10-K

UNITED STATES

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, 2012

o 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)

Pennsylvania (State or other jurisdiction of incorporation or organization)	25-1111467 (I.R.S. Employer Identification No.)
Federated Investors Tower Pittsburgh, Pennsylvania (Address of principal executive offices)	15222-3779 (zip code)

412-288-1900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Class B Common Stock, no par value (Title of each class) New York Stock Exchange (Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes x   No  o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.YesoNox

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  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x   No  o

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 definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o   No  x

The aggregate market value of the Class B Common Stock held by non-affiliates of the registrant as of June 29, 2012 was approximately $2.0 billion, based on the last reported sales price of $21.85 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 A and Class B Common Stock outstanding on February 19, 2013, was 9,000 and 104,419,704, respectively.

Documents incorporated by reference:

Selected portions of the 2012 Annual Report to Shareholders – Part I, Part II and Part IV of this Form 10-K.

Selected portions of the 2013 Information Statement – Part III of this Form 10-K.

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Table of Contents

		Page
Part I
Item 1	Business	3
Item 1A	Risk Factors	11
Item 1B	Unresolved Staff Comments	11
Item 2	Properties	11
Item 3	Legal Proceedings	11
Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6	Selected Financial Data	13
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	13
Item 8	Financial Statements and Supplementary Data	14
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	14
Item 9A	Controls and Procedures	14
Item 9B	Other Information	14
Part III
Item 10	Directors, Executive Officers and Corporate Governance	14
Item 11	Executive Compensation	14
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	15
Item 13	Certain Relationships and Related Transactions, and Director Independence	15
Item 14	Principal Accountant Fees and Services	15
Part IV
Item 15	Exhibits, Financial Statement Schedules	15
Signatures		19
Exhibit Index		20

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Part I

ITEM 1 – BUSINESS

General

Federated Investors, Inc., a Pennsylvania corporation, together with its consolidated subsidiaries (collectively, Federated), is a leading provider of investment management products and related financial services. Federated has been in the investment management business since 1955 and is one of the largest investment managers in the United States with $379.8 billion in assets under management (AUM or managed assets) at December 31, 2012.

Federated sponsors, markets and provides investment-related services to various investment products, including mutual funds and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets. Federated’s principal source of revenue is investment advisory fee income earned by various domestic subsidiaries of Federated pursuant to investment advisory contracts with the investment products. These subsidiaries are registered as investment advisers under the Investment Advisers Act of 1940 (Advisers Act). Investment advisers are compensated for their services in the form of investment advisory fees based primarily upon the AUM of the investment products.

Federated provided investment advisory services to 137 Federated-sponsored funds (the Federated Funds) as of December 31, 2012. Federated markets these funds to banks, broker/dealers and other financial intermediaries who use them to meet the needs of their customers, including retail investors, corporations and retirement plans. The funds sponsored by Federated are domiciled in the U.S., with the exception of Federated International Funds Plc and Federated Unit Trust, both of which are domiciled in Dublin, Ireland, and the Federated Prime Rate Capital Management funds, which are domiciled in the United Kingdom. Most of Federated’s U.S.-domiciled funds are registered under the Investment Company Act of 1940 (Investment Company Act) and under applicable federal laws. Each of the U.S.-domiciled registered funds enters into an advisory agreement that is subject to annual approval by the fund’s board of directors or trustees, a majority of whom are not interested persons of the funds or Federated as defined under the Investment Company Act. In general, material amendments to such advisory agreements must be approved by the funds’ shareholders. A significant portion of Federated’s revenue is derived from these advisory agreements, which generally are terminable upon 60 days notice to the investment adviser.

Of the 137 Federated Funds as of December 31, 2012, Federated’s investment advisory subsidiaries managed 50 money market funds totaling $255.7 billion in AUM, 52 fixed-income funds with $42.5 billion in AUM and 35 equity funds with $23.2 billion in AUM.

As of December 31, 2012, Federated provided investment advisory services to $51.1 billion in Separate Account assets. These Separate Accounts represent assets of government entities, high-net-worth individuals, pension and other employee benefit plans, corporations, trusts, foundations, endowments, mutual funds and other products sponsored by third parties. Fees for Separate Accounts are typically based on AUM pursuant to investment advisory agreements that may be terminated at any time.

In addition, Federated manages liquidation portfolios which include portfolios of distressed fixed-income securities. In the distressed security category, Federated has been retained by third parties to manage assets through an orderly liquidation process that will generally occur over a multi-year period. As of December 31, 2012, Federated managed one liquidation portfolio with $7.3 billion in assets.

Certain Federated Funds have adopted distribution plans that, subject to applicable law, provide for payment to Federated for distribution expenses, including sales commissions paid to broker/dealers. These distribution plans are implemented through a distribution agreement between Federated and each respective fund. Although the specific terms of each such agreement vary, the basic terms of the agreements are similar. Pursuant to these agreements, Federated acts as underwriter for the funds and distributes shares of the funds primarily 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 by such directors or trustees annually.

Federated also provides a broad range of services to support the operation and administration of the Federated Funds. These services, for which Federated receives fees pursuant to agreements with the Federated Funds, include administrative services, shareholder servicing and general support.

Total managed assets are composed of Federated Funds, Separate Accounts and liquidation portfolios and represent the balance of AUM at a point in time. Total managed assets for the past three years were as follows:

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Assets Under Management

	As of December 31,						2012 vs. 2011		2011 vs. 2010
dollars in millions	2012		2011		2010
Money market	$	284,704	$	285,140	$	276,026	0	%	3	%
Fixed-income	52,711		44,814		40,705		18	%	10	%
Equity	35,010		30,887		30,802		13	%	0	%
Liquidation portfolios	7,346		8,856		10,708		(17	)%	(17	)%
Total managed assets	$	379,771	$	369,697	$	358,241	3	%	3	%

Average managed assets represent the average balance of AUM during a period of time. Because substantially all revenue and certain components of distribution expense are generally calculated daily based on AUM, changes in average managed assets are typically a key indicator of changes in revenue earned and asset-based expenses incurred during the same period. Average managed assets for the past three years were as follows:

	Year ended December 31,						2012 vs. 2011		2011 vs. 2010
dollars in millions	2012		2011		2010
Money market	$	274,206	$	271,501	$	268,701	1	%	1	%
Fixed-income	48,986		42,573		37,690		15	%	13	%
Equity	33,816		30,560		29,104		11	%	5	%
Liquidation portfolios	8,141		9,753		11,579		(17	)%	(16	)%
Total average managed assets	$	365,149	$	354,387	$	347,074	3	%	2	%

Changes in Federated’s average asset mix year-over-year across both asset and product types have a direct impact on Federated’s operating income. Asset mix impacts Federated’s total revenue due to the difference in the fee rates earned on each asset class and product type per invested dollar. Equity products generally have a higher management-fee rate than fixed-income products, money market products and liquidation portfolios. Likewise, mutual fund products typically have a higher management-fee rate than Separate Accounts. Similarly, traditional separate accounts typically have a higher management-fee rate than liquidation portfolios. Additionally, certain components of distribution expense can vary depending upon the asset class, distribution channel and/or the size of the customer relationship. Federated generally pays out a larger portion of the revenue earned from managed assets in money market funds than the revenue earned from managed assets in equity or fixed-income funds.

Revenue

Federated’s revenues from investment advisory, administrative and other service fees provided under agreements with the Federated Funds and other entities over the last three years were as follows:

	Year ended December 31,						2012 vs. 2011		2011 vs. 2010
dollars in thousands	2012		2011		2010
Investment advisory fees, net	$	630,834	$	586,340	$	639,404	8	%	(8	)%
Administrative service fees, net	225,529		220,356		215,643		2	%	2	%
Other service fees, net	85,902		85,385		94,035		1	%	(9	)%
Other, net	3,441		3,033		2,861		13	%	6	%
Total revenue	$	945,706	$	895,114	$	951,943	6	%	(6	)%

Federated’s revenues from domestic and foreign operations over the last three years were as follows:

	Year ended December 31,						2012 vs. 2011		2011 vs. 2010
dollars in thousands	2012		2011		2010
Domestic	$	923,208	$	878,504	$	929,903	5	%	(6	)%
Foreign	22,498		16,610		22,040		35	%	(25	)%
Total revenue	$	945,706	$	895,114	$	951,943	6	%	(6	)%

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Historically Low Short-Term Interest Rates

Throughout 2011 and 2012, the Federal Reserve left the near-zero federal funds rate unchanged and short-term interest rates continued at all-time low levels. Since the fourth quarter 2008, Federated has voluntarily waived fees in order for certain money market funds to maintain positive or zero net yields. These fee waivers were partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to share the impact of the waivers.

These voluntary fee waivers are calculated as a percent of AUM in certain money market funds and thus will vary dependent upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, available yields on instruments held by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of fee waivers necessary in order for certain funds to maintain positive or zero net yields. As an isolated variable, an increase in yields on instruments held by the money market funds will cause fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market fund would cause fee waivers to increase.

With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds as well as the distribution among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower waivers to maintain positive or zero net yields. Conversely, the opposite would also be true.

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the years ended December 31:

										2012		2011
in millions	2012			2011			2010			vs. 2011		vs. 2010
Investment advisory fees	$	(177.2	)	$	(201.6	)	$	(134.3	)	12	%	(50	)%
Other service fees	(113.8		)	(119.1		)	(107.3		)	4	%	(11	)%
Total Revenue	(291.0		)	(320.7		)	(241.6		)	9	%	(33	)%
Less: Reduction in Distribution expense	218.5			232.3			186.6			(6	)%	24	%
Operating income	(72.5		)	(88.4		)	(55.0		)	18	%	(61	)%
Less: Reduction in Noncontrolling interest	1.3			6.5			1.0			(80	)%	550	%
Pre-tax impact	$	(71.2	)	$	(81.9	)	$	(54.0	)	13	%	(52	)%

The negative pre-tax impact of fee waivers to maintain positive or zero net yields decreased in 2012 as compared to 2011 primarily as a result of improved yields on instruments held by the money market funds. During 2011, further declines in interest rates for certain money market investments drove an increase in these fee waivers as compared to 2010. (See Note (22) to the Consolidated Financial Statements for information regarding the quarterly pre-tax impact of these fee waivers.)

Based on recent commentary from the Federal Reserve Bank in its January 30, 2013 press release, “the current highly accommodative stance of monetary policy will remain appropriate for a considerable time…,” Federated is unable to predict when the Federal Reserve will increase its target for the federal funds rate. As such, fee waivers to maintain positive or zero net yields and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. Assuming asset levels and mix remain constant and based on recent market conditions including the lower short-term interest rate environment in the first quarter of 2013 as compared to the fourth quarter of 2012, fee waivers for the first quarter 2013 may result in a negative pre-tax impact on income of approximately $21 million. While the level of fee waivers are impacted by various factors, increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the negative pre-tax impact of these waivers. Management estimates that an increase of 10 basis points in gross yields on securities purchased in money market fund portfolios will likely reduce the negative pre-tax impact of these waivers by approximately forty percent from the current levels and an increase of 25 basis points would reduce the impact by approximately seventy percent from the current levels. The actual amount of future fee waivers could vary significantly from management’s estimates as they are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, available yields on instruments held by the money market funds, actions by the Federal Reserve, the U.S. Department of the Treasury, the Securities and Exchange Commission (SEC), the Financial Stability Oversight Council (FSOC) and other governmental entities, changes in expenses of the money market

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funds, changes in the mix of money market customer assets, Federated’s willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by third parties. 

Investment Products

Federated offers a wide range of products, including money market, equity and fixed-income investments. Federated’s mix includes products that Federated expects to be in demand under a variety of economic and market conditions. 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 regarding portfolio composition, risk and investment performance.

Federated is one of the largest U.S. managers of money market assets, with $284.7 billion in such AUM at December 31, 2012. Federated has developed expertise in managing cash for institutions, which typically have strict requirements for regulatory compliance, relative safety, liquidity and competitive yields. Federated has managed money market funds for nearly 40 years and began selling money market fund products to institutions in 1974. Federated also manages retail money market products that are typically distributed through broker/dealers. Federated manages money market assets in the following asset classes: government ($139.0 billion); prime ($123.3 billion); and tax free ($22.4 billion).

Federated’s fixed-income assets totaled $52.7 billion at December 31, 2012 and are managed in a wide range of sectors including multi-sector ($23.1 billion); municipal ($7.5 billion); U.S. government ($6.1 billion); U.S. corporate ($5.8 billion); high-yield ($5.1 billion); mortgage-backed ($3.1 billion); and international/global ($2.0 billion). Federated’s fixed-income products offer fiduciaries and others a broad range of products designed to meet their investment needs.

Equity assets totaled $35.0 billion at December 31, 2012 and are managed across a wide range of styles including income and value ($15.1 billion); growth ($7.8 billion); blend ($3.7 billion); value ($3.0 billion); international/global ($2.3 billion); and alternative ($1.3 billion). Federated also manages assets in balanced and asset allocation funds ($1.8 billion). These asset allocation funds may also invest in fixed-income securities.

Federated’s liquidation portfolio totaled $7.3 billion in fixed-income assets at December 31, 2012.

Investment products are generally managed by a team of portfolio managers supported by fundamental and quantitative research analysts. Federated’s proprietary, independent investment research process is centered on the integration of several fundamentals: fundamental research and credit analysis, quantitative research models, style-consistent and disciplined portfolio construction and management, performance attribution and trading.

Distribution Channels

Federated’s distribution strategy is to provide products geared toward financial intermediaries, primarily banks, broker/dealers and investment advisers and directly to institutions such as corporations and government entities. Federated provides comprehensive investment management to approximately 4,700 institutions and intermediaries including corporations, government entities, insurance companies, foundations, endowments, banks and broker/dealers. Federated uses its trained sales force of approximately 200 representatives and managers to add new customer relationships and strengthen and expand existing relationships.

Product Markets

Federated’s investment products are primarily distributed in four markets. These markets and the relative percentage of managed assets at December 31, 2012 attributable to such markets are as follows: wealth management and trust (48%), broker/dealer (31%), institutional (12%) and international (6%).

Wealth Management & Trust, Global Capital Markets and Institutional Cash. Federated pioneered the concept of providing liquidity management to bank trust departments through money market mutual funds nearly 40 years ago, and has since expanded its services nationwide to institutional cash management and treasury professionals, as well as financial professionals. Today, wealth management professionals across all of these types of firms use a broad range of Federated’s equity and fixed-income funds to invest the assets over which they have discretion.

The majority of Federated’s managed assets from the wealth management channel are invested in money market funds. 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. In addition, Federated offers an extensive menu of equity and fixed-income mutual funds and Separate Accounts structured for the wealth management and trust market. In addition to bank trust departments and registered investment advisory firms, Federated provides products and

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services to capital markets clients (institutional brokerages generally within banks) and directly to cash management and treasury departments at major corporations and government entities.

Federated employs a dedicated sales force backed by an experienced support staff to offer products and services to the wealth management and trust market. As of December 31, 2012, managed assets in this market included $158.0 billion in money market assets, $17.1 billion in fixed-income assets and $7.4 billion in equity assets.

Broker/Dealer. Federated distributes its products in this market through a large, diversified group of approximately 1,500 national, regional and independent broker/dealers and bank broker/dealers. Federated maintains sales staff dedicated to calling on broker/dealers, bank broker/dealers and insurance interests. Broker/dealers use Federated’s products to meet the needs of their customers, who are typically retail investors. Federated also offers money market mutual funds as cash management products designed for use by its broker/dealer clients. As of December 31, 2012, managed assets in the broker/dealer market included $77.8 billion in money market assets, $18.9 billion in fixed-income assets and $19.7 billion in equity assets.

Institutional. Federated maintains a dedicated sales staff to focus on the distribution of its products to a wide variety of domestic institutional customers including corporations, corporate and public pension funds, government entities, foundations, endowments, hospitals, and non-Federated investment companies. As of December 31, 2012, managed assets in the institutional market included $30.8 billion in money market assets, $13.0 billion in fixed-income assets and $3.2 billion in equity assets.

International. Federated manages assets from clients outside the U.S. through subsidiaries focused on gathering assets in Europe, the Middle East, and through a new business initiative in the Asia-Pacific region launched in 2012. See Federated’s 2012 Annual Report to Shareholders under the captions Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Developments – Global Expansion for additional information. As of December 31, 2012, managed assets in the international market included $12.5 billion in money market assets, $7.3 billion in liquidation portfolios, $2.4 billion in fixed-income assets and $1.0 billion in equity assets.

Competition

The investment management business is highly competitive. Competition is particularly intense among mutual fund providers. According to the Investment Company Institute, at the end of 2012, there were approximately 7,600 open-end mutual funds of varying sizes and investment objectives whose shares are currently being offered to the public both on a sales-load and no-sales-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, other financial institutions, hedge funds and exchange traded funds.

Competition for sales of investment products is influenced by various factors, including investment performance, in terms of attaining the stated objectives of the particular products and in terms of fund yields and total returns, advertising and sales promotional efforts, investor confidence and type and quality of services.

Regulatory Matters

Federated and its investment management business are subject to extensive regulation in the United States and abroad. Federated and the Federated Funds are subject to Federal securities laws, principally the Securities Act of 1933, the Investment Company Act and the Investment Advisers Act of 1940, state laws regarding securities fraud and regulations promulgated by various regulatory authorities, including the SEC, the Financial Industry Regulatory Authority (FINRA) and the New York Stock Exchange (the NYSE). Federated is also affected by certain regulations governing banks and other financial institutions. Federated's operations outside of the United States are subject to foreign laws and regulation by foreign regulatory authorities, such as the U.K. Financial Services Authority (FSA) for its London-based operations, the Central Bank of Ireland for its Irish-domiciled operations, the German Federal Financial Supervisory Authority for its Frankfurt-based operations and the Australian Securities and Investments Commission for its Melbourne-based operations. Changes in laws, regulations or governmental policies, both domestically and abroad, and the costs associated with compliance, could materially and adversely affect the business and operations of Federated.

From time to time, the Federal securities laws have been augmented substantially. For example, among other measures, Federated has been impacted by the Sarbanes-Oxley Act of 2002, the Patriot Act of 2001 and the Gramm-Leach-Bliley Act of 1999. The Dodd-Frank Act was enacted into law on July 21, 2010. Under the Dodd-Frank Act, Federated, as well as mutual funds, continue to be primarily regulated by the SEC. The Dodd-Frank Act provides, however, for a new systemic risk regulation regime under which it is possible that Federated and/or any one or more of its mutual funds could be subject to designation as a systemically important financial institution by FSOC thereby resulting in additional regulation by the Federal Reserve Board, in addition to primary regulation by the SEC. Any such designation would subject the designated entity to

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enhanced prudential measures, including capital and liquidity requirements, leverage limits, enhanced public disclosures and risk management requirements. Other provisions of the Dodd-Frank Act may affect intermediaries in their sale or use of Federated's products. Prior to complete implementation, it will be difficult to assess the full impact of the Dodd-Frank Act on Federated.

In January 2010, the SEC adopted extensive amendments to Rule 2a-7 aimed at enhancing the resiliency of money market funds. These amendments included a series of enhancements including rules that require all money market funds to meet specific portfolio liquidity standards and rules that significantly enhance the public disclosure and regulatory reporting obligations of these funds. In 2010 and 2011, Federated dedicated internal resources to comply with these amendments including efforts to enhance its information systems and improve related reporting capabilities. These efforts were internally sourced and not material to Federated's financial position, results of operations or cash flows for those years. In Federated's view, the amendments of 2010 meaningfully and sufficiently strengthen money market funds. Recent experience demonstrated that the amendments of 2010 were effective in meeting heightened requests for redemptions occurring in connection with the U.S. credit rating downgrade in 2011 and the ongoing European debt crisis.

On October 21, 2010, the President's Working Group issued its report on Money Market Fund Reform Options (the Report). The President's Working Group was tasked with studying possible additional reforms relating to money market funds that could mitigate systemic risk in the financial markets (including the potential for disruption in the financial markets caused by rapid shareholder redemptions in money market funds). The Report discusses the conditions that could cause money market funds to experience rapid shareholder redemptions and describes the advantages and disadvantages of a variety of policy options that could reduce the risk of such rapid redemptions. The Report suggests that the FSOC examine these options as part of its implementation of the Dodd-Frank Act.

The SEC undertook a project to develop a proposal for additional reforms related to money market funds. In August 2012, then SEC Chairman Mary Schapiro issued a public statement announcing that she did not have sufficient votes from the other SEC commissioners to pursue certain proposed reforms relating to money market funds. In her statement, Ms. Schapiro stated that the SEC had been considering two alternative reform proposals, one which would have required a floating net asset value (NAV), and the other which would have imposed capital requirements coupled with some form of redemption restriction. In her statement, she invited other policymakers to take up the issue of reform. On September 27, 2012, then Treasury Secretary Timothy Geithner sent a letter to the members of the FSOC announcing his intent to pursue money market fund reform. His letter urged FSOC to use its authority under Section 120 of the Dodd-Frank Act to recommend that the SEC proceed with money market reform. Mr. Geithner outlined three potential options for reform in his letter and stated that he had asked his staff to begin drafting a formal recommendation for FSOC to consider at its November 2012 meeting.

In November 2012, FSOC issued Proposed Recommendations Regarding Mutual Fund Reform citing its authority under Section 120 of the Dodd-Frank Act (Proposed Recommendations). The Proposed Recommendations are in draft form and are subject to a public comment period which ended on February 15, 2013. The Proposed Recommendations include three main alternatives: a floating NAV for money market funds; an NAV capital buffer and minimum balance at risk (or 30-day hold back of up to 3% on certain redemptions); and an NAV capital buffer combined with other measures. In response to the Proposed Recommendations, Federated has filed five comment letters on the Proposed Recommendations pointing out, among other things, that: (1) FSOC exceeded its authority in how it used the Section 120 process; (2) FSOC has not provided justification for further reform efforts; (3) a floating NAV would not prevent “runs” on money market funds; (4) an NAV capital buffer of the kind proposed is impractical and not economically attainable in the current interest rate environment; and (5) the minimum-balance-at-risk concept would impair the utility of money market funds to investors and would be prohibitively costly for both fund groups and intermediaries to implement.

On November 30, 2012, the SEC Staff issued a study entitled Response to Questions Posed by Commissioners Aguilar, Parades and Gallagher. This study responded to questions posed by the Commissioners in response to potential reform measures being advanced by then SEC Chairman Mary Shapiro. The study addressed certain misconceptions about the role of money market funds in the financial crisis of 2008 and confirmed the effectiveness of the 2010 amendments to Rule 2a-7. Federated also filed a comment letter on the study commending the SEC Staff for its work while raising questions on some aspects of the study and recommending further analysis.

Finally, it has been reported that the SEC Staff is working on its own rule proposal and that proposal could include a floating NAV for certain money market funds, in particular prime funds. It could also include a floating NAV proposal for all money market funds as well as other reform measures.

Federated believes the changes currently under consideration, if enacted, would significantly reduce the utility and attractiveness of money market funds for investors who, in Federated's view, value money market funds in their current form as an efficient and effective cash management investment product offering daily liquidity at par.

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If ultimately enacted, some or all of these changes would be detrimental to Federated's money market fund business and could materially and adversely affect Federated's operations. The very proposal of such amendments could have an adverse impact on Federated's money market fund business and operations and could also negatively impact the short-term credit markets. Management is carefully monitoring developments in this area and plans to actively participate both individually and with industry groups in the public comment process that would accompany any rule change proposal. Federated is unable to assess the degree of any potential impact such additional reforms may have on its business and operations until such proposals are issued. Even when issued, the final version of any rule amendment could vary significantly from the form in which it is proposed.

In addition, during the past few years regulators such as the SEC, FINRA and the NYSE have adopted other regulations, rules and amendments that have increased Federated's operating expenses and affected the conduct of its business, and may continue to do so. Rule amendments adopted by the Commodity Futures Trading Commission in the first quarter 2012 may also increase Federated's operating expenses and affect the conduct of its business. International regulators, such as the FSA, have also adopted and proposed regulations that could increase Federated's operating expenses and affect the conduct of its business. Other significant regulations or amendments to regulations have been proposed that, if adopted, will affect Federated and the Federated Funds.

Over the past few years, various service industries, including mutual fund service providers, have been the subject of changes in tax policy that impact their state and local tax liability. Changes that have been adopted or proposed include (1) an expansion of the nature of a service company's activities that subject it to tax in a jurisdiction, (2) a change in the methodology by which multi-state companies apportion their income between jurisdictions, and (3) a requirement that affiliated companies calculate their state tax as one combined entity. As adopted changes become effective and additional jurisdictions effect similar changes, there could be a material adverse effect on Federated's tax liability and effective tax rate and, as a result, net income.

Employees

At December 31, 2012, Federated employed 1,402 persons.

Forward-Looking Statements

Certain statements in this Annual Report on Form 10-K and the 2012 Annual Report to Shareholders, including those related to asset flows and business mix; obligations to make additional contingent payments pursuant to acquisition agreements; obligations to make additional payments pursuant to employment arrangements; legal proceedings; future cash needs and management’s expectations regarding borrowing; future principal uses of cash; performance indicators; impact of accounting policies and new accounting pronouncements; concentration risk; indemnification obligations; the impact of increased regulation including potential rule proposals by the Securities and Exchange Commission affecting money market funds or action taken by the Financial Stability Oversight Council; the prospect of increased distribution-related expenses; management’s expectations regarding fee waivers, the impact of interest rates on such waivers, and the impact of such waivers on revenues and net income; the ability to raise additional capital; possible impairment charges; tax liability and the realization of deferred tax assets; capital losses; the impact of the interest rate swap; plans for international growth and the various items set forth under the section entitled Risk Factors 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 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. Among other risks and uncertainties, market conditions may change significantly resulting in changes to Federated’s asset flows and business mix, which may cause a decline in revenues and net income, result in impairments and increase the amount of fee waivers incurred by Federated. The obligation to make contingent payments is based on certain growth and fund performance targets and will be affected by the achievement of such targets, and the obligation to make additional payments pursuant to employment arrangements is based on satisfaction of certain conditions set forth in those arrangements. Future cash needs and future uses of cash will be impacted by a variety of factors, including the number and size of any acquisitions, Federated’s success in distributing its products, as well as potential changes in assets under management and/or changes in the terms of distribution and shareholder services contracts with intermediaries who offer Federated’s products to customers. Federated’s risks and uncertainties also include liquidity and credit risks in Federated’s money market funds and revenue risk, which will be affected by yield levels in money market fund products, changes in fair values of assets under management and the ability of Federated to collect fees in connection with the management of such products. Many of these factors may be more likely to occur as a result of the increased scrutiny of the mutual fund industry by federal and state regulators, and the recent and ongoing disruption in global financial markets. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither Federated nor any other person assumes responsibility for the accuracy and completeness of such statements in the future. For more information on these items, see the section entitled Risk Factors under Item 7 of Part II, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Executive Officers

The following section sets forth certain information regarding the executive officers of Federated as of February 22, 2013:

Name	Position	Age
John F. Donahue	Chairman and Director	88
J. Christopher Donahue	President, Chief Executive Officer and Director	63
Brian P. Bouda	Vice President and Chief Compliance Officer	65
Gordon J. Ceresino	Vice Chairman, and President, Federated International Management Limited	55
Thomas R. Donahue	Vice President, Treasurer and Chief Financial Officer and President, FII Holdings, Inc.	54
John B. Fisher	Vice President, and President and Chief Executive Officer of Federated Advisory Companies*	56
Eugene F. Maloney	Executive Vice President and Executive Vice President, Federated Investors Management Company	67
Denis McAuley III	Vice President, Principal Accounting Officer, and President of Federated Investors Trust Company	66
John W. McGonigle	Vice Chairman, Executive Vice President, Chief Legal Officer, Secretary and Director	74
Thomas E. Territ	Vice President, and President, Federated Securities Corp.	53

* Federated Advisory Companies include the following: Federated Advisory Services Company, Federated Equity Management Company of Pennsylvania, Federated Global Investment Management Corp., Federated Investment Counseling, Federated Investment Management Company and Federated MDTA LLC, each wholly owned by Federated, and Passport Research Ltd., a limited partnership.

Mr. John F. Donahue is a co-founder of Federated. He has served as director and Chairman of Federated since Federated's initial public offering in May 1998. He is a director or trustee of 38 investment companies managed by subsidiaries of Federated. Mr. Donahue is the father of J. Christopher Donahue who serves as President, Chief Executive Officer and director of Federated and Thomas R. Donahue who serves as Vice President, Treasurer and Chief Financial Officer of Federated.

Mr. J. Christopher Donahue has served as director, President and Chief Executive Officer of Federated since 1998. He is President of 38 investment companies managed by subsidiaries of Federated. He is also director or trustee of 40 investment companies managed by subsidiaries of Federated. Mr. Donahue is the son of John F. Donahue who serves as Chairman and director of Federated and the brother of Thomas R. Donahue who serves as Vice President, Treasurer and Chief Financial Officer.

Mr. Brian P. Bouda has served as Vice President of Federated Services Company since 1999. Mr. Bouda has been Vice President of Federated and serves as Chief Compliance Officer of Federated and for each of Federated’s subsidiaries. He is also Chief Compliance Officer and Senior Vice President of the investment companies managed by subsidiaries of Federated since as early as 2004.

Mr. Gordon J. Ceresino has served as Vice Chairman of Federated since 2007. He is President of Federated International Management Limited and Vice Chairman of Federated MDTA LLC, both of which are wholly owned subsidiaries of Federated.

Mr. Thomas R. Donahue has served as Vice President, Treasurer and Chief Financial Officer of Federated since 1998. He is President of FII Holdings, Inc., a wholly owned subsidiary of Federated. Mr. Donahue is the son of John F. Donahue who serves as Chairman and director of Federated and the brother of J. Christopher Donahue who serves as director, President and Chief Executive Officer of Federated.

Mr. John B. Fisher has served as Vice President of Federated since 1998. He has also been President and Chief Executive Officer of Federated Advisory Companies since 2006 and serves as a board member for each of the wholly owned subsidiaries. Prior to that, he served as President of the Institutional Sales Division of Federated Securities Corp., a wholly owned subsidiary of Federated.

Mr. Eugene F. Maloney has served as Executive Vice President of Federated since March 2009. Prior to that time, he served as Vice President of Federated since 1998. He is also Executive Vice President of Federated Investors Management Company, a wholly owned subsidiary of Federated. Mr. Maloney provides certain legal, technical and management expertise to Federated’s

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sales divisions, including regulatory and legal requirements relating to a bank’s use of mutual funds in both trust and commercial environments.

Mr. Denis McAuley III has served as Vice President of Federated since 1998 and as Principal Accounting Officer of Federated since 2001. He also serves as President of Federated Investors Trust Company and as Senior Vice President, Treasurer or Assistant Treasurer for various other subsidiaries of Federated. Mr. McAuley is a Certified Public Accountant.

Mr. John W. McGonigle has been a director of Federated since 1998. He has served as Executive Vice President, Chief Legal Officer and Secretary of Federated since 1998 and as Vice Chairman since 2003. Mr. McGonigle is also Chairman of Federated International Management Limited, a wholly owned subsidiary of Federated. He is a trustee of four investment companies managed by subsidiaries of Federated. Mr. McGonigle is also Secretary of 41 registered investment companies managed by subsidiaries of Federated and Executive Vice President of 40 of those registered investment companies.

Mr. Thomas E. Territ has served as Vice President of Federated since 2006. He is President of Federated Securities Corp., a wholly owned subsidiary of Federated. As President of Federated Securities Corp., Mr. Territ is responsible for the marketing and sales efforts of Federated. Mr. Territ had previously served as Senior Vice President of Federated Securities Corp. since 1995, and held the position of National Sales Director for several of Federated’s sales divisions during that time.

Available Information

Federated makes available, free of charge on its website, www.FederatedInvestors.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 as soon as reasonably practicable after such information is electronically filed with or furnished to the SEC.

Federated will also provide, free of charge, a copy of the company's most recent annual report on Form 10-K upon written request. Send requests to: Corporate Communications, Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

The public may read and copy any materials Federated files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE., Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at www.sec.gov that contains reports, proxies and information statements, and other information regarding issuers that file electronically with the SEC.

Other Information

All other information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the captions Management’s Discussion and Analysis of Financial Condition and Results of Operations, Consolidated Balance Sheets, Consolidated Statements of Income and Notes to the Consolidated Financial Statements and is incorporated herein by reference.

ITEM 1A – RISK FACTORS

The information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the caption Management’s Discussion and Analysis of Financial Condition and Results of Operations – Risk Factors and is incorporated herein by reference.

ITEM 1B – UNRESOLVED STAFF COMMENTS

None.

ITEM 2 – PROPERTIES

Federated leases space sufficient to meet its operating needs. Federated’s operations are headquartered in Pittsburgh, Pennsylvania where it occupies approximately 259,000 square feet in the Federated Investors Tower. Federated leases approximately 94,000 square feet at the Keystone Summit Corporate Park location in Warrendale, Pennsylvania. Federated also leases an aggregate of approximately 25,000 square feet at other locations in the Pittsburgh area. Federated maintains office space in New York, New York, for the operations of Federated Global Investment Management Corp.; in Boston, Massachusetts, for the operations of Federated MDTA LLC; in Rochester, New York, for the operations of Federated Clover Investment Advisors; in Frankfurt, Germany and London, England for the operations of Federated International Holdings B.V.; and in Melbourne, Australia for the operations of Federated Investors Australia Pty Ltd.

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ITEM 3 – LEGAL PROCEEDINGS

The information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the caption Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Contingent Liabilities and under the caption Notes to the Consolidated Financial Statements – Note (20) Commitments and Contingencies – (c) Legal Proceedings and is incorporated herein by reference.

PART II

ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The following table summarizes stock repurchases under Federated’s share repurchase program during the fourth quarter of 2012.

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs1
October	50,000	$	20.62	50,000	1,859,834
November	0	0.00		0	1,859,834
December	0	0.00		0	1,859,834
Total	50,000	$	20.62	50,000	1,859,834

1 Federated’s share repurchase program was authorized in August 2008 by the board of directors and permits the purchase of up to 5.0 million shares of Federated Class B common stock with no stated expiration date. No other plans existed as of December 31, 2012.

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The following performance graph compares the total shareholder return of an investment in Federated’s Class B Common Stock to that of the Standard and Poor’s 500^® Index (S&P 500 Index) and to the S&P 1500 Asset Management & Custody Banks Index for the five-year period ended on December 31, 2012.

The graph assumes that the value of the investment in Federated’s Class B Common Stock and each index was $100 on December 31, 2007. Total return includes reinvestment of all dividends. As a member of the S&P 500 Index as of December 31, 2012, Federated is required to include this comparison. Peer Group returns are weighted by the market capitalization of each firm at the beginning of each measurement period. The historical information set forth below is not necessarily indicative of future performance. Federated does not make or endorse any predictions as to future stock performance. Beginning on January 1, 2013, Federated was moved from the S&P 500 Index to the S&P MidCap 400^® Index.

	12/31/2008	12/31/2009	12/31/2010	12/31/2011	12/31/2012
Federated	46.56	78.62	81.91	49.67	74.73
S&P 500 Index	63.00	79.67	91.68	93.61	108.59
S&P 1500 Asset Management & Custody Banks	51.33	64.87	74.01	60.15	77.02

All other information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the captions Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes to the Consolidated Financial Statements (including, but not limited to Note (11)Debt and Interest Rate Swap and Note (22)Supplementary Quarterly Financial Data (Unaudited)) and is incorporated herein by reference.

ITEM 6 – SELECTED FINANCIAL DATA

The information required by this Item is contained in Federated’s 2012 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 2012 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.

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ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the caption Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative Disclosures About Market Risk and is incorporated herein by reference.

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the captions Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Consolidated Financial Statements, Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity, Consolidated Statements of Cash Flows, and Notes to the Consolidated Financial Statements and is incorporated herein by reference.

ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A – CONTROLS AND PROCEDURES

Federated carried out an evaluation, under the supervision and with the participation of management, including Federated’s President and Chief Executive Officer and Chief Financial Officer, of the effectiveness of Federated’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2012. Based upon that evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded that Federated’s disclosure controls and procedures were effective at December 31, 2012.

There has been no change in Federated’s internal control over financial reporting that occurred during the fourth quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, Federated’s internal control over financial reporting.

All other information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the caption Management’s Assessment of Internal Control Over Financial Reporting and Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Effectiveness of Internal Control Over Financial Reporting and is incorporated herein by reference.

ITEM 9B – OTHER INFORMATION

None.

PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item (other than the information set forth below) is contained in Federated’s Information Statement for the 2013 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 information required by this Item with respect to Federated’s executive officers is contained in Item 1 of Part I of this Form 10-K under the section Executive Officers.

Code of Ethics

In October 2003, Federated adopted a code of ethics for its senior financial officers. This code meets the requirements provided by Item 406 of Regulation S-K and is incorporated by reference in Part IV, Item 15(a)(3) of this Form 10-K as Exhibit 14.01. The code of ethics is available at www.FederatedInvestors.com. In the event that Federated amends or waives a provision of this code and such amendment or waiver relates to any element of the code of ethics definition enumerated in paragraph (b) of Item 406 of Regulation S-K, Federated would post such information on its internet website.

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ITEM 11 – EXECUTIVE COMPENSATION

The information required by this Item is contained in Federated’s Information Statement for the 2013 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 AND RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding Federated’s share-based compensation as of December 31, 2012:

Category of share-based compensation plan	Number of securities to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options			Number of securities remaining available for future issuance under equity compensation plans
Approved by shareholders	54,750		$	31.97	5,966,722
Not approved by shareholders	0		0		0
Total	54,750		$	31.97	5,966,722

All other information required by this Item is contained in Federated’s Information Statement for the 2013 Annual Meeting of Shareholders under the caption Security Ownership and is incorporated herein by reference.

ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is contained in Federated’s Information Statement for the 2013 Annual Meeting of Shareholders under the captions Transactions with Related Persons, Conflict of Interest Policies and Procedures and Board of Directors and Election of Directors and is incorporated herein by reference.

ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is contained in Federated’s Information Statement for the 2013 Annual Meeting of Shareholders under the caption Independent Registered Public Accounting Firm and is incorporated herein by reference.

PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1)     Financial Statements:

The information required by this Item is contained in Federated’s 2012 Annual Report to Shareholders under the captions Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Consolidated Financial Statements, Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity, Consolidated Statements of Cash Flows and Notes to the Consolidated Financial Statements and is incorporated herein by reference.

(a)(2)     Financial Statement Schedules:

All schedules for which provisions are made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because such schedules are not required under the related instructions, are inapplicable, or the required information is either incorporated herein by reference or included in the financial statements or notes thereto included in this Form 10-K.

(a)(3)     Exhibits:

The following exhibits are filed or incorporated as part of this Form 10-K:

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))

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2.02	Asset Purchase Agreement dated as of October 20, 2000, by and among Federated Investors, Inc., Edgemont Asset Management Corporation, Lawrence Auriana and Hans P. Utsch (incorporated by reference to Exhibit 2.1 of Amendment No. 2 to the Current Report on Form 8-K dated April 20, 2001, filed with the Securities and Exchange Commission on July 3, 2001 (File No. 001-14818))
2.03	Amendment No. 1, dated April 11, 2001, to the Asset Purchase Agreement dated as of October 20, 2000, by and among Federated Investors, Inc., Edgemont Asset Management Corporation, Lawrence Auriana and Hans P. Utsch (incorporated by reference to Exhibit 2.2 of Amendment No. 2 to the Current Report on Form 8-K dated April 20, 2001, filed with the Securities and Exchange Commission on July 3, 2001 (File No. 001-14818))
2.04	Sale, Purchase and Put/Call Agreement dated as of May 11, 2006, among Federated Investors, Inc., MDTA LLC, HBSS Acquisition Co. and the Selling Parties (incorporated by reference to Exhibit 2.1 to the June 30, 2006 Quarterly Report on Form 10-Q (File No. 001-14818))
2.05	Definitive Agreement between Federated Investors, Inc. and David W. Tice & Associates, LLC dated as of July 14, 2008 (incorporated by reference to Exhibit 2.1 to the September 30, 2008 Quarterly Report on Form 10-Q (File No. 001-14818))
2.06	Definitive Agreement between Federated Investors, Inc. and Clover Capital Management, Inc. dated as of September 12, 2008 (incorporated by reference to Exhibit 2.2 to the September 30, 2008 Quarterly Report on Form 10-Q (File No. 001-14818))
2.07	Amendment No. 1 dated as of December 1, 2008 to the Asset Purchase Agreement dated as of September 12, 2008, among Federated Investors, Inc. and Clover Capital Management Inc. (incorporated by reference to Exhibit 2.07 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (File No. 001-14818))
2.08	Definitive Agreement between Federated Investors, Inc. and SunTrust Banks, Inc. dated July 16, 2010 (incorporated by reference to Exhibit 2.1 to the September 30, 2010 Quarterly Report on Form 10-Q (File No. 001-14818))
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))
4.05	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))
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))
10.15	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))
10.19	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))
10.26	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. Company (incorporated by reference to Exhibit 10.26 of the Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 001-14818))
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 (incorporated by reference to Exhibit 10.27 of the Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 001-14818))

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10.34 Annual Stock Option Agreement dated April 24, 2002, between Federated Investors, Inc. and the independent directors (incorporated by reference to Exhibit 10.1 to the June 30, 2002 Quarterly Report on Form 10-Q (File No. 001-14818))

10.40	Amendment to Purchase and Sale Agreement, dated as of December 31, 2003, among Federated Investors Management Company, Federated Securities Corp., Federated Funding 1997-1, Inc., Federated Investors, Inc., Citibank, N.A., and Citicorp North America, Inc. Company (incorporated by reference to Exhibit 10.40 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-14818))
10.41	Amendments No. 6, 5, 4, 3 and 2 to Federated Investors Tower Lease dated as of December 31, 2003; November 10, 2000; June 30, 2000; February 10, 1999; and September 19, 1996 (incorporated by reference to Exhibit 10.41 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-14818))
10.46	Agreement with Alliance Capital Management L.P., dated as of October 28, 2004 (incorporated by reference to Exhibit 10.46 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-14818))
10.47	Amendment dated December 31, 2004 to the Federated Investors Program Documents 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. (incorporated by reference to Exhibit 10.47 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-14818))
10.49	Form of Bonus Restricted Stock Program Award Agreement (incorporated by reference to Exhibit 10.1 to the March 31, 2005 Quarterly Report on Form 10-Q (File No. 001-14818))
10.50	Amendment dated June 29, 2005 to the definitive agreement between Federated Investors and Alliance Capital Management L.P. dated October 28, 2004 and filed as Exhibit 10.46 to Federated’s Annual Report on Form 10-K for the year ended December 31, 2004 (incorporated by reference to Exhibit 10.1 to the June 30, 2005 Quarterly Report on Form 10-Q (File No. 001-14818))
10.51	Amendment dated June 30, 2005 to the Federated Investors Program Documents 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. (incorporated by reference to Exhibit 10.2 to the June 30, 2005 Quarterly Report on Form 10-Q (File No. 001-14818))
10.52	Amendment dated June 30, 2005 to the Federated Program Master Agreement, dated as of October 24, 1997, among Federated Investors Management Company, Federated Securities Corp., Federated Funding 1997-1, Inc., Federated Investors Inc., Wilmington Trust Company, Putnam Lovell Finance, L.P., Putnam, Lovell NBF Securities Inc. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.3 to the June 30, 2005 Quarterly Report on Form 10-Q (File No. 001-14818))
10.58	Federated Investors, Inc. Employee Stock Purchase Plan, amended as of October 26, 2006 (incorporated by reference to Exhibit 10.2 to the September 30, 2006 Quarterly Report on Form 10-Q (File No. 001-14818))
10.60	Amendment dated December 29, 2006 to the Federated Investors Program Documents 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. (incorporated by reference to Exhibit 10.60 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 001-14818))
10.61	Agreement, effective March 1, 2007, by and among Federated, Federated Investors Management Company, as transferor, Federated Securities Corp., as distributor, principal shareholder servicer and servicer, Federated Funding 1997-1, Inc., as Seller, Citibank, N.A., as purchaser, and Citicorp North America, Inc., as Program Agent (incorporated by reference to Exhibit 10.1 to the March 7, 2007 Report on Form 8-K (File No. 001-14818))
10.62	Definitive Agreement between Federated Investors, Inc. and Rochdale Investment Management, LLC dated as of April 20, 2007 (incorporated by reference to Exhibit 10.1 to the June 30, 2007 Quarterly Report on Form 10-Q (File No. 001-14818))

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10.65	Form of Restricted Stock Program Award Agreement (incorporated by reference to Exhibit 10.65 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (File No. 001-14818))
10.67	ISDA Master Agreement and schedule between Federated Investors, Inc. and PNC Bank National Association related to the $425,000,000 forward-starting interest rate swap, entered into on March 30, 2010 and effective April 9, 2010 (incorporated by reference to Exhibit 10.2 to the June 30, 2010 Quarterly Report on Form 10-Q (File No. 001-14818))
10.68	ISDA Master Agreement and schedule between Federated Investors, Inc. and Citibank, N.A. related to the $425,000,000 forward-starting interest rate swap, entered into on March 30, 2010 and effective April 9, 2010 (incorporated by reference to Exhibit 10.3 to the June 30, 2010 Quarterly Report on Form 10-Q (File No. 001-14818))
10.69	Employment Agreement, dated July 6, 1983, between Federated Investors and an executive officer (incorporated by reference to Exhibit 10.69 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 001-14818))
10.70	Federated Investors, Inc. Stock Incentive Plan, amended as of April 28, 2011 (incorporated by reference to Exhibit 10.1 to the March 31, 2011 Quarterly Report on Form 10-Q (File No. 001-14818))
10.71	The Amended and Restated Credit Agreement, dated as of June 10, 2011, by and among Federated Investors, Inc. and PNC Bank, National Association, PNC Bank Capital Markets LLC, Citigroup Global Markets, Inc. and Citibank, N.A. (incorporated by reference to Exhibit 10.1 to the June 30, 2011 Quarterly Report on Form 10-Q (File No. 001-14818))
10.72	Amendments No. 8 and 7 to Federated Investors Tower Lease dated as of September 9, 2011 and August 15, 2007 (incorporated by reference to Exhibit 10.1 to the September 30, 2011 Quarterly Report on Form 10-Q (File No. 001-14818))
10.73	Federated Investors, Inc. Annual Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the March 31, 2012 Quarterly Report on Form 10-Q (File No. 001-14818))
13.01	Selected Portions of 2012 Annual Report to Shareholders (Filed herewith)
14.01	Federated Investors, Inc. Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14.01 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-14818))
21.01	Subsidiaries of the Registrant (Filed herewith)
23.01	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (Filed herewith)
31.01	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
31.02	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
32.01	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE	The following XBRL documents are filed herewith: XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document

(b) Exhibits:

See (a)(3) above.

(c) Financial Statement Schedules:

See (a)(2) above.

18

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:	February 22, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, 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	February 22, 2013
John F. Donahue
/s/ J. Christopher Donahue	President, Chief Executive Officer	February 22, 2013
J. Christopher Donahue	and Director (Principal Executive Officer)
/s/ Thomas R. Donahue	Chief Financial Officer	February 22, 2013
Thomas R. Donahue
/s/ Michael J. Farrell	Director	February 22, 2013
Michael J. Farrell
/s/ David M. Kelly	Director	February 22, 2013
David M. Kelly
/s/ Denis McAuley III	Principal Accounting Officer	February 22, 2013
Denis McAuley III
/s/ John W. McGonigle	Director	February 22, 2013
John W. McGonigle
/s/ Edward G. O’Connor	Director	February 22, 2013
Edward G. O’Connor

19

EXHIBIT INDEX

Exhibit Number	Description
13.01	Selected Portions of 2012 Annual Report to Shareholders
21.01	Subsidiaries of the Registrant
23.01	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
31.01	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

20

EX-13.01

EXHIBIT 13.01

Financial Review
Selected Consolidated Financial Data	8
Management’s Discussion and Analysis	9
Management’s Assessment of Internal Control Over Financial Reporting	34
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Consolidated Financial Statements	35
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Effectiveness of Internal Control Over Financial Reporting	36
Consolidated Balance Sheets	37
Consolidated Statements of Income	38
Consolidated Statements of Comprehensive Income	39
Consolidated Statements of Changes in Equity	40
Consolidated Statements of Cash Flows	42
Notes to the Consolidated Financial Statements	43

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K and the 2012 Annual Report to Shareholders, including those related to asset flows and business mix; obligations to make additional contingent payments pursuant to acquisition agreements; obligations to make additional payments pursuant to employment arrangements; legal proceedings; future cash needs and management’s expectations regarding borrowing; future principal uses of cash; performance indicators; impact of accounting policies and new accounting pronouncements; concentration risk; indemnification obligations; the impact of increased regulation including potential rule proposals by the Securities and Exchange Commission affecting money market funds or action taken by the Financial Stability Oversight Council; the prospect of increased distribution-related expenses; management’s expectations regarding fee waivers, the impact of interest rates on such waivers, and the impact of such waivers on revenues and net income; the ability to raise additional capital; possible impairment charges; tax liability and the realization of deferred tax assets; capital losses; the impact of the interest rate swap; plans for international growth and the various items set forth under the section entitled Risk Factors 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 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. Among other risks and uncertainties, market conditions may change significantly resulting in changes to Federated’s asset flows and business mix, which may cause a decline in revenues and net income, result in impairments and increase the amount of fee waivers incurred by Federated. The obligation to make contingent payments is based on certain growth and fund performance targets and will be affected by the achievement of such targets, and the obligation to make additional payments pursuant to employment arrangements is based on satisfaction of certain conditions set forth in those arrangements. Future cash needs and future uses of cash will be impacted by a variety of factors, including the number and size of any acquisitions, Federated’s success in distributing its products, as well as potential changes in assets under management and/or changes in the terms of distribution and shareholder services contracts with intermediaries who offer Federated’s products to customers. Federated’s risks and uncertainties also include liquidity and credit risks in Federated’s money market funds and revenue risk, which will be affected by yield levels in money market fund products, changes in fair values of assets under management and the ability of Federated to collect fees in connection with the management of such products. Many of these factors may be more likely to occur as a result of the increased scrutiny of the mutual fund industry by federal and state regulators, and the recent and ongoing disruption in global financial markets. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither Federated nor any other person assumes responsibility for the accuracy and completeness of such statements in the future. For more information on these items, see the section entitled Risk Factors herein under Management’s Discussion and Analysis of Financial Condition and Results of Operations.

2012 Annual Report 7

SELECTED CONSOLIDATED FINANCIAL DATA

(in thousands, except per share data and managed assets)

The selected consolidated financial data below should be read in conjunction with Federated Investors, Inc. and its subsidiaries’ (Federated) Consolidated Financial Statements and Notes. The selected consolidated financial data (except managed assets) of Federated for the five years ended December 31, 2012 have been derived from the audited Consolidated Financial Statements of Federated. See Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes which follow.

Years Ended December 31,	2012			2011			2010			2009			2008
Statement of Income Data1, 2
Total revenue	$	945,706		$	895,114		$	951,943		$	1,175,950		$	1,223,680
Operating income	312,593			257,455			309,791			329,227			361,175
Income from continuing operations including    noncontrolling interests in subsidiaries	197,628			155,083			189,163			208,540			228,625
Amounts attributable to Federated Investors, Inc.
Income from continuing operations	188,088			150,906			179,114			197,292			221,509
Income from discontinued operations	0			0			0			0			2,808
Net income	188,088			150,906			179,114			197,292			224,317
Share Data attributable to Federated Investors, Inc.
Earnings per share – Basic1, 2
Income from continuing operations	$	1.79		$	1.45		$	1.73		$	1.93		$	2.17
Income from discontinued operations	0.00			0.00			0.00			0.00			0.03
Net income	1.79			1.45			1.73			1.93			2.20
Earnings per share – Diluted1, 2
Income from continuing operations	$	1.79		$	1.45		$	1.73		$	1.92		$	2.15
Income from discontinued operations	0.00			0.00			0.00			0.00			0.03
Net income	1.79			1.45			1.73			1.92			2.18
Cash dividends per share3	$	2.47		$	0.96		$	2.22		$	0.96		$	3.69
Weighted-average shares outstanding – basic	100,313			100,609			99,925			99,923			99,605
Weighted-average shares outstanding – diluted	100,313			100,632			99,993			100,056			100,395
Balance Sheet Data at Period End
Intangible assets, net and Goodwill1, 4	$	727,857		$	720,926		$	720,825		$	662,996		$	657,321
Total assets1, 4	1,090,061			1,150,856			1,153,504			912,433			846,610
Long-term debt5	276,250			318,750			361,250			105,000			126,000
Federated Investors shareholders’ equity3	495,432			541,959			491,799			528,207			423,374
Impact of Minimum Yield Waivers6
Revenue	$	(290,966	)	$	(320,671	)	$	(241,576	)	$	(120,587	)	$	(3,743	)
Less: Reduction in Distribution expense	218,479			232,336			186,573			86,357			2,067
Operating income	(72,487		)	(88,335		)	(55,003		)	(34,230		)	(1,676		)
Less: Reduction in Noncontrolling interest	1,243			6,473			1,023			0			0
Pre-tax impact	(71,244		)	(81,862		)	(53,980		)	(34,230		)	(1,676		)
Managed Assets (in millions)
As of period end	$	379,771		$	369,697		$	358,241		$	389,316		$	407,310
Average for the period	365,149			354,387			347,074			405,595			342,521

1 In 2010 and 2009, Federated recorded pretax impairments totaling $10.2 million and $21.7 million, respectively, primarily related to certain intangible and fixed assets. See Note (6) to the Consolidated Financial Statements for information on the 2010 impairment.

2 In 2012 and 2010, results included pretax insurance recoveries totaling $20.2 million and $25.0 million, respectively, for claims submitted over the past several years related to various legal proceedings.

3 Federated paid a special dividend to shareholders of $1.51 per share or $156.9 million in 2012, $1.26 per share or $129.8 million in 2010 (see Note (14)(a) to the Consolidated Financial Statements) and $2.76 per share or $281.2 million in 2008.

4 In connection with business acquisitions, Federated recorded Intangible assets, net and Goodwill in 2010 of $44.7 million and $24.1 million. See Note (20)(a) and Note (3), respectively, to the Consolidated Financial Statements.

5 In 2010, Federated amended and restated its term-loan facility which increased borrowings and extended the term of the loan. See Note (11) to the Consolidated Financial Statements for additional information.

6 See Note (4) to the Consolidated Financial Statements for additional information regarding the impact of minimum yield waivers.

8 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Selected Consolidated Financial Data and the Consolidated Financial Statements appearing elsewhere in this report.

General

Federated Investors, Inc. (together with its subsidiaries, Federated) is one of the largest investment managers in the United States with $379.8 billion in managed assets as of December 31, 2012. The majority of Federated’s revenue is derived from advising Federated mutual funds and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets. Federated also derives revenue from providing administrative and other mutual fund-related services, including distribution, shareholder servicing, and retirement plan recordkeeping services.

Federated’s investment products are primarily distributed in four markets. These markets and the relative percentage of managed assets at December 31, 2012 attributable to such markets are as follows: wealth management and trust (48%), broker/dealer (31%), institutional (12%) and international (6%).

Investment advisory fees, administrative service fees and certain fees for other services, such as distribution and shareholder service fees, are contract-based fees that are generally calculated as a percentage of the net assets of the investment portfolios that are managed by Federated. Federated’s revenue is primarily dependent upon factors that affect the value of managed assets including market conditions and the ability to attract and retain assets. Nearly all assets under management (AUM or managed assets) in Federated’s investment products can be redeemed at any time with no advance notice requirement. Fee rates for Federated's services generally vary by asset and service type and may vary based on changes in asset levels. Generally, management-fee rates charged for advisory services provided to equity products are higher than management-fee rates charged on money market and fixed-income products. Likewise, mutual funds typically have a higher management-fee rate than Separate Accounts. Similarly, traditional separate accounts typically have a higher management-fee rate than liquidation portfolios. Accordingly, revenue is also dependent upon the relative composition of average AUM across both asset and product types. Federated may waive certain fees for competitive reasons such as to maintain positive or zero net yields, to meet regulatory requirements or to meet contractual requirements. Since Federated’s products are largely distributed and serviced through financial intermediaries, Federated pays a portion of fees earned from sponsored products to the financial intermediaries that sell these products. These payments are generally calculated as a percentage of net assets attributable to the financial intermediary selling the product and comprise the vast majority of Distribution expense on the Consolidated Statements of Income. Certain components of distribution expense can vary depending upon the asset type, distribution channel and/or the size of the customer relationship. Federated generally pays out a larger portion of revenue earned from managed assets in money market funds than revenue earned from managed assets in equity or fixed-income funds.

Federated’s most significant operating expense, aside from distribution expense previously described, is compensation and related expense. Compensation and related costs include base salary and wages, incentive compensation and other employee expenses including payroll taxes and benefits. Incentive compensation, which includes stock-based compensation, can vary dependent on various factors including, but not limited to, overall results of operations for Federated, investment management performance and sales performance.

The discussion and analysis of Federated’s financial condition and results of operations are based on Federated’s Consolidated Financial Statements. Federated operates in a single operating segment, the investment management business. Management evaluates Federated’s performance at the consolidated level. Management analyzes all expected revenue and expenses and considers market demands in determining an overall fee structure for services provided and in evaluating the addition of new business. Federated’s growth and profitability are dependent upon its ability to attract and retain AUM and upon the profitability of those assets, which is impacted, in part, by management’s decisions regarding fee waivers in order for certain money market funds to maintain positive or zero net yields. Fees for fund-related services are ultimately subject to the approval of the independent directors or trustees of the mutual funds. Management believes the most meaningful indicators of Federated’s performance are AUM, total revenue and net income, both in total and per diluted share.

2012 Annual Report 9

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Business Developments

Money Market Fund Matters

For the year ended December 31, 2012, approximately 47% of Federated’s total revenue was attributable to money market assets as compared to 46% and 50% for 2011 and 2010, respectively. A significant change in Federated’s money market business or a significant reduction in money market assets due to regulatory changes, changes in the financial markets including significant and rapid increases in interest rates over a short period of time causing certain investors to prefer direct investments in interest-bearing securities, significant deterioration in investor confidence, further persistent declines in or additional prolonged periods of historically low short-term interest rates and resulting fee waivers or other circumstances, could have a material adverse effect on Federated’s results of operations.

(a)Current Regulatory Environment

In January 2010, the Securities and Exchange Commission (SEC) adopted extensive amendments to Rule 2a-7 of the Investment Company Act of 1940 (Rule 2a-7) aimed at enhancing the resiliency of money market funds. These amendments included a series of enhancements including rules that require all money market funds to meet specific portfolio liquidity standards and rules that significantly enhance the public disclosure and regulatory reporting obligations of these funds. In 2010 and 2011, Federated dedicated internal resources to comply with these amendments including efforts to enhance its information systems and improve related reporting capabilities. These efforts were internally sourced and not material to Federated's financial position, results of operations or cash flows for those years. In Federated's view, the amendments of 2010 meaningfully and sufficiently strengthen money market funds. Recent experience demonstrated that the amendments of 2010 were effective in meeting heightened requests for redemptions occurring in connection with the U.S. credit rating downgrade in 2011 and the ongoing European debt crisis.

The SEC undertook a project to develop a proposal for additional reforms related to money market funds. In August 2012, then SEC Chairman Mary Schapiro issued a public statement announcing that she did not have sufficient votes from the other SEC commissioners to pursue certain proposed reforms relating to money market funds. In her statement, Ms. Schapiro stated that the SEC had been considering two alternative reform proposals, one which would have required a floating net asset value (NAV), and the other which would have imposed capital requirements coupled with some form of redemption restriction. In her statement, she invited other policymakers to take up the issue of reform. On September 27, 2012, then Treasury Secretary Timothy Geithner sent a letter to the members of the Financial Stability Oversight Council (FSOC) announcing his intent to pursue money market fund reform. His letter urged FSOC to use its authority under Section 120 of the Dodd-Frank Act to recommend that the SEC proceed with money market reform. Mr. Geithner outlined three potential options for reform in his letter and stated that he had asked his staff to begin drafting a formal recommendation for FSOC to consider at its November 2012 meeting.

In November 2012, FSOC issued Proposed Recommendations Regarding Mutual Fund Reform citing its authority under Section 120 of the Dodd-Frank Act (Proposed Recommendations). The Proposed Recommendations are in draft form and are subject to a public comment period which ended on February 15, 2013. The Proposed Recommendations include three main alternatives: a floating NAV for money market funds; an NAV capital buffer and minimum balance at risk (or 30-day hold back of up to 3% on certain redemptions); and an NAV capital buffer combined with other measures. In response to the Proposed Recommendations, Federated has filed five comment letters on the Proposed Recommendations pointing out, among other things, that: (1) FSOC exceeded its authority in how it used the Section 120 process; (2) FSOC has not provided justification for further reform efforts; (3) a floating NAV would not prevent “runs” on money market funds; (4) an NAV capital buffer of the kind proposed is impractical and not economically attainable in the current interest rate environment; and (5) the minimum-balance-at-risk concept would impair the utility of money market funds to investors and would be prohibitively costly for both fund groups and intermediaries to implement.

On November 30, 2012, the SEC Staff issued a study entitled Response to Questions Posed by Commissioners Aguilar, Parades and Gallagher. This study responded to questions posed by the Commissioners in response to potential reform measures being advanced by then SEC Chairman Mary Shapiro. The study addressed certain misconceptions about the role of money market funds in the financial crisis of 2008 and confirmed the effectiveness of the 2010 amendments to Rule 2a-7. Federated also filed a comment letter on the study commending the SEC Staff for its work while raising questions on some aspects of the study and recommending further analysis.

10 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Finally, it has been reported that the SEC Staff is working on its own rule proposal and that proposal could include a floating NAV for certain money market funds, in particular prime funds. It could also include a floating NAV proposal for all money market funds as well as other reform measures.

Federated believes the changes currently under consideration, if enacted, would significantly reduce the utility and attractiveness of money market funds for investors who, in Federated's view, value money market funds in their current form as an efficient and effective cash management investment product offering daily liquidity at par.

If ultimately enacted, some or all of these changes would be detrimental to Federated's money market fund business and could materially and adversely affect Federated's operations. The very proposal of such amendments could have an adverse impact on Federated's money market fund business and operations and could also negatively impact the short-term credit markets. Management is carefully monitoring developments in this area and plans to actively participate both individually and with industry groups in the public comment process that would accompany any rule change proposal. Federated is unable to assess the degree of any potential impact such additional reforms may have on its business and operations until such proposals are issued. Even when issued, the final version of any rule amendment could vary significantly from the form in which it is proposed.

(b)Historically Low Short-Term Interest Rates

Throughout 2011 and 2012, the Federal Reserve left the near-zero federal funds rate unchanged and short-term interest rates continued at all-time low levels. Since the fourth quarter 2008, Federated has voluntarily waived fees in order for certain money market funds to maintain positive or zero net yields. These fee waivers were partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to share the impact of the waivers.

These voluntary fee waivers are calculated as a percent of AUM in certain money market funds and thus will vary dependent upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, available yields on instruments held by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of fee waivers necessary in order for certain funds to maintain positive or zero net yields. As an isolated variable, an increase in yields on instruments held by the money market funds will cause fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market fund would cause fee waivers to increase.

With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds as well as the distribution among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower waivers to maintain positive or zero net yields. Conversely, the opposite would also be true.

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the years ended December 31:

										2012		2011
in millions	2012			2011			2010			vs. 2011		vs. 2010
Investment advisory fees	$	(177.2	)	$	(201.6	)	$	(134.3	)	12	%	(50	)%
Other service fees	(113.8		)	(119.1		)	(107.3		)	4	%	(11	)%
Total Revenue	(291.0		)	(320.7		)	(241.6		)	9	%	(33	)%
Less: Reduction in Distribution expense	218.5			232.3			186.6			(6	)%	24	%
Operating income	(72.5		)	(88.4		)	(55.0		)	18	%	(61	)%
Less: Reduction in Noncontrolling interest	1.3			6.5			1.0			(80	)%	550	%
Pre-tax impact	$	(71.2	)	$	(81.9	)	$	(54.0	)	13	%	(52	)%

The negative pre-tax impact of fee waivers to maintain positive or zero net yields decreased in 2012 as compared to 2011 primarily as a result of improved yields on instruments held by the money market funds. During 2011, further declines in

2012 Annual Report 11

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

interest rates for certain money market investments drove an increase in these fee waivers as compared to 2010. (See Note (22) to the Consolidated Financial Statements for information regarding the quarterly pre-tax impact of these fee waivers.)

Based on recent commentary from the Federal Reserve Bank in its January 30, 2013 press release, “the current highly accommodative stance of monetary policy will remain appropriate for a considerable time…,” Federated is unable to predict when the Federal Reserve will increase its target for the federal funds rate. As such, fee waivers to maintain positive or zero net yields and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. Assuming asset levels and mix remain constant and based on recent market conditions including the lower short-term interest rate environment in the first quarter of 2013 as compared to the fourth quarter of 2012, fee waivers for the first quarter 2013 may result in a negative pre-tax impact on income of approximately $21 million. While the level of fee waivers are impacted by various factors, increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the negative pre-tax impact of these waivers. Management estimates that an increase of 10 basis points in gross yields on securities purchased in money market fund portfolios will likely reduce the negative pre-tax impact of these waivers by approximately forty percent from the current levels and an increase of 25 basis points would reduce the impact by approximately seventy percent from the current levels. The actual amount of future fee waivers could vary significantly from management’s estimates as they are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, available yields on instruments held by the money market funds, actions by the Federal Reserve, the U.S. Department of the Treasury, the SEC, FSOC and other governmental entities, changes in expenses of the money market funds, changes in the mix of money market customer assets, Federated’s willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by third parties. 

Global Expansion

Federated continues to explore opportunities to further expand its global footprint. In the second quarter 2012, Federated completed the acquisition of London-based Prime Rate Capital Management LLP, a cash management firm with $4.3 billion in money market AUM as of the date of acquisition. In the third quarter 2012, Federated expanded its European distribution capabilities through an agreement with Bury Street Capital, a European distribution firm based in London. Federated also expanded into the Asia-Pacific region by opening an office in Australia. The expansion into the Asia-Pacific region will result in increased operating costs that could approximate $5 million over the next twelve months. The actual increase in operating costs could vary significantly from management’s estimates as further business development plans are finalized and implemented.

Prior Year Business Combinations and Acquisitions

In the third quarter 2010, Federated acquired the money market management business of SunTrust Banks, Inc. (SunTrust Acquisition). Pursuant to the acquisition agreement, $14.1 billion of money market assets transitioned to Federated in a series of closings during the third and fourth quarters of 2010. The SunTrust Acquisition included upfront cash payments that totaled $6.6 million. The transaction also includes annual contingent purchase price payments payable in the fourth quarters of each of the five years following the acquisition date. See Note (3) and Note (20)(a) to the Consolidated Financial Statements for additional information on this acquisition and the related contingent payments.

Insurance Proceeds

In 2012 and 2010, Federated obtained the final approvals from various insurance carriers for claims submitted over the past several years related to various legal proceedings. Accordingly, in 2012 and 2010 Federated recognized $20.2 million and $25.0 million, respectively, in the Consolidated Statements of Income as a reduction to the operating expense lines originally charged, primarily Professional service fees.

Special Cash Dividend

In the fourth quarter 2012, Federated paid $1.51 per share, or $156.9 million, as a special cash dividend to shareholders. This payment was in addition to the aggregate $0.96 per share, or $99.9 million, regular quarterly cash dividends paid throughout the course of 2012. The fourth quarter 2012 special dividend of $1.51 per share negatively impacted diluted earnings per share for the fourth quarter 2012 by $0.04 per share and for the full-year 2012 by $0.02 per share due to the application of the two-class method of calculating earnings per share.

In the first quarter 2010, Federated paid $1.26 per share, or $129.8 million, as a special cash dividend to shareholders. This payment was in addition to the aggregate $0.96 per share, or $98.9 million, regular quarterly cash dividends paid throughout the course of 2010. The first quarter 2010 special dividend of $1.26 per share negatively impacted diluted earnings per share for the

12 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

first quarter 2010 by $0.03 per share and for the full-year 2010 by $0.01 per share due to the application of the two-class method of calculating earnings per share.

All dividends were considered ordinary dividends for tax purposes.

Asset Impairments

In 2012, Federated recorded a $3.0 million charge to write down the value of its equity-method investment and in 2010, recorded a $10.2 million charge to write down the value of certain intangible assets. See Note (6)(b) to the Consolidated Financial Statements for additional information regarding these impairments.

2012 Annual Report 13

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Asset Highlights

Managed Assets at Period End

in millions as of December 31,	2012		2011		Percent Change
By Asset Class
Money market	$	284,704	$	285,140	0	%
Fixed-income	52,711		44,814		18	%
Equity	35,010		30,887		13	%
Liquidation portfolios1	7,346		8,856		(17	)%
Total managed assets	$	379,771	$	369,697	3	%
By Product Type
Mutual Funds:
Money market	$	255,689	$	255,857	0	%
Fixed-income	42,478		37,241		14	%
Equity	23,152		21,930		6	%
Total mutual fund assets	321,319		315,028		2	%
Separate Accounts:
Money market	$	29,015	$	29,283	(1	)%
Fixed-income	10,233		7,573		35	%
Equity	11,858		8,957		32	%
Total separate account assets	51,106		45,813		12	%
Liquidation Portfolios1	$	7,346	$	8,856	(17	)%
Total managed assets	$	379,771	$	369,697	3	%

Average Managed Assets

in millions for the years ended December 31,	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
By Asset Class
Money market	$	274,206	$	271,501	$	268,701	1	%	1	%
Fixed-income	48,986		42,573		37,690		15	%	13	%
Equity	33,816		30,560		29,104		11	%	5	%
Liquidation portfolios1	8,141		9,753		11,579		(17	)%	(16	)%
Total average managed assets	$	365,149	$	354,387	$	347,074	3	%	2	%
By Product Type
Mutual Funds:
Money market	$	246,731	$	242,187	$	238,767	2	%	1	%
Fixed-income	39,941		34,455		30,864		16	%	12	%
Equity	23,015		22,071		21,016		4	%	5	%
Total average mutual fund assets	309,687		298,713		290,647		4	%	3	%
Separate Accounts:
Money market	$	27,475	$	29,314	$	29,934	(6	)%	(2	)%
Fixed-income	9,045		8,118		6,826		11	%	19	%
Equity	10,801		8,489		8,088		27	%	5	%
Total average separate account assets	47,321		45,921		44,848		3	%	2	%
Liquidation Portfolios1	$	8,141	$	9,753	$	11,579	(17	)%	(16	)%
Total average managed assets	$	365,149	$	354,387	$	347,074	3	%	2	%

1 Liquidation portfolios include portfolios of distressed fixed-income securities. Federated has been retained by a third party to manage these assets through an orderly liquidation process that will generally occur over a multi-year period.

14 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Changes in Federated’s average asset mix year-over-year across both asset and product types have a direct impact on Federated’s operating income. As described above, asset mix impacts Federated’s total revenue due to the difference in the fee rates earned on each asset class and product type per invested dollar and certain components of distribution expense can vary depending upon the asset class, distribution channel and/or the size of the customer relationship. The following table presents the relative composition of average managed assets and the percent of total revenue derived from each asset class and product type over the last three years:

	Percent of Total Average Managed Assets						Percent of Total Revenue
	2012		2011		2010		2012		2011		2010
By Asset Class
Money market assets	75	%	76	%	78	%	47	%	46	%	50	%
Fixed-income assets	14	%	12	%	11	%	21	%	20	%	18	%
Equity assets	9	%	9	%	8	%	31	%	33	%	31	%
Liquidation portfolios	2	%	3	%	3	%	0	%	0	%	0	%
Other activities	--		--		--		1	%	1	%	1	%
By Product Type
Mutual Funds:
Money market assets	68	%	68	%	69	%	46	%	45	%	49	%
Fixed-income assets	11	%	10	%	9	%	19	%	19	%	17	%
Equity assets	6	%	6	%	6	%	26	%	28	%	27	%
Separate Accounts:
Money market assets	7	%	8	%	9	%	1	%	1	%	1	%
Fixed-income assets	3	%	2	%	2	%	2	%	1	%	1	%
Equity assets	3	%	3	%	2	%	5	%	5	%	4	%
Liquidation Portfolios	2	%	3	%	3	%	0	%	0	%	0	%
Other activities	--		--		--		1	%	1	%	1	%

Total managed assets represent the balance of AUM at a point in time. By contrast, average managed assets represent the average balance of AUM during a period of time. Because substantially all revenue and certain components of distribution expense are generally calculated daily based on AUM, changes in average managed assets are typically a key indicator of changes in revenue earned and asset-based expenses incurred during the same period.

December 31, 2012 period-end and average managed assets for the year then ended increased 3% over December 31, 2011 period-end and average managed assets for the year then ended primarily as a result of increases in fixed-income and equity assets. Period-end money market assets remained flat for 2012 compared to 2011. Average money market assets increased 1% for 2012 compared to 2011. The financial markets posted a strong performance in 2012 despite the continued pressure of global macroeconomic events, including political uncertainty regarding U.S. election outcomes and fiscal policies on taxes and federal spending as well as the ongoing effects of the global financial crisis. Short-term interest rates remained low as 2012 proved to be another historic year for U.S. Federal Reserve quantitative easing. Federated experienced net sales in both equity and fixed-income asset classes in 2012, once again led by income-oriented investment strategies. Average equity assets increased 11% for 2012 compared to 2011. Period-end equity assets increased 13% for 2012 as compared to 2011 primarily due to market appreciation and, to a lesser extent, positive net sales. Average fixed-income assets increased 15% for 2012 as compared to 2011. Period-end fixed-income assets increased 18% for 2012 as compared to 2011 primarily due to positive net sales and, to a lesser extent, market appreciation. Average assets in liquidation portfolios decreased 17% for 2012 as compared to 2011 due to the anticipated gradual liquidation of the portfolio.

December 31, 2011 period-end managed assets increased 3% over period-end managed assets at December 31, 2010 primarily as a result of increases in money market assets and fixed-income assets. Average managed assets for 2011 increased 2% over average managed assets for 2010. Period-end money market assets increased 3% for 2011 compared to 2010. Average money market assets increased 1% for 2011 compared to 2010. In 2011, the financial markets experienced extreme volatility, driven by the effects of the global financial crisis and uncertainty surrounding U.S. policies regarding deficit reduction and federal debt ceiling limits. Historically low interest rates persisted in 2011. In this environment, investors favored income-seeking strategies. As a result, Federated experienced net sales in both equity and fixed-income asset classes in 2011. Average equity assets increased 5% for 2011 compared to 2010, while period-end equity assets remained flat. Strong net sales in certain equity portfolios investing in domestic and international dividend-paying companies were largely offset by market depreciation and net redemptions in other equity products. In addition, Federated completed two acquisitions in mid-2011 which resulted in an increase in equity assets. Period-end fixed-income assets increased 10% and average fixed-income assets increased 13% for

2012 Annual Report 15

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

2011 as compared to 2010. Net sales in the multi-sector and high-yield bond strategies and market appreciation drove the increase. Average assets in liquidation portfolios decreased 16% for 2011 as compared to 2010 due to the anticipated gradual liquidation of the portfolio.

Changes in Fixed-Income and Equity Fund Assets

in millions for the years ended December 31,	2012			2011			Percent Change
Fixed-Income Funds
Beginning assets	$	37,241		$	31,933		17	%
Sales	20,426			17,990			14	%
Redemptions	(15,664		)	(15,844		)	(1	)%
Net sales	4,762			2,146			122	%
Net exchanges	(1,520		)	1,873			(181	)%
Acquisition-related	144			132			9	%
Market gains and losses/reinvestments1	1,851			1,157			60	%
Ending assets	$	42,478		$	37,241		14	%
Equity Funds
Beginning assets	$	21,930		$	22,626		(3	)%
Sales	6,221			7,633			(18	)%
Redemptions	(7,377		)	(7,461		)	(1	)%
Net (redemptions) sales	(1,156		)	172			(772	)%
Net exchanges	(70		)	(76		)	8	%
Acquisition-related	190			463			(59	)%
Market gains and losses/reinvestments1	2,258			(1,255		)	280	%
Ending assets	$	23,152		$	21,930		6	%

1 Reflects approximate changes in the fair value of the securities held by the funds, and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates.

16 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Changes in Fixed-Income and Equity Separate Account Assets and Liquidation Portfolios

in millions for the years ended December 31,	2012			2011			Percent Change
Fixed-Income Separate Accounts
Beginning assets	$	7,573		$	8,772		(14	)%
Sales2	1,546			1,698			(9	)%
Redemptions2	(1,128		)	(1,443		)	(22	)%
Net sales2	418			255			64	%
Net exchanges	1,593			(1,806		)	188	%
Market gains and losses/reinvestments3	649			352			84	%
Ending assets	$	10,233		$	7,573		35	%
Equity Separate Accounts
Beginning assets	$	8,957		$	8,176		10	%
Sales2	4,252			2,861			49	%
Redemptions2	(2,291		)	(2,530		)	(9	)%
Net sales2	1,961			331			492	%
Net exchanges	(8		)	54			(115	)%
Market gains and losses/reinvestments3	948			396			139	%
Ending assets	$	11,858		$	8,957		32	%
Liquidation Portfolios
Beginning assets	$	8,856		$	10,708		(17	)%
Sales2	0			2			(100	)%
Redemptions2	(1,509		)	(1,854		)	(19	)%
Net redemptions2	(1,509		)	(1,852		)	(19	)%
Market gains and losses/reinvestments3	(1		)	0			N/A
Ending assets	$	7,346		$	8,856		(17	)%

2 For certain accounts, Sales, Redemptions or Net sales/redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses/reinvestments.

3 Reflects approximate changes in the fair value of the securities held in the portfolios, and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates.

Results of Operations

Revenue. The following table sets forth components of total revenue for the three years ended December 31:

in millions	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
Revenue from managed assets	$	937.9	$	887.1	$	944.4	6	%	(6	)%
Revenue from sources other than managed assets	7.8		8.0		7.5		(3	)%	7	%
Total revenue	$	945.7	$	895.1	$	951.9	6	%	(6	)%

Revenue from managed assetsincreased$50.8 million in 2012 as compared to 2011 primarily due to a decrease of $29.7 million in voluntary fee waivers related to certain money market funds in order for these funds to maintain positive or zero net yields and an increase of $19.2 million due to higher average fixed-income assets.

See Business Developments – Historically Low Short-Term Interest Rates for additional information on voluntary fee waivers related to certain money market funds in order for these funds to maintain positive or zero net yields, including the offsetting decreases in expense and net income attributable to noncontrolling interests, the net pre-tax impact on income and a discussion of management's expectation regarding the pre-tax impact on income from fee waivers for the first quarter of 2013.

Federated’s ratio of revenue from managed assets to average managed assets for 2012 was 0.26% as compared to 0.25% for 2011. The increase in the rate was primarily due to the decrease in voluntary fee waivers to maintain positive or zero net yields for 2012 as compared to 2011.

2012 Annual Report 17

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Revenue from managed assets decreased $57.3 million in 2011 as compared to 2010 primarily due to an increase of $79.1 million in voluntary fee waivers related to certain money market funds in order for these funds to maintain positive or zero net yields. The decrease in revenue was partially offset by an increase of $13.4 million due to higher average fixed-income assets, an increase of $9.1 million resulting from higher average money market assets (inclusive of an increase in revenue of approximately $26.6 million from average assets attributable to the SunTrust Acquisition) and an increase of $3.5 million due to higher average equity assets.

Federated’s ratio of revenue from managed assets to average managed assets for 2011 was 0.25% as compared to 0.27% for 2010. The decrease in the rate was primarily due to the significant increase in voluntary fee waivers to maintain positive or zero net yields for 2011 as compared to 2010.

Operating Expenses. The following table sets forth significant fluctuations in operating expenses for the three years ended December 31:

in millions	2012		2011		2010		2012 vs. 2011		2011 vs. 2010
Compensation and related	$	257.6	$	245.4	$	242.9	5	%	1	%
Distribution	253.4		235.7		259.2		8	%	(9	)%
Professional service fees	18.9		53.7		19.0		(65	)%	183	%
Intangible asset related	2.6		7.9		22.5		(67	)%	(65	)%
All other	100.6		95.0		98.6		6	%	(4	)%
Total operating expenses	$	633.1	$	637.7	$	642.2	(1	)%	(1	)%

Total operating expenses for 2012decreased$4.6 million compared to 2011. Professional service feesdecreased$34.8 million primarily due to a $20.2 million decrease related to the recognition of insurance proceeds in 2012 (See Business Developments – Insurance Proceeds for additional information) and a $17.2 million decrease in expenses related to non-recurring legal proceedings in 2011. Distribution expense increased$17.7 million in 2012 as compared to 2011 primarily due to a $13.8 million increase resulting from lower fee waivers associated with maintaining positive or zero net yields in certain money market funds and a $4.7 million increase related to higher average fixed-income assets. Compensation and related expense increased$12.2 million in 2012 as compared to 2011 reflecting a $5.9 million increase in base compensation primarily due to increased headcount and a $5.4 million increase in incentive compensation. Intangible asset related expense decreased$5.3 million primarily due to a $2.2 million decrease due to certain intangible assets becoming fully amortized in 2011 and a $1.7 million decrease related to changes in fair value of acquisition-related future consideration liabilities.

Total operating expenses for 2011 decreased $4.5 million compared to 2010. Professional service fees increased $34.7 million primarily due to the recognition of $25.0 million in insurance proceeds in 2010 related to various previously disclosed legal proceedings, $21.6 million of which was recorded as a reduction to Professional service fees. See Business Developments – Insurance Proceeds for additional information. In addition, there was an $8.5 million increase in Professional service fees related to certain of these legal proceedings. Distribution expense decreased $23.5 million in 2011 as compared to 2010 primarily due to a $45.7 million decrease as a result of higher fee waivers associated with maintaining positive or zero net yields in certain money market funds, partially offset by a $17.5 million increase related to the client mix of average money market assets in 2011 as compared to 2010 and a $4.2 million increase resulting from higher average fixed-income assets in 2011 as compared to 2010. Intangible asset related expense decreased $14.6 million primarily due to the $8.2 million impairment of certain intangible assets in 2010 and a $5.4 million decrease due to certain intangible assets becoming fully amortized in 2010 and the second quarter of 2011. See Note (6)(b) to the Consolidated Financial Statements for additional information on these impairments. Compensation and related expense increased $2.5 million in 2011 as compared to 2010 reflecting a $3.1 million increase in base compensation primarily due to merit increases and a $1.1 million increase in other compensation, including payroll taxes and benefits. These increases were partially offset by a $1.7 million decrease in incentive compensation.

Nonoperating Income (Expenses). Nonoperating expenses, net, decreased$7.0 million in 2012 as compared to 2011. The decrease reflects a $5.5 millionincrease in Gain on securities, net due primarily to increases in fair values of trading securities held ($3.1 million) and increased realized gains on Investments—affiliates ($1.4 million), a $2.6 milliondecrease in Debt expense primarily due to decreased average outstanding loan balances ($1.7 million) and a lower average interest rate ($1.2 million) due to Federated refinancing this debt in June 2011 (see Note (11) to the Consolidated Financial Statements for additional information) and a $1.9 millionincrease in Investment income, net primarily due to a higher average yield on Federated's investment portfolio. This decrease was partially offset by a $3.0 millionincrease in Other, net primarily due to an

18 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

impairment charge recorded in 2012 to write down the value of Federated's equity-method investment to fair value (see Note (6)(b) to the Consolidated Financial Statements for additional information).

Nonoperating expenses, net, increased $2.4 million in 2011 as compared to 2010. The increase reflects a $2.1 million decrease in Gain on securities, net due primarily to decreases in fair values of trading securities held during 2011 as compared to 2010 and an increase of $2.0 million in Debt expense primarily resulting from loan borrowings outstanding for a full year in 2011 as compared to a partial year in 2010. See Liquidity and Capital Resources – Borrowings for additional information.This was partially offset by a $1.5 million increase in Investment income, net in 2011 as compared to 2010 due primarily to increases in average investment balances and investments in higher yielding products.

Income Taxes. The income tax provision for 2012, 2011, and 2010 was $110.9 million, $91.3 million, and $112.0 million, respectively. The provision for 2012increased$19.6 million as compared to 2011 primarily due to higher Income before income taxes. The provision for 2011decreased$20.7 million as compared to 2010 primarily due to lower Income before income taxes. The effective tax rate was 35.9% for 2012, 37.1% for 2011 and 37.2% for 2010. See Note (16) to the Consolidated Financial Statements for additional information on the effective tax rate, as well as other tax disclosures.

For 2012, Federated’s pretax book income was $76.8 million in excess of federal taxable income due primarily to temporary tax differences of $56.4 million associated with certain intangible assets, $9.2 million associated with capital losses recognized in 2012 for tax purposes for which impairment charges had been recognized in a prior year for book purposes and $8.3 million related to the insurance proceeds recognized as income for book purposes in 2012 versus when received in a prior year for tax purposes. See Business Developments – Insurance Proceeds for additional information.

For 2011, Federated’s pretax book income was $50.9 million in excess of federal taxable income due primarily to $53.4 million in temporary tax differences associated with certain intangible assets.

For 2010, Federated’s pretax book income was $69.0 million in excess of federal taxable income due primarily to $33.8 million in temporary tax differences associated with certain intangible assets and $20.8 million in temporary tax differences related to the insurance proceeds recognized as income for book purposes in 2010 versus when received in a prior year for tax purposes. See Business Developments – Insurance Proceeds for additional information.

Net Income attributable to Noncontrolling Interests in Subsidiaries. Net income attributable to noncontrolling interests in subsidiaries increased$5.4 million for 2012 as compared to 2011 primarily due to the impact of lower fee waivers associated with maintaining positive or zero net yields in certain money market funds.

Net income attributable to noncontrolling interests in subsidiaries decreased$5.9 million for 2011 as compared to 2010 primarily due to the impact of higher fee waivers associated with maintaining positive or zero net yields in certain money market funds.

Net Income attributable to Federated Investors, Inc. Net income increased$37.2 million in 2012 as compared to 2011 primarily as a result of the changes in revenues and expenses noted above. Diluted earnings per share for the year ended December 31, 2012increased$0.34 as compared to the same period of 2011 primarily due to increased net income.

Net income decreased$28.2 million in 2011 as compared to 2010 primarily as a result of the changes in revenues and expenses noted above. Diluted earnings per share for the year ended December 31, 2011decreased$0.28 as compared to the same period of 2010 primarily due to decreased net income.

Liquidity and Capital Resources

Liquid Assets. At December 31, 2012, liquid assets, consisting of cash and cash equivalents, investments and receivables, totaled $282.7 million as compared to $343.8 million at December 31, 2011. The decrease of $61.1 million primarily reflects a decrease of $58.5 million in Investments—other due primarily to net redemptions of trading securities and a decrease of $23.5 million in Investments—affiliates due primarily to net redemptions of available-for-sale securities in 2012, partially offset by an increase of $18.3 million in Cash and cash equivalents, which is described further in the discussion below.

At December 31, 2012, Federated's liquid assets included investments in certain Federated-sponsored money market and fluctuating-value funds that may have direct and/or indirect exposures to international sovereign debt and currency risks. Federated has been actively monitoring its money market, fixed-income and equity portfolios to manage sovereign debt and currency risks with respect to recent events in certain euro-zone countries. Federated's experienced portfolio managers and analysts work to evaluate credit risk through quantitative and fundamental analysis. Further, for cash invested in certain money

2012 Annual Report 19

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

market funds (approximately $53 million), only indirect short-term exposures exist primarily to high-quality international bank names that are subject to Federated's credit analysis process and meet the requirements of Rule 2a-7.

Cash Provided by Operating Activities. Net cash provided by operating activities totaled $316.3 million for 2012 as compared to $113.5 million for 2011. The increase of $202.8 million was primarily due to a $169.1 million increase in net sales of trading securities and an increase in cash received from customers due to the $50.8 million increase in revenue from managed assets previously discussed.

Cash Provided by Investing Activities. In 2012, cash provided by investing activities was $11.4 million and was primarily related to $92.4 million in redemptions of available-for-sale securities, partially offset by $58.3 million in cash paid for purchases of available-for-sale securities and $14.1 million in cash paid in connection with acquisitions. See the section entitled Contractual Obligations and Contingent Liabilities for additional information on payments made in connection with acquisitions.

Cash Used by Financing Activities. In 2012, cash used by financing activities was $309.4 million. During 2012, Federated paid $256.8 million or $2.47 per share in dividends to holders of its common shares, $156.9 million or $1.51 per share of which related to a special cash dividend to shareholders. Federated also repaid $42.5 million during 2012 in connection with its long-term debt obligations (see Note (11) to the Consolidated Financial Statements for additional information).

Borrowings. In the second quarter 2011, Federated entered into an Amended and Restated Credit Agreement with a syndicate of banks (Credit Agreement). The borrowings included a $382.5 million term loan (Term Loan) and $200 million revolving credit facility. Proceeds from the debt facilities have been used for general corporate purposes including cash payments related to acquisitions, dividends, investments and share repurchases. During each of 2012 and 2011, Federated made principal payments of $42.5 million on the Term Loan. As of December 31, 2012, the entire $200 million revolving credit facility was available for borrowings. The interest rate swap (the Swap) that Federated entered into during 2010 to hedge its interest rate risk associated with the term loan remains in effect. The Swap converts the variable interest rate on the Term Loan to a fixed rate of 3.646%. See Note (11) to the Consolidated Financial Statements for additional information.

The Credit Agreement has an interest coverage ratio covenant (consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) to consolidated interest expense) and a leverage ratio covenant (consolidated debt to consolidated EBITDA) as well as other customary terms and conditions. An interest coverage ratio of at least 4 to 1 is required and as of December 31, 2012, the interest coverage ratio was 27.00 to 1. A leverage ratio of no more than 2.5 to 1 is required and as of December 31, 2012, the leverage ratio was 0.91 to 1. Federated was in compliance with its interest coverage and leverage ratios at and during the year ended December 31, 2012. The Credit Agreement and the Swap also have certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt or the Swap if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, deterioration in credit rating to below investment grade, notice of lien or assessment and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

Future Cash Needs. In addition to the contractual obligations and contingent liabilities described below, management expects that principal uses of cash will include paying incentive and base compensation, funding distribution expenditures, paying shareholder dividends, repaying debt obligations, funding business acquisitions and global expansion, paying taxes, repurchasing company stock, advancing sales commissions, seeding new products and funding property and equipment acquisitions, including computer-related software and hardware. As a result of the highly regulated nature of the investment management business, management anticipates that expenditures for compliance and investment management personnel, compliance systems and related professional and consulting fees may continue to increase.

On January 24, 2013, the board of directors declared a $0.24 per share dividend to shareholders of record as of February 8, 2013, which was paid on February 15, 2013.

After evaluating Federated’s existing liquid assets, expected continuing cash flow from operations, its remaining borrowing capacity under the revolving credit facility of the Credit Agreement and its ability to obtain additional financing arrangements and issue debt or stock, management believes it will have sufficient liquidity to meet its present and reasonably foreseeable cash needs. Although management currently is not projecting to draw on the availability under the revolving credit facility in 2013, management may choose to borrow additional amounts up to the maximum available under the revolving credit facility which could cause total outstanding borrowings to total as much as $508 million.

20 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Management estimates that of the $14.1 million of deferred tax assets (net of valuation allowances) at December 31, 2012, $6.9 million and $1.7 million will reverse in 2013 and 2014, respectively, as tax deductions are taken in those years for various expenses recorded in 2012 or prior years, such as certain compensation-related expenses. In addition, a $3.9 million deferred tax asset associated with the Swap is expected to reverse no later than its expiration in 2015.

Financial Position

The following discussion summarizes significant changes in assets and liabilities that are not discussed elsewhere in Management’s Discussion and Analysis of Financial Condition and Results of Operations and the status of Federated's goodwill and equity-method investment as of December 31, 2012.

Long-term deferred tax liability, net at December 31, 2012increased$26.2 million from December 31, 2011 primarily as a result of tax amortization in excess of book amortization of intangible assets.

There were no indicators of goodwill impairment as of December 31, 2012 as Federated's market capitalization exceeded the book value of equity by more than 300%.

Federated holds a 12% non-voting, noncontrolling interest in a privately-held investment management firm that is registered as an investment adviser and a commodity trading adviser. This investment is accounted for using the equity-method of accounting. Federated's investment in and maximum exposure to loss related to its equity-method investment as compared to its proportionate share of the investee's underlying net assets is characterized as goodwill. Federated evaluates the carrying value of its investment for other-than-temporary impairment under the equity-method of accounting. Due to declines in the investee's AUM, their performance relative to indices and the uncertainty regarding each in the future, management estimated the fair value of its investment at June 30, 2012 and September 30, 2012. Based on the evaluation of qualitative and quantitative factors, management concluded that the investment was not other-than-temporarily impaired as of June 30, 2012 and September 30, 2012.

In light of significant declines in the investee's AUM in the fourth quarter of 2012 and lower short-term growth forecasts in AUM, management once again estimated the fair value of its investment at December 31, 2012 and considered whether it was other-than-temporarily impaired. The estimate of fair value was based primarily upon the present value of expected future cash flows using an income-approach valuation methodology with unobservable data inputs (Level 3). Significant unobservable model inputs included: (1) projected AUM across product lines with a 10-year compounded annual growth rate of 15% and a terminal growth rate of 3%; and (2) a 17% discount rate based upon the current estimated market rate of return. Based on management's evaluation of qualitative and quantitative factors, management concluded that the investment was other-than-temporarily impaired as of December 31, 2012. Accordingly, Federated recorded a $3.0 million impairment charge in Nonoperating Income (Expenses) – Other, net to write down the equity-method investment to a fair value of $3.8 million. Given uncertainties regarding the success of future sales efforts and possible prolonged periods of over/underperformance compared to indices and the significance of these factors to AUM, management cannot be certain of the outcome of future cash flow analyses.

Off-Balance Sheet Arrangements

As of December 31, 2012 and 2011, Federated did not have any material off-balance sheet arrangements.

2012 Annual Report 21

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Contractual Obligations and Contingent Liabilities

Contractual. The following table presents as of December 31, 2012, Federated’s significant minimum noncancelable contractual obligations by payment date. The payment amounts represent amounts contractually due to the recipient and do not include any unamortized discounts or other similar carrying value adjustments. Further discussion of the nature of each obligation is included either in the referenced Note to the Consolidated Financial Statements or in a footnote to the table.

		Payments due in
in millions	Note Reference	2013		2014-2015		2016-2017		After 2017		Total
Long-term debt obligations1	(11)	$	53.4	$	205.3	$	86.0	$	0	$	344.7
Operating lease obligations	(15)	12.7		21.9		18.2		28.5		81.3
Purchase obligations2		20.0		8.5		1.0		0.2		29.7
Employment-related commitments3		16.9		7.7		0		0		24.6
Acquisition-related commitments4	(20)	4.5		0		0		0		4.5
Total		$	107.5	$	243.4	$	105.2	$	28.7	$	484.8

1 Amounts include principal and interest payments. Assuming the debt amortization schedule and the fixed interest rate in effect at December 31, 2012 as a result of the Swap (see Note (11) to the Consolidated Financial Statements), Federated’s minimum contractual interest payments would be approximately $10.9 million, $14.0 million and $1.0 million for 2013, 2014-2015 and 2016, respectively.

2 Federated is a party to various contracts pursuant to which it receives certain services including services for legal, marketing and information technology, access to various fund-related information systems and research databases, trade order transmission and recovery services as well as other services. These contracts contain certain minimum noncancelable payments, cancellation provisions and renewal terms. The contracts expire on various dates through the year 2019. Costs for such services are expensed as incurred.

3 Federated has certain domestic and international employment arrangements pursuant to which Federated is obligated to make minimum compensation payments. These contracts expire on various dates through the year 2014.

4 Amount represents Federated's obligation to make acquisition-related contingent purchase price payments in cases where the related contingencies are resolved as of December 31, 2012. For a full discussion of Federated's commitments regarding acquisition-related purchase price payments, see the discussion that follows herein under Contingent Payments.

Contingent Payments. Pursuant to various acquisition- and employee-related agreements, Federated is required to make certain periodic contingent payments. Details regarding these commitments are as follows:

As part of the SunTrust Acquisition, Federated is required to make annual contingent purchase price payments in the fourth quarters of each of the five years following the acquisition date. The contingent purchase price payments are calculated as a percentage of revenue less distribution expenses directly attributed to certain eligible assets. The first two contingent purchase price payments of $5.0 million and $4.2 million were paid in the fourth quarters of 2011 and 2012, respectively. At December 31, 2012, management estimated remaining contingent payments could total $11 million over the three years that remain; however, the actual amount of the contingent payments will vary based on asset levels and related net revenues and is not limited by any maximum amount. A wide range of outcomes for actual payments is possible due to the extent of reasonably possible flow-rate volatility for the respective AUM. As of December 31, 2012, a liability of $8.2 million representing the estimated fair value of future consideration payments was recorded in Other current liabilities ($3.5 million) and Other long-term liabilities ($4.7 million) (see Note (6)(a) for a discussion regarding the valuation methodology). This liability is remeasured at each reporting date with changes in the fair value recognized in Intangible asset related expense on the Consolidated Statements of Income.

In 2008, Federated completed the acquisition of certain assets of David W. Tice & Associates LLC that relate to the management of the Prudent Bear Fund and the Prudent DollarBear Fund (Prudent Bear Acquisition). As part of the Prudent Bear Acquisition, Federated was required to make contingent purchase price payments based upon certain revenue growth targets over the four-year period following the acquisition date. The contingent purchase price payments were recorded as additional goodwill at the time the contingency was resolved. The first two contingent purchase price payments of $5.1 million and $44.7 million were paid in the first quarters of 2010 and 2011, respectively. The applicable growth targets were not met for the third or fourth anniversary years. As such, no amount was paid related to the third anniversary year and no amount was accrued for the fourth and final anniversary year ended in December 2012.

In 2008, Federated completed the acquisition of certain assets of Clover Capital Management, Inc., a Rochester, New York-based investment manager that specializes in value investing (Clover Capital Acquisition). As part of the Clover Capital Acquisition, Federated is required to make contingent purchase price payments based upon growth in revenues over the five-

22 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

year period following the acquisition date. The contingent purchase price payments, which could total as much as $56 million, will be recorded as additional goodwill at the time the contingency is resolved. The applicable growth targets were not met for the first two anniversary years and as such, no related payments were made. In the first quarter 2012, $5.9 million was paid with regard to the third anniversary year ended in December 2011. As of December 31, 2012, $3.4 million was accrued for the fourth anniversary year ended in December 2012 and was paid in January 2013.

As part of the 2005 acquisition of the cash management business of Alliance Capital Management L.P. (Alliance Acquisition), Federated was required to make contingent purchase price payments over a five-year period following the acquisition date. These payments were primarily calculated as a percentage of revenues less certain distribution expenses directly attributed to the assets acquired. Contingent purchase price payments totaled $95.7 million, including $35.7 million paid in 2010, the final year of the contingent-payment period. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

In 2007, Federated completed a transaction with Rochdale Investment Management LLC to acquire certain assets relating to its business of providing investment advisory and investment management services to the Rochdale Atlas Portfolio (Rochdale Acquisition). The Rochdale Acquisition agreement provided for two forms of contingent purchase price payments payable over the five-year period following the acquisition date based on certain revenue earned by Federated from the Federated InterContinental Fund and/or related asset growth and performance. Contingent purchase price payments over the five-year period totaled $8.0 million, which included payments totaling $2.1 million in 2010, $1.1 million in 2011 and $2.8 million in 2012, the final year of payment. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

Pursuant to other acquisition agreements, Federated may be required to make additional purchase price payments based on a percentage of revenue less certain direct expenses attributable to eligible AUM. The payments could occur annually through 2017 and, based on current projections, are not expected to be material to the Consolidated Financial Statements.

In addition to the $16.9 million of employee-related commitments to be paid in 2013, Federated may be required to make certain incentive compensation-related payments in connection with various significant employment arrangements. The employment contracts expire on various dates through the year 2014 with payments possible through 2018. As of December 31, 2012, the maximum bonus payable over the remaining terms of the contracts approximates $43 million, none of which would be payable in 2013. In addition, certain employees have incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund (the Fund Bonus). Based on asset levels at December 31, 2012, $0.6 million would be paid in 2013 as a Fund Bonus payment. Management is unable to reasonably estimate a range of possible bonus payments for the Fund Bonus for subsequent years due to the wide range of possible growth-rate scenarios.

Legal Proceedings. Federated has claims asserted and threatened against it in the ordinary course of business. As of December 31, 2012, Federated does not believe that a material loss related to these claims is reasonably possible.

Variable Interest Entities

Federated is involved with various entities in the normal course of business that may be deemed to be variable interest entities (VIEs). Federated determined that it was the primary beneficiary of certain investment-fund VIEs and, as a result, consolidated the assets, liabilities and operations of these VIEs in its Consolidated Financial Statements. See Note (5) to the Consolidated Financial Statements for more information.

Recent Accounting Pronouncements

For a complete list of new accounting standards recently adopted by Federated and new accounting standards issued, but not yet adopted by Federated, see Note (2) to the Consolidated Financial Statements.

Critical Accounting Policies

Federated’s Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Management continually evaluates the accounting policies and estimates it uses to prepare the Consolidated Financial Statements. In general, management’s estimates are based on historical experience, information from third-party professionals and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results may differ from those estimates made by management and those differences may be material.

2012 Annual Report 23

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Of the significant accounting policies described in Note (1) to the Consolidated Financial Statements, management believes that its policies regarding accounting for intangible assets, acquisition-related future consideration liabilities and income taxes involve a higher degree of judgment and complexity.

Accounting for Intangible Assets. Three aspects of accounting for intangible assets require significant management estimates and judgment: (1) valuation in connection with the initial purchase price allocation; (2) ongoing evaluation for impairment and (3) reconsideration of an asset's useful life. The process of determining the fair value of identifiable intangible assets at the date of acquisition requires significant management estimates and judgment as to expectations for earnings on the related managed assets acquired, redemption rates for such managed assets, growth from sales efforts and the effects of market conditions. Management often utilizes an independent valuation expert to help with this process. If actual changes in the related managed assets or the projected useful life of the intangible asset, among other assumptions, differ significantly from the estimates and judgments used in determining the initial fair value, the intangible asset amounts recorded in the financial statements could be subject to possible impairment or could require an acceleration in amortization expense that could have a material adverse effect on Federated’s consolidated financial position and results of operations.

Indefinite-lived intangible assets are reviewed for impairment annually as of October 1 using a qualitative approach which requires the weighing of positive and negative evidence collected through the consideration of various factors to determine whether it is more likely than not that an indefinite-lived intangible asset or asset group is impaired. Management considers entity-specific and macroeconomic factors and their potential impact on significant inputs used to determine the fair value measurement for the indefinite-lived intangible assets including, primarily, changes in AUM, net revenue rates, operating margins, tax rates and discount rates. In addition, management reconsiders on a quarterly basis whether events or circumstances indicate that a change in the useful life may have occurred. Indicators of a possible change in useful life monitored by management include a significant decline in the level of managed assets, changes to legal, regulatory or contractual provisions of the renewable investment advisory contracts and reductions in underlying operating cash flows.

If actual changes in the underlying managed assets or other conditions indicate that it is more likely than not that the asset is impaired, or if the estimated useful life is reduced, management estimates the fair value of the intangible asset using an income approach where future cash flows are discounted. Impairment is indicated when the carrying value of the intangible asset exceeds its fair value.

At December 31, 2012, Federated had $70.4 million in indefinite-lived intangible assets recorded on its Consolidated Balance Sheets. Based on testing performed in 2012, 2011 and 2010, it was determined that no impairment or change in useful life existed for these assets. For the $8.7 million in finite-lived intangible assets, no indicators of impairment existed as of December 31, 2012 or 2011 and no impairments were recorded during the years then ended.

In 2010, in light of declines in AUM related to certain quantitative investment products acquired in 2006, and given the performance of these products relative to peers and indices, the carrying values of the related intangible assets were deemed to be impaired. Accordingly, Federated recorded $10.2 million in impairment charges on the Consolidated Statements of Income during 2010, $8.2 million of which was included in Intangible asset related expense with the remainder in Operating expenses – Other. See Note (6)(b) to the Consolidated Financial Statements for additional information.

Accounting for Acquisition-Related Future Consideration Liabilities. For acquisitions completed since January 1, 2009, Federated is required to carry its liability for future consideration payments at fair value each period end with changes in fair value recorded in earnings. As of December 31, 2012, the fair value of all acquisition-related future consideration liabilities was $11.8 million. Future consideration payments will be calculated as a percentage of revenue less certain distribution expenses directly attributed to eligible assets. The process of estimating the fair value of the related liabilities requires management estimates and judgment as to expectations for the amount of net revenue to be earned on the applicable AUM, net sales/redemptions for such AUM and the discount rate. Expected net revenue per managed asset is generally based on contract terms, historical experience and management's expectation regarding the impact of potential future fee waivers for certain money market funds to maintain positive or zero net yields. Net flow rates are estimated by evaluating historical net flow rates in similar funds and recent trends in the eligible AUM. The discount rate is estimated as the current market rate of return.

If actual amounts or management’s estimates and judgment regarding changes in the related managed assets, revenue earned from the managed assets or the discount rate, among other assumptions, differ significantly at a period-end date as compared to the estimates and judgments used in determining the fair value as of the prior period-end date, the adjustment to record the change in the fair value of the respective liability could result in a significant favorable or unfavorable adjustment to earnings which could have a material effect on Federated’s consolidated financial position and results of operations. See Note (6)(a) to the Consolidated Financial Statements for additional information regarding this liability.

24 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

Accounting for Income Taxes. Significant management judgment is required in developing Federated’s provision for income taxes and the determination of any valuation allowances related to deferred tax assets. As of December 31, 2012, Federated had recorded a valuation allowance on $3.5 million of its $4.0 million of deferred tax assets relating to capital losses (recognized for tax purposes). Federated considered various factors in connection with its evaluation of the partial realizability of these assets including: the five-year carry-forward period for capital losses, Federated's continued investment of available cash with the intent to generate capital gains and its history of generating capital gains in times of favorable market conditions. Based on these factors, management believes it is more likely than not that Federated will be able to utilize a portion of these losses in the future. In the event that Federated’s strategies do not materialize, Federated may be required to record an additional valuation allowance of as much as $0.5 million for these deferred tax assets.

Significant management judgment is required to account for uncertainty in income taxes. The processes of determining (1) whether it is more likely than not that a position will be sustained upon examination and (2) the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the taxing authority require management estimates and judgment as to expectations of the amounts and probabilities of the outcomes that could be realized. Management considers the facts and circumstances available as of the reporting date in order to determine the appropriate tax benefit to recognize including tax legislation and statutes, legislative intent, regulations, rulings and case law. Significant differences could exist between the ultimate outcome of the examination of a tax position and management’s estimate. These differences could have a material impact on Federated’s effective tax rate, results of operations, financial position and/or cash flows.

Risk Factors

Potential Adverse Effects of a Material Concentration in Revenue. For 2012, approximately 47% of Federated’s total revenue was attributable to money market assets as compared to 46% and 50% for 2011 and 2010, respectively. The change in the relative proportion of Federated's revenue attributable to money market assets from 2011 to 2012 was primarily the result of decreases in fee waivers for certain money market funds to maintain positive or zero net yields. The decline in the relative proportion of Federated's revenue attributable to money market assets from 2010 to 2011 was primarily the result of increases in fee waivers for certain money market funds to maintain positive or zero net yields. A significant change in Federated’s money market business or a significant reduction in money market assets due to regulatory changes, changes in the financial markets including significant increases in interest rates over a short period of time, significant deterioration in investor confidence, further persistent declines in or additional prolonged periods of historically low short-term interest rates and resulting fee waivers or other circumstances, could have a material adverse effect on Federated’s results of operations.

Potential Adverse Effects of Historically Low Interest Rates. In December 2008, the Federal Reserve cut the federal funds target rate, a benchmark used by banks to set rates paid on many types of consumer and business loans, to a range between 0% and 0.25%. This action by the Federal Reserve negatively impacts the yields of money market funds, in particular treasury and government agency money market funds. Money market fund yields reflect the return on short-term investments (e.g. Treasury bills), less fund expenses. With short-term interest rates at or near zero, money market funds may not be able to maintain positive yields for shareholders. Based on recent commentary from the Federal Reserve Bank in its January 30, 2013 press release, “the current highly accommodative stance of monetary policy will remain appropriate for a considerable time…,” Federated is unable to predict when the Federal Reserve will increase its target for the federal funds rate. As such, economic conditions are likely to warrant exceptionally low levels for the federal funds rate for the foreseeable future. Federated voluntarily waives certain fees or assumes expenses of certain funds for competitive reasons such as to maintain positive or zero net yields, which has and could continue to cause material adverse effects on Federated’s results of operations. Federated, however, is not obligated to make such fee waivers or to assume any such fund expenses.

Since the fourth quarter 2008, Federated has voluntarily waived fees in order for certain money market funds to maintain positive or zero net yields. These fee waivers were partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to share the impact of the waivers.

These voluntary fee waivers are calculated as a percent of AUM in certain money market funds and thus will vary dependent upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, available yields on instruments held by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of fee waivers necessary in order for certain funds to maintain positive or zero net yields. As an isolated variable, an increase in yields on instruments held by the money market funds will cause fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market fund would cause fee waivers to increase.

2012 Annual Report 25

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds as well as the distribution among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower waivers to maintain positive or zero net yields. Conversely, the opposite would also be true.

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the years ended December 31:

										2012		2011
in millions	2012			2011			2010			vs. 2011		vs. 2010
Investment advisory fees	$	(177.2	)	$	(201.6	)	$	(134.3	)	12	%	(50	)%
Other service fees	(113.8		)	(119.1		)	(107.3		)	4	%	(11	)%
Total Revenue	(291.0		)	(320.7		)	(241.6		)	9	%	(33	)%
Less: Reduction in Distribution expense	218.5			232.3			186.6			(6	)%	24	%
Operating income	(72.5		)	(88.4		)	(55.0		)	18	%	(61	)%
Less: Reduction in Noncontrolling interest	1.3			6.5			1.0			(80	)%	550	%
Pre-tax impact	$	(71.2	)	$	(81.9	)	$	(54.0	)	13	%	(52	)%

The negative pre-tax impact of fee waivers to maintain positive or zero net yields decreased in 2012 as compared to 2011 primarily as a result of improved yields on instruments held by the money market funds. During 2011, further declines in interest rates for certain money market investments drove an increase in these fee waivers as compared to 2010. (See Note (22) to the Consolidated Financial Statements for information regarding the quarterly pre-tax impact of these fee waivers.)

Based on the above-mentioned Federal Reserve Bank commentary, Federated is unable to predict when the Federal Reserve will increase its target for the federal funds rate. As such, fee waivers to maintain positive or zero net yields and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. Assuming asset levels and mix remain constant and based on recent market conditions including the lower short-term interest rate environment in the first quarter of 2013 as compared to the fourth quarter of 2012, fee waivers for the first quarter 2013 may result in a negative pre-tax impact on income of approximately $21 million. While the level of fee waivers are impacted by various factors, increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the negative pre-tax impact of these waivers. Management estimates that an increase of 10 basis points in gross yields on securities purchased in money market fund portfolios will likely reduce the negative pre-tax impact of these waivers by approximately forty percent from the current levels and an increase of 25 basis points would reduce the impact by approximately seventy percent from the current levels. The actual amount of future fee waivers could vary significantly from management’s estimates as they are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, available yields on instruments held by the money market funds, actions by the Federal Reserve, the U.S. Department of the Treasury, FSOC and other governmental entities, changes in expenses of the money market funds, changes in the mix of money market customer assets, Federated’s willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by third parties. 

Potential Adverse Effects of Rising Interest Rates. Despite the expectation that increases in short-term interest rates above the historically low rates of 0% - 0.25% will reduce the impact of fee waivers to maintain positive or zero net yields, increases in interest rates could also have an adverse effect on Federated’s revenue from money market and other fixed-income products. In a rising short-term interest rate environment, certain investors using money market products and other short-term duration fixed-income products for cash management purposes may shift these investments to direct investments in comparable instruments in order to realize higher yields than those available in money market and other fund products holding lower-yielding instruments. In addition, rising interest rates will tend to reduce the fair value of securities held in various investment portfolios and other products. Management cannot estimate the impact of rising interest rates on Federated’s revenue, but such impact could be material.

Potential Adverse Effects of a Decline or Disruption in the Economy or Financial Markets. Economic or financial market downturns (domestic or international), including disruptions in securities and credit markets, may adversely affect the profitability and performance of, demand for and investor confidence in Federated’s investment products and services. In

26 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

addition, Federated's products may be adversely affected by potential deterioration in international sovereign or currency market conditions. At December 31, 2012, Federated's liquid assets of $282.7 million included investments in certain Federated-sponsored money market and fluctuating-value funds that may have direct and/or indirect exposures to international sovereign debt and currency risks. Federated actively monitors its money market, fixed-income and equity portfolios to manage sovereign debt and currency risks with respect to recent events in certain euro-zone countries. Federated's experienced portfolio managers and analysts work to evaluate credit risk through quantitative and fundamental analysis. Further, for cash invested in certain money market funds (approximately $53 million), only indirect short-term exposures exist primarily to high-quality international bank names that are subject to Federated's credit analysis process and meet the requirements of Rule 2a-7. Although investments held by sponsored money market and fluctuating-value funds are subject to Federated's proprietary investment research process, there can be no assurance that potential losses that may be realized as a result of these exposures will not have a material adverse effect on Federated's business, financial condition or results of operations.

The ability of Federated to compete and sustain asset and revenue growth is dependent, in part, on the relative attractiveness of the types of investment products Federated offers and its investment performance and strategies under prevailing market conditions. In the event of extreme circumstances, including economic, political, or business crises, Federated’s products may suffer significant net redemptions in AUM causing severe liquidity issues in its short-term sponsored investment products and declines in the value of and returns on AUM, all of which could cause material adverse effects on Federated’s reputation, financial position, results of operations or liquidity.

Custody and portfolio accounting services for all of Federated's mutual fund products are outsourced to one of three third-party financial institutions that are leading providers of such mutual fund services. Accounting records for Federated's mutual funds are maintained by these service providers. These service providers, or other vendors of Federated, could also be adversely affected by the adverse market conditions described above. It is not possible to predict with certainty the extent to which the services or products Federated receives from such service providers or vendors would be interrupted or affected by such situations. Accordingly, there can be no assurance that potential service interruption or Federated’s ability to find a suitable replacement would not have a material adverse effect on Federated’s reputation, financial position, results of operations or liquidity.

Potential Adverse Effects of Changes in Laws and Regulations on Federated’s Investment Management Business. Federated and its investment management business are subject to extensive regulation in the United States and abroad. Federated and the Federated Funds are subject to Federal securities laws, principally the Securities Act of 1933, the Investment Company Act of 1940 (Investment Company Act) and the Investment Advisers Act of 1940, state laws regarding securities fraud and regulations promulgated by various regulatory authorities, including the SEC, the Financial Industry Regulatory Authority (FINRA) and the New York Stock Exchange (the NYSE). Federated is also affected by the regulations governing banks and other financial institutions. Federated's operations outside of the United States are subject to foreign laws and regulation by foreign regulatory authorities, such as the U.K. Financial Services Authority (FSA) for its London-based operations, the Central Bank of Ireland for its Irish-domiciled operations, the German Federal Financial Supervisory Authority for its Frankfurt-based operations and the Australian Securities and Investments Commission for its Melbourne-based operations. Changes in laws, regulations or governmental policies, both domestically and abroad, and the costs associated with compliance, could materially and adversely affect the business and operations of Federated.

From time to time, the Federal securities laws have been augmented substantially. For example, among other measures, Federated has been impacted by the Sarbanes-Oxley Act of 2002, the Patriot Act of 2001 and the Gramm-Leach-Bliley Act of 1999. The Dodd-Frank Act was enacted into law on July 21, 2010. Under the Dodd-Frank Act, Federated, as well as mutual funds, continue to be primarily regulated by the SEC. The Dodd-Frank Act provides, however, for a new systemic risk regulation regime under which it is possible that Federated and/or any one or more of its mutual funds could be subject to designation as a systemically important financial institution by FSOC thereby resulting in additional regulation by the Federal Reserve Board, in addition to primary regulation by the SEC. Any such designation would subject the designated entity to enhanced prudential measures, including capital and liquidity requirements, leverage limits, enhanced public disclosures and risk management requirements. Other provisions of the Dodd-Frank Act may affect intermediaries in their sale or use of Federated's products. Prior to complete implementation, it will be difficult to assess the full impact of the Dodd-Frank Act on Federated.

In January 2010, the SEC adopted extensive amendments to Rule 2a-7 aimed at enhancing the resiliency of money market funds. These amendments included a series of enhancements including rules that require all money market funds to meet specific portfolio liquidity standards and rules that significantly enhance the public disclosure and regulatory reporting obligations of these funds. In 2010 and 2011, Federated dedicated internal resources to comply with these amendments including efforts to enhance its information systems and improve related reporting capabilities. These efforts were internally

2012 Annual Report 27

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

sourced and not material to Federated's financial position, results of operations or cash flows for those years. In Federated's view, the amendments of 2010 meaningfully and sufficiently strengthen money market funds. Recent experience demonstrated that the amendments of 2010 were effective in meeting heightened requests for redemptions occurring in connection with the U.S. credit rating downgrade in 2011 and the ongoing European debt crisis.

On October 21, 2010, the President's Working Group issued its report on Money Market Fund Reform Options (the Report). The President's Working Group was tasked with studying possible additional reforms relating to money market funds that could mitigate systemic risk in the financial markets (including the potential for disruption in the financial markets caused by rapid shareholder redemptions in money market funds). The Report discusses the conditions that could cause money market funds to experience rapid shareholder redemptions and describes the advantages and disadvantages of a variety of policy options that could reduce the risk of such rapid redemptions. The Report suggests that the FSOC examine these options as part of its implementation of the Dodd-Frank Act.

The SEC undertook a project to develop a proposal for additional reforms related to money market funds. In August 2012, then SEC Chairman Mary Schapiro issued a public statement announcing that she did not have sufficient votes from the other SEC commissioners to pursue certain proposed reforms relating to money market funds. In her statement, Ms. Schapiro stated that the SEC had been considering two alternative reform proposals, one which would have required a floating NAV, and the other which would have imposed capital requirements coupled with some form of redemption restriction. In her statement, she invited other policymakers to take up the issue of reform. On September 27, 2012, then Treasury Secretary Timothy Geithner sent a letter to the members of the FSOC announcing his intent to pursue money market fund reform. His letter urged FSOC to use its authority under Section 120 of the Dodd-Frank Act to recommend that the SEC proceed with money market reform. Mr. Geithner outlined three potential options for reform in his letter and stated that he had asked his staff to begin drafting a formal recommendation for FSOC to consider at its November 2012 meeting.

In November 2012, FSOC issued Proposed Recommendations Regarding Mutual Fund Reform citing its authority under Section 120 of the Dodd-Frank Act (Proposed Recommendations). The Proposed Recommendations are in draft form and are subject to a public comment period which ended on February 15, 2013. The Proposed Recommendations include three main alternatives: a floating NAV for money market funds; an NAV capital buffer and minimum balance at risk (or 30-day hold back of up to 3% on certain redemptions); and an NAV capital buffer combined with other measures. In response to the Proposed Recommendations, Federated has filed five comment letters on the Proposed Recommendations pointing out, among other things, that: (1) FSOC exceeded its authority in how it used the Section 120 process; (2) FSOC has not provided justification for further reform efforts; (3) a floating NAV would not prevent “runs” on money market funds; (4) an NAV capital buffer of the kind proposed is impractical and not economically attainable in the current interest rate environment; and (5) the minimum-balance-at-risk concept would impair the utility of money market funds to investors and would be prohibitively costly for both fund groups and intermediaries to implement.

On November 30, 2012, the SEC Staff issued a study entitled Response to Questions Posed by Commissioners Aguilar, Parades and Gallagher. This study responded to questions posed by the Commissioners in response to potential reform measures being advanced by then SEC Chairman Mary Shapiro. The study addressed certain misconceptions about the role of money market funds in the financial crisis of 2008 and confirmed the effectiveness of the 2010 amendments to Rule 2a-7. Federated also filed a comment letter on the study commending the SEC Staff for its work while raising questions on some aspects of the study and recommending further analysis.

Finally, it has been reported that the SEC Staff is working on its own rule proposal and that proposal could include a floating NAV for certain money market funds, in particular prime funds. It could also include a floating NAV proposal for all money market funds as well as other reform measures.

Federated believes the changes currently under consideration, if enacted, would significantly reduce the utility and attractiveness of money market funds for investors who, in Federated's view, value money market funds in their current form as an efficient and effective cash management investment product offering daily liquidity at par.

If ultimately enacted, some or all of these changes would be detrimental to Federated's money market fund business and could materially and adversely affect Federated's operations. The very proposal of such amendments could have an adverse impact on Federated's money market fund business and operations and could also negatively impact the short-term credit markets. Management is carefully monitoring developments in this area and plans to actively participate both individually and with industry groups in the public comment process that would accompany any rule change proposal. Federated is unable to assess the degree of any potential impact such additional reforms may have on its business and operations until such proposals are issued. Even when issued, the final version of any rule amendment could vary significantly from the form in which it is proposed.

28 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

In addition, during the past few years regulators such as the SEC, FINRA and the NYSE have adopted other regulations, rules and amendments that have increased Federated's operating expenses and affected the conduct of its business, and may continue to do so. Rule amendments adopted by the Commodity Futures Trading Commission in the first quarter 2012 may also increase Federated's operating expenses and affect the conduct of its business. International regulators, such as the FSA, have also adopted and proposed regulations that could increase Federated's operating expenses and affect the conduct of its business. Other significant regulations or amendments to regulations have been proposed that, if adopted, will affect Federated and the Federated Funds.

Over the past few years, various service industries, including mutual fund service providers, have been the subject of changes in tax policy that impact their state and local tax liability. Changes that have been adopted or proposed include (1) an expansion of the nature of a service company's activities that subject it to tax in a jurisdiction, (2) a change in the methodology by which multi-state companies apportion their income between jurisdictions, and (3) a requirement that affiliated companies calculate their state tax as one combined entity. As adopted changes become effective and additional jurisdictions effect similar changes, there could be a material adverse effect on Federated's tax liability and effective tax rate and, as a result, net income.

Potential Adverse Effect of Providing Financial Support to Investment Products. Federated may, at its sole discretion, from time to time elect to provide financial support to its sponsored investment products. Providing such support utilizes capital that would otherwise be available for other corporate purposes. Losses on such support, or failure to have or devote sufficient capital to support products, could have a material adverse effect on Federated’s reputation, financial position, results of operations or liquidity.

Risk of Federated’s Money Market Products’ Ability to Maintain a Stable $1.00 Net Asset Value. Approximately 47% of Federated’s total revenue for 2012 was attributable to money market assets. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation. Although money market funds seek to preserve an NAV of $1.00 per share, it is possible for an investor to lose money by investing in these funds. Federated devotes substantial resources including significant credit analysis to the management of its products. Federated money market funds have always maintained a $1.00 NAV; however, there is no guarantee that such results will be achieved in the future. Market conditions could lead to severe liquidity issues and/or further persistent declines in or additional prolonged periods of historically low yields in money market products which could impact their NAVs. If the NAV of a Federated money market fund were to decline to less than $1.00 per share, Federated money market funds would likely experience significant redemptions in AUM, loss of shareholder confidence and reputational harm, all of which could cause material adverse effects on Federated’s financial position, results of operations or liquidity.

No Assurance of Access to Sufficient Liquidity. From time to time, Federated’s operations may require more cash than is then available from operations. In these circumstances, it may be necessary to borrow from lending facilities or to raise capital by securing new debt or by selling shares of Federated equity or debt securities. Federated’s ability to raise additional capital in the future will be affected by several factors including Federated’s creditworthiness, the fair value of Federated’s common stock, as well as general market conditions. There can be no assurance that Federated will be able to obtain these funds and financing on acceptable terms, if at all.

Retaining and Recruiting Key Personnel. Federated’s ability to locate and retain quality personnel has contributed significantly to its growth and success and is important to attracting and retaining customers. The market for qualified executives, investment managers, analysts, traders, sales representatives and other key personnel is extremely competitive. There can be no assurance that Federated will be successful in its efforts to recruit and retain the required personnel. Federated has encouraged the continued retention of its executives and other key personnel through measures such as providing competitive compensation arrangements and in certain cases, employment agreements. The loss of any such personnel could have an adverse effect on Federated. In certain circumstances, the departure of key employees could cause higher redemption rates for certain AUM or the loss of client accounts. Moreover, since certain of Federated’s products contribute significantly to its revenues and earnings, the loss of even a small number of key personnel associated with these products could have a disproportionate impact on Federated’s business.

Various executives, investment, sales and other key personnel own restricted stock subject to vesting periods of up to ten years from the date awarded and to provisions that require resale or forfeiture to Federated in certain circumstances upon termination of employment. In addition, certain of these employees are employed under contracts which require periodic review of compensation and contain restrictive covenants with regard to divulging confidential information and engaging in competitive activities.

Potential Adverse Effects of Increased Competition in the Investment Management Business. The investment management business is highly competitive. Federated competes in the management and distribution of mutual funds and Separate Accounts

2012 Annual Report 29

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

with other 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, investment performance, quality of service, the strength and continuity of management and selling relationships, distribution services offered, the range of products offered and fees charged.

Many of Federated’s 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 assets are held by institutional investors. Because most institutional investment vehicles are sold without sales commissions at either the time of purchase or the time of redemption, institutional investors may be more inclined to transfer their assets among various institutional funds than investors in retail mutual funds.

A significant portion of Federated’s revenue is derived from providing mutual funds to the wealth management and trust market, comprising approximately 1,500 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 consolidations in the banking industry, as well as regulatory changes.

Potential Adverse Effects of Changes in Federated’s Distribution Channels. Federated acts as a wholesaler of investment products to financial intermediaries including banks, broker/dealers, registered investment advisers and other financial planners. Federated also sells investment products directly to corporations and institutions. Approximately 10% of Federated’s total revenue for 2012 was derived from services provided to one intermediary customer, the Bank of New York Mellon Corporation. If this financial intermediary were to cease operations or limit or otherwise end the distribution of Federated’s investment products, it could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income. There can be no assurance that Federated will continue to have access to the financial intermediaries that currently distribute Federated products or that Federated’s relationship with such intermediaries will continue over time. In addition, exclusive of the impacts of minimum yield waivers and related reductions in distribution expense to maintain positive or zero net yields, Federated has experienced increases in the cost of distribution as a percentage of total revenue from 31% in 2007 to over 38% in 2012. Federated expects such costs to continue to increase in total due to asset growth and per dollar of revenue due to the competitive pressures of the mutual fund business. Higher distribution costs reduce Federated’s operating and net income.

Adverse Effects of Declines in the Amount of or Changes in the Mix of Assets Under Management. 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 products than on fixed-income and money market products and liquidation portfolios. Likewise, mutual fund products generally have a higher management-fee rate than Separate Accounts. Similarly, traditional separate accounts typically have a higher management-fee rate than liquidation portfolios. Additionally, certain components of distribution expense can vary depending upon the asset class, distribution channel and/or the size of the customer relationship. Consequently, significant fluctuations in the fair value of securities held by, or the level of redemptions from, the funds or other products advised by Federated may materially affect the amount of managed assets and thus Federated’s revenue, profitability and ability to grow. Similarly, changes in Federated’s average asset mix across both asset and product types have a direct impact on Federated’s revenue and profitability. Federated generally pays out a larger portion of the revenue earned from managed assets in money market funds than the revenue earned from managed assets in equity or fixed-income funds. Substantially all of Federated’s managed assets are in investment products that permit investors to redeem their investment at any time. Additionally, changing market conditions may continue to cause a shift in Federated’s asset mix towards money market and fixed-income products which may cause a decline in Federated’s revenue and net income.

Adverse Effects of Poor Investment Performance. Success in the investment management business is largely dependent on investment performance relative to market conditions and the performance of competing products. Good performance generally assists retention and growth of managed assets, resulting in additional revenues. Conversely, poor performance tends to result in decreased sales and increased redemptions with corresponding decreases in revenues to Federated. Poor performance could, therefore, have a material adverse effect on Federated’s business, results of operations or business prospects. In terms of revenue concentration by product, approximately 11% and 10% of Federated’s total revenue for 2012 were derived from services provided to two sponsored funds, the Federated Prime Obligations Fund and the Federated Kaufmann Fund, respectively. A significant and prolonged decline in the AUM in these funds could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to related reductions to distribution expenses associated with these funds.

Operational Risks. Operational risks include, but are not limited to, improper or unauthorized execution and processing of transactions, deficiencies in operating systems, business disruptions, inadequacies or breaches in Federated’s internal control

30 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

processes and noncompliance with regulatory requirements. Management relies on its employees and systems to comply with established procedures, controls and regulatory requirements. Breakdown or improper use of systems, human error or improper action by employees, or noncompliance with regulatory rules could cause material adverse effects on Federated’s reputation, financial position, results of operations and/or liquidity.

No Assurance of Successful Future Acquisitions. Federated’s business strategy contemplates the acquisition of other investment management companies as well as investment assets, both domestically and internationally. 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.

Impairment Risk. At December 31, 2012, Federated had intangible assets including goodwill and a long-term equity-method investment totaling $731.7 million on its Consolidated Balance Sheets, the vast majority of which represents assets capitalized in connection with Federated’s acquisitions and business combinations. Federated may not realize the value of these assets. Management performs an annual review of the carrying values of goodwill and indefinite-lived intangible assets and periodic reviews of the carrying values of all other assets to determine whether events and circumstances indicate that an impairment in value may have occurred. A variety of factors could cause the carrying value of an asset to become impaired. Should a review indicate impairment, a write-down of the carrying value of the asset would occur, resulting in a non-cash charge which would adversely affect Federated’s results of operations for the period.

Systems and Technology Risks. Federated utilizes software and related technologies throughout its business including both proprietary systems and those provided by outside vendors. Unanticipated issues 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. In addition, Federated's operating systems are dependent on the effectiveness of its information security policies and procedures which help to ensure that its systems are protected from cyber-security incidents such as attacks by hackers, viruses, worms or other methods. Any such attacks could result in unauthorized access to Federated's systems which could cause a business interruption or the loss of proprietary information and/or sensitive or confidential client information. Federated cannot predict the financial or reputational impact to its business resulting from any such situations.

Potential Adverse Effects of Reputational Harm. Any material losses in client or shareholder confidence in Federated or in the mutual fund industry as a result of potential litigation, economic or financial market downturns or disruptions, material errors in public news reports, misconduct, rumors on the internet or other matters could increase redemptions from and/or reduce sales of Federated funds and other investment management services, resulting in a decrease in future revenues.

Adverse Effects of Termination or Failure to Renew Fund Agreements. A substantial majority of Federated’s revenues are derived from investment management agreements with sponsored funds that, as required by law, are terminable upon 60 days notice. In addition, each such investment management agreement must be approved and renewed annually by each fund’s board of directors or trustees, including independent members of the board, or its shareholders, as required by law. Failure to renew, changes resulting in lower fees, or termination of a significant number of these agreements could have a material adverse impact on Federated. 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 agreements.

Under the terms of a settlement agreement with the SEC and New York State Attorney General, a Federated investment advisory subsidiary may not serve as investment adviser to any registered investment company unless: (1) at least 75% of the fund’s directors are independent of Federated; (2) the chairman of each such fund is independent of Federated; (3) no action may be taken by the fund’s board of directors or trustees or any committee thereof unless approved by a majority of the independent board members of the fund or committee, respectively; and (4) the fund appoints a senior officer who reports to the independent directors or trustees and is responsible for monitoring compliance by the fund with applicable laws and fiduciary duties and for managing the process by which management fees charged to a fund are approved.

Potential Adverse Effects of Unpredictable Events. Unpredictable events, including natural disaster, pandemic, war and terrorist attack, could adversely impact Federated’s ability to conduct business. Such events could cause disruptions in

2012 Annual Report 31

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

economic conditions, system interruption, loss of life, unavailability of personnel or additional costs. As such, there can be no assurance that unpredictable events, or the costs to address such events, would not have a material adverse effect on Federated’s business, financial condition, results of operations or business prospects.

Federated’s status as a "controlled company." Federated has two classes of common stock: Class A Common Stock, which has voting power, and Class B Common Stock, which is non-voting except in certain limited circumstances. All of the outstanding shares of Federated's Class A Common Stock are held by the Voting Shares Irrevocable Trust for the benefit of the members of the family of John F. Donahue. The three trustees of this trust are Chairman of Federated's board of directors, Mr. John F. Donahue, his wife, and his son, Mr. J. Christopher Donahue, who is Federated's President, Chief Executive Officer and a director. Accordingly, Federated qualifies as a “controlled company” under Section 303A of the NYSE Listed Company Manual. As a controlled company, Federated qualifies for and relies upon exemptions from several NYSE corporate governance requirements, including requirements that: (1) a majority of the Board of Directors consists of independent directors; and (2) the entity maintains a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities. As a result, Federated's board does not have a majority of independent directors nor does it maintain a nominating/corporate governance committee.

Quantitative and Qualitative Disclosures About Market Risk

In the normal course of its business, Federated is exposed to fluctuations in the securities market and general economy. As an investment manager, Federated’s business requires that it continuously identify, assess, monitor and manage market and other risks including those risks affecting its own investment portfolio. Federated invests in sponsored investment companies for the primary purpose of generating returns from capital appreciation, investment income, or both, or in the case of newly launched sponsored investment companies, in order to provide the fund with investable cash to establish a performance history. These investments expose Federated to various market risks. A single investment can expose Federated to multiple risks arising from changes in interest rates, credit ratings, equity prices and foreign currency exchange rates. Federated manages its exposure to market risk by diversifying its investments among different asset classes and by altering its investment holdings from time to time in response to changes in market risks and other factors.  In addition, in certain cases, Federated enters into derivative instruments for purposes of hedging its market risks.

Interest-rate risk is the risk that unplanned fluctuations in earnings will result from interest-rate volatility while credit risk is the risk that an issuer of debt securities may default on its obligations. At December 31, 2012 and 2011, Federated was exposed to interest-rate risk as a result of holding investments in fixed-income sponsored funds ($86.3 million and $116.5 million, respectively) and investments in debt securities held by certain consolidated investment companies ($33.8 million and $101.7 million, respectively). At both December 31, 2012 and 2011, management considered a hypothetical 100-basis-point fluctuation in interest rates and determined that the impact of such fluctuations on these investments would not have a material effect on Federated’s financial condition or results of operations.

These investments also exposed Federated to credit risk at December 31, 2012 and 2011. At both December 31, 2012 and 2011, management considered a hypothetical 50-basis-point fluctuation in credit spreads and determined that the impact of such fluctuations on these investments would not have a material effect on Federated’s financial condition or results of operations.

In the second quarter 2011, Federated entered into the Credit Agreement which amended and restated its previous term-loan facility. The Swap associated with the previous term-loan facility remains in effect. Federated entered into the Swap to convert the variable rate on its term loan to a fixed rate thereby mitigating its exposure to interest-rate risk. As of December 31, 2012 and December 31, 2011, Federated’s fair value on the Swap was a liability of $11.2 million and $15.2 million, respectively, which is recognized in earnings as a component of Federated’s fixed interest rate of 3.646% over the term of the Swap. Near-term reductions in the fair value of the Swap are reasonably possible as a result of changes in projected interest rates. Management performed a sensitivity analysis of the fair value of the Swap and considered hypothetical six- and twelve-month forward shifts in the assumed yield curve. The analysis showed that a six- and twelve-month forward shift in the current yield curve would lead to a further decrease in the fair value of the Swap of approximately $0.3 million and $0.4 million, respectively, as of December 31, 2012 and approximately $1 million and $2 million, respectively, as of December 31, 2011. Gains and losses in the fair value of the Swap are recorded in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets.

Price risk is the risk that the market price of an investment will decline and ultimately result in the recognition of a loss. Federated was exposed to price risk as a result of its $62.8 million and $54.3 million investment in sponsored equity products at December 31, 2012 and 2011, respectively. Federated’s investment in these products represents its maximum exposure to loss. At both December 31, 2012 and 2011, management considered a hypothetical 20% fluctuation in fair value and determined that

32 Federated Investors, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

of Financial Condition and Results of Operations

the impact of such fluctuations on these investments could impact Federated’s financial condition and results of operations by approximately $12.6 million and $10.9 million, respectively.

Foreign exchange risk is the risk that an investment’s value will change due to changes in currency exchange rates. As of December 31, 2012 and December 31, 2011, Federated was exposed to foreign exchange risk as a result of its investments in sponsored mutual funds holding non-U.S. dollar securities as well as non-U.S. dollar operating cash accounts held at certain foreign operating subsidiaries of Federated ($13.6 million and $90.4 million, respectively). These investments and cash accounts primarily exposed Federated to risk of changes in the Euro and the British pound. Of these investments held as of December 31, 2011, Federated's exposure to the British pound of $77.7 million was fully hedged at December 31, 2011 by certain foreign currency forward contracts. For the remaining investments at both December 31, 2012 and December 31, 2011, management considered a hypothetical 20% fluctuation in these currency exchange rates and determined that the impact of such fluctuation on these investments would not have a material effect on Federated's financial condition or results of operations.

In addition to market risks attributable to Federated’s investments, substantially all of Federated's revenue is calculated based on AUM. Accordingly, changes in the market value of managed assets have a direct impact on Federated's revenue. Declines in the fair values of these assets as a result of changes in the market or other conditions will negatively impact revenue and net income. Assuming the ratio of revenue from managed assets to average AUM for 2012 or 2011 remained unchanged, a 20% decline in the average AUM for either period would result in a corresponding 20% decline in revenue. Certain expenses including distribution and compensation and related expenses may not vary in proportion with changes in the market value of managed assets. As such, the impact on net income of a decline in the market values of managed assets may be greater or less than the percentage decline in the market value of managed assets. For further discussion of managed assets and factors that impact Federated’s revenue, see the sections entitled General, Asset Highlights, Contractual Obligations and Contingent Liabilities and Risk Factors herein as well as the section entitled Regulatory Matters in Federated’s Annual Report on Form 10-K for the year ended December 31, 2012 on file with the SEC.

2012 Annual Report 33

MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

Federated Investors, Inc.’s (Federated) management is responsible for the preparation, integrity and fair presentation of the consolidated financial statements in this annual report. These consolidated financial statements and notes have been prepared in conformity with U.S. generally accepted accounting principles from accounting records which management believes fairly and accurately reflect Federated’s operations and financial position. The consolidated financial statements include amounts based on management’s best estimates and judgments considering currently available information and management’s view of current conditions and circumstances.

Management is responsible for establishing and maintaining adequate internal control over financial reporting that is designed to provide reasonable assurance of the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the effectiveness of Federated’s internal control over financial reporting as of December 31, 2012, in relation to criteria for effective internal control over financial reporting as described in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2012, Federated’s internal controls over financial reporting were effective. Ernst & Young LLP, independent registered public accounting firm, has audited the consolidated financial statements included in this annual report and has issued an attestation report on Federated’s internal control over financial reporting.

Federated Investors, Inc.

/s/ J. Christopher Donahue	/s/ Thomas R. Donahue
President and Chief Executive Officer	Chief Financial Officer
February 22, 2013

34 Federated Investors, Inc.

REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, ON CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors and Shareholders

Federated Investors, Inc.

We have audited the accompanying consolidated balance sheets of Federated Investors, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of Federated Investors, Inc.’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Federated Investors, Inc. at December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Federated Investors, Inc.’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Pittsburgh, Pennsylvania

February 22, 2013

2012 Annual Report 35

REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, ON EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING

The Board of Directors and Shareholders

Federated Investors, Inc.

We have audited Federated Investors, Inc.’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Federated Investors, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Assessment of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Federated Investors, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Federated Investors, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2012, of Federated Investors, Inc., and our report dated February 22, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Pittsburgh, Pennsylvania

February 22, 2013

36 Federated Investors, Inc.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

December 31,	2012			2011
ASSETS
Current Assets
Cash and cash equivalents	$	67,585		$	49,273
Investments—affiliates	136,023			159,539
Investments—other	55,020			113,505
Receivables, net of reserve of $50 and $121, respectively	24,120			21,526
Prepaid expenses	12,986			17,420
Other current assets	4,328			5,248
Total current assets	300,062			366,511
Long-Term Assets
Goodwill	648,820			642,329
Renewable investment advisory rights	68,455			64,600
Other intangible assets, net	10,582			13,997
Property and equipment, net	38,912			38,228
Other long-term assets	23,230			25,191
Total long-term assets	789,999			784,345
Total assets	$	1,090,061		$	1,150,856
LIABILITIES
Current Liabilities
Short-term debt	$	42,500		$	42,500
Accounts payable and accrued expenses	45,255			41,691
Accrued compensation and benefits	68,172			59,971
Other current liabilities	25,207			34,324
Total current liabilities	181,134			178,486
Long-Term Liabilities
Long-term debt	276,250			318,750
Long-term deferred tax liability, net	99,399			73,246
Other long-term liabilities	29,334			37,191
Total long-term liabilities	404,983			429,187
Total liabilities	586,117			607,673
Commitments and contingencies (Note (20))
TEMPORARY EQUITY
Redeemable noncontrolling interest in subsidiaries	7,268			506
PERMANENT EQUITY
Federated Investors shareholders’ equity
Common stock:
Class A, no par value, 20,000 shares authorized, 9,000 shares issued and outstanding	189			189
Class B, no par value, 900,000,000 shares authorized, 129,505,456 shares issued	273,697			252,950
Retained earnings	984,505			1,069,913
Treasury stock, at cost, 25,064,280 and 25,762,366 shares Class B common stock, respectively	(760,022		)	(772,481		)
Accumulated other comprehensive loss, net of tax	(2,937		)	(8,612		)
Total Federated Investors shareholders’ equity	495,432			541,959
Nonredeemable noncontrolling interest in subsidiary	1,244			718
Total permanent equity	496,676			542,677
Total liabilities, temporary equity and permanent equity	$	1,090,061		$	1,150,856

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

2012 Annual Report 37

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

Years Ended December 31,	2012			2011			2010
Revenue
Investment advisory fees, net—affiliates	$	560,978		$	524,779		$	579,159
Investment advisory fees, net—other	69,856			61,561			60,245
Administrative service fees, net—affiliates	225,529			220,356			215,643
Other service fees, net—affiliates	74,103			73,343			82,476
Other service fees, net—other	11,799			12,042			11,559
Other, net	3,441			3,033			2,861
Total revenue	945,706			895,114			951,943
Operating Expenses
Compensation and related	257,622			245,439			242,853
Distribution	253,445			235,670			259,210
Systems and communications	25,716			22,971			22,828
Office and occupancy	24,828			24,689			22,958
Professional service fees	18,925			53,737			18,980
Advertising and promotional	13,413			13,413			10,110
Travel and related	12,838			12,174			11,461
Intangible asset related	2,593			7,915			22,511
Other	23,733			21,651			31,241
Total operating expenses	633,113			637,659			642,152
Operating income	312,593			257,455			309,791
Nonoperating Income (Expenses)
Investment income, net	6,756			4,827			3,330
Gain on securities, net	6,911			1,432			3,542
Debt expense	(14,441		)	(17,047		)	(15,049		)
Other, net	(3,308		)	(296		)	(494		)
Total nonoperating expenses, net	(4,082		)	(11,084		)	(8,671		)
Income before income taxes	308,511			246,371			301,120
Income tax provision	110,883			91,288			111,957
Net income including noncontrolling interests in subsidiaries	197,628			155,083			189,163
Less: Net income attributable to the noncontrolling interests in subsidiaries	9,540			4,177			10,049
Net income	$	188,088		$	150,906		$	179,114
Amounts attributable to Federated Investors, Inc.
Earnings Per Share—Basic and Diluted	$	1.79		$	1.45		$	1.73
Cash dividends per share	$	2.47		$	0.96		$	2.22

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

38 Federated Investors, Inc.

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

Years Ended December 31,	2012			2011			2010
Net income including noncontrolling interest in subsidiaries	$	197,628		$	155,083		$	189,163
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on securities available for sale and reclassification adjustment1	3,319			(2,939		)	2,840
Reclassification adjustment and unrealized loss on interest rate swap2	2,563			(2,007		)	(7,627		)
Foreign currency translation (loss) gain and reclassification adjustment3	(422		)	1			(470		)
Other comprehensive income (loss)	5,460			(4,945		)	(5,257		)
Comprehensive income including noncontrolling interest in subsidiaries	203,088			150,138			183,906
Less: Comprehensive (loss) income attributable to redeemable noncontrolling interest in subsidiaries	(147		)	88			1,178
Less: Comprehensive income attributable to nonredeemable noncontrolling interest in subsidiary	9,472			4,061			8,823
Comprehensive income attributable to Federated Investors, Inc.	$	193,763		$	145,989		$	173,905

1 The tax expense (benefit) related to this line item was $2,282, $(2,139) and $2,209 for the years ended December 31, 2012, 2011 and 2010, respectively.

2 The tax expense (benefit) related to this line item was $1,500, $(1,501) and $(4,107) for the years ended December 31, 2012, 2011 and 2010, respectively.

3 The tax benefit related to this line item was $(8), $(251) and $(227) for the years ended December 31, 2012, 2011 and 2010, respectively.

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

2012 Annual Report 39

	Shares
	Class A	Class B		Treasury
Balance at January 1, 2010	9,000	102,934,237		26,571,219
Net income	0	0		0
Other comprehensive income (loss), net of tax:
Unrealized gain on securities available for sale and reclassification adjustment	0	0		0
Unrealized loss on interest rate swap and reclassification adjustment	0	0		0
Foreign currency translation loss	0	0		0
Subscriptions – redeemable noncontrolling interest holders	0	0		0
Consolidation/(Deconsolidation)	0	0		0
Stock award activity	0	903,379		(903,379	)
Dividends declared/Distributions to noncontrolling interest in subsidiaries	0	0		0
Exercise of stock options	0	486,150		(486,150	)
Purchase of treasury stock	0	(659,675	)	659,675
Other	0	0		0
Balance at December 31, 2010	9,000	103,664,091		25,841,365
Net income	0	0		0
Other comprehensive income (loss), net of tax:
Reclassification adjustment and unrealized loss on securities available for sale	0	0		0
Unrealized loss on interest rate swap and reclassification adjustment	0	0		0
Foreign currency translation gain (loss)	0	0		0
Subscriptions – redeemable noncontrolling interest holders	0	0		0
Consolidation/(Deconsolidation)	0	0		0
Stock award activity	0	1,016,376		(1,016,376	)
Dividends declared/Distributions to noncontrolling interest in subsidiaries	0	0		0
Stock option activity	0	603,418		(603,418	)
Purchase of treasury stock	0	(1,540,795	)	1,540,795
Other	0	0		0
Balance at December 31, 2011	9,000	103,743,090		25,762,366
Net income	0	0		0
Other comprehensive income (loss), net of tax:
Unrealized gain on securities available for sale and reclassification adjustment	0	0		0
Reclassification adjustment and unrealized loss on interest rate swap	0	0		0
Foreign currency translation loss and reclassification adjustment	0	0		0
Subscriptions – redeemable noncontrolling interest holders	0	0		0
Consolidation/(Deconsolidation)	0	0		0
Stock award activity	0	1,019,773		(1,019,773	)
Dividends declared/Distributions to noncontrolling interest in subsidiaries	0	0		0
Stock option activity	0	0		0
Purchase of treasury stock	0	(321,687	)	321,687
Other	0	0		0
Balance at December 31, 2012	9,000	104,441,176		25,064,280

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

40 Federated Investors, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(dollars in thousands)

Federated Investors, Inc. Shareholders
Common Stock			Additional Paid-in Capital from Treasury Stock Transactions			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss) Income, Net of Tax			Total Shareholder’s Equity			Nonredeemable Noncontrolling Interest in Subsidiary			Total Permanent Equity			Redeemable Noncontrolling Interest in Subsidiaries/ Temporary Equity
$	217,009		$	0		$	1,105,073		$	(795,389	)	$	1,514		$	528,207		$	608		$	528,815		$	13,913
0			0			179,114			0			0			179,114			8,823			187,937			1,226
0			0			0			0			2,840			2,840			0			2,840			0
0			0			0			0			(7,627		)	(7,627		)	0			(7,627		)	0
0			0			0			0			(422		)	(422		)	0			(422		)	(48		)
0			0			0			0			0			0			0			0			10,074
0			0			0			0			0			0			0			0			(21,334		)
20,118			0			(19,096		)	20,883			0			21,905			0			21,905			0
0			0			(228,084		)	0			0			(228,084		)	(9,058		)	(237,142		)	(2,288		)
270			135			(478		)	10,146			0			10,073			0			10,073			0
0			0			0			(14,249		)	0			(14,249		)	0			(14,249		)	0
0			0			42			0			0			42			0			42			0
237,397			135			1,036,571			(778,609		)	(3,695		)	491,799			373			492,172			1,543
0			0			150,906			0			0			150,906			4,061			154,967			116
0			0			0			0			(2,939		)	(2,939		)	0			(2,939		)	0
0			0			0			0			(2,007		)	(2,007		)	0			(2,007		)	0
0			0			0			0			29			29			0			29			(28		)
0			0			0			0			0			0			0			0			6,511
0			0			0			0			0			0			0			0			(7,626		)
19,770			(797		)	(17,640		)	19,717			0			21,050			0			21,050			0
0			0			(99,921		)	0			0			(99,921		)	(3,716		)	(103,637		)	(10		)
(4,028		)	662			0			14,468			0			11,102			0			11,102			0
0			0			0			(28,057		)	0			(28,057		)	0			(28,057		)	0
0			0			(3		)	0			0			(3		)	0			(3		)	0
253,139			0			1,069,913			(772,481		)	(8,612		)	541,959			718			542,677			506
0			0			188,088			0			0			188,088			9,472			197,560			68
0			0			0			0			3,319			3,319			0			3,319			0
0			0			0			0			2,563			2,563			0			2,563			0
0			0			0			0			(207		)	(207		)	0			(207		)	(215		)
0			0			0			0			0			0			0			0			14,070
0			0			0			0			0			0			0			0			5,353
21,227			0			(17,189		)	18,793			0			22,831			0			22,831			0
0			0			(256,319		)	0			0			(256,319		)	(8,946		)	(265,265		)	(12,514		)
(480		)	0			0			0			0			(480		)	0			(480		)	0
0			0			0			(6,334		)	0			(6,334		)	0			(6,334		)	0
0			0			12			0			0			12			0			12			0
$	273,886		$	0		$	984,505		$	(760,022	)	$	(2,937	)	$	495,432		$	1,244		$	496,676		$	7,268

2012 Annual Report 41

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

Years Ended December 31,	2012			2011			2010
Operating Activities
Net income including noncontrolling interest in subsidiaries	$	197,628		$	155,083		$	189,163
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Amortization of deferred sales commissions	7,465			7,378			12,197
Depreciation and other amortization	10,445			14,400			21,075
Share-based compensation expense	20,135			19,006			19,124
Gain on disposal of assets	(5,093		)	(2,834		)	(2,584		)
Provision for deferred income taxes	25,030			17,252			24,213
Fair-value adjustments for contingent liabilities	(793		)	900			0
Tax benefit from share-based compensation	1,543			179			1,830
Excess tax benefits from share-based compensation	(2,974		)	(1,693		)	(3,005		)
Impairment of assets	3,000			0			10,191
Net sales (purchases) of trading securities	66,403			(102,738		)	(25,803		)
Deferred sales commissions paid	(12,102		)	(9,386		)	(10,638		)
Contingent deferred sales charges received	1,383			1,443			2,275
Proceeds from sale of certain B-share-related future revenue	0			0			1,223
Other changes in assets and liabilities:
(Increase) decrease in receivables, net	(2,552		)	2,188			(2,408		)
Decrease in prepaid expenses and other assets	4,525			1,255			11,391
Increase (decrease) in accounts payable and accrued expenses	7,727			(3,990		)	(14,249		)
(Decrease) increase in other liabilities	(5,427		)	15,047			(18,048		)
Net cash provided by operating activities	316,343			113,490			215,947
Investing Activities
Purchases of securities available for sale	(58,284		)	(73,192		)	(99,284		)
Cash paid for business acquisitions	(14,064		)	(53,507		)	(49,561		)
Proceeds from redemptions of securities available for sale	92,398			27,492			55,121
Cash paid for property and equipment	(8,675		)	(8,247		)	(7,870		)
Cash paid for purchased loans	0			0			(47,178		)
Proceeds from sale of purchased loans	0			0			1,044
Proceeds from disposal of property and equipment	0			0			3,298
Net cash provided (used) by investing activities	11,375			(107,454		)	(144,430		)
Financing Activities
Dividends paid	(256,750		)	(99,960		)	(228,651		)
Purchases of treasury stock	(6,633		)	(28,545		)	(13,462		)
Distributions to noncontrolling interests in subsidiaries	(21,460		)	(3,726		)	(11,347		)
Contributions from noncontrolling interests in subsidiaries	14,070			6,511			10,074
Proceeds from shareholders for share-based compensation	1,604			16,795			11,590
Excess tax benefits from share-based compensation	2,974			1,693			3,005
Proceeds from new borrowings	0			0			407,000
Payments on debt	(42,500		)	(42,500		)	(129,250		)
Other financing activities	(711		)	(5,787		)	(12,172		)
Net cash (used) provided by financing activities	(309,406		)	(155,519		)	36,787
Net increase (decrease) in cash and cash equivalents	18,312			(149,483		)	108,304
Cash and cash equivalents, beginning of year	49,273			198,756			90,452
Cash and cash equivalents, end of year	$	67,585		$	49,273		$	198,756
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Income Taxes	$	79,817		$	72,149		$	77,072
Interest	$	13,091		$	15,893		$	12,941

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

42 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(December 31, 2012, 2011 and 2010)

(1)Summary of Significant Accounting Policies

(a) Nature of Operations

Federated Investors, Inc. and its subsidiaries (collectively, Federated) provide investment advisory, administrative, distribution and other services primarily to Federated mutual funds and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets. For presentation purposes in the Consolidated Financial Statements, the Federated-sponsored mutual funds are considered to be affiliates of Federated.

The majority of Federated’s revenue is derived from investment advisory services provided to Federated mutual funds and Separate Accounts through various subsidiaries pursuant to investment advisory contracts. These subsidiaries are registered as investment advisers under the Investment Advisers Act of 1940 or operate in similar capacities under applicable jurisdictional law.

Federated's U.S.-domiciled mutual funds are distributed by a wholly owned subsidiary registered as a broker/dealer under the Securities Exchange Act of 1934 and under applicable state laws. Federated's non-U.S.-domiciled products are distributed by wholly owned subsidiaries and a third-party distribution firm which are registered under applicable jurisdictional law. Federated’s investment products are primarily distributed within the wealth management and trust, broker/dealer and global institutional markets.

(b) Basis of Presentation

The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements.

(c) Reclassification of Prior Period Financial Statements

Certain items previously reported have been reclassified to conform with the current year’s presentation.

(d) Principles of Consolidation

The Consolidated Financial Statements include the accounts of Federated Investors, Inc. and entities or sponsored products in which Federated holds a controlling financial interest. A controlling financial interest is determined by the extent of Federated’s (1) decision-making ability through voting interests, (2) decision-making ability and rights/obligations to benefits/losses through variable interest or (3) participation in the economic risks and rewards of the entity through variable interests. To the extent Federated’s controlling financial interest in a consolidated subsidiary represents less than 100% of the subsidiary’s equity, Federated recognizes noncontrolling interests in subsidiaries. In the case of consolidated sponsored products (see Note (5)(b)), the noncontrolling interests represent equity which is redeemable or convertible for cash or other assets at the option of the equity holder. As such, these noncontrolling interests are deemed to represent temporary equity and are classified as redeemable noncontrolling interests in subsidiaries in the mezzanine section of the Consolidated Balance Sheets. All other noncontrolling interests in subsidiaries are classified as permanent equity. All significant intercompany accounts and transactions have been eliminated.

Beginning on January 1, 2010, Federated adopted the provisions of the Financial Accounting Standards Board’s (FASB) new consolidation model for variable interest entities (VIEs). As a result, Federated applies two different approaches to consider VIEs for possible consolidation. For non-investment fund entities, Federated considers a qualitative model for identifying whether its interest in a VIE is a controlling financial interest. The qualitative model considers whether Federated has: (1) the ability to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or to provide rights to receive benefits from the VIE that could potentially be significant to the VIE. Federated reevaluates the need for consolidation under this qualitative approach on an ongoing basis.

For Federated’s interests in certain investment funds that meet the definition of VIEs, Federated evaluates the extent of Federated’s participation in the economic risks and rewards of the entity based on a quantitative model to determine whether consolidation is necessary. In cases where the results of the quantitative model indicate that Federated’s interest in such an entity absorbs the majority of the variability in the entity’s net assets, Federated is deemed to be the primary beneficiary and thus consolidates the entity.

2012 Annual Report 43

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

The equity method of accounting is used to account for an investment in an entity in which Federated’s noncontrolling equity investment is deemed to give it the ability to exercise significant influence over the operating and financial policies of the investee. This equity-method investment is included in Other long-term assets on the Consolidated Balance Sheets. The proportionate share of income or loss is included in Nonoperating Income (Expenses) – Other, net in the Consolidated Statements of Income. The investment is subject to review for other-than-temporary impairments as indicators arise. If the carrying value of the investment is deemed to be other-than-temporarily impaired, an impairment charge is recorded in Nonoperating Income (Expenses) – Other, net to write the asset down to fair value.

(e) Business Combinations

Beginning in 2009, business combinations are accounted for under the acquisition method of accounting. Results of operations of an acquired business are included from the date of acquisition. Management estimates the fair value of the acquired assets, including identifiable intangible assets, and assumed liabilities based on their estimated fair values as of the date of acquisition. Any excess fair value of the acquired net assets over the acquisition-date fair value of the consideration transferred, including the fair value of any contingent consideration, is recorded as Goodwill on the Consolidated Balance Sheets. The fair value of contingent consideration is recorded as a liability in Other current liabilities and Other long-term liabilities on the Consolidated Balance Sheets as of the acquisition date. This liability is remeasured at fair value each quarter end with changes in fair value recognized in Intangible asset related expense on the Consolidated Statements of Income. For a discussion regarding the approach used to estimate the fair value of such liabilities, see Note (6)(a).

(f) Cash and Cash Equivalents

Cash and cash equivalents include money market accounts and deposits with banks.

(g) Investments

Federated's investments are categorized as Investments—affiliates or Investments—other on the Consolidated Balance Sheets. Investments—affiliates represent Federated’s available-for-sale investments in Federated sponsored fluctuating-value mutual funds. These investments are carried at fair value with unrealized gains or losses on securities included in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets. Realized gains and losses on these securities are computed on a specific-identification basis and recognized in Gain on securities, net in the Consolidated Statements of Income.

Investments—other represents trading securities held by Federated primarily as a result of consolidating certain Federated-sponsored investment companies. Trading securities are carried at fair value with changes in fair value recognized in Gain on securities, net in the Consolidated Statements of Income. See Note (7) for additional information regarding investments held as of December 31, 2012 and 2011.

The fair value of Federated's investments is generally based on quoted market prices in active markets for identical instruments. If quoted market prices are not available, fair value is generally based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. In the absence of observable market data inputs and/or value drivers, internally generated valuation techniques may be utilized in which one or more significant inputs or significant value drivers are unobservable in the market place. On a periodic basis, management evaluates the carrying value of investments for impairment. With respect to its investments in fluctuating-value mutual funds, management considers various criteria, including the duration and extent of a decline in fair value, the ability and intent of management to retain the investment for a period of time sufficient to allow the value to recover and the financial condition and near-term prospects of the fund and the underlying investments of the fund, to determine whether a decline in fair value is other than temporary. If, after considering these criteria, management believes that a decline is other than temporary, the carrying value of the security is written down to fair value through the Consolidated Statements of Income.

(h) Derivatives and Hedging Instruments

From time to time, Federated may consolidate an investment product that holds freestanding derivative financial instruments for trading purposes. Federated reports such derivative instruments at fair value and records the changes in fair value in Gain on securities, net on the Consolidated Statements of Income.

From time to time, Federated may also enter into and designate as accounting hedges derivative financial instruments to hedge interest-rate exposures with respect to variable-rate loan facilities (cash flow hedges) or to hedge foreign-currency exchange risk with respect to non-U.S. dollar trading investments in consolidated investment companies (net investment hedges). To qualify for hedge accounting, the derivative must be deemed to be highly effective in offsetting the designated changes in the

44 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

hedged item. For cash flow hedges and net investment hedges, the effective portions of the change in the fair value of the derivative are reported as a component of Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets and subsequently reclassified to earnings in the period or periods during which the hedged item affects earnings. The change in fair value of the ineffective portion of the derivative, if any, is recognized immediately in earnings. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued. If hedge accounting is discontinued because it is no longer probable that a forecasted transaction will occur, the derivative will continue to be recorded on the balance sheets at its fair value with changes in fair value included in current earnings, and the gains and losses in Accumulated other comprehensive loss, net of tax will be recognized immediately into earnings. If hedge accounting is discontinued because the hedging instrument is sold, terminated or no longer designated, the amount reported in Accumulated other comprehensive loss, net of tax up to the date of sale, termination or de-designation continues to be reported in Accumulated other comprehensive loss, net of tax until the forecasted transaction or the hedged item affects earnings. See Note (6) and Note (11) for additional information on the fair value of the hedges at December 31, 2012.

(i) Property and Equipment

Property and equipment are initially recorded at cost and are depreciated using the straight-line method over their estimated useful lives ranging from 1 to 12 years. Depreciation and amortization expense is recorded in Office and occupancy in the Consolidated Statements of Income. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or their respective lease terms. As property and equipment are taken out of service, the cost and related accumulated depreciation and amortization are removed. The write-off of any material residual net book value is reflected as a loss in Operating Expenses – Other in the Consolidated Statements of Income.

Management reviews the remaining useful lives and carrying values of property and equipment to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decrease in the market price of the asset, an accumulation of costs significantly in excess of the amount originally expected in the acquisition or development of the asset, historical and projected cash flows associated with the asset and an expectation that the asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Should there be an indication of a change in the useful life or an impairment in value, Federated compares the carrying value of the asset to the probability-weighted undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether an impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to fair value which is determined based on prices of similar assets if available or discounted cash flows. Impairment adjustments are recognized in Operating Expenses – Other in the Consolidated Statements of Income.

(j) Costs of Computer Software Developed or Obtained for Internal Use

Certain internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized. These capitalized costs are included in Property and equipment, net on the Consolidated Balance Sheets and are amortized using the straight-line method over the shorter of the estimated useful life of the software or four years. These assets are subject to the impairment test used for other categories of property and equipment described in Note (1)(i).

(k) Intangible Assets

Intangible assets, consisting primarily of goodwill and renewable investment advisory contracts acquired in connection with various acquisitions, are recorded at fair value determined using a discounted cash flow model as of the date of acquisition. The discounted cash flow model considers various factors to project future cash flows expected to be generated from the asset. Given the investment advisory nature of Federated’s business and of the businesses acquired over the years, these factors typically include: (1) an estimated rate of change for underlying managed assets; (2) expected revenue per managed asset; (3) incremental operating expenses; and (4) a discount rate. Management estimates a rate of change for underlying managed assets based on a combination of an estimated rate of market appreciation or depreciation and an estimated net redemption or sales rate. Expected revenue per managed asset and incremental operating expenses of the acquired asset are generally based on contract terms, average market participant data and historical experience. The discount rate is estimated at the current market rate of return. After the fair value of all separately identifiable assets has been estimated, goodwill is recorded to the extent the consideration paid for the acquisition exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities.

Federated tests goodwill for impairment at least annually or when indicators of potential impairment exist. Goodwill is evaluated at the reporting unit level. Federated has determined that it has a single reporting unit consistent with its single operating segment based on the fact that Federated’s operations are managed as a single business: investment management.

2012 Annual Report 45

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

Federated does not have multiple operating segments or business components for which discrete financial information is prepared. Federated uses a qualitative approach to test for potential impairment of goodwill. If after considering various factors, management determines that it is more likely than not that goodwill is impaired, a two-step process to test for and measure impairment is performed which begins with an estimation of the fair value of its reporting unit by considering Federated’s market capitalization. If Federated’s market capitalization falls to a level below its recorded book value of equity, Federated’s goodwill would be considered for possible impairment.

Federated has determined that certain acquired assets, specifically, certain renewable investment advisory contracts, have indefinite useful lives. In reaching this conclusion, management considered the legal, regulatory and contractual provisions of the investment advisory contract that enable the renewal of the contract, the level of cost and effort required in renewing the investment advisory contract, and the effects of obsolescence, demand, competition and other economic factors that could impact the funds’ projected performance and existence. The contracts generally renew annually and the value of these acquired assets assumes renewal. These indefinite-lived intangible assets are reviewed for impairment annually using a qualitative approach which requires that positive and negative evidence collected as a result of considering various factors be weighed in order to determine whether it is more likely than not that an indefinite-lived intangible asset or asset group is impaired. In addition, management reconsiders on a quarterly basis whether events or circumstances indicate that a change in the useful life may have occurred. Indicators of a possible change in useful life monitored by management include a significant decline in the level of managed assets, changes to legal, regulatory or contractual provisions of the renewable investment advisory contracts and reductions in underlying operating cash flows. Federated estimates the fair value of the indefinite-lived intangible asset and compares it to the book value of the asset to determine whether an impairment charge is necessary. Impairment is indicated when the carrying value of the intangible asset exceed its fair value.

Federated generally amortizes finite-lived identifiable intangible assets on a straight-line basis over their estimated useful lives, which range from 5 to 11 years. Management periodically evaluates the remaining useful lives and carrying values of the intangible assets to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying certain intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the finite-lived intangible assets, Federated compares the carrying value of the asset and its related useful life to the projected undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to its fair value determined using discounted cash flows. Federated writes-off the cost and accumulated amortization balances for all fully amortized intangible assets.

(l) Deferred Sales Commissions

Federated pays upfront commissions to broker/dealers to promote the sale of certain mutual fund shares. Under various fund-related contracts, Federated is entitled to distribution and servicing fees from the mutual fund over the life of such shares. Both of these fees are calculated as a percentage of average managed assets associated with the related classes of shares. For certain share classes, Federated is also entitled to receive a contingent deferred sales charge (CDSC), which is collected from certain redeeming shareholders.

For share classes that pay both a distribution fee and CDSC, Federated generally capitalizes a portion of the upfront commissions as deferred sales commissions, dependent upon expected recoverability rates. The deferred sales commission asset is amortized over the estimated period of benefit of up to eight years. Deferred sales commission amortization expense was $7.5 million, $7.4 million and $12.2 million for 2012, 2011 and 2010, respectively, and was included in Operating Expenses – Other on the Consolidated Statements of Income.

Distribution and shareholder service fees are recognized in Other service fees, net—affiliates on the Consolidated Statements of Income over the life of the mutual fund share class. CDSCs collected on these share classes are used to reduce the deferred sales commission asset. Federated reviews the carrying value of deferred sales commission assets on a periodic basis to determine whether a significant long-term decline in the equity or bond markets or other events or circumstances indicate that an impairment in value may have occurred. Should there be an indication of an impairment in value, Federated compares the carrying value of the asset to the probability-weighted undiscounted future cash flows of the underlying asset to determine whether an impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the deferred sales commission asset is written down to its estimated fair value determined using discounted cash flows.

46 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

For share classes that do not pay both a distribution fee and CDSC, Federated expenses the cost of the upfront commission as incurred in Distribution expense on the Consolidated Statements of Income and credits Distribution expense for any CDSCs collected.

(m) Foreign Currency Translation

The balance sheets of certain wholly owned foreign subsidiaries of Federated and certain consolidated foreign-denominated investment products are translated at the current exchange rate as of the end of the accounting period and the related income or loss is translated at the average exchange rate in effect during the period. Net exchange gains and losses resulting from these translations are excluded from income and are recorded in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets. Foreign currency transaction gains and losses are reflected in Operating Expenses – Other in the Consolidated Statements of Income.

(n) Treasury Stock

Federated accounts for acquisitions of treasury stock at cost and reports total treasury stock held as a deduction from Federated Investors shareholders’ equity on the Consolidated Balance Sheets. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a specific-identification basis. Additional paid-in capital from treasury stock transactions is increased as Federated reissues treasury stock for more than the cost of the shares. If Federated issues treasury stock for less than its cost, Additional paid-in capital from treasury stock transactions is reduced to no less than zero. Once this account is at zero, any further required reductions are recorded to Retained earnings on the Consolidated Balance Sheets.

(o) Revenue Recognition

Revenue from providing investment advisory, administrative and other services (including distribution, shareholder servicing and retirement plan recordkeeping) is recognized during the period in which the services are performed. Investment advisory, administrative and the majority of other service fees are generally calculated as a percentage of total net assets of the investment portfolios that are managed by Federated. The fair value of the investment portfolios is primarily determined using quoted market prices or independent third-party broker or dealer price quotes. In limited circumstances, a quotation or price evaluation is not readily available from a pricing source. In these cases, pricing is determined by management based on a prescribed valuation process that has been approved by the directors/trustees of the sponsored products. For the periods presented, a de minimus amount of assets under management (AUM or managed assets) were priced by Federated management. Federated may waive certain fees for competitive reasons, such as to maintain positive or zero net yields, to meet regulatory requirements or to meet contractual requirements. Federated waived fees of $709.3 million, $724.9 million and $653.1 million for the years ended December 31, 2012, 2011 and 2010, respectively, nearly all of which was for competitive reasons. The decrease in fee waivers for the year ended December 31, 2012 as compared to the same period of 2011 was primarily due to a $29.7 million decrease in fee waivers to maintain positive or zero net yields, partially offset by a $16.2 million increase in fee waivers related to managed asset growth for the year ended December 31, 2012 as compared to the same period of 2011. Fee waivers may continue to increase as a result of continued waivers to maintain positive or zero net yields and other competitive reasons. Fee waivers to maintain positive or zero net yields are partially offset by a related reduction to distribution expense and net income attributable to noncontrolling interests (see Note (4) for additional information on the net impact of these waivers).

Federated has contractual arrangements with third parties to provide certain fund-related services. Management considers various factors to determine whether Federated’s revenue should be recorded based on the gross amount payable by the funds or net of payments to third-party service providers. Management’s analysis is based on whether Federated is acting as the principal service provider or as an agent. The primary factors considered include: (1) whether the customer holds Federated or the service provider responsible for the fulfillment and acceptability of the services to be provided; (2) whether Federated has any practical latitude in negotiating the price to pay a third-party provider; (3) whether Federated or the customer selects the ultimate service provider; and (4) whether Federated has credit risk in the arrangement. Generally, the less the customer is directly involved with or participates in making decisions regarding the ultimate third-party service provider, the more supportive the facts are that Federated is acting as the principal in these transactions and should therefore report gross revenues. As a result of considering these factors, investment advisory fees, distribution fees and certain other service fees are recorded gross of payments made to third parties.

(p) Share-Based Compensation

Federated recognizes compensation costs based on grant-date fair value for all share-based awards granted, modified or settled after January 1, 2006, as well as for any awards that were granted prior to January 1, 2006 for which requisite service has not yet been provided.

2012 Annual Report 47

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

Federated issues shares for share-based awards from treasury stock. For restricted stock awards, the fair value of the award is calculated as the difference between the closing fair value of Federated’s Class B common stock on the date of grant and the purchase price paid by the employee, if any. Federated’s awards are generally subject to graded vesting schedules. Compensation and related expense is adjusted for estimated forfeitures and is recognized on a straight-line or modified straight-line basis over the requisite service period of the award. Compensation and related expense also includes dividends paid on forfeited awards. Forfeiture assumptions are evaluated on a quarterly basis and updated as necessary.

For awards granted prior to January 1, 2006 with provisions that allow for accelerated vesting upon retirement, Federated recognizes expense over the vesting period of the awards, regardless of the employee’s attainment of retirement age. Beginning January 1, 2006, for all newly granted awards with provisions that allow for accelerated vesting upon retirement, Federated recognizes expense over the shorter of the vesting period or the period between grant date and the date on which the employee meets the minimum age requirement for retirement.

(q) Leases

Federated classifies leases as operating in accordance with the provisions of lease accounting. Rent expense under noncancelable operating leases with scheduled rent increases or rent holidays is accounted for on a straight-line basis over the lease term, beginning on the date of initial possession or the effective date of the lease agreement. The amount of the excess of straight-line rent expense over scheduled payments is recorded as a deferred liability. Build-out allowances and other such lease incentives are recorded as deferred credits, and are amortized on a straight-line basis as a reduction of rent expense beginning in the period they are deemed to be earned, which generally coincides with the effective date of the lease. The current portion of unamortized deferred lease costs and build-out allowances is included in Other current liabilities and the long-term portion is included in Other long-term liabilities on the Consolidated Balance Sheets.

(r) Advertising Costs

Federated generally expenses the cost of all advertising and promotional activities as incurred. Certain printed matter, however, such as sales brochures, are accounted for as prepaid supplies and are included in Other current assets on the Consolidated Balance Sheets until they no longer are owned or expected to be used, at which time their costs are expensed. Federated expensed advertising costs of $2.7 million, $2.6 million and $0.2 million in 2012, 2011 and 2010, respectively.

(s) Income Taxes

Federated accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Federated recognizes a valuation allowance if, based on the weight of available evidence regarding future taxable income, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

(t) Earnings Per Share

Basic and diluted earnings per share are calculated under the two-class method. Pursuant to the two-class method, Federated’s unvested restricted stock awards with nonforfeitable rights to dividends are considered participating securities and are required to be considered in the computation of earnings per share. Dividends paid to unvested restricted shares and their proportionate share of undistributed earnings, if any, is excluded from the computation of earnings per share attributable to Federated Investors, Inc.

(u) Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of tax is reported in the Consolidated Balance Sheets and the Consolidated Statements of Changes in Equity and includes net of tax, the unrealized gains and losses on securities available for sale, foreign currency translation adjustments and the effective portion of the gain or loss on derivative instruments designated and qualifying as a cash flow or net investment hedge.

(v) Loss Contingencies

Federated accrues for estimated costs, including legal costs related to existing lawsuits, claims and proceedings, if any, when it is probable that a loss has been incurred and the costs can be reasonably estimated. Accruals are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information pertinent to a

48 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

particular matter. Significant differences could exist between the actual cost required to investigate, litigate and/or settle a claim or the ultimate outcome of a suit and management’s estimate. These differences could have a material impact on Federated’s results of operations, financial position and/or cash flows. Recoveries of losses are recognized in the Consolidated Statements of Income when receipt is deemed probable.

(w) Business Segments

Business or operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources and assess performance.

Federated does not have multiple operating segments or business components for which discrete financial information is prepared. Federated operates in one operating segment, the investment management business, nearly all of which is conducted within the United States. Federated’s Chief Executive Officer (CEO) is Federated’s chief operating decision maker. Federated’s CEO utilizes a consolidated approach to assess performance and allocate resources.

(2)Recent Accounting Pronouncements

(a) Intangibles - Goodwill and Other

On July 27, 2012, the FASB issued an update to the accounting standard on intangibles. The update amends guidance on testing indefinite-lived intangible assets for impairment to permit an optional qualitative assessment prior to performing a fair value calculation. If the result of the qualitative assessment determines it is more likely than not that an indefinite-lived intangible asset is not impaired, a quantitative fair value calculation would not be required. This update is effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012, however, early adoption is permitted. Federated elected to early adopt the new guidance effective October 1, 2012 in connection with its annual impairment testing of indefinite-lived intangible assets. The adoption of the update did not have a financial impact on Federated's Consolidated Financial Statements.

On January 1, 2012, Federated adopted a FASB update to the accounting standard on intangibles that amends guidance on testing goodwill for impairment to permit a qualitative assessment prior to performance of the two-step impairment test. If the result of the qualitative assessment reveals that there are no indicators of impairment, a quantitative calculation would not be required. This update did not have a financial impact on Federated's Consolidated Financial Statements.

(b) Fair Value Measurement

On January 1, 2012, Federated adopted updated requirements for expanded fair-value disclosures as issued by the FASB. The update amends certain fair value measurement guidance and expands disclosure requirements primarily for fair value measurements utilizing significant unobservable inputs (Level 3) and items not measured at fair value but for which fair value must be disclosed. As the updates affect disclosure only, the adoption of the update did not have a financial impact on Federated’s Consolidated Financial Statements.

(c) Comprehensive Income

On January 1, 2012, Federated adopted FASB updates to the accounting standard on the presentation of comprehensive income that requires presentation of the components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Federated elected to present the components of comprehensive income in two separate but consecutive statements and as a result, began reporting the Consolidated Statements of Comprehensive Income.

(3)Prior Year Business Combinations and Acquisitions

SunTrust. On September 20, 2010, Federated acquired the money market management business of SunTrust Banks, Inc. (SunTrust Acquisition). Pursuant to the acquisition agreement, $14.1 billion of money market assets transitioned to Federated in a series of closings during the third and fourth quarters of 2010. Money market mutual fund assets in nine money market mutual funds managed by SunTrust’s RidgeWorth Capital Management were transitioned into eight existing Federated money market mutual funds with similar investment objectives. The first and most significant closing occurred on September 20, 2010.

2012 Annual Report 49

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

The SunTrust Acquisition included upfront cash payments that totaled $6.6 million. The transaction also includes annual contingent purchase price payments payable in the fourth quarters of each of the five years following the acquisition date. The contingent purchase price payments are calculated as a percentage of revenue less operating expenses directly attributed to certain eligible assets. As of the acquisition date, Federated recognized a liability of $20.1 million to record the estimated fair value of these future payments. See Note (20)(a) for information on contingent payments related to this acquisition. At December 31, 2012, management estimated remaining contingent payments could total $11 million over the three years that remain; however, the actual amount of the contingent payments will vary based on managed asset levels and related net revenues and is not limited by any maximum amount. A wide range of outcomes for actual payments is possible due to the extent of reasonably possible flow-rate volatility for the respective AUM.

The SunTrust Acquisition was accounted for under the acquisition method of accounting. The valuation resulted in total consideration with a fair value of $24.1 millionassignable to a single identifiable intangible asset with an indefinite life and recorded in Renewable investment advisory rights on the Consolidated Balance Sheets. This asset is deductible for tax purposes. The valuation results, which were finalized in the first quarter 2011, are reflected in the Consolidated Balance Sheets and the related footnotes. As of December 31, 2012, the estimated fair value of future consideration payments was $8.2 million and was recorded in Other current liabilities ($3.5 million) and Other long-term liabilities ($4.7 million) (see Note (6)(a) for a discussion regarding the valuation methodology). This liability is remeasured at each reporting date with changes in the fair value recognized in Intangible asset related expense on the Consolidated Statements of Income.

The results of operations for the SunTrust Acquisition were included in Federated’s Consolidated Financial Statements beginning in September 2010 based on the date of the acquisition. The following table summarizes unaudited pro forma financial information assuming the SunTrust Acquisition occurred at the beginning of the year presented. This pro forma financial information is for informational purposes only and is not indicative of future results. In addition, the following pro forma financial information was not adjusted to reflect lower current levels of AUM:

in millions, except per share data for the year ended,	2010
Revenue	$	980.7
Net income attributable to Federated Investors, Inc.	$	186.6
Earnings per share – Basic and Diluted
Net income attributable to Federated Investors, Inc.	$	1.80

The pro forma results include adjustments for the effect of acquisition-related expenses including accretion of interest on the contingent consideration liability and income tax expense.

(4)Concentration Risk

(a) Revenue Concentration by Asset Class

The following table summarizes the percentage of total revenue earned from Federated's asset classes over the last three years:

	2012		2011		2010
Money market assets	47	%	46	%	50	%
Equity assets	31	%	33	%	31	%
Fixed-income assets	21	%	20	%	18	%

The change in the relative proportion of Federated's revenue attributable to money market assets from 2011 to 2012 was primarily the result of decreases in fee waivers for certain money market funds to maintain positive or zero net yields. The decline in the relative proportion of Federated's revenue attributable to money market assets from 2010 to 2011 was primarily the result of increases in fee waivers for certain money market funds to maintain positive or zero net yields. A significant change in Federated’s money market business or a significant reduction in money market assets due to regulatory changes, changes in the financial markets including significant and rapid increases in interest rates over a short period of time causing certain investors to prefer direct investments in interest-bearing securities, significant deterioration in investor confidence, further persistent declines in or additional prolonged periods of historically low short-term interest rates and resulting fee waivers or other circumstances, could have a material adverse effect on Federated’s results of operations.

50 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

Current Regulatory Environment

In January 2010, the Securities and Exchange Commission (SEC) adopted extensive amendments to Rule 2a-7 of the Investment Company Act of 1940 (Rule 2a-7) aimed at enhancing the resiliency of money market funds. These amendments included a series of enhancements including rules that require all money market funds to meet specific portfolio liquidity standards and rules that significantly enhance the public disclosure and regulatory reporting obligations of these funds. In 2010 and 2011, Federated dedicated internal resources to comply with these amendments including efforts to enhance its information systems and improve related reporting capabilities. These efforts were internally sourced and not material to Federated's financial position, results of operations or cash flows for those years. In Federated's view, the amendments of 2010 meaningfully and sufficiently strengthen money market funds. Recent experience demonstrated that the amendments of 2010 were effective in meeting heightened requests for redemptions occurring in connection with the U.S. credit rating downgrade in 2011 and the ongoing European debt crisis.

The SEC undertook a project to develop a proposal for additional reforms related to money market funds. In August 2012, then SEC Chairman Mary Schapiro issued a public statement announcing that she did not have sufficient votes from the other SEC commissioners to pursue certain proposed reforms relating to money market funds. In her statement, Ms. Schapiro stated that the SEC had been considering two alternative reform proposals, one which would have required a floating net asset value (NAV), and the other which would have imposed capital requirements coupled with some form of redemption restriction. In her statement, she invited other policymakers to take up the issue of reform. On September 27, 2012, then Treasury Secretary Timothy Geithner sent a letter to the members of the Financial Stability Oversight Council (FSOC) announcing his intent to pursue money market fund reform. His letter urged FSOC to use its authority under Section 120 of the Dodd-Frank Act to recommend that the SEC proceed with money market reform. Mr. Geithner outlined three potential options for reform in his letter and stated that he had asked his staff to begin drafting a formal recommendation for FSOC to consider at its November 2012 meeting.

In November 2012, FSOC issued Proposed Recommendations Regarding Mutual Fund Reform citing its authority under Section 120 of the Dodd-Frank Act (Proposed Recommendations). The Proposed Recommendations are in draft form and are subject to a public comment period which ended on February 15, 2013. The Proposed Recommendations include three main alternatives: a floating NAV for money market funds; an NAV capital buffer and minimum balance at risk (or 30-day hold back of up to 3% on certain redemptions); and an NAV capital buffer combined with other measures. In response to the Proposed Recommendations, Federated has filed five comment letters on the Proposed Recommendations pointing out, among other things, that: (1) FSOC exceeded its authority in how it used the Section 120 process; (2) FSOC has not provided justification for further reform efforts; (3) a floating NAV would not prevent “runs” on money market funds; (4) an NAV capital buffer of the kind proposed is impractical and not economically attainable in the current interest rate environment; and (5) the minimum-balance-at-risk concept would impair the utility of money market funds to investors and would be prohibitively costly for both fund groups and intermediaries to implement.

On November 30, 2012, the SEC Staff issued a study entitled Response to Questions Posed by Commissioners Aguilar, Parades and Gallagher. This study responded to questions posed by the Commissioners in response to potential reform measures being advanced by then SEC Chairman Mary Shapiro. The study addressed certain misconceptions about the role of money market funds in the financial crisis of 2008 and confirmed the effectiveness of the 2010 amendments to Rule 2a-7. Federated also filed a comment letter on the study commending the SEC Staff for its work while raising questions on some aspects of the study and recommending further analysis.

Finally, it has been reported that the SEC Staff is working on its own rule proposal and that proposal could include a floating NAV for certain money market funds, in particular prime funds. It could also include a floating NAV proposal for all money market funds as well as other reform measures.

Federated believes the changes currently under consideration, if enacted, would significantly reduce the utility and attractiveness of money market funds for investors who, in Federated's view, value money market funds in their current form as an efficient and effective cash management investment product offering daily liquidity at par.

If ultimately enacted, some or all of these changes would be detrimental to Federated's money market fund business and could materially and adversely affect Federated's operations. The very proposal of such amendments could have an adverse impact on Federated's money market fund business and operations and could also negatively impact the short-term credit markets. Management is carefully monitoring developments in this area and plans to actively participate both individually and with industry groups in the public comment process that would accompany any rule change proposal. Federated is unable to assess the degree of any potential impact such additional reforms may have on its business and operations until such proposals are

2012 Annual Report 51

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

issued. Even when issued, the final version of any rule amendment could vary significantly from the form in which it is proposed.

Historically Low Short-Term Interest Rates

In certain money market funds, the gross yield is not sufficient to cover all of the fund’s normal operating expenses due to historically low short-term interest rates. Since the fourth quarter 2008, Federated has voluntarily waived fees in order for certain funds to maintain positive or zero net yields. These fee waivers were partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to share the impact of the waivers.

These voluntary fee waivers are calculated as a percent of AUM in certain money market funds and thus will vary dependent upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, available yields on instruments held by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of fee waivers necessary in order for certain funds to maintain positive or zero net yields. As an isolated variable, an increase in yields on instruments held by the money market funds will cause fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market fund would cause fee waivers to increase.

With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds as well as the distribution among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower waivers to maintain positive or zero net yields. Conversely, the opposite would also be true.

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the years ended December 31:

in millions	2012			2011			2010
Revenue	$	(291.0	)	$	(320.7	)	$	(241.6	)
Less: Reduction in Distribution expense	218.5			232.3			186.6
Operating income	(72.5		)	(88.4		)	(55.0		)
Less: Reduction in Noncontrolling interest	1.3			6.5			1.0
Pre-tax impact	$	(71.2	)	$	(81.9	)	$	(54.0	)

The negative pre-tax impact of fee waivers to maintain positive or zero net yields decreased in 2012 as compared to 2011 primarily as a result of improved yields on instruments held by the money market funds. During 2011, further declines in interest rates for certain money market investments drove an increase in these fee waivers as compared to 2010. (See Note (22) for information regarding the quarterly pre-tax impact of these fee waivers.)

Based on recent commentary from the Federal Reserve Bank in its January 30, 2013 press release, “the current highly accommodative stance of monetary policy will remain appropriate for a considerable time…,” Federated is unable to predict when the Federal Reserve will increase its target for the federal funds rate. As such, fee waivers to maintain positive or zero net yields and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. Assuming asset levels and mix remain constant and based on recent market conditions including the lower short-term interest rate environment in the first quarter of 2013 as compared to the fourth quarter of 2012, fee waivers for the first quarter 2013 could increase as compared to the fourth quarter. See Management's Discussion and Analysis for additional information on management’s expectations regarding fee waivers. While the level of fee waivers are impacted by various factors, increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the negative pre-tax impact of these waivers. The actual amount of future fee waivers are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, available yields on instruments held by the money market funds, actions by the Federal Reserve, the U.S. Department of the Treasury, the SEC, FSOC and other governmental entities, changes in expenses of the money market funds, changes in the mix of money market customer assets, Federated’s willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by third parties. 

52 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

(b) Revenue Concentration by Investment Fund

Approximately 11% and 10% of Federated’s total revenue for 2012 were derived from services provided to two sponsored funds, the Federated Prime Obligations Fund and the Federated Kaufmann Fund, respectively. A significant and prolonged decline in the AUM in these funds could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to a related reduction to distribution expenses associated with these funds.

(c) Revenue Concentration by Customer

Approximately 10% of Federated’s total revenue for 2012 was derived from services provided to one intermediary customer, the Bank of New York Mellon Corporation. Significant changes in Federated’s relationship with this customer could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to related material reductions to distribution expenses associated with this intermediary.

A listing of Federated’s risk factors is included herein under the section entitled Risk Factors in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(5)Consolidation

Federated is involved with various entities in the normal course of business that may be deemed to be voting rights entities or VIEs. In accordance with Federated’s consolidation accounting policy, Federated first determines whether the entity being evaluated is a voting rights entity or a VIE. Once this determination is made, Federated proceeds with its evaluation of whether or not to consolidate the entity. The disclosures below represent the results of such evaluations pertaining to 2012 and 2011.

(a) Consolidated Voting Interest Entities

Federated has a majority interest (50.5%) and acts as the general partner in Passport Research Ltd., a limited partnership. Edward D. Jones & Co., L.P. is the limited partner with a 49.5% interest. The partnership is an investment adviser to two sponsored funds. Noncontrolling interests in this subsidiary are included in Nonredeemable noncontrolling interest in subsidiary on the Consolidated Balance Sheets.

(b) Consolidated Variable Interest Entities

From time to time, Federated invests in investment companies that meet the definition of a VIE for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Most of Federated’s sponsored mutual funds meet the definition of a VIE primarily due to the funds' typical series fund structure in which the shareholders of each participating portfolio underlying the series fund generally lack the ability as an individual group to make decisions through voting rights regarding the board of directors/trustees of the fund. Federated’s investment in investment companies represents its maximum exposure to loss. As of December 31, 2012 and 2011, Federated was the sole or majority investor in certain investment companies and was deemed to be the primary beneficiary since Federated’s majority interest would absorb the majority of the variability of the net assets of the VIE. At December 31, 2012, the aggregate assets and liabilities of such entities that Federated consolidated were $52.8 million and $2.0 million, respectively, and Federated recorded $7.3 million to Redeemable noncontrolling interest in subsidiaries on Federated’s Consolidated Balance Sheets. At December 31, 2011, the aggregate assets and liabilities of such entities that Federated consolidated were $111.1 million and $0.5 million, respectively, and Federated recorded $0.5 million to Redeemable noncontrolling interest in subsidiaries on Federated’s Consolidated Balance Sheets. The assets of the consolidated investment companies are primarily classified as Investments—other on Federated’s Consolidated Balance Sheets and are restricted for use by the respective investment company. The liabilities of the consolidated investment companies are primarily classified as Other current liabilities on Federated’s Consolidated Balance Sheets and primarily represent investments sold short.

Federated’s conclusion to consolidate an investment company may vary from period to period, most commonly as a result of changes in its percentage interest in the entity resulting from changes in the number of fund shares held by either Federated or third parties. Given that the entities follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses for Federated. During 2012, Federated deconsolidated three mutual funds. The first mutual fund was deconsolidated based on a determination that Federated no longer was the primary beneficiary of the fund as a result of new subscriptions in fund shares by unrelated third parties. The remaining two mutual funds, in which Federated was previously the sole investor, were deconsolidated as a result of Federated redeeming its investments. Accordingly, Federated deconsolidated $80.3 million in Investments—other and $0.6 million in Redeemable noncontrolling interest in subsidiaries on the Consolidated Balance Sheets as of the date of deconsolidation. One of the deconsolidated funds

2012 Annual Report 53

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

was a non-U.S. dollar money market fund. Upon its deconsolidation, Federated realized a foreign currency gain of $1.2 million in Nonoperating Income (Expenses) - Other, net on the Consolidated Statements of Income that had been recorded in Accumulated other comprehensive loss, net of tax. Federated's foreign currency risk in this investment was hedged by investments in foreign currency forward contracts which were settled in the third quarter 2012. Accordingly, an offsetting pre-tax loss of $1.1 million was reclassified out of Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets and realized in Nonoperating Income (Expenses) - Other, net on the Consolidated Statements of Income.

In addition, during 2012, Federated consolidated two funds as a result of new investments. Accordingly, Federated consolidated $21.0 million in Investments—other and $6.0 million in Redeemable noncontrolling interest in subsidiaries on the Consolidated Balance Sheets as of the date of consolidation.

During 2011, Federated deconsolidated two mutual funds based on a determination that it no longer was the primary beneficiary of the funds as a result of new subscriptions in fund shares by unrelated third parties. Accordingly, Federated deconsolidated $17.7 million in Investments—other and $7.6 million in Redeemable noncontrolling interest in subsidiaries on the Consolidated Balance Sheets as of the date of deconsolidation. There was no impact to the Consolidated Statements of Income in 2011 or 2010 as a result of deconsolidation.

Neither creditors nor equity investors in the investment companies have any recourse to Federated’s general credit. In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) for information regarding fee waivers). Federated has not provided financial support to any of these entities outside the ordinary course of business.

(c) Non-Consolidated Variable Interest Entities

At December 31, 2012 and 2011, Federated was involved with certain VIEs in which it held a variable interest but for which it was not the primary beneficiary. The assets and liabilities of these unconsolidated VIEs and Federated’s maximum risk of loss related thereto were as follows at December 31:

	2012						2011
in millions	Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total carrying value of investment and maximum risk of loss		Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total carrying value of investment and maximum risk of loss
Investment companies1	$	295,414.3	$	—	$	205.3	$	290,517.7	$	—	$	221.5
Collateralized debt obligation2	$	0	$	0	$	0	$	2.1	$	12.0	$	0
Equity investment	$	2.8	$	0.3	$	3.8	$	4.5	$	0.7	$	7.1

1 The unconsolidated VIE assets for the investment companies represent total net AUM for the related investment companies. Of Federated’s $205.3 million invested in these entities at December 31, 2012, $57.2 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $148.1 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets. Of Federated’s $221.5 million invested in these entities at December 31, 2011, $44.0 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $177.5 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets.

2 The Collateralized Debt Obligation closed in July 2012. There was no resulting impact to the Consolidated Financial Statements.

Investment Companies – Federated's involvement with certain investment companies that are deemed to be VIEs includes serving as the investment manager, or at times, holding a minority interest or both. Federated’s variable interest is not deemed to absorb the majority of the variability of the entity’s net assets. Therefore Federated is not the primary beneficiary of these VIEs and has not consolidated these entities.

In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of these sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) for information regarding fee waivers). Federated has not provided financial support to any of these entities outside the ordinary course of business.

Equity Investment – Federated holds a 12% non-voting, noncontrolling interest in a privately-held investment management firm that is registered as an investment adviser and a commodity trading adviser. This investment is accounted for using the equity method of accounting. As of December 31, 2012, the equity-method investee managed over $400 million in both absolute return and enhanced fixed-income mandates, including a hedge fund strategy and an enhanced cash strategy. Due primarily to the nature of the voting rights of the equity holders of the investee, the investee meets the definition of a VIE,

54 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

however, with its non-voting 12% interest, Federated is not deemed to have power to direct the investee's activities and therefore is not the primary beneficiary. Federated has not provided financial support to the investee. Federated’s investment is included in Other long-term assets on the Consolidated Balance Sheets. In 2012, Federated recorded a $3.0 million impairment charge to write down the investment to a fair value of $3.8 million. See Note (6)(b) for additional information.

(6)Fair Value Measurements

Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are:

Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets may include equity and debt securities that are traded in an active exchange market, including shares of mutual funds.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets.

(a) Fair Value Measurements on a Recurring Basis

Fair value measurements for classes of Federated’s assets and liabilities measured at fair value on a recurring basis consisted of the following at December 31:

	2012								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	$	67,585	$	0	$	0	$	67,585	$	49,273	$	0	$	0	$	49,273
Available-for-sale equity securities1	102,493		33,530		0		136,023		128,611		30,928		0		159,539
Trading securities—equity	9,194		16,776		0		25,970		10,805		18,653		0		29,458
Trading securities—debt	614		28,436		0		29,050		216		83,831		0		84,047
Foreign currency forward contract	0		158		0		158		0		55		0		55
Total financial assets	$	179,886	$	78,900	$	0	$	258,786	$	188,905	$	133,467	$	0	$	322,372
Financial Liabilities
Interest rate swap	$	0	$	11,178	$	0	$	11,178	$	0	$	15,241	$	0	$	15,241
Acquisition-related future consideration liabilities	0		0		11,759		11,759		0		0		13,404		13,404
Other2	1,015		0		0		1,015		0		245		0		245
Total financial liabilities	$	1,015	$	11,178	$	11,759	$	23,952	$	0	$	15,486	$	13,404	$	28,890

1 Previously 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 in Other current liabilities on the Consolidated Balance Sheets.

The following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis. Federated did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at December 31, 2012 or 2011.

2012 Annual Report 55

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

Cash and cash equivalents

Cash and cash equivalents include investments in money market funds and deposits with banks. Cash and cash equivalents invested in Federated money market funds totaled $60.2 million and $45.8 million at December 31, 2012 and 2011, respectively. Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value of the underlying funds, and are classified within Level 1 of the valuation hierarchy.

Available-for-sale equity securities

Available-for-sale equity securities include investments in sponsored fluctuating-value mutual funds and are included in Investments—affiliates on the Consolidated Balance Sheets. For investments in mutual funds that are listed on an active exchange, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the net asset value of the underlying funds, and are classified within Level 1 of the valuation hierarchy. For one investment in a mutual fund that is not listed on an active exchange but for which the net asset value is calculated daily and for which there are no redemption restrictions, the security is valued using net asset value as a practical expedient and is classified as Level 2. There is no modeling or additional information needed to arrive at the fair values of these investments.

Trading securities—equity

These trading securities primarily represented the equity securities held by consolidated investment funds and are included in Investments—other on the Consolidated Balance Sheets. For the publicly traded equity securities available in an active exchange market, whether domestic or foreign, the fair value of these securities is often classified as Level 1 and is based on unadjusted quoted market prices. From time to time, however, the fair value of certain equity securities traded principally in foreign markets may be determined by third-party pricing services when it has been determined that there has been a significant trend in the U.S. equity markets or in index futures trading. The determination to use the third-party pricing service versus the unadjusted quoted market price is the cause for transfers between Level 1 and Level 2 for these securities. For the period between December 31, 2011 and December 31, 2012, $2.0 million of investments transferred from Level 1 to Level 2 as a result of a determination by management at the end of 2012 to use adjusted quoted market prices because there had been a significant trend to do so in the U.S. equity markets or in index futures trading after the foreign markets closed, as compared to, at the end of 2011, using unadjusted quoted market prices to determine fair values of these equity securities. For the period between December 31, 2010 and December 31, 2011, approximately $3.5 million of investments transferred from Level 2 to Level 1 as a result of a determination by management at the end of 2010 to use adjusted quoted market prices for the reasons noted above. Transfers into and out of Levels 1 and 2 of the fair value hierarchy are reported at fair values as of the beginning of the period in which the transfers occur.

At December 31, 2012 and 2011, equity trading securities also included shares of certain non-publicly traded mutual funds that were valued using net asset value as a practical expedient (Level 2). Most significantly, Federated held shares of an offshore master investment fund as a result of consolidating one of its feeder funds as of December 31, 2012 and 2011. The offshore master investment fund, which is not publicly traded in an active exchange market, makes investments in global project and trade finance transactions. The $12.1 million and $17.9 million fair value at December 31, 2012 and 2011, respectively, of the feeder fund's investment in the master fund was determined using the net asset value of the master fund, as a practical expedient, and was classified as Level 2 in the valuation hierarchy at December 31, 2012 and 2011.

Trading securities—debt

At December 31, 2012, trading debt securities primarily represented U.S. and foreign bonds held by consolidated sponsored investment funds. The fair value of these securities may include observable market data such as closing market prices provided by independent pricing services after considering factors such as the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. At December 31, 2011, trading debt securities primarily represented high-quality, short-term debt securities held by a consolidated, non-U.S. dollar money market fund ($77.1 million). Such assets had a maximum weighted-average maturity of 15 days at December 31, 2011 and were valued based on amortized cost, which approximated fair value given the high-quality, short-term nature of these securities. The entire amount of these securities is included in Investments—other on the Consolidated Balance Sheets.

Foreign currency forward contracts

The fair value of foreign currency forward contracts is primarily included in Receivables, net or Other current liabilities on the Consolidated Balance Sheets. These contracts primarily represent contracts held by certain consolidated sponsored investment funds as part of their investment strategy. Pricing is determined by interpolating a value by utilizing the spot foreign exchange

56 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

rate and forward points (based on the spot rate and currency interest rate differentials), which are all inputs that are observable in active markets (Level 2).

Interest rate swap

The fair value of Federated's interest rate swap (the Swap) at December 31, 2012 is included in Other current liabilities ($5.9 million) and Other long-term liabilities ($5.3 million) on the Consolidated Balance Sheets. Pricing is determined based on a third-party, model-derived valuation in which all significant inputs are observable in active markets including the Eurodollar future rate and yields for three- and thirty-year Treasury securities. See Note (11) for more information regarding the Swap.

Acquisition-related future consideration liabilities

From time to time, pursuant to purchase and sale agreements entered into in connection with certain business combinations, Federated may be required to make future consideration payments if certain contingencies are met. See Note (20)(a) for additional information regarding the nature and timing of these payments. In connection with these arrangements entered into after January 1, 2009, Federated records a liability representing the estimated fair value of future consideration payments as of the acquisition date. The liability is subsequently remeasured at fair value on a recurring basis with changes in fair value recorded in earnings. As of December 31, 2012, acquisition-related future consideration liabilities were recorded in Other current liabilities ($3.5 million) and Other long-term liabilities ($8.3 million) on the Consolidated Balance Sheets. Management estimated the fair value of future consideration payments based primarily upon expected future cash flows using an income approach valuation methodology with unobservable data inputs (Level 3). As of December 31, 2012, significant inputs involving unobservable market data included (1) an estimated rate of change for underlying AUM ranging from (13)% - 28% per year (weighted average of 4%); (2) an estimate ranging from 0.01% - 0.02% per year of the impact of fee waivers to maintain positive or zero net yields on the contractually-derived net revenue per managed asset assumptions (weighted average of 0.01%); and (3) an estimated discount rate ranging from 15% - 18% based on the current estimated market rate of return (weighted average of 16%). Assuming no other changes in model inputs, the fair value of the future consideration liability will increase, resulting in additional Intangible asset related expense in the period of change if: (1) the underlying AUM grow at a rate that is greater than the assumed rate, (2) the actual impact of fee waivers to maintain positive or zero net yields on the net revenue is less than the assumed amount, or (3) the discount rate decreases. Conversely, the fair value of the future consideration liability will decrease if the inverse occurs for any of these inputs, assuming no other changes.

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 year presented:

in thousands	2012			2011			2010
Beginning balance	$	13,404		$	20,058		$	0
New acquisition adjustment1	3,361			(2,600		)	20,058
Changes in fair value2	(793		)	900			0
Contingent consideration payments	(4,213		)	(4,954		)	0
Ending balance	$	11,759		$	13,404		$	20,058

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

Investments sold short

The fair value of investments sold short within a consolidated investment fund is included in Other current liabilities on the Consolidated Balance Sheets. These investments primarily relate to domestic equity securities that are available in an active exchange market. The fair value of these investments is classified as Level 1 and is based on unadjusted quoted market prices.

(b) Fair Value Measurements on a Nonrecurring Basis

As previously disclosed, Federated holds a 12% non-voting, noncontrolling interest in a privately-held investment management firm that is registered as an investment adviser and a commodity trading adviser. This investment is accounted for using the equity-method of accounting. Federated's investment in and maximum exposure to loss related to its equity-method investment as compared to its proportionate share of the investee's underlying net assets is characterized as goodwill. Federated evaluated the carrying value of its investment for other-than-temporary impairment under the equity-method of accounting. Due to declines in the investee's AUM, their performance relative to indices and the uncertainty regarding each in the future, management estimated the fair value of its investment at June 30, 2012 and September 30, 2012. Based on the evaluation of

2012 Annual Report 57

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

qualitative and quantitative factors, management concluded that the investment was not other-than-temporarily impaired as of June 30, 2012 and September 30, 2012.

In light of significant declines in the investee's AUM in the fourth quarter 2012 and lower short-term growth forecasts in AUM, management once again estimated the fair value of its investment at December 31, 2012 and considered whether it was other-than-temporarily impaired. The estimate of fair value was based primarily upon the present value of expected future cash flows using an income approach valuation methodology with unobservable data inputs (Level 3). Significant unobservable model inputs included: (1) projected AUM across product lines with a 10-year compounded annual growth rate of 15% and a terminal growth rate of 3%; and (2) a 17% discount rate based upon the current estimated market rate of return. Based on management's evaluation of qualitative and quantitative factors, management concluded that the investment was other-than-temporarily impaired as of December 31, 2012. Accordingly, Federated recorded a $3.0 million impairment charge in Nonoperating Income (Expenses) – Other, net to write down the equity-method investment to a fair value of $3.8 million. Given uncertainties regarding the success of future sales efforts and possible prolonged periods of over/underperformance compared to indices and the significance of these factors to AUM, management cannot be certain of the outcome of future cash flow analyses.

Since 2008, Federated experienced significant declines in the AUM related to certain quantitative investment products acquired in 2006. The declines in AUM reflected significant market depreciation as well as investor net redemptions. In light of these declines in AUM, performance relative to peers and indices and the uncertainty regarding each of these in the future, the carrying values of the related intangible assets were tested for recoverability at various times over the past several years. Management’s quarterly recoverability test of the carrying value of these intangible assets performed as of June 30, 2010 and December 31, 2010 indicated that the carrying values were not fully recoverable. Cash flow projections at June 30, 2010 and December 31, 2010 were lower than previous projections prepared in connection with recoverability testing as a result of actual and projected declines in AUM in excess of prior estimates. Management estimated the fair value of these intangible assets at June 30, 2010 and December 31, 2010 based primarily upon expected future cash flows using an income approach valuation methodology with unobservable data inputs (Level 3). Such inputs included (1) an estimated rate of change for underlying AUM; (2) expected revenue per managed asset; (3) direct operating expenses; and (4) a discount rate. Management estimated a rate of change for underlying AUM based on a combination of an estimated rate of market appreciation or depreciation and an estimated net redemption or sales rate. Expected revenue per managed asset and direct operating expenses are generally based on contract terms, average market participant data and historical experience. The discount rate was estimated at the current market rate of return. In addition, because of the subjective nature of the projected discounted cash flows, management considered several scenarios and used probability weighting to calculate the expected future cash flows attributable to the intangible assets. The probability-weighted scenarios assumed growth rates in AUM ranging from -100% to 9% over the cash-flow projection period. As a result of these fair value analyses, during 2010 Federated recorded a $10.2 million impairment charge on the Consolidated Statements of Income, $8.2 million of which was included in Intangible asset related expenses with the remainder in Operating Expenses – Other. The related customer relationship intangible assets were written down to $2.0 million, the noncompete agreement included in Other intangible assets was written down to $0.8 million and the related fixed assets were written down to $0.7 million as of December 31, 2010. Intangible asset amortization expense and fixed asset depreciation for future periods were reduced as a result of this impairment. Given the uncertainties regarding future market conditions, the timing and pace of a forecasted recovery and possible prolonged periods of underperformance of the quantitative products compared to peers and indices and the significance of these factors to AUM, management cannot be certain of the outcome of future undiscounted cash flow analyses for these assets with a remaining net book value of $2.1 million at December 31, 2012.

(c) Fair Value Measurements of Other Financial Instruments

The fair value of Federated’s debt is estimated by management based upon expected future cash flows utilizing a discounted cash flow methodology under the income approach. The fair value of the liability is estimated using observable market data (Level 2) in estimating inputs including the discount rate. Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value.

(7)Investments

Investments on the Consolidated Balance Sheets as of December 31, 2012 and 2011 included available-for-sale and trading securities. At December 31, 2012 and 2011, Federated held investments totaling $136.0 million and $159.5 million, respectively, in fluctuating-value Federated-sponsored mutual funds that were classified as available-for-sale securities and were included in Investments—affiliates on the Consolidated Balance Sheets. Federated’s trading securities totaled $55.0 million and $113.5 million at December 31, 2012 and 2011, respectively, and were included in Investments—other on the

58 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

Consolidated Balance Sheets. Federated consolidates certain investment companies into its Consolidated Financial Statements as a result of Federated’s controlling financial interest in the products (see Note (5)). All investments held by these investment companies, which primarily represented Federated-sponsored investment companies, were included in Federated’s Consolidated Balance Sheets as of December 31, 2012 and 2011 as trading securities.

Federated’s trading securities as of December 31, 2012 were primarily comprised of domestic and foreign debt securities ($28.7 million), stocks of large U.S. and international companies ($13.9 million) held by various other consolidated investment companies and an offshore master fund invested in global project and trade finance transactions ($12.1 million). Federated’s trading securities as of December 31, 2011 were primarily comprised of high quality, short-term debt securities held by a consolidated, non-U.S. dollar, sponsored money market fund ($77.1 million), as well as shares of an offshore master fund invested in global project and trade finance transactions ($17.9 million) and stocks of large U.S. and international companies ($10.9 million) held by various other consolidated investment companies.

Available-for-sale securities (see Note (1)(g)) consisted of the following at December 31:

	2012									2011
			Gross Unrealized					Estimated Fair Value				Gross Unrealized					Estimated Fair Value
in thousands	Cost		Gains		(Losses)					Cost		Gains		(Losses)
Equity mutual funds	$	44,944	$	4,814	$	(5	)	$	49,753	$	43,217	$	2,037	$	(925	)	$	44,329
Fixed-income mutual funds	84,855		1,436		(21		)	86,270		115,699		461		(950		)	115,210
Total fluctuating-value mutual funds	$	129,799	$	6,250	$	(26	)	$	136,023	$	158,916	$	2,498	$	(1,875	)	$	159,539

The decrease in available-for-sale securities at December 31, 2012 as compared to December 31, 2011, was primarily due to $92.4 million in redemptions of fixed-income and equity mutual funds during 2012 partially offset by purchases of $58.3 million of fixed-income and equity mutual funds in 2012. As of December 31, 2012, unrealized gains of $6.3 million related to equity and fixed-income investments with a fair value of $120.6 million. As of December 31, 2011, unrealized losses of $1.9 million related to fixed-income and equity investments with a fair value of $111.1 million, all of which were outstanding for less than twelve months.

Gains and losses recognized in Gain on securities, net on the Consolidated Statements of Income in connection with investments and economic derivatives held by certain consolidated investment companies consisted of the following for the years ended December 31:

in thousands	2012			2011			2010
Unrealized gain (loss)
Trading securities	$	1,614		$	(871	)	$	541
Derivatives1	72			(560		)	190
Realized gains2
Available-for-sale securities	4,439			3,006			1,239
Trading securities	1,200			931			2,045
Derivatives1	310			570			720
Purchased loans	0			0			678
Realized losses2
Available-for-sale securities	0			0			(6		)
Trading securities	(627		)	(830		)	(958		)
Derivatives1	(97		)	(814		)	(907		)
Gain on securities, net3	$	6,911		$	1,432		$	3,542

1 Amounts related to the settlement of economic derivatives held by certain consolidated sponsored products.

2 Realized gains and losses are computed on a specific-identification basis.

3 Amounts related to consolidated investment companies totaled $2.0 million, $(1.2) million and $1.5 million for 2012, 2011 and 2010, respectively.

2012 Annual Report 59

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

(8)Intangible Assets and Goodwill

Federated’s identifiable intangible assets and goodwill consisted of the following at December 31:

	2012							2011
in thousands	Cost		Accumulated Amortization			Carrying Value		Cost		Accumulated Amortization			Carrying Value
Finite-lived intangible assets:
Customer relationships	$	45,812	$	(37,914	)	$	7,898	$	56,492	$	(45,958	)	$	10,534
Noncompete agreements	7,094		(6,310		)	784		12,142		(10,579		)	1,563
Total finite-lived intangible assets	52,906		(44,224		)	8,682		68,634		(56,537		)	12,097
Indefinite-lived intangible assets:
Renewable investment advisory rights	68,455		N/A			68,455		64,600		N/A			64,600
Trade names	1,900		N/A			1,900		1,900		N/A			1,900
Total indefinite-lived intangible assets	70,355		N/A			70,355		66,500		N/A			66,500
Goodwill	648,820		N/A			648,820		642,329		N/A			642,329
Total identifiable intangible assets and goodwill	$	772,081	$	(44,224	)	$	727,857	$	777,463	$	(56,537	)	$	720,926

The decrease of $15.7 million in the cost of the total finite-lived intangible assets at December 31, 2012 as compared to December 31, 2011 relates to the write-off of fully amortized customer relationship intangible assets and noncompete agreements relating to prior year acquisitions.

Amortization expense for finite-lived intangible assets was $3.4 million, $7.0 million and $14.3 million in 2012, 2011 and 2010, respectively. This expense was included in Intangible asset related on the Consolidated Statements of Income for each period. See Note (6)(b) for information regarding the intangible asset impairments.

Following is a schedule of expected aggregate annual amortization expense for intangible assets in each of the five succeeding years assuming no new acquisitions or impairments:

in millions
2013	$	2.6
2014	$	2.0
2015	$	1.4
2016	$	1.0
2017	$	0.6

Goodwill at December 31, 2012 and 2011 was $648.8 million and $642.3 million, respectively. During 2012, Federated recorded goodwill primarily in connection with contingent purchase price payments or accruals thereof related to the acquisition of certain assets of Clover Capital Management, Inc., a Rochester, New York-based investment manager that specializes in value investing (Clover Capital Acquisition) and the acquisition of certain assets of Rochdale Investment Management LLC relating to its business of providing investment advisory and investment management services to the Rochdale Atlas Portfolio (Rochdale Acquisition). These acquisitions were accounted for under the purchase method of accounting and therefore goodwill was recorded at the time the contingencies lapsed. See Note (20)(a) for additional information.

60 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

(9)Property and Equipment

Property and equipment consisted of the following at December 31:

in thousands	Estimated Useful Life			2012			2011
Computer software and hardware	3	to	7 years	$	47,566		$	45,468
Transportation equipment		12 years		17,875			17,875
Leasehold improvements	Up to term of lease			18,143			15,934
Office furniture and equipment	5	to	10 years	6,238			6,200
Total cost				89,822			85,477
Accumulated depreciation				(50,910		)	(47,249		)
Property and equipment, net				$	38,912		$	38,228

Depreciation expense was $8.1 million, $8.3 million and $7.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

(10)Insurance Proceeds

Federated’s Other current liabilities at December 31, 2011 included an accrual of $10.0 million related to insurance proceeds received for claims submitted to cover costs primarily associated with various legal proceedings. The retention of these advance insurance payments was contingent upon final approval of the claim by the insurance carrier. In the event that all or a portion of the claim had been denied, Federated would have been required to repay all or a portion of these advance payments. During the third and fourth quarters of 2012, Federated received final approvals from various insurance carriers for $20.2 million of claims. Accordingly, Federated recognized $20.2 million in the Consolidated Statements of Income as a reduction to Professional service fees. Federated reversed the $10.0 million in Other current liabilities in the third quarter 2012 and the remaining $10.2 million in insurance proceeds was received in the fourth quarter 2012.

(11)Debt and Interest Rate Swap

Debt at December 31 consisted of the following:

dollars in thousands	Weighted-Average Interest Rate1	2012		2011
Term Loan	3.646%	$	318,750	$	361,250
Less: Short-term debt		42,500		42,500
Long-term debt		$	276,250	$	318,750

1 See additional information below regarding the interest rate fixed at 3.646% in connection with the Swap.

In the second quarter 2011, Federated entered into an Amended and Restated Credit Agreement with a syndicate of banks that included a $382.5 million term loan (Term Loan) and $200 million revolving credit facility (collectively, Credit Agreement). The Credit Agreement expires on June 10, 2016. The Term Loan, a variable-rate note, requires principal payments of $10.6 million per quarter for the first three years and $28.3 million per quarter for the fourth and fifth years and a final payment of $28.3 million due upon its expiration. Certain subsidiaries entered into an Amended and Restated Continuing Agreement of Guaranty and Suretyship whereby these subsidiaries guarantee payment of all obligations incurred through the Credit Agreement.

The borrowings under the Term Loan bear interest at a spread over London Interbank Offering Rate (LIBOR). The interest rate swap (the Swap) that Federated entered into with PNC Bank, National Association and certain other banks during 2010 to hedge its interest rate risk associated with the prior term loan remains in effect.

Under the Swap, which expires on April 1, 2015, Federated will receive payments based on LIBOR plus a spread and will make payments based on an annual fixed rate of 3.646%. The Swap requires monthly cash settlements of interest paid or received. The differential between the interest paid or interest received from the monthly settlements will be recorded as adjustments to Debt expense on the Consolidated Statements of Income. The Swap is accounted for as a cash flow hedge and has been determined to be highly effective. Federated evaluates effectiveness using the long-haul method. Changes in the fair value of the Swap will likely be offset by an equal and opposite change in the fair value of the hedged item, therefore very little, if any, net impact on reported earnings is expected. The fair value of the Swap agreement at December 31, 2012 was a liability of $11.2 million which was recorded in Other current liabilities ($5.9 million) and Other long-term liabilities ($5.3 million) on the Consolidated Balance Sheets. The entire amount of this loss in fair value was recorded in Accumulated other

2012 Annual Report 61

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

comprehensive loss, net of tax on the Consolidated Balance Sheets at December 31, 2012. During the next twelve months management expects to charge $5.9 million of this loss to Debt expense on the Consolidated Statements of Income as a component of Federated’s fixed interest rate of 3.646%. This amount could differ from amounts actually recognized due to changes in interest rates subsequent to December 31, 2012 and will not affect the amount of interest expense recognized in total on the Term Loan for any period presented. During the years ended December 31, 2012 and 2011, $7.3 million and $8.3 million, respectively, were charged to Debt expense on the Consolidated Statements of Income as a component of Federated’s fixed interest rate associated with the Swap.

As of December 31, 2012, the entire $200 million revolving credit facility was available for borrowings. Federated pays an annual facility fee, currently 15 basis points, based on its credit rating. Borrowings under the revolving credit facility bear interest similar to the Term Loan borrowings under the Credit Agreement except the LIBOR spread is currently 110 basis points, based on Federated's credit rating.

The Credit Agreement includes representations, warranties and other covenants, including an interest coverage ratio covenant and a leverage ratio covenant. Federated was in compliance with all covenants at and during the year ended December 31, 2012. The Credit Agreement and the Swap also have certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt or to terminate the Swap if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, deterioration in credit rating to below investment grade, notice of lien or assessment and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

(12)Employee Benefit Plans

(a) 401(k)/Profit Sharing Plan

Federated offers defined contribution plans to its employees. Its 401(k) plan covers substantially all employees. Under the 401(k) plan, employees can make salary deferral contributions at a rate of 1% to 50% of their annual compensation (as defined in the 401(k) plan), subject to Internal Revenue Code limitations. Federated makes a matching contribution in an amount equal to 100% of the first 2% that each participant defers and 50% of the next 4% of deferral contributions. Forfeitures of unvested matching contributions are used to offset future matching contributions.

Matching contributions to the 401(k) plan recognized in Compensation and related expense amounted to $4.2 million, $4.0 million and $3.9 million for 2012, 2011 and 2010, respectively.

Vesting in Federated’s matching contributions commences once a participant in the 401(k) plan has been employed at least two years and worked at least 1,000 hours per year. Upon completion of two years of service, 20% of Federated’s contribution included in a participant’s account vests and 20% vests for each of the following four years if the participant works at least 1,000 hours per year. Employees are immediately vested in their 401(k) salary deferral contributions.

A Federated employee becomes eligible to participate in the profit sharing plan if they are employed on the last day of the year and have worked at least 500 hours for the year. The profit sharing plan is a defined contribution plan to which Federated may contribute amounts as authorized by its board of directors. No contributions have been made to the profit sharing plan in 2012, 2011 or 2010. At December 31, 2012, the profit sharing plan held 0.5 million shares of Federated Class B common stock.

(b) Employee Stock Purchase Plan

Federated offers an employee stock purchase plan that allows employees to purchase a maximum of 750,000 shares of Class B common stock. Employees may contribute up to 10% of their salary to purchase shares of Federated’s Class B common stock on a quarterly basis at the market price. The shares purchased under this plan may be newly issued shares, treasury shares or shares purchased on the open market. As of December 31, 2012, 140,600 shares were purchased by employees in this plan on the open market since the plan’s inception in 1998.

(13)Share-Based Compensation Plans

Federated’s long-term stock-incentive compensation has been provided for under the Stock Incentive Plan (the Plan), as amended and subsequently approved by shareholders from time to time. Share-based awards are granted to reward Federated’s employees and non-management directors who have contributed to the success of Federated and to provide incentive to increase their efforts on behalf of Federated. Since the Plan’s inception, a total of 27.1 million shares of Class B common stock

62 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

have been authorized for granting share-based awards in the form of restricted stock, stock options or other share-based awards. As of December 31, 2012, 6.0 million shares are available under the Plan.

Share-based compensation expense was $20.1 million, $19.0 million and $19.1 million for the years ended December 31, 2012, 2011 and 2010, respectively. The associated tax benefits recorded in connection with share-based compensation expense was $7.6 million, $7.1 million and $7.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012, the maximum remaining unrecognized compensation expense related to share-based awards approximated $64 million which is expected to be recognized over a weighted-average period of approximately 6 years.

(a) Restricted Stock

Federated’s restricted stock awards represent shares of Federated Class B common stock that may be sold by the awardee only once the restrictions lapse, as dictated by the terms of the award. The awards are generally subject to graded vesting schedules that vary in length from three to ten years with a portion of the award vesting each year, as dictated by the terms of the award. For an award with a ten-year vesting period, the restrictions on the vested portion of the award typically lapse on approximately the award’s fifth- and tenth-year anniversaries. Certain restricted stock awards granted pursuant to a key employee bonus program have a three-year graded vesting schedule with restrictions lapsing at each vesting date. During the period of restriction, the recipient receives dividends on all shares awarded, regardless of their vesting status.

The following table summarizes activity of non-vested restricted stock awards for the year ended December 31, 2012:

	Restricted Shares		Weighted- Average Grant- Date Fair Value
Non-vested at January 1, 2012	3,770,021			$	22.74
Granted1	1,015,273			$	18.06
Vested	(722,825	)		$	24.53
Forfeited	(21,687	)		$	23.71
Non-vested at December 31, 2012	4,040,782			$	21.24

1 During 2012, Federated awarded 480,773 shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a three-year period. Also during 2012, Federated awarded 534,500 shares of restricted Federated Class B common stock to certain key employees. The restricted stock awards generally vest over ten-year periods with restrictions on the vested portions of the awards lapsing on approximately the awards’ fifth- and tenth-year anniversaries.

Federated awarded 1,015,273 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $18.06 to employees during 2012; awarded 1,011,876 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $19.97 to employees during 2011; and awarded 897,379 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $22.97 to employees during 2010.

The total fair value of restricted stock vested during December 31, 2012, 2011 and 2010 was $14.1 million, $15.4 million and $12.2 million, respectively.

(b) Stock Options

The outstanding stock options as of December 31, 2012 were granted to non-management directors with exercise prices that equaled the market price of Federated’s Class B common stock on the grant dates. Nearly all of these stock options were awarded with no requisite service requirement, were immediately exercisable and expire no later than ten years after the grant date. Each vested option may be exercised for the purchase of one share of Class B common stock at the exercise price.

2012 Annual Report 63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

The following table summarizes the status of and changes in Federated’s stock option program for the year ended December 31, 2012:

	Options		Weighted-Average Exercise Price		Weighted-Average Remaining  Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2012	392,479		$	29.72
Expired unexercised	(337,729	)	$	29.36
Outstanding at December 31, 20121	54,750		$	31.97	3.7	$	0

1 All stock options outstanding at December 31, 2012 were also vested and exercisable.

Total options exercised during the years ended December 31, 2011 and 2010 were 603,418 and 486,150, respectively. There were no options exercised during the year ended December 31, 2012. The total intrinsic value of stock options exercised during 2011 and 2010 was $1.2 million and $2.3 million, respectively.

There were no stock options granted in 2012, 2011 or 2010.

(c) Non-management Director Stock Award

Federated awarded 4,500, 4,500 and 6,000 shares of Federated Class B common stock to non-management directors in the second quarters of 2012, 2011 and 2010, respectively. There were no additional awards to non-management directors in 2012, 2011 or 2010.

(14)Common Stock

The Class A common stockholder has the entire voting rights of Federated; however, without the consent of the majority of the holders of the Class B common stock, the Class A common stockholder cannot alter Federated’s structure, dispose of all or substantially all of Federated’s assets, amend the Articles of Incorporation or Bylaws of Federated to adversely affect the Class B common stockholders, or liquidate or dissolve Federated. With respect to dividends, distributions and liquidation rights, the Class A common stock and Class B common stock have equal preferences and rights.

(a) Dividends

Cash dividends of $256.8 million, $100.0 million and $228.7 million were paid in 2012, 2011 and 2010, respectively, to holders of common stock. Of the amount paid in 2012, $156.9 million represented a $1.51 per share special dividend paid in the fourth quarter. Of the amount paid in 2010, $129.8 million represented a $1.26 per share special dividend paid in the first quarter. All dividends are considered ordinary dividends for tax purposes.

(b) Treasury Stock Repurchases

During 2008, the board of directors authorized a share repurchase program that allows Federated to buy back as many as 5 million shares of Class B common stock. The program has no stated expiration date and no other programs existed as of December 31, 2012. The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities. During the year ended December 31, 2012, Federated repurchased 0.3 million shares of common stock for $6.3 million, nearly all of which were repurchased in the open market. The remaining shares were repurchased in connection with employee separations and are not counted against the board-approved share repurchase program. At December 31, 2012, approximately 1.9 million shares remained available to be purchased under the current buyback program. 

64 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

(15)Leases

The following is a schedule by year of future minimum payments required under the operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2012:

in millions
2013	$	12.7
2014	11.9
2015	10.0
2016	9.3
2017	8.9
2018 and thereafter	28.5
Total minimum lease payments	$	81.3

Federated held a material operating lease at December 31, 2012 for its corporate headquarters building in Pittsburgh, Pennsylvania. This lease expires in 2021 and has renewal options for two successive terms of five years each. This lease includes provisions for leasehold improvement incentives, rent escalation and certain penalties for early termination. In addition, at December 31, 2012, Federated had various other operating lease agreements primarily involving additional facilities. These leases are noncancelable and expire on various dates through the year 2019. Most leases include renewal options and, in certain leases, escalation clauses.

Rental expenses were $11.5 million, $11.2 million and $11.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.

(16)Income Taxes

Federated files a consolidated federal income tax return. Financial statement tax expense is determined under the liability method.

Income tax expense (benefit), net consisted of the following components for the years ended December 31:

in thousands	2012		2011			2010
Current:
Federal	$	78,422	$	67,662		$	79,273
State	7,430		6,426			8,504
Foreign	6		(56		)	(33		)
	85,858		74,032			87,744
Deferred:
Federal	23,143		15,996			20,997
State	1,878		1,291			3,210
Foreign	4		(31		)	6
Total	$	110,883	$	91,288		$	111,957

The federal net tax effects of timing differences exceeding 5% of the respective year’s pretax income at the statutory federal income tax rate included in Income tax provision on the Consolidated Statements of Income were as follows: $(19.7) million, $(18.7) million and $(11.8) million related to intangible assets in 2012, 2011 and 2010, respectively; $5.1 million related to accrued incentive compensation in 2011; and $(7.3) million related to the recognition of insurance proceeds in 2010.

2012 Annual Report 65

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

The reconciliation between the statutory income tax rate and the effective tax rate consisted of the following for the years ended December 31:

	2012		2011		2010
Expected statutory income tax rate	35.0	%	35.0	%	35.0	%
Increase/(decrease):
State and local income taxes, net of Federal benefit	2.1		2.1		2.5
Other	0		0.6		1.0
Effective tax rate (excluding noncontrolling interests)	37.1		37.7		38.5
Income attributable to noncontrolling interests	(1.2	)	(0.6	)	(1.3	)
Effective tax rate per Consolidated Statements of Income	35.9	%	37.1	%	37.2	%

The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities consisted of the following at December 31:

in thousands	2012			2011
Deferred Tax Assets
Tax net operating losses	$	16,781		$	16,481
Other compensation related	6,226			5,843
Unrealized and realized capital losses, net	4,839			7,835
Share-based compensation	3,622			3,405
Deferred income	578			3,500
Write-down of Collateralized Debt Obligation and other investments	169			3,331
Other	1,944			2,560
Total deferred tax assets	34,159			42,955
Valuation allowance	(20,069		)	(21,030		)
Total deferred tax asset, net of valuation allowance	$	14,090		$	21,925
Deferred Tax Liabilities
Intangible assets	$	92,823		$	73,269
Property and equipment	5,323			5,902
State taxes	5,156			3,546
Deferred sales commissions	4,927			3,788
Costs of internal-use software	2,811			2,630
Other	1,595			1,791
Total gross deferred tax liability	$	112,635		$	90,926
Net deferred tax liability	$	98,545		$	69,001

At December 31, 2012, the company had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $16.8 million, which will expire through 2032. A valuation allowance has been recognized for $14.8 million (or 99%) of the deferred tax asset for state tax net operating losses, and for $1.8 million (or 95%) of the deferred tax asset for foreign tax net operating losses. The valuation allowances were recorded due to management’s belief that it is more likely than not that Federated will not realize the full benefit of these net operating losses.

At December 31, 2011, the company had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $16.3 million, which will expire through 2031. A valuation allowance has been recognized for $14.3 million (or 99%) of the deferred tax asset for state tax net operating losses, and for $1.7 million (or 94%) of the deferred tax asset for foreign tax net operating losses. The valuation allowances were recorded due to management’s belief that it is more likely than not that Federated will not realize the full benefit of these net operating losses.

In addition, at December 31, 2012 and 2011, Federated had recorded deferred tax assets resulting from capital losses on certain previously held investments in Collateralized Debt Obligations and other investments. The carry-forward period for capital losses, once recognized, is five years. Management currently believes it is more likely than not that Federated will not fully

66 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

realize these deferred tax assets in the future and therefore has a related valuation allowance balance of $3.5 million and $5.0 million at December 31, 2012 and 2011, respectively.

The company and its subsidiaries file annual income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, and in certain foreign jurisdictions. Based upon its review of these filings, there were no material unrecognized tax benefits as of December 31, 2012 or 2011. Therefore, there were no material changes during 2012, and no reasonable possibility of a significant increase or decrease in unrecognized tax benefits within the next twelve months.

(17)Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated Investors, Inc. for the years ended December 31:

in thousands, except per share data	2012			2011			2010
Numerator – Basic
Net income attributable to Federated Investors, Inc.	$	188,088		$	150,906		$	179,114
Less: Total income available to participating unvested restricted shareholders1	(8,400		)	(4,922		)	(6,443		)
Total net income attributable to Federated Common Stock2	$	179,688		$	145,984		$	172,671
Numerator – Diluted
Net income attributable to Federated Investors, Inc.	$	188,088		$	150,906		$	179,114
Less: Total income available to participating unvested restricted shareholders1	(8,400		)	(4,921		)	(6,443		)
Total net income attributable to Federated Common Stock2	$	179,688		$	145,985		$	172,671
Denominator
Basic weighted-average common shares outstanding	100,313			100,609			99,925
Dilutive potential shares from stock options	0			23			68
Diluted weighted-average common shares outstanding	100,313			100,632			99,993
Earnings per share
Net income attributable to Federated Common Stock - Basic and Diluted2	$	1.79		$	1.45		$	1.73

1 Income available to participating restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings, if any.

2 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

For the years ended December 31, 2012, 2011 and 2010, 0.2 million, 0.7 million and 3.0 million stock option awards, respectively, were not included in the computation of diluted earnings per share for each year because the exercise price was greater than the average market price of Federated Class B common stock for each respective year. As of December 31, 2012, 0.1 million stock option awards remain outstanding. In the event the awards become dilutive, these shares would be included in the calculation of diluted earnings per share and would result in a proportional amount of dilution.

2012 Annual Report 67

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

(18)Accumulated Other Comprehensive (Loss) Income attributable to Federated Shareholders

The components of accumulated other comprehensive (loss) income, net of tax, attributable to Federated shareholders are as follows:

in thousands	Unrealized Loss on Interest Rate Swap			Unrealized Gain (Loss) on Securities Available for Sale			Foreign Currency Translation (Loss) Gain			Total
Balance at January 1, 2010	$	0		$	424		$	1,090		$	1,514
Change in fair value1	(11,828		)	3,642			0			(8,186		)
Reclassification adjustment2	4,201			(802		)	0			3,399
Loss on currency conversion3	0			0			(422		)	(422		)
Balance at December 31, 2010	(7,627		)	3,264			668			(3,695		)
Change in fair value1	(7,373		)	(1,449		)	0			(8,822		)
Reclassification adjustment2	5,366			(1,490		)	0			3,876
Gain on currency conversion3	0			0			29			29
Balance at December 31, 2011	(9,634		)	325			697			(8,612		)
Change in fair value1	(2,193		)	5,535			0			3,342
Reclassification adjustment2	4,756			(2,216		)	(44		)	2,496
Loss on currency conversion3	0			0			(163		)	(163		)
Balance at December 31, 2012	$	(7,071	)	$	3,644		$	490		$	(2,937	)

1 The tax benefit related to the change in fair value of the interest rate swap was $(1,060), $(4,390) and $(6,369) for 2012, 2011 and 2010, respectively. The tax expense (benefit) related to the change in fair value of securities available for sale was $3,474, $(1,337) and $2,640 for 2012, 2011 and 2010, respectively.

2 The tax expense related to the reclassification adjustments for the interest rate swap was $2,560, $2,889 and $2,262 for 2012, 2011 and 2010, respectively. The tax benefit related to the reclassification adjustments for securities available for sale was $(1,192), $(802) and $(431) for 2012, 2011 and 2010, respectively. The tax benefit related to the reclassification adjustments for foreign currency translation was $(24) for 2012.

3 The tax expense (benefit) related to the foreign currency translation gain/loss was $16, $(251) and $(227) for 2012, 2011 and 2010, respectively.

(19)Purchased Loans

As part of seeding a new Federated-sponsored fund, Federated began investing in purchased loans, consisting primarily of syndicated, commercial, U.S. dollar, floating-rate term loans during the second quarter 2010. The purchased loans were recorded at fair value using a third-party pricing service that determined fair value based on bid and ask prices (Level 2) and were included in Other current assets on the Consolidated Balance Sheets. During 2010, Federated transferred $46.2 million in purchased loans and $4.3 million in cash into a new Federated-sponsored fund in exchange for shares of the fund. This transfer of assets was recorded as a sale for accounting purposes given that the loans were legally isolated from Federated, the Federated-sponsored fund has the right to pledge or exchange the loans and Federated has not maintained effective control over the transferred loans. For the year ended December 31, 2010, Federated recorded $0.7 million in Gain on securities, net on the Consolidated Statements of Income as a result of the sale of these loans. As of December 31, 2012 and 2011, Federated did not hold any purchased loans but maintained an investment in this fund.

68 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

(20)Commitments and Contingencies

(a) Contractual

Federated is obligated to make certain future payments under various agreements to which it is a party, including operating leases (see Note (15)). The following table summarizes minimum noncancelable payments contractually due under Federated’s significant service contracts and employment arrangements:

	Payments due in
											After
in millions	2013		2014		2015		2016		2017		2017		Total
Purchase obligations1	$	20.0	$	7.4	$	1.1	$	0.6	$	0.4	$	0.2	$	29.7
Employment-related commitments2	16.9		7.7		0		0		0		0		24.6
Total	$	36.9	$	15.1	$	1.1	$	0.6	$	0.4	$	0.2	$	54.3

1 Federated is a party to various contracts pursuant to which it receives certain services including services for legal, marketing and information technology, access to various fund-related information systems and research databases, trade order transmission and recovery services as well as other services. These contracts contain certain minimum noncancelable payments, cancellation provisions and renewal terms. The contracts expire on various dates through the year 2019. Costs for such services are expensed as incurred.

2 Federated has certain domestic and international employment arrangements pursuant to which Federated is obligated to make minimum compensation payments. These contracts expire on various dates through the year 2014.

As part of the SunTrust Acquisition, Federated is required to make annual contingent purchase price payments in the fourth quarters of each of the five years following the acquisition date. The contingent purchase price payments are calculated as a percentage of revenue less distribution expenses directly attributed to certain eligible assets. The first two contingent purchase price payments of $5.0 million and $4.2 million were paid in the fourth quarters of 2011 and 2012, respectively. At December 31, 2012, management estimated remaining contingent payments could total $11 million over the three years that remain; however, the actual amount of the contingent payments will vary based on asset levels and related net revenues and is not limited by any maximum amount. A wide range of outcomes for actual payments is possible due to the extent of reasonably possible flow-rate volatility for the respective AUM. As of December 31, 2012, a liability of $8.2 million representing the estimated fair value of future consideration payments was recorded in Other current liabilities ($3.5 million) and Other long-term liabilities ($4.7 million) (see Note (6)(a) for a discussion regarding the valuation methodology). This liability is remeasured at each reporting date with changes in the fair value recognized in Intangible asset related expense on the Consolidated Statements of Income.

In 2008, Federated completed the acquisition of certain assets of David W. Tice & Associates LLC that relate to the management of the Prudent Bear Fund and the Prudent DollarBear Fund (Prudent Bear Acquisition). As part of the Prudent Bear Acquisition, Federated was required to make contingent purchase price payments based upon certain revenue growth targets over the four-year period following the acquisition date. The contingent purchase price payments were recorded as additional goodwill at the time the contingency is resolved. The first two contingent purchase price payments of $5.1 million and $44.7 million were paid in the first quarters of 2010 and 2011, respectively. The applicable growth targets were not met for the third or fourth anniversary years. As such, no amount was paid related to the third anniversary year and no amount was accrued for the fourth and final anniversary year ended in December 2012.

As part of the Clover Capital Acquisition, Federated is required to make contingent purchase price payments based upon growth in revenues over the five-year period following the acquisition date. The contingent purchase price payments, which could total as much as $56 million, will be recorded as additional goodwill at the time the contingency is resolved. The applicable growth targets were not met for the first two anniversary years and as such, no related payments were made. In the first quarter 2012, $5.9 million was paid with regard to the third anniversary year ended in December 2011. As of December 31, 2012, $3.4 million was accrued for the fourth anniversary year ended in December 2012 and was paid in January 2013.

As part of the 2005 acquisition of the cash management business of Alliance Capital Management L.P. (Alliance Acquisition), Federated was required to make contingent purchase price payments over a five-year period following the acquisition date. These payments were primarily calculated as a percentage of revenues less certain distribution expenses directly attributed to the assets acquired. Contingent purchase price payments totaled $95.7 million, including $35.7 million paid in 2010, the final year of the contingent-payment period. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

2012 Annual Report 69

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

The Rochdale Acquisition agreement provided for two forms of contingent purchase price payments payable over the five-year period following the acquisition date based on certain revenue earned by Federated from the Federated InterContinental Fund and/or related asset growth and performance. Contingent purchase price payments over the five-year period totaled $8.0 million, which included payments totaling $2.1 million in 2010, $1.1 million in 2011 and $2.8 million in 2012, the final year of payment. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

Pursuant to other acquisition agreements, Federated may be required to make additional purchase price payments based on a percentage of revenue less certain direct expenses attributable to eligible AUM. The payments could occur annually through 2017 and, based on current projections, are not expected to be material to the Consolidated Financial Statements.

In addition to the $16.9 million of employee-related commitments to be paid in 2013, Federated may be required to make certain incentive compensation-related payments in connection with various significant employment arrangements. The employment contracts expire on various dates through the year 2014 with payments possible through 2018. As of December 31, 2012, the maximum bonus payable over the remaining terms of the contracts approximates $43 million, none of which would be payable in 2013. In addition, certain employees have incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund (the Fund Bonus). Based on asset levels at December 31, 2012, $0.6 million would be paid in 2013 as a Fund Bonus payment. Management is unable to reasonably estimate a range of possible bonus payments for the Fund Bonus for subsequent years due to the wide range of possible growth-rate scenarios.

(b) Guarantees and Indemnifications

On an intercompany basis, various wholly owned subsidiaries of Federated guarantee certain financial obligations of Federated Investors, Inc., and Federated Investors, Inc. guarantees certain financial and performance-related obligations of various wholly owned subsidiaries. In addition, in the normal course of business, Federated has entered into contracts that provide a variety of indemnifications. Typically, obligations to indemnify third parties arise in the context of contracts entered into by Federated, under which Federated agrees to hold the other party harmless against losses arising out of the contract, provided the other party’s actions are not deemed to have breached an agreed upon standard of care. In each of these circumstances, payment by Federated is contingent on the other party making a claim for indemnity, subject to Federated’s right to challenge the other party’s claim. Further, Federated’s obligations under these agreements may be limited in terms of time and/or amount. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of Federated’s obligations and the unique facts and circumstances involved in each particular agreement. Management believes that if Federated were to incur a loss in any of these matters, such loss should not have a material effect on its business, financial position or results of operations.

(c) Legal Proceedings

Federated has claims asserted and threatened against it in the ordinary course of business. As of December 31, 2012, Federated does not believe that a material loss related to these claims is reasonably possible.

(21)Subsequent Events

On January 24, 2013, the board of directors declared a $0.24 per share dividend to shareholders of record as of February 8, 2013, which was paid on February 15, 2013.

70 Federated Investors, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(December 31, 2012, 2011 and 2010)

(22)Supplementary Quarterly Financial Data (Unaudited)

in thousands, except per share data, for the quarters ended	March 31,			June 30,			September 30,			December 31,
2012
Revenue	$	230,281		$	232,132		$	238,468		$	244,824
Operating income1	70,347			69,020			90,033			83,192
Net income including noncontrolling interest in subsidiaries1, 2	44,407			43,073			58,193			51,956
Amounts attributable to Federated Investors, Inc.
Net income1, 2	42,325			40,410			55,773			49,581
Earnings per share – Basic and Diluted1, 2, 3	0.41			0.39			0.54			0.44
Cash dividends per share3	0.24			0.24			0.24			1.75
Stock price per share4
High	23.89			23.23			22.31			23.48
Low	15.45			18.54			19.32			18.28
Impact of Minimum Yield Waivers
Revenue	(80,468		)	(70,254		)	(69,495		)	(70,748		)
Less: Reduction in Distribution expense	57,547			53,080			52,934			54,918
Operating income	(22,921		)	(17,174		)	(16,561		)	(15,830		)
Less: Reduction in Noncontrolling interest	618			(5		)	298			331
Pre-tax impact	(22,303		)	(17,179		)	(16,263		)	(15,499		)
2011
Revenue	$	238,882		$	225,777		$	214,048		$	216,406
Operating income	56,500			72,083			67,011			61,861
Net income including noncontrolling interest in subsidiaries	35,054			42,885			38,520			38,625
Amounts attributable to Federated Investors, Inc.
Net income	33,231			42,413			38,320			36,943
Earnings per share – Basic and Diluted	0.32			0.41			0.37			0.36
Cash dividends per share	0.24			0.24			0.24			0.24
Stock price per share4
High	28.57			27.11			24.54			22.39
Low	24.93			23.43			16.01			14.36
Impact of Minimum Yield Waivers
Revenue	(63,461		)	(79,355		)	(88,901		)	(88,953		)
Less: Reduction in Distribution expense	49,484			57,807			63,187			61,857
Operating income	(13,977		)	(21,548		)	(25,714		)	(27,096		)
Less: Reduction in Noncontrolling interest	839			2,172			2,483			978
Pre-tax impact	(13,138		)	(19,376		)	(23,231		)	(26,118		)

1 For the quarters ended September 30, 2012 and December 31, 2012, Federated recorded pretax insurance recoveries totaling $17.3 million and $3.0 million, respectively, for claims submitted over the past several years related to various legal proceedings. See Note (10) for additional information.

2 Federated recorded an impairment charge of $3.0 million related to an equity-method investment in the fourth quarter of 2012. See Note (6) for additional information.

3 For the quarter ended December 31, 2012, Federated paid $1.51 per share as a special cash dividend and a $0.24 per share regular dividend. All dividends are considered ordinary dividends for tax purposes. The special dividend negatively impacted fourth quarter 2012 diluted earnings per share by $0.04 per share.

4 Federated’s common stock is traded on the New York Stock Exchange under the symbol FII.

The approximate number of beneficial shareholders of Federated’s Class A and Class B common stock as of February 15, 2013, was 1 and 25,779, respectively.

2012 Annual Report 71

EX-21.01

EXHIBIT 21.01

SIGNIFICANT SUBSIDIARIES OF FEDERATED INVESTORS, INC.:

Edgewood Services, Inc., a New York corporation

Federated Administrative Services, a Delaware statutory trust

Federated Administrative Services, Inc., a Pennsylvania corporation

Federated Advisory Services Company, a Delaware statutory trust

Federated Asset Management GmbH, a German company

Federated Equity Management Company of Pennsylvania, Delaware statutory trust

Federated Funding 1997-1, Inc., a Delaware corporation

Federated Global Holdings LLC, a Delaware limited liability company

Federated Global Investment Management Corp., a Delaware corporation

Federated Holdings (UK) Ltd., a United Kingdom company

Federated International – Europe GmbH, a German company

Federated International Holdings B.V., a Netherlands company

Federated International Management Limited, an Ireland company

Federated Investment Counseling, a Delaware statutory trust

Federated Investment Management Company, a Delaware statutory trust

Federated Investors Australia PTY LTD, an Australian company

Federated Investors International Holdings Pte. Ltd., a Singapore holding company

Federated Investors Management Company, a Pennsylvania corporation

Federated Investors Trust Company, a Pennsylvania trust company

Federated Investors (UK) Ltd., a United Kingdom company

Federated MDTA LLC, a Delaware limited liability company

Federated MDTA Trust, a Massachusetts business trust

Federated Prime Rate Capital Management LLP, a United Kingdom limited liability partnership

Federated Private Asset Management, Inc., a Delaware corporation

Federated Securities Corp., a Pennsylvania corporation

Federated Services Company, a Pennsylvania corporation

Federated Shareholder Services Company, a Delaware statutory trust

FII Holdings, Inc., a Delaware corporation

HBSS Acquisition Company, a Delaware corporation

Retirement Plan Service Company of America, a Delaware statutory trust, doing business as “Federated Retirement Plan Services Company” and “Federated Retirement Solutions”

Passport Research Ltd., a Pennsylvania limited partnership

Southpointe Distribution Services Inc., a Pennsylvania corporation

EX-23.01

EXHIBIT 23.01

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-173859) pertaining to the Federated Investors, Inc. Stock Incentive Plan and the Registration Statement (Form S-8 No. 333-56429) pertaining to the Federated Investors, Inc. Employee Stock Purchase Plan of our reports dated February 22, 2013, with respect to the consolidated financial statements of Federated Investors, Inc., and the effectiveness of internal control over financial reporting of Federated Investors, Inc., incorporated by reference in this Annual Report (Form 10-K) for the year ended December 31, 2012.

/s/ Ernst & Young LLP

Pittsburgh, Pennsylvania

February 22, 2013

EX-31.01

EXHIBIT 31.01

CERTIFICATIONS

I, J. Christopher Donahue, certify that:

1. I have reviewed this annual report on Form 10-K of Federated Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 22, 2013	By:	/s/ J. Christopher Donahue
		J. Christopher Donahue
		President and
		Chief Executive Officer

EX-31.02

EXHIBIT 31.02

CERTIFICATIONS

I, Thomas R. Donahue, certify that:

1. I have reviewed this annual report on Form 10-K of Federated Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 22, 2013	By:	/s/ Thomas R. Donahue
		Thomas R. Donahue
		Chief Financial Officer

EX-32.01

EXHIBIT 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Federated Investors, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 22, 2013	By:	/s/ J. Christopher Donahue
		J. Christopher Donahue
		President and
		Chief Executive Officer
February 22, 2013	By:	/s/ Thomas R. Donahue
		Thomas R. Donahue
		Chief Financial Officer

XML

Debt and Interest Rate Swap (Tables)

12 Months Ended

Dec. 31, 2012

Debt And Interest Rate Swap [Abstract]

Debt

Debt at December 31 consisted of the following:

dollars in thousands	Weighted-Average Interest Rate1	2012		2011
Term Loan	3.646%	$	318,750	$	361,250
Less: Short-term debt		42,500		42,500
Long-term debt		$	276,250	$	318,750

1 See additional information below regarding the interest rate fixed at 3.646% in connection with the Swap.

XML

Consolidation Assets and Liabilities of Unconsolidated VIEs and Federated's Maximum Risk of Loss (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Variable Interest Entity [Line Items]
Investments in money market products included in cash and cash equivalents	$ 57.2		$ 44.0
Investments in money market products included in investments	148.1		177.5
Investment Companies [Member]
Variable Interest Entity [Line Items]
Unconsolidated VIE assets	295,414.3	[1]	290,517.7	[1]
Unconsolidated VIE liabilities	0	[1]	0	[1]
Total remaining carrying value of investment and maximum risk of loss	205.3	[1]	221.5	[1]
Collateralized Debt Obligations [Member]
Variable Interest Entity [Line Items]
Unconsolidated VIE assets	0	[2]	2.1	[2]
Unconsolidated VIE liabilities	0	[2]	12.0	[2]
Total remaining carrying value of investment and maximum risk of loss	0	[2]	0	[2]
Equity Investment [Member]
Variable Interest Entity [Line Items]
Unconsolidated VIE assets	2.8		4.5
Unconsolidated VIE liabilities	0.3		0.7
Total remaining carrying value of investment and maximum risk of loss	$ 3.8		$ 7.1

[1] The unconsolidated VIE assets for the investment companies represent total net AUM for the related investment companies. Of Federated’s $205.3 million invested in these entities at December 31, 2012, $57.2 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $148.1 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets. Of Federated’s $221.5 million invested in these entities at December 31, 2011, $44.0 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $177.5 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets.

[2] The Collateralized Debt Obligation closed in July 2012. There was no resulting impact to the Consolidated Financial Statements.

XML

Prior Year Business Combinations and Acquisitions Narrative (Details) (USD $)	6 Months Ended			3 Months Ended			6 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Sep. 20, 2010	Sep. 30, 2010 SunTrust Acquisition [Member]	Dec. 31, 2012 SunTrust Acquisition [Member]	Mar. 31, 2011 SunTrust Acquisition [Member]	Dec. 31, 2010 SunTrust Acquisition [Member] Money Market Funds [Member]
Business acquisition assets under management acquired							$ 14,100,000,000
Total upfront payments	6,600,000
Business Acquisition Contingent Consideration Payable Period				5 years
Business Acquisition, Contingent Consideration, at Fair Value			20,100,000
Estimated remaining contingent purchase price payments					11,000,000
Remaining Business Acquisition Contingent Consideration Payable Period					3 years
Identifiable intangible assets, indefinite life						24,100,000
Fair value of future consideration payments liability					8,200,000
Fair value of acquisition-related future consideration liabilities, current					3,500,000
Fair value of acquisition-related future consideration liabilities, noncurrent		$ 8,300,000			$ 4,700,000

XML

Share-Based Compensation Plans Narrative (Details) (USD $)	3 Months Ended			12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010
Number of Shares Authorized under Stock Incentive Plan				27,100,000
Number of Shares Available for Grant under Stock Incentive Plan				6,000,000
Share-based compensation expense				20,135,000		19,006,000	19,124,000
Tax benefit from share-based compensation				7,600,000		7,100,000	7,200,000
Nonvested Awards, Total Compensation Cost Not yet Recognized				64,000,000
Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition				6 years
Restricted Stock Granted in Period				1,015,273	[1]	1,011,876	897,379
Restricted Stock Granted in Period, Weighted Average Grant Date Fair Value				18.06	[1]	19.97	22.97
Restricted Stock, Vested in Period, Total Fair Value				14,100,000		15,400,000	12,200,000
Number of Shares of Common Stock Able To Be Purchased For Each Exercised Stock Option				1
Stock Options, Exercises in Period				0		603,418	486,150
Stock Options, Exercises in Period, Total Intrinsic Value						1,200,000	2,300,000
Options, Granted In Period				0		0	0
Non-management director stock award				(722,825)
Director [Member]
Stock Options Exercise Period, Years				10 years
Non-management director stock award	4,500	4,500	6,000	0		0	0
Minimum [Member]
Award Requisite Service Period				3 years
Lapse of restrictions on vested portion of restricted stock award				5 years
Maximum [Member]
Award Requisite Service Period				10 years
Lapse of restrictions on vested portion of restricted stock award				10 years

[1] During 2012, Federated awarded 480,773 shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a three-year period. Also during 2012, Federated awarded 534,500 shares of restricted Federated Class B common stock to certain key employees. The restricted stock awards generally vest over ten-year periods with restrictions on the vested portions of the awards lapsing on approximately the awards’ fifth- and tenth-year anniversaries.

XML

Fair Value Measurements Narrative (Details) (USD $)	3 Months Ended	12 Months Ended		12 Months Ended												60 Months Ended			12 Months Ended			3 Months Ended	120 Months Ended	132 Months Ended
	Dec. 31, 2012	Dec. 31, 2010	Dec. 31, 2011	Dec. 31, 2010 Minimum [Member]	Dec. 31, 2010 Maximum [Member]	Dec. 31, 2012 SunTrust Acquisition [Member]	Dec. 31, 2011 Money Market Funds [Member]	Dec. 31, 2012 Carrying (Reported) Amount, Fair Value Disclosure [Member]	Dec. 31, 2012 Customer Relationships [Member]	Dec. 31, 2011 Customer Relationships [Member]	Dec. 31, 2010 Customer Relationships [Member]	Dec. 31, 2012 Noncompete Agreements [Member]	Dec. 31, 2011 Noncompete Agreements [Member]	Dec. 31, 2010 Noncompete Agreements [Member]	Dec. 31, 2010 Property, Plant and Equipment, Other Types [Member]	Dec. 31, 2017 Acquisition-related Future Consideration Liabilities [Member] Minimum [Member]	Dec. 31, 2017 Acquisition-related Future Consideration Liabilities [Member] Maximum [Member]	Dec. 31, 2017 Acquisition-related Future Consideration Liabilities [Member] Weighted Average [Member]	Dec. 31, 2010 Intangible asset related [Member]	Dec. 31, 2012 Consolidated feeder fund investment in offshore master investment fund [Member]	Dec. 31, 2011 Consolidated feeder fund investment in offshore master investment fund [Member]	Dec. 31, 2012 Equity Method Investee [Member]	Dec. 31, 2022 10-year compounded annual growth rate [Member] Equity Method Investee [Member]	Dec. 31, 2033 Terminal Growth Rate [Member] Equity Method Investee [Member]	Dec. 31, 2012 Liabilities Current [Member]	Dec. 31, 2012 Liabilities Non-current [Member]
Cash and cash equivalents invested in money market funds	$ 60,200,000		$ 45,800,000
Investments transferred from Level 1 to Level 2	2,000,000
Investments transferred from Level 2 to Level 1			3,500,000
Trading Securities, Current	55,020,000		113,505,000																	12,100,000	17,900,000
Trading Securities, Debt, Current							77,100,000
Interest Rate Cash Flow Hedge Liability at Fair Value	11,200,000																								5,900,000	5,300,000
Fair value of acquisition-related future consideration liabilities, current						3,500,000
Fair value of acquisition-related future consideration liabilities, noncurrent	8,300,000					4,700,000
Fair Value Inputs Estimated Rate of Change for Underlying Assets Under Management																(13.00%)	28.00%	4.00%					15.00%	3.00%
Fair Value Inputs Estimate of Impact of Fee Waiver																0.01%	0.02%	0.01%
Fair Value Inputs, Discount Rate																15.00%	18.00%	16.00%				17.00%
Ownership interest in equity-method investment	12.00%
Other Asset Impairment Charges	3,000,000
Equity Method Investments	3,800,000
Probability-weighted scenarios assumed growth rates in assets				(100.00%)	9.00%
Impairment of Intangible Assets, Finite-lived		10,200,000																	8,200,000
Finite-lived intangible assets, net value after impairment	8,682,000		12,097,000						7,898,000	10,534,000	2,000,000	784,000	1,563,000	800,000
Fixed assets value after impairment	38,912,000		38,228,000												700,000
Fair value of asset								$ 2,100,000

XML

Income Taxes Effective Income Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Expected statutory income tax rate	35.00%	35.00%	35.00%
Increase/(decrease)
State and local income taxes, net of Federal benefit	2.10%	2.10%	2.50%
Other	0.00%	0.60%	1.00%
Effective tax rate (excluding noncontrolling interests)	37.10%	37.70%	38.50%
Income attributable to noncontrolling interests	(1.20%)	(0.60%)	(1.30%)
Effective tax rate per Consolidated Statements of Income	35.90%	37.10%	37.20%

XML

Supplementary Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

in thousands, except per share data, for the quarters ended	March 31,			June 30,			September 30,			December 31,
2012
Revenue	$	230,281		$	232,132		$	238,468		$	244,824
Operating income1	70,347			69,020			90,033			83,192
Net income including noncontrolling interest in subsidiaries1, 2	44,407			43,073			58,193			51,956
Amounts attributable to Federated Investors, Inc.
Net income1, 2	42,325			40,410			55,773			49,581
Earnings per share – Basic and Diluted1, 2, 3	0.41			0.39			0.54			0.44
Cash dividends per share3	0.24			0.24			0.24			1.75
Stock price per share4
High	23.89			23.23			22.31			23.48
Low	15.45			18.54			19.32			18.28
Impact of Minimum Yield Waivers
Revenue	(80,468		)	(70,254		)	(69,495		)	(70,748		)
Less: Reduction in Distribution expense	57,547			53,080			52,934			54,918
Operating income	(22,921		)	(17,174		)	(16,561		)	(15,830		)
Less: Reduction in Noncontrolling interest	618			(5		)	298			331
Pre-tax impact	(22,303		)	(17,179		)	(16,263		)	(15,499		)
2011
Revenue	$	238,882		$	225,777		$	214,048		$	216,406
Operating income	56,500			72,083			67,011			61,861
Net income including noncontrolling interest in subsidiaries	35,054			42,885			38,520			38,625
Amounts attributable to Federated Investors, Inc.
Net income	33,231			42,413			38,320			36,943
Earnings per share – Basic and Diluted	0.32			0.41			0.37			0.36
Cash dividends per share	0.24			0.24			0.24			0.24
Stock price per share4
High	28.57			27.11			24.54			22.39
Low	24.93			23.43			16.01			14.36
Impact of Minimum Yield Waivers
Revenue	(63,461		)	(79,355		)	(88,901		)	(88,953		)
Less: Reduction in Distribution expense	49,484			57,807			63,187			61,857
Operating income	(13,977		)	(21,548		)	(25,714		)	(27,096		)
Less: Reduction in Noncontrolling interest	839			2,172			2,483			978
Pre-tax impact	(13,138		)	(19,376		)	(23,231		)	(26,118		)

1 For the quarters ended September 30, 2012 and December 31, 2012, Federated recorded pretax insurance recoveries totaling $17.3 million and $3.0 million, respectively, for claims submitted over the past several years related to various legal proceedings. See Note (10) for additional information.

2 Federated recorded an impairment charge of $3.0 million related to an equity-method investment in the fourth quarter of 2012. See Note (6) for additional information.

3 For the quarter ended December 31, 2012, Federated paid $1.51 per share as a special cash dividend and a $0.24 per share regular dividend. All dividends are considered ordinary dividends for tax purposes. The special dividend negatively impacted fourth quarter 2012 diluted earnings per share by $0.04 per share.

4 Federated’s common stock is traded on the New York Stock Exchange under the symbol FII.

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Concentration Risk Concentration Risk (Tables)

12 Months Ended

Dec. 31, 2012

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

The following table summarizes the percentage of total revenue earned from Federated's asset classes over the last three years:

	2012		2011		2010
Money market assets	47	%	46	%	50	%
Equity assets	31	%	33	%	31	%
Fixed-income assets	21	%	20	%	18	%

Voluntary Fee Waivers [Table Text Block]

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the years ended December 31:

in millions	2012			2011			2010
Revenue	$	(291.0	)	$	(320.7	)	$	(241.6	)
Less: Reduction in Distribution expense	218.5			232.3			186.6
Operating income	(72.5		)	(88.4		)	(55.0		)
Less: Reduction in Noncontrolling interest	1.3			6.5			1.0
Pre-tax impact	$	(71.2	)	$	(81.9	)	$	(54.0	)

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Deferred tax assets and liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred Tax Assets
Tax net operating losses	$ 16,781	$ 16,481
Other compensation related	6,226	5,843
Unrealized and realized capital losses, net	4,839	7,835
Share-based compensation	3,622	3,405
Deferred income	578	3,500
Write-down of Collateralized Debt Obligation and other investments	169	3,331
Other	1,944	2,560
Total deferred tax assets	34,159	42,955
Valuation allowance	(20,069)	(21,030)
Total deferred tax asset, net of valuation allowance	14,090	21,925
Deferred Tax Liabilities
Intangible assets	92,823	73,269
Property and equipment	5,323	5,902
State taxes	5,156	3,546
Deferred sales commissions	4,927	3,788
Costs of internal-use software	2,811	2,630
Other	1,595	1,791
Total gross deferred tax liability	112,635	90,926
Net deferred tax liability	$ 98,545	$ 69,001

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Common Stock Narrative (Details) (USD $)	3 Months Ended													12 Months Ended					3 Months Ended		12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Mar. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Class B [Member]	Dec. 31, 2008 Class B [Member]	Dec. 31, 2012 Special Cash Dividend [Member]	Mar. 31, 2010 Special Cash Dividend [Member]	Dec. 31, 2012 Treasury Stock [Member]	Dec. 31, 2011 Treasury Stock [Member]	Dec. 31, 2010 Treasury Stock [Member]
Class of Stock [Line Items]
Dividends paid														$ 256,750,000	$ 99,960,000	$ 228,651,000
Payments Of Special Dividends	156,900,000												129,800,000
Cash dividends per share	$ 1.75	[1]	$ 0.24	[1]	$ 0.24	[1]	$ 0.24	[1]	$ 0.24	$ 0.24	$ 0.24	$ 0.24		$ 2.47	$ 0.96	$ 2.22			$ 1.51	$ 1.26
Number of shares authorized under share repurchase program																		5,000,000
Repurchased shares, shares																					(321,687)	(1,540,795)	(659,675)
Amount paid for repurchase of common stock														$ 6,334,000	$ 28,057,000	$ 14,249,000
Remaining number of shares authorized to be repurchased																	1,900,000

[1] For the quarter ended December 31, 2012, Federated paid $1.51 per share as a special cash dividend and a $0.24 per share regular dividend. All dividends are considered ordinary dividends for tax purposes. The special dividend negatively impacted fourth quarter 2012 diluted earnings per share by $0.04 per share.

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Fair Value Measurements Reconciliation of Fair Value Measurements of Liability for Future Consideration Payments (Details) (Acquisition-related Future Consideration Liabilities [Member], Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Acquisition-related Future Consideration Liabilities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 13,404		$ 20,058		$ 0
New acquisition adjustment	3,361	[1]	(2,600)	[1]	20,058	[1]
Changes in fair value	(793)	[2]	900	[2]	0	[2]
Contingent consideration payments	(4,213)		(4,954)		0
Ending balance	$ 11,759		$ 13,404		$ 20,058

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

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Income Taxes Narrative (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deferred Federal	$ 23,143,000	$ 15,996,000	$ 20,997,000
Tax net operating losses	16,781,000	16,481,000
Capital Loss Carry-forward period	5 years
Unrecognized Tax Benefits	0	0
State Operating Loss, Net [Member]
Valuation Allowance, Amount	14,800,000	14,300,000
Deferred tax asset, valuation allowance	99.00%	99.00%
Foreign Operating Loss, Net [Member]
Valuation Allowance, Amount	1,800,000	1,700,000
Deferred tax asset, valuation allowance	95.00%	94.00%
Capital Losses [Member]
Valuation Allowance, Amount	3,500,000	5,000,000
Intangible Assets [Member]
Deferred Federal	(19,700,000)	(18,700,000)	(11,800,000)
Accrued Incentive Compensation [Member]
Deferred Federal		5,100,000
Insurance Proceeds [Member]
Deferred Federal			(7,300,000)
State and Foreign Tax Jurisdictions [Member]
Tax net operating losses	$ 16,800,000	$ 16,300,000

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Subsequent Events (Details) (USD $)	Jan. 24, 2013
Subsequent Events [Abstract]
Dividend per share paid to shareholders	$ 0.24

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Earnings Per Share Attributable to Federated Investors, Inc. Shareholders Computation of Basic and Diluted Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Net income attributable to Federated Investors, Inc.	$ 49,581	[1],[2]	$ 55,773	[1],[2]	$ 40,410	[1],[2]	$ 42,325	[1],[2]	$ 36,943	$ 38,320	$ 42,413	$ 33,231	$ 188,088		$ 150,906		$ 179,114
Basic weighted-average common shares outstanding													100,313		100,609		99,925
Dilutive potential shares from stock options													0		23		68
Diluted weighted-average common shares outstanding													100,313		100,632		99,993
Earnings Per Share, Basic and Diluted	$ 0.44	[1],[2],[3]	$ 0.54	[1],[2],[3]	$ 0.39	[1],[2],[3]	$ 0.41	[1],[2],[3]	$ 0.36	$ 0.37	$ 0.41	$ 0.32	$ 1.79	[4]	$ 1.45	[4]	$ 1.73	[4]
Basic [Member]
Net income attributable to Federated Investors, Inc.													188,088		150,906		179,114
Less: Total income available to participating unvested restricted shareholders													(8,400)	[5]	(4,922)	[5]	(6,443)	[5]
Total net income attributable to Federated Common Stock													179,688	[4]	145,984	[4]	172,671	[4]
Diluted [Member]
Net income attributable to Federated Investors, Inc.													188,088		150,906		179,114
Less: Total income available to participating unvested restricted shareholders													(8,400)	[5]	(4,921)	[5]	(6,443)	[5]
Total net income attributable to Federated Common Stock													$ 179,688	[4]	$ 145,985	[4]	$ 172,671	[4]

[1] Federated recorded an impairment charge of $3.0 million related to an equity-method investment in the fourth quarter of 2012. See Note (6) for additional information.

[2] For the quarters ended September 30, 2012 and December 31, 2012, Federated recorded pretax insurance recoveries totaling $17.3 million and $3.0 million, respectively, for claims submitted over the past several years related to various legal proceedings. See Note (10) for additional information.

[3] For the quarter ended December 31, 2012, Federated paid $1.51 per share as a special cash dividend and a $0.24 per share regular dividend. All dividends are considered ordinary dividends for tax purposes. The special dividend negatively impacted fourth quarter 2012 diluted earnings per share by $0.04 per share.

[4] Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

[5] Income available to participating restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings, if any.

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Supplementary Quarterly Financial Data Narrative (Details)	Feb. 15, 2013
Common Class A [Member]
Class of Stock [Line Items]
Common Stock Number Of Beneficial Shareholders	1
Class B [Member]
Class of Stock [Line Items]
Common Stock Number Of Beneficial Shareholders	25,779

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Income Taxes Components of Income Tax Expense (Benefit) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current:
Federal	$ 78,422	$ 67,662	$ 79,273
State	7,430	6,426	8,504
Foreign	6	(56)	(33)
Total Current	85,858	74,032	87,744
Deferred:
Federal	23,143	15,996	20,997
State	1,878	1,291	3,210
Foreign	4	(31)	6
Total	$ 110,883	$ 91,288	$ 111,957

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Share-Based Compensation Plans Nonvested Restricted Stock Units (Details) (USD $)	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010
Restricted Stock Awards, Nonvested, Number of Shares [Roll Forward]
Nonvested, Beginning Balance	3,770,021
Granted in Period	1,015,273	[1]	1,011,876	897,379
Vested in Period	(722,825)
Forfeited in Period	(21,687)
Nonvested, Ending Balance	4,040,782		3,770,021
Restricted Stock Awards, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Nonvested, Weighted Average Grant Date Fair Value, Beginning Balance	$ 22.74
Granted in Period, Weighted Average Grant Date Fair Value	$ 18.06	[1]	$ 19.97	$ 22.97
Vested in Period, Weighted Average Grant Date Fair Value	$ 24.53
Forfeited in Period, Weighted Average Grant Date Fair Value	$ 23.71
Nonvested, Weighted Average Grant Date Fair Value, Ending Balance	$ 21.24		$ 22.74
Class B Common Stock Bonus [Member]
Restricted Stock Awards, Nonvested, Number of Shares [Roll Forward]
Granted in Period	480,773
Restricted Stock Awards, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Vesting period, years	3 years
Class B Common Stock Key Employees [Member]
Restricted Stock Awards, Nonvested, Number of Shares [Roll Forward]
Granted in Period	534,500
Restricted Stock Awards, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Vesting period, years	10 years
Minimum [Member]
Restricted Stock Awards, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Vesting period, years	3 years
Lapse of restrictions on vested portion of restricted stock award	5 years
Maximum [Member]
Restricted Stock Awards, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Vesting period, years	10 years
Lapse of restrictions on vested portion of restricted stock award	10 years

[1] During 2012, Federated awarded 480,773 shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a three-year period. Also during 2012, Federated awarded 534,500 shares of restricted Federated Class B common stock to certain key employees. The restricted stock awards generally vest over ten-year periods with restrictions on the vested portions of the awards lapsing on approximately the awards’ fifth- and tenth-year anniversaries.

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Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated Investors, Inc. for the years ended December 31:

in thousands, except per share data	2012			2011			2010
Numerator – Basic
Net income attributable to Federated Investors, Inc.	$	188,088		$	150,906		$	179,114
Less: Total income available to participating unvested restricted shareholders1	(8,400		)	(4,922		)	(6,443		)
Total net income attributable to Federated Common Stock2	$	179,688		$	145,984		$	172,671
Numerator – Diluted
Net income attributable to Federated Investors, Inc.	$	188,088		$	150,906		$	179,114
Less: Total income available to participating unvested restricted shareholders1	(8,400		)	(4,921		)	(6,443		)
Total net income attributable to Federated Common Stock2	$	179,688		$	145,985		$	172,671
Denominator
Basic weighted-average common shares outstanding	100,313			100,609			99,925
Dilutive potential shares from stock options	0			23			68
Diluted weighted-average common shares outstanding	100,313			100,632			99,993
Earnings per share
Net income attributable to Federated Common Stock - Basic and Diluted2	$	1.79		$	1.45		$	1.73

1 Income available to participating restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings, if any.

2 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

For the years ended December 31, 2012, 2011 and 2010, 0.2 million, 0.7 million and 3.0 million stock option awards, respectively, were not included in the computation of diluted earnings per share for each year because the exercise price was greater than the average market price of Federated Class B common stock for each respective year. As of December 31, 2012, 0.1 million stock option awards remain outstanding. In the event the awards become dilutive, these shares would be included in the calculation of diluted earnings per share and would result in a proportional amount of dilution.

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Concentration Risk (Details)	12 Months Ended
	Dec. 31, 2012
Revenue Concentration By Customer [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	10.00%
Federated Prime Obligations Fund [Member] | Revenue Concentration By Investment Fund [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	11.00%
Federated Kaufmann Fund [Member] | Revenue Concentration By Investment Fund [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	10.00%

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Income tax expense (benefit), net consisted of the following components for the years ended December 31:

in thousands	2012		2011			2010
Current:
Federal	$	78,422	$	67,662		$	79,273
State	7,430		6,426			8,504
Foreign	6		(56		)	(33		)
	85,858		74,032			87,744
Deferred:
Federal	23,143		15,996			20,997
State	1,878		1,291			3,210
Foreign	4		(31		)	6
Total	$	110,883	$	91,288		$	111,957

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The reconciliation between the statutory income tax rate and the effective tax rate consisted of the following for the years ended December 31:

	2012		2011		2010
Expected statutory income tax rate	35.0	%	35.0	%	35.0	%
Increase/(decrease):
State and local income taxes, net of Federal benefit	2.1		2.1		2.5
Other	0		0.6		1.0
Effective tax rate (excluding noncontrolling interests)	37.1		37.7		38.5
Income attributable to noncontrolling interests	(1.2	)	(0.6	)	(1.3	)
Effective tax rate per Consolidated Statements of Income	35.9	%	37.1	%	37.2	%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities consisted of the following at December 31:

in thousands	2012			2011
Deferred Tax Assets
Tax net operating losses	$	16,781		$	16,481
Other compensation related	6,226			5,843
Unrealized and realized capital losses, net	4,839			7,835
Share-based compensation	3,622			3,405
Deferred income	578			3,500
Write-down of Collateralized Debt Obligation and other investments	169			3,331
Other	1,944			2,560
Total deferred tax assets	34,159			42,955
Valuation allowance	(20,069		)	(21,030		)
Total deferred tax asset, net of valuation allowance	$	14,090		$	21,925
Deferred Tax Liabilities
Intangible assets	$	92,823		$	73,269
Property and equipment	5,323			5,902
State taxes	5,156			3,546
Deferred sales commissions	4,927			3,788
Costs of internal-use software	2,811			2,630
Other	1,595			1,791
Total gross deferred tax liability	$	112,635		$	90,926
Net deferred tax liability	$	98,545		$	69,001

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Leases Future Minimum Rental Payments (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Leases [Abstract]
2013	$ 12.7
2014	11.9
2015	10.0
2016	9.3
2017	8.9
2018 and thereafter	28.5
Total minimum lease payments	$ 81.3

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Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

Federated’s identifiable intangible assets and goodwill consisted of the following at December 31:

	2012							2011
in thousands	Cost		Accumulated Amortization			Carrying Value		Cost		Accumulated Amortization			Carrying Value
Finite-lived intangible assets:
Customer relationships	$	45,812	$	(37,914	)	$	7,898	$	56,492	$	(45,958	)	$	10,534
Noncompete agreements	7,094		(6,310		)	784		12,142		(10,579		)	1,563
Total finite-lived intangible assets	52,906		(44,224		)	8,682		68,634		(56,537		)	12,097
Indefinite-lived intangible assets:
Renewable investment advisory rights	68,455		N/A			68,455		64,600		N/A			64,600
Trade names	1,900		N/A			1,900		1,900		N/A			1,900
Total indefinite-lived intangible assets	70,355		N/A			70,355		66,500		N/A			66,500
Goodwill	648,820		N/A			648,820		642,329		N/A			642,329
Total identifiable intangible assets and goodwill	$	772,081	$	(44,224	)	$	727,857	$	777,463	$	(56,537	)	$	720,926

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Following is a schedule of expected aggregate annual amortization expense for intangible assets in each of the five succeeding years assuming no new acquisitions or impairments:

in millions
2013	$	2.6
2014	$	2.0
2015	$	1.4
2016	$	1.0
2017	$	0.6

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Concentration Risk Voluntary Fee Waivers (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Concentration Risk [Line Items]
Revenue	$ (70,748)	$ (69,495)	$ (70,254)	$ (80,468)	$ (88,953)	$ (88,901)	$ (79,355)	$ (63,461)	$ (291,000)	$ (320,700)	$ (241,600)
Less: Reduction in Distribution expense	54,918	52,934	53,080	57,547	61,857	63,187	57,807	49,484	218,500	232,300	186,600
Operating income	(15,830)	(16,561)	(17,174)	(22,921)	(27,096)	(25,714)	(21,548)	(13,977)	(72,500)	(88,400)	(55,000)
Less: Reduction in Noncontrolling interest	331	298	(5)	618	978	2,483	2,172	839	1,300	6,500	1,000
Pre-tax impact	$ (15,499)	$ (16,263)	$ (17,179)	$ (22,303)	$ (26,118)	$ (23,231)	$ (19,376)	$ (13,138)	$ (71,200)	$ (81,900)	$ (54,000)

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Debt and Interest Rate Swap Narrative (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2012		Dec. 31, 2011	Jun. 10, 2011
Borrowings Under Credit Agreement		$ 318,750,000		$ 361,250,000
Line of Credit Facility, Maximum Borrowing Capacity					200,000,000
Final payment due upon expiration	28,300,000
Term Loan, Interest Rates		3.646%	[1]
Interest Rate Cash Flow Hedge Liability at Fair Value		11,200,000
Amount of swap liability to be reclassified during next twelve months		5,900,000
Amount of swap liability reclassified during the period		7,300,000		8,300,000
Line of Credit Facility, Current Borrowing Capacity		200,000,000
Line Of Credit Facility Facility Fee Basis Points		15
Revolving Credit Facility Spread Basis Points		110
Borrowings Under Credit Agreement At Date Of Amendment [Member]
Borrowings Under Credit Agreement					382,500,000
Term Loan Quarterly Payment First Three Years [Member]
Required principal payments per quarter for the term loan	10,600,000
Term Loan Quarterly Payment Years Four And Five [Member]
Required principal payments per quarter for the term loan	28,300,000
Liabilities Current [Member]
Interest Rate Cash Flow Hedge Liability at Fair Value		5,900,000
Liabilities Non-current [Member]
Interest Rate Cash Flow Hedge Liability at Fair Value		$ 5,300,000

[1] See additional information below regarding the interest rate fixed at 3.646% in connection with the Swap.

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Intangible Assets and Goodwill Narrative (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Period Increase (Decrease)	$ (15,700,000)
Finite-Lived Intangible Assets, Amortization Expense	3,400,000	7,000,000	14,300,000
Goodwill	$ 648,820,000	$ 642,329,000

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Summary of Significant Accounting Policies Narrative (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Internal Use Software Estimated Useful Lives	4 years
Deferred Sales Commission Asset B-Shares Estimated Period Of Benefit	8 years
Amortization of deferred sales commissions	$ 7,465,000	$ 7,378,000	$ 12,197,000
Total Waived Fees	709,300,000	724,900,000	653,100,000
Change In Voluntary Waiver Of Fees To Maintain Positive Or Zero Net Yields	(29,700,000)
Change In Fee Waivers Due to Managed Assets	16,200,000
Advertising Expense	$ 2,700,000	$ 2,600,000	$ 200,000
Minimum [Member]
Property and equipment, Useful Life	1 year
Finite-Lived Intangible Assets, Useful Life	5 years
Maximum [Member]
Property and equipment, Useful Life	12 years
Finite-Lived Intangible Assets, Useful Life	11 years

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Significant Accounting Policies

Summary of Significant Accounting Policies

(a) Nature of Operations

Federated Investors, Inc. and its subsidiaries (collectively, Federated) provide investment advisory, administrative, distribution and other services primarily to Federated mutual funds and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets. For presentation purposes in the Consolidated Financial Statements, the Federated-sponsored mutual funds are considered to be affiliates of Federated.

The majority of Federated’s revenue is derived from investment advisory services provided to Federated mutual funds and Separate Accounts through various subsidiaries pursuant to investment advisory contracts. These subsidiaries are registered as investment advisers under the Investment Advisers Act of 1940 or operate in similar capacities under applicable jurisdictional law.

Federated's U.S.-domiciled mutual funds are distributed by a wholly owned subsidiary registered as a broker/dealer under the Securities Exchange Act of 1934 and under applicable state laws. Federated's non-U.S.-domiciled products are distributed by wholly owned subsidiaries and a third-party distribution firm which are registered under applicable jurisdictional law. Federated’s investment products are primarily distributed within the wealth management and trust, broker/dealer and global institutional markets.

(b) Basis of Presentation

The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements.

(c) Reclassification of Prior Period Financial Statements

Certain items previously reported have been reclassified to conform with the current year’s presentation.

(d) Principles of Consolidation

The Consolidated Financial Statements include the accounts of Federated Investors, Inc. and entities or sponsored products in which Federated holds a controlling financial interest. A controlling financial interest is determined by the extent of Federated’s (1) decision-making ability through voting interests, (2) decision-making ability and rights/obligations to benefits/losses through variable interest or (3) participation in the economic risks and rewards of the entity through variable interests. To the extent Federated’s controlling financial interest in a consolidated subsidiary represents less than 100% of the subsidiary’s equity, Federated recognizes noncontrolling interests in subsidiaries. In the case of consolidated sponsored products (see Note (5)(b)), the noncontrolling interests represent equity which is redeemable or convertible for cash or other assets at the option of the equity holder. As such, these noncontrolling interests are deemed to represent temporary equity and are classified as redeemable noncontrolling interests in subsidiaries in the mezzanine section of the Consolidated Balance Sheets. All other noncontrolling interests in subsidiaries are classified as permanent equity. All significant intercompany accounts and transactions have been eliminated.

Beginning on January 1, 2010, Federated adopted the provisions of the Financial Accounting Standards Board’s (FASB) new consolidation model for variable interest entities (VIEs). As a result, Federated applies two different approaches to consider VIEs for possible consolidation. For non-investment fund entities, Federated considers a qualitative model for identifying whether its interest in a VIE is a controlling financial interest. The qualitative model considers whether Federated has: (1) the ability to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or to provide rights to receive benefits from the VIE that could potentially be significant to the VIE. Federated reevaluates the need for consolidation under this qualitative approach on an ongoing basis.

For Federated’s interests in certain investment funds that meet the definition of VIEs, Federated evaluates the extent of Federated’s participation in the economic risks and rewards of the entity based on a quantitative model to determine whether consolidation is necessary. In cases where the results of the quantitative model indicate that Federated’s interest in such an entity absorbs the majority of the variability in the entity’s net assets, Federated is deemed to be the primary beneficiary and thus consolidates the entity.

The equity method of accounting is used to account for an investment in an entity in which Federated’s noncontrolling equity investment is deemed to give it the ability to exercise significant influence over the operating and financial policies of the investee. This equity-method investment is included in Other long-term assets on the Consolidated Balance Sheets. The proportionate share of income or loss is included in Nonoperating Income (Expenses) – Other, net in the Consolidated Statements of Income. The investment is subject to review for other-than-temporary impairments as indicators arise. If the carrying value of the investment is deemed to be other-than-temporarily impaired, an impairment charge is recorded in Nonoperating Income (Expenses) – Other, net to write the asset down to fair value.

(e) Business Combinations

Beginning in 2009, business combinations are accounted for under the acquisition method of accounting. Results of operations of an acquired business are included from the date of acquisition. Management estimates the fair value of the acquired assets, including identifiable intangible assets, and assumed liabilities based on their estimated fair values as of the date of acquisition. Any excess fair value of the acquired net assets over the acquisition-date fair value of the consideration transferred, including the fair value of any contingent consideration, is recorded as Goodwill on the Consolidated Balance Sheets. The fair value of contingent consideration is recorded as a liability in Other current liabilities and Other long-term liabilities on the Consolidated Balance Sheets as of the acquisition date. This liability is remeasured at fair value each quarter end with changes in fair value recognized in Intangible asset related expense on the Consolidated Statements of Income. For a discussion regarding the approach used to estimate the fair value of such liabilities, see Note (6)(a).

(f) Cash and Cash Equivalents

Cash and cash equivalents include money market accounts and deposits with banks.

(g) Investments

Federated's investments are categorized as Investments—affiliates or Investments—other on the Consolidated Balance Sheets. Investments—affiliates represent Federated’s available-for-sale investments in Federated sponsored fluctuating-value mutual funds. These investments are carried at fair value with unrealized gains or losses on securities included in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets. Realized gains and losses on these securities are computed on a specific-identification basis and recognized in Gain on securities, net in the Consolidated Statements of Income.

Investments—other represents trading securities held by Federated primarily as a result of consolidating certain Federated-sponsored investment companies. Trading securities are carried at fair value with changes in fair value recognized in Gain on securities, net in the Consolidated Statements of Income. See Note (7) for additional information regarding investments held as of December 31, 2012 and 2011.

The fair value of Federated's investments is generally based on quoted market prices in active markets for identical instruments. If quoted market prices are not available, fair value is generally based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. In the absence of observable market data inputs and/or value drivers, internally generated valuation techniques may be utilized in which one or more significant inputs or significant value drivers are unobservable in the market place. On a periodic basis, management evaluates the carrying value of investments for impairment. With respect to its investments in fluctuating-value mutual funds, management considers various criteria, including the duration and extent of a decline in fair value, the ability and intent of management to retain the investment for a period of time sufficient to allow the value to recover and the financial condition and near-term prospects of the fund and the underlying investments of the fund, to determine whether a decline in fair value is other than temporary. If, after considering these criteria, management believes that a decline is other than temporary, the carrying value of the security is written down to fair value through the Consolidated Statements of Income.

(h) Derivatives and Hedging Instruments

From time to time, Federated may consolidate an investment product that holds freestanding derivative financial instruments for trading purposes. Federated reports such derivative instruments at fair value and records the changes in fair value in Gain on securities, net on the Consolidated Statements of Income.

From time to time, Federated may also enter into and designate as accounting hedges derivative financial instruments to hedge interest-rate exposures with respect to variable-rate loan facilities (cash flow hedges) or to hedge foreign-currency exchange risk with respect to non-U.S. dollar trading investments in consolidated investment companies (net investment hedges). To qualify for hedge accounting, the derivative must be deemed to be highly effective in offsetting the designated changes in the hedged item. For cash flow hedges and net investment hedges, the effective portions of the change in the fair value of the derivative are reported as a component of Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets and subsequently reclassified to earnings in the period or periods during which the hedged item affects earnings. The change in fair value of the ineffective portion of the derivative, if any, is recognized immediately in earnings. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued. If hedge accounting is discontinued because it is no longer probable that a forecasted transaction will occur, the derivative will continue to be recorded on the balance sheets at its fair value with changes in fair value included in current earnings, and the gains and losses in Accumulated other comprehensive loss, net of tax will be recognized immediately into earnings. If hedge accounting is discontinued because the hedging instrument is sold, terminated or no longer designated, the amount reported in Accumulated other comprehensive loss, net of tax up to the date of sale, termination or de-designation continues to be reported in Accumulated other comprehensive loss, net of tax until the forecasted transaction or the hedged item affects earnings. See Note (6) and Note (11) for additional information on the fair value of the hedges at December 31, 2012.

(i) Property and Equipment

Property and equipment are initially recorded at cost and are depreciated using the straight-line method over their estimated useful lives ranging from 1 to 12 years. Depreciation and amortization expense is recorded in Office and occupancy in the Consolidated Statements of Income. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or their respective lease terms. As property and equipment are taken out of service, the cost and related accumulated depreciation and amortization are removed. The write-off of any material residual net book value is reflected as a loss in Operating Expenses – Other in the Consolidated Statements of Income.

Management reviews the remaining useful lives and carrying values of property and equipment to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decrease in the market price of the asset, an accumulation of costs significantly in excess of the amount originally expected in the acquisition or development of the asset, historical and projected cash flows associated with the asset and an expectation that the asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Should there be an indication of a change in the useful life or an impairment in value, Federated compares the carrying value of the asset to the probability-weighted undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether an impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to fair value which is determined based on prices of similar assets if available or discounted cash flows. Impairment adjustments are recognized in Operating Expenses – Other in the Consolidated Statements of Income.

(j) Costs of Computer Software Developed or Obtained for Internal Use

Certain internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized. These capitalized costs are included in Property and equipment, net on the Consolidated Balance Sheets and are amortized using the straight-line method over the shorter of the estimated useful life of the software or four years. These assets are subject to the impairment test used for other categories of property and equipment described in Note (1)(i).

(k) Intangible Assets

Intangible assets, consisting primarily of goodwill and renewable investment advisory contracts acquired in connection with various acquisitions, are recorded at fair value determined using a discounted cash flow model as of the date of acquisition. The discounted cash flow model considers various factors to project future cash flows expected to be generated from the asset. Given the investment advisory nature of Federated’s business and of the businesses acquired over the years, these factors typically include: (1) an estimated rate of change for underlying managed assets; (2) expected revenue per managed asset; (3) incremental operating expenses; and (4) a discount rate. Management estimates a rate of change for underlying managed assets based on a combination of an estimated rate of market appreciation or depreciation and an estimated net redemption or sales rate. Expected revenue per managed asset and incremental operating expenses of the acquired asset are generally based on contract terms, average market participant data and historical experience. The discount rate is estimated at the current market rate of return. After the fair value of all separately identifiable assets has been estimated, goodwill is recorded to the extent the consideration paid for the acquisition exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities.

Federated tests goodwill for impairment at least annually or when indicators of potential impairment exist. Goodwill is evaluated at the reporting unit level. Federated has determined that it has a single reporting unit consistent with its single operating segment based on the fact that Federated’s operations are managed as a single business: investment management. Federated does not have multiple operating segments or business components for which discrete financial information is prepared. Federated uses a qualitative approach to test for potential impairment of goodwill. If after considering various factors, management determines that it is more likely than not that goodwill is impaired, a two-step process to test for and measure impairment is performed which begins with an estimation of the fair value of its reporting unit by considering Federated’s market capitalization. If Federated’s market capitalization falls to a level below its recorded book value of equity, Federated’s goodwill would be considered for possible impairment.

Federated has determined that certain acquired assets, specifically, certain renewable investment advisory contracts, have indefinite useful lives. In reaching this conclusion, management considered the legal, regulatory and contractual provisions of the investment advisory contract that enable the renewal of the contract, the level of cost and effort required in renewing the investment advisory contract, and the effects of obsolescence, demand, competition and other economic factors that could impact the funds’ projected performance and existence. The contracts generally renew annually and the value of these acquired assets assumes renewal. These indefinite-lived intangible assets are reviewed for impairment annually using a qualitative approach which requires that positive and negative evidence collected as a result of considering various factors be weighed in order to determine whether it is more likely than not that an indefinite-lived intangible asset or asset group is impaired. In addition, management reconsiders on a quarterly basis whether events or circumstances indicate that a change in the useful life may have occurred. Indicators of a possible change in useful life monitored by management include a significant decline in the level of managed assets, changes to legal, regulatory or contractual provisions of the renewable investment advisory contracts and reductions in underlying operating cash flows. Federated estimates the fair value of the indefinite-lived intangible asset and compares it to the book value of the asset to determine whether an impairment charge is necessary. Impairment is indicated when the carrying value of the intangible asset exceed its fair value.

Federated generally amortizes finite-lived identifiable intangible assets on a straight-line basis over their estimated useful lives, which range from 5 to 11 years. Management periodically evaluates the remaining useful lives and carrying values of the intangible assets to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying certain intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the finite-lived intangible assets, Federated compares the carrying value of the asset and its related useful life to the projected undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to its fair value determined using discounted cash flows. Federated writes-off the cost and accumulated amortization balances for all fully amortized intangible assets.

(l) Deferred Sales Commissions

Federated pays upfront commissions to broker/dealers to promote the sale of certain mutual fund shares. Under various fund-related contracts, Federated is entitled to distribution and servicing fees from the mutual fund over the life of such shares. Both of these fees are calculated as a percentage of average managed assets associated with the related classes of shares. For certain share classes, Federated is also entitled to receive a contingent deferred sales charge (CDSC), which is collected from certain redeeming shareholders.

For share classes that pay both a distribution fee and CDSC, Federated generally capitalizes a portion of the upfront commissions as deferred sales commissions, dependent upon expected recoverability rates. The deferred sales commission asset is amortized over the estimated period of benefit of up to eight years. Deferred sales commission amortization expense was $7.5 million, $7.4 million and $12.2 million for 2012, 2011 and 2010, respectively, and was included in Operating Expenses – Other on the Consolidated Statements of Income.

Distribution and shareholder service fees are recognized in Other service fees, net—affiliates on the Consolidated Statements of Income over the life of the mutual fund share class. CDSCs collected on these share classes are used to reduce the deferred sales commission asset. Federated reviews the carrying value of deferred sales commission assets on a periodic basis to determine whether a significant long-term decline in the equity or bond markets or other events or circumstances indicate that an impairment in value may have occurred. Should there be an indication of an impairment in value, Federated compares the carrying value of the asset to the probability-weighted undiscounted future cash flows of the underlying asset to determine whether an impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the deferred sales commission asset is written down to its estimated fair value determined using discounted cash flows.

For share classes that do not pay both a distribution fee and CDSC, Federated expenses the cost of the upfront commission as incurred in Distribution expense on the Consolidated Statements of Income and credits Distribution expense for any CDSCs collected.

(m) Foreign Currency Translation

The balance sheets of certain wholly owned foreign subsidiaries of Federated and certain consolidated foreign-denominated investment products are translated at the current exchange rate as of the end of the accounting period and the related income or loss is translated at the average exchange rate in effect during the period. Net exchange gains and losses resulting from these translations are excluded from income and are recorded in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets. Foreign currency transaction gains and losses are reflected in Operating Expenses – Other in the Consolidated Statements of Income.

(n) Treasury Stock

Federated accounts for acquisitions of treasury stock at cost and reports total treasury stock held as a deduction from Federated Investors shareholders’ equity on the Consolidated Balance Sheets. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a specific-identification basis. Additional paid-in capital from treasury stock transactions is increased as Federated reissues treasury stock for more than the cost of the shares. If Federated issues treasury stock for less than its cost, Additional paid-in capital from treasury stock transactions is reduced to no less than zero. Once this account is at zero, any further required reductions are recorded to Retained earnings on the Consolidated Balance Sheets.

(o) Revenue Recognition

Revenue from providing investment advisory, administrative and other services (including distribution, shareholder servicing and retirement plan recordkeeping) is recognized during the period in which the services are performed. Investment advisory, administrative and the majority of other service fees are generally calculated as a percentage of total net assets of the investment portfolios that are managed by Federated. The fair value of the investment portfolios is primarily determined using quoted market prices or independent third-party broker or dealer price quotes. In limited circumstances, a quotation or price evaluation is not readily available from a pricing source. In these cases, pricing is determined by management based on a prescribed valuation process that has been approved by the directors/trustees of the sponsored products. For the periods presented, a de minimus amount of assets under management (AUM or managed assets) were priced by Federated management. Federated may waive certain fees for competitive reasons, such as to maintain positive or zero net yields, to meet regulatory requirements or to meet contractual requirements. Federated waived fees of $709.3 million, $724.9 million and $653.1 million for the years ended December 31, 2012, 2011 and 2010, respectively, nearly all of which was for competitive reasons. The decrease in fee waivers for the year ended December 31, 2012 as compared to the same period of 2011 was primarily due to a $29.7 million decrease in fee waivers to maintain positive or zero net yields, partially offset by a $16.2 million increase in fee waivers related to managed asset growth for the year ended December 31, 2012 as compared to the same period of 2011. Fee waivers may continue to increase as a result of continued waivers to maintain positive or zero net yields and other competitive reasons. Fee waivers to maintain positive or zero net yields are partially offset by a related reduction to distribution expense and net income attributable to noncontrolling interests (see Note (4) for additional information on the net impact of these waivers).

Federated has contractual arrangements with third parties to provide certain fund-related services. Management considers various factors to determine whether Federated’s revenue should be recorded based on the gross amount payable by the funds or net of payments to third-party service providers. Management’s analysis is based on whether Federated is acting as the principal service provider or as an agent. The primary factors considered include: (1) whether the customer holds Federated or the service provider responsible for the fulfillment and acceptability of the services to be provided; (2) whether Federated has any practical latitude in negotiating the price to pay a third-party provider; (3) whether Federated or the customer selects the ultimate service provider; and (4) whether Federated has credit risk in the arrangement. Generally, the less the customer is directly involved with or participates in making decisions regarding the ultimate third-party service provider, the more supportive the facts are that Federated is acting as the principal in these transactions and should therefore report gross revenues. As a result of considering these factors, investment advisory fees, distribution fees and certain other service fees are recorded gross of payments made to third parties.

(p) Share-Based Compensation

Federated recognizes compensation costs based on grant-date fair value for all share-based awards granted, modified or settled after January 1, 2006, as well as for any awards that were granted prior to January 1, 2006 for which requisite service has not yet been provided.

Federated issues shares for share-based awards from treasury stock. For restricted stock awards, the fair value of the award is calculated as the difference between the closing fair value of Federated’s Class B common stock on the date of grant and the purchase price paid by the employee, if any. Federated’s awards are generally subject to graded vesting schedules. Compensation and related expense is adjusted for estimated forfeitures and is recognized on a straight-line or modified straight-line basis over the requisite service period of the award. Compensation and related expense also includes dividends paid on forfeited awards. Forfeiture assumptions are evaluated on a quarterly basis and updated as necessary.

For awards granted prior to January 1, 2006 with provisions that allow for accelerated vesting upon retirement, Federated recognizes expense over the vesting period of the awards, regardless of the employee’s attainment of retirement age. Beginning January 1, 2006, for all newly granted awards with provisions that allow for accelerated vesting upon retirement, Federated recognizes expense over the shorter of the vesting period or the period between grant date and the date on which the employee meets the minimum age requirement for retirement.

(q) Leases

Federated classifies leases as operating in accordance with the provisions of lease accounting. Rent expense under noncancelable operating leases with scheduled rent increases or rent holidays is accounted for on a straight-line basis over the lease term, beginning on the date of initial possession or the effective date of the lease agreement. The amount of the excess of straight-line rent expense over scheduled payments is recorded as a deferred liability. Build-out allowances and other such lease incentives are recorded as deferred credits, and are amortized on a straight-line basis as a reduction of rent expense beginning in the period they are deemed to be earned, which generally coincides with the effective date of the lease. The current portion of unamortized deferred lease costs and build-out allowances is included in Other current liabilities and the long-term portion is included in Other long-term liabilities on the Consolidated Balance Sheets.

(r) Advertising Costs

Federated generally expenses the cost of all advertising and promotional activities as incurred. Certain printed matter, however, such as sales brochures, are accounted for as prepaid supplies and are included in Other current assets on the Consolidated Balance Sheets until they no longer are owned or expected to be used, at which time their costs are expensed. Federated expensed advertising costs of $2.7 million, $2.6 million and $0.2 million in 2012, 2011 and 2010, respectively.

(s) Income Taxes

Federated accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Federated recognizes a valuation allowance if, based on the weight of available evidence regarding future taxable income, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

(t) Earnings Per Share

Basic and diluted earnings per share are calculated under the two-class method. Pursuant to the two-class method, Federated’s unvested restricted stock awards with nonforfeitable rights to dividends are considered participating securities and are required to be considered in the computation of earnings per share. Dividends paid to unvested restricted shares and their proportionate share of undistributed earnings, if any, is excluded from the computation of earnings per share attributable to Federated Investors, Inc.

(u) Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of tax is reported in the Consolidated Balance Sheets and the Consolidated Statements of Changes in Equity and includes net of tax, the unrealized gains and losses on securities available for sale, foreign currency translation adjustments and the effective portion of the gain or loss on derivative instruments designated and qualifying as a cash flow or net investment hedge.

(v) Loss Contingencies

Federated accrues for estimated costs, including legal costs related to existing lawsuits, claims and proceedings, if any, when it is probable that a loss has been incurred and the costs can be reasonably estimated. Accruals are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information pertinent to a particular matter. Significant differences could exist between the actual cost required to investigate, litigate and/or settle a claim or the ultimate outcome of a suit and management’s estimate. These differences could have a material impact on Federated’s results of operations, financial position and/or cash flows. Recoveries of losses are recognized in the Consolidated Statements of Income when receipt is deemed probable.

(w) Business Segments

Business or operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources and assess performance.

Federated does not have multiple operating segments or business components for which discrete financial information is prepared. Federated operates in one operating segment, the investment management business, nearly all of which is conducted within the United States. Federated’s Chief Executive Officer (CEO) is Federated’s chief operating decision maker. Federated’s CEO utilizes a consolidated approach to assess performance and allocate resources.

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Intangible Assets and Goodwill Table (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Intangible Assets Including Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	$ 52,906	$ 68,634
Finite-Lived Intangible Assets, Accumulated Amortization	(44,224)	(56,537)
Finite-Lived Intangible Assets, Net	8,682	12,097
Indefinite-Lived Intangible Assets (Excluding Goodwill)	70,355	66,500
Intangible Assets Including Goodwill Gross	772,081	777,463
Goodwill	648,820	642,329
Intangible Assets, Net (Including Goodwill)	727,857	720,926
Intangible Assets Including Goodwill [Member]
Intangible Assets Including Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	(44,224)	(56,537)
Renewable Investment Advisory Rights [Member]
Intangible Assets Including Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	68,455	64,600
Trade Names [Member]
Intangible Assets Including Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	1,900	1,900
Customer Relationships [Member]
Intangible Assets Including Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	45,812	56,492
Finite-Lived Intangible Assets, Accumulated Amortization	(37,914)	(45,958)
Finite-Lived Intangible Assets, Net	7,898	10,534	2,000
Noncompete Agreements [Member]
Intangible Assets Including Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	7,094	12,142
Finite-Lived Intangible Assets, Accumulated Amortization	(6,310)	(10,579)
Finite-Lived Intangible Assets, Net	$ 784	$ 1,563	$ 800

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Earnings Per Share Attributable to Federated Investors, Inc. Shareholders (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated Investors, Inc. for the years ended December 31:

in thousands, except per share data	2012			2011			2010
Numerator – Basic
Net income attributable to Federated Investors, Inc.	$	188,088		$	150,906		$	179,114
Less: Total income available to participating unvested restricted shareholders1	(8,400		)	(4,922		)	(6,443		)
Total net income attributable to Federated Common Stock2	$	179,688		$	145,984		$	172,671
Numerator – Diluted
Net income attributable to Federated Investors, Inc.	$	188,088		$	150,906		$	179,114
Less: Total income available to participating unvested restricted shareholders1	(8,400		)	(4,921		)	(6,443		)
Total net income attributable to Federated Common Stock2	$	179,688		$	145,985		$	172,671
Denominator
Basic weighted-average common shares outstanding	100,313			100,609			99,925
Dilutive potential shares from stock options	0			23			68
Diluted weighted-average common shares outstanding	100,313			100,632			99,993
Earnings per share
Net income attributable to Federated Common Stock - Basic and Diluted2	$	1.79		$	1.45		$	1.73

1 Income available to participating restricted shareholders includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings, if any.

2 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

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Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On January 24, 2013, the board of directors declared a $0.24 per share dividend to shareholders of record as of February 8, 2013, which was paid on February 15, 2013.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

(a) Contractual

Federated is obligated to make certain future payments under various agreements to which it is a party, including operating leases (see Note (15)). The following table summarizes minimum noncancelable payments contractually due under Federated’s significant service contracts and employment arrangements:

	Payments due in
											After
in millions	2013		2014		2015		2016		2017		2017		Total
Purchase obligations1	$	20.0	$	7.4	$	1.1	$	0.6	$	0.4	$	0.2	$	29.7
Employment-related commitments2	16.9		7.7		0		0		0		0		24.6
Total	$	36.9	$	15.1	$	1.1	$	0.6	$	0.4	$	0.2	$	54.3

1 Federated is a party to various contracts pursuant to which it receives certain services including services for legal, marketing and information technology, access to various fund-related information systems and research databases, trade order transmission and recovery services as well as other services. These contracts contain certain minimum noncancelable payments, cancellation provisions and renewal terms. The contracts expire on various dates through the year 2019. Costs for such services are expensed as incurred.

2 Federated has certain domestic and international employment arrangements pursuant to which Federated is obligated to make minimum compensation payments. These contracts expire on various dates through the year 2014.

As part of the SunTrust Acquisition, Federated is required to make annual contingent purchase price payments in the fourth quarters of each of the five years following the acquisition date. The contingent purchase price payments are calculated as a percentage of revenue less distribution expenses directly attributed to certain eligible assets. The first two contingent purchase price payments of $5.0 million and $4.2 million were paid in the fourth quarters of 2011 and 2012, respectively. At December 31, 2012, management estimated remaining contingent payments could total $11 million over the three years that remain; however, the actual amount of the contingent payments will vary based on asset levels and related net revenues and is not limited by any maximum amount. A wide range of outcomes for actual payments is possible due to the extent of reasonably possible flow-rate volatility for the respective AUM. As of December 31, 2012, a liability of $8.2 million representing the estimated fair value of future consideration payments was recorded in Other current liabilities ($3.5 million) and Other long-term liabilities ($4.7 million) (see Note (6)(a) for a discussion regarding the valuation methodology). This liability is remeasured at each reporting date with changes in the fair value recognized in Intangible asset related expense on the Consolidated Statements of Income.

In 2008, Federated completed the acquisition of certain assets of David W. Tice & Associates LLC that relate to the management of the Prudent Bear Fund and the Prudent DollarBear Fund (Prudent Bear Acquisition). As part of the Prudent Bear Acquisition, Federated was required to make contingent purchase price payments based upon certain revenue growth targets over the four-year period following the acquisition date. The contingent purchase price payments were recorded as additional goodwill at the time the contingency is resolved. The first two contingent purchase price payments of $5.1 million and $44.7 million were paid in the first quarters of 2010 and 2011, respectively. The applicable growth targets were not met for the third or fourth anniversary years. As such, no amount was paid related to the third anniversary year and no amount was accrued for the fourth and final anniversary year ended in December 2012.

As part of the Clover Capital Acquisition, Federated is required to make contingent purchase price payments based upon growth in revenues over the five-year period following the acquisition date. The contingent purchase price payments, which could total as much as $56 million, will be recorded as additional goodwill at the time the contingency is resolved. The applicable growth targets were not met for the first two anniversary years and as such, no related payments were made. In the first quarter 2012, $5.9 million was paid with regard to the third anniversary year ended in December 2011. As of December 31, 2012, $3.4 million was accrued for the fourth anniversary year ended in December 2012 and was paid in January 2013.

As part of the 2005 acquisition of the cash management business of Alliance Capital Management L.P. (Alliance Acquisition), Federated was required to make contingent purchase price payments over a five-year period following the acquisition date. These payments were primarily calculated as a percentage of revenues less certain distribution expenses directly attributed to the assets acquired. Contingent purchase price payments totaled $95.7 million, including $35.7 million paid in 2010, the final year of the contingent-payment period. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

The Rochdale Acquisition agreement provided for two forms of contingent purchase price payments payable over the five-year period following the acquisition date based on certain revenue earned by Federated from the Federated InterContinental Fund and/or related asset growth and performance. Contingent purchase price payments over the five-year period totaled $8.0 million, which included payments totaling $2.1 million in 2010, $1.1 million in 2011 and $2.8 million in 2012, the final year of payment. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

Pursuant to other acquisition agreements, Federated may be required to make additional purchase price payments based on a percentage of revenue less certain direct expenses attributable to eligible AUM. The payments could occur annually through 2017 and, based on current projections, are not expected to be material to the Consolidated Financial Statements.

In addition to the $16.9 million of employee-related commitments to be paid in 2013, Federated may be required to make certain incentive compensation-related payments in connection with various significant employment arrangements. The employment contracts expire on various dates through the year 2014 with payments possible through 2018. As of December 31, 2012, the maximum bonus payable over the remaining terms of the contracts approximates $43 million, none of which would be payable in 2013. In addition, certain employees have incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund (the Fund Bonus). Based on asset levels at December 31, 2012, $0.6 million would be paid in 2013 as a Fund Bonus payment. Management is unable to reasonably estimate a range of possible bonus payments for the Fund Bonus for subsequent years due to the wide range of possible growth-rate scenarios.

(b) Guarantees and Indemnifications

On an intercompany basis, various wholly owned subsidiaries of Federated guarantee certain financial obligations of Federated Investors, Inc., and Federated Investors, Inc. guarantees certain financial and performance-related obligations of various wholly owned subsidiaries. In addition, in the normal course of business, Federated has entered into contracts that provide a variety of indemnifications. Typically, obligations to indemnify third parties arise in the context of contracts entered into by Federated, under which Federated agrees to hold the other party harmless against losses arising out of the contract, provided the other party’s actions are not deemed to have breached an agreed upon standard of care. In each of these circumstances, payment by Federated is contingent on the other party making a claim for indemnity, subject to Federated’s right to challenge the other party’s claim. Further, Federated’s obligations under these agreements may be limited in terms of time and/or amount. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of Federated’s obligations and the unique facts and circumstances involved in each particular agreement. Management believes that if Federated were to incur a loss in any of these matters, such loss should not have a material effect on its business, financial position or results of operations.

(c) Legal Proceedings

Federated has claims asserted and threatened against it in the ordinary course of business. As of December 31, 2012, Federated does not believe that a material loss related to these claims is reasonably possible.

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Fair Value Measurements Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Total financial assets	$ 258,786		$ 322,372
Total financial liabilities	23,952		28,890
Cash and Cash Equivalents [Member]
Total financial assets	67,585		49,273
Available-for-sale Equity Securities [Member]
Total financial assets	136,023	[1]	159,539	[1]
Trading Securities - Equity [Member]
Total financial assets	25,970		29,458
Trading Securities - Debt [Member]
Total financial assets	29,050		84,047
Foreign Currency Forward Contract [Member]
Total financial assets	158		55
Level 1 [Member]
Total financial assets	179,886		188,905
Total financial liabilities	1,015		0
Level 1 [Member] | Cash and Cash Equivalents [Member]
Total financial assets	67,585		49,273
Level 1 [Member] | Available-for-sale Equity Securities [Member]
Total financial assets	102,493	[1]	128,611	[1]
Level 1 [Member] | Trading Securities - Equity [Member]
Total financial assets	9,194		10,805
Level 1 [Member] | Trading Securities - Debt [Member]
Total financial assets	614		216
Level 1 [Member] | Foreign Currency Forward Contract [Member]
Total financial assets	0		0
Level 2 [Member]
Total financial assets	78,900		133,467
Total financial liabilities	11,178		15,486
Level 2 [Member] | Cash and Cash Equivalents [Member]
Total financial assets	0		0
Level 2 [Member] | Available-for-sale Equity Securities [Member]
Total financial assets	33,530	[1]	30,928	[1]
Level 2 [Member] | Trading Securities - Equity [Member]
Total financial assets	16,776		18,653
Level 2 [Member] | Trading Securities - Debt [Member]
Total financial assets	28,436		83,831
Level 2 [Member] | Foreign Currency Forward Contract [Member]
Total financial assets	158		55
Level 3 [Member]
Total financial assets	0		0
Total financial liabilities	11,759		13,404
Level 3 [Member] | Cash and Cash Equivalents [Member]
Total financial assets	0		0
Level 3 [Member] | Available-for-sale Equity Securities [Member]
Total financial assets	0	[1]	0	[1]
Level 3 [Member] | Trading Securities - Equity [Member]
Total financial assets	0		0
Level 3 [Member] | Trading Securities - Debt [Member]
Total financial assets	0		0
Level 3 [Member] | Foreign Currency Forward Contract [Member]
Total financial assets	0		0
Interest Rate Swap [Member]
Total financial liabilities	11,178		15,241
Interest Rate Swap [Member] | Level 1 [Member]
Total financial liabilities	0		0
Interest Rate Swap [Member] | Level 2 [Member]
Total financial liabilities	11,178		15,241
Interest Rate Swap [Member] | Level 3 [Member]
Total financial liabilities	0		0
Acquisition-related Future Consideration Liabilities [Member]
Total financial liabilities	11,759		13,404
Acquisition-related Future Consideration Liabilities [Member] | Level 1 [Member]
Total financial liabilities	0		0
Acquisition-related Future Consideration Liabilities [Member] | Level 2 [Member]
Total financial liabilities	0		0
Acquisition-related Future Consideration Liabilities [Member] | Level 3 [Member]
Total financial liabilities	11,759		13,404
Other [Member]
Total financial liabilities	1,015	[2]	245	[2]
Other [Member] | Level 1 [Member]
Total financial liabilities	1,015	[2]	0	[2]
Other [Member] | Level 2 [Member]
Total financial liabilities	0	[2]	245	[2]
Other [Member] | Level 3 [Member]
Total financial liabilities	$ 0	[2]	$ 0	[2]

[1] Previously 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 in Other current liabilities on the Consolidated Balance Sheets.

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Accumulated Other Comprehensive (Loss) Income attributable to Federated Shareholders (Tables)

12 Months Ended

Dec. 31, 2012

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The components of accumulated other comprehensive (loss) income, net of tax, attributable to Federated shareholders are as follows:

in thousands	Unrealized Loss on Interest Rate Swap			Unrealized Gain (Loss) on Securities Available for Sale			Foreign Currency Translation (Loss) Gain			Total
Balance at January 1, 2010	$	0		$	424		$	1,090		$	1,514
Change in fair value1	(11,828		)	3,642			0			(8,186		)
Reclassification adjustment2	4,201			(802		)	0			3,399
Loss on currency conversion3	0			0			(422		)	(422		)
Balance at December 31, 2010	(7,627		)	3,264			668			(3,695		)
Change in fair value1	(7,373		)	(1,449		)	0			(8,822		)
Reclassification adjustment2	5,366			(1,490		)	0			3,876
Gain on currency conversion3	0			0			29			29
Balance at December 31, 2011	(9,634		)	325			697			(8,612		)
Change in fair value1	(2,193		)	5,535			0			3,342
Reclassification adjustment2	4,756			(2,216		)	(44		)	2,496
Loss on currency conversion3	0			0			(163		)	(163		)
Balance at December 31, 2012	$	(7,071	)	$	3,644		$	490		$	(2,937	)

1 The tax benefit related to the change in fair value of the interest rate swap was $(1,060), $(4,390) and $(6,369) for 2012, 2011 and 2010, respectively. The tax expense (benefit) related to the change in fair value of securities available for sale was $3,474, $(1,337) and $2,640 for 2012, 2011 and 2010, respectively.

2 The tax expense related to the reclassification adjustments for the interest rate swap was $2,560, $2,889 and $2,262 for 2012, 2011 and 2010, respectively. The tax benefit related to the reclassification adjustments for securities available for sale was $(1,192), $(802) and $(431) for 2012, 2011 and 2010, respectively. The tax benefit related to the reclassification adjustments for foreign currency translation was $(24) for 2012.

3 The tax expense (benefit) related to the foreign currency translation gain/loss was $16, $(251) and $(227) for 2012, 2011 and 2010, respectively.

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Supplementary Quarterly Financial Data

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Text Block]

Supplementary Quarterly Financial Data (Unaudited)

in thousands, except per share data, for the quarters ended	March 31,			June 30,			September 30,			December 31,
2012
Revenue	$	230,281		$	232,132		$	238,468		$	244,824
Operating income1	70,347			69,020			90,033			83,192
Net income including noncontrolling interest in subsidiaries1, 2	44,407			43,073			58,193			51,956
Amounts attributable to Federated Investors, Inc.
Net income1, 2	42,325			40,410			55,773			49,581
Earnings per share – Basic and Diluted1, 2, 3	0.41			0.39			0.54			0.44
Cash dividends per share3	0.24			0.24			0.24			1.75
Stock price per share4
High	23.89			23.23			22.31			23.48
Low	15.45			18.54			19.32			18.28
Impact of Minimum Yield Waivers
Revenue	(80,468		)	(70,254		)	(69,495		)	(70,748		)
Less: Reduction in Distribution expense	57,547			53,080			52,934			54,918
Operating income	(22,921		)	(17,174		)	(16,561		)	(15,830		)
Less: Reduction in Noncontrolling interest	618			(5		)	298			331
Pre-tax impact	(22,303		)	(17,179		)	(16,263		)	(15,499		)
2011
Revenue	$	238,882		$	225,777		$	214,048		$	216,406
Operating income	56,500			72,083			67,011			61,861
Net income including noncontrolling interest in subsidiaries	35,054			42,885			38,520			38,625
Amounts attributable to Federated Investors, Inc.
Net income	33,231			42,413			38,320			36,943
Earnings per share – Basic and Diluted	0.32			0.41			0.37			0.36
Cash dividends per share	0.24			0.24			0.24			0.24
Stock price per share4
High	28.57			27.11			24.54			22.39
Low	24.93			23.43			16.01			14.36
Impact of Minimum Yield Waivers
Revenue	(63,461		)	(79,355		)	(88,901		)	(88,953		)
Less: Reduction in Distribution expense	49,484			57,807			63,187			61,857
Operating income	(13,977		)	(21,548		)	(25,714		)	(27,096		)
Less: Reduction in Noncontrolling interest	839			2,172			2,483			978
Pre-tax impact	(13,138		)	(19,376		)	(23,231		)	(26,118		)

1 For the quarters ended September 30, 2012 and December 31, 2012, Federated recorded pretax insurance recoveries totaling $17.3 million and $3.0 million, respectively, for claims submitted over the past several years related to various legal proceedings. See Note (10) for additional information.

2 Federated recorded an impairment charge of $3.0 million related to an equity-method investment in the fourth quarter of 2012. See Note (6) for additional information.

3 For the quarter ended December 31, 2012, Federated paid $1.51 per share as a special cash dividend and a $0.24 per share regular dividend. All dividends are considered ordinary dividends for tax purposes. The special dividend negatively impacted fourth quarter 2012 diluted earnings per share by $0.04 per share.

4 Federated’s common stock is traded on the New York Stock Exchange under the symbol FII.

The approximate number of beneficial shareholders of Federated’s Class A and Class B common stock as of February 15, 2013, was 1 and 25,779, respectively.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Nature of Operations [Text Block]

(a) Nature of Operations

Federated Investors, Inc. and its subsidiaries (collectively, Federated) provide investment advisory, administrative, distribution and other services primarily to Federated mutual funds and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets. For presentation purposes in the Consolidated Financial Statements, the Federated-sponsored mutual funds are considered to be affiliates of Federated.

The majority of Federated’s revenue is derived from investment advisory services provided to Federated mutual funds and Separate Accounts through various subsidiaries pursuant to investment advisory contracts. These subsidiaries are registered as investment advisers under the Investment Advisers Act of 1940 or operate in similar capacities under applicable jurisdictional law.

Federated's U.S.-domiciled mutual funds are distributed by a wholly owned subsidiary registered as a broker/dealer under the Securities Exchange Act of 1934 and under applicable state laws. Federated's non-U.S.-domiciled products are distributed by wholly owned subsidiaries and a third-party distribution firm which are registered under applicable jurisdictional law. Federated’s investment products are primarily distributed within the wealth management and trust, broker/dealer and global institutional markets.

Basis of Accounting [Text Block]

(b) Basis of Presentation

The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements.

Reclassifications [Text Block]

(c) Reclassification of Prior Period Financial Statements

Certain items previously reported have been reclassified to conform with the current year’s presentation.

Consolidation, Policy [Policy Text Block]

(d) Principles of Consolidation

The Consolidated Financial Statements include the accounts of Federated Investors, Inc. and entities or sponsored products in which Federated holds a controlling financial interest. A controlling financial interest is determined by the extent of Federated’s (1) decision-making ability through voting interests, (2) decision-making ability and rights/obligations to benefits/losses through variable interest or (3) participation in the economic risks and rewards of the entity through variable interests. To the extent Federated’s controlling financial interest in a consolidated subsidiary represents less than 100% of the subsidiary’s equity, Federated recognizes noncontrolling interests in subsidiaries. In the case of consolidated sponsored products (see Note (5)(b)), the noncontrolling interests represent equity which is redeemable or convertible for cash or other assets at the option of the equity holder. As such, these noncontrolling interests are deemed to represent temporary equity and are classified as redeemable noncontrolling interests in subsidiaries in the mezzanine section of the Consolidated Balance Sheets. All other noncontrolling interests in subsidiaries are classified as permanent equity. All significant intercompany accounts and transactions have been eliminated.

Beginning on January 1, 2010, Federated adopted the provisions of the Financial Accounting Standards Board’s (FASB) new consolidation model for variable interest entities (VIEs). As a result, Federated applies two different approaches to consider VIEs for possible consolidation. For non-investment fund entities, Federated considers a qualitative model for identifying whether its interest in a VIE is a controlling financial interest. The qualitative model considers whether Federated has: (1) the ability to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or to provide rights to receive benefits from the VIE that could potentially be significant to the VIE. Federated reevaluates the need for consolidation under this qualitative approach on an ongoing basis.

For Federated’s interests in certain investment funds that meet the definition of VIEs, Federated evaluates the extent of Federated’s participation in the economic risks and rewards of the entity based on a quantitative model to determine whether consolidation is necessary. In cases where the results of the quantitative model indicate that Federated’s interest in such an entity absorbs the majority of the variability in the entity’s net assets, Federated is deemed to be the primary beneficiary and thus consolidates the entity.

The equity method of accounting is used to account for an investment in an entity in which Federated’s noncontrolling equity investment is deemed to give it the ability to exercise significant influence over the operating and financial policies of the investee. This equity-method investment is included in Other long-term assets on the Consolidated Balance Sheets. The proportionate share of income or loss is included in Nonoperating Income (Expenses) – Other, net in the Consolidated Statements of Income. The investment is subject to review for other-than-temporary impairments as indicators arise. If the carrying value of the investment is deemed to be other-than-temporarily impaired, an impairment charge is recorded in Nonoperating Income (Expenses) – Other, net to write the asset down to fair value.

Business Combinations and Other Purchase of Business Transactions, Policy [Policy Text Block]

(e) Business Combinations

Beginning in 2009, business combinations are accounted for under the acquisition method of accounting. Results of operations of an acquired business are included from the date of acquisition. Management estimates the fair value of the acquired assets, including identifiable intangible assets, and assumed liabilities based on their estimated fair values as of the date of acquisition. Any excess fair value of the acquired net assets over the acquisition-date fair value of the consideration transferred, including the fair value of any contingent consideration, is recorded as Goodwill on the Consolidated Balance Sheets. The fair value of contingent consideration is recorded as a liability in Other current liabilities and Other long-term liabilities on the Consolidated Balance Sheets as of the acquisition date. This liability is remeasured at fair value each quarter end with changes in fair value recognized in Intangible asset related expense on the Consolidated Statements of Income. For a discussion regarding the approach used to estimate the fair value of such liabilities, see Note (6)(a).

Cash and Cash Equivalents, Policy [Policy Text Block]

(f) Cash and Cash Equivalents

Cash and cash equivalents include money market accounts and deposits with banks.

Marketable Securities, Policy [Policy Text Block]

(g) Investments

Federated's investments are categorized as Investments—affiliates or Investments—other on the Consolidated Balance Sheets. Investments—affiliates represent Federated’s available-for-sale investments in Federated sponsored fluctuating-value mutual funds. These investments are carried at fair value with unrealized gains or losses on securities included in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets. Realized gains and losses on these securities are computed on a specific-identification basis and recognized in Gain on securities, net in the Consolidated Statements of Income.

Investments—other represents trading securities held by Federated primarily as a result of consolidating certain Federated-sponsored investment companies. Trading securities are carried at fair value with changes in fair value recognized in Gain on securities, net in the Consolidated Statements of Income. See Note (7) for additional information regarding investments held as of December 31, 2012 and 2011.

The fair value of Federated's investments is generally based on quoted market prices in active markets for identical instruments. If quoted market prices are not available, fair value is generally based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. In the absence of observable market data inputs and/or value drivers, internally generated valuation techniques may be utilized in which one or more significant inputs or significant value drivers are unobservable in the market place. On a periodic basis, management evaluates the carrying value of investments for impairment. With respect to its investments in fluctuating-value mutual funds, management considers various criteria, including the duration and extent of a decline in fair value, the ability and intent of management to retain the investment for a period of time sufficient to allow the value to recover and the financial condition and near-term prospects of the fund and the underlying investments of the fund, to determine whether a decline in fair value is other than temporary. If, after considering these criteria, management believes that a decline is other than temporary, the carrying value of the security is written down to fair value through the Consolidated Statements of Income.

Derivatives, Policy [Policy Text Block]

(h) Derivatives and Hedging Instruments

From time to time, Federated may consolidate an investment product that holds freestanding derivative financial instruments for trading purposes. Federated reports such derivative instruments at fair value and records the changes in fair value in Gain on securities, net on the Consolidated Statements of Income.

From time to time, Federated may also enter into and designate as accounting hedges derivative financial instruments to hedge interest-rate exposures with respect to variable-rate loan facilities (cash flow hedges) or to hedge foreign-currency exchange risk with respect to non-U.S. dollar trading investments in consolidated investment companies (net investment hedges). To qualify for hedge accounting, the derivative must be deemed to be highly effective in offsetting the designated changes in the hedged item. For cash flow hedges and net investment hedges, the effective portions of the change in the fair value of the derivative are reported as a component of Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets and subsequently reclassified to earnings in the period or periods during which the hedged item affects earnings. The change in fair value of the ineffective portion of the derivative, if any, is recognized immediately in earnings. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued. If hedge accounting is discontinued because it is no longer probable that a forecasted transaction will occur, the derivative will continue to be recorded on the balance sheets at its fair value with changes in fair value included in current earnings, and the gains and losses in Accumulated other comprehensive loss, net of tax will be recognized immediately into earnings. If hedge accounting is discontinued because the hedging instrument is sold, terminated or no longer designated, the amount reported in Accumulated other comprehensive loss, net of tax up to the date of sale, termination or de-designation continues to be reported in Accumulated other comprehensive loss, net of tax until the forecasted transaction or the hedged item affects earnings. See Note (6) and Note (11) for additional information on the fair value of the hedges at December 31, 2012.

Property, Plant and Equipment, Policy [Policy Text Block]

(i) Property and Equipment

Property and equipment are initially recorded at cost and are depreciated using the straight-line method over their estimated useful lives ranging from 1 to 12 years. Depreciation and amortization expense is recorded in Office and occupancy in the Consolidated Statements of Income. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or their respective lease terms. As property and equipment are taken out of service, the cost and related accumulated depreciation and amortization are removed. The write-off of any material residual net book value is reflected as a loss in Operating Expenses – Other in the Consolidated Statements of Income.

Management reviews the remaining useful lives and carrying values of property and equipment to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decrease in the market price of the asset, an accumulation of costs significantly in excess of the amount originally expected in the acquisition or development of the asset, historical and projected cash flows associated with the asset and an expectation that the asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Should there be an indication of a change in the useful life or an impairment in value, Federated compares the carrying value of the asset to the probability-weighted undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether an impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to fair value which is determined based on prices of similar assets if available or discounted cash flows. Impairment adjustments are recognized in Operating Expenses – Other in the Consolidated Statements of Income.

Internal Use Software, Policy [Policy Text Block]

(j) Costs of Computer Software Developed or Obtained for Internal Use

Certain internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized. These capitalized costs are included in Property and equipment, net on the Consolidated Balance Sheets and are amortized using the straight-line method over the shorter of the estimated useful life of the software or four years. These assets are subject to the impairment test used for other categories of property and equipment described in Note (1)(i).

Goodwill and Intangible Assets, Policy [Policy Text Block]

(k) Intangible Assets

Intangible assets, consisting primarily of goodwill and renewable investment advisory contracts acquired in connection with various acquisitions, are recorded at fair value determined using a discounted cash flow model as of the date of acquisition. The discounted cash flow model considers various factors to project future cash flows expected to be generated from the asset. Given the investment advisory nature of Federated’s business and of the businesses acquired over the years, these factors typically include: (1) an estimated rate of change for underlying managed assets; (2) expected revenue per managed asset; (3) incremental operating expenses; and (4) a discount rate. Management estimates a rate of change for underlying managed assets based on a combination of an estimated rate of market appreciation or depreciation and an estimated net redemption or sales rate. Expected revenue per managed asset and incremental operating expenses of the acquired asset are generally based on contract terms, average market participant data and historical experience. The discount rate is estimated at the current market rate of return. After the fair value of all separately identifiable assets has been estimated, goodwill is recorded to the extent the consideration paid for the acquisition exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities.

Federated tests goodwill for impairment at least annually or when indicators of potential impairment exist. Goodwill is evaluated at the reporting unit level. Federated has determined that it has a single reporting unit consistent with its single operating segment based on the fact that Federated’s operations are managed as a single business: investment management. Federated does not have multiple operating segments or business components for which discrete financial information is prepared. Federated uses a qualitative approach to test for potential impairment of goodwill. If after considering various factors, management determines that it is more likely than not that goodwill is impaired, a two-step process to test for and measure impairment is performed which begins with an estimation of the fair value of its reporting unit by considering Federated’s market capitalization. If Federated’s market capitalization falls to a level below its recorded book value of equity, Federated’s goodwill would be considered for possible impairment.

Federated has determined that certain acquired assets, specifically, certain renewable investment advisory contracts, have indefinite useful lives. In reaching this conclusion, management considered the legal, regulatory and contractual provisions of the investment advisory contract that enable the renewal of the contract, the level of cost and effort required in renewing the investment advisory contract, and the effects of obsolescence, demand, competition and other economic factors that could impact the funds’ projected performance and existence. The contracts generally renew annually and the value of these acquired assets assumes renewal. These indefinite-lived intangible assets are reviewed for impairment annually using a qualitative approach which requires that positive and negative evidence collected as a result of considering various factors be weighed in order to determine whether it is more likely than not that an indefinite-lived intangible asset or asset group is impaired. In addition, management reconsiders on a quarterly basis whether events or circumstances indicate that a change in the useful life may have occurred. Indicators of a possible change in useful life monitored by management include a significant decline in the level of managed assets, changes to legal, regulatory or contractual provisions of the renewable investment advisory contracts and reductions in underlying operating cash flows. Federated estimates the fair value of the indefinite-lived intangible asset and compares it to the book value of the asset to determine whether an impairment charge is necessary. Impairment is indicated when the carrying value of the intangible asset exceed its fair value.

Federated generally amortizes finite-lived identifiable intangible assets on a straight-line basis over their estimated useful lives, which range from 5 to 11 years. Management periodically evaluates the remaining useful lives and carrying values of the intangible assets to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying certain intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the finite-lived intangible assets, Federated compares the carrying value of the asset and its related useful life to the projected undiscounted cash flows expected to be generated from the underlying asset over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the asset is written down to its fair value determined using discounted cash flows. Federated writes-off the cost and accumulated amortization balances for all fully amortized intangible assets.

Deferred Sales Commissions [Policy Text Block]

(l) Deferred Sales Commissions

Federated pays upfront commissions to broker/dealers to promote the sale of certain mutual fund shares. Under various fund-related contracts, Federated is entitled to distribution and servicing fees from the mutual fund over the life of such shares. Both of these fees are calculated as a percentage of average managed assets associated with the related classes of shares. For certain share classes, Federated is also entitled to receive a contingent deferred sales charge (CDSC), which is collected from certain redeeming shareholders.

For share classes that pay both a distribution fee and CDSC, Federated generally capitalizes a portion of the upfront commissions as deferred sales commissions, dependent upon expected recoverability rates. The deferred sales commission asset is amortized over the estimated period of benefit of up to eight years. Deferred sales commission amortization expense was $7.5 million, $7.4 million and $12.2 million for 2012, 2011 and 2010, respectively, and was included in Operating Expenses – Other on the Consolidated Statements of Income.

Distribution and shareholder service fees are recognized in Other service fees, net—affiliates on the Consolidated Statements of Income over the life of the mutual fund share class. CDSCs collected on these share classes are used to reduce the deferred sales commission asset. Federated reviews the carrying value of deferred sales commission assets on a periodic basis to determine whether a significant long-term decline in the equity or bond markets or other events or circumstances indicate that an impairment in value may have occurred. Should there be an indication of an impairment in value, Federated compares the carrying value of the asset to the probability-weighted undiscounted future cash flows of the underlying asset to determine whether an impairment has occurred. If the carrying value of the asset exceeds the undiscounted cash flows, the deferred sales commission asset is written down to its estimated fair value determined using discounted cash flows.

For share classes that do not pay both a distribution fee and CDSC, Federated expenses the cost of the upfront commission as incurred in Distribution expense on the Consolidated Statements of Income and credits Distribution expense for any CDSCs collected.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

(m) Foreign Currency Translation

The balance sheets of certain wholly owned foreign subsidiaries of Federated and certain consolidated foreign-denominated investment products are translated at the current exchange rate as of the end of the accounting period and the related income or loss is translated at the average exchange rate in effect during the period. Net exchange gains and losses resulting from these translations are excluded from income and are recorded in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets. Foreign currency transaction gains and losses are reflected in Operating Expenses – Other in the Consolidated Statements of Income.

Treasury Stock [Policy Text Block]

(n) Treasury Stock

Federated accounts for acquisitions of treasury stock at cost and reports total treasury stock held as a deduction from Federated Investors shareholders’ equity on the Consolidated Balance Sheets. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a specific-identification basis. Additional paid-in capital from treasury stock transactions is increased as Federated reissues treasury stock for more than the cost of the shares. If Federated issues treasury stock for less than its cost, Additional paid-in capital from treasury stock transactions is reduced to no less than zero. Once this account is at zero, any further required reductions are recorded to Retained earnings on the Consolidated Balance Sheets.

Revenue Recognition, Policy [Policy Text Block]

(o) Revenue Recognition

Revenue from providing investment advisory, administrative and other services (including distribution, shareholder servicing and retirement plan recordkeeping) is recognized during the period in which the services are performed. Investment advisory, administrative and the majority of other service fees are generally calculated as a percentage of total net assets of the investment portfolios that are managed by Federated. The fair value of the investment portfolios is primarily determined using quoted market prices or independent third-party broker or dealer price quotes. In limited circumstances, a quotation or price evaluation is not readily available from a pricing source. In these cases, pricing is determined by management based on a prescribed valuation process that has been approved by the directors/trustees of the sponsored products. For the periods presented, a de minimus amount of assets under management (AUM or managed assets) were priced by Federated management. Federated may waive certain fees for competitive reasons, such as to maintain positive or zero net yields, to meet regulatory requirements or to meet contractual requirements. Federated waived fees of $709.3 million, $724.9 million and $653.1 million for the years ended December 31, 2012, 2011 and 2010, respectively, nearly all of which was for competitive reasons. The decrease in fee waivers for the year ended December 31, 2012 as compared to the same period of 2011 was primarily due to a $29.7 million decrease in fee waivers to maintain positive or zero net yields, partially offset by a $16.2 million increase in fee waivers related to managed asset growth for the year ended December 31, 2012 as compared to the same period of 2011. Fee waivers may continue to increase as a result of continued waivers to maintain positive or zero net yields and other competitive reasons. Fee waivers to maintain positive or zero net yields are partially offset by a related reduction to distribution expense and net income attributable to noncontrolling interests (see Note (4) for additional information on the net impact of these waivers).

Federated has contractual arrangements with third parties to provide certain fund-related services. Management considers various factors to determine whether Federated’s revenue should be recorded based on the gross amount payable by the funds or net of payments to third-party service providers. Management’s analysis is based on whether Federated is acting as the principal service provider or as an agent. The primary factors considered include: (1) whether the customer holds Federated or the service provider responsible for the fulfillment and acceptability of the services to be provided; (2) whether Federated has any practical latitude in negotiating the price to pay a third-party provider; (3) whether Federated or the customer selects the ultimate service provider; and (4) whether Federated has credit risk in the arrangement. Generally, the less the customer is directly involved with or participates in making decisions regarding the ultimate third-party service provider, the more supportive the facts are that Federated is acting as the principal in these transactions and should therefore report gross revenues. As a result of considering these factors, investment advisory fees, distribution fees and certain other service fees are recorded gross of payments made to third parties.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

(p) Share-Based Compensation

Federated recognizes compensation costs based on grant-date fair value for all share-based awards granted, modified or settled after January 1, 2006, as well as for any awards that were granted prior to January 1, 2006 for which requisite service has not yet been provided.

Federated issues shares for share-based awards from treasury stock. For restricted stock awards, the fair value of the award is calculated as the difference between the closing fair value of Federated’s Class B common stock on the date of grant and the purchase price paid by the employee, if any. Federated’s awards are generally subject to graded vesting schedules. Compensation and related expense is adjusted for estimated forfeitures and is recognized on a straight-line or modified straight-line basis over the requisite service period of the award. Compensation and related expense also includes dividends paid on forfeited awards. Forfeiture assumptions are evaluated on a quarterly basis and updated as necessary.

For awards granted prior to January 1, 2006 with provisions that allow for accelerated vesting upon retirement, Federated recognizes expense over the vesting period of the awards, regardless of the employee’s attainment of retirement age. Beginning January 1, 2006, for all newly granted awards with provisions that allow for accelerated vesting upon retirement, Federated recognizes expense over the shorter of the vesting period or the period between grant date and the date on which the employee meets the minimum age requirement for retirement.

Lease, Policy [Policy Text Block]

(q) Leases

Federated classifies leases as operating in accordance with the provisions of lease accounting. Rent expense under noncancelable operating leases with scheduled rent increases or rent holidays is accounted for on a straight-line basis over the lease term, beginning on the date of initial possession or the effective date of the lease agreement. The amount of the excess of straight-line rent expense over scheduled payments is recorded as a deferred liability. Build-out allowances and other such lease incentives are recorded as deferred credits, and are amortized on a straight-line basis as a reduction of rent expense beginning in the period they are deemed to be earned, which generally coincides with the effective date of the lease. The current portion of unamortized deferred lease costs and build-out allowances is included in Other current liabilities and the long-term portion is included in Other long-term liabilities on the Consolidated Balance Sheets.

Advertising Cost, Policy, Expensed Advertising Cost [Policy Text Block]

(r) Advertising Costs

Federated generally expenses the cost of all advertising and promotional activities as incurred. Certain printed matter, however, such as sales brochures, are accounted for as prepaid supplies and are included in Other current assets on the Consolidated Balance Sheets until they no longer are owned or expected to be used, at which time their costs are expensed. Federated expensed advertising costs of $2.7 million, $2.6 million and $0.2 million in 2012, 2011 and 2010, respectively.

Income Tax, Policy [Policy Text Block]

(s) Income Taxes

Federated accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Federated recognizes a valuation allowance if, based on the weight of available evidence regarding future taxable income, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Earnings Per Share, Policy [Policy Text Block]

(t) Earnings Per Share

Basic and diluted earnings per share are calculated under the two-class method. Pursuant to the two-class method, Federated’s unvested restricted stock awards with nonforfeitable rights to dividends are considered participating securities and are required to be considered in the computation of earnings per share. Dividends paid to unvested restricted shares and their proportionate share of undistributed earnings, if any, is excluded from the computation of earnings per share attributable to Federated Investors, Inc.

Accumulated Other Comprehensive Income (Loss) [Policy Text Block]

(u) Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of tax is reported in the Consolidated Balance Sheets and the Consolidated Statements of Changes in Equity and includes net of tax, the unrealized gains and losses on securities available for sale, foreign currency translation adjustments and the effective portion of the gain or loss on derivative instruments designated and qualifying as a cash flow or net investment hedge.

Loss Contingencies [Policy Text Block]

(v) Loss Contingencies

Federated accrues for estimated costs, including legal costs related to existing lawsuits, claims and proceedings, if any, when it is probable that a loss has been incurred and the costs can be reasonably estimated. Accruals are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information pertinent to a particular matter. Significant differences could exist between the actual cost required to investigate, litigate and/or settle a claim or the ultimate outcome of a suit and management’s estimate. These differences could have a material impact on Federated’s results of operations, financial position and/or cash flows. Recoveries of losses are recognized in the Consolidated Statements of Income when receipt is deemed probable.

Segment Reporting, Policy [Policy Text Block]

(w) Business Segments

Business or operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources and assess performance.

Federated does not have multiple operating segments or business components for which discrete financial information is prepared. Federated operates in one operating segment, the investment management business, nearly all of which is conducted within the United States. Federated’s Chief Executive Officer (CEO) is Federated’s chief operating decision maker. Federated’s CEO utilizes a consolidated approach to assess performance and allocate resources.

Intangibles - Goodwill And Other Adopted [Policy Text Block]

(a) Intangibles - Goodwill and Other

On July 27, 2012, the FASB issued an update to the accounting standard on intangibles. The update amends guidance on testing indefinite-lived intangible assets for impairment to permit an optional qualitative assessment prior to performing a fair value calculation. If the result of the qualitative assessment determines it is more likely than not that an indefinite-lived intangible asset is not impaired, a quantitative fair value calculation would not be required. This update is effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012, however, early adoption is permitted. Federated elected to early adopt the new guidance effective October 1, 2012 in connection with its annual impairment testing of indefinite-lived intangible assets. The adoption of the update did not have a financial impact on Federated's Consolidated Financial Statements.

On January 1, 2012, Federated adopted a FASB update to the accounting standard on intangibles that amends guidance on testing goodwill for impairment to permit a qualitative assessment prior to performance of the two-step impairment test. If the result of the qualitative assessment reveals that there are no indicators of impairment, a quantitative calculation would not be required. This update did not have a financial impact on Federated's Consolidated Financial Statements.

Fair Value Measurement Adopted

(b) Fair Value Measurement

On January 1, 2012, Federated adopted updated requirements for expanded fair-value disclosures as issued by the FASB. The update amends certain fair value measurement guidance and expands disclosure requirements primarily for fair value measurements utilizing significant unobservable inputs (Level 3) and items not measured at fair value but for which fair value must be disclosed. As the updates affect disclosure only, the adoption of the update did not have a financial impact on Federated’s Consolidated Financial Statements.

Comprehensive Income Adopted

(c) Comprehensive Income

On January 1, 2012, Federated adopted FASB updates to the accounting standard on the presentation of comprehensive income that requires presentation of the components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Federated elected to present the components of comprehensive income in two separate but consecutive statements and as a result, began reporting the Consolidated Statements of Comprehensive Income.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Activities
Net income including noncontrolling interest in subsidiaries	$ 197,628	$ 155,083	$ 189,163
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Amortization of deferred sales commissions	7,465	7,378	12,197
Depreciation and other amortization	10,445	14,400	21,075
Share-based compensation expense	20,135	19,006	19,124
Gain on disposal of assets	(5,093)	(2,834)	(2,584)
Provision for deferred income taxes	25,030	17,252	24,213
Fair-value adjustments for contingent liabilities	(793)	900	0
Tax benefit from share-based compensation	1,543	179	1,830
Excess tax benefits from share-based compensation	(2,974)	(1,693)	(3,005)
Impairment of assets	3,000	0	10,191
Net sales (purchases) of trading securities	66,403	(102,738)	(25,803)
Deferred sales commissions paid	(12,102)	(9,386)	(10,638)
Contingent deferred sales charges received	1,383	1,443	2,275
Proceeds from sale of certain B-share-related future revenue	0	0	1,223
Other changes in assets and liabilities:
(Increase) decrease in receivables, net	(2,552)	2,188	(2,408)
Decrease in prepaid expenses and other assets	4,525	1,255	11,391
Increase (decrease) in accounts payable and accrued expenses	7,727	(3,990)	(14,249)
(Decrease) increase in other liabilities	(5,427)	15,047	(18,048)
Net cash provided by operating activities	316,343	113,490	215,947
Investing Activities
Purchases of securities available for sale	(58,284)	(73,192)	(99,284)
Cash paid for business acquisitions	(14,064)	(53,507)	(49,561)
Proceeds from redemptions of securities avaliable for sale	92,398	27,492	55,121
Cash paid for property and equipment	(8,675)	(8,247)	(7,870)
Cash paid for purchased loans	0	0	(47,178)
Proceeds from sale of purchased loans	0	0	1,044
Proceeds from disposal of property and equipment	0	0	3,298
Net cash provided (used) by investing activities	11,375	(107,454)	(144,430)
Financing Activities
Dividends paid	(256,750)	(99,960)	(228,651)
Purchases of treasury stock	(6,633)	(28,545)	(13,462)
Distributions to noncontrolling interests in subsidiaries	(21,460)	(3,726)	(11,347)
Contributions from noncontrolling interests in subsidiaries	14,070	6,511	10,074
Proceeds from shareholders for share-based compensation	1,604	16,795	11,590
Excess tax benefits from share-based compensation	2,974	1,693	3,005
Proceeds from new borrowings	0	0	407,000
Payments on debt	(42,500)	(42,500)	(129,250)
Other financing activities	(711)	(5,787)	(12,172)
Net cash (used) provided by financing activities	(309,406)	(155,519)	36,787
Net increase (decrease) in cash and cash equivalents	18,312	(149,483)	108,304
Cash and cash equivalents, beginning of year	49,273	198,756	90,452
Cash and cash equivalents, end of year	67,585	49,273	198,756
Supplemental Disclosure of Cash Flow Information
Income Taxes	79,817	72,149	77,072
Interest	$ 13,091	$ 15,893	$ 12,941

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Prior Year Business Combinations and Acquisitions (Tables)

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Unaudited Pro Forma Financial Information

in millions, except per share data for the year ended,	2010
Revenue	$	980.7
Net income attributable to Federated Investors, Inc.	$	186.6
Earnings per share – Basic and Diluted
Net income attributable to Federated Investors, Inc.	$	1.80

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Purchased Loans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2010
Transfers Of Purchased Loans [Abstract]
Transfer of purchased loans into new company sponsored fund in exchange for shares	$ 46.2
Cash invested in new company sponsored fund In exchange for shares	4.3
Gain (Loss) on Sale of Other Loans and Leases	$ 0.7

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Share-Based Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

The following table summarizes activity of non-vested restricted stock awards for the year ended December 31, 2012:

	Restricted Shares		Weighted- Average Grant- Date Fair Value
Non-vested at January 1, 2012	3,770,021			$	22.74
Granted1	1,015,273			$	18.06
Vested	(722,825	)		$	24.53
Forfeited	(21,687	)		$	23.71
Non-vested at December 31, 2012	4,040,782			$	21.24

1 During 2012, Federated awarded 480,773 shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a three-year period. Also during 2012, Federated awarded 534,500 shares of restricted Federated Class B common stock to certain key employees. The restricted stock awards generally vest over ten-year periods with restrictions on the vested portions of the awards lapsing on approximately the awards’ fifth- and tenth-year anniversaries.

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The following table summarizes the status of and changes in Federated’s stock option program for the year ended December 31, 2012:

	Options		Weighted-Average Exercise Price		Weighted-Average Remaining  Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2012	392,479		$	29.72
Expired unexercised	(337,729	)	$	29.36
Outstanding at December 31, 20121	54,750		$	31.97	3.7	$	0

1 All stock options outstanding at December 31, 2012 were also vested and exercisable.

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Consolidation (Details) (USD $)	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Deconsolidation [Member]	Aug. 31, 2012 Deconsolidation [Member]	Apr. 11, 2011 Deconsolidation [Member]	Dec. 18, 2012 Consolidation [Member]
Variable Interest Entity [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	50.50%	50.50%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	49.50%	49.50%
Consolidated variable interest entities aggregate assets	$ 52,800,000	$ 52,800,000	$ 111,100,000			$ 80,300,000	$ 17,700,000	$ 21,000,000
Consolidated variable interest entities aggregate liabilities	2,000,000	2,000,000	500,000				7,600,000
Redeemable noncontrolling interest in subsidiaries	7,268,000	7,268,000	506,000		600,000			6,000,000
Translation Adjustment Functional to Reporting Currency, (Loss) Gain, Reclassified to Earnings		1,200,000
Derivatives used in Net Investment Hedge, (Loss) Gain, Reclassified to Earnings		(1,100,000)
Deconsolidation, Gain (Loss), Amount			0	0
Ownership interest in equity-method investment	12.00%	12.00%
Assets under management of equity investee	400,000,000	400,000,000
Other Asset Impairment Charges	3,000,000
Equity Method Investments	$ 3,800,000	$ 3,800,000

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Share-Based Compensation Plans Stock Options (Details) (USD $)	12 Months Ended
	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Number, Beginning Balance	392,479
Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 29.72
Options, Expirations in Period	(337,729)
Options, Expirations in Period, Weighted Average Exercise Price	$ 29.36
Options Outstanding, Number, Ending Balance	54,750	[1]
Options, Outstanding, Weighted Average Exercise Price, Ending Balance	$ 31.97	[1]
Options, Outstanding, Weighted Average Remaining Contractual Term	3 years 8 months 12 days	[1]
Options, Outstanding, Intrinsic Value	$ 0	[1]
Options, Vested and Expected to Vest, Outstanding, Number	54,750
Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 31.97
Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	3 years 8 months 12 days
Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	0
Options, Exercisable, Number	54,750
Options, Exercisable, Weighted Average Exercise Price	$ 31.97
Options, Exercisable, Weighted Average Remaining Contractual Term	3 years 8 months 12 days
Options, Exercisable, Intrinsic Value	$ 0

[1] All stock options outstanding at December 31, 2012 were also vested and exercisable.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current Assets
Cash and cash equivalents	$ 67,585	$ 49,273
Investments—affiliates	136,023	159,539
Investments—other	55,020	113,505
Receivables, net of reserve of $50 and $121, respectively	24,120	21,526
Prepaid expenses	12,986	17,420
Other current assets	4,328	5,248
Total current assets	300,062	366,511
Long-Term Assets
Goodwill	648,820	642,329
Renewable investment advisory rights	68,455	64,600
Other intangible assets, net	10,582	13,997
Property and equipment, net	38,912	38,228
Other long-term assets	23,230	25,191
Total long-term assets	789,999	784,345
Total assets	1,090,061	1,150,856
Current Liabilities
Short-term debt	42,500	42,500
Accounts payable and accrued expenses	45,255	41,691
Accrued compensation and benefits	68,172	59,971
Other current liabilities	25,207	34,324
Total current liabilities	181,134	178,486
Long-Term Liabilities
Long-term debt	276,250	318,750
Long-term deferred tax liability, net	99,399	73,246
Other long-term liabilities	29,334	37,191
Total long-term liabilities	404,983	429,187
Total liabilities	586,117	607,673
Commitments and contingencies (Note (20))
TEMPORARY EQUITY
Redeemable noncontrolling interest in subsidiaries	7,268	506
PERMANENT EQUITY
Retained earnings	984,505	1,069,913
Treasury stock, at cost, 25,064,280 and 25,762,366 shares Class B common stock, respectively	(760,022)	(772,481)
Accumulated other comprehensive loss, net of tax	(2,937)	(8,612)
Total Federated Investors, Inc. shareholders' equity	495,432	541,959
Nonredeemable noncontrolling interest in subsidiary	1,244	718
Total permanent equity	496,676	542,677
Total liabilities, temporary equity and permanent equity	1,090,061	1,150,856
Class A [Member]
PERMANENT EQUITY
Common stock	189	189
Class B [Member]
PERMANENT EQUITY
Common stock	$ 273,697	$ 252,950

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Unrecorded Unconditional Purchase Obligations Disclosure [Table Text Block]

Federated is obligated to make certain future payments under various agreements to which it is a party, including operating leases (see Note (15)). The following table summarizes minimum noncancelable payments contractually due under Federated’s significant service contracts and employment arrangements:

	Payments due in
											After
in millions	2013		2014		2015		2016		2017		2017		Total
Purchase obligations1	$	20.0	$	7.4	$	1.1	$	0.6	$	0.4	$	0.2	$	29.7
Employment-related commitments2	16.9		7.7		0		0		0		0		24.6
Total	$	36.9	$	15.1	$	1.1	$	0.6	$	0.4	$	0.2	$	54.3

1 Federated is a party to various contracts pursuant to which it receives certain services including services for legal, marketing and information technology, access to various fund-related information systems and research databases, trade order transmission and recovery services as well as other services. These contracts contain certain minimum noncancelable payments, cancellation provisions and renewal terms. The contracts expire on various dates through the year 2019. Costs for such services are expensed as incurred.

2 Federated has certain domestic and international employment arrangements pursuant to which Federated is obligated to make minimum compensation payments. These contracts expire on various dates through the year 2014.

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Unrealized gain (loss) on securities available for sale and reclassification adjustment, tax	$ 2,282	$ (2,139)	$ 2,209
Unrealized gain (loss) on hedging instruments and reclassification adjustment, tax	1,500	(1,501)	(4,107)
Foreign currency translation gain (loss), tax	$ (8)	$ (251)	$ (227)

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Investments Available-For-Sale Securities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Equity Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 44,944	$ 43,217
Gross Unrealized Gains	4,814	2,037
Gross Unrealized Losses	(5)	(925)
Estimated Fair Value	49,753	44,329
Fixed-Income Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	84,855	115,699
Gross Unrealized Gains	1,436	461
Gross Unrealized Losses	(21)	(950)
Estimated Fair Value	86,270	115,210
Total Fluctuating-Value Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	129,799	158,916
Gross Unrealized Gains	6,250	2,498
Gross Unrealized Losses	(26)	(1,875)
Estimated Fair Value	$ 136,023	$ 159,539

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

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

Fair value measurements for classes of Federated’s assets and liabilities measured at fair value on a recurring basis consisted of the following at December 31:

	2012								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	$	67,585	$	0	$	0	$	67,585	$	49,273	$	0	$	0	$	49,273
Available-for-sale equity securities1	102,493		33,530		0		136,023		128,611		30,928		0		159,539
Trading securities—equity	9,194		16,776		0		25,970		10,805		18,653		0		29,458
Trading securities—debt	614		28,436		0		29,050		216		83,831		0		84,047
Foreign currency forward contract	0		158		0		158		0		55		0		55
Total financial assets	$	179,886	$	78,900	$	0	$	258,786	$	188,905	$	133,467	$	0	$	322,372
Financial Liabilities
Interest rate swap	$	0	$	11,178	$	0	$	11,178	$	0	$	15,241	$	0	$	15,241
Acquisition-related future consideration liabilities	0		0		11,759		11,759		0		0		13,404		13,404
Other2	1,015		0		0		1,015		0		245		0		245
Total financial liabilities	$	1,015	$	11,178	$	11,759	$	23,952	$	0	$	15,486	$	13,404	$	28,890

1 Previously 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 in 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 year presented:

in thousands	2012			2011			2010
Beginning balance	$	13,404		$	20,058		$	0
New acquisition adjustment1	3,361			(2,600		)	20,058
Changes in fair value2	(793		)	900			0
Contingent consideration payments	(4,213		)	(4,954		)	0
Ending balance	$	11,759		$	13,404		$	20,058

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

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Property and Equipment Table (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	$ 89,822	$ 85,477
Accumulated Depreciation	(50,910)	(47,249)
Property and equipment, net	38,912	38,228
Computer Software and Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	47,566	45,468
Transportation Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Useful Life	12 years
Property and equipment, Gross	17,875	17,875
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	18,143	15,934
Office Furniture And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Gross	$ 6,238	$ 6,200
Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Useful Life	1 year
Minimum [Member] | Computer Software and Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Useful Life	3 years
Minimum [Member] | Office Furniture And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Useful Life	5 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Useful Life	12 years
Maximum [Member] | Computer Software and Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Useful Life	7 years
Maximum [Member] | Office Furniture And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, Useful Life	10 years

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Common Stock

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Common Stock

The Class A common stockholder has the entire voting rights of Federated; however, without the consent of the majority of the holders of the Class B common stock, the Class A common stockholder cannot alter Federated’s structure, dispose of all or substantially all of Federated’s assets, amend the Articles of Incorporation or Bylaws of Federated to adversely affect the Class B common stockholders, or liquidate or dissolve Federated. With respect to dividends, distributions and liquidation rights, the Class A common stock and Class B common stock have equal preferences and rights.

(a) Dividends

Cash dividends of $256.8 million, $100.0 million and $228.7 million were paid in 2012, 2011 and 2010, respectively, to holders of common stock. Of the amount paid in 2012, $156.9 million represented a $1.51 per share special dividend paid in the fourth quarter. Of the amount paid in 2010, $129.8 million represented a $1.26 per share special dividend paid in the first quarter. All dividends are considered ordinary dividends for tax purposes.

(b) Treasury Stock Repurchases

During 2008, the board of directors authorized a share repurchase program that allows Federated to buy back as many as 5 million shares of Class B common stock. The program has no stated expiration date and no other programs existed as of December 31, 2012. The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities. During the year ended December 31, 2012, Federated repurchased 0.3 million shares of common stock for $6.3 million, nearly all of which were repurchased in the open market. The remaining shares were repurchased in connection with employee separations and are not counted against the board-approved share repurchase program. At December 31, 2012, approximately 1.9 million shares remained available to be purchased under the current buyback program.

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Investments (Tables)

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Available-For-Sale Securities

Available-for-sale securities (see Note (1)(g)) consisted of the following at December 31:

	2012									2011
			Gross Unrealized					Estimated Fair Value				Gross Unrealized					Estimated Fair Value
in thousands	Cost		Gains		(Losses)					Cost		Gains		(Losses)
Equity mutual funds	$	44,944	$	4,814	$	(5	)	$	49,753	$	43,217	$	2,037	$	(925	)	$	44,329
Fixed-income mutual funds	84,855		1,436		(21		)	86,270		115,699		461		(950		)	115,210
Total fluctuating-value mutual funds	$	129,799	$	6,250	$	(26	)	$	136,023	$	158,916	$	2,498	$	(1,875	)	$	159,539

Gains and losses on investments

Gains and losses recognized in Gain on securities, net on the Consolidated Statements of Income in connection with investments and economic derivatives held by certain consolidated investment companies consisted of the following for the years ended December 31:

in thousands	2012			2011			2010
Unrealized gain (loss)
Trading securities	$	1,614		$	(871	)	$	541
Derivatives1	72			(560		)	190
Realized gains2
Available-for-sale securities	4,439			3,006			1,239
Trading securities	1,200			931			2,045
Derivatives1	310			570			720
Purchased loans	0			0			678
Realized losses2
Available-for-sale securities	0			0			(6		)
Trading securities	(627		)	(830		)	(958		)
Derivatives1	(97		)	(814		)	(907		)
Gain on securities, net3	$	6,911		$	1,432		$	3,542

1 Amounts related to the settlement of economic derivatives held by certain consolidated sponsored products.

2 Realized gains and losses are computed on a specific-identification basis.

3 Amounts related to consolidated investment companies totaled $2.0 million, $(1.2) million and $1.5 million for 2012, 2011 and 2010, respectively.

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

Federated files a consolidated federal income tax return. Financial statement tax expense is determined under the liability method.

Income tax expense (benefit), net consisted of the following components for the years ended December 31:

in thousands	2012		2011			2010
Current:
Federal	$	78,422	$	67,662		$	79,273
State	7,430		6,426			8,504
Foreign	6		(56		)	(33		)
	85,858		74,032			87,744
Deferred:
Federal	23,143		15,996			20,997
State	1,878		1,291			3,210
Foreign	4		(31		)	6
Total	$	110,883	$	91,288		$	111,957

The federal net tax effects of timing differences exceeding 5% of the respective year’s pretax income at the statutory federal income tax rate included in Income tax provision on the Consolidated Statements of Income were as follows: $(19.7) million, $(18.7) million and $(11.8) million related to intangible assets in 2012, 2011 and 2010, respectively; $5.1 million related to accrued incentive compensation in 2011; and $(7.3) million related to the recognition of insurance proceeds in 2010.

The reconciliation between the statutory income tax rate and the effective tax rate consisted of the following for the years ended December 31:

	2012		2011		2010
Expected statutory income tax rate	35.0	%	35.0	%	35.0	%
Increase/(decrease):
State and local income taxes, net of Federal benefit	2.1		2.1		2.5
Other	0		0.6		1.0
Effective tax rate (excluding noncontrolling interests)	37.1		37.7		38.5
Income attributable to noncontrolling interests	(1.2	)	(0.6	)	(1.3	)
Effective tax rate per Consolidated Statements of Income	35.9	%	37.1	%	37.2	%

The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities consisted of the following at December 31:

in thousands	2012			2011
Deferred Tax Assets
Tax net operating losses	$	16,781		$	16,481
Other compensation related	6,226			5,843
Unrealized and realized capital losses, net	4,839			7,835
Share-based compensation	3,622			3,405
Deferred income	578			3,500
Write-down of Collateralized Debt Obligation and other investments	169			3,331
Other	1,944			2,560
Total deferred tax assets	34,159			42,955
Valuation allowance	(20,069		)	(21,030		)
Total deferred tax asset, net of valuation allowance	$	14,090		$	21,925
Deferred Tax Liabilities
Intangible assets	$	92,823		$	73,269
Property and equipment	5,323			5,902
State taxes	5,156			3,546
Deferred sales commissions	4,927			3,788
Costs of internal-use software	2,811			2,630
Other	1,595			1,791
Total gross deferred tax liability	$	112,635		$	90,926
Net deferred tax liability	$	98,545		$	69,001

At December 31, 2012, the company had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $16.8 million, which will expire through 2032. A valuation allowance has been recognized for $14.8 million (or 99%) of the deferred tax asset for state tax net operating losses, and for $1.8 million (or 95%) of the deferred tax asset for foreign tax net operating losses. The valuation allowances were recorded due to management’s belief that it is more likely than not that Federated will not realize the full benefit of these net operating losses.

At December 31, 2011, the company had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $16.3 million, which will expire through 2031. A valuation allowance has been recognized for $14.3 million (or 99%) of the deferred tax asset for state tax net operating losses, and for $1.7 million (or 94%) of the deferred tax asset for foreign tax net operating losses. The valuation allowances were recorded due to management’s belief that it is more likely than not that Federated will not realize the full benefit of these net operating losses.

In addition, at December 31, 2012 and 2011, Federated had recorded deferred tax assets resulting from capital losses on certain previously held investments in Collateralized Debt Obligations and other investments. The carry-forward period for capital losses, once recognized, is five years. Management currently believes it is more likely than not that Federated will not fully realize these deferred tax assets in the future and therefore has a related valuation allowance balance of $3.5 million and $5.0 million at December 31, 2012 and 2011, respectively.

The company and its subsidiaries file annual income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, and in certain foreign jurisdictions. Based upon its review of these filings, there were no material unrecognized tax benefits as of December 31, 2012 or 2011. Therefore, there were no material changes during 2012, and no reasonable possibility of a significant increase or decrease in unrecognized tax benefits within the next twelve months.

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Debt and Interest Rate Swap Table (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Debt And Interest Rate Swap [Abstract]
Term Loan, Interest Rates	3.646%	[1]
Term Loan	$ 318,750		$ 361,250
Less: Short-term debt	42,500		42,500
Long-term debt	$ 276,250		$ 318,750

[1] See additional information below regarding the interest rate fixed at 3.646% in connection with the Swap.

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Consolidated Statements of Changes in Equity (USD $)	Total		Common Class A [Member]	Class B [Member]	Treasury Stock [Member]	Common Stock [Member]	Additional Paid-in Capital from Treasury Stock Transactions [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive (Loss) Income, Net of Tax [Member]	Total Shareholders' Equity [Member]	Nonredeemable Noncontrolling Interest in Subsidiary [Member]	Redeemable Noncontrolling Interests in Subsidiaries Temporary Equity [Member]
Balance at Dec. 31, 2009	$ 528,815,000					$ 217,009,000	$ 0	$ 1,105,073,000	$ (795,389,000)	$ 1,514,000	$ 528,207,000	$ 608,000	$ 13,913,000
Shares, Outstanding at Dec. 31, 2009			9,000	102,934,237	26,571,219
Net Income	187,937,000		0	0	0	0	0	179,114,000	0	0	179,114,000	8,823,000	1,226,000
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale and reclassification adjustment	2,840,000	[1]	0	0	0	0	0	0	0	2,840,000	2,840,000	0	0
Reclassification adjustment and unrealized loss on interest rate swap	(7,627,000)	[2]	0	0	0	0	0	0	0	(7,627,000)	(7,627,000)	0	0
Foreign currency translation (loss) gain and reclassification adjustment	(422,000)		0	0	0	0	0	0	0	(422,000)	(422,000)	0	(48,000)
Subscriptions – redeemable noncontrolling interest holders	0		0	0	0	0	0	0	0	0	0	0	10,074,000
Consolidation/(Deconsolidation)	0		0	0	0	0	0	0	0	0	0	0	(21,334,000)
Stock award activity	21,905,000					20,118,000	0	(19,096,000)	20,883,000	0	21,905,000	0	0
Stock award activity, shares			0	903,379	(903,379)
Dividends declared/Distributions to noncontrolling interest in subsidiaries	(237,142,000)		0	0	0	0	0	(228,084,000)	0	0	(228,084,000)	(9,058,000)	(2,288,000)
Stock option activity	10,073,000					270,000	135,000	(478,000)	10,146,000	0	10,073,000	0	0
Stock option activity, shares			0	486,150	(486,150)
Purchase of treasury stock	(14,249,000)					0	0	0	(14,249,000)	0	(14,249,000)	0	0
Purchase of treasury stock, shares			0	(659,675)	659,675
Other	42,000					0	0	42,000	0	0	42,000	0	0
Other, shares			0	0	0
Balance at Dec. 31, 2010	492,172,000					237,397,000	135,000	1,036,571,000	(778,609,000)	(3,695,000)	491,799,000	373,000	1,543,000
Shares, Outstanding at Dec. 31, 2010			9,000	103,664,091	25,841,365
Net Income	154,967,000		0	0	0	0	0	150,906,000	0	0	150,906,000	4,061,000	116,000
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale and reclassification adjustment	(2,939,000)	[1]	0	0	0	0	0	0	0	(2,939,000)	(2,939,000)	0	0
Reclassification adjustment and unrealized loss on interest rate swap	(2,007,000)	[2]	0	0	0	0	0	0	0	(2,007,000)	(2,007,000)	0	0
Foreign currency translation (loss) gain and reclassification adjustment	29,000		0	0	0	0	0	0	0	29,000	29,000	0	(28,000)
Subscriptions – redeemable noncontrolling interest holders	0		0	0	0	0	0	0	0	0	0	0	6,511,000
Consolidation/(Deconsolidation)	0		0	0	0	0	0	0	0	0	0	0	(7,626,000)
Stock award activity	21,050,000					19,770,000	(797,000)	(17,640,000)	19,717,000	0	21,050,000	0	0
Stock award activity, shares			0	1,016,376	(1,016,376)
Dividends declared/Distributions to noncontrolling interest in subsidiaries	(103,637,000)		0	0	0	0	0	(99,921,000)	0	0	(99,921,000)	(3,716,000)	(10,000)
Stock option activity	11,102,000					(4,028,000)	662,000	0	14,468,000	0	11,102,000	0	0
Stock option activity, shares			0	603,418	(603,418)
Purchase of treasury stock	(28,057,000)					0	0	0	(28,057,000)	0	(28,057,000)	0	0
Purchase of treasury stock, shares			0	(1,540,795)	1,540,795
Other	(3,000)					0	0	(3,000)	0	0	(3,000)	0	0
Other, shares			0	0	0
Balance at Dec. 31, 2011	542,677,000					253,139,000	0	1,069,913,000	(772,481,000)	(8,612,000)	541,959,000	718,000	506,000
Shares, Outstanding at Dec. 31, 2011			9,000	103,743,090	25,762,366
Net Income	197,560,000		0	0	0	0	0	188,088,000	0	0	188,088,000	9,472,000	68,000
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale and reclassification adjustment	3,319,000	[1]	0	0	0	0	0	0	0	3,319,000	3,319,000	0	0
Reclassification adjustment and unrealized loss on interest rate swap	2,563,000	[2]	0	0	0	0	0	0	0	2,563,000	2,563,000	0	0
Foreign currency translation (loss) gain and reclassification adjustment	(207,000)		0	0	0	0	0	0	0	(207,000)	(207,000)	0	(215,000)
Subscriptions – redeemable noncontrolling interest holders	0		0	0	0	0	0	0	0	0	0	0	14,070,000
Consolidation/(Deconsolidation)	0		0	0	0	0	0	0	0	0	0	0	5,353,000
Stock award activity	22,831,000					21,227,000	0	(17,189,000)	18,793,000	0	22,831,000	0	0
Stock award activity, shares			0	1,019,773	(1,019,773)
Dividends declared/Distributions to noncontrolling interest in subsidiaries	(265,265,000)		0	0	0	0	0	(256,319,000)	0	0	(256,319,000)	(8,946,000)	(12,514,000)
Stock option activity	(480,000)					(480,000)	0	0	0	0	(480,000)	0	0
Stock option activity, shares			0	0	0
Purchase of treasury stock	(6,334,000)					0	0	0	(6,334,000)	0	(6,334,000)	0	0
Purchase of treasury stock, shares			0	(321,687)	321,687
Other	12,000					0	0	12,000	0	0	12,000	0	0
Other, shares			0	0	0
Balance at Dec. 31, 2012	$ 496,676,000					$ 273,886,000	$ 0	$ 984,505,000	$ (760,022,000)	$ (2,937,000)	$ 495,432,000	$ 1,244,000	$ 7,268,000
Shares, Outstanding at Dec. 31, 2012			9,000	104,441,176	25,064,280

[1] The tax expense (benefit) related to this line item was $2,282, $(2,139) and $2,209 for the years ended December 31, 2012, 2011 and 2010, respectively.

[2] The tax expense (benefit) related to this line item was $1,500, $(1,501) and $(4,107) for the years ended December 31, 2012, 2011 and 2010, respectively.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Receivables, reserve	$ 50	$ 121
Treasury stock, shares	25,064,280	25,762,366
Class A [Member]
Common stock, no par value	$ 0	$ 0
Common stock, shares authorized	20,000	20,000
Common stock, shares issued	9,000	9,000
Common stock, shares outstanding	9,000	9,000
Class B [Member]
Common stock, no par value	$ 0	$ 0
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	129,505,456	129,505,456

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Property and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Property and equipment Disclosure [Text Block]

Property and Equipment

Property and equipment consisted of the following at December 31:

in thousands	Estimated Useful Life			2012			2011
Computer software and hardware	3	to	7 years	$	47,566		$	45,468
Transportation equipment		12 years		17,875			17,875
Leasehold improvements	Up to term of lease			18,143			15,934
Office furniture and equipment	5	to	10 years	6,238			6,200
Total cost				89,822			85,477
Accumulated depreciation				(50,910		)	(47,249		)
Property and equipment, net				$	38,912		$	38,228

Depreciation expense was $8.1 million, $8.3 million and $7.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Jun. 29, 2012	Feb. 19, 2013 Class A [Member]	Feb. 19, 2013 Class B [Member]
Entity Registrant Name	FEDERATED INVESTORS INC /PA/
Entity Central Index Key	0001056288
Trading Symbol	FII
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2012
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Amendment Flag	false
Entity Common Stock, Shares Outstanding			9,000	104,419,704
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float		$ 2,000,000,000

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Insurance Proceeds

12 Months Ended

Dec. 31, 2012

Other Liabilities, Current [Abstract]

Other Current Liabilities

Insurance Proceeds

Federated’s Other current liabilities at December 31, 2011 included an accrual of $10.0 million related to insurance proceeds received for claims submitted to cover costs primarily associated with various legal proceedings. The retention of these advance insurance payments was contingent upon final approval of the claim by the insurance carrier. In the event that all or a portion of the claim had been denied, Federated would have been required to repay all or a portion of these advance payments. During the third and fourth quarters of 2012, Federated received final approvals from various insurance carriers for $20.2 million of claims. Accordingly, Federated recognized $20.2 million in the Consolidated Statements of Income as a reduction to Professional service fees. Federated reversed the $10.0 million in Other current liabilities in the third quarter 2012 and the remaining $10.2 million in insurance proceeds was received in the fourth quarter 2012.

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Earnings Per Share Attributable to Federated Investors, Inc. Shareholders Narrative (Details)	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010
Earnings Per Share [Abstract]
Stock option awards excluded from calculation of diluted EPS	200,000		700,000	3,000,000
Options Outstanding, Number	54,750	[1]	392,479

[1] All stock options outstanding at December 31, 2012 were also vested and exercisable.

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Revenue
Investment advisory fees, net—affiliates	$ 560,978		$ 524,779		$ 579,159
Investment advisory fees, net—other	69,856		61,561		60,245
Administrative service fees, net—affiliates	225,529		220,356		215,643
Other service fees, net—affiliates	74,103		73,343		82,476
Other service fees, net—other	11,799		12,042		11,559
Other, net	3,441		3,033		2,861
Total revenue	945,706		895,114		951,943
Operating Expenses
Compensation and related	257,622		245,439		242,853
Distribution	253,445		235,670		259,210
Systems and communications	25,716		22,971		22,828
Office and occupancy	24,828		24,689		22,958
Professional service fees	18,925		53,737		18,980
Advertising and promotional	13,413		13,413		10,110
Travel and related	12,838		12,174		11,461
Intangible asset related	2,593		7,915		22,511
Other	23,733		21,651		31,241
Total operating expenses	633,113		637,659		642,152
Operating income	312,593		257,455		309,791
Nonoperating Income (Expenses)
Investment income, net	6,756		4,827		3,330
Gain on securities, net	6,911	[1]	1,432	[1]	3,542	[1]
Debt expense	(14,441)		(17,047)		(15,049)
Other, net	(3,308)		(296)		(494)
Total nonoperating expenses, net	(4,082)		(11,084)		(8,671)
Income before income taxes	308,511		246,371		301,120
Income tax provision	110,883		91,288		111,957
Net income including noncontrolling interests in subsidiaries	197,628		155,083		189,163
Less: Net income attributable to the noncontrolling interests in subsidiaries	9,540		4,177		10,049
Net income	$ 188,088		$ 150,906		$ 179,114
Amounts attributable to Federated Investors, Inc.
Earnings Per Share, Basic and Diluted	$ 1.79	[2]	$ 1.45	[2]	$ 1.73	[2]
Cash dividends per share	$ 2.47		$ 0.96		$ 2.22

[1] Amounts related to consolidated investment companies totaled $2.0 million, $(1.2) million and $1.5 million for 2012, 2011 and 2010, respectively.

[2] Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

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Concentration Risk

12 Months Ended

Dec. 31, 2012

Risks and Uncertainties [Abstract]

Concentration Risk

Concentration Risk

(a) Revenue Concentration by Asset Class

The following table summarizes the percentage of total revenue earned from Federated's asset classes over the last three years:

	2012		2011		2010
Money market assets	47	%	46	%	50	%
Equity assets	31	%	33	%	31	%
Fixed-income assets	21	%	20	%	18	%

The change in the relative proportion of Federated's revenue attributable to money market assets from 2011 to 2012 was primarily the result of decreases in fee waivers for certain money market funds to maintain positive or zero net yields. The decline in the relative proportion of Federated's revenue attributable to money market assets from 2010 to 2011 was primarily the result of increases in fee waivers for certain money market funds to maintain positive or zero net yields. A significant change in Federated’s money market business or a significant reduction in money market assets due to regulatory changes, changes in the financial markets including significant and rapid increases in interest rates over a short period of time causing certain investors to prefer direct investments in interest-bearing securities, significant deterioration in investor confidence, further persistent declines in or additional prolonged periods of historically low short-term interest rates and resulting fee waivers or other circumstances, could have a material adverse effect on Federated’s results of operations.

Current Regulatory Environment

In January 2010, the Securities and Exchange Commission (SEC) adopted extensive amendments to Rule 2a-7 of the Investment Company Act of 1940 (Rule 2a-7) aimed at enhancing the resiliency of money market funds. These amendments included a series of enhancements including rules that require all money market funds to meet specific portfolio liquidity standards and rules that significantly enhance the public disclosure and regulatory reporting obligations of these funds. In 2010 and 2011, Federated dedicated internal resources to comply with these amendments including efforts to enhance its information systems and improve related reporting capabilities. These efforts were internally sourced and not material to Federated's financial position, results of operations or cash flows for those years. In Federated's view, the amendments of 2010 meaningfully and sufficiently strengthen money market funds. Recent experience demonstrated that the amendments of 2010 were effective in meeting heightened requests for redemptions occurring in connection with the U.S. credit rating downgrade in 2011 and the ongoing European debt crisis.

The SEC undertook a project to develop a proposal for additional reforms related to money market funds. In August 2012, then SEC Chairman Mary Schapiro issued a public statement announcing that she did not have sufficient votes from the other SEC commissioners to pursue certain proposed reforms relating to money market funds. In her statement, Ms. Schapiro stated that the SEC had been considering two alternative reform proposals, one which would have required a floating net asset value (NAV), and the other which would have imposed capital requirements coupled with some form of redemption restriction. In her statement, she invited other policymakers to take up the issue of reform. On September 27, 2012, then Treasury Secretary Timothy Geithner sent a letter to the members of the Financial Stability Oversight Council (FSOC) announcing his intent to pursue money market fund reform. His letter urged FSOC to use its authority under Section 120 of the Dodd-Frank Act to recommend that the SEC proceed with money market reform. Mr. Geithner outlined three potential options for reform in his letter and stated that he had asked his staff to begin drafting a formal recommendation for FSOC to consider at its November 2012 meeting.

In November 2012, FSOC issued Proposed Recommendations Regarding Mutual Fund Reform citing its authority under Section 120 of the Dodd-Frank Act (Proposed Recommendations). The Proposed Recommendations are in draft form and are subject to a public comment period which ended on February 15, 2013. The Proposed Recommendations include three main alternatives: a floating NAV for money market funds; an NAV capital buffer and minimum balance at risk (or 30-day hold back of up to 3% on certain redemptions); and an NAV capital buffer combined with other measures. In response to the Proposed Recommendations, Federated has filed five comment letters on the Proposed Recommendations pointing out, among other things, that: (1) FSOC exceeded its authority in how it used the Section 120 process; (2) FSOC has not provided justification for further reform efforts; (3) a floating NAV would not prevent “runs” on money market funds; (4) an NAV capital buffer of the kind proposed is impractical and not economically attainable in the current interest rate environment; and (5) the minimum-balance-at-risk concept would impair the utility of money market funds to investors and would be prohibitively costly for both fund groups and intermediaries to implement.

On November 30, 2012, the SEC Staff issued a study entitled Response to Questions Posed by Commissioners Aguilar, Parades and Gallagher. This study responded to questions posed by the Commissioners in response to potential reform measures being advanced by then SEC Chairman Mary Shapiro. The study addressed certain misconceptions about the role of money market funds in the financial crisis of 2008 and confirmed the effectiveness of the 2010 amendments to Rule 2a-7. Federated also filed a comment letter on the study commending the SEC Staff for its work while raising questions on some aspects of the study and recommending further analysis.

Finally, it has been reported that the SEC Staff is working on its own rule proposal and that proposal could include a floating NAV for certain money market funds, in particular prime funds. It could also include a floating NAV proposal for all money market funds as well as other reform measures.

Federated believes the changes currently under consideration, if enacted, would significantly reduce the utility and attractiveness of money market funds for investors who, in Federated's view, value money market funds in their current form as an efficient and effective cash management investment product offering daily liquidity at par.

If ultimately enacted, some or all of these changes would be detrimental to Federated's money market fund business and could materially and adversely affect Federated's operations. The very proposal of such amendments could have an adverse impact on Federated's money market fund business and operations and could also negatively impact the short-term credit markets. Management is carefully monitoring developments in this area and plans to actively participate both individually and with industry groups in the public comment process that would accompany any rule change proposal. Federated is unable to assess the degree of any potential impact such additional reforms may have on its business and operations until such proposals are issued. Even when issued, the final version of any rule amendment could vary significantly from the form in which it is proposed.

Historically Low Short-Term Interest Rates

In certain money market funds, the gross yield is not sufficient to cover all of the fund’s normal operating expenses due to historically low short-term interest rates. Since the fourth quarter 2008, Federated has voluntarily waived fees in order for certain funds to maintain positive or zero net yields. These fee waivers were partially offset by related reductions in distribution expense and net income attributable to noncontrolling interests as a result of Federated's mutual understanding and agreement with third-party intermediaries to share the impact of the waivers.

These voluntary fee waivers are calculated as a percent of AUM in certain money market funds and thus will vary dependent upon the asset levels in such funds. In addition, the level of waivers are dependent on several other factors including, but not limited to, available yields on instruments held by the money market funds, changes in expenses of the money market funds and changes in the mix of money market assets. In any given period, a combination of these factors drives the amount of fee waivers necessary in order for certain funds to maintain positive or zero net yields. As an isolated variable, an increase in yields on instruments held by the money market funds will cause fee waivers to decrease. Conversely, as an isolated variable, an increase in expenses of the money market fund would cause fee waivers to increase.

With regard to asset mix, changes in the relative amount of money market fund assets in prime and government money market funds as well as the distribution among certain share classes that vary in pricing structure will impact the level of fee waivers. Generally, prime money market funds waive less than government money market funds as a result of higher gross yields on the underlying investments. As such, as an isolated variable, an increase in the relative proportion of average managed assets invested in prime money market funds as compared to total average money market fund assets should typically result in lower waivers to maintain positive or zero net yields. Conversely, the opposite would also be true.

The impact of such fee waivers on various components of Federated's Consolidated Statements of Income was as follows for the years ended December 31:

in millions	2012			2011			2010
Revenue	$	(291.0	)	$	(320.7	)	$	(241.6	)
Less: Reduction in Distribution expense	218.5			232.3			186.6
Operating income	(72.5		)	(88.4		)	(55.0		)
Less: Reduction in Noncontrolling interest	1.3			6.5			1.0
Pre-tax impact	$	(71.2	)	$	(81.9	)	$	(54.0	)

The negative pre-tax impact of fee waivers to maintain positive or zero net yields decreased in 2012 as compared to 2011 primarily as a result of improved yields on instruments held by the money market funds. During 2011, further declines in interest rates for certain money market investments drove an increase in these fee waivers as compared to 2010. (See Note (22) for information regarding the quarterly pre-tax impact of these fee waivers.)

Based on recent commentary from the Federal Reserve Bank in its January 30, 2013 press release, “the current highly accommodative stance of monetary policy will remain appropriate for a considerable time…,” Federated is unable to predict when the Federal Reserve will increase its target for the federal funds rate. As such, fee waivers to maintain positive or zero net yields and the related reduction in distribution expense and net income attributable to noncontrolling interests could continue for the foreseeable future. Assuming asset levels and mix remain constant and based on recent market conditions including the lower short-term interest rate environment in the first quarter of 2013 as compared to the fourth quarter of 2012, fee waivers for the first quarter 2013 could increase as compared to the fourth quarter. See Management's Discussion and Analysis for additional information on management’s expectations regarding fee waivers. While the level of fee waivers are impacted by various factors, increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the negative pre-tax impact of these waivers. The actual amount of future fee waivers are contingent on a number of variables including, but not limited to, changes in assets within the money market funds, available yields on instruments held by the money market funds, actions by the Federal Reserve, the U.S. Department of the Treasury, the SEC, FSOC and other governmental entities, changes in expenses of the money market funds, changes in the mix of money market customer assets, Federated’s willingness to continue the fee waivers and changes in the extent to which the impact of the waivers is shared by third parties. 

(b) Revenue Concentration by Investment Fund

Approximately 11% and 10% of Federated’s total revenue for 2012 were derived from services provided to two sponsored funds, the Federated Prime Obligations Fund and the Federated Kaufmann Fund, respectively. A significant and prolonged decline in the AUM in these funds could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to a related reduction to distribution expenses associated with these funds.

(c) Revenue Concentration by Customer

Approximately 10% of Federated’s total revenue for 2012 was derived from services provided to one intermediary customer, the Bank of New York Mellon Corporation. Significant changes in Federated’s relationship with this customer could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to related material reductions to distribution expenses associated with this intermediary.

A listing of Federated’s risk factors is included herein under the section entitled Risk Factors in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Prior Year Business Combinations and Acquisitions

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Business Combinations and Acquisitions

Prior Year Business Combinations and Acquisitions

SunTrust. On September 20, 2010, Federated acquired the money market management business of SunTrust Banks, Inc. (SunTrust Acquisition). Pursuant to the acquisition agreement, $14.1 billion of money market assets transitioned to Federated in a series of closings during the third and fourth quarters of 2010. Money market mutual fund assets in nine money market mutual funds managed by SunTrust’s RidgeWorth Capital Management were transitioned into eight existing Federated money market mutual funds with similar investment objectives. The first and most significant closing occurred on September 20, 2010.

The SunTrust Acquisition included upfront cash payments that totaled $6.6 million. The transaction also includes annual contingent purchase price payments payable in the fourth quarters of each of the five years following the acquisition date. The contingent purchase price payments are calculated as a percentage of revenue less operating expenses directly attributed to certain eligible assets. As of the acquisition date, Federated recognized a liability of $20.1 million to record the estimated fair value of these future payments. See Note (20)(a) for information on contingent payments related to this acquisition. At December 31, 2012, management estimated remaining contingent payments could total $11 million over the three years that remain; however, the actual amount of the contingent payments will vary based on managed asset levels and related net revenues and is not limited by any maximum amount. A wide range of outcomes for actual payments is possible due to the extent of reasonably possible flow-rate volatility for the respective AUM.

The SunTrust Acquisition was accounted for under the acquisition method of accounting. The valuation resulted in total consideration with a fair value of $24.1 millionassignable to a single identifiable intangible asset with an indefinite life and recorded in Renewable investment advisory rights on the Consolidated Balance Sheets. This asset is deductible for tax purposes. The valuation results, which were finalized in the first quarter 2011, are reflected in the Consolidated Balance Sheets and the related footnotes. As of December 31, 2012, the estimated fair value of future consideration payments was $8.2 million and was recorded in Other current liabilities ($3.5 million) and Other long-term liabilities ($4.7 million) (see Note (6)(a) for a discussion regarding the valuation methodology). This liability is remeasured at each reporting date with changes in the fair value recognized in Intangible asset related expense on the Consolidated Statements of Income.

The results of operations for the SunTrust Acquisition were included in Federated’s Consolidated Financial Statements beginning in September 2010 based on the date of the acquisition. The following table summarizes unaudited pro forma financial information assuming the SunTrust Acquisition occurred at the beginning of the year presented. This pro forma financial information is for informational purposes only and is not indicative of future results. In addition, the following pro forma financial information was not adjusted to reflect lower current levels of AUM:

in millions, except per share data for the year ended,	2010
Revenue	$	980.7
Net income attributable to Federated Investors, Inc.	$	186.6
Earnings per share – Basic and Diluted
Net income attributable to Federated Investors, Inc.	$	1.80

The pro forma results include adjustments for the effect of acquisition-related expenses including accretion of interest on the contingent consideration liability and income tax expense.

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Leases

12 Months Ended

Dec. 31, 2012

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Leases

The following is a schedule by year of future minimum payments required under the operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2012:

in millions
2013	$	12.7
2014	11.9
2015	10.0
2016	9.3
2017	8.9
2018 and thereafter	28.5
Total minimum lease payments	$	81.3

Federated held a material operating lease at December 31, 2012 for its corporate headquarters building in Pittsburgh, Pennsylvania. This lease expires in 2021 and has renewal options for two successive terms of five years each. This lease includes provisions for leasehold improvement incentives, rent escalation and certain penalties for early termination. In addition, at December 31, 2012, Federated had various other operating lease agreements primarily involving additional facilities. These leases are noncancelable and expire on various dates through the year 2019. Most leases include renewal options and, in certain leases, escalation clauses.

Rental expenses were $11.5 million, $11.2 million and $11.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.

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Debt and Interest Rate Swap

12 Months Ended

Dec. 31, 2012

Debt And Interest Rate Swap [Abstract]

Debt and Interest Rate Swap

Debt and Interest Rate Swap

Debt at December 31 consisted of the following:

dollars in thousands	Weighted-Average Interest Rate1	2012		2011
Term Loan	3.646%	$	318,750	$	361,250
Less: Short-term debt		42,500		42,500
Long-term debt		$	276,250	$	318,750

1 See additional information below regarding the interest rate fixed at 3.646% in connection with the Swap.

In the second quarter 2011, Federated entered into an Amended and Restated Credit Agreement with a syndicate of banks that included a $382.5 million term loan (Term Loan) and $200 million revolving credit facility (collectively, Credit Agreement). The Credit Agreement expires on June 10, 2016. The Term Loan, a variable-rate note, requires principal payments of $10.6 million per quarter for the first three years and $28.3 million per quarter for the fourth and fifth years and a final payment of $28.3 million due upon its expiration. Certain subsidiaries entered into an Amended and Restated Continuing Agreement of Guaranty and Suretyship whereby these subsidiaries guarantee payment of all obligations incurred through the Credit Agreement.

The borrowings under the Term Loan bear interest at a spread over London Interbank Offering Rate (LIBOR). The interest rate swap (the Swap) that Federated entered into with PNC Bank, National Association and certain other banks during 2010 to hedge its interest rate risk associated with the prior term loan remains in effect.

Under the Swap, which expires on April 1, 2015, Federated will receive payments based on LIBOR plus a spread and will make payments based on an annual fixed rate of 3.646%. The Swap requires monthly cash settlements of interest paid or received. The differential between the interest paid or interest received from the monthly settlements will be recorded as adjustments to Debt expense on the Consolidated Statements of Income. The Swap is accounted for as a cash flow hedge and has been determined to be highly effective. Federated evaluates effectiveness using the long-haul method. Changes in the fair value of the Swap will likely be offset by an equal and opposite change in the fair value of the hedged item, therefore very little, if any, net impact on reported earnings is expected. The fair value of the Swap agreement at December 31, 2012 was a liability of $11.2 million which was recorded in Other current liabilities ($5.9 million) and Other long-term liabilities ($5.3 million) on the Consolidated Balance Sheets. The entire amount of this loss in fair value was recorded in Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets at December 31, 2012. During the next twelve months management expects to charge $5.9 million of this loss to Debt expense on the Consolidated Statements of Income as a component of Federated’s fixed interest rate of 3.646%. This amount could differ from amounts actually recognized due to changes in interest rates subsequent to December 31, 2012 and will not affect the amount of interest expense recognized in total on the Term Loan for any period presented. During the years ended December 31, 2012 and 2011, $7.3 million and $8.3 million, respectively, were charged to Debt expense on the Consolidated Statements of Income as a component of Federated’s fixed interest rate associated with the Swap.

As of December 31, 2012, the entire $200 million revolving credit facility was available for borrowings. Federated pays an annual facility fee, currently 15 basis points, based on its credit rating. Borrowings under the revolving credit facility bear interest similar to the Term Loan borrowings under the Credit Agreement except the LIBOR spread is currently 110 basis points, based on Federated's credit rating.

The Credit Agreement includes representations, warranties and other covenants, including an interest coverage ratio covenant and a leverage ratio covenant. Federated was in compliance with all covenants at and during the year ended December 31, 2012. The Credit Agreement and the Swap also have certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt or to terminate the Swap if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, deterioration in credit rating to below investment grade, notice of lien or assessment and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

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Commitments and Contingencies Narrative (Details) (USD $)		3 Months Ended								3 Months Ended					3 Months Ended				64 Months Ended	3 Months Ended	6 Months Ended	54 Months Ended
	Dec. 31, 2012	Dec. 31, 2012 SunTrust Acquisition [Member]	Dec. 31, 2011 SunTrust Acquisition [Member]	Sep. 30, 2010 SunTrust Acquisition [Member]	Mar. 31, 2012 Prudent Bear Acquisition [Member]	Mar. 31, 2011 Prudent Bear Acquisition [Member]	Mar. 31, 2010 Prudent Bear Acquisition [Member]	Dec. 31, 2008 Prudent Bear Acquisition [Member]	Dec. 31, 2012 Prudent Bear Acquisition [Member]	Mar. 31, 2012 Clover Capital Acquisition [Member]	Mar. 31, 2011 Clover Capital Acquisition [Member]	Mar. 31, 2010 Clover Capital Acquisition [Member]	Dec. 31, 2008 Clover Capital Acquisition [Member]	Dec. 31, 2012 Clover Capital Acquisition [Member]	Dec. 31, 2012 Rochdale Acquisition [Member]	Dec. 31, 2011 Rochdale Acquisition [Member]	Dec. 31, 2010 Rochdale Acquisition [Member]	Sep. 30, 2007 Rochdale Acquisition [Member]	Dec. 31, 2012 Rochdale Acquisition [Member]	Jun. 30, 2005 Alliance Acquisition [Member]	Sep. 30, 2010 Alliance Acquisition [Member]	Sep. 30, 2010 Alliance Acquisition [Member]	Dec. 31, 2012 Employment-related Commitments [Member]
Business Acquisition Contingent Consideration Payable Period				5 years				4 years					5 years					5 years		5 years
Contingent purchase price payments		$ 4,200,000	$ 5,000,000		$ 0	$ 44,700,000	$ 5,100,000			$ 5,900,000	$ 0	$ 0			$ 2,800,000	$ 1,100,000	$ 2,100,000		$ 8,000,000		$ 35,700,000	$ 95,700,000
Estimated remaining contingent purchase price payments		11,000,000												56,000,000
Remaining Business Acquisition Contingent Consideration Payable Period		3 years
Fair value of future consideration payments liability		8,200,000
Fair value of acquisition-related future consideration liabilities, current		3,500,000
Fair value of acquisition-related future consideration liabilities, noncurrent	8,300,000	4,700,000
Business acquisition contingent consideration accrued liability									0					3,400,000
Employee-related commitments to be paid in 2013	36,900,000																						16,900,000	[1]
Maximum bonus payable over remaining terms	43,000,000
Bonus payable in succeeding year	0
Bonus payable related to the Fund Bonus	$ 600,000

[1] Federated has certain domestic and international employment arrangements pursuant to which Federated is obligated to make minimum compensation payments. These contracts expire on various dates through the year 2014.

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Investments

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

Investments on the Consolidated Balance Sheets as of December 31, 2012 and 2011 included available-for-sale and trading securities. At December 31, 2012 and 2011, Federated held investments totaling $136.0 million and $159.5 million, respectively, in fluctuating-value Federated-sponsored mutual funds that were classified as available-for-sale securities and were included in Investments—affiliates on the Consolidated Balance Sheets. Federated’s trading securities totaled $55.0 million and $113.5 million at December 31, 2012 and 2011, respectively, and were included in Investments—other on the Consolidated Balance Sheets. Federated consolidates certain investment companies into its Consolidated Financial Statements as a result of Federated’s controlling financial interest in the products (see Note (5)). All investments held by these investment companies, which primarily represented Federated-sponsored investment companies, were included in Federated’s Consolidated Balance Sheets as of December 31, 2012 and 2011 as trading securities.

Federated’s trading securities as of December 31, 2012 were primarily comprised of domestic and foreign debt securities ($28.7 million), stocks of large U.S. and international companies ($13.9 million) held by various other consolidated investment companies and an offshore master fund invested in global project and trade finance transactions ($12.1 million). Federated’s trading securities as of December 31, 2011 were primarily comprised of high quality, short-term debt securities held by a consolidated, non-U.S. dollar, sponsored money market fund ($77.1 million), as well as shares of an offshore master fund invested in global project and trade finance transactions ($17.9 million) and stocks of large U.S. and international companies ($10.9 million) held by various other consolidated investment companies.

Available-for-sale securities (see Note (1)(g)) consisted of the following at December 31:

	2012									2011
			Gross Unrealized					Estimated Fair Value				Gross Unrealized					Estimated Fair Value
in thousands	Cost		Gains		(Losses)					Cost		Gains		(Losses)
Equity mutual funds	$	44,944	$	4,814	$	(5	)	$	49,753	$	43,217	$	2,037	$	(925	)	$	44,329
Fixed-income mutual funds	84,855		1,436		(21		)	86,270		115,699		461		(950		)	115,210
Total fluctuating-value mutual funds	$	129,799	$	6,250	$	(26	)	$	136,023	$	158,916	$	2,498	$	(1,875	)	$	159,539

The decrease in available-for-sale securities at December 31, 2012 as compared to December 31, 2011, was primarily due to $92.4 million in redemptions of fixed-income and equity mutual funds during 2012 partially offset by purchases of $58.3 million of fixed-income and equity mutual funds in 2012. As of December 31, 2012, unrealized gains of $6.3 million related to equity and fixed-income investments with a fair value of $120.6 million. As of December 31, 2011, unrealized losses of $1.9 million related to fixed-income and equity investments with a fair value of $111.1 million, all of which were outstanding for less than twelve months.

Gains and losses recognized in Gain on securities, net on the Consolidated Statements of Income in connection with investments and economic derivatives held by certain consolidated investment companies consisted of the following for the years ended December 31:

in thousands	2012			2011			2010
Unrealized gain (loss)
Trading securities	$	1,614		$	(871	)	$	541
Derivatives1	72			(560		)	190
Realized gains2
Available-for-sale securities	4,439			3,006			1,239
Trading securities	1,200			931			2,045
Derivatives1	310			570			720
Purchased loans	0			0			678
Realized losses2
Available-for-sale securities	0			0			(6		)
Trading securities	(627		)	(830		)	(958		)
Derivatives1	(97		)	(814		)	(907		)
Gain on securities, net3	$	6,911		$	1,432		$	3,542

1 Amounts related to the settlement of economic derivatives held by certain consolidated sponsored products.

2 Realized gains and losses are computed on a specific-identification basis.

3 Amounts related to consolidated investment companies totaled $2.0 million, $(1.2) million and $1.5 million for 2012, 2011 and 2010, respectively.

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Investments Gain on Securities, Net of Investment Income (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Gain on securities, net	$ 6,911	[1]	$ 1,432	[1]	$ 3,542	[1]
Consolidated Investment Companies [Member]
Gain on securities, net	2,000		(1,200)		1,500
Trading Securities [Member]
Unrealized gain (loss) on trading securities	1,614		(871)		541
Realized gains	1,200	[2]	931	[2]	2,045	[2]
Realized losses	(627)	[2]	(830)	[2]	(958)	[2]
Settlement Of Derivative [Member]
Unrealized gain (loss) on derivatives	72	[3]	(560)	[3]	190	[3]
Realized gains	310	[2],[3]	570	[2],[3]	720	[2],[3]
Realized losses	(97)	[2],[3]	(814)	[2],[3]	(907)	[2],[3]
Available-for-sale Securities [Member]
Realized gains	4,439	[2]	3,006	[2]	1,239	[2]
Realized losses	0	[2]	0	[2]	(6)	[2]
Purchased Loans [Member]
Realized gains	$ 0	[2]	$ 0	[2]	$ 678	[2]

[1] Amounts related to consolidated investment companies totaled $2.0 million, $(1.2) million and $1.5 million for 2012, 2011 and 2010, respectively.

[2] Realized gains and losses are computed on a specific-identification basis.

[3] Amounts related to the settlement of economic derivatives held by certain consolidated sponsored products.

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Consolidation

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Consolidation

Federated is involved with various entities in the normal course of business that may be deemed to be voting rights entities or VIEs. In accordance with Federated’s consolidation accounting policy, Federated first determines whether the entity being evaluated is a voting rights entity or a VIE. Once this determination is made, Federated proceeds with its evaluation of whether or not to consolidate the entity. The disclosures below represent the results of such evaluations pertaining to 2012 and 2011.

(a) Consolidated Voting Interest Entities

Federated has a majority interest (50.5%) and acts as the general partner in Passport Research Ltd., a limited partnership. Edward D. Jones & Co., L.P. is the limited partner with a 49.5% interest. The partnership is an investment adviser to two sponsored funds. Noncontrolling interests in this subsidiary are included in Nonredeemable noncontrolling interest in subsidiary on the Consolidated Balance Sheets.

(b) Consolidated Variable Interest Entities

From time to time, Federated invests in investment companies that meet the definition of a VIE for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Most of Federated’s sponsored mutual funds meet the definition of a VIE primarily due to the funds' typical series fund structure in which the shareholders of each participating portfolio underlying the series fund generally lack the ability as an individual group to make decisions through voting rights regarding the board of directors/trustees of the fund. Federated’s investment in investment companies represents its maximum exposure to loss. As of December 31, 2012 and 2011, Federated was the sole or majority investor in certain investment companies and was deemed to be the primary beneficiary since Federated’s majority interest would absorb the majority of the variability of the net assets of the VIE. At December 31, 2012, the aggregate assets and liabilities of such entities that Federated consolidated were $52.8 million and $2.0 million, respectively, and Federated recorded $7.3 million to Redeemable noncontrolling interest in subsidiaries on Federated’s Consolidated Balance Sheets. At December 31, 2011, the aggregate assets and liabilities of such entities that Federated consolidated were $111.1 million and $0.5 million, respectively, and Federated recorded $0.5 million to Redeemable noncontrolling interest in subsidiaries on Federated’s Consolidated Balance Sheets. The assets of the consolidated investment companies are primarily classified as Investments—other on Federated’s Consolidated Balance Sheets and are restricted for use by the respective investment company. The liabilities of the consolidated investment companies are primarily classified as Other current liabilities on Federated’s Consolidated Balance Sheets and primarily represent investments sold short.

Federated’s conclusion to consolidate an investment company may vary from period to period, most commonly as a result of changes in its percentage interest in the entity resulting from changes in the number of fund shares held by either Federated or third parties. Given that the entities follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses for Federated. During 2012, Federated deconsolidated three mutual funds. The first mutual fund was deconsolidated based on a determination that Federated no longer was the primary beneficiary of the fund as a result of new subscriptions in fund shares by unrelated third parties. The remaining two mutual funds, in which Federated was previously the sole investor, were deconsolidated as a result of Federated redeeming its investments. Accordingly, Federated deconsolidated $80.3 million in Investments—other and $0.6 million in Redeemable noncontrolling interest in subsidiaries on the Consolidated Balance Sheets as of the date of deconsolidation. One of the deconsolidated funds was a non-U.S. dollar money market fund. Upon its deconsolidation, Federated realized a foreign currency gain of $1.2 million in Nonoperating Income (Expenses) - Other, net on the Consolidated Statements of Income that had been recorded in Accumulated other comprehensive loss, net of tax. Federated's foreign currency risk in this investment was hedged by investments in foreign currency forward contracts which were settled in the third quarter 2012. Accordingly, an offsetting pre-tax loss of $1.1 million was reclassified out of Accumulated other comprehensive loss, net of tax on the Consolidated Balance Sheets and realized in Nonoperating Income (Expenses) - Other, net on the Consolidated Statements of Income.

In addition, during 2012, Federated consolidated two funds as a result of new investments. Accordingly, Federated consolidated $21.0 million in Investments—other and $6.0 million in Redeemable noncontrolling interest in subsidiaries on the Consolidated Balance Sheets as of the date of consolidation.

During 2011, Federated deconsolidated two mutual funds based on a determination that it no longer was the primary beneficiary of the funds as a result of new subscriptions in fund shares by unrelated third parties. Accordingly, Federated deconsolidated $17.7 million in Investments—other and $7.6 million in Redeemable noncontrolling interest in subsidiaries on the Consolidated Balance Sheets as of the date of deconsolidation. There was no impact to the Consolidated Statements of Income in 2011 or 2010 as a result of deconsolidation.

Neither creditors nor equity investors in the investment companies have any recourse to Federated’s general credit. In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) for information regarding fee waivers). Federated has not provided financial support to any of these entities outside the ordinary course of business.

(c) Non-Consolidated Variable Interest Entities

At December 31, 2012 and 2011, Federated was involved with certain VIEs in which it held a variable interest but for which it was not the primary beneficiary. The assets and liabilities of these unconsolidated VIEs and Federated’s maximum risk of loss related thereto were as follows at December 31:

	2012						2011
in millions	Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total carrying value of investment and maximum risk of loss		Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total carrying value of investment and maximum risk of loss
Investment companies1	$	295,414.3	$	—	$	205.3	$	290,517.7	$	—	$	221.5
Collateralized debt obligation2	$	0	$	0	$	0	$	2.1	$	12.0	$	0
Equity investment	$	2.8	$	0.3	$	3.8	$	4.5	$	0.7	$	7.1

1 The unconsolidated VIE assets for the investment companies represent total net AUM for the related investment companies. Of Federated’s $205.3 million invested in these entities at December 31, 2012, $57.2 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $148.1 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets. Of Federated’s $221.5 million invested in these entities at December 31, 2011, $44.0 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $177.5 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets.

2 The Collateralized Debt Obligation closed in July 2012. There was no resulting impact to the Consolidated Financial Statements.

Investment Companies – Federated's involvement with certain investment companies that are deemed to be VIEs includes serving as the investment manager, or at times, holding a minority interest or both. Federated’s variable interest is not deemed to absorb the majority of the variability of the entity’s net assets. Therefore Federated is not the primary beneficiary of these VIEs and has not consolidated these entities.

In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of these sponsored investment companies for competitive, regulatory or contractual reasons (see Note (1)(o) for information regarding fee waivers). Federated has not provided financial support to any of these entities outside the ordinary course of business.

Equity Investment – Federated holds a 12% non-voting, noncontrolling interest in a privately-held investment management firm that is registered as an investment adviser and a commodity trading adviser. This investment is accounted for using the equity method of accounting. As of December 31, 2012, the equity-method investee managed over $400 million in both absolute return and enhanced fixed-income mandates, including a hedge fund strategy and an enhanced cash strategy. Due primarily to the nature of the voting rights of the equity holders of the investee, the investee meets the definition of a VIE, however, with its non-voting 12% interest, Federated is not deemed to have power to direct the investee's activities and therefore is not the primary beneficiary. Federated has not provided financial support to the investee. Federated’s investment is included in Other long-term assets on the Consolidated Balance Sheets. In 2012, Federated recorded a $3.0 million impairment charge to write down the investment to a fair value of $3.8 million. See Note (6)(b) for additional information.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are:

Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets may include equity and debt securities that are traded in an active exchange market, including shares of mutual funds.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets.

(a) Fair Value Measurements on a Recurring Basis

Fair value measurements for classes of Federated’s assets and liabilities measured at fair value on a recurring basis consisted of the following at December 31:

	2012								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	$	67,585	$	0	$	0	$	67,585	$	49,273	$	0	$	0	$	49,273
Available-for-sale equity securities1	102,493		33,530		0		136,023		128,611		30,928		0		159,539
Trading securities—equity	9,194		16,776		0		25,970		10,805		18,653		0		29,458
Trading securities—debt	614		28,436		0		29,050		216		83,831		0		84,047
Foreign currency forward contract	0		158		0		158		0		55		0		55
Total financial assets	$	179,886	$	78,900	$	0	$	258,786	$	188,905	$	133,467	$	0	$	322,372
Financial Liabilities
Interest rate swap	$	0	$	11,178	$	0	$	11,178	$	0	$	15,241	$	0	$	15,241
Acquisition-related future consideration liabilities	0		0		11,759		11,759		0		0		13,404		13,404
Other2	1,015		0		0		1,015		0		245		0		245
Total financial liabilities	$	1,015	$	11,178	$	11,759	$	23,952	$	0	$	15,486	$	13,404	$	28,890

1 Previously 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 in Other current liabilities on the Consolidated Balance Sheets.

The following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis. Federated did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at December 31, 2012 or 2011.

Cash and cash equivalents

Cash and cash equivalents include investments in money market funds and deposits with banks. Cash and cash equivalents invested in Federated money market funds totaled $60.2 million and $45.8 million at December 31, 2012 and 2011, respectively. Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value of the underlying funds, and are classified within Level 1 of the valuation hierarchy.

Available-for-sale equity securities

Available-for-sale equity securities include investments in sponsored fluctuating-value mutual funds and are included in Investments—affiliates on the Consolidated Balance Sheets. For investments in mutual funds that are listed on an active exchange, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the net asset value of the underlying funds, and are classified within Level 1 of the valuation hierarchy. For one investment in a mutual fund that is not listed on an active exchange but for which the net asset value is calculated daily and for which there are no redemption restrictions, the security is valued using net asset value as a practical expedient and is classified as Level 2. There is no modeling or additional information needed to arrive at the fair values of these investments.

Trading securities—equity

These trading securities primarily represented the equity securities held by consolidated investment funds and are included in Investments—other on the Consolidated Balance Sheets. For the publicly traded equity securities available in an active exchange market, whether domestic or foreign, the fair value of these securities is often classified as Level 1 and is based on unadjusted quoted market prices. From time to time, however, the fair value of certain equity securities traded principally in foreign markets may be determined by third-party pricing services when it has been determined that there has been a significant trend in the U.S. equity markets or in index futures trading. The determination to use the third-party pricing service versus the unadjusted quoted market price is the cause for transfers between Level 1 and Level 2 for these securities. For the period between December 31, 2011 and December 31, 2012, $2.0 million of investments transferred from Level 1 to Level 2 as a result of a determination by management at the end of 2012 to use adjusted quoted market prices because there had been a significant trend to do so in the U.S. equity markets or in index futures trading after the foreign markets closed, as compared to, at the end of 2011, using unadjusted quoted market prices to determine fair values of these equity securities. For the period between December 31, 2010 and December 31, 2011, approximately $3.5 million of investments transferred from Level 2 to Level 1 as a result of a determination by management at the end of 2010 to use adjusted quoted market prices for the reasons noted above. Transfers into and out of Levels 1 and 2 of the fair value hierarchy are reported at fair values as of the beginning of the period in which the transfers occur.

At December 31, 2012 and 2011, equity trading securities also included shares of certain non-publicly traded mutual funds that were valued using net asset value as a practical expedient (Level 2). Most significantly, Federated held shares of an offshore master investment fund as a result of consolidating one of its feeder funds as of December 31, 2012 and 2011. The offshore master investment fund, which is not publicly traded in an active exchange market, makes investments in global project and trade finance transactions. The $12.1 million and $17.9 million fair value at December 31, 2012 and 2011, respectively, of the feeder fund's investment in the master fund was determined using the net asset value of the master fund, as a practical expedient, and was classified as Level 2 in the valuation hierarchy at December 31, 2012 and 2011.

Trading securities—debt

At December 31, 2012, trading debt securities primarily represented U.S. and foreign bonds held by consolidated sponsored investment funds. The fair value of these securities may include observable market data such as closing market prices provided by independent pricing services after considering factors such as the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. At December 31, 2011, trading debt securities primarily represented high-quality, short-term debt securities held by a consolidated, non-U.S. dollar money market fund ($77.1 million). Such assets had a maximum weighted-average maturity of 15 days at December 31, 2011 and were valued based on amortized cost, which approximated fair value given the high-quality, short-term nature of these securities. The entire amount of these securities is included in Investments—other on the Consolidated Balance Sheets.

Foreign currency forward contracts

The fair value of foreign currency forward contracts is primarily included in Receivables, net or Other current liabilities on the Consolidated Balance Sheets. These contracts primarily represent contracts held by certain consolidated sponsored investment funds as part of their investment strategy. Pricing is determined by interpolating a value by utilizing the spot foreign exchange rate and forward points (based on the spot rate and currency interest rate differentials), which are all inputs that are observable in active markets (Level 2).

Interest rate swap

The fair value of Federated's interest rate swap (the Swap) at December 31, 2012 is included in Other current liabilities ($5.9 million) and Other long-term liabilities ($5.3 million) on the Consolidated Balance Sheets. Pricing is determined based on a third-party, model-derived valuation in which all significant inputs are observable in active markets including the Eurodollar future rate and yields for three- and thirty-year Treasury securities. See Note (11) for more information regarding the Swap.

Acquisition-related future consideration liabilities

From time to time, pursuant to purchase and sale agreements entered into in connection with certain business combinations, Federated may be required to make future consideration payments if certain contingencies are met. See Note (20)(a) for additional information regarding the nature and timing of these payments. In connection with these arrangements entered into after January 1, 2009, Federated records a liability representing the estimated fair value of future consideration payments as of the acquisition date. The liability is subsequently remeasured at fair value on a recurring basis with changes in fair value recorded in earnings. As of December 31, 2012, acquisition-related future consideration liabilities were recorded in Other current liabilities ($3.5 million) and Other long-term liabilities ($8.3 million) on the Consolidated Balance Sheets. Management estimated the fair value of future consideration payments based primarily upon expected future cash flows using an income approach valuation methodology with unobservable data inputs (Level 3). As of December 31, 2012, significant inputs involving unobservable market data included (1) an estimated rate of change for underlying AUM ranging from (13)% - 28% per year (weighted average of 4%); (2) an estimate ranging from 0.01% - 0.02% per year of the impact of fee waivers to maintain positive or zero net yields on the contractually-derived net revenue per managed asset assumptions (weighted average of 0.01%); and (3) an estimated discount rate ranging from 15% - 18% based on the current estimated market rate of return (weighted average of 16%). Assuming no other changes in model inputs, the fair value of the future consideration liability will increase, resulting in additional Intangible asset related expense in the period of change if: (1) the underlying AUM grow at a rate that is greater than the assumed rate, (2) the actual impact of fee waivers to maintain positive or zero net yields on the net revenue is less than the assumed amount, or (3) the discount rate decreases. Conversely, the fair value of the future consideration liability will decrease if the inverse occurs for any of these inputs, assuming no other changes.

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 year presented:

in thousands	2012			2011			2010
Beginning balance	$	13,404		$	20,058		$	0
New acquisition adjustment1	3,361			(2,600		)	20,058
Changes in fair value2	(793		)	900			0
Contingent consideration payments	(4,213		)	(4,954		)	0
Ending balance	$	11,759		$	13,404		$	20,058

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

Investments sold short

The fair value of investments sold short within a consolidated investment fund is included in Other current liabilities on the Consolidated Balance Sheets. These investments primarily relate to domestic equity securities that are available in an active exchange market. The fair value of these investments is classified as Level 1 and is based on unadjusted quoted market prices.

(b) Fair Value Measurements on a Nonrecurring Basis

As previously disclosed, Federated holds a 12% non-voting, noncontrolling interest in a privately-held investment management firm that is registered as an investment adviser and a commodity trading adviser. This investment is accounted for using the equity-method of accounting. Federated's investment in and maximum exposure to loss related to its equity-method investment as compared to its proportionate share of the investee's underlying net assets is characterized as goodwill. Federated evaluated the carrying value of its investment for other-than-temporary impairment under the equity-method of accounting. Due to declines in the investee's AUM, their performance relative to indices and the uncertainty regarding each in the future, management estimated the fair value of its investment at June 30, 2012 and September 30, 2012. Based on the evaluation of qualitative and quantitative factors, management concluded that the investment was not other-than-temporarily impaired as of June 30, 2012 and September 30, 2012.

In light of significant declines in the investee's AUM in the fourth quarter 2012 and lower short-term growth forecasts in AUM, management once again estimated the fair value of its investment at December 31, 2012 and considered whether it was other-than-temporarily impaired. The estimate of fair value was based primarily upon the present value of expected future cash flows using an income approach valuation methodology with unobservable data inputs (Level 3). Significant unobservable model inputs included: (1) projected AUM across product lines with a 10-year compounded annual growth rate of 15% and a terminal growth rate of 3%; and (2) a 17% discount rate based upon the current estimated market rate of return. Based on management's evaluation of qualitative and quantitative factors, management concluded that the investment was other-than-temporarily impaired as of December 31, 2012. Accordingly, Federated recorded a $3.0 million impairment charge in Nonoperating Income (Expenses) – Other, net to write down the equity-method investment to a fair value of $3.8 million. Given uncertainties regarding the success of future sales efforts and possible prolonged periods of over/underperformance compared to indices and the significance of these factors to AUM, management cannot be certain of the outcome of future cash flow analyses.

Since 2008, Federated experienced significant declines in the AUM related to certain quantitative investment products acquired in 2006. The declines in AUM reflected significant market depreciation as well as investor net redemptions. In light of these declines in AUM, performance relative to peers and indices and the uncertainty regarding each of these in the future, the carrying values of the related intangible assets were tested for recoverability at various times over the past several years. Management’s quarterly recoverability test of the carrying value of these intangible assets performed as of June 30, 2010 and December 31, 2010 indicated that the carrying values were not fully recoverable. Cash flow projections at June 30, 2010 and December 31, 2010 were lower than previous projections prepared in connection with recoverability testing as a result of actual and projected declines in AUM in excess of prior estimates. Management estimated the fair value of these intangible assets at June 30, 2010 and December 31, 2010 based primarily upon expected future cash flows using an income approach valuation methodology with unobservable data inputs (Level 3). Such inputs included (1) an estimated rate of change for underlying AUM; (2) expected revenue per managed asset; (3) direct operating expenses; and (4) a discount rate. Management estimated a rate of change for underlying AUM based on a combination of an estimated rate of market appreciation or depreciation and an estimated net redemption or sales rate. Expected revenue per managed asset and direct operating expenses are generally based on contract terms, average market participant data and historical experience. The discount rate was estimated at the current market rate of return. In addition, because of the subjective nature of the projected discounted cash flows, management considered several scenarios and used probability weighting to calculate the expected future cash flows attributable to the intangible assets. The probability-weighted scenarios assumed growth rates in AUM ranging from -100% to 9% over the cash-flow projection period. As a result of these fair value analyses, during 2010 Federated recorded a $10.2 million impairment charge on the Consolidated Statements of Income, $8.2 million of which was included in Intangible asset related expenses with the remainder in Operating Expenses – Other. The related customer relationship intangible assets were written down to $2.0 million, the noncompete agreement included in Other intangible assets was written down to $0.8 million and the related fixed assets were written down to $0.7 million as of December 31, 2010. Intangible asset amortization expense and fixed asset depreciation for future periods were reduced as a result of this impairment. Given the uncertainties regarding future market conditions, the timing and pace of a forecasted recovery and possible prolonged periods of underperformance of the quantitative products compared to peers and indices and the significance of these factors to AUM, management cannot be certain of the outcome of future undiscounted cash flow analyses for these assets with a remaining net book value of $2.1 million at December 31, 2012.

(c) Fair Value Measurements of Other Financial Instruments

The fair value of Federated’s debt is estimated by management based upon expected future cash flows utilizing a discounted cash flow methodology under the income approach. The fair value of the liability is estimated using observable market data (Level 2) in estimating inputs including the discount rate. Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value.

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Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Intangible Assets and Goodwill

Federated’s identifiable intangible assets and goodwill consisted of the following at December 31:

	2012							2011
in thousands	Cost		Accumulated Amortization			Carrying Value		Cost		Accumulated Amortization			Carrying Value
Finite-lived intangible assets:
Customer relationships	$	45,812	$	(37,914	)	$	7,898	$	56,492	$	(45,958	)	$	10,534
Noncompete agreements	7,094		(6,310		)	784		12,142		(10,579		)	1,563
Total finite-lived intangible assets	52,906		(44,224		)	8,682		68,634		(56,537		)	12,097
Indefinite-lived intangible assets:
Renewable investment advisory rights	68,455		N/A			68,455		64,600		N/A			64,600
Trade names	1,900		N/A			1,900		1,900		N/A			1,900
Total indefinite-lived intangible assets	70,355		N/A			70,355		66,500		N/A			66,500
Goodwill	648,820		N/A			648,820		642,329		N/A			642,329
Total identifiable intangible assets and goodwill	$	772,081	$	(44,224	)	$	727,857	$	777,463	$	(56,537	)	$	720,926

The decrease of $15.7 million in the cost of the total finite-lived intangible assets at December 31, 2012 as compared to December 31, 2011 relates to the write-off of fully amortized customer relationship intangible assets and noncompete agreements relating to prior year acquisitions.

Amortization expense for finite-lived intangible assets was $3.4 million, $7.0 million and $14.3 million in 2012, 2011 and 2010, respectively. This expense was included in Intangible asset related on the Consolidated Statements of Income for each period. See Note (6)(b) for information regarding the intangible asset impairments.

Following is a schedule of expected aggregate annual amortization expense for intangible assets in each of the five succeeding years assuming no new acquisitions or impairments:

in millions
2013	$	2.6
2014	$	2.0
2015	$	1.4
2016	$	1.0
2017	$	0.6

Goodwill at December 31, 2012 and 2011 was $648.8 million and $642.3 million, respectively. During 2012, Federated recorded goodwill primarily in connection with contingent purchase price payments or accruals thereof related to the acquisition of certain assets of Clover Capital Management, Inc., a Rochester, New York-based investment manager that specializes in value investing (Clover Capital Acquisition) and the acquisition of certain assets of Rochdale Investment Management LLC relating to its business of providing investment advisory and investment management services to the Rochdale Atlas Portfolio (Rochdale Acquisition). These acquisitions were accounted for under the purchase method of accounting and therefore goodwill was recorded at the time the contingencies lapsed. See Note (20)(a) for additional information.

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Property and Equipment Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 8.1	$ 8.3	$ 7.5

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Commitments and Contingencies Unrecorded Unconditional Purchase Obligations Disclosure (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Unrecorded Unconditional Purchase Obligation [Line Items]
2013	$ 36.9
2014	15.1
2015	1.1
2016	0.6
2017	0.4
After 2017	0.2
Total	54.3
Purchase Obligations [Member]
Unrecorded Unconditional Purchase Obligation [Line Items]
2013	20.0	[1]
2014	7.4	[1]
2015	1.1	[1]
2016	0.6	[1]
2017	0.4	[1]
After 2017	0.2	[1]
Total	29.7	[1]
Employment-related Commitments [Member]
Unrecorded Unconditional Purchase Obligation [Line Items]
2013	16.9	[2]
2014	7.7	[2]
2015	0	[2]
2016	0	[2]
2017	0	[2]
After 2017	0	[2]
Total	$ 24.6	[2]

[1] Federated is a party to various contracts pursuant to which it receives certain services including services for legal, marketing and information technology, access to various fund-related information systems and research databases, trade order transmission and recovery services as well as other services. These contracts contain certain minimum noncancelable payments, cancellation provisions and renewal terms. The contracts expire on various dates through the year 2019. Costs for such services are expensed as incurred.

[2] Federated has certain domestic and international employment arrangements pursuant to which Federated is obligated to make minimum compensation payments. These contracts expire on various dates through the year 2014.

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Insurance Proceeds (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Advance insurance proceeds				$ 10.0
Insurance Recoveries	3.0	17.3	20.2
Proceeds from Insurance Settlement	$ 10.2

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Intangible Assets and Goodwill Future Amortization Expense Table (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
2013	$ 2.6
2014	2.0
2015	1.4
2016	1.0
2017	$ 0.6

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Consolidation (Tables)

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities [Table Text Block]

At December 31, 2012 and 2011, Federated was involved with certain VIEs in which it held a variable interest but for which it was not the primary beneficiary. The assets and liabilities of these unconsolidated VIEs and Federated’s maximum risk of loss related thereto were as follows at December 31:

	2012						2011
in millions	Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total carrying value of investment and maximum risk of loss		Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total carrying value of investment and maximum risk of loss
Investment companies1	$	295,414.3	$	—	$	205.3	$	290,517.7	$	—	$	221.5
Collateralized debt obligation2	$	0	$	0	$	0	$	2.1	$	12.0	$	0
Equity investment	$	2.8	$	0.3	$	3.8	$	4.5	$	0.7	$	7.1

1 The unconsolidated VIE assets for the investment companies represent total net AUM for the related investment companies. Of Federated’s $205.3 million invested in these entities at December 31, 2012, $57.2 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $148.1 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets. Of Federated’s $221.5 million invested in these entities at December 31, 2011, $44.0 million represents investments in money market funds included in Cash and cash equivalents, with the remaining $177.5 million included in Investments—affiliates and Investments—other on the Consolidated Balance Sheets.

2 The Collateralized Debt Obligation closed in July 2012. There was no resulting impact to the Consolidated Financial Statements.

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Concentration Risk Schedule of Revenue Concentration (Details) (Revenue Concentration by Asset Class [Member])	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Money Market Assets [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	47.00%	46.00%	50.00%
Equity Assets [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	31.00%	33.00%	31.00%
Fixed-income Assets [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	21.00%	20.00%	18.00%

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Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

Share-Based Compensation Plans

Federated’s long-term stock-incentive compensation has been provided for under the Stock Incentive Plan (the Plan), as amended and subsequently approved by shareholders from time to time. Share-based awards are granted to reward Federated’s employees and non-management directors who have contributed to the success of Federated and to provide incentive to increase their efforts on behalf of Federated. Since the Plan’s inception, a total of 27.1 million shares of Class B common stock have been authorized for granting share-based awards in the form of restricted stock, stock options or other share-based awards. As of December 31, 2012, 6.0 million shares are available under the Plan.

Share-based compensation expense was $20.1 million, $19.0 million and $19.1 million for the years ended December 31, 2012, 2011 and 2010, respectively. The associated tax benefits recorded in connection with share-based compensation expense was $7.6 million, $7.1 million and $7.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012, the maximum remaining unrecognized compensation expense related to share-based awards approximated $64 million which is expected to be recognized over a weighted-average period of approximately 6 years.

(a) Restricted Stock

Federated’s restricted stock awards represent shares of Federated Class B common stock that may be sold by the awardee only once the restrictions lapse, as dictated by the terms of the award. The awards are generally subject to graded vesting schedules that vary in length from three to ten years with a portion of the award vesting each year, as dictated by the terms of the award. For an award with a ten-year vesting period, the restrictions on the vested portion of the award typically lapse on approximately the award’s fifth- and tenth-year anniversaries. Certain restricted stock awards granted pursuant to a key employee bonus program have a three-year graded vesting schedule with restrictions lapsing at each vesting date. During the period of restriction, the recipient receives dividends on all shares awarded, regardless of their vesting status.

The following table summarizes activity of non-vested restricted stock awards for the year ended December 31, 2012:

	Restricted Shares		Weighted- Average Grant- Date Fair Value
Non-vested at January 1, 2012	3,770,021			$	22.74
Granted1	1,015,273			$	18.06
Vested	(722,825	)		$	24.53
Forfeited	(21,687	)		$	23.71
Non-vested at December 31, 2012	4,040,782			$	21.24

1 During 2012, Federated awarded 480,773 shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, generally vests over a three-year period. Also during 2012, Federated awarded 534,500 shares of restricted Federated Class B common stock to certain key employees. The restricted stock awards generally vest over ten-year periods with restrictions on the vested portions of the awards lapsing on approximately the awards’ fifth- and tenth-year anniversaries.

Federated awarded 1,015,273 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $18.06 to employees during 2012; awarded 1,011,876 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $19.97 to employees during 2011; and awarded 897,379 shares of restricted Federated Class B common stock with a weighted-average grant-date fair value of $22.97 to employees during 2010.

The total fair value of restricted stock vested during December 31, 2012, 2011 and 2010 was $14.1 million, $15.4 million and $12.2 million, respectively.

(b) Stock Options

The outstanding stock options as of December 31, 2012 were granted to non-management directors with exercise prices that equaled the market price of Federated’s Class B common stock on the grant dates. Nearly all of these stock options were awarded with no requisite service requirement, were immediately exercisable and expire no later than ten years after the grant date. Each vested option may be exercised for the purchase of one share of Class B common stock at the exercise price.

The following table summarizes the status of and changes in Federated’s stock option program for the year ended December 31, 2012:

	Options		Weighted-Average Exercise Price		Weighted-Average Remaining  Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2012	392,479		$	29.72
Expired unexercised	(337,729	)	$	29.36
Outstanding at December 31, 20121	54,750		$	31.97	3.7	$	0

1 All stock options outstanding at December 31, 2012 were also vested and exercisable.

Total options exercised during the years ended December 31, 2011 and 2010 were 603,418 and 486,150, respectively. There were no options exercised during the year ended December 31, 2012. The total intrinsic value of stock options exercised during 2011 and 2010 was $1.2 million and $2.3 million, respectively.

There were no stock options granted in 2012, 2011 or 2010.

(c) Non-management Director Stock Award

Federated awarded 4,500, 4,500 and 6,000 shares of Federated Class B common stock to non-management directors in the second quarters of 2012, 2011 and 2010, respectively. There were no additional awards to non-management directors in 2012, 2011 or 2010.

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Accumulated Other Comprehensive (Loss) Income attributable to Federated Shareholders

12 Months Ended

Dec. 31, 2012

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Comprehensive Income (Loss) Note [Text Block]

Accumulated Other Comprehensive (Loss) Income attributable to Federated Shareholders

The components of accumulated other comprehensive (loss) income, net of tax, attributable to Federated shareholders are as follows:

in thousands	Unrealized Loss on Interest Rate Swap			Unrealized Gain (Loss) on Securities Available for Sale			Foreign Currency Translation (Loss) Gain			Total
Balance at January 1, 2010	$	0		$	424		$	1,090		$	1,514
Change in fair value1	(11,828		)	3,642			0			(8,186		)
Reclassification adjustment2	4,201			(802		)	0			3,399
Loss on currency conversion3	0			0			(422		)	(422		)
Balance at December 31, 2010	(7,627		)	3,264			668			(3,695		)
Change in fair value1	(7,373		)	(1,449		)	0			(8,822		)
Reclassification adjustment2	5,366			(1,490		)	0			3,876
Gain on currency conversion3	0			0			29			29
Balance at December 31, 2011	(9,634		)	325			697			(8,612		)
Change in fair value1	(2,193		)	5,535			0			3,342
Reclassification adjustment2	4,756			(2,216		)	(44		)	2,496
Loss on currency conversion3	0			0			(163		)	(163		)
Balance at December 31, 2012	$	(7,071	)	$	3,644		$	490		$	(2,937	)

1 The tax benefit related to the change in fair value of the interest rate swap was $(1,060), $(4,390) and $(6,369) for 2012, 2011 and 2010, respectively. The tax expense (benefit) related to the change in fair value of securities available for sale was $3,474, $(1,337) and $2,640 for 2012, 2011 and 2010, respectively.

2 The tax expense related to the reclassification adjustments for the interest rate swap was $2,560, $2,889 and $2,262 for 2012, 2011 and 2010, respectively. The tax benefit related to the reclassification adjustments for securities available for sale was $(1,192), $(802) and $(431) for 2012, 2011 and 2010, respectively. The tax benefit related to the reclassification adjustments for foreign currency translation was $(24) for 2012.

3 The tax expense (benefit) related to the foreign currency translation gain/loss was $16, $(251) and $(227) for 2012, 2011 and 2010, respectively.

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Prior Year Business Combinations and Acquisitions Unaudited Pro Forma Financial Information (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2010
Revenue	$ 980.7
Net income attributable to Federated Investors, Inc.	$ 186.6
Basic [Member]
Earnings per share - Basic Net income attributable to Federated Investors, Inc.	$ 1.80
Diluted [Member]
Earnings per share - Diluted Net Income attributable to Federated Investors, Inc.	$ 1.80

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Leases (Tables)

12 Months Ended

Dec. 31, 2012

Leases [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

The following is a schedule by year of future minimum payments required under the operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2012:

in millions
2013	$	12.7
2014	11.9
2015	10.0
2016	9.3
2017	8.9
2018 and thereafter	28.5
Total minimum lease payments	$	81.3

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Consolidated Statements of Comprehensive Income (USD $)	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Net income including noncontrolling interest in subsidiaries	$ 197,628,000		$ 155,083,000		$ 189,163,000
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale and reclassification adjustment	3,319,000	[1]	(2,939,000)	[1]	2,840,000	[1]
Reclassification adjustment and unrealized loss on interest rate swap	2,563,000	[2]	(2,007,000)	[2]	(7,627,000)	[2]
Foreign currency translation (loss) gain and reclassification adjustment	(207,000)		29,000		(422,000)
Other comprehensive income (loss)	5,460,000		(4,945,000)		(5,257,000)
Comprehensive income including noncontrolling interest in subsidiaries	203,088,000		150,138,000		183,906,000
Less: Comprehensive (loss) income attributable to redeemable noncontrolling interest in subsidiaries	(147,000)		88,000		1,178,000
Less: Comprehensive income attributable to nonredeemable noncontrolling interest in subsidiary	9,472,000		4,061,000		8,823,000
Comprehensive income attributable to Federated Investors, Inc.	193,763,000		145,989,000		173,905,000
Other Comprehensive Income (Loss) [Member]
Other comprehensive income (loss), net of tax:
Foreign currency translation (loss) gain and reclassification adjustment	$ (422,000)	[3]	$ 1,000	[3]	$ (470,000)	[3]

[1] The tax expense (benefit) related to this line item was $2,282, $(2,139) and $2,209 for the years ended December 31, 2012, 2011 and 2010, respectively.

[2] The tax expense (benefit) related to this line item was $1,500, $(1,501) and $(4,107) for the years ended December 31, 2012, 2011 and 2010, respectively.

[3] The tax benefit related to this line item was $(8), $(251) and $(227) for the years ended December 31, 2012, 2011 and 2010, respectively.

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Supplementary Quarterly Financial Data Schedule (Details) (USD $)	3 Months Ended																6 Months Ended	12 Months Ended						3 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30, 2011		Jun. 30, 2011		Mar. 31, 2011		Dec. 31, 2012	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2012 Special Cash Dividend [Member]	Mar. 31, 2010 Special Cash Dividend [Member]	Dec. 31, 2012 Quarterly Cash Dividend [Member]
Quarterly Financial Information [Line Items]
Revenue	$ 244,824,000		$ 238,468,000		$ 232,132,000		$ 230,281,000		$ 216,406,000		$ 214,048,000		$ 225,777,000		$ 238,882,000			$ 945,706,000		$ 895,114,000		$ 951,943,000
Operating income	83,192,000	[1]	90,033,000	[1]	69,020,000	[1]	70,347,000	[1]	61,861,000		67,011,000		72,083,000		56,500,000			312,593,000		257,455,000		309,791,000
Net income including noncontrolling interest in subsidiaries	51,956,000	[1],[2]	58,193,000	[1],[2]	43,073,000	[1],[2]	44,407,000	[1],[2]	38,625,000		38,520,000		42,885,000		35,054,000			197,628,000		155,083,000		189,163,000
Amounts attributable to Federated Investors, Inc.
Net income	49,581,000	[1],[2]	55,773,000	[1],[2]	40,410,000	[1],[2]	42,325,000	[1],[2]	36,943,000		38,320,000		42,413,000		33,231,000			188,088,000		150,906,000		179,114,000
Earnings Per Share, Basic and Diluted	$ 0.44	[1],[2],[3]	$ 0.54	[1],[2],[3]	$ 0.39	[1],[2],[3]	$ 0.41	[1],[2],[3]	$ 0.36		$ 0.37		$ 0.41		$ 0.32			$ 1.79	[4]	$ 1.45	[4]	$ 1.73	[4]
Cash dividends per share	$ 1.75	[3]	$ 0.24	[3]	$ 0.24	[3]	$ 0.24	[3]	$ 0.24		$ 0.24		$ 0.24		$ 0.24			$ 2.47		$ 0.96		$ 2.22		$ 1.51	$ 1.26	$ 0.24
Stock price per share
High	$ 23.48	[5]	$ 22.31	[5]	$ 23.23	[5]	$ 23.89	[5]	$ 22.39	[5]	$ 24.54	[5]	$ 27.11	[5]	$ 28.57	[5]
Low	$ 18.28	[5]	$ 19.32	[5]	$ 18.54	[5]	$ 15.45	[5]	$ 14.36	[5]	$ 16.01	[5]	$ 23.43	[5]	$ 24.93	[5]
Impact of Minimum Yield Waivers
Revenue	(70,748,000)		(69,495,000)		(70,254,000)		(80,468,000)		(88,953,000)		(88,901,000)		(79,355,000)		(63,461,000)			(291,000,000)		(320,700,000)		(241,600,000)
Less: Reduction in Distribution expense	54,918,000		52,934,000		53,080,000		57,547,000		61,857,000		63,187,000		57,807,000		49,484,000			218,500,000		232,300,000		186,600,000
Operating income	(15,830,000)		(16,561,000)		(17,174,000)		(22,921,000)		(27,096,000)		(25,714,000)		(21,548,000)		(13,977,000)			(72,500,000)		(88,400,000)		(55,000,000)
Less: Reduction in Noncontrolling interest	331,000		298,000		(5,000)		618,000		978,000		2,483,000		2,172,000		839,000			1,300,000		6,500,000		1,000,000
Pre-tax impact	(15,499,000)		(16,263,000)		(17,179,000)		(22,303,000)		(26,118,000)		(23,231,000)		(19,376,000)		(13,138,000)			(71,200,000)		(81,900,000)		(54,000,000)
Insurance Recoveries	3,000,000		17,300,000														20,200,000
Other Asset Impairment Charges	$ 3,000,000
Negative Impact to Diluted Earnings Per Share From Special Dividend	$ 0.04

[1] For the quarters ended September 30, 2012 and December 31, 2012, Federated recorded pretax insurance recoveries totaling $17.3 million and $3.0 million, respectively, for claims submitted over the past several years related to various legal proceedings. See Note (10) for additional information.

[2] Federated recorded an impairment charge of $3.0 million related to an equity-method investment in the fourth quarter of 2012. See Note (6) for additional information.

[3] For the quarter ended December 31, 2012, Federated paid $1.51 per share as a special cash dividend and a $0.24 per share regular dividend. All dividends are considered ordinary dividends for tax purposes. The special dividend negatively impacted fourth quarter 2012 diluted earnings per share by $0.04 per share.

[4] Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

[5] Federated’s common stock is traded on the New York Stock Exchange under the symbol FII.

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Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Recent Accounting Pronouncements

(a) Intangibles - Goodwill and Other

On July 27, 2012, the FASB issued an update to the accounting standard on intangibles. The update amends guidance on testing indefinite-lived intangible assets for impairment to permit an optional qualitative assessment prior to performing a fair value calculation. If the result of the qualitative assessment determines it is more likely than not that an indefinite-lived intangible asset is not impaired, a quantitative fair value calculation would not be required. This update is effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012, however, early adoption is permitted. Federated elected to early adopt the new guidance effective October 1, 2012 in connection with its annual impairment testing of indefinite-lived intangible assets. The adoption of the update did not have a financial impact on Federated's Consolidated Financial Statements.

On January 1, 2012, Federated adopted a FASB update to the accounting standard on intangibles that amends guidance on testing goodwill for impairment to permit a qualitative assessment prior to performance of the two-step impairment test. If the result of the qualitative assessment reveals that there are no indicators of impairment, a quantitative calculation would not be required. This update did not have a financial impact on Federated's Consolidated Financial Statements.

(b) Fair Value Measurement

On January 1, 2012, Federated adopted updated requirements for expanded fair-value disclosures as issued by the FASB. The update amends certain fair value measurement guidance and expands disclosure requirements primarily for fair value measurements utilizing significant unobservable inputs (Level 3) and items not measured at fair value but for which fair value must be disclosed. As the updates affect disclosure only, the adoption of the update did not have a financial impact on Federated’s Consolidated Financial Statements.

(c) Comprehensive Income

On January 1, 2012, Federated adopted FASB updates to the accounting standard on the presentation of comprehensive income that requires presentation of the components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Federated elected to present the components of comprehensive income in two separate but consecutive statements and as a result, began reporting the Consolidated Statements of Comprehensive Income.

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Investments Narrative (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Investments [Line Items]
Available-for-sale Securities, Current	$ 136,023,000	$ 159,539,000
Trading Securities, Current	55,020,000	113,505,000
Proceeds from redemptions of securities avaliable for sale	92,398,000	27,492,000	55,121,000
Purchases of securities available for sale	58,284,000	73,192,000	99,284,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		111,100,000
Total Fluctuating-Value Mutual Funds [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Gross Unrealized Gains	6,250,000	2,498,000
Available For Sale Securities Fair Value	136,023,000	159,539,000
Available-for-sale Securities, Gross Unrealized Losses	26,000	1,875,000
Domestic and Foreign Debt Securities [Member]
Schedule of Investments [Line Items]
Trading Securities, Current	28,700,000
Stocks of large U.S. and international companies [Member]
Schedule of Investments [Line Items]
Trading Securities, Current	13,900,000	10,900,000
Consolidated feeder fund investment in offshore master investment fund [Member]
Schedule of Investments [Line Items]
Trading Securities, Current	12,100,000	17,900,000
Unrealized Gains [Member]
Schedule of Investments [Line Items]
Available For Sale Securities Fair Value	120,600,000
Money Market Funds [Member]
Schedule of Investments [Line Items]
Trading Securities, Debt, Current		$ 77,100,000

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Accumulated Other Comprehensive (Loss) Income attributable to Federated Shareholders Schedule (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Unrealized Loss on Hedging Instruments Net of Tax Reconciliation Value	$ (7,071)		$ (9,634)		$ (7,627)		$ 0
Unrealized (Loss) Gain on Securities Available for Sale Net Of Tax Reconciliation Value	3,644		325		3,264		424
Foreign Currency Translation Gain (Loss) Net of Tax Reconciliation Value	490		697		668		1,090
Accumulated other comprehensive income (loss), net of tax	(2,937)		(8,612)		(3,695)		(1,514)
Unrealized Loss on Hedging Instruments Change in Market Value, Net of Tax	(2,193)	[1]	(7,373)	[1]	(11,828)	[1]
Unrealized (Loss) Gain on Securities Available for Sale Change in Market Value, Net of Tax	5,535	[1]	(1,449)	[1]	3,642	[1]
Total Change in Market Value Net Of Tax	3,342	[1]	(8,822)	[1]	(8,186)	[1]
Unrealized Loss on Hedging Instruments Reclassification Adjustment, Net of Tax	4,756	[2]	5,366	[2]	4,201	[2]
Unrealized (Loss) Gain on Securities Available For Sale, Reclassification Adjustment, Net of Tax	(2,216)	[2]	(1,490)	[2]	(802)	[2]
Foreign Currency Translation Gain (Loss) Reclassification Adjustment, Net of Tax	(44)	[2]	0	[2]	0	[2]
Total Reclassification Adjustment Net of Tax	2,496	[2]	3,876	[2]	3,399	[2]
Foreign Currency Translation Gain (Loss), Gain (Loss) on currency conversion, Net of Tax	(163)	[3]	29	[3]	(422)	[3]
Change in market value of the hedging instruments, tax	(1,060)		(4,390)		(6,369)
Change in market value of securities available for sale, tax	3,474		(1,337)		2,640
Reclassification adjustment for hedging instruments, tax	2,560		2,889		2,262
Reclassification adjustment for available for sale securities, tax	(1,192)		(802)		(431)
Reclassification adjustment for foreign currency translation, tax	(24)
Foreign currency translation gain/loss, tax	$ 16		$ (251)		$ (227)

[1] The tax benefit related to the change in fair value of the interest rate swap was $(1,060), $(4,390) and $(6,369) for 2012, 2011 and 2010, respectively. The tax expense (benefit) related to the change in fair value of securities available for sale was $3,474, $(1,337) and $2,640 for 2012, 2011 and 2010, respectively.

[2] The tax expense related to the reclassification adjustments for the interest rate swap was $2,560, $2,889 and $2,262 for 2012, 2011 and 2010, respectively. The tax benefit related to the reclassification adjustments for securities available for sale was $(1,192), $(802) and $(431) for 2012, 2011 and 2010, respectively.

[3] The tax expense (benefit) related to the foreign currency translation gain/loss was $16, $(251) and $(227) for 2012, 2011 and 2010, respectively.

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Employee Benefit Plans Narrative (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Employee Benefit Plans [Line Items]
Employer contribution expense	$ 4,200,000	$ 4,000,000	$ 3,900,000
401(k) Plan [Member]
Employee Benefit Plans [Line Items]
Number of years of service for vesting	2 years
Number of hours of service for vesting, per year	1,000
Percentage vested after fulfilling the minimum required years of service	20.00%
Number of years for incremental percentage vesting until participant fully vested in Company's matching contribution	4 years
Deferred Profit Sharing [Member]
Employee Benefit Plans [Line Items]
Employer contribution expense	0	0	0
Number of hours of service for eligibility in profit sharing plan, per year	500
Number of shares in profit sharing plan	500,000
Employee Stock [Member]
Employee Benefit Plans [Line Items]
Maximum number of shares of Class B common stock for Employee Stock Purchase Plan	$ 750,000
Defined Contribution Plan Number Of Shares Of Class B Common Stock Purchased Under Plan Since Inception	140,600
First Salary Deferral Contribution [Member] | 401(k) Plan [Member]
Employee Benefit Plans [Line Items]
Employee contribution percentage	2.00%
Employers contribution percentage	100.00%
Second Salary Deferral Contribution [Member] | 401(k) Plan [Member]
Employee Benefit Plans [Line Items]
Employee contribution percentage	4.00%
Employers contribution percentage	50.00%
Minimum [Member] | 401(k) Plan [Member]
Employee Benefit Plans [Line Items]
Employee contribution percentage	1.00%
Maximum [Member] | 401(k) Plan [Member]
Employee Benefit Plans [Line Items]
Employee contribution percentage	50.00%
Maximum [Member] | Employee Stock [Member]
Employee Benefit Plans [Line Items]
Employee contribution percentage	10.00%

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Purchased Loans

12 Months Ended

Dec. 31, 2012

Transfers Of Purchased Loans [Abstract]

Purchased Loans

Purchased Loans

As part of seeding a new Federated-sponsored fund, Federated began investing in purchased loans, consisting primarily of syndicated, commercial, U.S. dollar, floating-rate term loans during the second quarter 2010. The purchased loans were recorded at fair value using a third-party pricing service that determined fair value based on bid and ask prices (Level 2) and were included in Other current assets on the Consolidated Balance Sheets. During 2010, Federated transferred $46.2 million in purchased loans and $4.3 million in cash into a new Federated-sponsored fund in exchange for shares of the fund. This transfer of assets was recorded as a sale for accounting purposes given that the loans were legally isolated from Federated, the Federated-sponsored fund has the right to pledge or exchange the loans and Federated has not maintained effective control over the transferred loans. For the year ended December 31, 2010, Federated recorded $0.7 million in Gain on securities, net on the Consolidated Statements of Income as a result of the sale of these loans. As of December 31, 2012 and 2011, Federated did not hold any purchased loans but maintained an investment in this fund.

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Leases Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Leased Assets [Line Items]
Operating Leases Number Of Renewal Terms	2 years
Operating Leases Number Of Years For Each Renewal Term	5 years
Rental expenses	$ 11.5	$ 11.2	$ 11.3

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Property and equipment [Table Text Block]

Property and equipment consisted of the following at December 31:

in thousands	Estimated Useful Life			2012			2011
Computer software and hardware	3	to	7 years	$	47,566		$	45,468
Transportation equipment		12 years		17,875			17,875
Leasehold improvements	Up to term of lease			18,143			15,934
Office furniture and equipment	5	to	10 years	6,238			6,200
Total cost				89,822			85,477
Accumulated depreciation				(50,910		)	(47,249		)
Property and equipment, net				$	38,912		$	38,228

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Employee Benefit Plans

(a) 401(k)/Profit Sharing Plan

Federated offers defined contribution plans to its employees. Its 401(k) plan covers substantially all employees. Under the 401(k) plan, employees can make salary deferral contributions at a rate of 1% to 50% of their annual compensation (as defined in the 401(k) plan), subject to Internal Revenue Code limitations. Federated makes a matching contribution in an amount equal to 100% of the first 2% that each participant defers and 50% of the next 4% of deferral contributions. Forfeitures of unvested matching contributions are used to offset future matching contributions.

Matching contributions to the 401(k) plan recognized in Compensation and related expense amounted to $4.2 million, $4.0 million and $3.9 million for 2012, 2011 and 2010, respectively.

Vesting in Federated’s matching contributions commences once a participant in the 401(k) plan has been employed at least two years and worked at least 1,000 hours per year. Upon completion of two years of service, 20% of Federated’s contribution included in a participant’s account vests and 20% vests for each of the following four years if the participant works at least 1,000 hours per year. Employees are immediately vested in their 401(k) salary deferral contributions.

A Federated employee becomes eligible to participate in the profit sharing plan if they are employed on the last day of the year and have worked at least 500 hours for the year. The profit sharing plan is a defined contribution plan to which Federated may contribute amounts as authorized by its board of directors. No contributions have been made to the profit sharing plan in 2012, 2011 or 2010. At December 31, 2012, the profit sharing plan held 0.5 million shares of Federated Class B common stock.

(b) Employee Stock Purchase Plan

Federated offers an employee stock purchase plan that allows employees to purchase a maximum of 750,000 shares of Class B common stock. Employees may contribute up to 10% of their salary to purchase shares of Federated’s Class B common stock on a quarterly basis at the market price. The shares purchased under this plan may be newly issued shares, treasury shares or shares purchased on the open market. As of December 31, 2012, 140,600 shares were purchased by employees in this plan on the open market since the plan’s inception in 1998.