8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Act of 1934

Date of Report (Date of earliest event reported): October 27, 2006 (October 26, 2006)

FEDERATED INVESTORS, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	001-14818	25-1111467
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

(Address of principal executive offices, including zip code)

(412) 288-1900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 26, 2006, Federated Investors, Inc. issued the earnings press release attached hereto as Exhibit 99.1 to report third quarter 2006 results.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits:

Exhibit 99.1 – Earnings press release issued by Federated Investors, Inc. dated October 26, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FEDERATED INVESTORS, INC.
	(REGISTRANT)
Dated: October 27, 2006	By:	/s/ Thomas R. Donahue
		Thomas R. Donahue
		Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Earnings press release issued by Federated Investors, Inc. dated October 26, 2006

EX-99.1

Exhibit 99.1

Federated Investors, Inc. Reports Third Quarter 2006 Earnings

• Assets Under Management Reach a Record $222 Billion

• Equity and Fixed-Income Assets Reach $60 Billion

• Board declares quarterly dividend of $0.18

(PITTSBURGH, Pa., October 26, 2006) — Federated Investors, Inc. (NYSE: FII), one of the nation’s largest investment managers, today reported earnings per diluted share from continuing operations (EPS) of $0.43 for the quarter ended Sept. 30, 2006. Federated’s Q3 2006 financial results include a charge of $2.3 million pre-tax, or $0.01 per share after tax, related to the estimated cost of distributing Federated’s 2005 regulatory settlement amount. For Q3 2005, Federated reported EPS of $0.60, which included the recognition of an insurance reimbursement of $23.6 million, or $0.14 per share after tax. For the nine months ended Sept. 30, 2006, Federated reported EPS of $1.29 compared to $1.01 for the same period in 2005.

Federated’s income from continuing operations was $45.2 million for Q3 2006 compared to $64.8 million for Q3 2005. For the nine months ended Sept. 30, 2006, income from continuing operations was $137.9 million compared to $109.6 million for the same period in 2005.

Federated’s total managed assets reached a record $222.7 billion at Sept. 30, 2006, up $15.3 billion or 7 percent from $207.4 billion at Sept. 30, 2005 and up $12.2 billion or 6 percent from the $210.5 billion reported at June 30, 2006. Through its mutual funds and separately managed accounts, Federated managed a record $59.9 billion in equity and fixed-income assets as of Sept. 30, 2006, a $6.4 billion or 12 percent increase from $53.5 billion as of Sept. 30, 2005. Average managed assets for Q3 2006 were $219.7 billion, up $11.6 billion or 6 percent from $208.1 billion reported for Q3 2005 and up $5.8 billion or 3 percent from $213.9 billion in average managed assets reported for Q2 2006. Early in Q3 2006, Federated completed the acquisition of the $6.7 billion quantitative equity firm MDTA LLC. MDTA assets increased to $7.1 billion at Sept. 30, 2006.

“During the quarter, Federated’s equity assets under management grew by nearly $8 billion to over $38 billion at the end of the quarter due to our acquisition of MDTA, improving equity product sales and market appreciation,” said President and CEO J. Christopher Donahue. “In addition, Federated grew its money market assets under management as demand increased among broker/dealer and trust clients. With a backdrop of a more favorable interest rate environment, we believe that we will continue to grow money market assets over time.”

Contacts:
MEDIA	MEDIA	ANALYSTS
Meghan McAndrew	J.T. Tuskan	Ray Hanley
(412) 288-8103	(412) 288-7895	(412) 288-1920
mmcandrew@federatedinv.com	jtuskan@federatedinv.com	rhanley@federatedinv.com

Federated Reports Q3 Earnings

Oct. 26, 2006

Page 2 of 8

During Q3 2006, Federated purchased 787,221 shares of class B common stock for $23.1 million. The board of directors declared a quarterly dividend of $0.18 per share. The dividend is payable on Nov. 15, 2006 to shareholders of record as of Nov. 8, 2006.

Federated’s equity assets were a record $38.3 billion at Sept. 30, 2006, up $8.6 billion or 29 percent from $29.7 billion at Sept. 30, 2005 and up $7.8 billion or 26 percent from $30.5 billion at June 30, 2006. Federated’s top selling equity mutual funds on a net basis were: Federated Strategic Value Fund, Federated Market Opportunity Fund, Federated Kaufmann Small Cap Fund, MDT All Cap Core Fund and MDT Balanced Fund.

Federated’s fixed-income assets were $21.7 billion at Sept. 30, 2006, down $2.1 billion or 9 percent from $23.8 billion at Sept. 30, 2005 and down slightly from June 30, 2006. Federated’s top selling fixed-income mutual funds on a net basis were: Federated Total Return Bond Fund, Federated Total Return Government Bond Fund, Federated International High Income Fund and Federated Municipal High Yield Advantage Fund, Inc.

Money market assets in both funds and separate accounts were $162.8 billion at Sept. 30, 2006, up $8.8 billion or 6 percent from $154.0 billion at Sept. 30, 2005 and up $4.5 billion or 3 percent from $158.3 billion at June 30, 2006. Money market mutual fund assets were $146.8 billion at the end of Q3 2006, up $7.2 billion or 5 percent from $139.6 billion at Sept. 30, 2005 and up $4.8 billion or 3 percent from $142.0 billion at June 30, 2006. Average money market mutual fund assets were $145.8 billion for Q3 2006, up $5.7 billion or 4 percent from $140.1 billion for Q3 2005 and up $2.0 billion or 1 percent from $143.8 billion for Q2 2006.

Financial Summary

For Q3 2006, revenue increased $5.9 million or 3 percent to $243.9 million compared to $238.0 million for the same quarter last year, primarily due to Federated’s acquisition of MDTA LLC in July. For Q3 2006, Federated derived 47 percent of its revenue from money market assets, 39 percent from equity assets, 13 percent from fixed-income assets and 1 percent from other products and services. Revenue for the first nine months of 2006 increased $61.5 million or 9 percent to $719.1 million compared to $657.6 million for the first nine months of 2005, primarily due to the acquisition of the cash management business of Alliance Capital Management L.P. ($43.2 million); the acquisition of MDTA LLC ($6.8 million); and increases in average equity ($20.0 million) and money market ($18.2 million) assets under management, offset by a decrease in fixed-income assets ($14.8 million) under management. For YTD 2006, Federated derived 47 percent of its revenue from money market assets, 39 percent from equity assets, 13 percent from fixed-income assets and 1 percent from other products.

Operating expenses for Q3 2006 increased by $39.1 million or 30 percent to $170.0 million compared to $130.9 million for Q3 2005. Operating expenses for Q3 2005 included the recognition of a $23.6 million

Federated Reports Q3 Earnings

Oct. 26, 2006

Page 3 of 8

insurance reimbursement related to costs incurred for various legal, regulatory and compliance matters. For Q3 2006, as compared to Q3 2005, other increases to operating expenses were caused primarily by the marketing and distribution expenses related to the acquisition of MDTA LLC ($5.8 million) and increased money market ($5.3 million) and equity ($1.2 million) assets. For YTD 2006, operating expenses increased by $47.2 million or 11 percent to $495.4 million compared to $448.2 million for the same period last year. Increases in YTD 2006 operating expenses, as compared to YTD 2005, were caused primarily by the above-mentioned insurance reimbursement; the Alliance acquisition ($37.9 million); the marketing and distribution expenses related to increased equity ($4.3 million) and money market ($12.9 million) assets; and the acquisition of MDTA LLC ($5.8 million). These increases were partially offset by the $55.6 million of regulatory settlement expense, which was recorded in the first half of 2005.

Federated will host an earnings conference call at 9 a.m. Eastern on Friday, Oct. 27, 2006. Investors are invited to listen to Federated’s Q3 earnings teleconference by calling 888-412-9259 (domestic) or 706-679-0848 (international) prior to the 9 a.m. start time for the teleconference. The call may also be accessed in real time on the Internet via the About Us section of FederatedInvestors.com. A replay will be available after 12:30 p.m. and until Nov. 3, 2006 by calling 800-642-1687 (domestic) or 706-645-9291 (international) and entering code 7815144.

Federated Investors, Inc. is one of the largest investment managers in the United States, managing $222.7 billion in assets as of Sept. 30, 2006. With 149 mutual funds and a variety of separately managed account options, Federated provides comprehensive investment management to more than 5,400 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Federated ranks in the top 2 percent of money market fund managers in the industry, the top 7 percent of equity fund managers and the top 9 percent of fixed-income fund managers¹. For more information, visit FederatedInvestors.com.

###

1 Strategic Insight, August 2006. Based on assets under management in open-end funds.

Certain statements in this press release, such as those related to interest rates and growth of money market assets, constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the company 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 are the uncertainty of interest rate changes and the ability of the company to grow money market assets as a result of such changes, as well as the risk factors discussed in the company’s annual and quarterly reports as filed with the Securities and Exchange Commission. Many of these factors may be impacted as a result of the ongoing threat of terrorism. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness of such statements in the future.

Federated Securities Corp. is distributor of the Federated funds.

Separately managed accounts are made available through Federated Investment Counseling and Federated MDTA LLC, both registered investment advisors.

Federated Reports Q3 Earnings

Oct. 26, 2006

Page 4 of 8

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share data)

	Quarter Ended Sept. 30,						% Change Q3 2005 to Q3 2006		Quarter Ended June 30, 2006			% Change Q2 2006 to Q3 2006
	2006			2005
Revenue
Investment advisory fees, net	$	153,713		$	148,284		4	%	$	146,487		5	%
Administrative service fees, net		36,864			36,061		2			36,082		2
Other service fees, net		51,813			51,867		(0	)		52,099		(1	)
Other, net		1,545			1,757		(12	)		1,738		(11	)
Total Revenue		243,935			237,969		3			236,406		3
Operating Expenses
Compensation and related		48,099			44,868		7			44,780		7
General and administrative
Marketing and distribution		72,172			64,818		11			70,430		2
Professional service fees		10,040			(15,135	)	166			8,422		19
Office and occupancy		5,917			3,560		66			4,976		19
Systems and communications		5,757			4,552		26			4,952		16
Advertising and promotional		3,650			4,732		(23	)		3,794		(4	)
Travel and related		2,900			2,959		(2	)		3,346		(13	)
Other		3,460			3,546		(2	)		2,898		19
Total general and administrative		103,896			69,032		51			98,818		5
Amortization of deferred sales commissions		12,600			12,947		(3	)		13,018		(3	)
Amortization of intangible assets		5,389			4,035		34			4,220		28
Total Operating Expenses		169,984			130,882		30			160,836		6
Operating Income		73,951			107,087		(31	)		75,570		(2	)
Nonoperating (Expenses) Income
Investment income, net		1,958			2,448		(20	)		3,074		(36	)
Debt expense––recourse		(157	)		(82	)	91			(65	)	142
Debt expense––nonrecourse		(1,846	)		(4,327	)	(57	)		(2,019	)	(9	)
Other, net		—			103		(100	)		(1	)	(100	)
Total Nonoperating (Expenses) Income, net		(45	)		(1,858	)	(98	)		989		(105	)
Minority interest		1,359			2,563		(47	)		1,333		2
Income from continuing operations before income taxes		72,547			102,666		(29	)		75,226		(4	)
Income tax provision		27,383			37,833		(28	)		28,570		(4	)
Income from continuing operations		45,164			64,833		(30	)		46,656		(3	)
Discontinued operations, net of tax*		445			(1,166	)	138			3,265		(86	)
Net Income	$	45,609		$	63,667		(28	)%	$	49,921		(9	)%
Earnings Per Share—Basic
Income from continuing operations	$	0.44		$	0.61		(28	)%	$	0.44		0	%
Income (loss) from discontinued operations*	$	0.00		$	(0.01	)	100		$	0.03		(100	)%
Net Income**	$	0.44		$	0.60		(27	)%	$	0.48		(8	)%
Earnings Per Share—Diluted
Income from continuing operations	$	0.43		$	0.60		(28	)%	$	0.44		(2	)%
Income (loss) from discontinued operations*	$	0.00		$	(0.01	)	100		$	0.03		(100	)%
Net Income	$	0.43		$	0.59		(27	)%	$	0.47		(9	)%
Weighted-average shares outstanding
Basic		103,587			106,109					104,923
Diluted		105,342			108,236					107,078
Dividends declared per share	$	0.180		$	0.150				$	0.180

* Discontinued operations primarily reflects the after-tax gain on the sale of Federated’s trade-clearing business of $0.6 million and $3.2 million in Q3 and Q2 2006 respectively. Discontinued operations in Q3 2005 primarily reflects the after-tax loss on the sale of InvestLink Technologies, Inc. ($1.7 million) partially offset by operating income for Federated’s trade-clearing business ($0.7 million).

** May not sum due to rounding.

Federated Reports Q3 Earnings

Oct. 26, 2006

Page 5 of 8

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share data)

	Nine Months Ended Sept. 30,						% Change
	2006			2005
Revenue
Investment advisory fees, net	$	448,254		$	422,052		6	%
Administrative service fees, net		109,045			98,843		10
Other service fees, net		156,789			131,026		20
Other, net		5,035			5,725		(12	)
Total Revenue		719,123			657,646		9
Operating Expenses
Compensation and related		142,456			130,938		9
General and administrative
Marketing and distribution		212,617			153,828		38
Professional service fees		26,050			125		20,740
Office and occupancy		16,419			14,223		15
Systems and communications		15,465			14,091		10
Advertising and promotional		11,396			12,241		(7	)
Travel and related		8,860			8,573		3
Settlement expense		—			55,550		(100	)
Other, net		9,206			9,074		1
Total general and administrative		300,013			267,705		12
Amortization of deferred sales commissions		39,126			39,486		(1	)
Amortization of intangible assets		13,835			10,039		38
Total Operating Expenses		495,430			448,168		11
Operating Income		223,693			209,478		7
Nonoperating Income (Expenses)
Investment income, net		8,245			5,852		41
Debt expense––recourse		(287	)		(256	)	12
Debt expense––nonrecourse		(6,017	)		(13,358	)	(55	)
Other, net		(2	)		51		(104	)
Total Nonoperating Income (Expenses), net		1,939			(7,711	)	125
Minority interest		4,193			7,491		(44	)
Income from continuing operations before income taxes		221,439			194,276		14
Income tax provision		83,533			84,652		(1	)
Income from continuing operations		137,906			109,624		26
Discontinued operations, net of tax*		6,545			(1,168	)	660
Net Income	$	144,451		$	108,456		33	%
Earnings Per Share—Basic
Income from continuing operations	$	1.32		$	1.03		28	%
Income (loss) from discontinued operations*	$	0.06		$	(0.01	)	700	%
Net Income	$	1.38		$	1.02		35	%
Earnings Per Share—Diluted
Income from continuing operations	$	1.29		$	1.01		28	%
Income (loss) from discontinued operations*	$	0.06		$	(0.01	)	700	%
Net Income	$	1.35		$	1.00		35	%
Weighted-average shares outstanding
Basic		104,711			106,116
Diluted		106,843			108,139
Dividends declared per share	$	0.510		$	0.425

* Discontinued operations for YTD 2006 reflects the after-tax gain on the sale of Federated’s trade-clearing business ($3.7 million), the reversal of a related deferred tax asset valuation allowance ($1.8 million) and after-tax operating income ($1.0 million) of Federated’s trade-clearing operations. Discontinued operations for YTD 2005 primarily reflects the after-tax loss on the sale ($1.7 million) and after-tax operating loss ($1.1 million) of InvestLink Technologies, Inc., partially offset by after-tax operating income of Federated’s trade-clearing operations ($1.8 million).

Federated Reports Q3 Earnings

Oct. 26, 2006

Page 6 of 8

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

	Sept. 30, 2006			Dec. 31, 2005
Assets
Cash, restricted cash and other short-term investments	$	113,520		$	284,805
Other current assets		63,177			61,618
Deferred sales commissions, net		123,376			157,562
Intangible assets, net, and goodwill		489,709			370,026
Other long-term assets		26,221			22,610
Total Assets	$	816,003		$	896,621
Liabilities, Minority Interest and Shareholders’ Equity
Current liabilities	$	119,492		$	166,300
Long-term debt—nonrecourse		124,294			159,784
Other long-term liabilities and minority interest		37,719			30,208
Shareholders’ equity excluding treasury stock		1,186,283			1,090,915
Treasury stock		(651,785	)		(550,586	)
Total Liabilities, Minority Interest and Shareholders’ Equity	$	816,003		$	896,621

Federated Reports Q3 Earnings

Oct. 26, 2006

Page 7 of 8

Changes in Equity and Fixed-Income Fund Managed Assets

(in millions)

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
	2006			2005			2006			2005
Equity Funds
Beginning assets	$	26,488		$	25,573		$	26,031		$	25,951
Sales		1,457			1,150			4,450			3,838
Redemptions		(1,610	)		(1,854	)		(5,291	)		(4,870	)
Net redemptions		(153	)		(704	)		(841	)		(1,032	)
Net exchanges		(7	)		(3	)		8			25
Acquisition related		267			142			643			142
Other*		576			1,090			1,330			1,012
Ending assets	$	27,171		$	26,098		$	27,171		$	26,098
Fixed-Income Funds
Beginning assets	$	17,967		$	20,237		$	19,037		$	21,137
Sales		1,039			1,166			3,448			4,038
Redemptions		(1,453	)		(1,609	)		(4,875	)		(5,652	)
Net redemptions		(414	)		(443	)		(1,427	)		(1,614	)
Net exchanges		(5	)		(24	)		(58	)		(65	)
Acquisition related		34			0			34			50
Other*		430			(26	)		426			236
Ending assets	$	18,012		$	19,744		$	18,012		$	19,744

* Includes the approximate effect of changes in the market value of securities held by the funds, reinvested dividends and distributions and net investment income.

Changes in Equity and Fixed-Income Separate Account Assets*

(in millions)

	Three Months Ended Sept. 30, 2006
Equity Separate Accounts
Beginning assets	$	4,035
Net customer flows**		201
Acquisition related		6,420
Other**		449
Ending assets	$	11,105
Fixed-Income Separate Accounts
Beginning assets	$	3,708
Net customer flows**		(170	)
Acquisition related		0
Other**		109
Ending assets	$	3,647

* Includes separately managed accounts (SMA), institutional accounts and sub-advised funds (variable annuity and other).

** For certain accounts, Net Customer Flows are calculated as the remaining difference between beginning and ending assets after the calculation of Other and the impact of Acquisition Related. Other includes the approximate effect of changes in the market value of securities held in the portfolios, reinvested dividends and distributions and net investment income.

Prior period data is not available for Changes in Equity and Fixed-Income Separate Account Assets.

Federated Reports Q3 Earnings

Oct. 26, 2006

Page 8 of 8

(in millions)

MANAGED ASSETS	Sept. 30, 2006		June 30, 2006		March 31, 2006		Dec. 31, 2005		Sept. 30, 2005
By Asset Class
Equity	$	38,276	$	30,523	$	31,552	$	29,785	$	29,650
Fixed-income		21,659		21,675		22,342		23,017		23,800
Money market		162,808		158,319		163,604		160,621		153,985
Total Managed Assets	$	222,743	$	210,517	$	217,498	$	213,423	$	207,435
By Market*
Wealth Management & Trust	$	102,878	$	100,935	$	107,885	$	105,918	$	101,980
Broker/Dealer		95,144		84,316		82,969		82,886		82,171
Global Institutional		18,905		19,507		20,441		18,592		17,300
Other		5,816		5,759		6,203		6,027		5,984
Total Managed Assets	$	222,743	$	210,517	$	217,498	$	213,423	$	207,435
By Product Type
Mutual Funds:
Equity	$	27,171	$	26,488	$	27,567	$	26,031	$	26,098
Fixed-income		18,012		17,967		18,579		19,037		19,744
Money market		146,841		142,023		145,978		145,289		139,621
Total Fund Assets	$	192,024	$	186,478	$	192,124	$	190,357	$	185,463
Separate Accounts:
Equity	$	11,105	$	4,035	$	3,985	$	3,754	$	3,552
Fixed-income		3,647		3,708		3,763		3,980		4,056
Money market		15,967		16,296		17,626		15,332		14,364
Total Separate Accounts	$	30,719	$	24,039	$	25,374	$	23,066	$	21,972
Total Managed Assets	$	222,743	$	210,517	$	217,498	$	213,423	$	207,435
	Quarter Ended
AVERAGE MANAGED ASSETS	Sept. 30, 2006		June 30, 2006		March 31, 2006		Dec. 31, 2005		Sept. 30, 2005
By Asset Class
Equity	$	36,429	$	30,976	$	30,696	$	29,386	$	29,542
Fixed-income		21,685		21,986		22,743		23,248		24,102
Money market		161,558		160,977		164,061		157,433		154,416
Total Avg. Assets	$	219,672	$	213,939	$	217,500	$	210,067	$	208,060
By Product Type
Mutual Funds:
Equity	$	26,550	$	27,000	$	26,779	$	25,760	$	26,043
Fixed-income		18,023		18,244		18,874		19,249		20,007
Money market		145,840		143,794		146,096		143,691		140,060
Total Avg. Fund Assets	$	190,413	$	189,038	$	191,749	$	188,700	$	186,110
Separate Accounts:
Equity	$	9,879	$	3,976	$	3,917	$	3,626	$	3,499
Fixed-income		3,662		3,742		3,869		3,999		4,095
Money market		15,718		17,183		17,965		13,742		14,356
Total Avg. Separate Accts.	$	29,259	$	24,901	$	25,751	$	21,367	$	21,950
Total Avg. Assets	$	219,672	$	213,939	$	217,500	$	210,067	$	208,060
	Quarter Ended
ADMINISTERED ASSETS	Sept. 30, 2006		June 30, 2006		March 31, 2006		Dec. 31, 2005		Sept. 30, 2005
Period End	$	18,423	$	18,224	$	18,555	$	18,271	$	18,632
Average	$	18,236	$	18,298	$	18,494	$	17,908	$	18,020

* Federated’s market definitions changed as of Jan. 1, 2006. Channels that had been included in the former Institutional market are now included in the Broker/Dealer and the Wealth Management & Trust markets.