Federated Investors, Inc. Reports First Quarter Earnings; Announces Share Buyback Program and Dividend Increase
- Fixed-income assets reach record high of $28.4 billion; Managed assets increase 10% since Q1 2002
- Board approves 5 million share buyback program and increases quarterly dividend 23% to $0.07 per share
(PITTSBURGH, Pa., 04/23/2003 09:44 PM) — 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.”
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 managers1. For more information, visit www.federatedinvestors.com.
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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.
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