Federated Hermes (FHI) 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.3

INDEX TO PRO FORMA FINANCIAL INFORMATION

Unaudited Pro Forma Consolidated Financial Statements:

Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2006	2
Unaudited Pro Forma Consolidated Statement of Income for the quarter ended March 31, 2006	3
Unaudited Pro Forma Consolidated Statement of Income for the year ended December 31, 2005	4
Notes to Unaudited Pro Forma Consolidated Financial Statements	5

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Federated Investors, Inc.

Unaudited Pro Forma Consolidated Balance Sheet

As of March 31, 2006

(dollars in thousands)

	Federated		MDTA LLC		Pro Forma Adjustments						Combined Pro Forma Federated
Current Assets:
Cash and cash equivalents	$	258,016	$	3,428	$	(102,434	)(a)	$			$	159,010
Investments		37,963		15,687								53,650
Receivables, net		47,105		2,010		(1,085	)(b)					48,030
Other current assets		19,484		338								19,822
Total current assets		362,568		21,463								280,512
Long-Term Assets:
Goodwill and other intangible assets, net		377,452		32,709		(32,709	)(c)		108,521	(d)		485,972
Deferred sales commissions, net		146,200		133								146,333
Property and equipment, net		23,001		234								23,235
Other long-term assets		556		—		1,806	(f)					2,362
Total long-term assets		547,209		33,076								657,903
Total assets	$	909,777	$	54,539							$	938,415
Current Liabilities:
Accrued expenses and accounts payable	$	129,625	$	2,381		458	(b)		179	(g)	$	132,643
Other current liabilities		47,332		—								47,332
Total current liabilities		176,957		2,381								179,975
Long-Term Liabilities:
Long-term debt – recourse		—		8,329		(8,329	)(h)		8,040	(a)		8,040
Long-term debt – nonrecourse		147,674		—								147,674
Long-term deferred tax liability, net		20,191		—								20,191
Other long-term liabilities		7,204		—		1,448	(f)					8,652
Total long-term liabilities		175,069		8,329								184,557
Total liabilities		352,026		10,710								364,532
Minority interest		594		16,132								16,726
Shareholders’ Equity:
Common stock		138,372										138,372
Other shareholders’ equity		418,785		27,697		(27,697	)					418,785
Total shareholders’ equity		557,157		27,697								557,157
Total liabilities, minority interest, and shareholders’ equity	$	909,777	$	54,539							$	938,415

See notes to unaudited pro forma consolidated financial statements.

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Federated Investors, Inc.

Unaudited Pro Forma Consolidated Statement of Income

For the Quarter Ended March 31, 2006

(dollars in thousands, except per share data)

	Federated			MDTA LLC			Pro Forma Adjustments			Combined Pro Forma Federated
Revenue:
Investment advisory fees, net	$	148,055		$	6,132		$	(505	)(e)	$	153,682
Administrative service fees, net		36,098			—						36,098
Other service fees, net		52,877			—						52,877
Other, net		1,751			(76	)		76	(e)		1,751
Total revenue		238,781			6,056			(429	)		244,408
Operating Expenses:
Marketing and distribution		69,952			58						70,010
Compensation and related		49,576			2,431			(180	)(e)		53,249
								1,422	(i)
Other		45,082			1,432			(323	)(e)		47,683
								1,492	(j)
Total operating expenses		164,610			3,921			2,411			170,942
Operating income		74,171			2,135			(2,840	)		73,466
Nonoperating Income (Expenses):
Debt expense – recourse		(65	)		(206	)		206	(k)		(153	)
								(88	)(l)
Debt expense – nonrecourse		(2,153	)								(2,153	)
Other		3,213			994			(1,116	)(m)		3,091
Total nonoperating income (expenses), net		995			788			(998	)		785
Income from continuing operations before minority interest and income taxes		75,166			2,923			(3,838	)		74,251
Minority interest		1,501			948			—			2,449
Income from continuing operations before income taxes		73,665			1,975			(3,838	)		71,802
Income tax provision (benefit)		27,580			—			(652	)(n)		26,928
Income from continuing operations	$	46,085		$	1,975		$	(3,186	)	$	44,874
Earnings per share from continuing operations:
Basic	$	0.44								$	0.42
Diluted	$	0.43								$	0.42
Weighted average shares outstanding:
Basic		105,639									105,639
Diluted		108,125									108,125

See notes to unaudited pro forma consolidated financial statements.

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Federated Investors, Inc.

Unaudited Pro Forma Consolidated Statement of Income

For the Year Ended December 31, 2005

(dollars in thousands, except per share data)

	Federated			MDTA LLC			Pro Forma Adjustments			Combined Pro Forma Federated
Revenue:
Investment advisory fees, net	$	570,695		$	16,209		$	(2,384	)(e)	$	584,520
Administrative service fees, net		135,070			—						135,070
Other service fees, net		196,193			—						196,193
Other, net		7,258			56			(26	)(e)		7,288
Total revenue		909,216			16,265			(2,410	)		923,071
Operating Expenses:
Marketing and distribution		222,689			345						223,034
Compensation and related		175,629			10,872			(2,024	)(e)		190,317
								5,840	(i)
Settlement expense		55,592			—						55,592
Amortization of deferred sales commissions		51,732			—						51,732
Other		104,518			3,982			(739	)(e)		113,728
								5,967	(j)
Total operating expenses		610,160			15,199			9,044			634,403
Operating income		299,056			1,066			(11,454	)		288,668
Nonoperating Income (Expenses):
Debt expense—recourse		(369	)		(918	)		918	(k)		(624	)
								(255	)(l)
Debt expense—nonrecourse		(17,517	)		—						(17,517	)
Other, net		9,046			19			(3,247	)(m)		5,818
Total nonoperating expenses, net		(8,840	)		(899	)		(2,584	)		(12,323	)
Income from continuing operations before minority interest and income taxes		290,216			167			(14,038	)		276,345
Minority interest		10,205			—			—			10,205
Income from continuing operations before income taxes		280,011			167			(14,038	)		266,140
Income tax provision (benefit)		116,719			—			(4,855	)(n)		111,864
Income from continuing operations	$	163,292		$	167		$	(9,183	)	$	154,276
Earnings per share from continuing operations:
Basic	$	1.54								$	1.45
Diluted	$	1.51								$	1.43
Weighted average shares outstanding:
Basic		106,114									106,114
Diluted		108,252									108,252

See notes to unaudited pro forma consolidated financial statements.

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Federated Investors, Inc.

Notes to Unaudited Pro Forma Consolidated Financial Statements

Year Ended December 31, 2005,

And Quarter Ended March 31, 2006

(1) Basis of presentation

On July 14, 2006, Federated Investors, Inc. (Federated) completed the acquisition of MDTA LLC (MDTA)(Acquisition). Federated acquired approximately 89 percent of the outstanding equity interests of MDTA with a right to acquire the remaining 11 percent by June 30, 2007. The transaction includes an initial purchase payment of approximately $102 million, an additional purchase price payment of approximately $8 million in the first half of 2007 upon acquisition of the remaining 11 percent outstanding equity interests and a series of contingent payments totaling as much as $130 million over the next three years based on growth. The transaction was accounted for as a purchase under U.S. GAAP.

The following unaudited pro forma consolidated balance sheet as of March 31, 2006 has been prepared to give effect to the acquisition as if such transaction occurred on March 31, 2006. The unaudited statements of income for the three months ended March 31, 2006, and for the year ended December 31, 2005, have been prepared to give effect to the Acquisition as if such transaction occurred at the beginning of the periods presented.

The following is a description of the individual columns included in the unaudited pro forma consolidated financial statements:

Federated: The information presented as of and for the three months ended March 31, 2006, was derived from Federated’s unaudited historical consolidated financial statements. The information for the year ended December 31, 2005, was derived from Federated’s audited consolidated financial statements for 2005.

MDTA LLC: The information presented as of and for the three months ended March 31, 2006, was derived from MDTA’s unaudited historical financial statements. The information for the year ended December 31, 2005, was derived from MDTA’s audited financial statements for 2005. Information presented in this column includes certain reclassifications to conform MDTA’s financial statements with Federated’s presentation.

Pro Forma Adjustments: The pro forma adjustments are based on available information and certain assumptions that we believe are reasonable under the circumstances. Actual adjustments to record the purchase could be different. The adjustments represent adjustments that are directly attributable to the Acquisition and are considered to have a continuing impact on the financial position and results of operations of Federated.

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These unaudited pro forma consolidated financial statements and notes thereto are provided for informational purposes only and do not purport to be indicative of the actual financial position or results of operations had such transaction been completed on the dates indicated or of future results of operations. In addition, the unaudited pro forma consolidated financial statements do not include any synergies that may be realized as a result of combining the entities.

These unaudited pro forma consolidated financial statements should be read in conjunction with Federated’s Annual Report on Form 10-K for the year ended December 31, 2005, Quarterly Report on Form 10-Q for the periods ended March 31, 2006, and June 30, 2006, and Current Report on Form 8-K as amended filed July 20, 2006.

(2) Pro forma adjustments

(a) To record the total cost of the Acquisition, which was equal to approximately $110.4 million and included the following components:

Cash consideration	$	102.0
Debt	$	8.0
Other direct costs of acquisition	$	0.4

(b) To reduce net working capital of MDTA at closing to $0 in accordance with the Acquisition agreement.

(c) To eliminate historical goodwill recorded on MDTA’s balance sheet.

(d) To record the fair value of the assets acquired including goodwill, other identifiable intangible and tangible assets. For purposes of the accompanying pro forma consolidated financial statements, we have recorded the acquired assets using preliminary estimates of fair value as of the acquisition date. A valuation is currently in progress to determine the fair value of those assets. We believe that the excess purchase price over the value of the acquired tangible assets will be allocated to various assets including but not limited to customer relationships, noncompetition agreements, internally developed software and goodwill. However, there can be no assurance that the actual allocation will not differ significantly from the pro forma allocation.

(e) To eliminate certain assets, revenues and expenses attributable to certain historical operations of MDTA which were not acquired by Federated.

(f) To record a liability for costs to be incurred under certain contractual obligations of MDTA that existed before the closing date but have no economic benefit to the combined company.

(g) To record a liability for termination benefits resulting from an involuntary employee termination plan that was approved in connection with the Acquisition and pertains to certain MDTA employees.

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(h) To reflect the elimination of MDTA’s note payable to it’s affiliate. This note was not part of the purchase of MDTA.

(i) To adjust compensation expense in accordance with compensation arrangements agreed to in connection with the Acquisition agreement.

(j) To increase amortization expense based on preliminary estimates of fair value and an average estimated useful life of 10 years for the amortizable assets including customer relationships, the noncompetition agreement and internally developed software. Should the actual allocation of the purchase price differ significantly from the pro forma allocation as described in Note (2)(d) above, actual amortization expense could differ significantly from pro forma amortization.

(k) To eliminate interest expense associated with a note payable with an affiliate of MDTA. This note was not part of the purchase of MDTA.

(l) To record interest expense on the purchase price financed by the minority interest holder. Average annual interest rates of 4.42% and 3.17% were used to calculate the interest expense for the three months ended March 31, 2006 and the year ended December 31, 2005, respectively, and were derived in accordance with the terms of the Acquisition agreement.

(m) To give effect to foregone interest income from invested cash of Federated as a result of using cash equal to approximately $102.4 million for the acquisition. Average annual interest rates of 4.42% and 3.17% were used to calculate foregone interest for the three months ended March 31, 2006, and the year ended December 31, 2005, respectively.

(n) To reflect the income tax impacts of the pro forma adjustments described above and to record the tax on MDTA’s historical results at the applicable federal statutory rate. MDTA is organized as a partnership under the U.S. federal tax laws.

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