Federated Investors, Inc. Reports Preliminary First Quarter 2008 Financial Results
- Total managed assets reach a record $338 billion
- Money market assets increase to a record $278 billion
(PITTSBURGH, Pa., ) — Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment managers, today reported preliminary earnings per diluted share (EPS) of $0.55 for the quarter ended March 31, 2008, compared to $0.50 reported for the quarter ended March 31, 2007, an increase of 10 percent. Federated’s preliminary net income was $56 million for Q1 2008 compared to $52 million for Q1 2007, an increase of 8 percent. These results and explanations are preliminary and are subject to change.
Federated’s total managed assets were a record $338.5 billion at March 31, 2008. The increase in total managed assets was driven by a $40.9 billion increase in money market assets during Q1 2008. Federated’s equity assets declined $4.6 billion to $37.5 billion mainly due to market depreciation. Average managed assets were $322.0 billion for the quarter with average money market assets of $260.3 billion, average equity assets of $38.5 billion and average fixed-income assets of $23.2 billion.
For Q1 2008, revenue increased $41.3 million or 16 percent to $305.7 million compared to $264.4 million for the same quarter last year. The increase is primarily due to an increase in revenue from average money market assets under management ($47.9 million) and the impact of the leap year on Q1 2008 compared to Q1 2007 ($2.3 million) partially offset by an increase in fee waivers due to higher fund expenses ($3.7 million), a decrease in revenue from average equity assets under management ($3.6 million) and a change in the mix of average fixed-income assets under management ($1.2 million).
Compared to the prior quarter, total revenue increased by $5.4 million or 2 percent. The increase is primarily due to an increase in revenue from average money market assets under management ($23.0 million) partially offset by a decrease in revenue from average equity assets under management ($11.0 million), one fewer day in Q1 2008 as compared to Q4 2007 ($4.3 million) and an increase in fee waivers due to higher fund expenses ($1.9 million). For Q1 2008, Federated derived 56 percent of its revenue from money market assets, 33 percent from equity assets, 10 percent from fixed-income assets and 1 percent from other products and services.
Operating expenses for Q1 2008 increased $34.2 million or 19 percent to $214.8 million compared to $180.6 million for Q1 2007. The increase in operating expenses was primarily attributable to the increase in marketing and distribution expenses related to increased average money market managed assets ($24.2 million) and increased regular and incentive compensation expenses ($6.9 million).
Compared to Q4 2007, operating expenses increased slightly. Compensation and related expenses decreased $9.7 million in Q1 2008 as compared to Q4 2007. The prior quarter included $15 million in compensation expenses related to new employment agreements with certain Federated Kaufmann employees and Q1 2008 included $1.7 million in new compensation for Federated Kaufmann personnel. In addition, Q1 2008 compensation was higher due to $1.8 million for seasonally higher payroll tax and employee benefit expenses, $1.2 million due to higher base pay expenses and $1.2 million in additional expense related to 2007 incentive pay. Overall, marketing and distribution expense increased by $11.5 million for the consecutive quarter comparison. Of this amount, $10.6 million was due to higher average money market managed assets and, to a lesser extent, changes in the terms of distribution contracts with certain intermediary customers. Q1 2008 marketing and distribution expense was also affected by one fewer day compared to the prior quarter, resulting in $1.2 million less in these expenses.
In Q1 2008, Federated purchased 68,684 shares of Federated Investors, Inc. class B common stock for $2.1 million.
As previously noted, the foregoing financial information, explanations and the attached financial statements and asset data as of and for the quarter ended March 31, 2008 are preliminary and subject to change. Federated will report full financial and operational results for Q1 2008 on April 24, 2008 and will host an earnings conference call at 9 a.m. Eastern on April 25, 2008. Investors are invited to listen to Federated’s Q1 2008 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 the About Us section of FederatedInvestors.com. A replay will be available after 12:30 p.m. and until May 2, 2008 by calling 877-660-6853 (domestic) or 201-612-7415 (international) and entering codes 286 and 281178.
Federated Investors, Inc. is one of the largest investment managers in the United States, managing $338.5 billion in assets as of March 31, 2008. With 147 mutual funds and separately managed accounts in a wide range of investment strategies, Federated provides comprehensive investment management to more than 5,400 institutions and intermediaries includingcorporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. For more information, visit FederatedInvestors.com.
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Certain statements in this press release, such as those related to Federated’s results and financial position as of and for the quarter ended March 31, 2008, 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 completion of the review of the financial statements as of and for the quarter ended March 31, 2008 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.
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