Federated Investors Beats

Federated Investors Inc. (FII - Analyst Report) reported third quarter 2009 net income applicable to common shareholders of $57.0 million or 56 cents per share compared to a net income of $53.3 million or 52 cents per share in the prior quarter and a net income of $56.2 million or 52 cents per share in the prior-year quarter. Results were ahead of the Zacks Consensus Estimate of 52 cents due to lower-than-expected expenses offsetting lower revenues.

Total revenue decreased 4.3% year-over-year to $293.6 billion primarily due to $36.5 million in voluntary fee waivers related to certain money market funds in order to maintain positive or zero net yields. Falling yields forced Federated and other money fund managers to waive fees to keep clients invested in their products. The company witnessed positive flows into bond and equity funds.

Total operating expenses decreased 6.5% sequentially and 9.1% year-over-year to $198.9 million. The decline was primarily attributable to decreased marketing and distribution expenses because of the fee-waiver related reductions, partially offset by the impact of increases in average money market managed assets.

Total assets under management was $392.3 billion at Sept. 30, 2009, up 14% compared to $344.0 billion at Sept. 30, 2008 and down 2% from $401.8 billion reported on June 30, 2009.

The company declared quarterly dividend of 24 cents per share payable on Nov. 13, 2009 to shareholders of record as of Nov. 9, 2009. During the quarter, Federated purchased 470,581 shares of Federated class B common stock for $12.0 million.

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