Exhibit 99.1
[Federated Logo Appears Here] | Press Release |
Federated Investors, Inc. Reports Second Quarter EPS of $0.44; Board Approves 21 Percent Dividend Increase; Dividend Up 49 Percent Compared to First Quarter Dividend
| · | | Period-end managed assets reach a record $202.4 billion; Assets double over last five years |
| · | | Equity and fixed-income assets top $50 billion for the first time |
| · | | Quarterly dividend of $0.085 declared |
(PITTSBURGH, PA, July 22, 2003) — Federated Investors, Inc. (NYSE: FII), one of the nation’s largest investment management companies, today reported earnings per diluted share (EPS) of $0.44 for the quarter ended June 30, 2003, a decrease of two percent from $0.45 per share for Q2 2002 and an increase of two percent from $0.43 per share for Q1 2003. Federated reported year-to-date 2003 EPS of $0.87 as compared to $0.89 for the first six months of 2002. Net income was $49.1 million for Q2 2003 compared to net income of $52.6 million for Q2 2002 and $97.8 million for the six months ended June 30, 2003, compared to $104.9 million for the same period in 2002.
Federated’s managed assets grew across investment classes to a record $202.4 billion at June 30, 2003, up $17.4 billion or nine percent from $185.0 billion at June 30, 2002 and up $6.7 billion from the $195.7 billion reported at March 31, 2003. Since June 30, 1998, Federated’s managed assets have grown at a compound annual growth rate of 15 percent, doubling from $101 to $202 billion. Average managed assets for the quarter were $199.4 billion, $8.6 billion higher than the $190.8 billion reported for Q2 2002 and slightly lower than the $200.7 billion in average managed assets reported for Q1 2003.
“During the quarter an improved equity environment contributed to a significant increase in Federated’s equity assets, while the demand for fixed-income products also remained robust,” said J. Christopher Donahue, president and CEO. “Federated continued to add strength to our investment management capabilities by enhancing our equity team with additional top-tier fund managers and experienced analysts.”
The company also announced today that its board of directors declared a quarterly dividend of $0.085 per share, an increase of 21 percent from the May 15, 2003 dividend and up 49 percent from the dividend paid on February 14, 2003. This dividend is payable on August 15, 2003, to shareholders of
Contacts:
MEDIA | | MEDIA | | ANALYSTS |
Meghan McAndrew | | J.T. Tuskan | | Ray Hanley |
(412) 288-8103 | | (412) 288-7895 | | (412) 288-1920 |
mmcandrew@federatedinv.com | | jtuskan@federatedinv.com | | rhanley@federatedinv.com |
Federated Reports Q2 2003 Earnings
July 22, 2003
Page 2 of 6
record as of August 7, 2003. Federated continued its share buyback program by purchasing 1,225,600 shares of Federated Investors, Inc. class B common stock for $32.9 million in the open market.
“Based on Federated’s strong financial performance and position in the marketplace, as well as recent changes in tax treatment for dividends, the board of directors chose to increase our quarterly dividend for the second time in three months, further enhancing shareholder value,” Donahue said.
Through its mutual funds and separate accounts, Federated managed $51.0 billion in fixed-income and equity assets as of June 30, 2003, an increase of 15 percent from $44.1 billion for Q2 2002. Equity assets were $20.8 billion at the end of Q2 2003, compared to the $20.9 billion at the end of Q2 2002 and up from $17.4 billion at the end of Q1 2003. In addition to positive market returns, Federated’s distribution channels continued to produce positive equity fund flows with $1.4 billion in gross sales and $113 million in net sales for Q2 2003. Fixed-income assets increased to a new high of $30.2 billion at June 30, 2003, up $6.9 billion from the end of Q2 2002 and up $1.8 billion from the end of Q1 2003. Federated delivered strong fixed-income fund sales across the investment spectrum, reaching $3.8 billion in gross sales and $480 million in net sales for Q2 2003.
“In particular, our large-cap core, small-and mid-cap growth and strategic value products are attracting investors across all of our distribution channels,” Donahue said. “On the fixed income side, we continued to have strong flows into core strategies, high yield and municipal bond products.”
Money market assets in both funds and separate accounts totaled $151.4 billion at June 30, 2003, $10.5 billion or seven percent over the $140.9 billion at June 30, 2002. Money market fund assets increased to $135.9 billion at the end of Q2 2003 from $128.0 billion at the end of Q2 2002. Money market separate account assets increased to $15.5 billion at the end of Q2 2003 from $12.9 billion at the end of Q2 2002.
For the second quarter of 2003, total revenue declined two percent to $178.0 million from the same period in 2002. Total revenue for the first half of 2003 declined four percent to $348.0 million from $364.0 million for the first half of 2002. For Q2 2003, Federated derived 45 percent of its revenue from money market assets, 28 percent from equity assets, 21 percent from fixed-income assets and six percent from other products. Operating expenses fell marginally for Q2 2003 to $98.1 million from $98.3 million for Q2 2002. For the first half of the year, operating expenses were down three percent to $189.2 million compared to $194.2 million for the same period last year.
Federated will host an earnings conference call at 9:00 a.m. on Wednesday, July 23, 2003. Investors are invited to listen to Federated’s Q2 earnings teleconference by calling 888-412-9259 (domestic) or 706-679-0848 (international) prior to the 9:00 a.m. Eastern start time. The call may also be accessed in real time on the Internet via theCompany section ofwww.federatedinvestors.com. A replay will be available after 12:30 p.m. and until July 30, 2003, by calling 800-642-1687 (domestic) or 706-645-9291 (international) and entering code 1412630.
Federated Reports Q2 2003 Earnings
July 22, 2003
Page 3 of 6
Federated Investors, Inc. is one of the largest investment managers in the United States, managing $202.4 billion in assets as of June 30, 2003. With more than 135 mutual funds, various separately managed account and closed end funds, Federated provides comprehensive investment management to more than 5,900 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Federated ranks in the top one percent of money market fund managers in the industry, the top four percent of fixed-income fund managers and the top five percent of equity fund managers1. For more information, visitwww.federatedinvestors.com.
###
1. Strategic Insight, May, 2003. Based on assets in open-end funds.
Certain statements in this press release, such as those related to the prospects for growth constitute forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that may cause the actual results, levels of activity, performance, or achievements of the company, or industry results, to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Such factors include those discussed in the company’s annual and quarterly reports as filed with the Securities and Exchange Commission. Many of these factors may be more likely to occur as a result of the ongoing threat of terrorism. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness of such statements.
For more complete information on Federated funds, please visitwww.federatedinvestors.com for prospectuses. Investors should read the prospectus carefully before investing. Federated Securities Corp., Distributor of the Federated funds. Separately managed accounts available through Federated Investment Counseling, a registered investment advisor.
Federated Reports Q2 2003 Earnings
July 22, 2003
Page 4 of 6
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
| | | Quarter Ended
June 30,
| | | Six Months Ended
June 30,
| |
| | | 2003
| | | 2002
| | | 2003
| | | 2002
| |
| Revenue | | | | | | | | | | | | | | | | |
Investment advisory fees, net | | $ | 113,424 | | | $ | 115,899 | | | $ | 221,730 | | | $ | 232,339 | |
Administrative service fees, net | | | 34,912 | | | | 35,333 | | | | 69,612 | | | | 71,576 | |
Other service fees, net | | | 27,670 | | | | 29,615 | | | | 53,041 | | | | 57,629 | |
Other, net | | | 2,036 | | | | 1,534 | | | | 3,617 | | | | 2,457 | |
|
Total Revenue | | | 178,042 | | | | 182,381 | | | | 348,000 | | | | 364,001 | |
|
| Operating Expenses | | | | | | | | | | | | | | | | |
Compensation and related | | | 46,492 | | | | 47,429 | | | | 88,802 | | | | 95,965 | |
General and administrative | | | | | | | | | | | | | | | | |
Professional service fees | | | 6,852 | | | | 5,610 | | | | 13,610 | | | | 11,270 | |
Systems and communications | | | 6,758 | | | | 7,692 | | | | 13,506 | | | | 14,010 | |
Office and occupancy | | | 6,428 | | | | 6,430 | | | | 13,247 | | | | 12,718 | |
Travel and related | | | 3,274 | | | | 3,551 | | | | 6,124 | | | | 5,985 | |
Other | | | 3,341 | | | | 2,356 | | | | 5,617 | | | | 4,354 | |
|
Total general and administrative | | | 26,653 | | | | 25,639 | | | | 52,104 | | | | 48,337 | |
Marketing and promotional | | | 18,881 | | | | 18,492 | | | | 36,410 | | | | 36,395 | |
Amortization of deferred sales commissions | | | 3,404 | | | | 3,791 | | | | 6,642 | | | | 7,542 | |
Amortization of intangible assets | | | 2,628 | | | | 2,942 | | | | 5,252 | | | | 6,003 | |
|
Total Operating Expenses | | | 98,058 | | | | 98,293 | | | | 189,210 | | | | 194,242 | |
|
Operating Income | | | 79,984 | | | | 84,088 | | | | 158,790 | | | | 169,759 | |
|
| Nonoperating Income (Expenses) | | | | | | | | | | | | | | | | |
Investment income, net | | | 451 | | | | 475 | | | | 952 | | | | 931 | |
Debt expense — recourse | | | (124 | ) | | | (108 | ) | | | (252 | ) | | | (208 | ) |
Debt expense — nonrecourse | | | (1,065 | ) | | | (1,063 | ) | | | (2,121 | ) | | | (2,117 | ) |
Other | | | (102 | ) | | | (69 | ) | | | (108 | ) | | | (68 | ) |
|
Total Nonoperating Expenses, net | | | (840 | ) | | | (765 | ) | | | (1,529 | ) | | | (1,462 | ) |
|
Minority interest | | | 2,578 | | | | 2,638 | | | | 5,096 | | | | 5,302 | |
|
Income before income taxes | | | 76,566 | | | | 80,685 | | | | 152,165 | | | | 162,995 | |
Income tax provision | | | 27,506 | | | | 28,074 | | | | 54,394 | | | | 58,061 | |
|
Net Income | | $ | 49,060 | | | $ | 52,611 | | | $ | 97,771 | | | $ | 104,934 | |
|
Earnings Per Share | | | | | | | | | | | | | | | | |
Basic | | $ | 0.46 | | | $ | 0.47 | | | $ | 0.90 | | | $ | 0.93 | |
|
Diluted | | | 0.44 | | | | 0.45 | | | | 0.87 | | | | 0.89 | |
|
Weighted-average shares outstanding | | | | | | | | | | | | | | | | |
Basic | | | 107,307 | | | | 112,624 | | | | 108,490 | | | | 112,895 | |
|
Diluted | | | 111,703 | | | | 117,711 | | | | 112,831 | | | | 117,950 | |
|
Dividends declared per share | | $ | 0.070 | | | $ | 0.057 | | | $ | 0.127 | | | $ | 0.103 | |
|
Federated Reports Q2 2003 Earnings
July 22, 2003
Page 5 of 6
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| | | June 30,
2003
| | | Dec. 31,
2002
| |
| Assets | | | | | | | | |
Cash and other short-term investments | | $ | 118,623 | | | $ | 150,932 | |
Other current assets | | | 47,009 | | | | 48,756 | |
Deferred sales commissions, net | | | 61,484 | | | | 58,606 | |
Intangible assets, net | | | 230,034 | | | | 235,166 | |
Other long-term assets | | | 33,554 | | | | 36,547 | |
|
Total Assets | | $ | 490,704 | | | $ | 530,007 | |
|
| | |
| Liabilities, Minority Interest and Shareholders’ Equity | | | | | | | | |
Current liabilities | | $ | 86,068 | | | $ | 107,920 | |
Long-term debt — recourse | | | 1,068 | | | | 1,385 | |
Long-term debt — nonrecourse | | | 59,649 | | | | 57,858 | |
Other long-term liabilities and minority interest | | | 23,997 | | | | 22,127 | |
Shareholders’ equity excluding treasury stock | | | 762,025 | | | | 676,416 | |
Treasury stock | | | (442,103 | ) | | | (335,699 | ) |
|
Total Liabilities, Minority Interest and Shareholders’ Equity | | $ | 490,704 | | | $ | 530,007 | |
|
Changes in Equity and Fixed-Income Fund Managed Assets
(in millions)
| | | Quarter Ended June 30,
| | | Six Months Ended June 30,
| |
| | | 2003
| | | 2002
| | | 2003
| | | 2002
| |
| Equity Funds | | | | | | | | | | | | | | | | |
Beginning Assets | | $ | 15,606 | | | $ | 21,125 | | | $ | 16,240 | | | $ | 20,760 | |
|
Sales | | | 1,444 | | | | 1,527 | | | | 2,949 | | | | 3,090 | |
Redemptions | | | (1,331 | ) | | | (1,388 | ) | | | (2,665 | ) | | | (2,694 | ) |
|
Net sales | | | 113 | | | | 139 | | | | 284 | | | | 396 | |
Net exchanges | | | 50 | | | | (66 | ) | | | 41 | | | | (30 | ) |
Other* | | | 2,894 | | | | (2,164 | ) | | | 2,098 | | | | (2,092 | ) |
|
Ending Assets | | $ | 18,663 | | | $ | 19,034 | | | $ | 18,663 | | | $ | 19,034 | |
|
| | | | |
| Fixed-Income Funds | | | | | | | | | | | | | | | | |
Beginning Assets | | $ | 23,769 | | | $ | 18,533 | | | $ | 22,169 | | | $ | 17,378 | |
|
Sales | | | 3,824 | | | | 3,121 | | | | 8,296 | | | | 6,303 | |
Redemptions | | | (3,344 | ) | | | (2,353 | ) | | | (6,330 | ) | | | (4,522 | ) |
|
Net sales | | | 480 | | | | 768 | | | | 1,966 | | | | 1,781 | |
Net exchanges | | | (89 | ) | | | 100 | | | | (273 | ) | | | 134 | |
Other* | | | 549 | | | | 71 | | | | 847 | | | | 179 | |
|
Ending Assets | | $ | 24,709 | | | $ | 19,472 | | | $ | 24,709 | | | $ | 19,472 | |
|
*Includes changes in the market value of securities held by the funds, reinvested dividends and distributions and net investment income.
Federated Reports Q2 2003 Earnings
July 22, 2003
Page 6 of 6
(in millions)
| MANAGED ASSETS | | June 30,
2003
| | March 31, 2003
| | Dec. 31, 2002
| | Sept. 30, 2002
| | June 30, 2002
|
By Asset Class | | | | | | | | | | | | | | | |
Equity | | $ | 20,786 | | $ | 17,400 | | $ | 18,067 | | $ | 17,097 | | $ | 20,886 |
Fixed-income | | | 30,169 | | | 28,372 | | | 26,541 | | | 25,277 | | | 23,260 |
Money market | | | 151,398 | | | 149,893 | | | 150,745 | | | 138,552 | | | 140,860 |
|
Total Managed Assets | | $ | 202,353 | | $ | 195,665 | | $ | 195,353 | | $ | 180,926 | | $ | 185,006 |
|
By Market | | | | | | | | | | | | | | | |
Trust | | $ | 100,350 | | $ | 95,152 | | $ | 102,186 | | $ | 91,065 | | $ | 95,001 |
Broker/dealer | | | 46,221 | | | 44,390 | | | 44,060 | | | 42,413 | | | 44,196 |
Institutional | | | 31,968 | | | 31,551 | | | 27,730 | | | 27,738 | | | 25,310 |
International | | | 2,240 | | | 1,867 | | | 1,795 | | | 1,633 | | | 1,475 |
Other | | | 21,574 | | | 22,705 | | | 19,582 | | | 18,077 | | | 19,024 |
|
Total Managed Assets | | $ | 202,353 | | $ | 195,665 | | $ | 195,353 | | $ | 180,926 | | $ | 185,006 |
|
By Product Type | | | | | | | | | | | | | | | |
Mutual Funds: | | | | | | | | | | | | | | | |
Equity | | $ | 18,663 | | $ | 15,606 | | $ | 16,240 | | $ | 15,506 | | $ | 19,034 |
Fixed-income | | | 24,709 | | | 23,769 | | | 22,169 | | | 21,310 | | | 19,472 |
Money market | | | 135,922 | | | 132,454 | | | 136,374 | | | 126,292 | | | 127,972 |
|
Total Fund Assets | | $ | 179,294 | | $ | 171,829 | | $ | 174,783 | | $ | 163,108 | | $ | 166,478 |
|
Separate Accounts: | | | | | | | | | | | | | | | |
Equity | | $ | 2,123 | | $ | 1,794 | | $ | 1,827 | | $ | 1,591 | | $ | 1,852 |
Fixed-income | | | 5,460 | | | 4,602 | | | 4,372 | | | 3,967 | | | 3,788 |
Money market | | | 15,476 | | | 17,440 | | | 14,371 | | | 12,260 | | | 12,888 |
|
Total Separate Accounts | | $ | 23,059 | | $ | 23,836 | | $ | 20,570 | | $ | 17,818 | | $ | 18,528 |
|
Total Managed Assets | | $ | 202,353 | | $ | 195,665 | | $ | 195,353 | | $ | 180,926 | | $ | 185,006 |
|
| |
| AVERAGE MANAGED ASSETS | | Quarter Ended
|
| | | June 30,
2003
| | March 31, 2003
| | Dec. 31, 2002
| | Sept. 30, 2002
| | June 30, 2002
|
By Asset Class | | | | | | | | | | | | | | | |
Equity | | $ | 19,622 | | $ | 17,662 | | $ | 18,041 | | $ | 18,515 | | $ | 22,191 |
Fixed-income | | | 29,433 | | | 27,420 | | | 25,667 | | | 24,333 | | | 22,949 |
Money market | | | 150,307 | | | 155,631 | | | 148,930 | | | 147,174 | | | 145,632 |
|
Total Avg. Assets | | $ | 199,362 | | $ | 200,713 | | $ | 192,638 | | $ | 190,022 | | $ | 190,772 |
|
By Product Type | | | | | | | | | | | | | | | |
Mutual Funds: | | | | | | | | | | | | | | | |
Equity | | $ | 17,606 | | $ | 15,867 | | $ | 16,303 | | $ | 16,838 | | $ | 20,279 |
Fixed-income | | | 24,336 | | | 22,954 | | | 21,505 | | | 20,461 | | | 19,106 |
Money market | | | 134,027 | | | 138,427 | | | 135,920 | | | 134,747 | | | 133,026 |
|
Total Avg. Fund Assets | | $ | 175,969 | | $ | 177,248 | | $ | 173,728 | | $ | 172,046 | | $ | 172,411 |
|
Separate Accounts: | | | | | | | | | | | | | | | |
Equity | | $ | 2,017 | | $ | 1,795 | | $ | 1,738 | | $ | 1,677 | | $ | 1,912 |
Fixed-income | | | 5,097 | | | 4,466 | | | 4,162 | | | 3,872 | | | 3,843 |
Money market | | | 16,279 | | | 17,204 | | | 13,010 | | | 12,427 | | | 12,606 |
|
Total Avg. Separate Acct. | | $ | 23,393 | | $ | 23,465 | | $ | 18,910 | | $ | 17,976 | | $ | 18,361 |
|
Total Avg. Assets | | $ | 199,362 | | $ | 200,713 | | $ | 192,638 | | $ | 190,022 | | $ | 190,772 |
|
| |
| ADMINISTERED ASSETS | | Quarter Ended
|
| | | June 30,
2003
| | March 31, 2003
| | Dec. 31, 2002
| | Sept. 30, 2002
| | June 30, 2002
|
Period End | | $ | 37,612 | | $ | 36,133 | | $ | 34,827 | | $ | 31,485 | | $ | 32,830 |
Average | | $ | 36,982 | | $ | 36,790 | | $ | 36,303 | | $ | 32,319 | | $ | 39,367 |
|
