Exhibit 99.1
Federated World Class Investment Manager (R)
[FEDERATED LOGO OMITTED]
PRESS RELEASE
Federated Investors, Inc. Reports First Quarter Earnings; Announces Share
Buyback Program and Dividend Increase
o Fixed-income assets reach record high of $28.4 billion; Managed assets
increase 10% since Q1 2002
o Board approves 5 million share buyback program and increases quarterly
dividend 23% to $0.07 per share
(PITTSBURGH, PA, April 23, 2003) -- Federated Investors, Inc. (NYSE: FII), one
of the nation's largest investment management companies, today reported earnings
per diluted share (EPS) of $0.43 for the quarter ended March 31, 2003 compared
with $0.44 per share for the same quarter last year. Net income was $48.7
million for Q1 2003 compared to net income of $52.3 million for Q1 2002.
The company's board of directors approved an extension of the existing share
repurchase program authorizing the company to purchase up to five million shares
of Federated Class B Common Stock in addition to the 1.4 million shares
remaining eligible for purchase as of March 31, 2003 in its existing program. In
Q1 2003, Federated repurchased 2,937,300 shares of Federated Investors, Inc.
Class B common stock for $73.5 million in the open market.
The company also announced today that its board of directors increased the
quarterly dividend by 23 percent to $0.070 per share from $0.057 per share. The
dividend, payable on May 15, 2003, to shareholders of record as of May 7, 2003,
was approved based on the company's strong financial position and earnings
growth in 2002.
"Strong asset growth and record sales throughout our fixed-income product line
during the first quarter resulted from Federated's competitive investment
management skills coupled with our strong distribution capabilities," said J.
Christopher Donahue, president and CEO. "Federated also continued to enhance
investment management capabilities during the first quarter adding four veteran
investment professionals to compliment the global equity team and to further
augment our proprietary research capabilities."
Contacts:
MEDIA MEDIA ANALYSTS
Anne Cumberledge J.T. Tuskan Ray Hanley
(412) 288-7538 (412) 288-7895 (412) 288-1920
acumberledge@federatedinv.com jtuskan@federatedinv.com rhanley@federatedinv.com
Federated's total managed assets were $195.7 billion at March 31, 2003, up $18.1
billion or 10 percent from $177.6 billion at March 31, 2002 and up slightly from
the $195.4 billion reported at December 31, 2002. Average managed assets for Q1
2003 were $200.7 billion, $17.1 billion higher than the $183.6 billion reported
for Q1 2002 and $8.1 billion higher than the $192.6 billion in average managed
assets reported for Q4 2002.
Through its mutual funds and separate accounts, Federated managed $45.8 billion
in fixed-income and equity assets as of March 31, 2003. Federated's strong
fixed-income fund sales continued, reaching $4.5 billion in gross sales and $1.5
billion in net sales for Q1 2003. Led by sales, fixed-income assets increased to
$28.4 billion at March 31, 2003, up $6.0 billion from the end of Q1 2002 and up
$1.9 billion from the end of Q4 2002.
Federated produced positive equity fund flows with $1.5 billion in gross sales
and $170 million in net sales for Q1 2003. Due primarily to negative equity
market returns, equity assets declined to $17.4 billion at the end of Q1 2003
from $23.0 billion at the end of Q1 2002 and from $18.1 billion at the end of Q4
2002.
Money market assets in both funds and separate accounts totaled $149.9 billion
at March 31, 2003, $17.7 billion or 13 percent over the $132.2 billion at March
31, 2002. Money market fund assets increased to $132.5 billion at the end of Q1
2003 from $131.1 billion at the end of Q1 2002. Money market separate account
assets increased to $17.4 billion at the end of Q1 2003 from $1.1 billion at the
end of Q1 2002. The increase was due in large part to the addition of the
TexPool assets Federated began managing in Q2 2002.
Negative equity market returns in the first quarter of 2003 impacted both
revenues and operating expenses. For the first quarter of 2003, revenue declined
six percent to $170.0 million, as fixed-income and money market assets increased
while equity assets decreased. Operating expenses fell five percent for Q1 2003
to $91.2 million from $95.9 million at Q1 2002.
For Q1 2003, Federated derived 48 percent of its revenue from money market
assets, 25 percent from equity assets, 21 percent from fixed-income assets and
six percent from other products.
Federated will host an earnings conference call at 1:00 p.m. on April 23, 2003.
Investors are invited to listen to Federated's Q1 earnings teleconference by
calling 888-412-9259 (domestic) or 706-679-0848 (international) prior to the
1:00 p.m. EDT start time for the teleconference. The call may also be accessed
in real time on the Internet via the Company section of
www.federatedinvestors.com. A replay will be available after 4:00 p.m. and until
April 30, 2003, by calling 800-642-1687 (domestic) or 706-645-9291
(international) and entering code 9168703.
Federated Investors, Inc. is one of the largest investment managers in the
United States, managing $196 billion in assets as of March 31, 2003. With more
than 135 mutual funds and separately managed accounts in a wide range of
investment strategies, 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 managers (1). For more information, visit
www.federatedinvestors.com.
###
(1) Strategic Insight, February 28, 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 visit
www.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.
Unaudited Condensed Consolidated Statements of Income*
(in thousands, except per share data)
- ---------------------------------------------------------------------
Quarter Ended
March 31,
-------------------------------
2003 2002 % Change
- ---------------------------------------------------------------------
Revenue
Investment advisory fees, net $108,306 $116,441 (7.0)
Administrative service fees, net 34,700 36,243 (4.3)
Other service fees, net 25,371 28,014 (9.4)
Other, net 1,581 922 71.5
- ---------------------------------------------------------------------
Total Revenue 169,958 181,620 (6.4)
- ---------------------------------------------------------------------
Operating Expenses
Compensation and related 42,310 48,536 (12.8)
General and administrative
Office and occupancy 6,819 6,288 8.4
Professional service fees 6,758 5,661 19.4
Systems and communications 6,749 6,318 6.8
Travel and related 2,850 2,433 17.1
Other 2,276 1,998 13.9
- ---------------------------------------------------------------------
Total general and administrative 25,452 22,698 12.1
Marketing and promotional 17,529 17,904 (2.1)
Amortization of deferred sales 3,238 3,750 (13.7)
commissions
Amortization of intangible assets 2,624 3,061 (14.3)
- ---------------------------------------------------------------------
Total Operating Expenses 91,153 95,949 (5.0)
- ---------------------------------------------------------------------
Operating Income 78,805 85,671 (8.0)
- ---------------------------------------------------------------------
Nonoperating Income (Expenses)
Investment income, net 501 456 9.9
Debt expense -- recourse (128) (99) 29.3
Debt expense -- nonrecourse (1,056) (1,054) 0.2
Other (5) 1 (600.0)
- ---------------------------------------------------------------------
Total Nonoperating (688) (696) (1.1)
Expenses, net
- ---------------------------------------------------------------------
Minority interest 2,518 2,664 (5.5)
- ---------------------------------------------------------------------
Income before income taxes 75,599 82,311 (8.2)
Income tax provision 26,888 29,988 (10.3)
- ---------------------------------------------------------------------
Net Income $ 48,711 $ 52,323 (6.9)
- ---------------------------------------------------------------------
Earnings Per Share
Basic $ 0.44 $ 0.46 (4.3)
Diluted $ 0.43 $ 0.44 (2.3)
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Weighted-average shares outstanding
Basic 109,685 113,169
Diluted 113,973 118,191
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Dividends declared per share $ 0.057 $ 0.046
- ---------------------------------------------------------------------
* Certain items previously reported have been reclassified to conform with
the current year presentation.
Unaudited Condensed Consolidated Balance Sheets
(in thousands) March 31, Dec. 31,
2003 2002
- ---------------------------------------------------------------------------
Assets
Cash and other short-term investments $ 119,044 $150,932
Other current assets 43,310 48,756
Deferred sales commissions, net 59,310 58,606
Intangible assets, net 232,516 235,166
Other long-term assets 35,322 36,547
- ---------------------------------------------------------------------------
Total Assets $ 489,502 $530,007
- ---------------------------------------------------------------------------
Liabilities, Minority Interest and Shareholders'
Equity
Current liabilities $ 96,628 $107,920
Long-term debt--recourse 1,343 1,385
Long-term debt--nonrecourse 58,692 57,858
Other long-term liabilities and minority interest 22,398 22,127
Shareholders' equity excluding treasury stock 719,680 676,416
Treasury stock (409,239) (335,699)
- ---------------------------------------------------------------------------
Total Liabilities, Minority Interest and $ 489,502 $530,007
Shareholders' Equity
- ---------------------------------------------------------------------------
Changes in Equity and Fixed-Income Fund Managed Assets
(in millions)
Quarter Ended March 31,
----------------------------
2003 2002
- --------------------------------------------------------------
Equity Funds
Beginning Assets $ 16,240 $20,760
- --------------------------------------------------------------
Sales 1,504 1,563
Redemptions (1,334) (1,306)
- --------------------------------------------------------------
Net sales 170 257
Net exchanges (9) 36
Other* (795) 72
- --------------------------------------------------------------
Ending Assets $ 15,606 $21,125
- --------------------------------------------------------------
Fixed-Income Funds
Beginning Assets $ 22,169 $17,378
- --------------------------------------------------------------
Sales 4,464 3,182
Redemptions (2,983) (2,169)
- --------------------------------------------------------------
Net sales 1,481 1,013
Net exchanges (184) 34
Other* 303 108
- --------------------------------------------------------------
Ending Assets $ 23,769 $18,533
- --------------------------------------------------------------
*Includes changes in the market value of securities held by the funds,
reinvested dividends and distributions and net investment income.
(in millions)
- -------------------------------------------------------------------------------
MANAGED ASSETS March 31, Dec. 31, Sept. 30, June 30, March 31,
2003 2002 2002 2002 2002
- -------------------------------------------------------------------------------
By Asset Class
Equity $ 17,400 $ 18,067 $ 17,097 $ 20,886 $ 23,025
Fixed-income 28,372 26,541 25,277 23,260 22,370
Money market 149,893 150,745 138,552 140,860 132,205
- -------------------------------------------------------------------------------
Total Managed Assets $ 195,665 $ 195,353 $ 180,926 $ 185,006 $ 177,600
- -------------------------------------------------------------------------------
By Market
Trust $ 95,152 $ 102,186 $ 91,065 $ 95,001 $ 98,228
Broker/dealer 44,390 44,060 42,413 44,196 45,899
Institutional 31,551 27,730 27,738 25,310 24,472
International 1,867 1,795 1,633 1,475 1,366
Other 22,705 19,582 18,077 19,024 7,635
- -------------------------------------------------------------------------------
Total Managed $ 195,665 $ 195,353 $ 180,926 $ 185,006 $ 177,600
Assets
- -------------------------------------------------------------------------------
By Product Type
Mutual Funds:
Equity $ 15,606 $ 16,240 $ 15,506 $ 19,034 $ 21,125
Fixed-income 23,769 22,169 21,310 19,472 18,533
Money market 132,454 136,374 126,292 127,972 131,109
- -------------------------------------------------------------------------------
Total Fund Assets $ 171,829 $ 174,783 $ 163,108 $ 166,478 $ 170,767
- -------------------------------------------------------------------------------
Separate Accounts:
Equity $ 1,794 $ 1,827 $ 1,591 $ 1,852 $ 1,900
Fixed-income 4,602 4,372 3,967 3,788 3,837
Money market 17,440 14,371 12,260 12,888 1,096
- -------------------------------------------------------------------------------
Total Separate $ 23,836 $ 20,570 $ 17,818 $ 18,528 $ 6,833
Accounts
- -------------------------------------------------------------------------------
Total Managed Assets $ 195,665 $ 195,353 $ 180,926 $ 185,006 $ 177,600
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE MANAGED ASSETS Quarter Ended
- -------------------------------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2003 2002 2002 2002 2002
- -------------------------------------------------------------------------------
By Asset Class
Equity $ 17,662 $ 18,041 $ 18,515 $ 22,191 $ 22,334
Fixed-income 27,420 25,667 24,333 22,949 21,841
Money market 155,631 148,930 147,174 145,632 139,417
- -------------------------------------------------------------------------------
Total Avg. Assets $ 200,713 $ 192,638 $ 190,022 $ 190,772 $ 183,592
- -------------------------------------------------------------------------------
By Product Type
Mutual Funds:
Equity $ 15,867 $ 16,303 $ 16,838 $ 20,279 $ 20,471
Fixed-income 22,954 21,505 20,461 19,106 18,120
Money market 138,427 135,920 134,747 133,026 138,329
- -------------------------------------------------------------------------------
Total Avg. Fund $ 177,248 $ 173,728 $ 172,046 $ 172,411 $ 176,920
Assets
- -------------------------------------------------------------------------------
Separate Accounts:
Equity $ 1,795 $ 1,738 $ 1,677 $ 1,912 $ 1,863
Fixed-income 4,466 4,162 3,872 3,843 3,721
Money market 17,204 13,010 12,427 12,606 1,088
- -------------------------------------------------------------------------------
Total Avg. Separate $ 23,465 $ 18,910 $ 17,976 $ 18,361 $ 6,672
Acct.
- -------------------------------------------------------------------------------
Total Avg. Assets $ 200,713 $ 192,638 $ 190,022 $ 190,772 $ 183,592
- -------------------------------------------------------------------------------
ADMINISTERED ASSETS Quarter Ended
- -------------------------------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2003 2002 2002 2002 2002
- -------------------------------------------------------------------------------
Period End $ 36,133 $ 34,827 $ 31,485 $ 32,830 $ 42,790
Average $ 36,790 $ 36,303 $ 32,319 $ 39,367 $ 43,550
- -------------------------------------------------------------------------------