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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _____________
COMMISSION FILE NUMBER 1-14818
FEDERATED INVESTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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25-1111467
PENNSYLVANIA
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(I.R.S. EMPLOYER
(STATE OR OTHER JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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CLASS B COMMON STOCK, NO PAR VALUE NEW YORK STOCK EXCHANGE
(TITLE OF EACH CLASS) (NAME OF EACH EXCHANGE ON WHICH
REGISTERED)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes A No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. A
The aggregate market value of the Class B Common Stock held by
non-affiliates of the registrant as of March 19, 2001 was approximately $2,199
million, based on the last reported sales price of $26.76 as reported by the New
York Stock Exchange. For purposes of this calculation, the registrant has deemed
all of its executive officers and directors to be affiliates, but has made no
determination as to whether any other persons are "affiliates" within the
meaning of Rule 12b-2 under the Securities Exchange Act of 1934. The number of
shares of Class B Common Stock outstanding on March 19, 2001, was 116,466,611
shares.
Documents incorporated by reference:
Selected portions of the 2000 Annual Report to Shareholders - Part I, Part
II and Part IV of this Report.
Selected portions of the 2001 Information Statement - Part III of this
Report.
PART I
ITEM 1 - BUSINESS
OVERVIEW
Federated Investors, Inc. and its consolidated subsidiaries (collectively,
"Federated") is a leading provider of investment management and related
financial services. Federated sponsors, markets and provides investment
advisory, distribution and administrative services primarily to mutual funds in
both domestic and international markets. Total assets under management at
December 31, 2000, were $139.6 billion, primarily in funds managed, distributed
and administered by Federated and in other non-fund products ("Managed Assets"),
of which $5.9 billion were in separately managed accounts. Managed Assets at
December 31, 2000, increased $14.8 billion over the prior year.
Federated provided investment advisory services to 137 funds at December
31, 2000. These funds are offered through banks, broker/dealers and other
financial intermediaries who use them to meet the needs of their customers;
these customers include retail investors, corporations, and retirement plans.
Federated also provides mutual fund administrative services to its managed funds
and to funds sponsored by third parties, where Federated also acts as fund
distributor. Federated provided these services for $39.7 billion of assets in
funds sponsored by third parties, primarily banks, ("Administered Assets") as of
December 31, 2000. In addition, Federated provides other services related to
mutual funds including trade execution and clearing and retirement plan
recordkeeping.
Total Managed Assets for each of the past three years are as follows:
MANAGED ASSETS Growth Rate
-------------------
(DOLLARS IN MILLIONS) As of December 31, 3 Yr.
--------------------
---------
1998 CAGR* 2000
2000 1999
----------------------------- -------------------
Money Market Funds/
Cash Equivalents $98,797 $83,299 $77,055 16% 19%
Equity Funds 20,641 20,941 15,503 21% (1%)
Fixed-Income Funds 14,268 15,857 16,437 (2%) (10%)
Separate Accounts 5,878 4,723 2,558 40% 24%
-----------------------------
Total Managed Assets $139,584 $124,820 $111,553 15% 12%
=============================
*Compound Annual Growth Rate
Average Managed Assets for the past three years were as follows:
AVERAGE MANAGED ASSETS Growth Rate
-------------------
(DOLLARS IN MILLIONS) Year ended December 31, 3 Yr.
-----------------------------
--------------------
1998 CAGR* 2000
2000 1999
----------------------------- -------------------
Money Market Funds/
Cash Equivalent $86,406 $79,253 $69,074 16% 9%
Equity Funds 22,107 17,531 13,777 32% 26%
Fixed-Income Funds 14,713 16,680 15,851 1% (12%)
Separate Accounts 5,168 4,109 2,334 40% 26%
-----------------------------
Total Average Managed Assets $128,394 $117,573 $101,036 16% 9%
=============================
* Compound Annual Growth Rate
Federated's revenues from investment advisory, related administrative and
other service fees provided under agreements with the funds and other entities,
and other income over the last three years were as follows (Certain amounts
previously reported have been reclassified to conform with the current year's
presentation.):
REVENUE
(DOLLARS IN THOUSANDS) Growth Rate
-----------------------
Year ended December 31, 3 Yr.
-------------------------------
2000 1999 1998 CAGR* 2000
------------------------------------------------------
Investment Advisory $380,234 $324,923 $280,046 20% 17%
Fees
Administrative 109,870 104,381 97,234 9% 5%
Service Fees
Other Service Fees 166,356 147,700 124,599 24% 13%
Other Income 24,308 24,094 20,248 29% 1%
-------------------------------
TOTAL REVENUE $680,768 $601,098 $522,127 19% 13%
===============================
* Compound Annual Growth Rate
BUSINESS STRATEGY
Federated pursues a multi-faceted business strategy having three broad
objectives:
-To be widely recognized as a world-class investment management
company that offers highly competitive performance and disciplined risk
management across a broad spectrum of products.
-To profitably expand market penetration by increasing its assets
under management in each market where it chooses to apply its substantial
distribution resources.
-To profitably expand its customer relationships by providing
superior services designed to support the growth of Managed and Administered
Assets.
Federated offers a wide range of products, including equity, fixed-income
and money market investments designed to meet the needs of investors with
varying investment objectives. Federated has structured its investment process
to meet the requirements of fiduciaries and others who use Federated's products
to meet the needs of their customers. Fiduciaries typically have stringent
demands related to portfolio composition, risk and investment performance.
In recent years, Federated has emphasized growth of its equity business as
an important component of its strategy and has broadened its range of equity
products. Equity assets are managed across a wide range of styles including
large cap value ($6.3 billion), equity income ($4.6 billion), mid-large cap
growth ($4.2 billion) and international ($2.9 billion) investments. Federated
also manages assets in equity index funds ($3.1 billion), balanced and asset
allocation funds ($1.1 billion) and small cap blend ($0.4 billion). These asset
allocation funds may include fixed-income assets.
Federated's fixed-income assets are managed in a wide range of sectors
including high-yield ($4.3 billion), mortgage-backed ($4.3 billion),
multi-sector ($3.5 billion), municipal ($1.9 billion), corporate ($1.7 billion),
U.S. government ($1.5 billion) and international/global ($1.0 billion).
Federated's fixed-income funds offer fiduciaries and others a broad range of
highly defined products designed to meet many of their investment needs and
requirements.
Federated uses a team of portfolio managers led by a senior portfolio
manager for each fund. Federated's investment research process combines
disciplined quantitative screening along with rigorous fundamental analysis to
identify attractive securities. Portfolios are continually reevaluated with
respect to valuation, price and earnings estimate momentum, company
fundamentals, market factors, economic conditions and risk controls in order to
achieve specific investment objectives.
Federated is one of the largest U.S. managers of money market fund assets,
with $98.8 billion in assets under management at December 31, 2000. Federated
has developed expertise in managing cash for institutions, which typically have
stringent requirements for regulatory compliance, relative safety, liquidity and
competitive yields. Federated has managed money market funds for over 25 years
and began selling money market fund products to institutions in 1974. Federated
also manages retail money market fund products which are typically distributed
through broker/dealers. Federated manages money market fund assets in a variety
of asset classes including government ($48.0 billion), prime ($35.5 billion) and
tax-free ($15.3 billion).
Federated's distribution strategy is to provide products geared to
financial intermediaries, primarily banks, broker/dealers and investment
advisers, and directly to institutions such as corporations and government
entities. Through substantial investments in distribution for more than 20
years, Federated has developed selling relationships with more than 4,000
institutions and sells its products directly to another 500 corporations and
government entities. Federated uses its trained sales force of more than 180
representatives and managers across the United States to add new customer
relationships and strengthen and expand existing relationships.
INVESTMENT PRODUCTS AND MARKETS
Federated's investment products are distributed in four principal
markets: the bank trust market, the broker/dealer market, the institutional
market and the international market. The following chart shows Federated Managed
Assets by market for the dates indicated:
MANAGED ASSETS BY MARKET Growth Rate
------------------
(DOLLARS IN MILLIONS) As of December 31, 3 Yr.
---------
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2000 1999 1998 CAGR* 2000
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Bank Trust Market $71,955 $63,073 $58,891 13% 14%
Broker/Dealer Market 43,462 40,769 35,232 15% 7%
Institutional Market 17,808 16,349 13,993 16% 9%
International Market 1,356 1,104 0 N/A 23%
Other 5,003 3,525 3,437 15% 42%
-----------------------------
Total Managed Assets $139,584 $124,820 $111,553 15% 12%
=============================
*Compound Annual Growth Rate
Note: Certain amounts previously reported have been reclassified to conform
with the current year's presentation.
BANK TRUST MARKET. Federated pioneered the concept of providing cash
management to bank trust departments through mutual funds over 25 years ago. In
addition, Federated initiated a strategy to provide a broad range of equity and
fixed-income funds, termed MultiTrust(TM), to meet the evolving needs of bank
trust departments. Federated's bank trust customers invest the assets subject to
their control, or upon direction from their customers, in one or more funds
managed by Federated. Federated employs a dedicated sales force backed by a
staff of support personnel to offer its products and services in the bank trust
market. In addition to bank trust departments, Federated provides services to
bank capital markets (institutional brokerages within banks) and to other
institutional customers as part of the bank trust market.
Money market funds contain the majority of Federated's Managed Assets in
the bank trust market. In allocating investments across various asset classes,
investors typically maintain a portion of their portfolios in cash or cash
equivalents, including money market funds, irrespective of trends in bond or
stock prices. Federated also offers an extensive menu of equity and fixed-income
mutual funds structured for use in the bank trust market. As of December 31,
2000, Managed Assets in the bank trust market were comprised of $62.4 billion in
money market funds and cash equivalents, $5.0 billion in equity funds and $4.6
billion in fixed-income funds.
BROKER/DEALER MARKET. Federated distributes its products in this market
through a large, diversified group of approximately 2,000 national, regional,
independent, and bank broker/dealers. Federated maintains a sales staff
dedicated to this market, with a separate group focused on the bank
broker/dealers. Broker/dealers use Federated's products to meet the needs of
their customers, who are typically retail investors. Federated offers products
with a variety of commission structures that enable brokers to offer their
customers a choice of pricing options. Federated also offers money market mutual
funds as cash management products designed for use in the broker/dealer market.
As of December 31, 2000, Managed Assets in the broker/dealer market were
comprised of $24.5 billion in money market funds, $12.5 billion in equity funds,
$6.3 billion in fixed-income funds and $0.2 billion in separate accounts.
INSTITUTIONAL MARKET. Federated maintains a dedicated sales staff to focus
on the distribution of its products to a wide variety of users: investment
advisors, corporations, corporate and public pension funds, insurance companies,
government entities, foundations, endowments, hospitals, and non-Federated
investment companies. As of December 31, 2000, Managed Assets in the
institutional market were comprised of $10.9 billion in money market funds, $3.0
billion in separate accounts, $2.0 billion in fixed-income funds and $1.9
billion in equity funds.
INTERNATIONAL MARKET. Federated continues to broaden distribution to areas
outside of the U.S. In 1998, Federated entered into an agreement with
LVM-Versicherungen (LVM), a large German insurance company, to create a
joint-venture company named Federated Fonds-Service GmbH ("Federated GmbH"), to
exclusively manage, distribute and market a family of mutual funds to insurance
clients of LVM, as well as pursue institutional separate accounts. In early
2000, Federated GmbH launched six retail funds (Federated Unit Trust) for
distribution in German speaking countries in Europe. As of December 31, 2000,
Managed Assets in these funds and in separate accounts totaled $0.2 billion and
$1.1 billion, respectively.
ALTERNATIVE PRODUCTS. Over the last two years, Federated increased assets
by entering into advisory agreements for three separate collateralized bond
obligation (CBO) products. These products package Federated's investment
management expertise into an alternative product structure and offer another
source of investment advisory fee revenue. As of December 31, 2000, Managed
Assets in Federated's CBOs totaled $1.0 billion. Federated plans to continue to
seek opportunities to manage CBOs and other alternative products.
Federated continues to look for new alliances and opportunities to enhance
shareholder value through acquisitions. In 2000, Federated signed a definitive
agreement to acquire the business of New York-based Edgemont Asset Management
Corporation, the advisor for the $3.4 billion Kaufmann Fund. Upon closing the
transaction, Federated will introduce the Federated Kaufmann Fund through
Federated's existing distribution channels, and for the first time, this fund
will become available through financial intermediaries.
In addition, in 2000, Federated completed the acquisition of the mutual
fund assets of Investment Advisers, Inc. (IAI). As a result of this transaction,
Federated assumed the investment management, distribution and shareholder
servicing responsibilities for 11 former IAI funds totaling $346.0 million as of
the transaction date in primarily equity assets. Federated also acquired
InvestLink Technologies, Inc. in 2000, a software developer and marketer of
applications for recordkeeping, administration and servicing of defined
contribution benefit plans.
Federated's principal source of revenue is investment advisory fees earned
by various subsidiaries and affiliates pursuant to investment advisory contracts
with the funds. These subsidiaries and affiliates are registered as investment
advisers under the Investment Advisers Act of 1940 (the "Advisers Act").
Investment advisers are compensated for their services in the form of investment
advisory fees based upon the average daily net assets of the fund.
Federated provided investment advisory services to 137 funds as of
December 31, 2000. The funds sponsored by Federated are domiciled in the U.S.,
with the exception of Federated International Funds PLC and Federated Unit
Trust, which are domiciled in Dublin, Ireland. Each of Federated's
U.S.-domiciled funds (with the exception of a collective investment trust) is
registered under the Investment Company Act of 1940 ("Investment Company Act")
and under applicable federal and state laws. Each of the funds enters into an
advisory agreement. The advisory agreements are subject to annual approval by
the fund directors or trustees, including a majority of the directors who are
not "interested persons" of the funds or Federated as defined under the
Investment Company Act. Advisory agreements are subject to periodic review by
the directors or trustees of the respective funds and amendments to such
agreements must be approved by the fund shareholders. A significant portion of
Federated's revenue is derived from these advisory agreements which generally
are terminable upon 60 days notice.
Of these 137 funds, Federated's investment advisory subsidiaries managed
52 money market funds (and cash equivalents) totaling $98.8 billion in assets,
46 fixed-income funds with $14.3 billion in assets and 39 equity funds with
$20.6 billion in assets. Appendix "A" hereto lists all of these funds, including
asset levels and date of inception.
Federated also serves as investment advisor to pension and other employee
benefit plans, corporations, trusts, foundations, endowments, mutual funds
sponsored by third parties, and other investors. These separate accounts totaled
$5.9 billion in assets under management as of December 31, 2000. Fees for
separate accounts are typically based on the value of assets under management
pursuant to investment advisory agreements that may be terminated at any time.
Federated also provides a broad range of services to support the
operation, administration, and distribution of Federated-sponsored funds. These
services, for which Federated receives fees pursuant to administrative
agreements with the funds, include legal support and regulatory compliance,
audit, fund financial services, transfer agency services, and shareholder
servicing and support. Federated also offers these services to institutions
seeking to outsource all or part of their mutual fund service and distribution
functions. Through various subsidiaries, Federated provides its experience and
expertise in these areas to expand its relationships with key financial
intermediaries, primarily banks, who sponsor proprietary mutual funds. Federated
receives fees from these bank-sponsored funds for providing fund services.
The following chart shows period-end and average Administered Assets for
the past three years:
ADMINISTERED ASSETS As of and for the year ended Growth
(DOLLARS IN MILLIONS) December 31, Rate
----------------------------- ----------
2000
2000 1999 1998
----------------------------- ----------
Period End Administered Assets $39,732 $41,234 $28,165 (4%)
Average Administered Assets 41,966 35,079 53,136 20%
The decrease in 1999 average Administered Assets was due primarily to the
termination of certain administration contracts in 1998 due to internalization
of these functions by banks who developed the ability to provide mutual fund
services through acquisitions.
In addition, certain funds sponsored by Federated have adopted
distribution plans that, subject to applicable law, provide for payment to
Federated for the reimbursement of marketing expenses, including sales
commissions paid to broker/dealers. These distribution plans are implemented
through a distribution agreement between Federated and the Fund. Although the
specific terms of each such agreement vary, the basic terms of the agreements
are similar. Pursuant to the agreements, Federated acts as underwriter for the
fund and distributes shares of the Fund through unaffiliated dealers. Each
distribution plan and agreement is initially approved by the directors or
trustees of the respective Fund and is reviewed for approval annually.
Federated also provides retirement plan recordkeeping services and trade
execution and settlement services through its various subsidiaries.
COMPETITION
The mutual fund industry is highly competitive. According to the
Investment Company Institute, at the end of 2000, there were over 8,100
registered open-end investment companies, of varying sizes and investment
policies, whose shares are currently being offered to the public both on a load
and no-load basis. In addition to competition from other mutual fund managers
and investment advisers, Federated and the mutual fund industry compete with
investment alternatives offered by insurance companies, commercial banks,
broker/dealers and other financial institutions.
Competition for sales of mutual fund shares is influenced by various
factors, including investment performance in terms of attaining the stated
objectives of the particular funds and in terms of fund yields and total
returns; advertising and sales promotional efforts; and type and quality of
services.
Changes in the mix of customers for mutual fund distribution and
administrative services are expected to continue. Competition for fund
administration services is extremely high. In addition to competing with other
service providers, banks sponsoring mutual funds may choose to internalize
certain service functions. Consolidation within the banking industry also
impacts the fund administration business as merging bank funds typically choose
a single fund administration provider. Due to the relatively lower revenues,
changes in the amount of Administered Assets generally have less impact on
Federated's results of operations than changes in the amount of Managed Assets.
REGULATORY MATTERS
Substantially all aspects of Federated's business are subject to federal
and state regulation and to the extent operations take place outside the United
States they are subject to the regulations of foreign countries. Depending upon
the nature of any non-compliance, the results could include the suspension or
revocation of licenses or registration, including broker/dealer licenses and
registrations and transfer agent registrations, as well as the imposition of
civil fines and penalties and in certain limited circumstances prohibition from
acting as an adviser to registered investment companies. Federated's advisory
companies are registered with the Securities and Exchange Commission (the
"Commission") under the Advisers Act and with certain states. All of the mutual
funds managed, distributed, and administered by Federated are registered with
the Commission under the Investment Company Act. Certain wholly owned
subsidiaries of Federated are registered as broker-dealers with the Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
with various states and are members of the National Association of Securities
Dealers (the "NASD"). Their activities are regulated by the Commission, the
NASD, and the various states in which they are registered. These subsidiaries
are required to meet capital requirements established by the Commission pursuant
to the Exchange Act. Two other subsidiaries are registered with the Commission
as transfer agents. Federated Investors Trust Company is regulated by the State
of New Jersey. Federated believes that it and its subsidiaries are in
substantial compliance with all applicable laws and regulations. Amendments to
current laws and regulations or newly promulgated laws and regulations governing
Federated's operations could have a material adverse impact on Federated.
The federal, state and foreign laws and regulations applicable to most
aspects of Federated's business are primarily intended to benefit or protect
Federated's customers and the funds' shareholders and generally grant
supervisory agencies and bodies broad administrative powers, including the power
to limit or restrict Federated from carrying on its business in the event that
it fails to comply with such laws and regulations. In such event, the possible
sanctions that may be imposed include the suspension of individual employees,
limitations on engaging in certain lines of business for specified periods of
time, revocation of broker/dealer licenses and registrations and transfer agent
registrations, censure and fines.
EMPLOYEES
At December 31, 2000, Federated employed 1,899 persons. Federated
considers its relationships with its employees to be satisfactory.
FORWARD-LOOKING INFORMATION
THIS ANNUAL REPORT ON FORM 10-K AND THE 2000 ANNUAL REPORT TO SHAREHOLDERS
CONTAIN CERTAIN "FORWARD- LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THESE STATEMENTS INVOLVE CERTAIN
UNKNOWN RISKS AND UNCERTAINTIES, INCLUDING, AMONG OTHERS THOSE DISCUSSED UNDER
THE CAPTION "RISK FACTORS AND CAUTIONARY STATEMENTS" BELOW, THAT COULD CAUSE
ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, OR ACHIEVEMENTS OF FEDERATED,
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. FEDERATED CAUTIONS READERS NOT TO PLACE UNDUE RELIANCE ON
ANY SUCH FORWARD LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE MADE, AND
SHOULD BE READ IN CONJUNCTION WITH THE RISK DISCLOSURE BELOW. FEDERATED WILL NOT
UNDERTAKE AND SPECIFICALLY DECLINES ANY OBLIGATION TO RELEASE PUBLICLY THE
RESULT OF ANY REVISIONS WHICH MAY BE MADE TO ANY FORWARD LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS OR REFLECT THE
OCCURRENCE OF ANTICIPATED OR UNANTICIPATED EVENTS. AS A RESULT OF THE FOREGOING,
AND OTHER FACTORS, NO ASSURANCE CAN BE GIVEN AS TO FUTURE RESULTS, LEVELS OF
ACTIVITY, PERFORMANCE, OR ACHIEVEMENTS OF FEDERATED, AND NEITHER FEDERATED NOR
ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH
STATEMENTS.
RISK FACTORS AND CAUTIONARY STATEMENTS
POTENTIAL ADVERSE EFFECTS OF INCREASED COMPETITION IN THE INVESTMENT
MANAGEMENT BUSINESS. The investment management business is highly competitive.
Federated competes in the distribution of mutual funds with other independent
fund management companies, national and regional broker/dealers, commercial
banks, insurance companies, and other institutions. Many of these competitors
have substantially greater resources and brand recognition than Federated.
Competition is based on various factors, including business reputation; the
investment performance of funds managed or administered by Federated; quality of
service; the strength and continuity of management and selling relationships;
marketing and distribution services offered; the range of products offered; and
fees charged. See "Business--Competition."
Many of Federated's fund products are designed for use by institutions
such as banks, insurance companies and other corporations. A large portion of
Federated's Managed Assets, particularly money market and fixed-income Managed
Assets, are held by institutional investors. Because most institutional mutual
funds are sold without sales commissions at either the time of purchase or the
time of redemption, institutional investors may be more inclined to move their
assets among various institutional funds than investors in retail mutual funds.
Of Federated's 137 managed funds, 94 are sold without sales commission.
Institutions are sensitive to fund investment performance, consistent adherence
to investment objectives, quality of service and pricing. Federated believes
that competitive pressures in the institutional fund market are increasing as a
result of (i) the entry of well known managers from the retail investment
industry and of low-fee investment managers, (ii) mergers and consolidation
occurring in the banking industry, (iii) increased offering of proprietary funds
by institutional investors such as banks, and (iv) regulatory changes affecting
banks and other financial service firms.
A significant portion of Federated's revenue is derived from providing
mutual funds to its bank trust market, comprising over 1,400 banks and other
financial institutions. Future profitability of Federated will be affected by
its ability to retain its share of this market, and could also be adversely
affected by the general consolidation which is occurring in the banking industry
as well as recent regulatory changes. In addition, bank consolidation trends
could not only cause changes in Federated's customer mix, but could also affect
the scope of services provided and fees received by Federated, depending upon
the degree to which banks internalize administrative functions attendant to
proprietary mutual funds.
POTENTIAL ADVERSE EFFECTS OF A DECLINE IN SECURITIES MARKETS. Changes in
economic or market conditions may adversely affect the profitability and
performance of and demand for Federated's investment products and services. The
ability of Federated to compete and grow is dependent, in part, on the relative
attractiveness of the types of investment products Federated offers and its
investment philosophies and market strategies under prevailing market
conditions. A significant portion of Federated's revenue is derived from
investment advisory fees, which are based on the value of Managed Assets and
vary with the type of asset being managed, with higher fees generally earned on
equity and fixed-income funds than on money market funds. Consequently,
significant fluctuations in the prices of securities held by, or the level of
redemptions from, the funds advised by Federated may affect materially the
amount of Managed Assets and thus Federated's revenue, profitability and ability
to grow. Substantially all of Federated's Managed Assets are in open-end funds,
which permit investors to redeem their investment at any time.
POTENTIAL ADVERSE AFFECTS ON MONEY MARKET FUNDS RESULTING FROM INCREASES
IN INTEREST RATES. Approximately 33% of Federated's revenue in 2000 was from
managed money market funds. Assets in these funds are largely from institutional
investors. In a period of rapidly rising interest rates, institutional investors
may redeem shares in money market funds to invest directly in market issues
offering higher yields. These redemptions would reduce Managed Assets, thereby
reducing Federated's advisory fee revenue. Federated has been actively
diversifying its products to expand its Managed Assets in equity mutual funds
which may be less sensitive to interest rate increases. There can be no
assurance that Federated will continue to be successful in these diversification
efforts.
ADVERSE EFFECTS OF POOR FUND PERFORMANCE. Success in the investment
management and mutual fund business is largely dependent on the funds'
investment performance relative to market conditions and performance of
competing funds. Good performance generally stimulates sales of the funds'
shares and tends to keep redemptions low. Sales of funds generate higher
revenues (which are largely based on assets of the funds). Good performance also
attracts private institutional accounts to Federated. Conversely, relatively
poor performance tends to result in decreased sales, increased redemptions of
the funds' shares, and the loss of private institutional accounts, with
corresponding decreases in revenues to Federated. Failure of the funds to
perform well could, therefore, have a material adverse effect on Federated.
ADVERSE EFFECTS OF TERMINATION OR FAILURE TO RENEW FUND AGREEMENTS ON
FEDERATED'S REVENUES AND PROFITABILITY. A substantial majority of Federated's
revenues are derived from investment management agreements with the funds that,
as required by law, are terminable on 60 days' notice. In addition, each such
investment management agreement must be approved and renewed annually by each
fund's board, including disinterested members of the board, or its shareholders,
as required by law. Generally, Federated's administrative servicing agreements
with bank proprietary fund customers have an initial term of three years with a
provision for automatic renewal unless notice is otherwise given and provide for
termination for cause. Failure to renew or termination of a significant number
of these agreements could have a material adverse impact on Federated. In
addition, as required by the Investment Company Act, each investment advisory
agreement with a mutual fund automatically terminates upon its "assignment,"
although new investment advisory agreements may be approved by the mutual fund's
directors or trustees and shareholders. A sale of a sufficient number of shares
of Federated's voting securities to transfer control of Federated could be
deemed an "assignment" in certain circumstances. An assignment, actual or
constructive, will trigger these termination provisions and may adversely affect
Federated's ability to realize the value of these assets.
POTENTIAL ADVERSE EFFECTS OF CHANGES IN LAWS AND REGULATIONS ON
FEDERATED'S INVESTMENT MANAGEMENT BUSINESS. Federated's investment management
business is subject to extensive regulation in the United States primarily at
the Federal level, including regulations by the Commission particularly under
the Investment Company Act and the Advisers Act as well as the rules of the NASD
and all states. Federated is also affected by the regulations governing banks
and other financial institutions and, to the extent operations take place
outside the United States, by foreign regulations. Changes in laws or
regulations or in governmental policies could materially and adversely affect
the business and operations of Federated.
NO ASSURANCE OF SUCCESSFUL FUTURE ACQUISITIONS. Federated's business
strategy contemplates the acquisition of other investment management companies
as well as investment assets. There can be no assurance that Federated will find
suitable acquisition candidates at acceptable prices, have sufficient capital
resources to realize its acquisition strategy, be successful in entering into
definitive agreements for desired acquisitions, or successfully integrate
acquired companies into Federated, or that any such acquisitions, if
consummated, will prove to be advantageous to Federated.
SYSTEMS AND TECHNOLOGY RISKS. Federated utilizes software and related
technologies throughout its businesses including both proprietary systems as
well as those provided by outside vendors. As the century date change occurred,
Federated encountered no significant problems with date-sensitive systems of its
own or third party vendors in recognizing the year 2000. Unanticipated issues
unrelated to the century date change could occur and it is not possible to
predict with certainty all of the adverse effects that could result from a
failure of a third party to address computer system problems. Accordingly, there
can be no assurance that potential system interruptions or the cost necessary to
rectify the problems would not have a material adverse effect on Federated's
business, financial condition, results of operations or business prospects.
ITEM 2 - PROPERTIES
Federated's facilities are concentrated in Pittsburgh, Pennsylvania where
it leases space sufficient to meet its operating needs. Federated's headquarters
is located in the Federated Investors Tower, where Federated occupies
approximately 345,000 square feet. Federated leases approximately 100,000 square
feet at the Pittsburgh Office and Research Park and an aggregate of 60,000
square feet at other locations in Pittsburgh. Federated also leases
approximately 50,800 square feet of office space for a portion of its servicing
business in Rockland, Massachusetts. Federated maintains office space in Dublin,
Ireland, and Frankfurt, Germany, where administrative offices for offshore funds
and other international initiatives are maintained; in New York, New York, where
Federated Global Investment Management Corp. and InvestLink Technologies, Inc.
conduct their business; and in Gibbsboro, New Jersey, where Federated Investors
Trust Company is located. Additional offices in Wilmington, Delaware are
subleased by Federated.
ITEM 3 - LEGAL PROCEEDINGS
There is currently no pending litigation of a material nature involving
Federated.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5 - MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCK HOLDER MATTERS
The information required by this Item is contained in Federated's 2000
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Notes to
Consolidated Financial Statements" and is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this Item is contained in Federated's 2000
Annual Report to Shareholders under the caption "Selected Consolidated Financial
Data" and is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is contained in Federated's 2000
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is incorporated
herein by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is contained in Federated's 2000
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is incorporated
herein by reference.
ITEM 8 - FINANCIAL STATEMENT AND SUPPLEMENTARY DATA
The information required by this Item is contained in Federated's 2000
Annual Report to Shareholders under the captions "Report of Ernst & Young LLP,
Independent Auditors," "Consolidated Balance Sheets," "Consolidated Statements
of Income," "Consolidated Statements of Changes in Shareholders' Equity,"
"Consolidated Statements of Cash Flows," and "Notes to Consolidated Financial
Statements" and is incorporated herein by reference.
ITEM 9 - CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information required by this Item (other than the information set
forth below) will be contained in Federated's Information Statement for its 2001
Annual Meeting of Shareholders under the captions "Board of Directors and
Election of Directors" and "Security Ownership - Section 16(a) Beneficial
Ownership Reporting Compliance," and is incorporated herein by reference.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of Federated as of
March 31, 2001:
NAME POSITION AGE
- ---- -------- ---
John F. Donahue Chairman and Director 76
J. Christopher Donahue President, Chief Executive Officer and Director 51
Arthur L. Cherry President and Chief Executive Officer, 47
Federated Services Company and Director
William D. Dawson III Executive Vice President and Chief Investment 52
Officer - U.S. Fixed Income of Federated
Advisory Companies*
Thomas R. Donahue Vice President, Treasurer, Chief Financial 42
Officer and Director
John B. Fisher President - Institutional Sales Division of 44
Federated Securities
Corp. and Director
Henry A. Frantzen Executive Vice President and Chief Investment 58
Officer - Global
Equity and Fixed Income of Federated Advisory
Companies*
James F. Getz President -- Retail Sales Division of 54
Federated Securities Corp.
and Director
J. Thomas Madden Executive Vice President and Chief Investment 55
Officer - Domestic Equity, High Yield and
Asset Allocation of Federated
Advisory Companies*
Eugene F. Maloney Vice President and Director 56
John W. McGonigle Executive Vice President, Chief Legal Officer, 62
Secretary and Director
Denis McAuley III Vice President and Principal Accounting Officer 54
- ----------------------------
*Federated Advisory Companies include the following subsidiaries of Federated:
Federated Global Investment Management Corp., Passport Research Limited,
Federated Investment Counseling, and Federated Investment Management Company.
Mr. John F. Donahue was a founder of the predecessor of Federated and was
Chairman and Chief Executive Officer of Federated and a trustee of Federated
Investors, a Delaware business trust (the "Trust"), prior to the May 1998 merger
of the Trust into Federated, its wholly-owned subsidiary (the "Merger"). Mr.
Donahue has continued to serve as Chairman following the consummation of the
Merger. He served as President from 1989 until 1993. Mr. Donahue is Chairman or
President and a director or trustee of the investment companies managed by
subsidiaries of Federated. Mr. Donahue is the father of J. Christopher Donahue
and Thomas R. Donahue, each of whom serves as an executive officer and director
of Federated.
Mr. J. Christopher Donahue was a trustee of the Trust from 1989 until the
consummation of the Merger and has been a director of Federated since the
consummation of the Merger. He served as President and Chief Operating Officer
from 1993 until April 1998, when he became President and Chief Executive
Officer. Prior to 1993, he served as Vice President. He is President or
Executive Vice President of the investment companies managed by subsidiaries of
Federated and a director, trustee or managing general partner of some of the
investment companies. Mr. Donahue is the son of John F. Donahue and the brother
of Thomas R. Donahue.
Mr. Arthur L. Cherry was a trustee of the Trust from 1997 until the Merger
and has been a director of Federated since the consummation of the Merger. He is
the President and Chief Executive Officer of Federated Services Company, a
wholly-owned subsidiary of Federated. Prior to joining Federated in January
1997, he was a managing partner of AT&T Solutions, former president of Scudder
Services Corporation and a managing director of Scudder, Stevens & Clark.
Mr. William D. Dawson III serves as Executive Vice President and Chief
Investment Officer - U.S. Fixed Income of Federated Advisory Companies. He has
served as a portfolio manager and held various other positions in the advisory
companies. He is responsible for the investment policy and management of
domestic fixed-income funds. Mr. Dawson is a Chartered Financial Analyst.
Mr. Thomas R. Donahue was a trustee of the Trust from 1995 until the
consummation of the Merger and has been a director of Federated since the
consummation of the Merger. He has been Vice President since 1993 and currently
serves as Vice President, Treasurer and Chief Financial Officer. Prior to
joining Federated, Mr. Donahue was in the venture capital business, and from
1983 to 1987 was employed by PNC Bank in its Investment Banking Division. Mr.
Donahue is the son of John F. Donahue and the brother of J. Christopher Donahue.
Mr. John B. Fisher has been a director of Federated since the consummation
of the Merger. He is President-Institutional Sales Division of Federated
Securities Corp., a wholly-owned subsidiary of Federated, and is responsible for
the distribution of Federated's products and services to investment advisors,
insurance companies, retirement plans and corporations
Mr. Henry A. Frantzen serves as Executive Vice President and Chief
Investment Officer - Global Equity and Fixed Income of Federated Advisory
Companies. Mr. Frantzen is primarily responsible for the management of global
equity and fixed-income funds. Prior to joining Federated, Mr. Frantzen was
Managing Director of International Equities for Brown Brothers Harriman
Investment Management Ltd. and Manager and International Equity Chief Investment
Officer for Brown Brothers Harriman and Co. from 1992 to 1995. Prior thereto Mr.
Frantzen served in executive capacities for various investment management
companies, including Oppenheimer Management Corp., Yamaichi Capital Management
and CREF.
Mr. James F. Getz has been a director of Federated since the consummation
of the Merger. He serves as President - Retail Sales Division of Federated
Securities Corp., a wholly-owned subsidiary of Federated, and is responsible for
the marketing and sales efforts in the trust and broker/dealer markets. Mr. Getz
is a Chartered Financial Analyst.
Mr. J. Thomas Madden serves as Executive Vice President and Chief
Investment Officer - Domestic Equity, High Yield and Asset Allocation of
Federated Advisory Companies. Mr. Madden oversees the portfolio management in
the domestic equity, high yield and asset allocation areas. Mr. Madden is a
Chartered Financial Analyst.
Mr. Eugene F. Maloney was a trustee of the Trust from 1989 until the
consummation of the Merger and has continued as a director of Federated since
the consummation of the Merger. He serves as a Vice President of Federated and
provides certain legal, technical and management expertise to Federated's sales
divisions, including regulatory and legal requirements relating to a bank's use
of mutual funds in both trust and commercial environments.
Mr. John W. McGonigle was a trustee of the Trust from 1989 until the
consummation of the Merger and has been a director since the consummation of the
Merger. Mr. McGonigle has served as Secretary of Federated since 1989. He served
as Vice President of Federated from 1989 until August 1995, when he became
Executive Vice President. Mr. McGonigle acted as General Counsel until 1998 when
he became the Chief Legal Officer. Mr. McGonigle is Executive Vice President and
Secretary of the investment companies managed by subsidiaries of Federated.
Mr. Denis McAuley III became Principal Accounting Officer of Federated on
March 16, 2001. He also serves as Vice President of Federated and as Senior Vice
President, Treasurer or Assistant Treasurer for various subsidiaries of
Federated. Mr. McAuley is a Certified Public Accountant.
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this Item is contained in Federated's
Information Statement for the 2001 Annual Meeting of Shareholders under the
captions "Board of Directors and Election of Directors" and "Executive
Compensation" and is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is contained in Federated's
Information Statement for the 2001 Annual Meeting of Shareholders under the
caption "Security Ownership" and is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS:
The information required by this Item is contained in Federated's 2000
Annual Report to Shareholders under the captions "Report of Ernst & Young LLP,
Independent Auditors," "Consolidated Balance Sheets," "Consolidated Statements
of Income," "Consolidated Statements of Changes in Shareholders' Equity,"
"Consolidated Statements of Cash Flows," and "Notes to Consolidated Financial
Statements" and is incorporated herein by reference.
(A)(2) FINANCIAL STATEMENT SCHEDULES:
Schedules for which provision are made in the applicable accounting
regulations of the United States Securities and Exchange Commission have been
omitted because such schedules are not required under the related instructions
or are inapplicable or because the information required is included in the
Consolidated Financial Statements or notes thereto.
(A)(3) EXHIBITS:
The following exhibits are filed or incorporated as part of this report:
Exhibit
NUMBER DESCRIPTION
2.01 Agreement and Plan of Merger, dated as of February 20, 1998, between
Federated Investors and Federated (incorporated by reference to
Exhibit 2.01 to the Registration Statement on Form S-1 (File No.
333-48405))
3.01 Restated Articles of Incorporation of Federated (incorporated by
reference to Exhibit 3.01 to the Registration Statement on Form S-1
(File No. 333-48405))
3.02 Restated By-Laws of Federated (incorporated by reference to Exhibit
3.02 to the Registration Statement on Form S-1 (File No. 333-48405))
4.01 Form of Class A Common Stock certificate (incorporated by reference
to Exhibit 4.01 to the Registration Statement on Form S-1 (File No.
333-48405))
4.02 Form of Class B Common Stock certificate (incorporated by reference
to Exhibit 4.02 to the Registration Statement on Form S-1 (File No.
333-48405))
4.03 Stock Purchase Agreement, dated August 1, 1989, between Federated
and Westinghouse Credit Corporation (incorporated by reference to
Exhibit 4.04 to the Registration Statement on Form S-1 (File No.
333-48405))
4.04 Intercompany Subordination Agreement, dated as of June 15, 1996, by
and among Federated Investors and its subsidiaries (incorporated by
reference to Exhibit 4.05 to the Registration Statement on Form S-1
(File No. 333-48405))
4.05 Shareholder Rights Agreement, dated August 1, 1989, between
Federated and The Standard Fire Insurance Company, as amended
January 31, 1996 (incorporated by reference to Exhibit 4.06 to the
Registration Statement on Form S-1 (File No. 333-48405))
4.06 Senior Secured Credit Agreement, dated as of January 31, 1996, by
and among Federated and the Banks set forth therein and PNC Bank,
National Association (incorporated by reference to Exhibit 4.07 to
the Registration Statement on Form S-1 (File No. 333-48405))
9.01 Voting Shares Irrevocable Trust dated May 31, 1989 (incorporated by
reference to Exhibit 9.01 to the Registration Statement on Form S-1
(File No. 333-48405))
10.01 Amendment No. 4 to Credit Agreement, dated as of May 11, 1998, by
and among Federated Investors, Inc., the banks set forth therein
and PNC Bank, National Association. (incorporated by reference to
Exhibit 10.1 of the June 30, 1998 Quarterly Report on Form 10-Q
(File No. 001-14818))
10.02 Amendment No. 5 to Credit Agreement, dated as of May 11, 1998, by
and among Federated Investors, Inc., the banks set forth therein
and PNC Bank, National Association. (incorporated by reference to
Exhibit 10.2 of the June 30, 1998 Quarterly Report on Form 10-Q
(File No. 001-14818))
10.03 Amendment No. 6 to Credit Agreement, dated as of December 3, 1998,
by and among Federated Investors, Inc., the banks set forth therein
and PNC Bank, National Association (incorporated by reference to
Exhibit 10.03 of the Form 10-K for the fiscal year ended December
31, 1998 (File No. 001-14818))
10.04 Amendment No. 7 to Credit Agreement, dated as of February 22, 1999,
by and among Federated Investors, Inc., the banks set forth therein
and PNC Bank, National Association (incorporated by reference to
Exhibit 10.1 of the June 30, 1999 Quarterly Report on Form 10-Q
(File No. 001-14818))
10.05
Federated Note Purchase Agreement, dated as of June 15, 1996
(incorporated by reference to Exhibit 4.08 to the Registration
Statement on Form S-1 (File No. 333-48405))
10.06 Federated Program Master Agreement, dated as of October 24, 1997,
among Federated, Federated Funding 1997-1, Inc., Federated
Management Company, Federated Securities Corp., Wilmington Trust
Company, PLT Finance, L.P., Putnam, Lovell & Thornton Inc. and
Bankers Trust Company (incorporated by reference to Exhibit 4.09 to
the Registration Statement on Form S-1 (File No. 333-48405))
10.07 Federated Investors, Inc. Employee Stock Purchase Plan, amended as
of July 20, 1999 (incorporated by reference to Exhibit 10.2 of the
June 30, 1999 Quarterly Report on Form 10-Q (File No. 001-14818))
10.08 Federated Investors Program Initial Purchase Agreement, dated as of
October 24, 1997, between Federated Funding 1997-1, Inc. and
Wilmington Trust Company, solely as Trustee of the PLT Finance Trust
1997-1 (incorporated by reference to Exhibit 4.10 to the
Registration Statement on Form S-1 (File No. 333-48405))
10.09 Federated Investors Program Revolving Purchase Agreement, dated as
of October 24, 1997, between Federated Funding 1997-1, Inc. and
PLT Finance, L.P. (incorporated by reference to Exhibit 4.11 to the
Registration Statement on Form S-1 (File No. 333-48405))
10.10 Federated Investors Program Fee Agreement, dated as October 24,
1997, between Federated Investors and PLT Finance, L.P.
(incorporated by reference to Exhibit 4.12 to the Registration
Statement on Form S-1 (File No. 333-48405))
10.11 Schedule X to Federated Program Master Agreement, dated as of
October 24, 1997, among Federated, Federated Funding 1997-1, Inc.,
Federated Investors Management Company, Federated Securities Corp.,
Wilmington Trust Company, PLT Finance, L.P., Putnam, Lovell &
Thornton Inc. and Bankers Trust Company (incorporated by reference
to Exhibit 4.13 to the Registration Statement on Form S-1 (File No.
333-48405))
10.12 Stock Incentive Plan, as amended as of July 20, 1999 (incorporated
by reference to Exhibit 10.3 to the June 30, 1999 Quarterly Report
on Form 10-Q (File No. 001-14818))
10.13 Executive Annual Incentive Plan (incorporated by reference to
Exhibit 10.02 to the Registration Statement on Form S-1 (File No.
333-48405))
10.14 Form of Bonus Stock Option Agreement (incorporated by reference to
Exhibit 10.13 of the Form 10-K for the fiscal year ended December
31, 1998 (File No. 001-14818))
10.15 Federated Investors Tower Lease dated January 1, 1993 (incorporated
by reference to Exhibit 10.03 to the Registration Statement on Form
S-1 (File No. 333-48405))
10.16 Federated Investors Tower Lease dated February 1, 1994 (incorporated
by reference to Exhibit 10.04 to the Registration Statement on Form
S-1 (File No. 333-48405))
10.17 Centre City Tower Lease dated July 23, 1992, as amended
(incorporated by reference to Exhibit 10.05 to the Registration
Statement on Form S-1 (File No. 333-48405))
10.18 Employment Agreement, dated January 16, 1997, between Federated
Investors and an executive officer (incorporated by reference to
Exhibit 10.06 to the Registration Statement on Form S-1 (File No.
333-48405))
10.19 Employment Agreement, dated December 28, 1990, between Federated
Investors and an executive officer (incorporated by reference to
Exhibit 10.08 to the Registration Statement on Form S-1 (File No.
333-48405))
10.20 Employment Agreement, dated December 22, 1993, between Federated
Securities Corp. and an executive officer (incorporated by
reference to Exhibit 10.09 to the Registration Statement on Form
S-1 (File No. 333-48405))
10.21 Employment Agreement, dated March 17, 1995, between Federated
Investors and an executive officer (incorporated by reference to
Exhibit 10.07 to the Registration Statement on Form S-1 (File No.
333-48405))
10.22 Edgewood Services, Inc. Discretionary Line of Credit Demand Note,
dated as of March 28, 2000 (incorporated by reference to Exhibit
10.1 to the March 31, 2000 Quarterly Report on Form 10-Q (File No.
001-14818))
10.23 Federated Investors, Inc. Guaranty and Suretyship Agreement, dated
as of March 28, 2000 (incorporated by reference to Exhibit 10.2 to
the March 31, 2000 Quarterly Report on Form 10-Q (File No.
001-14818))
10.24 Federated Investors, Inc. Supplemental Agreement, dated as of April
20, 2000, amending the Note Purchase Agreements dated June 15, 1996
(incorporated by reference to Exhibit 10.1 to the June 30, 2000
Quarterly Report on Form 10-Q (File No. 001-14818))
10.25 Amendment No. 8 to Credit Agreement, dated April 14, 2000, by and
among Federated Investors, Inc. and the Banks set forth therein and
PNC Bank, National Association (incorporated by reference to
Exhibit 10.2 to the June 30, 2000 Quarterly Report on Form 10-Q
(File No. 001-14818))
10.26 Purchase and Sale Agreement, dated as of December 21, 2000, among
Federated Investors Management Company, Federated Securities Corp.,
Federated Funding 1997-1, Inc., Federated Investors, Inc.,
Citibank, N.A., and Citicorp North America, Inc. (Filed herewith)
10.27 Amendment No. 2 to the Federated Investors Program Documents dated
as of December 21, 2000 among Federated Investors, Inc., Federated
Funding 1997-1, Inc., Federated Investors Management Company,
Federated Securities Corp., Wilmington Trust Company, Putnam Lovell
Finance L.P., Putnam Lovell Securities Inc., and Bankers Trust
Company (Filed herewith)
10.28 Amended and Restated Senior Secured Credit Agreement, dated as of
January 23, 2001, by and among Federated Investors, Inc., the banks
set forth therein, PNC Bank, National Association and The Bank of
New York (Filed herewith)
13.01 Selected Portions of 2000 Annual Report to Shareholders (Filed
herewith)
21.01 Subsidiaries of the Registrant (Filed herewith)
23.01 Consent of Ernst & Young LLP (Filed herewith)
(B) REPORTS ON FORM 8-K:
Form 8-K filed on November 8, 2000
(C) EXHIBITS:
See (a)(3) above.
(D) FINANCIAL STATEMENT SCHEDULES:
See (a)(2) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FEDERATED INVESTORS, INC.
By: /S/ J. CHRISTOPHER DONAHUE
--------------------------------------
J. Christopher Donahue
President and Chief Executive Officer
Date: March 22, 2001
Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ John F. Donahue Chairman and Director March 22, 2001
- -------------------------
John F. Donahue
/s/ J. Christopher Donahue President, Chief Executive March 22, 2001
Officer
- -------------------------
J. Christopher Donahue and Director (Principal
Executive Officer)
/s/ John W. McGonigle Director March 22, 2001
- -------------------------
John W. McGonigle
/s/ Arthur L. Cherry Director March 22, 2001
- -------------------------
Arthur L. Cherry
/s/ James F. Getz Director March 22, 2001
- -------------------------
James F. Getz
/s/ John B. Fisher Director March 22, 2001
- -------------------------
John B. Fisher
SIGNATURE TITLE DATE
/s/ Thomas R. Donahue Chief Financial Officer and March 22, 2001
Director
- -------------------------
Thomas R. Donahue
/s/ Eugene F. Maloney Director March 22, 2001
- -------------------------
Eugene F. Maloney
/s/ Michael J. Farrell Director March 22, 2001
- -------------------------
Michael J. Farrell
/s/ James L. Murdy Director March 22, 2001
- -------------------------
James L. Murdy
/s/ Denis McAuley III Principal Accounting Officer March 22, 2001
- -------------------------
Denis McAuley III
EXHIBIT INDEX
Exhibit
NUMBER DESCRIPTION
10.26 Purchase and Sale Agreement, dated as of December 21, 2000, among
Federated Investors Management Company, Federated Securities Corp.,
Federated Funding 1997-1, Inc., Federated Investors, Inc.,
Citibank, N.A., and Citicorp North America, Inc.
10.27 Amendment No. 2 to the Federated Investors Program Documents dated
as of December 21, 2000 among Federated Investors, Inc., Federated
Funding 1997-1, Inc., Federated Investors Management Company,
Federated Securities Corp., Wilmington Trust Company, Putnam Lovell
Finance L.P., Putnam Lovell Securities Inc., and Bankers Trust
Company
10.28 Amended and Restated Senior Secured Credit Agreement, dated as of
January 23, 2001, by and among Federated Investors, Inc., the banks
set forth therein, PNC Bank, National Association and The Bank of
New York
13.01 Selected Portions of 2000 Annual Report to Shareholders
21.01 Subsidiaries of the Registrant
23.01 Consent of Ernst & Young LLP
Appendix A
FEDERATED FUNDS
Number
of Share Fund
Classes Assets as Effective
FUND NAME as of FUND CATEGORY of 12/31/00 LOAD DATE
--------- 12/31/00 ------------- -------- ---- ----
EQUITY FUNDS:
FEDERATED AGGRESSIVE GROWTH FUND 3 Equity Fund - $271,900,474 Y 11/18/1996
Growth
FEDERATED AMERICAN LEADERS FUND 4 Equity Fund - 3,624,954,543 Y 2/26/1969
INC. Growth and Income
FEDERATED AMERICAN LEADERS FUND II 1 Equity Fund - 485,611,608 N 12/15/1993
Growth and Income
FEDERATED ASIA PACIFIC GROWTH FUND 3 International/Global 36,219,968 Y 1/31/1996
FEDERATED CAPITAL APPRECIATION FUND 3 Equity Fund - 943,594,621 Y 11/14/1995
Growth
FEDERATED COMMUNICATIONS 3 Equity Fund - 533,695,604 Y 9/13/1999
TECHNOLOGY FUND Growth
FEDERATED EMERGING MARKETS FUND 3 International/Global 61,467,864 Y 1/31/1996
FEDERATED EQUITY INCOME FUND INC. 4 Equity 2,946,986,963 Y 12/30/1986
FEDERATED EQUITY INCOME FUND II 1 Equity 104,911,769 N 12/16/1996
FEDERATED EUROPEAN GROWTH FUND 3 International/Global 82,050,575 Y 1/31/1996
FEDERATED GLOBAL EQUITY INCOME FUND 3 International/Global 60,751,278 Y 3/8/1998
FEDERATED GLOBAL FINANCIAL 3 International/Global 60,857,260 Y 8/24/1998
SERVICES FUND
FEDERATED GROWTH STRATEGIES FUND 3 Equity Fund - 1,485,874,420 Y 8/23/1984
Growth
FEDERATED GROWTH STRATEGIES FUND II 1 Equity Fund - 132,255,742 N 9/30/1995
Growth
FEDERATED INTERNATIONAL EQUITY 1 International 24,361,183 N 3/21/1997
COMMINGLED TRUST Equity Fund
FEDERATED INTERNATIONAL EQUITY FUND 3 International 654,697,454 Y 8/17/1984
Equity Fund
FEDERATED INTERNATIONAL EQUITY 1 International 98,961,118 N 4/4/1995
FUND II Equity Fund
FEDERATED INTERNATIONAL SMALL 3 International/Global 1,075,576,426 Y 1/31/1996
COMPANY FUND
FEDERATED INTERNATIONAL SMALL 1 International/Global 9,436,175 N 6/21/2000
COMPANY FUND II
FEDERATED LARGE CAP GROWTH FUND 3 Equity Fund - 786,242,649 Y 12/23/1998
Growth
FEDERATED LARGE CAP GROWTH FUND II 1 Equity Fund - 7,205,309 N 6/21/2000
Growth
FEDERATED MANAGED GROWTH PORTFOLIO 2 Asset Allocation 158,267,231 N 3/11/1994
Fund
FEDERATED MANAGED CONSERVATIVE 2 Asset Allocation 175,377,787 N 3/11/1994
GROWTH PORTFOLIO Fund
FEDERATED MANAGED MODERATE GROWTH 2 Asset Allocation 255,416,915 N 3/11/1994
PORTFOLIO Fund
FEDERATED MARKET OPPORTUNITY FUND 3 Equity Fund - 3,424,394 Y 12/4/2000
Growth and Income
FEDERATED MAX-CAP FUND 3 Equity Fund - 2,761,904,918 N 7/2/1990
Growth and
Income/Index
FEDERATED MID-CAP FUND 1 Equity Fund - 221,863,142 N 7/7/1992
Growth and
Income/Index
FEDERATED MINI-CAP FUND 2 Equity Fund - 90,935,938 N 7/7/1992
Growth and
Income/Index
FEDERATED NEW ECONOMY FUND 3 Equity Fund - 44,962,799 Y 8/30/2000
Growth
FEDERATED SMALL CAP STRATEGIES FUND 3 Equity Fund - 307,037,989 Y 9/13/1995
Growth
FEDERATED SMALL CAP STRATEGIES 1 Equity Fund - 6,480,630 N 5/21/1999
FUND II Growth
FEDERATED STOCK AND BOND FUND INC. 3 Balanced 243,793,892 N 10/31/1984
FEDERATED STOCK TRUST 1 Equity Fund - 1,404,692,517 N 3/31/1982
Growth and Income
FEDERATED UTILITY FUND INC. 4 Equity Fund - 1,045,024,398 Y 5/29/1987
Domestic Utility
FEDERATED UTILITY FUND II 1 Equity Fund - 174,820,660 N 12/15/1993
Domestic Utility
FEDERATED WORLD UTILITY FUND 3 International 139,769,425 Y 4/12/1994
Equity Fund
LVM EUROPA-AKTIEN 1 International/Global 42,345,530 Y 1/26/2000
LVM INTER-AKTIEN 1 International/Global 41,622,490 Y 1/26/2000
LVM PROFUTUR 1 International/Global 35,861,846 Y 1/26/2000
-----------
TOTAL EQUITY FUNDS $20,641,215,504
-----------
FIXED INCOME FUNDS:
CAPITAL PRESERVATION FUND 1 Short-Term $638,205,939 N 8/1/1988
Corporate Bond Fund
- High Grade
FEDERATED LIMITED DURATION 2 Government Bond 89,960,230 Y 3/2/1992
GOVERNMENT FUND Fund
FEDERATED ARMS FUND 2 Adjustable Rate 295,566,242 N 12/3/1985
Mortgage-Backed Fund
FEDERATED BOND FUND 4 Long Corporate Bond 887,623,718 Y 6/27/1995
Fund - High Grade
FEDERATED CALIFORNIA MUNICIPAL 2 Municipal Bond Fund 63,578,683 Y 11/24/1992
INCOME FUND
FEDERATED FUND FOR U.S. GOVERNMENT 3 Mortgage Backed 1,095,559,606 Y 10/6/1969
SECURITIES INC Fund
FEDERATED FUND FOR U.S. GOVERNMENT 1 Mortgage Backed 159,732,341 N 12/15/1993
SECURITIES II Fund
FEDERATED GNMA TRUST 2 Mortgage Backed 809,772,668 N 3/23/1982
Fund
FEDERATED GOVERNMENT INCOME 4 Mortgage Backed 1,080,302,493 Y 8/2/1996
SECURITIES INC. Fund
FEDERATED GOVERNMENT ULTRASHORT 2 Government Bond 186,365,878 N 9/29/1999
FUND Fund
FEDERATED HIGH INCOME ADVANTAGE 1 High Yield Fund 62,427,143 Y 9/20/1993
FUND
FEDERATED HIGH INCOME BOND FUND 3 High Yield Fund 1,713,257,731 Y 11/30/1977
INC.
FEDERATED HIGH INCOME BOND FUND II 2 High Yield Fund 214,686,954 N 12/15/1993
FEDERATED HIGH YIELD TRUST 1 High Yield Fund 587,982,372 N 8/23/1984
FEDERATED INCOME TRUST 2 Mortgage Backed 636,087,551 N 3/30/1982
Fund
FEDERATED INTERMEDIATE INCOME FUND 2 General Investment 326,204,632 N 12/8/1993
Grade
FEDERATED INTERMEDIATE MUNICIPAL 1 Municipal Bond Fund 171,343,981 N 12/26/1985
TRUST
FEDERATED INTERNATIONAL HIGH 3 International Bond 82,392,558 Y 9/9/1996
INCOME FUND Fund
FEDERATED INTERNATIONAL BOND FUND 3 International Bond 82,204,079 Y 5/15/1991
Fund
FEDERATED LIMITED DURATION FUND 2 Mortgage Backed 108,657,458 N 9/16/1996
Fund
FEDERATED LIMITED TERM FUND 2 Short-Term 118,952,460 Y 12/24/1991
Corporate Bond Fund
- High Grade
FEDERATED LIMITED TERM MUNICIPAL 2 Municipal Bond Fund 67,257,788 Y 8/31/1993
FUND
FEDERATED MANAGED INCOME PORTFOLIO 2 Asset Allocation 108,244,228 N 3/11/1994
Fund
FEDERATED MICHIGAN INTERMEDIATE 1 Municipal Bond Fund 94,083,281 Y 9/9/1991
MUNICIPAL TRUST
FEDERATED MORTGAGE FUND 2 US Government Int. 92,084,508 N 6/30/1998
Muni. Bond
FEDERATED MUNICIPAL OPPORTUNITIES 4 Municipal Bond Fund 379,452,144 Y 5/3/1996
FUND INC.
FEDERATED MUNICIPAL SECURITIES 3 Municipal Bond Fund 542,187,432 N 10/4/1976
FUND INC.
FEDERATED MUNICIPAL ULTRASHORT FUND 2 Municipal Bond Fund 22,093,268 N 10/23/2000
FEDERATED NEW YORK MUNICIPAL 1 Municipal Bond Fund 21,701,573 Y 11/24/1992
INCOME FUND
FEDERATED NORTH CAROLINA MUNICIPAL 1 Municipal Bond Fund 44,779,893 Y 6/4/1999
INCOME FUND
FEDERATED OHIO MUNICIPAL INCOME 1 Municipal Bond Fund 75,027,516 Y 10/10/1990
FUND
FEDERATED PENNSYLVANIA MUNICIPAL 2 Municipal Bond Fund 230,720,728 Y 10/10/1990
INCOME FUND
FEDERATED QUALITY BOND FUND II 1 Short-Term 118,811,758 N 4/21/1999
Corporate Bond Fund
- High Grade
FEDERATED SHORT-TERM INCOME FUND 2 Short-Term 177,244,215 N 7/1/1986
Corporate Bond Fund
- High Grade
FEDERATED SHORT-TERM MUNICIPAL 2 Municipal Bond Fund 179,530,076 N 8/20/1981
TRUST
FEDERATED STRATEGIC INCOME FUND 4 Balanced 804,064,618 Y 4/5/1994
FEDERATED STRATEGIC INCOME FUND II 1 Balanced 16,015,112 N 5/21/1999
FEDERATED TOTAL RETURN BOND FUND 2 Mortgage Backed 337,608,877 N 1/19/1994
Fund
FEDERATED U.S.GOVERNMENT BOND FUND 1 Mortgage Backed 136,683,102 N 12/2/1985
Fund
FEDERATED ULTRASHORT BOND FUND 2 US Government ST 217,498,167 N 10/27/1998
FEDERATED US GOVERNMENT SECURITIES 2 Government Bond 430,309,185 N 3/15/1984
FUND: 1-3 YEARS Fund
FEDERATED US GOVERNMENT SECURITIES 2 Government Bond 581,595,584 N 2/18/1983
FUND: 2-5 YEARS Fund
FEDERATED TOTAL RETURN GOVERNMENT 2 Government Bond 84,404,775 N 9/13/1995
BOND FUND Fund
LVM EURO-KURZLAUFER 1 International/Global 28,131,405 Y 1/26/2000
LVM EURO-RENTEN 1 International/Global 35,103,500 Y 1/26/2000
LVM INTER-RENTEN 1 International/Global 32,551,639 Y 1/26/2000
-----------
TOTAL FIXED-INCOME FUNDS $
14,268,049,089
-----------
-----------
TOTAL NON-MONEY MARKET FUNDS $
34,909,264,593
-----------
MONEY MARKET FUNDS:
ALABAMA MUNICIPAL CASH TRUST 1 Municipal Money $229,217,607 N 12/1/1993
Market
ARIZONA MUNICIPAL CASH TRUST 1 Municipal Money 66,794,411 N 5/30/1998
Market
AUTOMATED CASH MANAGEMENT TRUST 2 Prime Money Market 4,461,366,125 N 9/19/1996
Fund
AUTOMATED GOVERNMENT CASH RESERVES 1 Government Money 709,653,747 N 2/2/1990
Market Fund
AUTOMATED GOVERNMENT MONEY TRUST 1 Government Money 1,726,706,212 N 6/1/1982
Market Fund
AUTOMATED TREASURY CASH RESERVES 1 Government Money 263,492,036 N 8/5/1991
Market Fund
CALIFORNIA MUNICIPAL CASH TRUST 3 Municipal Money 787,123,858 N 2/29/1996
Market
CONNECTICUT MUNICIPAL CASH TRUST 1 Municipal Money 284,631,051 N 11/1/1989
Market
EDWARD D. JONES DAILY PASSPORT 1 Government Money 10,327,817,381N 5/9/1980
CASH TRUST Market Fund
FEDERATED MASTER TRUST 1 Prime Money Market 424,662,154 N 12/16/1977
Fund
FEDERATED PRIME MONEY FUND II 1 Prime Money Market 154,591,513 N 12/15/1993
Fund
FEDERATED SHORT-TERM EURO FUND 1 Prime Money Market 110,538,840 N 11/9/1999
Fund
FEDERATED SHORT-TERM U.S. 1 Government Money 285,239,846 N 4/16/1987
GOVERNMENT TRUST Market Fund
FEDERATED SHORT-TERM U.S. PRIME 2 Government Money 812,949,842 N 9/20/1993
FUND Market Fund
FEDERATED SHORT-TERM U.S.GOVT 3 Government Money 1,381,410,827 N 1/18/1991
SECURITIES FUND Market Fund
FEDERATED SHORT-TERM U.S.TREASURY 1 Government Money 923,669,536 N 4/16/1992
SECURITIES FUND Market Fund
FEDERATED TAX-FREE TRUST 1 Municipal Money 522,456,891 N 3/6/1979
Market
FLORIDA MUNICIPAL CASH TRUST 2 Municipal Money 1,049,640,057 N 11/16/1995
Market
GEORGIA MUNICIPAL CASH TRUST 1 Municipal Money 280,959,683 N 8/14/1995
Market
GOVERNMENT CASH SERIES 1 Government Money 725,193,929 N 8/15/1989
Market Fund
GOVERNMENT OBLIGATIONS FUND 2 Government Money 8,334,502,757 N 12/11/1989
Market Fund
GOVERNMENT OBLIGATIONS TAX MANAGED 2 Government Money 4,285,031,831 N 5/7/1995
FUND Market Fund
LIBERTY U.S. GOVERNMENT MONEY 2 Government Money 806,024,364 N 6/6/1980
MARKET TRUST Market Fund
LIQUID CASH TRUST 1 Government Money 229,103,015 N 12/12/1980
Market Fund
MARYLAND MUNICIPAL CASH TRUST 1 Municipal Money 86,436,497 N 5/4/1994
Market
MASSACHUSETTS MUNICIPAL CASH TRUST 2 Municipal Money 964,185,399 N 2/22/1993
Market
MICHIGAN MUNICIPAL CASH TRUST 2 Municipal Money 245,205,368 N 2/29/1996
Market
MINNESOTA MUNICIPAL CASH TRUST 2 Municipal Money 506,626,323 N 12/31/1990
Market
MONEY MARKET MANAGEMENT INC. 1 Prime Money Market 81,483,608 N 2/25/1993
Fund
MONEY MARKET TRUST 1 Prime Money Market 352,345,579 N 10/13/1978
Fund
MUNICIPAL CASH SERIES 1 Municipal Money 498,298,000 N 8/15/1989
Market
MUNICIPAL CASH SERIES II 1 Municipal Money 451,256,920 N 1/25/1991
Market
MUNICIPAL OBLIGATIONS FUND 3 Municipal Money 645,916,199 N 2/5/1993
Market
NEW JERSEY MUNICIPAL CASH TRUST 2 Municipal Money 190,875,902 N 12/10/1990
Market
NEW YORK MUNICIPAL CASH TRUST 2 Municipal Money 919,962,713 N 5/30/1994
Market
NORTH CAROLINA MUNICIPAL CASH TRUST 1 Municipal Money 251,077,785 N 12/1/1993
Market
OHIO MUNICIPAL CASH TRUST 3 Municipal Money 373,004,933 N 3/26/1991
Market
PENNSYLVANIA MUNICIPAL CASH TRUST 3 Municipal Money 441,443,147 N 12/21/1990
Market
PRIME CASH OBLIGATIONS FUND 3 Prime Money Market 5,011,882,780 N 2/5/1993
Fund
PRIME CASH SERIES 1 Prime Money Market 5,716,707,247 N 8/15/1989
Fund
PRIME OBLIGATIONS FUND 2 Prime Money Market 13,922,867,120N 7/5/1994
Fund
PRIME VALUE OBLIGATIONS FUND 3 Prime Money Market 4,450,779,980 N 2/5/1993
Fund
TAX-FREE INSTRUMENTS TRUST 2 Municipal Money 2,142,622,030 N 12/21/1982
Market
TAX-FREE OBLIGATIONS FUND 2 Municipal Money 4,024,193,650 N 12/11/1989
Market
TREASURY CASH SERIES 1 Government Money 641,706,841 N 2/5/1990
Market Fund
TREASURY CASH SERIES II 1 Government Money 136,148,570 N 1/25/1991
Market Fund
TREASURY OBLIGATIONS FUND 3 Government Money 12,086,290,233N 4/14/1997
Market Fund
TRUST FOR GOVERNMENT CASH RESERVES 1 Government Money 324,711,027 N 3/30/1989
Market Fund
TRUST FOR SHORT-TERM U.S. 1 Government Money 530,212,510 N 12/29/1975
GOVERNMENT SECURITIES Market Fund
TRUST FOR U.S. TREASURY OBLIGATIONS 1 Government Money 975,538,409 N 11/8/1979
Market Fund
U.S. TREASURY CASH RESERVES 2 Government Money 3,141,318,088 N 5/14/1991
Market Fund
VIRGINIA MUNICIPAL CASH TRUST 2 Municipal Money 319,953,301 N 8/30/1993
Market
-----------
TOTAL MONEY MARKET FUNDS $98,615,827,672
-----------
------ -----------
MANAGED FUND TOTAL 262 $133,525,092,265
------ -----------
Other Managed Assets* 6,058,570,871
-----------
-----------
TOTAL MANAGED ASSETS $139,583,663,136
===========
Summary:
Total Number of Load Funds: 43
Total Number of No-Load Funds: 94
Total Number of Funds: 137
*Other Managed Assets include Separate Account and Repo
Assets