment | |||||||||
Federated and its investment management business are subject to extensive regulation in the U.S. and abroad. Federated and its products, such as the Federated sponsored funds (Federated Funds), and strategies are subject to federal securities laws, principally the Securities Act of 1933, the Securities Exchange Act of 1934 (1934 Act), the Investment Company Act of 1940 (1940 Act), the Investment Advisers Act of 1940, state laws regarding securities fraud and regulations promulgated by various regulatory authorities, as well as foreign laws and regulations promulgated by foreign regulatory authorities. In 2014, among other developments, the Securities and Exchange Commission (SEC) promulgated new money market reform rules (the 2014 Money Fund Rules). On April 22, 2015, the SEC published additional guidance regarding the 2014 Money Fund Rules in the form of 2014 Money Market Fund Reform Frequently Asked Questions and Valuation Guidance Frequently Asked Questions (the Money Fund Rules Guidance). Federated is analyzing the potential impact of these reforms, including the 2014 Money Fund Rules and Money Fund Rules Guidance, on its money market products and strategies, product structuring and development initiatives and business. Internationally, among other developments, European money market fund reforms, similar in some respects to the U.S. reforms, continued to be considered in 2015, but have not yet been finalized. Federated continues to reallocate certain resources from regulatory efforts and to dedicate internal and external resources to analyze the potential impact of the 2014 Money Fund Rules and Money Fund Rules Guidance, and certain related regulations, on Federated’s business, results of operations, financial condition and/or cash flows. Federated also continues to reallocate resources to planning and implementing product development and restructuring initiatives in response to the 2014 Money Fund Rules and Money Fund Rules Guidance. See Management's Discussion and Analysis for additional information. | |||||||||
Historically Low Short-Term Interest Rates | |||||||||
For several years, the Federal Open Market Committee of the Federal Reserve Board (FOMC) has kept the near-zero federal funds rate unchanged and short-term interest rates continued to be at all-time low levels. In certain money market funds, the gross yield earned by the fund is not sufficient to cover all of the fund's operating expenses due to these historically low short-term interest rates. Since the fourth quarter of 2008, Federated has voluntarily waived fees (either through fee waivers or reimbursements or assumptions of expenses) in order for certain money market funds to maintain positive or zero net yields. These fee waivers have been partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to share the impact of the waivers. | |||||||||
These voluntary fee waivers are calculated as a percentage of assets under management (AUM or managed assets) in certain money market funds and thus will vary depending upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, yields on instruments available for purchase by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of fee waivers necessary in order for certain funds to maintain positive or zero net yields. As an isolated variable, an increase in yields on instruments held by the money market funds will cause the pre-tax impact of fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market funds would cause the pre-tax impact of fee waivers to increase. | |||||||||
With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds as well as the mix among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower waivers to maintain positive or zero net yields. Conversely, the opposite would also be true. | |||||||||
The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the periods presented: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
(in millions) | 2015 | 2014 | |||||||
Revenue | $ | (94.1 | ) | $ | (106.7 | ) | |||
Less: Reduction in Distribution expense | 64.6 | 74.3 | |||||||
Operating income | (29.5 | ) | (32.4 | ) | |||||
Less: Reduction in Noncontrolling interests | 2.5 | 2.7 | |||||||
Pre-tax impact | $ | (27.0 | ) | $ | (29.7 | ) | |||
The negative pre-tax impact of fee waivers to maintain positive or zero net yields on certain money market funds decreased for the three-month period ended March 31, 2015 as compared to the same period in 2014 due primarily to a decrease in average money market assets and higher yields on instruments held by the money market funds. | |||||||||
Based on recent commentary from the FOMC in a March 18, 2015 press release, (i.e. "the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,") Federated is unable to predict when the FOMC will increase their target for the federal funds rate. As such, fee waivers to maintain positive or zero net yields on certain money market funds and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. Assuming asset levels and mix remain constant and based on recent market conditions, fee waivers for the second quarter of 2015 may result in a negative pre-tax impact on income of approximately $24 million. See Management's Discussion and Analysis for additional information on management's expectations regarding fee waivers. While the level of fee waivers are impacted by various factors, increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would likely reduce the negative pre-tax impact of these waivers. The actual amount of future fee waivers, the resulting negative impact of these waivers and Federated's ability to recover the net pre-tax impact of such waivers (that is, the ability to capture the pre-tax impact going forward, not re-capture previously waived amounts) could vary significantly from management's estimates as they are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, yields on instruments available for purchase by the money market funds, actions by the Board of Governors of the Federal Reserve System (Governors), the FOMC, the U.S. Treasury Department (Treasury Department), the SEC, the Financial Stability Oversight Council (FSOC) and other governmental entities, changes in fees and expenses of the money market funds, changes in the mix of money market customer assets, changes in money market product structures and offerings, demand for competing products, changes in the distribution fee arrangements with one or more third parties, Federated's willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by any one or more third parties. | |||||||||
A listing of Federated’s risk factors is included in Federated’s Annual Report on Form 10-K for the year ended December 31, 2014 under Item 1A - Risk Factors. | |||||||||
(b) Revenue Concentration by Investment Fund | |||||||||
A significant portion of Federated's total revenue for the three-month period ended March 31, 2015 was derived from services provided to a sponsored fund, the Federated Kaufmann Fund (11%). A significant and prolonged decline in the AUM in this fund could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to a related reduction to distribution expenses associated with this fund. |
Variable_Interest_Entities
Variable Interest Entities | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Variable Interest Entities [Abstract] | |||||||||
Variable Interest Entities | Variable Interest Entities | ||||||||
Federated is involved with various entities in the normal course of business that may be deemed to be voting rights entities (VREs) or variable interest entities (VIEs). In accordance with Federated’s consolidation accounting policy, Federated first determines whether the entity being evaluated is a VRE or a VIE. Once this determination is made, Federated proceeds with its evaluation of whether to consolidate the entity. The disclosures below represent the results of such evaluations pertaining to March 31, 2015 and December 31, 2014. | |||||||||
(a) Consolidated Variable Interest Entities | |||||||||
From time to time, Federated invests in investment companies that meet the definition of a VIE for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Most of Federated’s sponsored investment companies meet the definition of a VIE primarily due to their typical series fund structure in which the shareholders of each participating portfolio underlying the series fund generally lack the ability as an individual group to make decisions through voting rights regarding the board of directors/trustees of the fund. Federated’s investment in investment companies represents its maximum exposure to loss. Federated’s conclusion to consolidate an investment company may vary from period to period, most commonly as a result of changes in its percentage ownership interest resulting from changes in the number of shares held by either Federated or third parties. Given that the entities follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses for Federated. | |||||||||
The following table presents the balances related to the consolidated investment companies that were included on the Consolidated Balance Sheets as well as Federated's net interest in the investment companies for each period presented: | |||||||||
(in millions) | March 31, 2015 | December 31, 2014 | |||||||
Cash and cash equivalents | $ | 2.8 | $ | 1.9 | |||||
Investments—consolidated investment companies | 36 | 31.9 | |||||||
Receivables | 0.7 | 0.3 | |||||||
Less: Liabilities | 3.1 | 2.7 | |||||||
Less: Redeemable noncontrolling interest in subsidiaries | 8.6 | 3.7 | |||||||
Federated's net interest in consolidated investment companies | $ | 27.8 | $ | 27.7 | |||||
Federated's net interest in the consolidated investment companies of $27.8 million and $27.7 million at March 31, 2015 and December 31, 2014, respectively, represents the value of Federated's economic ownership interest in these sponsored investment companies. The assets of the consolidated investment companies are restricted for use by the respective investment company. The liabilities of the consolidated investment companies primarily represent investments sold short and operating liabilities of the entities. The liabilities are primarily classified as Other current liabilities on Federated’s Consolidated Balance Sheets. | |||||||||
Federated did not consolidate any new, or deconsolidate any, investment companies during the quarter ended March 31, 2015. | |||||||||
Neither creditors nor equity investors in the investment companies have any recourse to Federated’s general credit. In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) of Federated’s Annual Report on Form 10-K for the year ended December 31, 2014 for information regarding fee waivers). Federated has not provided financial support to any of these entities outside the ordinary course of business. | |||||||||
(b) Non-Consolidated Variable Interest Entities | |||||||||
Federated's involvement with certain investment companies that are deemed to be VIEs includes serving as the investment manager, or at times, holding a minority interest or both. Federated’s variable interest is not deemed to absorb the majority of the entity’s expected losses or receive the majority of the entity's expected residual returns. Therefore, Federated is not the primary beneficiary of these VIEs and has not consolidated these entities. | |||||||||
At March 31, 2015 and December 31, 2014, Federated’s investment and maximum risk of loss related to unconsolidated VIEs were entirely related to investment companies and totaled $226.5 million and $252.1 million, respectively. Of these amounts, $80.0 million and $107.3 million, respectively, represented investments in money market funds included in Cash and cash equivalents. The remaining $146.5 million and $144.8 million are primarily recorded in Investments—affiliates on the Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014, respectively. AUM for these unconsolidated investment companies totaled $264.8 billion and $273.5 billion at March 31, 2015 and December 31, 2014, respectively. Receivables from sponsored investment companies for advisory and other services totaled $13.2 million and $12.4 million at March 31, 2015 and December 31, 2014, respectively. | |||||||||
In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of these sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) of Federated’s Annual Report on Form 10-K for the year ended December 31, 2014 for information regarding fee waivers). Federated has not provided financial support to any of these entities outside the ordinary course of business. |
Investments
Investments | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||
Investments | Investments | ||||||||||||||||||||||||||||||||
Investments on the Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014 included available-for-sale and trading securities. At March 31, 2015 and December 31, 2014, Federated held investments totaling $144.9 million and $143.2 million, respectively, in fluctuating-value sponsored mutual funds that were classified as available-for-sale securities and were included in Investments—affiliates on the Consolidated Balance Sheets. | |||||||||||||||||||||||||||||||||
Available-for-sale securities were as follows: | |||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||||||||||||||||
Gross Unrealized | Estimated | Gross Unrealized | Estimated | ||||||||||||||||||||||||||||||
Fair | Fair | ||||||||||||||||||||||||||||||||
(in thousands) | Cost | Gains | (Losses) | Value | Cost | Gains | (Losses) | Value | |||||||||||||||||||||||||
Equity mutual funds | $ | 27,106 | $ | 1,422 | $ | (562 | ) | $ | 27,966 | $ | 26,887 | $ | 1,216 | $ | (737 | ) | $ | 27,366 | |||||||||||||||
Fixed-income mutual funds | 118,494 | 109 | (1,661 | ) | 116,942 | 118,081 | 110 | (2,367 | ) | 115,824 | |||||||||||||||||||||||
Total fluctuating-value mutual funds | $ | 145,600 | $ | 1,531 | $ | (2,223 | ) | $ | 144,908 | $ | 144,968 | $ | 1,326 | $ | (3,104 | ) | $ | 143,190 | |||||||||||||||
Federated’s trading securities totaled $42.9 million and $38.9 million at March 31, 2015 and December 31, 2014, respectively. Federated consolidates certain investment companies into its Consolidated Financial Statements as a result of Federated’s controlling financial interest in the companies (see Note (5)). All investments held by these investment companies, which primarily represented sponsored investment companies, were included in Investments—consolidated investment companies on Federated’s Consolidated Balance Sheets. Investments—other on the Consolidated Balance Sheets represented other trading investments held in Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) for which Federated is the beneficiary. | |||||||||||||||||||||||||||||||||
Federated’s trading securities as of March 31, 2015 and December 31, 2014, were primarily composed of stocks of large international and U.S. companies ($22.7 million and $21.3 million, respectively), investments in sponsored mutual funds ($10.5 million and $8.1 million, respectively) and domestic debt securities ($7.4 million and $7.5 million, respectively). | |||||||||||||||||||||||||||||||||
The following table presents gains and losses recognized in (Loss) gain on securities, net on the Consolidated Statements of Income in connection with investments and economic derivatives held by certain consolidated investment companies: | |||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||||||||||
(in thousands) | 2015 | 2014 | |||||||||||||||||||||||||||||||
Unrealized gain (loss) | |||||||||||||||||||||||||||||||||
Trading securities | $ | 456 | $ | 349 | |||||||||||||||||||||||||||||
Derivatives1 | (159 | ) | (62 | ) | |||||||||||||||||||||||||||||
Realized gains2 | |||||||||||||||||||||||||||||||||
Available-for-sale securities | 0 | 1,528 | |||||||||||||||||||||||||||||||
Trading securities | 189 | 953 | |||||||||||||||||||||||||||||||
Derivatives1 | 235 | 66 | |||||||||||||||||||||||||||||||
Realized losses2 | |||||||||||||||||||||||||||||||||
Trading securities | (613 | ) | (914 | ) | |||||||||||||||||||||||||||||
Derivatives1 | (362 | ) | (7 | ) | |||||||||||||||||||||||||||||
(Loss) gain on securities, net3 | $ | (254 | ) | $ | 1,913 | ||||||||||||||||||||||||||||
1 | Amounts related to the settlement of economic derivatives held by certain consolidated investment companies. | ||||||||||||||||||||||||||||||||
2 | Realized gains and losses are computed on a specific-identification basis. | ||||||||||||||||||||||||||||||||
3 | Amounts related to consolidated investment companies totaled ($0.3) million and $0.3 million for the three months ended March 31, 2015 and March 31, 2014, respectively. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements | ||||||||||||||||||||||||||||||||
Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are: | |||||||||||||||||||||||||||||||||
Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets may include equity and debt securities that are traded in an active exchange market, including shares of mutual funds. | |||||||||||||||||||||||||||||||||
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs. | |||||||||||||||||||||||||||||||||
Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active markets. | |||||||||||||||||||||||||||||||||
(a) Fair Value Measurements on a Recurring Basis | |||||||||||||||||||||||||||||||||
The following table presents fair value measurements for classes of Federated’s financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||||||||||||||||
Fair Value Measurements Using | Fair Value Measurements Using | ||||||||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 91,833 | $ | 0 | $ | 0 | $ | 91,833 | $ | 115,267 | $ | 0 | $ | 0 | $ | 115,267 | |||||||||||||||||
Available-for-sale equity securities | 120,373 | 24,535 | 0 | 144,908 | 119,435 | 23,755 | 0 | 143,190 | |||||||||||||||||||||||||
Trading securities—equity | 19,911 | 15,564 | 0 | 35,475 | 17,553 | 13,840 | 0 | 31,393 | |||||||||||||||||||||||||
Trading securities—debt | 0 | 7,414 | 0 | 7,414 | 0 | 7,488 | 0 | 7,488 | |||||||||||||||||||||||||
Other1 | 4 | 12 | 0 | 16 | 31 | 14 | 0 | 45 | |||||||||||||||||||||||||
Total financial assets | $ | 232,121 | $ | 47,525 | $ | 0 | $ | 279,646 | $ | 252,286 | $ | 45,097 | $ | 0 | $ | 297,383 | |||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||||||
Interest rate swap | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 425 | $ | 0 | $ | 425 | |||||||||||||||||
Acquisition-related future consideration liabilities | 0 | 0 | 1,909 | 1,909 | 0 | 0 | 1,909 | 1,909 | |||||||||||||||||||||||||
Other2 | 2,054 | 38 | 0 | 2,092 | 1,979 | 0 | 0 | 1,979 | |||||||||||||||||||||||||
Total financial liabilities | $ | 2,054 | $ | 38 | $ | 1,909 | $ | 4,001 | $ | 1,979 | $ | 425 | $ | 1,909 | $ | 4,313 | |||||||||||||||||
1 | Amounts include futures contracts and/or foreign currency forward contracts held within certain consolidated sponsored investment companies. | ||||||||||||||||||||||||||||||||
2 | Amounts include investments sold short, futures contracts and/or foreign currency forward contracts held within certain consolidated sponsored investment companies. | ||||||||||||||||||||||||||||||||
The following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis. Federated did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at March 31, 2015 or December 31, 2014. | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | |||||||||||||||||||||||||||||||||
Cash and cash equivalents include investments in money market funds and deposits with banks. Investments in Federated money market funds totaled $81.1 million and $107.6 million at March 31, 2015 and December 31, 2014, respectively. Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value (NAV) of the funds, and are classified within Level 1 of the valuation hierarchy. | |||||||||||||||||||||||||||||||||
Available-for-sale equity securities | |||||||||||||||||||||||||||||||||
Available-for-sale equity securities include investments in sponsored fluctuating-value mutual funds and are included in Investments—affiliates on the Consolidated Balance Sheets. For investments in mutual funds that are publicly available, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. For certain investments in mutual funds that are not publicly available but for which the NAV is calculated daily and for which there are no redemption restrictions, the securities are valued using NAV as a practical expedient and are classified as Level 2. There is no modeling or additional information needed to arrive at the fair values of any of these investments. | |||||||||||||||||||||||||||||||||
Trading securities—equity | |||||||||||||||||||||||||||||||||
Trading securities - equity primarily represent the equity securities held by consolidated sponsored investment companies (included in Investments—consolidated investment companies on the Consolidated Balance Sheets) as well as certain equity investments held in separate accounts for which Federated is the beneficiary (included in Investments—other on the Consolidated Balance Sheets). For the publicly traded equity securities available in an active market, whether domestic or foreign, the fair value of these securities is often classified as Level 1 when the fair value is based on unadjusted quoted market prices. From time to time, however, the fair value of certain equity securities traded principally in foreign markets and held by consolidated investment companies may be determined by third-party pricing services when a country's exchange is closed due to a holiday or when there has been a significant trend in the U.S. equity markets or in index futures trading between the time the foreign market closes and the pricing time of the consolidated investment company. The determination to use a third-party pricing service versus the unadjusted quoted market price is the cause for transfers between Level 1 and Level 2 for these securities. For the period between December 31, 2014 and March 31, 2015, there were $54 thousand of investments transferred from Level 2 to Level 1. For the period between December 31, 2013 and March 31, 2014, there were $4.8 million of investments transferred from Level 2 to Level 1. Transfers into and out of Levels 1 and 2 of the fair value hierarchy are reported at fair value as of the beginning of the period in which the transfers occur. | |||||||||||||||||||||||||||||||||
Trading securities—debt | |||||||||||||||||||||||||||||||||
Trading securities - debt primarily represent U.S. bonds held by consolidated sponsored investment companies. The fair value of these securities may include observable market data such as valuations provided by independent pricing services after considering factors such as the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions (Level 2). | |||||||||||||||||||||||||||||||||
Foreign currency forward contracts | |||||||||||||||||||||||||||||||||
The fair value of foreign currency forward contracts is primarily included in Receivables, net or Other current liabilities on the Consolidated Balance Sheets, representing contracts held by certain consolidated sponsored investment companies as part of their investment strategy. Pricing is determined by interpolating a value by utilizing the spot foreign exchange rate and forward points (based on the spot rate and currency interest rate differentials), which are all inputs that are observable in active markets (Level 2). | |||||||||||||||||||||||||||||||||
Futures contracts | |||||||||||||||||||||||||||||||||
The fair value of futures contracts is primarily included in Receivables, net or Other current liabilities on the Consolidated Balance Sheets, representing contracts held by certain consolidated sponsored investment companies as part of their investment strategy. Pricing is determined by using the value reported at settlement or closing price (Level 1). | |||||||||||||||||||||||||||||||||
Interest rate swap | |||||||||||||||||||||||||||||||||
The fair value of Federated's interest rate swap (the Swap), which expired on April 1, 2015, was included in Other current liabilities on the Consolidated Balance Sheets as of December 31, 2014. Pricing is determined based on a third-party, model-derived valuation in which all significant inputs are observable in active markets (Level 2), including the Eurodollar future rate and yields for three- and thirty-year Treasury securities. See Note (8) for additional information. | |||||||||||||||||||||||||||||||||
Acquisition-related future consideration liabilities | |||||||||||||||||||||||||||||||||
From time to time, pursuant to purchase and sale agreements entered into in connection with certain business combinations, Federated may be required to make future consideration payments if certain contingencies are met. See Note (12) for additional information regarding the nature and timing of these payments. In connection with these arrangements entered into after January 1, 2009, Federated records a liability as of the acquisition date representing the estimated fair value of future consideration payments. The liability is subsequently re-measured at fair value on a recurring basis with changes in fair value recorded in earnings. As of March 31, 2015, acquisition-related future consideration liabilities were recorded in Other current liabilities ($1.9 million) on the Consolidated Balance Sheets. Management estimated the fair value of future consideration payments based primarily upon expected future cash flows using an income approach valuation methodology with unobservable data inputs (Level 3). | |||||||||||||||||||||||||||||||||
There were no adjustments to the acquisition-related future consideration liabilities during the three months ended March 31, 2015 and March 31, 2014. | |||||||||||||||||||||||||||||||||
Investments sold short | |||||||||||||||||||||||||||||||||
The fair value of investments sold short within a consolidated sponsored investment company is included in Other current liabilities on the Consolidated Balance Sheets. The investments sold short primarily relate to domestic equity securities that are available in an active exchange market. The fair value of these investments sold short is based on unadjusted quoted market prices and is classified as Level 1. | |||||||||||||||||||||||||||||||||
(b) Fair Value Measurements on a Nonrecurring Basis | |||||||||||||||||||||||||||||||||
Federated did not hold any assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2015. | |||||||||||||||||||||||||||||||||
(c) Fair Value Measurements of Other Financial Instruments | |||||||||||||||||||||||||||||||||
The fair value of Federated’s debt is estimated by management based upon expected future cash flows utilizing a discounted cash flow methodology under the income approach. The fair value of the liability is estimated using observable market data (Level 2) in estimating inputs including the discount rate. Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value. |
Debt_and_Interest_Rate_Swap
Debt and Interest Rate Swap | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Debt And Interest Rate Swap [Abstract] | |||||||||||||
Debt and Interest Rate Swap | Debt and Interest Rate Swap | ||||||||||||
Debt consisted of the following: | |||||||||||||
Weighted-Average Interest Rates | |||||||||||||
March 31, | December 31, | ||||||||||||
(dollars in thousands) | 20151 | 20141 | March 31, 2015 | December 31, 2014 | |||||||||
Term Loan | 1.90% | 2.46% | $ | 235,875 | $ | 242,250 | |||||||
Less: Short-term debt | 25,500 | 25,500 | |||||||||||
Long-term debt | $ | 210,375 | $ | 216,750 | |||||||||
1 | The weighted-average interest rate was calculated based on a fixed-rate in connection with the interest rate Swap and a variable rate for the amount of the Term Loan not covered by the Swap. See below for additional information. | ||||||||||||
On June 24, 2014, Federated entered into an unsecured Second Amended and Restated Credit Agreement by and among Federated, certain of its subsidiaries as guarantors party thereto, a syndicate of 13 banks as Lenders party thereto led by PNC Bank, National Association as administrative agent, PNC Capital Markets LLC as sole bookrunner and joint lead arranger, Citigroup Global Markets, Inc. as joint lead arranger, Citibank, N.A. as syndication agent, and TD Bank, N.A. as documentation agent (Credit Agreement). The Credit Agreement amended and restated Federated's prior unsecured Amended and Restated Credit Agreement, which was dated June 10, 2011 and scheduled to mature on June 10, 2016 (Prior Credit Agreement). The borrowings under the Credit Agreement's term loan facility of $255 million (Term Loan) equaled the remaining principal balance from the Prior Credit Agreement's term loan facility. The Term Loan facility bears interest based on the London Interbank Offering Rate (LIBOR) plus a spread, currently 112.5 basis points. The Credit Agreement qualified for modification accounting treatment. | |||||||||||||
The Credit Agreement also refinanced the $200 million revolving credit facility under the Prior Credit Agreement. Federated had no borrowings outstanding on the previous revolving credit facility at the time of refinancing. As of March 31, 2015, the entire $200 million revolving credit facility was available for borrowings. Similar to the Prior Credit Agreement, certain subsidiaries entered into an Amended and Restated Continuing Agreement of Guaranty and Suretyship whereby these subsidiaries guarantee payment of all obligations incurred through the Credit Agreement. Federated pays an annual facility fee, currently 12.5 basis points. Borrowings under the Credit Agreement's revolving credit facility bear interest at LIBOR plus a spread, currently 100 basis points. | |||||||||||||
The Credit Agreement matures on June 24, 2019 and, with respect to the Term Loan, requires quarterly principal payments totaling $25.5 million in each of the years 2015, 2016 and 2017, $55.8 million in 2018 and $110.0 million in 2019. During the three months ended March 31, 2015, Federated repaid $6.4 million of its borrowings on the Term Loan. | |||||||||||||
During 2010, Federated entered into the Swap to hedge its interest rate risk associated with Federated's original term loan facility. Under the Swap, which expired on April 1, 2015, Federated received payments based on LIBOR plus a spread and made payments based on an annual fixed rate of 3.521% for the amount of the term loan covered by the Swap. For the quarter ended March 31, 2015, the Swap covered $63.8 million of the term loan. The remaining amount of the term loan not covered by the Swap bears interest at a spread, as previously noted, over LIBOR. | |||||||||||||
The Swap was accounted for as a cash flow hedge and had been determined to be highly effective. The Swap required monthly cash settlements of interest paid or received and were recorded as adjustments to Debt expense on the Consolidated Statements of Income. During the three-month periods ended March 31, 2015 and 2014, $0.4 million and $1.5 million, respectively, was charged to Debt expense on the Consolidated Statements of Income as a component of Federated's fixed interest rate associated with the Swap. | |||||||||||||
The Credit Agreement includes representations and warranties, affirmative and negative financial covenants, including an interest coverage ratio covenant and a leverage ratio covenant, reporting requirements and other non-financial covenants. Federated was in compliance with all covenants at and during the three months ended March 31, 2015 (see the Liquidity and Capital Resources section of Management's Discussion and Analysis for additional information). The Credit Agreement also has certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, deterioration in credit rating to below investment grade, notice of lien or assessment, and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed. |
ShareBased_Compensation_Plans
Share-Based Compensation Plans | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation Plans | Share-Based Compensation Plans |
(a) Restricted Stock | |
During the first three months of 2015, Federated awarded 373,137 shares of restricted Federated Class B common stock, all in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under Federated’s Stock Incentive Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, will generally vest over a three-year period. | |
Federated awarded 1,057,981 shares of restricted Federated Class B common stock under its Stock Incentive Plan during 2014. Of this amount, 426,931 shares were awarded in connection with the aforementioned bonus program in 2014. The remaining shares were awarded to certain key employees and generally vest over a ten-year period. | |
(b) Stock Options | |
During the three months ended March 31, 2015, there were 3,000 stock options exercised and no stock options granted. During the year ended December 31, 2014, there were 6,000 stock options exercised and no stock options granted. | |
(c) Non-Management Director Stock Award | |
There were no shares of Federated Class B common stock awarded to non-management directors during the first quarter of 2015. Federated awarded 5,100 shares of Federated Class B common stock to non-management directors during 2014. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2015 | |
Equity [Abstract] | |
Equity | Equity |
During 2008, the board of directors authorized a share repurchase program that allows Federated to buy back up to 5 million shares of Class B common stock with no stated expiration date for the buy back program. In February 2015, the board of directors authorized an additional share repurchase program that allows Federated to buy back up to 4 million additional shares of Federated Class B common stock with no stated expiration date. These programs authorize executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities. During the first three months of 2015, Federated repurchased 0.3 million shares of Class B common stock for $9.9 million, the majority of which were repurchased in the open market. The remaining repurchased shares represent restricted stock forfeited from employees and are not counted against the board-approved share repurchase program. At March 31, 2015, 4.1 million shares remained available to be purchased under Federated's buyback programs. |
Earnings_Per_Share_Attributabl
Earnings Per Share Attributable to Federated Investors, Inc. Shareholders | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Earnings Per Share Attributable to Federated Investors, Inc. Shareholders | Earnings Per Share Attributable to Federated Investors, Inc. Shareholders | ||||||||
The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
(in thousands, except per share data) | 2015 | 2014 | |||||||
Numerator – Basic and Diluted | |||||||||
Net income attributable to Federated Investors, Inc. | $ | 36,307 | $ | 35,194 | |||||
Less: Total income available to participating unvested restricted shareholders1 | (1,478 | ) | (1,387 | ) | |||||
Total net income attributable to Federated Common Stock2 | $ | 34,829 | $ | 33,807 | |||||
Denominator | |||||||||
Basic weighted-average common shares outstanding | 100,641 | 100,725 | |||||||
Dilutive potential shares from stock options | 1 | 2 | |||||||
Diluted weighted-average common shares outstanding | 100,642 | 100,727 | |||||||
Earnings per share | |||||||||
Net income attributable to Federated Common Stock – Basic and Diluted2 | $ | 0.35 | $ | 0.34 | |||||
1 | Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings. | ||||||||
2 | Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
(a) Contractual | |
In 2010, Federated acquired the money market management business of SunTrust Banks, Inc. (SunTrust Acquisition). As part of the SunTrust Acquisition, Federated is required to make annual contingent purchase price payments in the fourth quarters of each of the five years, as well as final stub-period payments, following the acquisition date. The contingent purchase price payments are calculated as a percentage of revenue less distribution expenses directly attributed to certain eligible assets. The first four contingent purchase price payments of $5.0 million, $4.2 million, $3.8 million and $2.1 million, were paid in the fourth quarters of 2011, 2012, 2013 and 2014, respectively. At March 31, 2015, management estimated remaining contingent payments could total approximately $1 million over the one year that remains; however, the actual amount of the contingent payments will vary based on asset levels and related net revenues and is not limited by any maximum amount. A wide range of outcomes for the actual payments is possible due to the extent of reasonably possible flow-rate volatility for the respective AUM. As of March 31, 2015, a liability of $1.2 million representing the estimated fair value of future consideration payments, which could be paid through 2016, was recorded in Other current liabilities (see Note (7) for a discussion regarding the valuation methodology). This liability is re-measured at each reporting date with changes in the fair value recognized in Operating Expenses - Other on the Consolidated Statements of Income. | |
In 2008, Federated completed the acquisition of certain assets of Clover Capital Management, Inc. (Clover Capital Acquisition). As part of the Clover Capital Acquisition, Federated was required to make contingent purchase price payments based upon growth in revenues over the five-year period following the acquisition date. The contingent purchase price payments were recorded as additional goodwill at the time the contingency was resolved. The applicable growth targets were not met for the first two anniversary years, and as such, no related payments were made. In the first quarters of 2012, 2013 and 2014, $5.9 million, $3.4 million and $9.2 million were paid with regard to the third, fourth and final anniversary years, respectively. | |
Pursuant to other acquisition agreements, Federated has made and may be required to make additional purchase price payments based on a percentage of revenue less certain direct expenses attributable to eligible AUM. The payments could occur through 2015. As of March 31, 2015, liabilities totaling $0.7 million, representing the estimated fair value of future consideration payments, were recorded in Other current liabilities (see Note (7) for a discussion regarding the valuation methodology). The liabilities are re-measured at each reporting date with changes in the fair value recognized in Operating Expenses - Other on the Consolidated Statements of Income. | |
Federated may be required to make certain incentive compensation-related payments through 2018 in connection with various significant employment arrangements. As of March 31, 2015, Federated may be required to pay up to $28 million over the remaining terms of the arrangements based on the achievement of performance goals. In addition, certain employees have incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund (the Fund Bonus). Based on asset levels at March 31, 2015, approximately $3 million would be paid in 2016 as a Fund Bonus payment. Management is unable to reasonably estimate a range of possible bonus payments for the Fund Bonus for subsequent years due to the wide-range of possible growth-rate scenarios. | |
(b) Guarantees and Indemnifications | |
On an intercompany basis, various wholly owned subsidiaries of Federated guarantee certain financial obligations of Federated Investors, Inc., and Federated Investors, Inc. guarantees certain financial and performance-related obligations of various wholly owned subsidiaries. In addition, in the normal course of business, Federated has entered into contracts that provide a variety of indemnifications. Typically, obligations to indemnify third parties arise in the context of contracts entered into by Federated, under which Federated agrees to hold the other party harmless against losses arising out of the contract, provided the other party's actions are not deemed to have breached an agreed upon standard of care. In each of these circumstances, payment by Federated is contingent on the other party making a claim for indemnity, subject to Federated's right to challenge the other party's claim. Further, Federated’s obligations under these agreements may be limited in terms of time and/or amount. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of Federated’s obligations and the unique facts and circumstances involved in each particular agreement. Management believes that if Federated were to incur a loss in any of these matters, such loss would not have a material effect on its business, financial position, results of operations or cash flows. | |
(c) Legal Proceedings | |
CCM Rochester, Inc. (CCM). In December 2008, Federated completed the acquisition of certain assets of CCM (f/k/a Clover Capital Management, Inc.), an investment manager that specialized in value investing. The purchase was consummated in the midst of the financial crisis. The payment terms under the Asset Purchase Agreement, dated September 12, 2008 (APA), included an upfront payment of $30 million paid by Federated Investors, Inc. at closing and the opportunity for contingent payments over a five year earn-out period following the acquisition date based on the growth in revenue associated with the acquired assets. Under the APA, in order to reach the maximum contingent payments totaling approximately $55 million, the revenue associated with the acquired assets would have had to have grown at a 30% compound annual growth rate. Under the APA, Federated Investors, Inc. paid CCM an additional $18 million, in the aggregate, in contingent payments for the last three years of the earn-out period. | |
On May 20, 2014, shortly after the final contingent payment was paid to CCM, Federated Investors, Inc. was named as the defendant in a case filed by CCM in the U.S. District Court for the Southern District of New York (CCM Rochester, Inc., f/k/a Clover Capital Management, Inc. v. Federated Investors, Inc., Case No. 14-cv-3600 (S.D.N.Y.)). In this lawsuit, CCM has asserted claims against Federated Investors, Inc. for fraudulent inducement, breach of contract (including CCM’s allegations relating to implied duties of best efforts and good faith and fair dealing) and indemnification based on Federated’s alleged failure to effectively market and distribute the investment products associated with the acquired assets and to pay CCM the maximum contingent payments. CCM seeks approximately $37 million in alleged damages plus attorneys’ fees from Federated Investors, Inc. | |
Federated filed a Motion to Dismiss the lawsuit on the basis that, among other reasons, CCM’s claims are implausible, contrary to the express terms of the APA and contrary to settled law. On November 25, 2014, the Court issued an order granting Federated's Motion to Dismiss in part and denying Federated's Motion to Dismiss in part. The Court dismissed CCM's claim for breach of contract and for breach of an implied obligation to use best efforts. Under the strict standards applicable to Motions to Dismiss that require the Court to accept the allegations of the Complaint as true and draw all inferences in CCM's favor, the Court concluded that CCM's "claim of fraud is at the edge of plausibility" but specifically noted that "[w]hether CCM can successfully prove facts necessary to support that artfully-pled theory remains to be seen." | |
Federated continues to believe that CCM’s claims are meritless and intends to continue to vigorously defend this lawsuit as it proceeds through discovery and summary judgment. Fact discovery was ongoing as of March 31, 2015. Federated continues to believe that at all times it acted in good faith and complied with its contractual obligations contained in the APA. As of March 31, 2015, Federated believes a material loss related to this lawsuit is remote, and as such, does not believe this pending lawsuit is material to Federated or its consolidated financial statements. Based on this assessment of the status and nature of CCM's claims, and the current stage of the lawsuit, no loss is estimable. | |
Other Litigation. Federated also has claims asserted and threatened against it in the ordinary course of business. As of March 31, 2015, Federated does not believe that a material loss related to these claims is reasonably possible. | |
See Item 1A - Risk Factors included in Federated's Annual Report on Form 10-K for the year ended December 31, 2014 for additional information regarding risks related to claims asserted or threatened against Federated. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive (Loss) Income Attributable to Federated Investors, Inc. Shareholders | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||
Accumulated Other Comprehensive (Loss) Income attributable to Federated Investors, Inc. Shareholders | Accumulated Other Comprehensive (Loss) Income Attributable to Federated Investors, Inc. Shareholders | |||||||||||||||
The components of Accumulated other comprehensive loss, net of tax attributable to Federated shareholders are as follows: | ||||||||||||||||
(in thousands) | Unrealized Loss | Unrealized | Foreign Currency | Total | ||||||||||||
on Interest Rate Swap1 | Gain (Loss) on Securities | Translation Gain (Loss) | ||||||||||||||
Available for | ||||||||||||||||
Sale2 | ||||||||||||||||
Balance at December 31, 2013 | $ | (3,185 | ) | $ | 1,586 | $ | 391 | $ | (1,208 | ) | ||||||
Other comprehensive (loss) income before reclassifications and tax | (127 | ) | 688 | 139 | 700 | |||||||||||
Tax impact | 48 | (269 | ) | (48 | ) | (269 | ) | |||||||||
Reclassification adjustments, before tax | 1,481 | (1,529 | ) | 0 | (48 | ) | ||||||||||
Tax impact | (560 | ) | 597 | 0 | 37 | |||||||||||
Net current-period other comprehensive income (loss) | 842 | (513 | ) | 91 | 420 | |||||||||||
Balance at March 31, 2014 | $ | (2,343 | ) | $ | 1,073 | $ | 482 | $ | (788 | ) | ||||||
Balance at December 31, 2014 | $ | (269 | ) | $ | (1,126 | ) | $ | (267 | ) | $ | (1,662 | ) | ||||
Other comprehensive income (loss) before reclassifications and tax | 67 | 1,086 | (677 | ) | 476 | |||||||||||
Tax impact | (25 | ) | (399 | ) | 237 | (187 | ) | |||||||||
Reclassification adjustments, before tax | 358 | 0 | 0 | 358 | ||||||||||||
Tax impact | (131 | ) | 0 | 0 | (131 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 269 | 687 | (440 | ) | 516 | |||||||||||
Balance at March 31, 2015 | $ | 0 | $ | (439 | ) | $ | (707 | ) | $ | (1,146 | ) | |||||
1 | Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Debt expense on the Consolidated Statements of Income. | |||||||||||||||
2 | Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in (Loss) gain on securities, net on the Consolidated Statements of Income. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
On April 23, 2015, the board of directors declared a $0.25 per share dividend to shareholders of record as of May 8, 2015 to be paid on May 15, 2015. |
Significant_Accounting_Policie1
Significant Accounting Policies Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Significant Accounting Policies [Abstract] | |
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | Consolidation |
On February 18, 2015, the FASB issued as final, ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which affects reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The update is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The update allows for the use of either a full retrospective or a modified retrospective adoption approach. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements. | |
Accounting for Fees Paid in a Cloud Computing Arrangement | |
On April 15, 2015, the FASB issued as final, ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. The update is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The update allows for the use of either a prospective or retrospective adoption approach. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements. | |
Revenue Recognition | |
On May 28, 2014, the FASB issued as final, Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) which supersedes virtually all existing revenue recognition guidance under GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016 and prohibits early adoption. The update allows for the use of either the retrospective or modified retrospective approach of adoption. Management is currently evaluating the available transition methods and the potential impact of adoption on Federated's Consolidated Financial Statements. |
Concentration_Risk_Tables
Concentration Risk (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Risks and Uncertainties [Abstract] | |||||||||
Schedule of Revenue Concentration | The following table summarizes the percentage of total revenue earned from Federated's asset classes for the periods presented: | ||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Money market assets | 32 | % | 34 | % | |||||
Equity assets | 46 | % | 42 | % | |||||
Fixed-income assets | 22 | % | 23 | % | |||||
Voluntary Fee Waivers | The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the periods presented: | ||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
(in millions) | 2015 | 2014 | |||||||
Revenue | $ | (94.1 | ) | $ | (106.7 | ) | |||
Less: Reduction in Distribution expense | 64.6 | 74.3 | |||||||
Operating income | (29.5 | ) | (32.4 | ) | |||||
Less: Reduction in Noncontrolling interests | 2.5 | 2.7 | |||||||
Pre-tax impact | $ | (27.0 | ) | $ | (29.7 | ) |
Variable_Interest_Entities_Tab
Variable Interest Entities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Variable Interest Entities [Abstract] | |||||||||
Consolidated VIEs | The following table presents the balances related to the consolidated investment companies that were included on the Consolidated Balance Sheets as well as Federated's net interest in the investment companies for each period presented: | ||||||||
(in millions) | March 31, 2015 | December 31, 2014 | |||||||
Cash and cash equivalents | $ | 2.8 | $ | 1.9 | |||||
Investments—consolidated investment companies | 36 | 31.9 | |||||||
Receivables | 0.7 | 0.3 | |||||||
Less: Liabilities | 3.1 | 2.7 | |||||||
Less: Redeemable noncontrolling interest in subsidiaries | 8.6 | 3.7 | |||||||
Federated's net interest in consolidated investment companies | $ | 27.8 | $ | 27.7 | |||||
Investments_Tables
Investments (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||
Available-For-Sale Securities | Available-for-sale securities were as follows: | ||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||||||||||||||||
Gross Unrealized | Estimated | Gross Unrealized | Estimated | ||||||||||||||||||||||||||||||
Fair | Fair | ||||||||||||||||||||||||||||||||
(in thousands) | Cost | Gains | (Losses) | Value | Cost | Gains | (Losses) | Value | |||||||||||||||||||||||||
Equity mutual funds | $ | 27,106 | $ | 1,422 | $ | (562 | ) | $ | 27,966 | $ | 26,887 | $ | 1,216 | $ | (737 | ) | $ | 27,366 | |||||||||||||||
Fixed-income mutual funds | 118,494 | 109 | (1,661 | ) | 116,942 | 118,081 | 110 | (2,367 | ) | 115,824 | |||||||||||||||||||||||
Total fluctuating-value mutual funds | $ | 145,600 | $ | 1,531 | $ | (2,223 | ) | $ | 144,908 | $ | 144,968 | $ | 1,326 | $ | (3,104 | ) | $ | 143,190 | |||||||||||||||
Gains and losses on investments | The following table presents gains and losses recognized in (Loss) gain on securities, net on the Consolidated Statements of Income in connection with investments and economic derivatives held by certain consolidated investment companies: | ||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||||||||||
(in thousands) | 2015 | 2014 | |||||||||||||||||||||||||||||||
Unrealized gain (loss) | |||||||||||||||||||||||||||||||||
Trading securities | $ | 456 | $ | 349 | |||||||||||||||||||||||||||||
Derivatives1 | (159 | ) | (62 | ) | |||||||||||||||||||||||||||||
Realized gains2 | |||||||||||||||||||||||||||||||||
Available-for-sale securities | 0 | 1,528 | |||||||||||||||||||||||||||||||
Trading securities | 189 | 953 | |||||||||||||||||||||||||||||||
Derivatives1 | 235 | 66 | |||||||||||||||||||||||||||||||
Realized losses2 | |||||||||||||||||||||||||||||||||
Trading securities | (613 | ) | (914 | ) | |||||||||||||||||||||||||||||
Derivatives1 | (362 | ) | (7 | ) | |||||||||||||||||||||||||||||
(Loss) gain on securities, net3 | $ | (254 | ) | $ | 1,913 | ||||||||||||||||||||||||||||
1 | Amounts related to the settlement of economic derivatives held by certain consolidated investment companies. | ||||||||||||||||||||||||||||||||
2 | Realized gains and losses are computed on a specific-identification basis. | ||||||||||||||||||||||||||||||||
3 | Amounts related to consolidated investment companies totaled ($0.3) million and $0.3 million for the three months ended March 31, 2015 and March 31, 2014, respectively. |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||
Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents fair value measurements for classes of Federated’s financial assets and liabilities measured at fair value on a recurring basis: | ||||||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||||||||||||||||
Fair Value Measurements Using | Fair Value Measurements Using | ||||||||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 91,833 | $ | 0 | $ | 0 | $ | 91,833 | $ | 115,267 | $ | 0 | $ | 0 | $ | 115,267 | |||||||||||||||||
Available-for-sale equity securities | 120,373 | 24,535 | 0 | 144,908 | 119,435 | 23,755 | 0 | 143,190 | |||||||||||||||||||||||||
Trading securities—equity | 19,911 | 15,564 | 0 | 35,475 | 17,553 | 13,840 | 0 | 31,393 | |||||||||||||||||||||||||
Trading securities—debt | 0 | 7,414 | 0 | 7,414 | 0 | 7,488 | 0 | 7,488 | |||||||||||||||||||||||||
Other1 | 4 | 12 | 0 | 16 | 31 | 14 | 0 | 45 | |||||||||||||||||||||||||
Total financial assets | $ | 232,121 | $ | 47,525 | $ | 0 | $ | 279,646 | $ | 252,286 | $ | 45,097 | $ | 0 | $ | 297,383 | |||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||||||
Interest rate swap | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 425 | $ | 0 | $ | 425 | |||||||||||||||||
Acquisition-related future consideration liabilities | 0 | 0 | 1,909 | 1,909 | 0 | 0 | 1,909 | 1,909 | |||||||||||||||||||||||||
Other2 | 2,054 | 38 | 0 | 2,092 | 1,979 | 0 | 0 | 1,979 | |||||||||||||||||||||||||
Total financial liabilities | $ | 2,054 | $ | 38 | $ | 1,909 | $ | 4,001 | $ | 1,979 | $ | 425 | $ | 1,909 | $ | 4,313 | |||||||||||||||||
1 | Amounts include futures contracts and/or foreign currency forward contracts held within certain consolidated sponsored investment companies. | ||||||||||||||||||||||||||||||||
2 | Amounts include investments sold short, futures contracts and/or foreign currency forward contracts held within certain consolidated sponsored investment companies. |
Debt_and_Interest_Rate_Swap_Ta
Debt and Interest Rate Swap (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Debt And Interest Rate Swap [Abstract] | |||||||||||||
Debt | Debt consisted of the following: | ||||||||||||
Weighted-Average Interest Rates | |||||||||||||
March 31, | December 31, | ||||||||||||
(dollars in thousands) | 20151 | 20141 | March 31, 2015 | December 31, 2014 | |||||||||
Term Loan | 1.90% | 2.46% | $ | 235,875 | $ | 242,250 | |||||||
Less: Short-term debt | 25,500 | 25,500 | |||||||||||
Long-term debt | $ | 210,375 | $ | 216,750 | |||||||||
1 | The weighted-average interest rate was calculated based on a fixed-rate in connection with the interest rate Swap and a variable rate for the amount of the Term Loan not covered by the Swap. See below for additional information. |
Earnings_Per_Share_Attributabl1
Earnings Per Share Attributable to Federated Investors, Inc. Shareholders (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated: | ||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
(in thousands, except per share data) | 2015 | 2014 | |||||||
Numerator – Basic and Diluted | |||||||||
Net income attributable to Federated Investors, Inc. | $ | 36,307 | $ | 35,194 | |||||
Less: Total income available to participating unvested restricted shareholders1 | (1,478 | ) | (1,387 | ) | |||||
Total net income attributable to Federated Common Stock2 | $ | 34,829 | $ | 33,807 | |||||
Denominator | |||||||||
Basic weighted-average common shares outstanding | 100,641 | 100,725 | |||||||
Dilutive potential shares from stock options | 1 | 2 | |||||||
Diluted weighted-average common shares outstanding | 100,642 | 100,727 | |||||||
Earnings per share | |||||||||
Net income attributable to Federated Common Stock – Basic and Diluted2 | $ | 0.35 | $ | 0.34 | |||||
1 | Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings. | ||||||||
2 | Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share. |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Investors, Inc. Shareholders (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of Accumulated other comprehensive loss, net of tax attributable to Federated shareholders are as follows: | |||||||||||||||
(in thousands) | Unrealized Loss | Unrealized | Foreign Currency | Total | ||||||||||||
on Interest Rate Swap1 | Gain (Loss) on Securities | Translation Gain (Loss) | ||||||||||||||
Available for | ||||||||||||||||
Sale2 | ||||||||||||||||
Balance at December 31, 2013 | $ | (3,185 | ) | $ | 1,586 | $ | 391 | $ | (1,208 | ) | ||||||
Other comprehensive (loss) income before reclassifications and tax | (127 | ) | 688 | 139 | 700 | |||||||||||
Tax impact | 48 | (269 | ) | (48 | ) | (269 | ) | |||||||||
Reclassification adjustments, before tax | 1,481 | (1,529 | ) | 0 | (48 | ) | ||||||||||
Tax impact | (560 | ) | 597 | 0 | 37 | |||||||||||
Net current-period other comprehensive income (loss) | 842 | (513 | ) | 91 | 420 | |||||||||||
Balance at March 31, 2014 | $ | (2,343 | ) | $ | 1,073 | $ | 482 | $ | (788 | ) | ||||||
Balance at December 31, 2014 | $ | (269 | ) | $ | (1,126 | ) | $ | (267 | ) | $ | (1,662 | ) | ||||
Other comprehensive income (loss) before reclassifications and tax | 67 | 1,086 | (677 | ) | 476 | |||||||||||
Tax impact | (25 | ) | (399 | ) | 237 | (187 | ) | |||||||||
Reclassification adjustments, before tax | 358 | 0 | 0 | 358 | ||||||||||||
Tax impact | (131 | ) | 0 | 0 | (131 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 269 | 687 | (440 | ) | 516 | |||||||||||
Balance at March 31, 2015 | $ | 0 | $ | (439 | ) | $ | (707 | ) | $ | (1,146 | ) | |||||
1 | Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Debt expense on the Consolidated Statements of Income. | |||||||||||||||
2 | Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in (Loss) gain on securities, net on the Consolidated Statements of Income. |
Concentration_Risk_Narrative_D
Concentration Risk Narrative (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Jun. 30, 2015 | Mar. 31, 2015 |
Scenario, Forecast [Member] | ||
Estimated Net Impact On Future Pre-Tax Income | $24 | |
Federated Kaufmann Fund [Member] | Revenue Concentration By Investment Fund [Member] | ||
Concentration Risk, Percentage | 11.00% |
Concentration_Risk_Schedule_of
Concentration Risk Schedule of Revenue Concentration (Details) (Revenue Concentration by Asset Class [Member]) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Money market assets [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 32.00% | 34.00% |
Equity assets [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 46.00% | 42.00% |
Fixed-income assets [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 22.00% | 23.00% |
Concentration_Risk_Voluntary_F
Concentration Risk Voluntary Fee Waivers (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Concentration Risk [Line Items] | ||
Revenue | ($94.10) | ($106.70) |
Less: Reduction in Distribution expense | 64.6 | 74.3 |
Operating income | -29.5 | -32.4 |
Less: Reduction in Noncontrolling interests | 2.5 | 2.7 |
Pre-tax impact | ($27) | ($29.70) |
Variable_Interest_Entities_Nar
Variable Interest Entities Narrative (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Variable Interest Entities Line Items] | ||
Federated's net interest in consolidated investment companies | $27.80 | $27.70 |
Accounts Receivable from sponsored investment companies | 13.2 | 12.4 |
Non-Consolidated Variable Interest Entity [Member] | ||
Variable Interest Entities Line Items] | ||
Carrying value of investment of nonconsolidated VIEs | 226.5 | 252.1 |
Unconsolidated VIE maximum risk of loss | 226.5 | 252.1 |
Investments in money market products included in cash and cash equivalents | 80 | 107.3 |
Investments in fund products included in investments—affiliates | 146.5 | 144.8 |
Unconsolidated VIE assets | $264,800 | $273,500 |
Variable_Interest_Entities_Con
Variable Interest Entities Consolidated Investment Companies (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Variable Interest Entity [Line Items] | ||
Investments—consolidated investment companies | $35,960,000 | $31,853,000 |
Less: Liabilities | 3,100,000 | 2,700,000 |
Less: Redeemable noncontrolling interest in subsidiaries | 8,582,000 | 3,697,000 |
Federated's net interest in consolidated investment companies | 27,800,000 | 27,700,000 |
Cash and Cash Equivalents [Member] | ||
Variable Interest Entity [Line Items] | ||
Consolidated assets | 2,800,000 | 1,900,000 |
Receivables [Member] | ||
Variable Interest Entity [Line Items] | ||
Consolidated assets | $700,000 | $300,000 |
Investments_Narrative_Details
Investments Narrative (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule of Investments [Line Items] | ||
Available-for-sale equity securities | $144,908,000 | $143,190,000 |
Trading Securities | 42,900,000 | 38,900,000 |
Stocks of large international and U.S. companies [Member] | ||
Schedule of Investments [Line Items] | ||
Trading Securities | 22,700,000 | 21,300,000 |
InvestmentsinMutualFunds [Member] | ||
Schedule of Investments [Line Items] | ||
Trading Securities | 10,500,000 | 8,100,000 |
Corporate Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Trading Securities | $7,400,000 | $7,500,000 |
Investments_AvailableForSale_S
Investments Available-For-Sale Securities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | $145,600 | $144,968 |
Gross unrealized gains | 1,531 | 1,326 |
Gross unrealized losses | -2,223 | -3,104 |
Available-for-sale equity securities | 144,908 | 143,190 |
Equity Mutual Funds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 27,106 | 26,887 |
Gross unrealized gains | 1,422 | 1,216 |
Gross unrealized losses | -562 | -737 |
Available-for-sale equity securities | 27,966 | 27,366 |
Fixed-Income Mutual Funds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 118,494 | 118,081 |
Gross unrealized gains | 109 | 110 |
Gross unrealized losses | -1,661 | -2,367 |
Available-for-sale equity securities | $116,942 | $115,824 |
Investments_Loss_Gain_on_Secur
Investments (Loss) Gain on Securities, Net of Investment Income (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Gain (Loss) on Investments [Line Items] | ||||
(Loss) gain on securities, net | ($254) | [1] | $1,913 | [1] |
Consolidated Investment Companies [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
(Loss) gain on securities, net | -300 | 300 | ||
Trading Securities [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Unrealized gain on trading securities | 456 | 349 | ||
Realized gains | 189 | [2] | 953 | [2] |
Realized losses | -613 | [2] | -914 | [2] |
Derivatives [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Unrealized loss on derivatives | -159 | [3] | -62 | [3] |
Realized gains | 235 | [2],[3] | 66 | [2],[3] |
Realized losses | -362 | [2],[3] | -7 | [2],[3] |
Available-for-sale Securities [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Realized gains | $0 | [2] | $1,528 | [2] |
[1] | Amounts related to consolidated investment companies totaled ($0.3) million and $0.3 million for the three months ended March 31, 2015 and March 31, 2014, respectively. | |||
[2] | Realized gains and losses are computed on a specific-identification basis. | |||
[3] | Amounts related to the settlement of economic derivatives held by certain consolidated investment companies. |
Fair_Value_Measurements_Narrat
Fair Value Measurements Narrative (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Cash and cash equivalents | $91,833 | $115,267 | |
Investments transferred from Level 2 to Level 1 | 54 | 4,800 | |
Acquisition-related future consideration liabilities | 1,909 | 1,909 | |
Other Current Liabilities [Member] | |||
Acquisition-related future consideration liabilities | 1,900 | ||
Money Market Funds [Member] | |||
Cash and cash equivalents | 81,100 | 107,600 | |
Fair Value, Inputs, Level 3 [Member] | |||
Cash and cash equivalents | 0 | 0 | |
Acquisition-related future consideration liabilities | 1,909 | 1,909 | |
Fair Value, Inputs, Level 3 [Member] | Acquisition-related Future Consideration Liabilities [Member] | |||
Acquisition-related adjustments | $0 | $0 |
Fair_Value_Measurements_Classe
Fair Value Measurements Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Cash and cash equivalents | $91,833 | $115,267 | ||
Available-for-sale equity securities | 144,908 | 143,190 | ||
Trading securities—equity | 35,475 | 31,393 | ||
Trading securities—debt | 7,414 | 7,488 | ||
Other assets | 16 | [1] | 45 | [1] |
Total financial assets | 279,646 | 297,383 | ||
Interest rate swap | 0 | 425 | ||
Acquisition-related future consideration liabilities | 1,909 | 1,909 | ||
Other liabilities | 2,092 | [2] | 1,979 | [2] |
Total financial liabilities | 4,001 | 4,313 | ||
Level 1 [Member] | ||||
Cash and cash equivalents | 91,833 | 115,267 | ||
Available-for-sale equity securities | 120,373 | 119,435 | ||
Trading securities—equity | 19,911 | 17,553 | ||
Trading securities—debt | 0 | 0 | ||
Other assets | 4 | [1] | 31 | [1] |
Total financial assets | 232,121 | 252,286 | ||
Interest rate swap | 0 | 0 | ||
Acquisition-related future consideration liabilities | 0 | 0 | ||
Other liabilities | 2,054 | [2] | 1,979 | [2] |
Total financial liabilities | 2,054 | 1,979 | ||
Level 2 [Member] | ||||
Cash and cash equivalents | 0 | 0 | ||
Available-for-sale equity securities | 24,535 | 23,755 | ||
Trading securities—equity | 15,564 | 13,840 | ||
Trading securities—debt | 7,414 | 7,488 | ||
Other assets | 12 | [1] | 14 | [1] |
Total financial assets | 47,525 | 45,097 | ||
Interest rate swap | 0 | 425 | ||
Acquisition-related future consideration liabilities | 0 | 0 | ||
Other liabilities | 38 | [2] | 0 | |
Total financial liabilities | 38 | 425 | ||
Level 3 [Member] | ||||
Cash and cash equivalents | 0 | 0 | ||
Available-for-sale equity securities | 0 | 0 | ||
Trading securities—equity | 0 | 0 | ||
Trading securities—debt | 0 | 0 | ||
Other assets | 0 | 0 | ||
Total financial assets | 0 | 0 | ||
Interest rate swap | 0 | 0 | ||
Acquisition-related future consideration liabilities | 1,909 | 1,909 | ||
Other liabilities | 0 | 0 | ||
Total financial liabilities | $1,909 | $1,909 | ||
[1] | Amounts include futures contracts and/or foreign currency forward contracts held within certain consolidated sponsored investment companies. | |||
[2] | Amounts include investments sold short, futures contracts and/or foreign currency forward contracts held within certain consolidated sponsored investment companies. |
Debt_and_Interest_Rate_Swap_Na
Debt and Interest Rate Swap Narrative (Details) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Jun. 24, 2014 | |
Borrowings under credit agreement | $255,000,000 | |||
Term loan spread basis points | 112.5 | |||
Line of credit facility, maximum borrowing capacity | 200,000,000 | |||
Line of credit, outstanding borrowings | 0 | |||
Line of credit facility, current borrowing capacity | 200,000,000 | |||
Line of credit facility, facility fee basis points | 12.5 | |||
Line of credit facility spread basis points | 100 | |||
Term loan quarterly payments, next twelve months | 25,500,000 | |||
Term loan quarterly payments, year two | 25,500,000 | |||
Term loan quarterly payments, year three | 25,500,000 | |||
Term loan quarterly payments, year four | 55,800,000 | |||
Term loan quarterly payments, year five | 110,000,000 | |||
Repayments on borrowings | 6,375,000 | 10,625,000 | ||
Term loan, annual fixed rate associated with the swap | 3.52% | |||
Term loan covered by the swap | 63,800,000 | |||
Amount of swap liability charged to Debt expense during the period | $400,000 | $1,500,000 |
Debt_and_Interest_Rate_Swap_De
Debt and Interest Rate Swap Debt (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Debt And Interest Rate Swap [Abstract] | ||||
Term loan, weighted average interest rate | 1.90% | [1] | 2.46% | [1] |
Term Loan | $235,875 | $242,250 | ||
Less: Short-term debt | 25,500 | 25,500 | ||
Long-term debt | $210,375 | $216,750 | ||
[1] | The weighted-average interest rate was calculated based on a fixed-rate in connection with the interest rate Swap and a variable rate for the amount of the Term Loan not covered by the Swap. See below for additional information. |
ShareBased_Compensation_Plans_
Share-Based Compensation Plans (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Restricted Stock Granted in Period | 373,137 | 1,057,981 |
Stock Options, Exercises in Period | 3,000 | 6,000 |
Stock Options, Issued in Period | 0 | 0 |
Shares of Federated Class B Common Stock to Non-Management Directors | 0 | 5,100 |
Class B Common Stock Bonus [Member] | ||
Restricted Stock Granted in Period | 373,137 | 426,931 |
Restricted stock requisite service period | 3 years | |
Class B Common Stock Key Employees [Member] | ||
Restricted stock requisite service period | 10 years |
Equity_Details
Equity (Details) (USD $) | 3 Months Ended | |||
In Thousands, except Share data in Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Feb. 19, 2015 | Dec. 31, 2008 |
Repurchased shares | 0.3 | |||
Amount paid for repurchase of common stock | $9,948 | $7,517 | ||
Class B [Member] | ||||
Number of shares authorized under share repurchase program | 4 | 5 | ||
Remaining number of shares authorized to be repurchased | 4.1 |
Earnings_Per_Share_Attributabl2
Earnings Per Share Attributable to Federated Investors, Inc. Shareholders Computation of Basic and Diluted Earnings Per Share (Details) (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Net income attributable to Federated Investors, Inc. | $36,307 | $35,194 | ||
Less: Total income available to participating unvested restricted shareholders, basic | -1,478 | [1] | -1,387 | [1] |
Less: Total income available to participating unvested restricted shareholders, diluted | -1,478 | [1] | -1,387 | [1] |
Total net income attributable to Federated Common Stock (Basic) | 34,829 | [2] | 33,807 | [2] |
Total net income attributable to Federated Common Stock (Diluted) | $34,829 | [2] | $33,807 | [2] |
Basic weighted-average common shares outstanding | 100,641 | 100,725 | ||
Dilutive potential shares from stock options | 1 | 2 | ||
Diluted weighted average common shares outstanding | 100,642 | 100,727 | ||
Net income attributable to Federated Common Stock - Basic and Diluted | $0.35 | [2] | $0.34 | [2] |
[1] | Income available to participating unvested restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings. | |||
[2] | Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share. |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 17 Months Ended | 3 Months Ended | 25 Months Ended | |||||||||||
Mar. 31, 2015 | Dec. 31, 2008 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2010 | Nov. 26, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2012 | Mar. 31, 2011 | Mar. 31, 2010 | Jan. 31, 2014 | Dec. 01, 2008 | |
Fair value of future consideration payments liability | $1,909,000 | $1,909,000 | |||||||||||||
Maximum performance incentive payable over remaining terms | 28,000,000 | ||||||||||||||
Employee Incentive Compensation Fund Bonus Payable Succeeding Fiscal Year | 3,000,000 | ||||||||||||||
Prior Business Acquisition Required Compound Annual Growth Rate | 30.00% | ||||||||||||||
Alleged damages sought | 37,000,000 | ||||||||||||||
SunTrust Acquisition [Member] | |||||||||||||||
Business Acquisition Contingent Consideration Payable Period | 5 years | ||||||||||||||
Contingent purchase price payments | 2,100,000 | 3,800,000 | 4,200,000 | 5,000,000 | |||||||||||
Estimated remaining contingent payments | 1,000,000 | ||||||||||||||
Remaining Business Acquisitions Contingent Consideration | 1 year | ||||||||||||||
Clover Capital Acquisition [Member] | |||||||||||||||
Business Acquisition Contingent Consideration Payable Period | 5 years | ||||||||||||||
Contingent purchase price payments | 9,200,000 | 3,400,000 | 5,900,000 | 0 | 0 | 18,000,000 | |||||||||
Estimated remaining contingent payments | 55,000,000 | ||||||||||||||
Business Acquisition Cost Of Acquired Entity Upfront Cash Paid | 30,000,000 | ||||||||||||||
Other Current Liabilities [Member] | |||||||||||||||
Fair value of future consideration payments liability | 1,900,000 | ||||||||||||||
Other Current Liabilities [Member] | SunTrust Acquisition [Member] | |||||||||||||||
Fair value of future consideration payments liability | 1,200,000 | ||||||||||||||
Other Current Liabilities [Member] | Series of Individually Immaterial Business Acquisitions [Member] | |||||||||||||||
Fair value of future consideration payments liability | $700,000 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive (Loss) Income Attributable to Federated Investors, Inc. Shareholders (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Accumulated other comprehensive (loss) income, net of tax | ($1,662) | ($1,208) | ||
Other comprehensive income (loss), before reclassifications and tax | 476 | 700 | ||
Other comprehensive income (loss), before reclassifications, tax total | -187 | -269 | ||
Reclassification adjustments, before tax | 358 | -48 | ||
Reclassification adjustment, tax total | -131 | 37 | ||
Net current-period other comprehensive income (loss) | 516 | 420 | ||
Accumulated other comprehensive (loss) income, net of tax | -1,146 | -788 | ||
Accumulated Net Loss from Designated or Qualifying Cash Flow Hedges [Member] | ||||
Accumulated other comprehensive (loss) income, net of tax | -269 | [1] | -3,185 | [1] |
Other comprehensive income (loss), before reclassifications and tax | 67 | [1] | -127 | [1] |
Other comprehensive income (loss), before reclassifications, tax total | -25 | [1] | 48 | [1] |
Reclassification adjustments, before tax | 358 | [1] | 1,481 | [1] |
Reclassification adjustment, tax total | -131 | [1] | -560 | [1] |
Net current-period other comprehensive income (loss) | 269 | [1] | 842 | [1] |
Accumulated other comprehensive (loss) income, net of tax | 0 | [1] | -2,343 | [1] |
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||||
Accumulated other comprehensive (loss) income, net of tax | -1,126 | [2] | 1,586 | [2] |
Other comprehensive income (loss), before reclassifications and tax | 1,086 | [2] | 688 | [2] |
Other comprehensive income (loss), before reclassifications, tax total | -399 | [2] | -269 | [2] |
Reclassification adjustments, before tax | 0 | [2] | -1,529 | [2] |
Reclassification adjustment, tax total | 0 | [2] | 597 | [2] |
Net current-period other comprehensive income (loss) | 687 | [2] | -513 | [2] |
Accumulated other comprehensive (loss) income, net of tax | -439 | [2] | 1,073 | [2] |
Accumulated Translation Adjustment [Member] | ||||
Accumulated other comprehensive (loss) income, net of tax | -267 | 391 | ||
Other comprehensive income (loss), before reclassifications and tax | -677 | 139 | ||
Other comprehensive income (loss), before reclassifications, tax total | 237 | -48 | ||
Reclassification adjustments, before tax | 0 | 0 | ||
Reclassification adjustment, tax total | 0 | 0 | ||
Net current-period other comprehensive income (loss) | -440 | 91 | ||
Accumulated other comprehensive (loss) income, net of tax | ($707) | $482 | ||
[1] | Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in Debt expense on the Consolidated Statements of Income. | |||
[2] | Amounts reclassified from Accumulated other comprehensive loss, net of tax were recorded in (Loss) gain on securities, net on the Consolidated Statements of Income. |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event [Member], USD $) | Apr. 23, 2015 |
Subsequent Event [Member] | |
Dividend declared | $0.25 |