Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents fair value measurements for classes of Federated’s financial assets and liabilities measured at fair value on a recurring basis:



	September 30, 2012								December 31, 2011
	Fair Value Measurements Using								Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial Assets
Cash and cash equivalents	$	183,484	$	0	$	0	$	183,484	$	49,273	$	0	$	0	$	49,273
Available-for-sale equity securities¹	110,487		33,025		0		143,512		128,611		30,928		0		159,539
Trading securities—equity	14,128		18,654		0		32,782		10,805		18,653		0		29,458
Trading securities—debt	701		7,298		0		7,999		216		83,831		0		84,047
Foreign currency forward contract	0		89		0		89		0		55		0		55
Total financial assets	$	308,800	$	59,066	$	0	$	367,866	$	188,905	$	133,467	$	0	$	322,372
Financial Liabilities
Interest rate swap	$	0	$	12,891	$	0	$	12,891	$	0	$	15,241	$	0	$	15,241
Acquisition-related future consideration payments liability	0		0		15,765		15,765		0		0		13,404		13,404
Other²	1,041		16		0		1,057		0		245		0		245
Total financial liabilities	$	1,041	$	12,907	$	15,765	$	29,713	$	0	$	15,486	$	13,404	$	28,890

¹Previously reported fair value measurements as of December 31, 2011 have been restated herein to reflect as Level 2 the fair value measurement of an investment in a mutual fund that is not traded in an active exchange market but for which net asset value was used as a practical expedient to estimate fair value. The entire balance in Level 2 as of December 31, 2011 had previously been listed as Level 1.


²	Amounts include investments sold short within sponsored investment products and/or foreign currency forward contracts recorded within Other current liabilities on the Consolidated Balance Sheets.

Reconciliation of the beginning and ending fair value measurements of a Level 3 financial liability

The following table presents a reconciliation of the beginning and ending fair value measurements of Federated’s liability for future consideration payments related to these acquisitions for each period presented:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2012		2011		2012			2011
Beginning balance	$	13,904	$	18,358	$	13,404		$	20,058
New acquisition adjustment¹	1,861		0		3,361			(2,600		)
Changes in fair value²	0		0		(1,000		)	900
Ending balance	$	15,765	$	18,358	$	15,765		$	18,358


¹	Amounts include the preliminary fair value estimate of the contingent payment liability recorded in connection with a new acquisition or the revision thereof upon finalization of the valuation process related to initial purchase accounting.


²	Amounts included as a (decrease) increase to Intangible asset related expense on the Consolidated Statements of Income.

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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