Exhibit 99.1
Press Release |
Federated Investors, Inc. Reports First Quarter 2007 Earnings; Total Assets Under Management Surpass Record $250 Billion
• | Equity and fixed-income assets reach record $64 billion |
• | Money market assets reach record $186 billion |
• | Board increases quarterly dividend 17 percent to $0.21 per share |
(PITTSBURGH, Pa., April 26, 2007) — Federated Investors, Inc. (NYSE: FII), one of the nation’s largest investment managers, today reported earnings per diluted share from continuing operations of $0.50 for the quarter ended March 31, 2007, compared to $0.43 for the quarter ended March 31, 2006, an increase of 16 percent. Federated’s income from continuing operations was $51.8 million for Q1 2007 compared to $46.1 million for Q1 2006. Q1 2007 results include a $1.2 million pre-tax charge, or $0.01 per share after tax, for severance and related expense.
Federated’s total managed assets were a record $250.5 billion at March 31, 2007, up $33.0 billion or 15 percent from $217.5 billion at March 31, 2006 and up $13.1 billion or 6 percent from the $237.4 billion reported at Dec. 31, 2006. Through its mutual funds and separately managed accounts, Federated managed $64.5 billion in equity and fixed-income assets as of March 31, 2007, a 20 percent increase from $53.9 billion as of March 31, 2006. Average managed assets for Q1 2007 were $246.5 billion, up $29.0 billion or 13 percent from $217.5 billion reported for Q1 2006 and up $14.8 billion or 6 percent from $231.7 billion in average managed assets reported for Q4 2006.
“At the end of the quarter, 69 percent of Federated’s domestic stock-fund assets outperformed their Lipper category averages on a one-year basis, which is a noteworthy performance improvement from a year ago,” said J. Christopher Donahue, president and CEO. “Federated continues to strengthen our equity management capacity—most recently through our agreement with Rochdale Investment Management to acquire certain assets related to the strong-performing Rochdale Atlas Portfolio and to hire two members of that fund’s investment management team.”
Federated’s board of directors declared a quarterly dividend of $0.21 per share, an increase of 17 percent from $0.18 per share last quarter. The dividend is payable on May 15, 2007 to shareholders of record as of May 8, 2007. During Q1 2007, Federated purchased 1,229,263 shares of class B common stock for $43.1 million.
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 Q1 Earnings
April 26, 2007
Page 2 of 7
Federated’s equity assets were a record $41.3 billion at March 31, 2007, up $9.7 billion or 31 percent from $31.6 billion at March 31, 2006 and up slightly from $40.9 billion at Dec. 31, 2006. Federated’s top-selling equity mutual funds on a net basis were: Federated Strategic Value Fund, Federated Muni and Stock Advantage Fund, Federated MDT All Cap Core Fund and Federated Kaufmann Small Cap Fund. Federated saw solid organic growth in its equity separate account products, which had $225 million in net flows during Q1 2007.
Federated’s fixed-income assets were $23.2 billion at March 31, 2007, up $0.9 billion or 4 percent from $22.3 billion at March 31, 2006 and up slightly from $22.9 billion at Dec. 31, 2006. Federated’s top-selling fixed-income mutual funds on a net basis were: Federated Total Return Bond Fund, Federated Total Return Government Bond Fund and Federated Intermediate Municipal Trust. Federated saw solid organic growth in its fixed-income separate account products, which had $236 million in net flows during Q1 2007.
Money market assets in both funds and separate accounts were a record $186.0 billion at March 31, 2007, up $22.4 billion or 14 percent from $163.6 billion at March 31, 2006 and up $12.4 billion or 7 percent from $173.6 billion at Dec. 31, 2006. Money market mutual fund assets increased to a record $163.8 billion at the end of Q1 2007, up $17.8 billion or 12 percent from $146.0 billion at March 31, 2006 and up $8.6 billion or 6 percent from $155.2 billion at Dec. 31, 2006.
Financial Summary
For Q1 2007, revenue increased $25.6 million or 11 percent to $264.4 million compared to $238.8 million for the same quarter last year. The increase in revenue is primarily due to increases in revenue from average money market managed assets ($14.3 million); increases in average equity managed assets due to the MDT acquisition ($9.1 million); and increases in remaining average equity managed assets ($6.2 million). The increases were partially offset by a decrease in revenue from a change in the asset mix of average fixed-income managed assets ($2.6 million). For Q1 2007, Federated derived 48 percent of its revenue from money market assets, 40 percent from equity assets, 11 percent from fixed-income assets and 1 percent from other products and services.
Operating expenses for Q1 2007 increased by $16.0 million or 10 percent to $180.6 million, compared to $164.6 million for Q1 2006. This increase in operating expenses was caused primarily by marketing and distribution expenses related to increased money market managed assets ($8.8 million) and operating expenses related to MDT ($6.9 million).
Federated will host an earnings conference call at 9 a.m. Eastern on April 27, 2007. Investors are invited to listen to Federated’s Q1 earnings teleconference by calling 877-407-0782 (domestic) or 201-689-8567 (international) prior to the 9 a.m. start time for the teleconference. The call may also be accessed in real time on the Internet via theAbout Us section ofFederatedInvestors.com. A replay will be available after 12:30 p.m. and until May 4, 2007 by calling 877-660-6853 (domestic) or 201-612-7415 (international) and entering codes 286 and 237770.
Federated Reports Q1 Earnings
April 26, 2007
Page 3 of 7
Federated Investors, Inc. is one of the largest investment managers in the United States, managing $250.5 billion in assets as of March 31, 2007. With 151 mutual funds and a variety of separately managed account options, Federated provides comprehensive investment management to more than 5,400 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Federated ranks in the top 2 percent of money market fund managers in the industry, the top 8 percent of equity fund managers and the top 10 percent of fixed-income fund managers1. For more information, visitFederatedInvestors.com.
###
1 Strategic Insight, February 28, 2007. Based on assets under management in open-end funds.
Certain statements in this press release, such as those related to strengthening the company’s equity management capacity, 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. Among other risks and uncertainties is the ability of the company to strengthen its equity management capacity and the risk factors discussed in the company’s annual and quarterly reports as filed with the Securities and Exchange Commission. Many of these factors may be impacted 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 in the future.
Federated Securities Corp. is distributor of the Federated funds.
Separately managed accounts are made available through Federated Investment Counseling and MDT Advisers, both registered investment advisors.
Federated Reports Q1 Earnings
April 26, 2007
Page 4 of 7
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
Quarter Ended March 31, | % Change Q1 2006 to Q1 2007 | Quarter Ended Dec. 31, 2006 | % Change Q4 2006 to Q1 2007 | |||||||||||||||
2007 | 2006 | |||||||||||||||||
Revenue | ||||||||||||||||||
Investment advisory fees, net | $ | 169,176 | $ | 148,055 | 14 | % | $ | 166,182 | 2 | % | ||||||||
Administrative service fees, net | 39,292 | 36,098 | 9 | 38,820 | 1 | |||||||||||||
Other service fees, net | 54,367 | 52,877 | 3 | 53,294 | 2 | |||||||||||||
Other, net | 1,579 | 1,751 | (10 | ) | 1,440 | 10 | ||||||||||||
Total Revenue | 264,414 | 238,781 | 11 | 259,736 | 2 | |||||||||||||
Operating Expenses | ||||||||||||||||||
Compensation and related | 54,185 | 49,576 | 9 | 49,626 | 9 | |||||||||||||
General and administrative | ||||||||||||||||||
Marketing and distribution | 80,202 | 70,015 | 15 | 74,413 | 8 | |||||||||||||
Professional service fees | 7,638 | 7,587 | 1 | 9,516 | (20 | ) | ||||||||||||
Systems and communications | 5,862 | 4,756 | 23 | 5,461 | 7 | |||||||||||||
Office and occupancy | 5,515 | 5,526 | (0 | ) | 5,366 | 3 | ||||||||||||
Advertising and promotional | 2,896 | 3,952 | (27 | ) | 3,745 | (23 | ) | |||||||||||
Travel and related | 2,738 | 2,614 | 5 | 3,502 | (22 | ) | ||||||||||||
Other | 3,813 | 2,849 | 34 | 5,455 | (30 | ) | ||||||||||||
Total general and administrative | 108,664 | 97,299 | 12 | 107,458 | 1 | |||||||||||||
Amortization of deferred sales commissions | 12,258 | 13,508 | (9 | ) | 12,697 | (3 | ) | |||||||||||
Amortization of intangible assets | 5,523 | 4,227 | 31 | 5,176 | 7 | |||||||||||||
Total Operating Expenses | 180,630 | 164,610 | 10 | 174,957 | 3 | |||||||||||||
Operating Income | 83,784 | 74,171 | 13 | 84,779 | (1 | ) | ||||||||||||
Nonoperating Income (Expenses) | ||||||||||||||||||
Investment income, net | 1,993 | 3,214 | (38 | ) | 1,841 | 8 | ||||||||||||
Debt expense––recourse | (95 | ) | (65 | ) | 46 | (195 | ) | (51 | ) | |||||||||
Debt expense––nonrecourse | (1,498 | ) | (2,153 | ) | (30 | ) | (1,688 | ) | (11 | ) | ||||||||
Other, net | — | (1 | ) | (100 | ) | (3 | ) | (100 | ) | |||||||||
Total Nonoperating Income (Expenses), net | 400 | 995 | (60 | ) | (45 | ) | 989 | |||||||||||
Minority interest | 1,376 | 1,501 | (8 | ) | 1,406 | (2 | ) | |||||||||||
Income from continuing operations before income taxes | 82,808 | 73,665 | 12 | 83,328 | (1 | ) | ||||||||||||
Income tax provision | 31,045 | 27,580 | 13 | 30,185 | 3 | |||||||||||||
Income from continuing operations | 51,763 | 46,085 | 12 | 53,143 | (3 | ) | ||||||||||||
Discontinued operations, net of tax | — | 2,836 | (100 | ) | 135 | (100 | ) | |||||||||||
Net Income | $ | 51,763 | $ | 48,921 | 6 | % | $ | 53,278 | (3 | )% | ||||||||
Earnings Per Share—Basic | ||||||||||||||||||
Income from continuing operations | $ | 0.51 | $ | 0.44 | 16 | % | $ | 0.52 | (2 | )% | ||||||||
Income from discontinued operations | $ | — | $ | 0.03 | (100 | ) | $ | 0.00 | — | |||||||||
Net Income* | $ | 0.51 | $ | 0.46 | 11 | % | $ | 0.52 | (2 | )% | ||||||||
Earnings Per Share—Diluted | ||||||||||||||||||
Income from continuing operations | $ | 0.50 | $ | 0.43 | 16 | % | $ | 0.51 | (2 | )% | ||||||||
Income from discontinued operations | $ | — | $ | 0.03 | (100 | ) | $ | 0.00 | — | |||||||||
Net Income* | $ | 0.50 | $ | 0.45 | 11 | % | $ | 0.51 | (2 | )% | ||||||||
Weighted-average shares outstanding | ||||||||||||||||||
Basic | 101,913 | 105,639 | 103,050 | |||||||||||||||
Diluted | 103,606 | 108,125 | 104,636 | |||||||||||||||
Dividends declared per share | $ | 0.18 | $ | 0.15 | $ | 0.18 | ||||||||||||
* | May not sum due to rounding |
Federated Reports Q1 Earnings
April 26, 2007
Page 5 of 7
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2007 | Dec. 31, 2006 | |||||||
Assets | ||||||||
Cash, restricted cash and other short-term investments | $ | 134,103 | $ | 134,943 | ||||
Other current assets | 48,724 | 47,108 | ||||||
Deferred sales commissions, net | 101,884 | 112,286 | ||||||
Intangible assets, net | 487,413 | 488,650 | ||||||
Other long-term assets | 26,744 | 27,307 | ||||||
Total Assets | $ | 798,868 | $ | 810,294 | ||||
Liabilities, Minority Interest and Shareholders’ Equity | ||||||||
Current liabilities | $ | 132,363 | $ | 131,907 | ||||
Long-term debt—nonrecourse | 102,183 | 112,987 | ||||||
Other long-term liabilities and minority interest | 39,570 | 36,025 | ||||||
Shareholders’ equity excluding treasury stock | 1,257,790 | 1,224,161 | ||||||
Treasury stock | (733,038 | ) | (694,786 | ) | ||||
Total Liabilities, Minority Interest and Shareholders’ Equity | $ | 798,868 | $ | 810,294 | ||||
Federated Reports Q1 Earnings
April 26, 2007
Page 6 of 7
Changes in Equity and Fixed-Income Fund Assets
(in millions)
Quarter Ended | ||||||||||||
March 31, 2007 | Dec. 31, 2006 | March 31, 2006 | ||||||||||
Equity Funds | ||||||||||||
Beginning assets | $ | 28,666 | $ | 27,171 | $ | 26,031 | ||||||
Sales | 1,469 | 1,401 | 1,517 | |||||||||
Redemptions | (1,973 | ) | (1,772 | ) | (1,922 | ) | ||||||
Net redemptions | (504 | ) | (371 | ) | (405 | ) | ||||||
Net exchanges | (12 | ) | (13 | ) | 20 | |||||||
Acquisition and related | 0 | 0 | 376 | |||||||||
Other* | 566 | 1,879 | 1,545 | |||||||||
Ending assets | $ | 28,716 | $ | 28,666 | $ | 27,567 | ||||||
Fixed-Income Funds | ||||||||||||
Beginning assets | $ | 18,113 | $ | 18,012 | $ | 19,037 | ||||||
Sales | 1,224 | 1,089 | 1,297 | |||||||||
Redemptions | (1,503 | ) | (1,330 | ) | (1,737 | ) | ||||||
Net redemptions | (279 | ) | (241 | ) | (440 | ) | ||||||
Net exchanges | 2 | 80 | (28 | ) | ||||||||
Acquisition and related | 0 | 73 | 0 | |||||||||
Other* | 197 | 189 | 10 | |||||||||
Ending assets | $ | 18,033 | $ | 18,113 | $ | 18,579 | ||||||
* | Includes changes in the market value of securities held by the funds, reinvested dividends and distributions and net investment income. |
Changes in Equity and Fixed-Income Separate Account Assets*
(in millions)
Quarter Ended | ||||||
March 31, 2007 | Dec. 31, 2006 | |||||
Equity Separate Accounts | ||||||
Beginning assets | $ | 12,228 | $ | 11,105 | ||
Net customer flows** | 225 | 154 | ||||
Other** | 167 | 969 | ||||
Ending assets | $ | 12,620 | $ | 12,228 | ||
Fixed-Income Separate Accounts | ||||||
Beginning assets | $ | 4,789 | $ | 3,647 | ||
Net customer flows** | 236 | 1,062 | ||||
Other** | 103 | 80 | ||||
Ending assets | $ | 5,128 | $ | 4,789 | ||
* | Includes separately managed accounts (SMA), institutional accounts and sub-advised funds (variable annuity and other). |
** | For certain accounts, Net customer flows are calculated as the remaining difference between beginning and ending assets after the calculation of Other and the impact of Acquisition related. Other includes the approximate effect of changes in the market value of securities held in the portfolios, reinvested dividends and distributions and net investment income. |
Federated began reporting Changes in Equity and Fixed-Income Separate Account Assets in Q3 2006; data for Q1 2006 is not available.
Federated Reports Q1 Earnings
April 26, 2007
Page 7 of 7
(in millions)
MANAGED ASSETS
| March 31, 2007 | Dec. 31, 2006 | Sept. 30, 2006 | June 30, 2006 | March 31, 2006 | ||||||||||
By Asset Class | |||||||||||||||
Equity | $ | 41,336 | $ | 40,894 | $ | 38,276 | $ | 30,523 | $ | 31,552 | |||||
Fixed-income | 23,162 | 22,902 | 21,659 | 21,675 | 22,342 | ||||||||||
Money market | 185,952 | 173,644 | 162,808 | 158,319 | 163,604 | ||||||||||
Total Managed Assets | $ | 250,450 | $ | 237,440 | $ | 222,743 | $ | 210,517 | $ | 217,498 | |||||
By Market | |||||||||||||||
Wealth Management & Trust | $ | 109,364 | $ | 106,350 | $ | 102,878 | $ | 100,935 | $ | 107,885 | |||||
Broker/Dealer | 107,148 | 103,081 | 95,144 | 84,316 | 82,969 | ||||||||||
Global Institutional | 24,764 | 20,785 | 18,905 | 19,507 | 20,441 | ||||||||||
Other | 9,174 | 7,224 | 5,816 | 5,759 | 6,203 | ||||||||||
Total Managed Assets | $ | 250,450 | $ | 237,440 | $ | 222,743 | $ | 210,517 | $ | 217,498 | |||||
By Product Type | |||||||||||||||
Mutual Funds: | |||||||||||||||
Equity | $ | 28,716 | $ | 28,666 | $ | 27,171 | $ | 26,488 | $ | 27,567 | |||||
Fixed-income | 18,033 | 18,113 | 18,012 | 17,967 | 18,579 | ||||||||||
Money market | 163,841 | 155,183 | 146,841 | 142,023 | 145,978 | ||||||||||
Total Fund Assets | $ | 210,590 | $ | 201,962 | $ | 192,024 | $ | 186,478 | $ | 192,124 | |||||
Separate Accounts: | |||||||||||||||
Equity | $ | 12,620 | $ | 12,228 | $ | 11,105 | $ | 4,035 | $ | 3,985 | |||||
Fixed-income | 5,128 | 4,789 | 3,647 | 3,708 | 3,763 | ||||||||||
Money market | 22,112 | 18,461 | 15,967 | 16,296 | 17,626 | ||||||||||
Total Separate Accounts | $ | 39,860 | $ | 35,478 | $ | 30,719 | $ | 24,039 | $ | 25,374 | |||||
Total Managed Assets | $ | 250,450 | $ | 237,440 | $ | 222,743 | $ | 210,517 | $ | 217,498 | |||||
AVERAGE MANAGED ASSETS | Quarter Ended | ||||||||||||||
March 31, 2007 | Dec. 31, 2006 | Sept. 30, 2006 | June 30, 2006 | March 31, 2006 | |||||||||||
By Asset Class | |||||||||||||||
Equity | $ | 41,118 | $ | 40,066 | $ | 36,429 | $ | 30,976 | $ | 30,696 | |||||
Fixed-income | 23,002 | 22,624 | 21,685 | 21,986 | 22,743 | ||||||||||
Money market | 182,352 | 169,008 | 161,558 | 160,977 | 164,061 | ||||||||||
Total Avg. Assets | $ | 246,472 | $ | 231,698 | $ | 219,672 | $ | 213,939 | $ | 217,500 | |||||
By Product Type | |||||||||||||||
Mutual Funds: | |||||||||||||||
Equity | $ | 28,743 | $ | 28,225 | $ | 26,550 | $ | 27,000 | $ | 26,779 | |||||
Fixed-income | 18,013 | 18,150 | 18,023 | 18,244 | 18,874 | ||||||||||
Money market | 160,325 | 152,192 | 145,840 | 143,794 | 146,096 | ||||||||||
Total Avg. Fund Assets | $ | 207,081 | $ | 198,567 | $ | 190,413 | $ | 189,038 | $ | 191,749 | |||||
Separate Accounts: | |||||||||||||||
Equity | $ | 12,375 | $ | 11,841 | $ | 9,879 | $ | 3,976 | $ | 3,917 | |||||
Fixed-income | 4,989 | 4,474 | 3,662 | 3,742 | 3,869 | ||||||||||
Money market | 22,027 | 16,816 | 15,718 | 17,183 | 17,965 | ||||||||||
Total Avg. Separate Accts. | $ | 39,391 | $ | 33,131 | $ | 29,259 | $ | 24,901 | $ | 25,751 | |||||
Total Avg. Assets | $ | 246,472 | $ | 231,698 | $ | 219,672 | $ | 213,939 | $ | 217,500 | |||||
ADMINISTERED ASSETS | Quarter Ended | ||||||||||||||
March 31, 2007 | Dec. 31, 2006 | Sept. 30, 2006 | June 30, 2006 | March 31, 2006 | |||||||||||
Period End | $ | 17,783 | $ | 17,778 | $ | 18,423 | $ | 18,224 | $ | 18,555 | |||||
Average | $ | 17,762 | $ | 18,060 | $ | 18,236 | $ | 18,298 | $ | 18,494 |