Federated Investors, Inc. Reports Record EPS of $0.46 for the Third Quarter of 2003
- Equity assets increase 31% since Q3 2002 and top $22 billion
- Quarterly dividend of $0.085 declared
(PITTSBURGH, PA, ) — Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment management companies, today reported earnings per diluted share (EPS) of $0.46 for the quarter ended September 30, 2003, an increase of seven percent from $0.43 per share for Q3 2002 and an increase of five percent from $0.44 per share for Q2 2003. Federated reported year-to-date 2003 EPS of $1.32, which equals the amount for the first nine months of 2002. Net income was $50.9 million and $148.7 million, respectively, for the three and nine months ended September 30, 2003, compared to $49.9 million and $154.9 million, respectively, for the same periods in 2002.
Federated's assets under management were $194.1 billion at September 30, 2003, up $13.2 billion or seven percent from $180.9 billion at September 30, 2002 and down $8.3 billion from the $202.4 billion reported at June 30, 2003. Average managed assets for Q3 2003 were $198.7 billion, $8.7 billion higher than the $190.0 billion reported for Q3 2002 and slightly lower than the $199.4 billion in average managed assets reported for Q2 2003.
"Improved equity market conditions combined with solid net inflows into our equity products were the drivers of our strong performance during the third quarter," said J. Christopher Donahue, president and CEO. "Federated's diverse revenue mix continues to enable the company to succeed across varying market conditions."
The company also announced today that its board of directors declared a quarterly dividend of $0.085 per share. The dividend is payable on November 14, 2003, to shareholders of record as of November 7, 2003. Federated continued its share buyback program by purchasing 252,100 shares of Federated Investors, Inc. class B common stock for $7.1 million in the open market.
Through its mutual funds and separate accounts, Federated managed $51.8 billion in fixed-income and equity assets as of September 30, 2003, an increase of 22 percent from $42.4 billion at the end of Q3 2002. As a result of positive market conditions and flows, equity assets increased to $22.4 billion at the end of Q3 2003, compared to $17.1 billion at the end of Q3 2002 and $20.8 billion at the end of Q2 2003.
The Federated Kaufmann Fund was the top selling equity fund during the quarter, followed by Federated Capital Appreciation Fund, a core blend fund; Federated Market Opportunity Fund, a midcap value fund; and Federated International Equity Fund, an international large-cap growth fund.
Fixed-income assets were $29.4 billion at September 30, 2003, up $4.1 billion from the end of Q3 2002 and down slightly from the end of Q2 2003.
Money market assets in both funds and separate accounts totaled $142.3 billion at September 30, 2003, $3.7 billion or three percent over the $138.6 billion at September 30, 2002 and down $9.1 billion from June 30, 2003. Average money market assets were $147.6 billion for the quarter ended September 30, 2003, compared to $147.2 billion for Q3 2002 and $150.3 billion for Q2 2003. Money market fund assets increased to $128.6 billion at the end of Q3 2003 from $126.3 billion at the end of Q3 2002 and decreased from the $135.9 billion at the end of the prior quarter.
For the third quarter of 2003, total revenue increased six percent to $183.0 million from Q3 2002 and grew by three percent from the prior quarter. Total revenue for the first nine months of 2003 declined slightly to $531.0 million from $537.2 million for the first nine months of 2002. Federated's revenue growth was due largely to the increase in both equity and fixed income assets since Q3 2002, while the increase in revenue since Q2 2003 was due primarily to the increase in equity assets. For Q3 2003, Federated derived 44 percent of its revenue from money market assets, 30 percent from equity assets, 20 percent from fixed-income assets and 6 percent from other products.
Operating expenses increased 12 percent for Q3 2003 to $99.8 million from $89.5 million for Q3 2002 and increased two percent from the prior quarter due largely to higher compensation expenses. For the first nine months of the year, operating expenses increased two percent to $289.0 million compared to $283.8 million for the same period last year.
Federated will host an earnings conference call at 9:00 a.m. on Wednesday, October 22, 2003. Investors are invited to listen to Federa ted's Q3 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 the About Us section of FederatedInvestors.com. A replay will be available after 12:30 p.m. and until October 29, 2003, by calling 800-642-1687 (domestic) or 706-645-9291 (international) and entering code 2735643.
Federated Investors, Inc. is one of the largest investment managers in the United States, managing $194.1 billion in assets as of September 30, 2003. With more than 135 mutual funds, various separately managed accounts 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 two 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, visit FederatedInvestors.com.
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1Strategic Insight, August, 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.
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