Cover Page
Cover Page - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 14, 2020 | Jun. 30, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 1-14818 | ||
Entity Registrant Name | FEDERATED HERMES, INC. | ||
Entity Incorporation, State or Country Code | PA | ||
Entity Tax Identification Number | 25-1111467 | ||
Entity Address, Address Line One | 1001 Liberty Avenue | ||
Entity Address, City or Town | Pittsburgh, | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 15222-3779 | ||
City Area Code | 412 | ||
Local Phone Number | 288-1900 | ||
Title of 12(b) Security | Class B common stock, no par value | ||
Trading Symbol | FHI | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 3.1 | ||
Documents Incorporated by Reference | Part III of this Form 10-K incorporates by reference certain information from the registrant's 2020 Information Statement. | ||
Entity Central Index Key | 0001056288 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class A | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 9,000 | ||
Class B | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 101,117,928 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and Cash Equivalents | $ 249,174 | $ 156,832 |
Investments—Consolidated Investment Companies | 64,526 | 22,798 |
Investments - Affiliates And Other | 26,935 | 10,860 |
Receivables, net of reserve of $14 and $50, respectively | 64,492 | 60,094 |
Receivables—Affiliates | 37,589 | 34,985 |
Prepaid Expenses | 16,748 | 16,513 |
Other Current Assets | 1,820 | 2,019 |
Total Current Assets | 461,284 | 304,101 |
Long-Term Assets | ||
Goodwill | 774,534 | 809,608 |
Intangible Assets, net | 446,228 | 339,639 |
Property and Equipment, net | 51,725 | 53,229 |
Right-of-Use Assets, net | 100,514 | |
Other Long-Term Assets | 45,846 | 37,106 |
Total Long-Term Assets | 1,418,847 | 1,239,582 |
Total Assets | 1,880,131 | 1,543,683 |
Current Liabilities | ||
Accounts Payable and Accrued Expenses | 69,014 | 56,110 |
Accrued Compensation and Benefits | 137,445 | 113,865 |
Lease Liabilities | 13,575 | |
Other Current Liabilities | 10,679 | 11,205 |
Total Current Liabilities | 230,713 | 181,180 |
Long-Term Liabilities | ||
Long-Term Debt | 100,000 | 135,000 |
Long-Term Deferred Tax Liability, net | 165,382 | 148,164 |
Long-Term Lease Liabilities | 107,543 | |
Other Long-Term Liabilities | 23,127 | 39,705 |
Total Long-Term Liabilities | 396,052 | 322,869 |
Total Liabilities | 626,765 | 504,049 |
Commitments and Contingencies (Note (21)) | ||
TEMPORARY EQUITY | ||
Redeemable Noncontrolling Interest in Subsidiaries | 212,086 | 182,513 |
Federated Hermes, Inc. Shareholders' Equity | ||
Retained Earnings | 930,351 | 791,823 |
Treasury Stock, at Cost, 8,375,077 and 8,702,074 Shares Class B Common Stock, respectively | (281,032) | (287,337) |
Accumulated Other Comprehensive Income (Loss), net of tax | (249) | (14,617) |
Total Permanent Equity | 1,041,280 | 857,121 |
Total Liabilities, Temporary Equity and Permanent Equity | 1,880,131 | 1,543,683 |
Class A | ||
Federated Hermes, Inc. Shareholders' Equity | ||
Common Stock | 189 | 189 |
Class B | ||
Federated Hermes, Inc. Shareholders' Equity | ||
Common Stock | $ 392,021 | $ 367,063 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Receivables, reserve | $ 14 | $ 50 |
Treasury stock, shares outstanding | 8,375,077 | 8,702,074 |
Class A | ||
Common stock, no par value (usd per share) | $ 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 | ||
Common stock, no par value (usd per share) | $ 0 | $ 0 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 109,505,456 | 109,505,456 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | |||
Total Revenue | $ 1,326,894 | $ 1,135,677 | $ 1,102,924 |
Operating Expenses | |||
Compensation and Related | 442,147 | 354,765 | 289,215 |
Systems and Communications | 52,988 | 39,925 | 31,971 |
Office and Occupancy | 44,926 | 34,622 | 29,258 |
Professional Service Fees | 43,714 | 42,903 | 29,064 |
Advertising and Promotional | 17,774 | 16,141 | 11,166 |
Travel and Related | 16,645 | 15,594 | 12,646 |
Other | 20,110 | 13,867 | 15,317 |
Total Operating Expenses | 978,967 | 805,397 | 761,416 |
Operating Income | 347,927 | 330,280 | 341,508 |
Nonoperating Income (Expenses) | |||
Investment Income, net | 4,450 | 5,985 | 7,236 |
Gain (Loss) on Securities, net | 4,966 | (4,357) | 8,072 |
Debt Expense | (5,037) | (5,885) | (4,772) |
Other, net | 12,965 | (29,849) | (42) |
Total Nonoperating Income (Expenses), net | 17,344 | (34,106) | 10,494 |
Income Before Income Taxes | 365,271 | 296,174 | 352,002 |
Income Tax Provision | 88,146 | 73,875 | 57,101 |
Net Income Including the Noncontrolling Interests in Subsidiaries | 277,125 | 222,299 | 294,901 |
Less: Net Income (Loss) Attributable to the Noncontrolling Interests in Subsidiaries | 4,786 | 2,002 | 3,560 |
Net Income | $ 272,339 | $ 220,297 | $ 291,341 |
Amounts Attributable to Federated Hermes, Inc. | |||
Earnings Per Common Share—Basic and Diluted (usd per share) | $ 2.69 | $ 2.18 | $ 2.87 |
Cash Dividends Per Share (usd per share) | $ 1.08 | $ 1.06 | $ 1 |
Investment Advisory Fees, net—Affiliates | |||
Revenue | |||
Total Revenue | $ 685,849 | $ 585,832 | $ 591,112 |
Investment Advisory Fees, net—Other | |||
Revenue | |||
Total Revenue | 221,756 | 187,586 | 140,558 |
Administrative Service Fees, net—Affiliates | |||
Revenue | |||
Total Revenue | 245,887 | 199,269 | 188,814 |
Other Service Fees, net—Affiliates | |||
Revenue | |||
Total Revenue | 161,421 | 156,935 | 176,397 |
Other Service Fees, net—Other | |||
Revenue | |||
Total Revenue | 11,981 | 6,055 | 6,043 |
Distribution | |||
Operating Expenses | |||
Distribution | $ 340,663 | $ 287,580 | $ 342,779 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net Income Including the Noncontrolling Interests in Subsidiaries | $ 277,125 | $ 222,299 | $ 294,901 |
Permanent Equity | |||
Foreign Currency Translation Gain (Loss) | 14,368 | (13,607) | 612 |
Reclassification Adjustment Related to Foreign Currency Items | 0 | (191) | 0 |
Unrealized Gain (Loss) on Equity Securities | 0 | 0 | 1,642 |
Reclassification Adjustment Related to Equity Securities | 0 | (29) | (2,521) |
Temporary Equity | |||
Foreign Currency Translation Gain (Loss) | 6,907 | (6,009) | 0 |
Other Comprehensive Income (Loss), net of tax | 21,275 | (19,836) | (267) |
Comprehensive Income Including the Noncontrolling Interests in Subsidiaries | 298,400 | 202,463 | 294,634 |
Less: Comprehensive Income (Loss) Attributable to Redeemable Noncontrolling Interest in Subsidiaries | 11,693 | (4,007) | 3,084 |
Less: Comprehensive Income (Loss) Attributable to Nonredeemable Noncontrolling Interest in Subsidiary | 0 | 0 | 476 |
Comprehensive Income Attributable to Federated Hermes, Inc. | $ 286,707 | $ 206,470 | $ 291,074 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Class A | Common Stock | Common StockClass A | Common StockClass B | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Total Shareholders' Equity | Nonredeemable Noncontrolling Interest in Subsidiary | Redeemable Noncontrolling Interest in Subsidiaries/ Temporary Equity |
Common stock, beginning balance (in shares) at Dec. 31, 2016 | 9,000 | 101,989,683 | |||||||||
Treasury stock, beginning balance (in shares) at Dec. 31, 2016 | 7,515,773 | ||||||||||
Beginning balance at Dec. 31, 2016 | $ 595,784 | $ 320,982 | $ (255,382) | $ 529,749 | $ (523) | $ 594,826 | $ 958 | ||||
Temporary equity, beginning balance at Dec. 31, 2016 | $ 31,362 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 291,817 | 291,341 | 291,341 | 476 | |||||||
Net Income | 3,084 | ||||||||||
Other Comprehensive Income (Loss), net of tax | (267) | (267) | (267) | ||||||||
Subscriptions – Redeemable Noncontrolling Interest Holders | 4,687 | ||||||||||
Consolidation/(Deconsolidation) | (67) | ||||||||||
Stock Award Activity (in shares) | 952,570 | ||||||||||
Stock Award Activity (in shares) | (952,570) | ||||||||||
Stock Award Activity | 23,695 | 22,396 | $ 23,607 | (22,308) | 23,695 | ||||||
Dividends Declared | (101,423) | (101,423) | (101,423) | ||||||||
Distributions to Noncontrolling Interest in Subsidiaries | (1,434) | (1,434) | |||||||||
Distributions to Noncontrolling Interest in Subsidiaries | (8,903) | ||||||||||
Purchase of Treasury Stock (in shares) | (1,841,800) | ||||||||||
Purchase of Treasury Stock (in shares) | 1,841,800 | ||||||||||
Purchase of Treasury Stock | (46,957) | $ (46,957) | (46,957) | ||||||||
Common stock, ending balance (in shares) at Dec. 31, 2017 | 9,000 | 101,100,453 | |||||||||
Treasury stock, ending balance (in shares) at Dec. 31, 2017 | 8,405,003 | ||||||||||
Ending balance at Dec. 31, 2017 | 761,215 | 343,378 | $ (278,732) | 697,359 | (790) | 761,215 | 0 | ||||
Temporary equity, ending balance at Dec. 31, 2017 | 30,163 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 220,297 | 220,297 | 220,297 | ||||||||
Net Income | 2,002 | ||||||||||
Other Comprehensive Income (Loss), net of tax | (13,573) | (13,573) | (13,573) | ||||||||
Other Comprehensive Income (Loss), net of tax | (6,009) | ||||||||||
Subscriptions – Redeemable Noncontrolling Interest Holders | 2,801 | ||||||||||
Consolidation/(Deconsolidation) | (1,751) | ||||||||||
Stock Award Activity (in shares) | 908,719 | ||||||||||
Stock Award Activity (in shares) | (908,719) | ||||||||||
Stock Award Activity | 25,318 | 23,874 | $ 20,495 | (19,051) | 25,318 | ||||||
Stock Award Activity | 4,239 | ||||||||||
Dividends Declared | (106,907) | (106,907) | (106,907) | ||||||||
Distributions to Noncontrolling Interest in Subsidiaries | (18,492) | ||||||||||
Business Acquisition | 169,560 | ||||||||||
Purchase of Treasury Stock (in shares) | (1,205,790) | ||||||||||
Purchase of Treasury Stock (in shares) | 1,205,790 | ||||||||||
Purchase of Treasury Stock | $ (29,100) | $ (29,100) | (29,100) | ||||||||
Common stock, ending balance (in shares) at Dec. 31, 2018 | 9,000 | 9,000 | 100,803,382 | ||||||||
Treasury stock, ending balance (in shares) at Dec. 31, 2018 | 8,702,074 | 8,702,074 | |||||||||
Ending balance at Dec. 31, 2018 | $ 857,121 | 367,252 | $ (287,337) | 791,823 | (14,617) | 857,121 | 0 | ||||
Temporary equity, ending balance at Dec. 31, 2018 | 182,513 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 272,339 | 272,339 | 272,339 | ||||||||
Net Income | 4,786 | ||||||||||
Other Comprehensive Income (Loss), net of tax | 14,368 | 14,368 | 14,368 | ||||||||
Other Comprehensive Income (Loss), net of tax | 6,907 | ||||||||||
Subscriptions – Redeemable Noncontrolling Interest Holders | 9,356 | ||||||||||
Consolidation/(Deconsolidation) | 454 | ||||||||||
Stock Award Activity (in shares) | 941,074 | ||||||||||
Stock Award Activity (in shares) | (941,074) | ||||||||||
Stock Award Activity | 26,389 | 24,958 | $ 22,045 | (20,614) | 26,389 | ||||||
Stock Award Activity | 7,888 | ||||||||||
Dividends Declared | (109,049) | (109,049) | (109,049) | ||||||||
Distributions to Noncontrolling Interest in Subsidiaries | (3,580) | ||||||||||
Business Acquisition | (386) | ||||||||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | (4,148) | (4,148) | (4,148) | ||||||||
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | 4,148 | ||||||||||
Purchase of Treasury Stock (in shares) | (614,077) | ||||||||||
Purchase of Treasury Stock (in shares) | 614,077 | ||||||||||
Purchase of Treasury Stock | $ (15,740) | $ (15,740) | (15,740) | ||||||||
Common stock, ending balance (in shares) at Dec. 31, 2019 | 9,000 | 9,000 | 101,130,379 | ||||||||
Treasury stock, ending balance (in shares) at Dec. 31, 2019 | 8,375,077 | 8,375,077 | |||||||||
Ending balance at Dec. 31, 2019 | $ 1,041,280 | $ 392,210 | $ (281,032) | $ 930,351 | $ (249) | $ 1,041,280 | $ 0 | ||||
Temporary equity, ending balance at Dec. 31, 2019 | $ 212,086 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Operating Activities | |||
Net Income Including the Noncontrolling Interests in Subsidiaries | $ 277,125 | $ 222,299 | $ 294,901 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | |||
Amortization of Deferred Sales Commissions | 2,077 | 2,967 | 8,025 |
Depreciation and Other Amortization | 25,922 | 17,087 | 10,637 |
Share-Based Compensation Expense | 25,057 | 23,893 | 22,508 |
Subsidiary Share-Based Compensation Expense | 7,888 | 4,239 | 0 |
(Gain) Loss on Disposal of Assets | (1,085) | 298 | (7,193) |
Provision (Benefit) for Deferred Income Taxes | 7,452 | 12,257 | (59,272) |
Net Unrealized (Gain) Loss on Investments | (6,915) | 4,322 | (889) |
Net Sales (Purchases) of Investments—Consolidated Investment Companies | (26,434) | 16,696 | 133,992 |
Other Changes in Assets and Liabilities: | |||
(Increase) Decrease in Receivables, net | (7,250) | (9,907) | (6,129) |
(Increase) Decrease in Prepaid Expenses and Other Assets | 7,411 | (210) | (115) |
Increase (Decrease) in Accounts Payable and Accrued Expenses | 30,912 | (96,231) | (13,875) |
Increase (Decrease) in Other Liabilities | (7,220) | 8,572 | 4,785 |
Net Cash Provided (Used) by Operating Activities | 334,940 | 206,282 | 387,375 |
Investing Activities | |||
Purchases of Investments—Affiliates and Other | (103,445) | (7,267) | (5,779) |
Cash Paid for Business Acquisitions, net of Cash Acquired | 785 | (168,430) | (4,352) |
Cash Paid for Asset Acquisitions | (58,046) | (1,962) | 0 |
Proceeds from Redemptions of Investments—Affiliates and Other | 81,068 | 20,283 | 20,930 |
Cash Paid for Property and Equipment | (15,045) | (17,274) | (9,799) |
Other Investing Activities | 0 | 211 | 0 |
Net Cash Provided (Used) by Investing Activities | (94,683) | (174,439) | 1,000 |
Financing Activities | |||
Dividends Paid | (109,147) | (106,943) | (101,511) |
Purchases of Treasury Stock | (15,740) | (29,247) | (48,642) |
Distributions to Noncontrolling Interests in Subsidiaries | (3,580) | (18,492) | (10,337) |
Contributions from Noncontrolling Interests in Subsidiaries | 9,356 | 2,801 | 4,687 |
Proceeds from Shareholders for Share-Based Compensation | 1,431 | 1,444 | 1,299 |
Proceeds from New Borrowings | 8,800 | 87,650 | 0 |
Payments on Debt | (43,800) | (122,650) | (21,250) |
Other Financing Activities | 0 | (678) | (1,167) |
Net Cash Provided (Used) by Financing Activities | (152,680) | (186,115) | (176,921) |
Effect of Exchange Rates on Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents | 4,508 | (5,111) | 0 |
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 92,085 | (159,383) | 211,454 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning of Period | 157,426 | 316,809 | 105,355 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period | 249,511 | 157,426 | 316,809 |
Less: Restricted Cash and Restricted Cash Equivalents Recorded in Other Long-Term Assets | 337 | 594 | 545 |
Cash and Cash Equivalents | 249,174 | 156,832 | 316,264 |
Cash paid during the year for: | |||
Income taxes | 72,612 | 61,573 | 118,412 |
Interest | $ 4,606 | $ 5,320 | $ 4,109 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Nature of Operations Federated provides investment advisory, administrative, distribution and other services to the Federated Funds and Separate Accounts in both domestic and international markets, as well as stewardship services to various companies. For presentation purposes in the Consolidated Financial Statements, the Federated Funds are considered to be affiliates of Federated. The majority of Federated's revenue is derived from investment advisory services provided to the Federated Funds and Separate Accounts through various subsidiaries pursuant to investment advisory contracts. These advisory subsidiaries are registered as investment advisors under the Advisers Act or operate in similar capacities under applicable jurisdictional law. U.S.-domiciled Federated Funds are generally distributed by a wholly owned subsidiary registered as a broker/dealer under the 1934 Act and under applicable state laws. Non-U.S.-domiciled Federated Funds are generally distributed by subsidiaries and third-party distribution firms which are registered under applicable jurisdictional law. Federated's investment products are distributed within the U.S. financial intermediary , U.S. institutional and international markets. (b) Basis of Presentation The Consolidated Financial Statements have been prepared in accordance with U.S. 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 to the current year's presentation. (d) Revenue Recognition All of Federated's revenue is earned from contracts with customers, which are generally terminable upon no more than 60 days ' notice. Revenue is measured as the consideration to which Federated expects to be entitled in exchange for providing its services. This amount may be reduced by Fee Waivers . See Note (6) for information about current period Fee Waivers . Revenue from providing investment advisory, administrative and the majority of other services is recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers. For these revenue streams, control is transferred over time as the customer simultaneously consumes the benefit of the service as it is provided. Federated utilizes a time-based measure of progress for which each day is a distinct service period over the life of the contract. Investment advisory, administrative and certain other service fees are generally calculated as a percentage of average net assets of the investment portfolios managed by Federated. Based on the nature of the calculation, the revenue for these services is accounted for as variable consideration, and is subject to factors outside of Federated's control, including investor activity and market volatility, and is recognized as these uncertainties are resolved. Certain other service fees are earned on fixed-rate contracts which are recorded over the life of the contract as services are performed. See Note (4) for information about expected future revenue. For the distribution performance obligation, control is transferred to the customer at a point in time upon investor subscription and/or redemption. Based on the nature of the calculation, the revenue for these services is accounted for as variable consideration, and is subject to factors outside of Federated's control, including investor activity and preferences and market volatility, and is recognized as these uncertainties are resolved. For certain revenue, primarily related to distribution and performance fees, Federated may recognize revenue in the current period that pertains to performance obligations satisfied in prior periods, as it represents variable consideration and is recognized as uncertainties are resolved. The fair value of the investment portfolios managed by Federated is primarily determined using quoted market prices, independent third-party pricing services and broker/dealer price quotes or the NAV Practical Expedient . In limited circumstances, a quotation or price determination is not readily available from an independent 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 Federated Funds . For the periods presented, an immaterial amount of AUM was priced in this manner. For Separate Accounts that are not registered investment companies under the 1940 Act , the fair value of portfolio investments is primarily determined as specified in applicable customer agreements, including in agreements between the customer and the customer's third-party custodian. For Separate Accounts that are registered investment companies under the 1940 Act (e.g., sub-advised mutual funds), the fair value of portfolio investments is determined based on a prescribed valuation process approved by the board of directors/trustees of the sub-advised fund. Federated has contractual arrangements with third parties to provide certain fund-related services. Management considers whether Federated is acting as the principal service provider or as an agent to determine whether its revenue should be recorded based on the gross amount received from the funds or net of Federated's payments to third-party service providers. Federated is considered a principal service provider if it controls the service that is transferred to the customer. Alternatively, it would be considered an agent when it does not control the service, but rather arranges for the service to be provided by another party. 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 revenues on a gross basis. All of Federated's revenue is recorded gross of payments made to third parties. Management judgments are used when reviewing newly-created contracts and/or materially-modified contracts to determine whether: (1) Federated is the principal or agent; (2) a contract has multiple performance obligations when Federated is paid a single fee; and (3) two or more contracts should be combined. A change in the conclusion of whether Federated is the principal or agent would result in a change in the revenue being recorded gross or net of payments made to third parties. Different conclusions for the remaining two judgments may change the line items to which revenue is being recorded. There are no significant judgments that would impact the timing of revenue recognition. (e) Principles of Consolidation Federated performs an analysis for each Federated Fund or other entity in which Federated holds a financial interest to determine if it is a VIE or voting rights entity ( VRE ). Factors considered in this analysis include, but are not limited to, whether (1) it is a legal entity, (2) a scope exception applies, (3) a variable interest exists and (4) shareholders have the power to direct the activities that most significantly impact the economic performance, as well as the equity ownership, and any related party or de facto agent implications of Federated's involvement with the entity. Entities that are determined to be VIE s are consolidated if Federated is deemed to be the primary beneficiary. Entities that are determined to be VREs are generally consolidated if Federated holds the majority voting interest. Federated's conclusion to consolidate a Federated Fund may vary from period to period, most commonly as a result of changes in its percentage interest in the entity. All intercompany accounts and transactions have been eliminated. Consolidation of Variable Interest Entities Federated has a controlling financial interest in a VIE and is, therefore, deemed to be the primary beneficiary of a VIE if it has (1) the power to direct the activities of a VIE that most significantly impact the VIE 's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE . Consolidation of Voting Rights Entities Federated has a controlling financial interest in a VRE if it can exert control over the financial and operating policies of the VRE , which generally occurs when Federated holds the majority voting interest (i.e., greater than 50% of the voting equity interest). (f) Cash and Cash Equivalents Cash and Cash Equivalents consist of investments in money market funds and deposits with banks. Cash equivalents are highly liquid investments that are readily convertible to cash with original maturities of 90 days or less at the date of acquisition. (g) Investments Federated's investments are categorized as Investments—Consolidated Investment Companies or Investments—Affiliates and Other on the Consolidated Balance Sheets . Investments—Consolidated Investment Companies represent securities held by Federated as a result of consolidating certain Federated Funds . Investments—Affiliates and Other represent Federated's investments in fluctuating-value Federated Funds and investments held in Separate Accounts for which Federated owns the underlying debt and equity securities. All investments are carried at fair value with unrealized gains or losses on these securities recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income . Realized gains and losses on these securities are computed on a specific-identification basis and recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income . 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. See Note (8) for additional information regarding the fair value of investments held as of December 31, 2019 and 2018 . (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 (Loss) on Securities, net on the Consolidated Statements of Income . From time to time, Federated may also enter into derivative financial instruments to hedge against the risk of movement in foreign exchange rates. Federated records all derivative financial instruments as either assets or liabilities on its Consolidated Balance Sheets and measures these instruments at fair value. Federated has not designated any derivative financial instrument as a hedging instrument for accounting purposes. In 2019, the gain or loss on these derivative instruments is recognized in Operating Expenses – Other on the Consolidated Statements of Income . (i) Asset Acquisitions and Business Combinations Federated performs an analysis to determine whether a transaction should be accounted for as an asset acquisition or a business combination. A transaction that does not meet the definition of a business under U.S. GAAP is accounted for as an asset acquisition. Asset acquisitions are accounted for using a cost accumulation and allocation method where the cost of the transaction is allocated on a relative fair value basis to the qualifying assets acquired and liabilities assumed on the acquisition date. The cost of the transaction includes both the consideration transferred to the seller and any direct transaction costs incurred. The primary asset acquired in previous asset acquisitions has been the rights to manage fund assets. The rights to manage fund assets is an intangible asset valued using the excess earnings method, under the income approach, which estimates fair value by quantifying the amount of discounted cash flows generated by the asset. No goodwill is recognized in an asset acquisition. A transaction that meets the definition of a business is accounted for as a business combination under the acquisition method of accounting. The consideration transferred to the seller in a business combination is measured at fair value and calculated as the sum of the acquisition date fair values of the assets transferred by Federated, the liabilities incurred by Federated to the acquirer and any equity interests issued by Federated. Direct transaction costs are expensed as incurred in a business combination. Results of operations of an acquired business are included in Federated's results from the date of acquisition. Rights to manage fund assets and trade names acquired in a business combination are recorded at fair value. The fair value of the rights to manage fund assets is determined using the excess earnings method, under the income approach. The fair value of the trade names is determined using the relief from royalty method, under the income approach. Each method considers various factors to project future cash flows expected to be generated from the asset. After the fair values of all separately identifiable assets and liabilities have been estimated, goodwill is recorded to the extent that the consideration paid exceeds the sum of the fair values of the separately identifiable acquired assets, net of assumed liabilities. For both asset acquisitions and business combinations, the significant assumptions used in the valuation of the intangible assets acquired typically include: (1) the asset's estimated useful life; (2) projected AUM; (3) projected revenue growth rates; (4) projected pre-tax profit margins; (5) tax rates; (6) discount rates and (7) in the case of a trade name valuation, a royalty rate. (j) Goodwill and Intangible Assets Intangible assets consist primarily of rights to manage fund assets and trade names acquired in connection with various asset acquisitions and business combinations. Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Certain portions of goodwill and intangible assets are denominated in foreign currency and, as such, include the effects of foreign currency fluctuations. 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 management of Federated's operations as a single business: investment management. 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 quantitative goodwill impairment test is performed which compares the fair value of its reporting unit, including consideration of Federated's market capitalization, with its carrying amount. If the carrying amount of its reporting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting unit. Federated has determined that certain acquired assets, primarily certain rights to manage fund assets and trade names, have indefinite useful lives. In reaching this conclusion, management considered the acquired assets' legal, regulatory and agreed-upon provisions, the highest and best use of the asset, the level of cost and effort required in agreed-upon renewals, and the effects of obsolescence, demand, competition and other economic factors that could impact the assets' fair value. The fair value of the rights to manage fund assets is determined using the excess earnings method, under the income approach. The fair value of the trade name is determined using the relief from royalty method, under the income approach. Federated has aggregated multiple indefinite-lived assets into three units of accounting for purposes of indefinite-lived intangible impairment testing. The determination to group indefinite-lived intangible assets into three units of accounting is not a one-time evaluation. Rather, it is subject to reconsideration and may change depending on the facts and circumstances. On a quarterly basis, indefinite-lived intangible assets are reviewed for potential changes in useful life. In addition, an annual impairment test is performed at the accounting unit level, or when indicators of a potential impairment exist. Management may use a qualitative or quantitative approach which requires the weighting 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. In 2019, management used a quantitative approach. Management considers macroeconomic and entity-specific factors, including the asset's estimated useful life, projected AUM, projected revenue growth rates, projected pre-tax profit margins, tax rates, discount rates and, in the case of a trade name valuation, a royalty rate. If Federated's carrying amount of its accounting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to the excess of the carrying value over the fair value. Federated amortizes finite-lived identifiable intangible assets on a straight-line basis over their estimated useful lives. 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 a potential impairment monitored by management include a significant decline in the level of managed assets, changes to contractual provisions underlying certain intangible assets and significant 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 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. (k) 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 15 years. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or their respective lease terms. Depreciation and amortization expense is recorded in Office and Occupancy on the Consolidated Statements of Income. As property and equipment are taken out of service, the cost and related accumulated depreciation and amortization are removed. The write-off of any residual net book value is reflected as a loss in Operating Expenses – Other on 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 on the Consolidated Statements of Income . (l) 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, including software licenses in a cloud computing arrangement, are capitalized in accordance with the applicable accounting guidance relating to Intangibles - Goodwill and Other - Internal-Use Software. 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 estimated useful life of the software, typically four years , or over the term of the software license. These assets are subject to the impairment test used for property and equipment described above. (m) Leases Prior to the adoption of the new lease guidance effective January 1, 2019, Federated classified leases as either capital or operating. All leases for the periods presented prior to January 1, 2019 were classified as operating leases. Rent expense under noncancelable operating leases with scheduled rent increases or rent holidays was 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 was recorded as a deferred liability. The liability was then reduced when scheduled payments were in excess of the straight-line rent expense. Build-out allowances and other such lease incentives were recorded as deferred credits, and were amortized on a straight-line basis as a reduction of rent expense beginning in the period they were deemed to have been earned, which generally coincided with the effective date of the lease. The current portion of remaining deferred lease costs and unamortized build-out allowances was included in Other Current Liabilities and the long-term portion was included in Other Long-Term Liabilities on the Consolidated Balance Sheets as of and prior to December 31, 2018. Following the adoption of the new lease guidance effective January 1, 2019, Federated classifies leases as either operating or financing, and records a ROU asset and a lease liability on the Consolidated Balance Sheets. The lease liability is initially measured at the present value of the unpaid lease payments remaining at the lease commencement date. The ROU asset is initially measured as the lease liability, adjusted for lease payments made prior to the lease commencement date and lease incentives received. ROU assets are reviewed for impairment when events or circumstances indicate that the carrying amount may not be recoverable. In determining the present value of the lease liability, a lessee must use the interest rate implicit in the lease or, if that rate is not readily determinable, its incremental borrowing rate ( IBR ). All leases for the periods presented are classified as operating leases. Management has made the following accounting policy elections: (1) not to separate lease components from non-lease components for all asset classes and (2) to apply the short-term lease exception, which does not require the capitalization of leases with terms of 12 months or less. Rent expense is recorded on a straight-line basis over the lease term, beginning on the earlier of the effective date of the lease or the date Federated obtains control of the asset. The lease term may include options to extend the lease when they are reasonably certain of being exercised. Management judgments are used when reviewing new and/or materially-modified contracts to determine (1) whether the contract is, or contains, a lease, and (2) the IBR . Management was unable to determine the rates implicit in Federated's leases based on the information available at the commencement date, therefore, management calculated an IBR for each lease. In order to calculate the IBR , management began with readily observable unsecured rates, and adjusted for the following assumptions: (1) collateralization, (2) remaining lease term and (3) the type of ROU asset. (n) Equity Method Investments The equity method of accounting is used to account for equity investments in which Federated does not control the investee and is not the primary beneficiary of a VIE, but has the ability to exercise significant influence over the financial and operating policies of the investee. Significant influence is generally considered to exist when Federated's ownership interest is between 20% and 50%. Equity method investments are initially recorded at cost in Other Long-Term Assets on the Consolidated Balance Sheets . Federated's proportionate share of the investee's net income or loss is recorded in Other, net - Nonoperating Income (Expenses) on the Consolidated Statements of Income . The investments are reviewed for impairment if events or changes in circumstance indicate that the carrying amount exceeds its fair value. If the carrying amount of an investment exceeds fair value and the decline in fair value is deemed to be other-than-temporary, the equity method investment will be adjusted to fair value and an impairment loss recorded equal to the difference. (o) 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 lawsuit, claim or proceeding 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 on the Consolidated Statements of Income when receipt is deemed probable, or when final approval is received by the insurance carrier. (p) Noncontrolling Interests To the extent Federated's interest in a consolidated entity represents less than 100% of the entity's equity, Federated recognizes noncontrolling interests in subsidiaries. These noncontrolling interests are deemed to represent temporary equity and are classified as Redeemable Noncontrolling Interest in Subsidiaries in the mezzanine section of the Consolidated Balance Sheets. In the case of consolidated investment companies, the noncontrolling interests represent equity which is redeemable or convertible for cash at the option of the equity holder. In the case of Hermes, the noncontrolling interest represents equity which is subject to the terms of a Put and Call Option Deed, redeemable at the option of either the noncontrolling party or Federated at future predetermined dates, and therefore, not entirely within Federated's control . The subsidiary's net income or loss and related dividends are allocated to Federated and the noncontrolling interest holder based on their relative ownership percentages. The noncontrolling interest carrying value is adjusted on a quarterly basis to the higher of the carrying value or current redemption value (fair value), as of the balance sheet date, through a corresponding adjustment to retained earnings. Management may use an independent valuation expert to assist in estimating the current redemption value (fair value) using three methodologies: (1) the discounted cash flow methodology under the income approach, (2) the guideline public company methodology under the market approach and (3) the guideline public transaction methodology under the market approach. The estimated current redemption value is derived from equally weighting the result of each of the three methodologies. The estimation of the current redemption value includes significant assumptions concerning: (1) projected AUM; (2) projected revenue growth rates; (3) projected pre-tax profit margins; (4) tax rates and (5) discount rates. (q) Treasury Stock Federated accounts for acquisitions of treasury stock at cost and reports total treasury stock held as a deduction from Federated Hermes, Inc. 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 and any further required reductions are recorded to Retained Earnings on the Consolidated Balance Sheets . (r) Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss), net of tax is reported on the Consolidated Balance Sheets and the Consolidated Statements of Changes in Equity and includes unrealized gains and losses on foreign currency translation adjustments. Prior to January 1, 2018, Accumulated Other Comprehensive Income (Loss), net of tax included unrealized gains and losses on equity securities available for sale. Following the adoption of the new financial instruments guidance effective January 1, 2018, unrealized gains and losses on these securities are recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income . (s) Foreign Currency Translation The balance sheets of certain foreign subsidiaries of Federated, certain consolidated foreign-denominated investment products and all other foreign-denominated cash or investment balances are translated at the current exchange rate as of the end of the reporting 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 Income (Loss), net of tax on the Consolidated Balance Sheets . Foreign currency transaction gains and losses are reflected in Operating Expenses – Other on the Consolidated Statements of Income . (t) Share-Based Compensation Federated issues shares for share-based awards from treasury stock. Federated recognizes compensation costs based on grant-date fair value for all share-based awards. For restricted stock awards, the grant-date 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 generally recognized on a straight-line basis over the requisite service period of the award and is adjusted for actual forfeitures as they occur. For 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 required age for retirement. Compensation and Related expense also includes dividends paid on forfeited awards. Excess |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Guidance (a) Leases On February 25, 2016, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update ( ASU ) 2016-02, Leases ( Topic 842 ). Its core principle is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet, while retaining a distinction between financing and operating leases. In the third quarter of 2018, the FASB issued ASU 2018-10, which provides improvements to narrow aspects of the guidance and ASU 2018-11, which provides an optional alternative transition method to initially apply the new leases standard at the adoption date (collectively, with ASU 2016-02, Topic 842). Effective January 1, 2019, Federated adopted Topic 842 using the alternative transition method, which did not require the restatement of prior years. In connection with the adoption of Topic 842, management has elected the package of practical expedients, which allows entities to not reassess (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Management did not elect the hindsight practical expedient to determine the lease term. Upon adoption, Federated recorded $133.7 million as a lease liability and, after the reclassification of certain lease-related liabilities into the ROU asset, $112.2 million as a ROU asset on the Consolidated Balance Sheets , which consists primarily of Federated's operating real estate leases. The adoption did not have a material impact on Federated's results of operations or cash flows. (b) Goodwill Impairment During the second quarter of 2019, Federated adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, effective January 1, 2019. Under this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the ASU retains the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The ASU required the prospective adoption method. The adoption did not have an impact to Federated's Consolidated Financial Statements. Recently Issued Accounting Guidance Not Yet Adopted (c) Credit Losses On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology with a current expected credit loss (CECL) model. CECL requires an entity to estimate lifetime expected credit losses based on relevant information about historical events, current conditions and reasonable and supportable forecasts. The update is effective for Federated on January 1, 2020. The update requires the modified retrospective adoption method. The adoption will not have a material impact to Federated's Consolidated Financial Statements. (d) Fair Value Measurement On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update remove, modify or add disclosure requirements for fair value measurements to improve the effectiveness of disclosures. The update is effective for Federated on January 1, 2020, and requires either the prospective or retrospective adoption method, depending on the amendment. The adoption will not have a material impact to Federated's Consolidated Financial Statements. (e) Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement On August 29, 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The update is effective for Federated on January 1, 2020, and allows for either the prospective or retrospective adoption method. Management plans to elect the prospective adoption approach, which does not require the restatement of prior years. The adoption will not have a material impact to Federated's Consolidated Financial Statements. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations On July 2, 2018, Federated completed, effective as of July 1, 2018 , the Hermes Acquisition . The addition of London-based Hermes provides the opportunity to further accelerate Federated's growth in markets outside of the U.S. BT Pension Scheme ( BTPS ) retained a 29.5 percent interest in Hermes and contributed the remaining 10.5 percent interest into an Employee Benefit Trust for the benefit of certain members of Hermes ' management and other key employees under a long-term incentive plan. Federated paid $343.5 million (which consists of $344.3 million paid in 2018 offset by $0.8 million returned in the second quarter of 2019). Federated funded the transaction through a combination of cash and an $18.0 million drawdown from its existing revolving credit facility (see Note (12) for additional information). Federated and BTPS entered into a Put and Call Option Deed pursuant to which Federated has a call option to acquire BTPS ' remaining 29.5 percent interest in Hermes at fair value and BTPS has a put option to sell its remaining interest in Hermes to Federated at fair value, after the third, fourth or fifth anniversaries, and subject to certain contingencies, the sixth anniversary, of the date of the purchase agreement. Federated does not consider BTPS ' 29.5 percent noncontrolling interest in Hermes to be permanent equity, due to it being redeemable at the option of either BTPS or Federated and, therefore, not entirely within Federated's control . Federated expensed $13.3 million in transaction costs directly attributable to the Hermes Acquisition in 2018, primarily recorded in Professional Service Fees on the Consolidated Statements of Income . The transaction costs exclude a $29.0 million derivative loss (see Note (9) for additional information) and a $1.7 million foreign exchange gain recognized in 2018 as a result of holding British pound sterling immediately prior to the Hermes Acquisition . Federated performed a valuation of the fair market value of the Hermes Acquisition . Provisional amounts must be finalized within a one-year measurement period. During the second quarter 2019, provisional amounts recognized for certain Intangible Assets and Other Long-Term Assets were adjusted to reflect facts and circumstances that existed as of the acquisition date. The adjustments were primarily the result of changes to the forecast revenue allocated to certain acquired assets based on review of actual fund and separate account revenue rates. Intangible Assets and Other Long-Term Assets increased $43.8 million and $5.0 million , respectively. Primarily as a result of these adjustments, the Long-Term Deferred Tax Liability increased by $8.2 million and Goodwill decreased by $41.8 million . There was no material change to the Consolidated Statements of Income for the year ended December 31, 2019 as a result of these adjustments. The following table summarizes the final purchase price allocation determined as of the purchase date: (in millions) Cash and Cash Equivalents $ 175.8 Other Current Assets 1 53.7 Goodwill 2 114.1 Intangible Assets 3 320.0 Other Long-Term Assets 4 40.1 Less: Long-Term Deferred Tax Liability, net (28.7 ) Less: Liabilities Acquired 5 (162.3 ) Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary 6 (169.2 ) Total Purchase Price Consideration $ 343.5 1 Includes $31.9 million of receivables, all of which has been collected. 2 The goodwill recognized is attributable to enhanced revenue and AUM growth opportunities from future investors and the assembled workforce of Hermes. In this instance, goodwill is not deductible for tax purposes. 3 Includes $71.6 million for customer relationships with a weighted-average useful life of 8.5 years , $198.5 million for indefinite-lived rights to manage fund assets and $49.9 million for an indefinite-lived trade name, all of which are recorded in Intangible Assets, net on the Consolidated Balance Sheets . 4 Includes $11.2 million of Property and Equipment, net . 5 Includes $130.3 million related to Accrued Compensation and Benefits . 6 The fair value of the noncontrolling interest was determined utilizing the market approach and consideration of the overall business enterprise value. The financial results of Hermes have been included in Federated's Consolidated Financial Statements from the July 1, 2018 effective date of the Hermes Acquisition. For the year ended December 31, 2019 , Hermes earned revenue of $198.3 million and net income of $10.4 million (which excludes acquisition-related intangible amortization and amounts attributable to the noncontrolling interests). For the six months ended December 31, 2018 , Hermes earned revenue of $100.8 million and net income of $9.6 million (which excludes acquisition-related intangible amortization and amounts attributable to the noncontrolling interests). The following table summarizes unaudited pro forma financial information assuming the Hermes Acquisition occurred at the beginning of the year presented. This pro forma financial information is for informational purposes only and is not indicative of actual results that would have occurred had the Hermes Acquisition been completed on the assumed date and it is not indicative of future results. In addition, the following pro forma financial information does not reflect the realization of any cost savings (nor does management expect to realize any cost savings) or other synergies from the Hermes Acquisition . The pro forma results include adjustments for the effect of acquisition-related expenses (including compensation and related expense, income tax expense and amortization related to newly acquired intangibles) as well as adjustments to conform to Federated's U.S. GAAP accounting policies. (in millions) 2018 Revenue $ 1,230.5 Net Income 1 $ 241.4 1 Excludes a $29.0 million loss on foreign currency forward transactions entered into in order to hedge against foreign exchange rate fluctuations associated with the payment for the Hermes Acquisition . |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table presents Federated's revenue disaggregated by asset class: (in thousands) 2019 2018 Equity $ 533,749 $ 470,436 Money Market 529,340 414,746 Fixed-Income 179,102 180,152 Other 1 84,703 70,343 Total Revenue $ 1,326,894 $ 1,135,677 1 Includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), Multi-Asset and, beginning in the third quarter of 2018, stewardship services revenue. The following table presents Federated's revenue disaggregated by performance obligation: (in thousands) 2019 2018 Asset Management 1 $ 907,605 $ 773,418 Administrative Services 245,887 199,269 Distribution 2 151,106 146,595 Other 3 22,296 16,395 Total Revenue $ 1,326,894 $ 1,135,677 1 The performance obligation may include administrative, distribution and other services recorded as a single asset management fee under Topic 606, as it is part of a unitary fee arrangement with a single performance obligation. 2 The performance obligation is satisfied at a point in time. A portion of this revenue relates to a performance obligation that has been satisfied in a prior period. 3 Includes shareholder service fees and, beginning in the third quarter of 2018, stewardship services revenue. The following table presents Federated's revenue disaggregated by product type: (in thousands) 2019 2018 Federated Funds $ 1,093,157 $ 942,037 Separate Accounts 221,756 187,585 Other 1 11,981 6,055 Total Revenue $ 1,326,894 $ 1,135,677 1 Includes stewardship services revenue beginning in the third quarter of 2018. Federated is not required to disclose certain estimates of revenue expected to be recorded in future periods as a result of applying the following exemptions: (1) contract terms are short-term in nature (i.e., expected duration of one year or less due to termination provisions) and (2) the expected variable consideration would be allocated entirely to future service periods. Federated expects to recognize revenue in the future related to the unsatisfied portion of the stewardship services performance obligations at December 31, 2019 . Generally, contracts are billed in arrears on a quarterly basis and have a three year duration, after which the customer can terminate the agreement with a three to twelve month notice. Based on existing contracts and the exchange rates as of December 31, 2019 , Federated may recognize future fixed revenue from stewardship services as presented in the following table: (in thousands) 2020 $ 7,777 2021 3,315 2022 1,625 2023 and Thereafter 1,035 Total Remaining Unsatisfied Performance Obligations $ 13,752 |
Concentration Risk
Concentration Risk | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk | Concentration Risk The following information summarizes Federated's revenue concentrations. See additional information on the risks related to such concentrations in Item 1A - Risk Factors . (a) Revenue Concentration by Asset Class The following table presents Federated's revenue concentration by asset class over the last three years: 2019 2018 2017 Equity Assets 40 % 41 % 38 % Money Market Assets 40 % 37 % 41 % Fixed-Income Assets 14 % 16 % 17 % The change in the relative proportion of Federated's revenue attributable to money market assets in 2019 , as compared to the same period in 2018 , was primarily the result of higher average money market assets in 2019. The change in the relative proportion of Federated's revenue attributable to equity assets in 2018 , as compared to the same period in 2017 , was primarily the result of higher average equity assets mostly as a result of the Hermes Acquisition . Because the Hermes Acquisition was primarily comprised of equity assets and alternative/private markets assets, the relative proportion of Federated's revenue attributable to money market assets decreased in 2018 as compared to 2017 . Furthermore, Federated's revenue attributable to money market assets decreased as a result of a change in the mix of average money market assets. (b) Revenue Concentration by Investment Strategy/Fund The following table presents Federated's revenue concentration by investment strategy/fund over the last three years: 2019 2018 2017 Federated Strategic Value Dividend strategy 1 11 % 15 % 18 % Federated Government Obligations Fund 10 % 9 % 10 % Federated Kaufmann Mid-Cap Growth strategy 2 9 % 10 % 9 % 1 Strategy includes Federated Funds and Separate Accounts . 2 Strategy includes Federated Funds . A significant and prolonged decline in the AUM in these strategies/fund could have a material adverse effect on Federated's future revenues and, to a lesser extent, net income, due to a related reduction in distribution expenses associated with the Federated Funds managed in accordance with these strategies. (c) Revenue Concentration by Intermediary Approximately 11% , 13% and 16% of Federated's total revenue for 2019 , 2018 and 2017 |
Consolidation
Consolidation | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | Consolidation The Consolidated Financial Statements include the accounts of Federated, certain Federated Funds and other entities in which Federated holds a controlling financial interest. Federated is involved with various entities in the normal course of business that may be deemed to be VRE s or VIEs. From time to time, Federated invests in Federated Funds for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Federated's investment in, and/or receivables from, these Federated Funds represents its maximum exposure to loss. The assets of each consolidated Federated Fund are restricted for use by the respective Federated Fund . Generally, neither creditors of, nor equity investors in, the Federated Funds have any recourse to Federated's general credit. 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. Receivables from all Federated Funds for advisory and other services totaled $37.6 million and $35.0 million at December 31, 2019 and 2018 , respectively. In the ordinary course of business, Federated may implement Fee Waivers for various Federated Funds for competitive, regulatory or contractual reasons. For the years ended December 31, 2019 , 2018 and 2017 , Fee Waivers totaled $427.3 million , $358.2 million and $345.5 million , respectively, of which $311.6 million , $242.9 million and $222.1 million , respectively, related to money market funds which meet the scope exception of the consolidation guidance. Like other sponsors of investment companies, Federated in the ordinary course of business may make capital contributions to certain money market Federated Funds in connection with the reorganization of such funds into certain affiliated money market Federated Funds or in connection with the liquidation of a money market Federated Fund . In these instances, such capital contributions typically are intended to either offset realized losses or other permanent impairments to a fund's NAV, increase the market-based NAV per share of the fund's portfolio that is being reorganized to equal the market-based NAV per share of the acquiring fund or to bear a portion of expenses relating to a fund liquidation. Under current money fund regulations and SEC guidance, Federated is required to report these types of capital contributions to U.S. money market mutual funds to the SEC as financial support to the investment company that is being reorganized or liquidated. There were no contributions for the years ended December 31, 2019 and 2018 , and no material contributions for the year ended December 31, 2017 . In accordance with Federated's consolidation accounting policy, Federated first determines whether the entity being evaluated is a VRE or a VIE. Once this determination is made, Federated proceeds with its evaluation of whether to consolidate the entity. The disclosures below represent the results of such evaluations as of December 31, 2019 and 2018 . (a) Consolidated Voting Rights Entities Most of the Federated Funds meet the definition of a VRE. Federated consolidates VREs when it is deemed to have control. Consolidated VREs are reported on Federated's Consolidated Balance Sheets primarily in Investments—Consolidated Investment Companies and Redeemable Noncontrolling Interest in Subsidiaries . (b) Consolidated Variable Interest Entities As of December 31, 2019 and 2018 , Federated was deemed to be the primary beneficiary of, and therefore consolidated, certain Federated Funds as a result of its controlling financial interest. The following table presents the balances related to the consolidated Federated Fund VIEs that were included on the Consolidated Balance Sheets as well as Federated's net interest in the consolidated Federated Fund VIEs at December 31: (in millions) 2019 2018 Investments—Consolidated Investment Companies $ 13.3 $ 21.2 Receivables 0.3 0.4 Less: Liabilities 0.1 0.3 Less: Redeemable Noncontrolling Interest in Subsidiaries 9.3 11.2 Federated's Net Interest in Federated Fund VIEs $ 4.2 $ 10.1 Federated's net interest in the consolidated Federated Fund VIEs represents the value of Federated's economic ownership interest in these Federated Funds . During the year ended December 31, 2019 , Federated liquidated its investment in one consolidated VIE in which it was the only remaining shareholder. Accordingly, Federated redeemed $6.2 million from Investments—Consolidated Investment Companies on the Consolidated Balance Sheets as of the date of the liquidation. There was no impact to the Consolidated Statements of Income as a result of this liquidation. There were no other consolidations or deconsolidations of VIEs during the year ended December 31, 2019 . (c) Non-Consolidated Variable Interest Entities Federated's involvement with certain Federated Funds 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 losses or receive benefits that could potentially be significant to the VIE. Therefore, Federated is not the primary beneficiary of these VIEs and has not consolidated these entities. At December 31, 2019 , Federated's variable interest in non-consolidated VIEs was $111.9 million (primarily recorded in Cash and Cash Equivalents on the Consolidated Balance Sheets) and was entirely related to Federated Funds. AUM for these non-consolidated Federated Funds totaled $9.6 billion at December 31, 2019. At December 31, 2018 , Federated did not have a variable interest in a non-consolidated VIE. Of the Receivables—Affiliates at December 31, 2019 and December 31, 2018 , $15.4 million and $16.2 million , respectively, related to non-consolidated VIEs and represented Federated's maximum risk of loss from non-consolidated VIE receivables. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments At December 31, 2019 and 2018 , Federated held investments in fluctuating-value Federated Funds of $20.1 million and $4.1 million , respectively, primarily in mutual funds which invest in equity securities. Federated held investments in Separate Accounts of $6.8 million at both December 31, 2019 and 2018 , that were included in Investments—Affiliates and Other on the Consolidated Balance Sheets . Federated's investments held in Separate Accounts as of December 31, 2019 and 2018 , were primarily composed of stocks of large U.S. and international companies ( $3.0 million and $2.7 million , respectively) and domestic debt securities ( $2.6 million and $3.5 million , respectively). Federated consolidates certain Federated Funds into its Consolidated Financial Statements as a result of Federated's controlling financial interest in these Federated Funds (see Note (6) ). All investments held by these consolidated Federated Funds were included in Investments—Consolidated Investment Companies on Federated's Consolidated Balance Sheets . Federated's investments held by consolidated Federated Funds as of December 31, 2019 and 2018 , were primarily composed of domestic and foreign debt securities ( $38.9 million and $20.9 million , respectively) and stocks of large U.S. and international companies ( $22.6 million and $1.6 million , respectively). The following table presents gains and losses recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income in connection with Federated's investments: (in thousands) 2019 2018 2017 Investments—Consolidated Investment Companies Unrealized Gains (Losses) $ 4,759 $ (3,142 ) $ 771 Net Realized Gains (Losses) 1 (1,243 ) (374 ) 2,245 Net Gains (Losses) on Investments—Consolidated Investment Companies 3,516 (3,516 ) 3,016 Investments—Affiliates and Other Unrealized Gains (Losses) 2,156 (1,180 ) 118 Net Realized Gains (Losses) 1 (706 ) 339 4,938 Net Gains (Losses) on Investments—Affiliates and Other 1,450 (841 ) 5,056 Gain (Loss) on Securities, net $ 4,966 $ (4,357 ) $ 8,072 1 Realized gains and losses are computed on a specific-identification basis. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
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 that would be paid to transfer a liability as of the measurement date. A 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 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 markets. NAV Practical Expedient – Investments that calculate NAV per share (or its equivalent) as a practical expedient. These investments have been excluded from the fair value hierarchy. (a) Fair Value Measurements on a Recurring Basis The following table presents fair value measurements for classes of Federated's financial assets and liabilities measured at fair value on a recurring basis at December 31: (in thousands) Level 1 Level 2 Level 3 Total 2019 Financial Assets Cash and Cash Equivalents $ 249,174 $ 0 $ 0 $ 249,174 Investments—Consolidated Investment Companies Equity Securities 7,245 18,383 0 25,628 Debt Securities 0 38,898 0 38,898 Investments—Affiliates and Other Equity Securities 23,667 335 12 24,014 Debt Securities 0 2,610 311 2,921 Other 1 2,901 3,177 0 6,078 Total Financial Assets $ 282,987 $ 63,403 $ 323 $ 346,713 Total Financial Liabilities 2 $ 6 $ 0 $ 2,081 $ 2,087 2018 Financial Assets Cash and Cash Equivalents $ 156,832 $ 0 $ 0 $ 156,832 Investments—Consolidated Investment Companies Equity Securities 1,269 633 0 1,902 Debt Securities 0 20,896 0 20,896 Investments—Affiliates and Other Equity Securities 6,963 403 38 7,404 Debt Securities 0 3,456 0 3,456 Other 597 0 70 667 Total Financial Assets $ 165,661 $ 25,388 $ 108 $ 191,157 Total Financial Liabilities 2 $ 53 $ 3,852 $ 385 $ 4,290 1 Amounts primarily consist of a derivative asset and security deposits. 2 Amounts primarily consist of acquisition-related future contingent consideration liabilities and derivative liabilities. 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, 2019 or 2018 . Cash and Cash Equivalents Cash and Cash Equivalents include deposits with banks and investments in money market funds. Investments in money market funds totaled $222.1 million and $135.7 million at December 31, 2019 and 2018 , respectively. Cash investments in publicly available money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. Investments—Consolidated Investment Companies—Equity Securities Investments—Consolidated Investment Companies—Equity Securities represent equity securities held by consolidated Federated Funds . For publicly traded equity securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on quoted market prices. The fair value of certain equity securities traded principally in foreign markets and held by consolidated Federated Funds are determined by a third-party pricing service (Level 2). Investments—Consolidated Investment Companies—Debt Securities Investments—Consolidated Investment Companies—Debt Securities primarily represent domestic and foreign bonds held by consolidated Federated Funds . The fair value of these securities may include observable market data such as valuations 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 (Level 2). Investments—Affiliates and Other—Equity Securities Investments—Affiliates and Other—Equity Securities primarily represent equity investments in fluctuating-value Federated Funds , as well as investments held in Separate Accounts . For publicly traded equity securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on quoted market prices. For investments in fluctuating-value Federated Funds that are publicly available, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. The fair value of certain equity securities traded principally in foreign markets are determined by third-party pricing services (Level 2). Investments—Affiliates and Other—Debt Securities Investments—Affiliates and Other—Debt Securities primarily represent domestic bonds held in Separate Accounts. The fair value of these securities may include observable market data such as valuations 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 (Level 2). Other Financial Assets For an investment in a mutual fund that is not publicly available but for which the NAV is calculated monthly and for which there are redemption restrictions, the security is valued using NAV as a practical expedient and is excluded from the fair value hierarchy. As of December 31, 2019 , this investment was $3.7 million and was recorded in Other Long-Term Assets . (b) Fair Value Measurements on a Nonrecurring Basis Federated did not hold any assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2019 . (c) Fair Value Measurements of Other Financial Instruments The fair value of Federated's debt is estimated by management using observable market data (Level 2). Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Hermes, a British Pound Sterling-denominated, majority-owned subsidiary of Federated , enters into foreign currency forward transaction s in order to hedge against foreign exchange rate fluctuations in the U.S. Dollar . None of the forwards have been designated as hedging instruments for accounting purposes. As of December 31, 2019 , this subsidiary held foreign currency forward derivative instruments with a combined notional amount of £53.0 million and expiration dates ranging from March 2020 through September 2020 . As a result of the change in fair value of these derivative instruments, Federated recorded $3.1 million in Receivables on the Consolidated Balance Sheets as of December 31, 2019 . As of December 31, 2018 , this subsidiary held foreign currency forward derivative instruments with a combined notional amount of £46.0 million and expiration dates ranging from March 2019 through September 2019 . As of December 31, 2018 , Federated recorded $3.8 million in Other Current Liabilities on the Consolidated Balance Sheets as a result of the change in fair value of these derivative instruments. In 2018, Federated entered into two foreign currency forward transactions in order to hedge against foreign exchange rate fluctuations associated with the payment for the Hermes Acquisition. Neither forward was designated as a hedging instrument for accounting purposes. Federated recorded $29.0 million as nonoperating expense in Other, net on the Consolidated Statements of Income as a result of the change in fair value of these derivatives in 2018. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets (a) Indefinite-lived intangible assets Indefinite-lived intangible assets are recorded in Intangible Assets, net on the Consolidated Balance Sheets and include rights to manage fund assets ( $335.2 million and $204.1 million at December 31, 2019 and 2018 , respectively) and trade names ( $52.0 million and $50.1 million at December 31, 2019 and 2018 , respectively). On November 18, 2019, Federated completed the acquisition of certain components of the PNC Capital Advisors LLC investment management business . As a result, Federated recorded $58.0 million of indefinite-lived rights to manage fund assets . The transaction was accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset. The remaining increase in indefinite-lived rights to manage fund assets during 2019 primarily related to a final purchase price adjustment of $65.8 million related to the Hermes Acquisition (see Note (3) for additional information). (b) Finite-lived intangible assets Finite-lived intangible assets represent customer relationships and consist of the following at December 31: (in thousands) 2019 2018 Cost $ 71,853 $ 96,598 Accumulated Amortization (12,856 ) (11,203 ) Carrying Value $ 58,997 $ 85,395 The decrease in the cost of the finite-lived intangible assets at December 31, 2019 as compared to December 31, 2018 primarily relates to a final purchase price adjustment related to the finite-lived customer relationship asset acquired in connection with the Hermes Acquisition . See Note (3) for additional information. Amortization expense for finite-lived intangible assets was $7.5 million , $6.2 million and $0.6 million in 2019 , 2018 and 2017 , respectively, and was recorded as operating expense in Other expense on the Consolidated Statements of Income . Expected aggregate annual amortization expense for finite-lived intangible assets in each of the five succeeding years assuming no new acquisitions or impairments will be $8.6 million . |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following at December 31: (in thousands) Estimated Useful Life 2019 2018 Computer Software and Hardware 1 to 7 years $ 87,443 $ 85,894 Leasehold Improvements Up to term of lease 35,348 33,379 Transportation Equipment 3 to 12 years 17,851 17,851 Office Furniture and Equipment 4 to 15 years 5,849 6,042 Total Cost 146,491 143,166 Accumulated Depreciation (94,766 ) (89,937 ) Property and Equipment, net $ 51,725 $ 53,229 Depreciation expense was $16.5 million , $12.9 million and $11.1 million for the years ended December 31, 2019 , 2018 and 2017 , respectively, and was recorded in Office and Occupancy expense on the Consolidated Statements of Income . |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt On June 5, 2017 , Federated entered into the Credit Agreement , which consists of a $375 million revolving credit facility with an additional $200 million available via an optional increase (or accordion) feature. The interest on the revolving credit facility is calculated at the monthly LIBOR plus a spread. The borrowings under the revolving credit facility may include up to $25 million for which interest is calculated at the daily LIBOR plus a spread ( Swing Line ). On July 1, 2018, Federated entered into an amendment to the Credit Agreement to add certain definitions and to amend certain negative covenants relating to indebtedness, guarantees, and restrictions on dividends, related to the Hermes Acquisition . This amendment contains other customary conditions, representations, warranties and covenants. The Credit Agreement , which expires on June 5, 2022, has no principal payment schedule, but instead requires that any outstanding principal be repaid by the expiration date. Federated, however, may elect to make discretionary principal payments. As of December 31, 2019 and 2018 , the amounts outstanding under the revolving credit facility were $100 million and $135 million , respectively, and were recorded as Long-Term Debt on the Consolidated Balance Sheets . The interest rate was 2.816% and 3.474% as of December 31, 2019 and 2018 , respectively, which was calculated at LIBOR plus a spread. The commitment fee under the Credit Agreement currently is 0.125% per annum on the daily unused portion of each Lender's commitment. As of December 31, 2019 , Federated has $275 million available for borrowings. The Credit Agreement includes representations and warranties, affirmative and negative financial covenants, including an interest coverage ratio covenant and a leverage ratio covenant, reporting requirements and other non-financial covenants. Federated was in compliance with all covenants at and during the year ended December 31, 2019 (see the Liquidity and Capital Resources section of Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information). The Credit Agreement also has certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of debt outstanding 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, notice of lien or assessment, and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed. The Credit Agreement also requires certain subsidiaries to enter into a Second Amended and Restated Continuing Agreement of Guaranty and Suretyship to guarantee payment of all obligations incurred through the Credit Agreement . |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans (a) 401(k) Plan Federated offers defined contribution plans to its employees. Its 401(k) plan covers domestic 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 ( IRC ) limitations. Prior to January 1, 2018, Federated's matching contribution was 100% of the first 2% of compensation contributed by an employee and 50% of the next 4% for a total possible match of 4% , subject to IRC compensation limits. For 2018, Federated's matching contribution was 100% of the first 3% of compensation contributed by an employee and 50% of the next 3% for a total possible match of 4.5% , subject to IRC compensation limits. Effective January 1, 2019, Federated's matching contribution is 100% of the first 4% of compensation contributed by an employee and 50% of the next 2% for a total possible match of 5% , subject to IRC limitations. 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 $6.6 million , $5.7 million and $5.0 million for 2019 , 2018 and 2017 , respectively. Vesting in Federated's matching contributions commences once a participant in the 401(k) plan has worked at least 1,000 hours per year for two years . Upon completion of this initial 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. (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. During 2019 , 7,611 shares were purchased by employees in this plan and, as of December 31, 2019 , a total of 201,835 shares were purchased by employees in this plan on the open market since its inception in 1998. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation (a) Restricted Stock Federated's long-term stock-incentive compensation is provided 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 30.6 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, 2019 , 3.5 million shares are available under the Plan . Share-based compensation expense was $25.1 million , $23.9 million and $22.5 million for the years ended December 31, 2019 , 2018 and 2017 , respectively. The associated tax benefits recorded in connection with share-based compensation expense were $6.0 million , $5.6 million and $8.4 million for the years ended December 31, 2019 , 2018 and 2017 , respectively. At December 31, 2019 , the maximum remaining unrecognized compensation expense related to share-based awards approximated $75 million which is expected to be recognized over a weighted-average period of approximately 6 years . 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 10 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 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 these restriction periods, 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, 2019 : Restricted Shares Weighted- Average Grant- Date Fair Value Non-vested at January 1, 2019 3,960,560 $ 25.59 Granted 1 928,324 30.10 Vested (966,258 ) 26.73 Forfeited (141,431 ) 23.91 Non-vested at December 31, 2019 3,781,195 $ 26.47 1 During 2019 , Federated awarded 498,324 shares of restricted 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 2019 , Federated awarded 430,000 shares of restricted Class B common stock to certain key employees. These restricted stock awards generally vest over a ten -year period. Federated awarded 928,324 shares of restricted Class B common stock with a weighted-average grant-date fair value of $30.10 to employees during 2019 ; awarded 899,269 shares of restricted Class B common stock with a weighted-average grant-date fair value of $28.30 to employees during 2018 ; and awarded 946,570 shares of restricted Class B common stock with a weighted-average grant-date fair value of $27.20 to employees during 2017 . The total fair value of restricted stock vested during 2019 , 2018 and 2017 was $28.4 million , $24.0 million and $23.9 million , respectively. (b) Subsidiary Stock Plan Effective July 2, 2018, Federated established a non-public subsidiary share-based compensation plan for certain employees of that subsidiary . These awards, which are subject to continued service vesting requirements, vest over a period of three to five years. At various predetermined dates, but no earlier than 9 months after vesting, award holders have a right to exercise a put option to sell shares to Federated at fair value and Federated has a right to exercise a call option to acquire shares at fair value. Federated recognized compensation expense for this plan of $7.9 million and $4.2 million in Compensation and Related expense on the Consolidated Statements of Income for the years ended December 31, 2019 and 2018 , respectively. At December 31, 2019 , the remaining unrecognized compensation expense related to these plan awards approximated $30 million which is expected to be recognized over a weighted-average period of approximately 4 years . |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Common Stock | 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 Class B common stock, the Class A common stockholder cannot alter Federated's structure, dispose of all or substantially all of its assets, amend its Articles of Incorporation or Bylaws 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 $109.1 million , $106.9 million and $101.5 million were paid in 2019 , 2018 and 2017 , respectively, to holders of Federated common stock. All dividends were considered ordinary dividends for tax purposes. (b) Treasury Stock In October 2016, the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 4 million shares of Class B common stock. No other programs existed as of December 31, 2019 . The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is to be held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities, unless Federated's board of directors subsequently determines to retire the repurchased stock and restore the shares to authorized but unissued status (rather than holding the shares in treasury). During the year ended December 31, 2019 , Federated repurchased 614 thousand shares of its Class B common stock for $15.7 million , most of which were repurchased in the open market. At December 31, 2019 , 547 thousand shares remained available to be purchased under this buyback program. Redeemable Noncontrolling Interest in Subsidiaries The following table presents the changes in Redeemable Noncontrolling Interest in Subsidiaries : (in thousands) Consolidated Investment Companies Hermes Total Balance at January 1, 2017 $ 31,362 $ 0 $ 31,362 Net Income (Loss) 3,084 0 3,084 Subscriptions—Redeemable Noncontrolling Interest Holders 4,687 0 4,687 Consolidation/(Deconsolidation) (67 ) 0 (67 ) Distributions to Noncontrolling Interest in Subsidiaries (8,903 ) 0 (8,903 ) Balance at December 31, 2017 $ 30,163 $ 0 $ 30,163 Net Income (Loss) (1,095 ) 3,097 2,002 Other Comprehensive Income (Loss), net of tax 0 (6,009 ) (6,009 ) Subscriptions—Redeemable Noncontrolling Interest Holders 2,801 0 2,801 Consolidation/(Deconsolidation) (1,751 ) 0 (1,751 ) Stock Award Activity 0 4,239 4,239 Distributions to Noncontrolling Interest in Subsidiaries (18,492 ) 0 (18,492 ) Business Acquisition 0 169,560 169,560 Balance at December 31, 2018 $ 11,626 $ 170,887 $ 182,513 Net Income (Loss) 2,016 2,770 4,786 Other Comprehensive Income (Loss), net of tax 0 6,907 6,907 Subscriptions—Redeemable Noncontrolling Interest Holders 9,356 0 9,356 Consolidation/(Deconsolidation) 454 0 454 Stock Award Activity 0 7,888 7,888 Distributions to Noncontrolling Interest in Subsidiaries (3,580 ) 0 (3,580 ) Business Acquisition 0 (386 ) (386 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 4,148 4,148 Balance at December 31, 2019 $ 19,872 $ 192,214 $ 212,086 During 2019, the Hermes Redeemable Noncontrolling Interest in Subsidiaries carrying value was adjusted by $4.1 million to the current redemption value, assuming the Hermes noncontrolling interest was redeemable at the balance sheet date. The noncontrolling interest was adjusted through a corresponding adjustment to retained earnings. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Federated files a consolidated federal income tax return. Financial statement tax expense is determined under the liability method. Income Tax Provision consisted of the following expense/(benefit) components for the years ended December 31: (in thousands) 2019 2018 2017 Current: Federal $ 67,745 $ 54,447 $ 106,710 State 10,158 7,359 9,446 Foreign 2,791 (188 ) 217 Total Current 80,694 61,618 116,373 Deferred: Federal 6,395 7,616 (59,517 ) State 1,427 1,750 638 Foreign (370 ) 2,891 (393 ) Total Deferred 7,452 12,257 (59,272 ) Total $ 88,146 $ 73,875 $ 57,101 The reconciliation between the statutory income tax rate and the effective tax rate consisted of the following for the years ended December 31: 2019 2018 2017 Expected Federal Statutory Income Tax Rate 21.0 % 21.0 % 35.0 % Increase/(Decrease): State and Local Income Taxes, net of Federal Benefit 2.4 2.4 1.9 Non-Deductible Executive Compensation 0.9 1.1 0.0 Federal Rate Adjustment to Deferred Taxes 1 0.0 0.0 (20.2 ) Other (0.2 ) 0.4 (0.5 ) Effective Tax Rate 24.1 % 24.9 % 16.2 % 1 Represents the impact of revaluing the net deferred tax liability due to the enactment of the Tax Act , and includes the federal tax benefit of any state and local deferred taxes. The effective tax rate for 2018 increased to 24.9% as compared to 2017's rate of 16.2% primarily due to the 2017 recording of a $70.4 million reduction in Federated's net deferred tax liability due to the Tax Act , partially offset by the reduction of the federal statutory income tax rate to a flat 21.0% effective January 1, 2018. 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) 2019 2018 Deferred Tax Assets Tax Net Operating Loss Carryforwards $ 71,724 $ 74,213 Compensation Related 15,994 12,514 Other 2,897 2,553 Total Deferred Tax Assets 90,615 89,280 Valuation Allowance (57,790 ) (56,925 ) Total Deferred Tax Asset, net of Valuation Allowance $ 32,825 $ 32,355 Deferred Tax Liabilities Intangible Assets $ 191,595 $ 174,812 Property and Equipment 5,493 4,646 Other 1,119 1,061 Total Gross Deferred Tax Liability $ 198,207 $ 180,519 Net Deferred Tax Liability $ 165,382 $ 148,164 Long-Term Deferred Tax Liability, net at December 31, 2019 increased $17.2 million from December 31, 2018 primarily due to an increase in intangible assets (see Note (10) for additional information) and the resulting tax amortization deduction being in excess of book amortization. At December 31, 2019 , Federated had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $71.7 million . The state net operating losses will expire through 2039 , while most foreign net operating losses do not expire. A valuation allowance has been recognized for $49.4 million (or 100% ) of the deferred tax asset for state tax net operating losses, and for $8.4 million (or 38% ) 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. For the deferred tax asset, net of valuation allowance related to foreign net operating losses, management believes that it is more likely than not that it will realize the benefit of these net operating losses based on projections of future taxable income for the entities to which these relate. At December 31, 2018 , Federated had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $74.2 million . The state net operating losses will expire through 2038 , while most foreign net operating losses do not expire. A valuation allowance has been recognized for $49.1 million (or 100% ) of the deferred tax asset for state tax net operating losses, and for $7.8 million (or 31% ) 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. For the deferred tax asset, net of valuation allowance related to foreign net operating losses, management believes that it is more likely than not that it will realize the benefit of these net operating losses based on projections of future taxable income for the entities to which these relate. Federated's remaining deferred tax assets as of December 31, 2019 and 2018 primarily related to compensation-related expenses that have been recognized for book purposes but are not yet deductible for tax purposes. Management believes that it is more likely than not that Federated will receive the full benefit of these deferred tax assets due to the expectation that Federated will generate taxable income well in excess of these amounts in the years they become deductible. Federated 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, 2019 or 2018 . Therefore, there were no material changes during 2019 , and no reasonable possibility of a significant increase or decrease in unrecognized tax benefits within the next twelve months. |
Earnings Per Share Attributable
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders | Earnings Per Share Attributable to Federated Hermes, 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 for the years ended December 31: (in thousands, except per share data) 2019 2018 2017 Numerator Net Income Attributable to Federated Hermes, Inc. 1 $ 272,339 $ 220,297 $ 291,341 Less: Total Net Income Available to Participating Unvested Restricted Shareholders 2 (10,234 ) (8,555 ) (11,420 ) Total Net Income Attributable to Federated Common Stock - Basic 1 $ 262,105 $ 211,742 $ 279,921 Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary (872 ) (794 ) 0 Total Net Income Attributable to Federated Common Stock - Diluted 1 $ 261,233 $ 210,948 $ 279,921 Denominator Basic Weighted-Average Federated Common Stock 3 97,259 96,949 97,411 Dilutive Potential Shares from Stock Options 0 0 1 Diluted Weighted-Average Federated Common Stock 3 97,259 96,949 97,412 Earnings Per Share Net Income Attributable to Federated Common Stock - Basic and Diluted 3,4 $ 2.69 $ 2.18 $ 2.87 1 2017 includes a $70.4 million reduction to the income tax provision resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act , thereby increasing net income. 2 Includes dividends paid on unvested restricted Federated Class B Common shares and their proportionate share of undistributed earnings attributable to Federated shareholders. 3 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share. 4 2017 includes a $0.69 increase to earnings per share resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act . |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases Federated has material operating leases related to its corporate headquarters in Pittsburgh, Pennsylvania. These leases expire in 2030 and have renewal options for additional periods through 2040 . These leases include provisions for leasehold improvement incentives, rent escalation and certain penalties for early termination. In addition, Federated has various other operating lease agreements primarily for additional facilities. These leases are noncancelable and expire on various dates through the year 2027 . Most leases include renewal options for additional rental periods that would end on various dates through 2037 and, in certain cases, escalation clauses. The value of the ROU assets and lease liabilities recognized do not include the consideration of any renewal options, as they are not yet reasonably certain to be exercised. During the years ended December 31, 2019 , 2018 , and 2017 , Federated recorded $17.7 million , $14.7 million and $13.8 million , respectively, in operating lease costs to Office and Occupancy expense on the Consolidated Statements of Income. The following table reconciles future minimum undiscounted payments to the operating lease liabilities recorded on the Consolidated Balance Sheets as of December 31, 2019 : (in millions) 2020 $ 17.9 2021 17.5 2022 18.3 2023 18.5 2024 17.8 2025 and Thereafter 53.1 Total Undiscounted Lease Payments $ 143.1 Present Value Adjustment 1 (22.0 ) Net Operating Lease Liabilities $ 121.1 1 Calculated using the IBR for each lease. The following information relates to the operating leases recorded on the Consolidated Balance Sheets as of December 31, 2019 : Weighted-average remaining lease term (in years) 8.6 Weighted-average discount rate (IBR) 3.8 % Year-to-date cash paid for the amounts included in the measurement of lease liabilities (in millions) $ 18.2 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders | Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders The components of Accumulated Other Comprehensive Income (Loss), net of tax attributable to Federated shareholders are as follows: (in thousands) Unrealized Gain (Loss) on Equity Securities 1 Foreign Currency Translation (Loss) Gain Total Balance at December 31, 2016 $ 908 $ (1,431 ) $ (523 ) Other Comprehensive Income (Loss) Before Reclassifications and Tax 2,546 775 3,321 Tax Impact (904 ) (163 ) (1,067 ) Reclassification Adjustment, before tax (3,854 ) 0 (3,854 ) Tax Impact 1,333 0 1,333 Net Current-Period Other Comprehensive Income (Loss) (879 ) 612 (267 ) Balance at December 31, 2017 $ 29 $ (819 ) $ (790 ) Other Comprehensive Income (Loss) Before Reclassifications and Tax 0 (13,607 ) (13,607 ) Reclassification Adjustment, before tax 2 (80 ) (242 ) (322 ) Tax Impact 2 51 51 102 Net Current-Period Other Comprehensive Income (Loss) (29 ) (13,798 ) (13,827 ) Balance at December 31, 2018 $ 0 $ (14,617 ) $ (14,617 ) Other Comprehensive Income (Loss) Before Reclassifications and Tax 0 14,368 14,368 Net Current-Period Other Comprehensive Income (Loss) 0 14,368 14,368 Balance at December 31, 2019 $ 0 $ (249 ) $ (249 ) 1 Other than described in note two below, amounts reclassified from Accumulated Other Comprehensive Income (Loss), net of tax were recorded in Gain (Loss) on Securities, net on the Consolidated Statements of Income. 2 Amount represents the reclassification from Accumulated Other Comprehensive Income (Loss), net of tax to Retained Earnings on the Consolidated Balance Sheets as a result of the adoption of new accounting guidance in 2018. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest in Subsidiaries | 12 Months Ended |
Dec. 31, 2019 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interest in Subsidiaries | 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 Class B common stock, the Class A common stockholder cannot alter Federated's structure, dispose of all or substantially all of its assets, amend its Articles of Incorporation or Bylaws 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 $109.1 million , $106.9 million and $101.5 million were paid in 2019 , 2018 and 2017 , respectively, to holders of Federated common stock. All dividends were considered ordinary dividends for tax purposes. (b) Treasury Stock In October 2016, the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 4 million shares of Class B common stock. No other programs existed as of December 31, 2019 . The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is to be held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities, unless Federated's board of directors subsequently determines to retire the repurchased stock and restore the shares to authorized but unissued status (rather than holding the shares in treasury). During the year ended December 31, 2019 , Federated repurchased 614 thousand shares of its Class B common stock for $15.7 million , most of which were repurchased in the open market. At December 31, 2019 , 547 thousand shares remained available to be purchased under this buyback program. Redeemable Noncontrolling Interest in Subsidiaries The following table presents the changes in Redeemable Noncontrolling Interest in Subsidiaries : (in thousands) Consolidated Investment Companies Hermes Total Balance at January 1, 2017 $ 31,362 $ 0 $ 31,362 Net Income (Loss) 3,084 0 3,084 Subscriptions—Redeemable Noncontrolling Interest Holders 4,687 0 4,687 Consolidation/(Deconsolidation) (67 ) 0 (67 ) Distributions to Noncontrolling Interest in Subsidiaries (8,903 ) 0 (8,903 ) Balance at December 31, 2017 $ 30,163 $ 0 $ 30,163 Net Income (Loss) (1,095 ) 3,097 2,002 Other Comprehensive Income (Loss), net of tax 0 (6,009 ) (6,009 ) Subscriptions—Redeemable Noncontrolling Interest Holders 2,801 0 2,801 Consolidation/(Deconsolidation) (1,751 ) 0 (1,751 ) Stock Award Activity 0 4,239 4,239 Distributions to Noncontrolling Interest in Subsidiaries (18,492 ) 0 (18,492 ) Business Acquisition 0 169,560 169,560 Balance at December 31, 2018 $ 11,626 $ 170,887 $ 182,513 Net Income (Loss) 2,016 2,770 4,786 Other Comprehensive Income (Loss), net of tax 0 6,907 6,907 Subscriptions—Redeemable Noncontrolling Interest Holders 9,356 0 9,356 Consolidation/(Deconsolidation) 454 0 454 Stock Award Activity 0 7,888 7,888 Distributions to Noncontrolling Interest in Subsidiaries (3,580 ) 0 (3,580 ) Business Acquisition 0 (386 ) (386 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 4,148 4,148 Balance at December 31, 2019 $ 19,872 $ 192,214 $ 212,086 During 2019, the Hermes Redeemable Noncontrolling Interest in Subsidiaries carrying value was adjusted by $4.1 million to the current redemption value, assuming the Hermes noncontrolling interest was redeemable at the balance sheet date. The noncontrolling interest was adjusted through a corresponding adjustment to retained earnings. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
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. The following table summarizes minimum noncancelable payments contractually due under Federated's significant service contracts: Payments due in After (in millions) 2020 2021 2022 2023 2024 2024 Total Purchase Obligations 1 $ 31.9 $ 9.6 $ 5.8 $ 5.4 $ 3.7 $ 8.6 $ 65.0 Other Obligations 2.7 0.5 0.0 0.0 0.0 0.0 3.2 Total $ 34.6 $ 10.1 $ 5.8 $ 5.4 $ 3.7 $ 8.6 $ 68.2 1 Federated is a party to various contracts pursuant to which it receives certain services, including services for 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 require payments through the year 2027. Costs for such services are expensed as incurred. (b) Guarantees and Indemnifications On an intercompany basis, various subsidiaries of Federated guarantee certain financial obligations of Federated Hermes, Inc., and Federated Hermes, 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 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. As of December 31, 2019 , management does not believe that a material loss related to any of these matters is reasonably possible. (c) Legal Proceedings Like other companies, Federated has claims asserted and threatened against it in the ordinary course of business. As of December 31, 2019 |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information Federated operates in one operating segment, the investment management business . Federated's revenues from U.S. and non-U.S. operations were as follows for the years ended December 31: (in thousands) 2019 2018 2017 U.S. $ 1,098,975 $ 1,005,948 $ 1,069,567 Non-U.S. 1 227,919 129,729 33,357 Total Revenue $ 1,326,894 $ 1,135,677 $ 1,102,924 1 This represents revenue earned by non-U.S. domiciled subsidiaries, primarily in the UK. Federated's Right-of-Use Assets, net and Property and Equipment, net for U.S. and non-U.S. operations was as follows at December 31: (in thousands) 2019 2018 U.S. 1 $ 129,322 $ 42,666 Non-U.S. 1,2 22,917 10,563 Total Right-of-Use Assets, net and Property and Equipment, net 1 $ 152,239 $ 53,229 1 Amounts for 2019 include Right-of-Use Assets recorded in connection with the adoption of Topic 842 . 2 This represents net assets of non-U.S. domiciled subsidiaries, primarily in the UK. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On January 30, 2020 , the board of directors declared a $0.27 per share dividend. The dividend was payable to shareholders of record as of February 7, 2020 , resulting in $27.3 million being paid on February 14, 2020 . Effective January 31, 2020, Federated changed its name to Federated Hermes, Inc. In addition, Federated changed its NYSE ticker symbol to FHI and shares of Federated stock began trading on the NYSE under the new ticker symbol on February 3, 2020. |
Supplementary Quarterly Financi
Supplementary Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Supplementary Quarterly Financial Data (Unaudited) | Supplementary Quarterly Financial Data (Unaudited) (in thousands, except per share data, for the quarters ended) March 31 June 30 September 30 December 31 2019 1 Revenue $ 307,050 $ 321,479 $ 340,340 $ 358,025 Operating Income $ 70,889 $ 84,940 $ 89,307 $ 102,791 Net Income Including the Noncontrolling Interests in Subsidiaries $ 54,611 $ 63,840 $ 73,585 $ 85,089 Amounts Attributable to Federated Hermes, Inc. Net Income $ 54,546 $ 62,724 $ 72,962 $ 82,107 Earnings Per Common Share – Basic and Diluted $ 0.54 $ 0.62 $ 0.72 $ 0.81 2018 1 Revenue $ 263,852 $ 255,993 $ 308,616 $ 307,216 Operating Income $ 79,671 $ 80,757 $ 81,898 $ 87,954 Net Income Including the Noncontrolling Interests in Subsidiaries 2 $ 60,006 $ 38,667 $ 61,994 $ 61,632 Amounts Attributable to Federated Hermes, Inc. Net Income 2 $ 60,331 $ 38,822 $ 59,608 $ 61,536 Earnings Per Common Share – Basic and Diluted $ 0.60 $ 0.38 $ 0.59 $ 0.61 1 The financial results of Hermes have been included in Federated's Consolidated Financial Statements from the July 1, 2018 effective date of the acquisition. 2 The quarter ended June 30, 2018 includes a $29.0 million loss related to two derivative financial instruments associated with the Hermes Acquisition (see Note (9) for additional information). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | (b) Basis of Presentation The Consolidated Financial Statements have been prepared in accordance with U.S. 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 of Prior Period Financial Statements | (c) Reclassification of Prior Period Financial Statements Certain items previously reported have been reclassified to conform to the current year's presentation. |
Revenue Recognition | (d) Revenue Recognition All of Federated's revenue is earned from contracts with customers, which are generally terminable upon no more than 60 days ' notice. Revenue is measured as the consideration to which Federated expects to be entitled in exchange for providing its services. This amount may be reduced by Fee Waivers . See Note (6) for information about current period Fee Waivers . Revenue from providing investment advisory, administrative and the majority of other services is recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers. For these revenue streams, control is transferred over time as the customer simultaneously consumes the benefit of the service as it is provided. Federated utilizes a time-based measure of progress for which each day is a distinct service period over the life of the contract. Investment advisory, administrative and certain other service fees are generally calculated as a percentage of average net assets of the investment portfolios managed by Federated. Based on the nature of the calculation, the revenue for these services is accounted for as variable consideration, and is subject to factors outside of Federated's control, including investor activity and market volatility, and is recognized as these uncertainties are resolved. Certain other service fees are earned on fixed-rate contracts which are recorded over the life of the contract as services are performed. See Note (4) for information about expected future revenue. For the distribution performance obligation, control is transferred to the customer at a point in time upon investor subscription and/or redemption. Based on the nature of the calculation, the revenue for these services is accounted for as variable consideration, and is subject to factors outside of Federated's control, including investor activity and preferences and market volatility, and is recognized as these uncertainties are resolved. For certain revenue, primarily related to distribution and performance fees, Federated may recognize revenue in the current period that pertains to performance obligations satisfied in prior periods, as it represents variable consideration and is recognized as uncertainties are resolved. The fair value of the investment portfolios managed by Federated is primarily determined using quoted market prices, independent third-party pricing services and broker/dealer price quotes or the NAV Practical Expedient . In limited circumstances, a quotation or price determination is not readily available from an independent 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 Federated Funds . For the periods presented, an immaterial amount of AUM was priced in this manner. For Separate Accounts that are not registered investment companies under the 1940 Act , the fair value of portfolio investments is primarily determined as specified in applicable customer agreements, including in agreements between the customer and the customer's third-party custodian. For Separate Accounts that are registered investment companies under the 1940 Act (e.g., sub-advised mutual funds), the fair value of portfolio investments is determined based on a prescribed valuation process approved by the board of directors/trustees of the sub-advised fund. Federated has contractual arrangements with third parties to provide certain fund-related services. Management considers whether Federated is acting as the principal service provider or as an agent to determine whether its revenue should be recorded based on the gross amount received from the funds or net of Federated's payments to third-party service providers. Federated is considered a principal service provider if it controls the service that is transferred to the customer. Alternatively, it would be considered an agent when it does not control the service, but rather arranges for the service to be provided by another party. 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 revenues on a gross basis. All of Federated's revenue is recorded gross of payments made to third parties. |
Principles of Consolidation and Noncontrolling Interests | (p) Noncontrolling Interests To the extent Federated's interest in a consolidated entity represents less than 100% of the entity's equity, Federated recognizes noncontrolling interests in subsidiaries. These noncontrolling interests are deemed to represent temporary equity and are classified as Redeemable Noncontrolling Interest in Subsidiaries in the mezzanine section of the Consolidated Balance Sheets. In the case of consolidated investment companies, the noncontrolling interests represent equity which is redeemable or convertible for cash at the option of the equity holder. In the case of Hermes, the noncontrolling interest represents equity which is subject to the terms of a Put and Call Option Deed, redeemable at the option of either the noncontrolling party or Federated at future predetermined dates, and therefore, not entirely within Federated's control (e) Principles of Consolidation Federated performs an analysis for each Federated Fund or other entity in which Federated holds a financial interest to determine if it is a VIE or voting rights entity ( VRE ). Factors considered in this analysis include, but are not limited to, whether (1) it is a legal entity, (2) a scope exception applies, (3) a variable interest exists and (4) shareholders have the power to direct the activities that most significantly impact the economic performance, as well as the equity ownership, and any related party or de facto agent implications of Federated's involvement with the entity. Entities that are determined to be VIE s are consolidated if Federated is deemed to be the primary beneficiary. Entities that are determined to be VREs are generally consolidated if Federated holds the majority voting interest. Federated's conclusion to consolidate a Federated Fund may vary from period to period, most commonly as a result of changes in its percentage interest in the entity. All intercompany accounts and transactions have been eliminated. Consolidation of Variable Interest Entities Federated has a controlling financial interest in a VIE and is, therefore, deemed to be the primary beneficiary of a VIE if it has (1) the power to direct the activities of a VIE that most significantly impact the VIE 's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE . Consolidation of Voting Rights Entities Federated has a controlling financial interest in a VRE if it can exert control over the financial and operating policies of the VRE , which generally occurs when Federated holds the majority voting interest (i.e., greater than 50% of the voting equity interest). |
Cash and Cash Equivalents | (f) Cash and Cash Equivalents Cash and Cash Equivalents consist of investments in money market funds and deposits with banks. Cash equivalents are highly liquid investments that are readily convertible to cash with original maturities of 90 days or less at the date of acquisition. |
Investments | (g) Investments Federated's investments are categorized as Investments—Consolidated Investment Companies or Investments—Affiliates and Other on the Consolidated Balance Sheets . Investments—Consolidated Investment Companies represent securities held by Federated as a result of consolidating certain Federated Funds . Investments—Affiliates and Other represent Federated's investments in fluctuating-value Federated Funds and investments held in Separate Accounts for which Federated owns the underlying debt and equity securities. All investments are carried at fair value with unrealized gains or losses on these securities recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income . Realized gains and losses on these securities are computed on a specific-identification basis and recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income . |
Derivatives and Hedging Instruments | (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 (Loss) on Securities, net on the Consolidated Statements of Income . From time to time, Federated may also enter into derivative financial instruments to hedge against the risk of movement in foreign exchange rates. Federated records all derivative financial instruments as either assets or liabilities on its Consolidated Balance Sheets and measures these instruments at fair value. Federated has not designated any derivative financial instrument as a hedging instrument for accounting purposes. In 2019, the gain or loss on these derivative instruments is recognized in Operating Expenses – Other on the Consolidated Statements of Income |
Asset Acquisitions and Business Combinations | (i) Asset Acquisitions and Business Combinations Federated performs an analysis to determine whether a transaction should be accounted for as an asset acquisition or a business combination. A transaction that does not meet the definition of a business under U.S. GAAP is accounted for as an asset acquisition. Asset acquisitions are accounted for using a cost accumulation and allocation method where the cost of the transaction is allocated on a relative fair value basis to the qualifying assets acquired and liabilities assumed on the acquisition date. The cost of the transaction includes both the consideration transferred to the seller and any direct transaction costs incurred. The primary asset acquired in previous asset acquisitions has been the rights to manage fund assets. The rights to manage fund assets is an intangible asset valued using the excess earnings method, under the income approach, which estimates fair value by quantifying the amount of discounted cash flows generated by the asset. No goodwill is recognized in an asset acquisition. A transaction that meets the definition of a business is accounted for as a business combination under the acquisition method of accounting. The consideration transferred to the seller in a business combination is measured at fair value and calculated as the sum of the acquisition date fair values of the assets transferred by Federated, the liabilities incurred by Federated to the acquirer and any equity interests issued by Federated. Direct transaction costs are expensed as incurred in a business combination. Results of operations of an acquired business are included in Federated's results from the date of acquisition. Rights to manage fund assets and trade names acquired in a business combination are recorded at fair value. The fair value of the rights to manage fund assets is determined using the excess earnings method, under the income approach. The fair value of the trade names is determined using the relief from royalty method, under the income approach. Each method considers various factors to project future cash flows expected to be generated from the asset. After the fair values of all separately identifiable assets and liabilities have been estimated, goodwill is recorded to the extent that the consideration paid exceeds the sum of the fair values of the separately identifiable acquired assets, net of assumed liabilities. |
Goodwill and Intangible Assets | (j) Goodwill and Intangible Assets Intangible assets consist primarily of rights to manage fund assets and trade names acquired in connection with various asset acquisitions and business combinations. Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Certain portions of goodwill and intangible assets are denominated in foreign currency and, as such, include the effects of foreign currency fluctuations. 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 management of Federated's operations as a single business: investment management. 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 quantitative goodwill impairment test is performed which compares the fair value of its reporting unit, including consideration of Federated's market capitalization, with its carrying amount. If the carrying amount of its reporting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting unit. Federated has determined that certain acquired assets, primarily certain rights to manage fund assets and trade names, have indefinite useful lives. In reaching this conclusion, management considered the acquired assets' legal, regulatory and agreed-upon provisions, the highest and best use of the asset, the level of cost and effort required in agreed-upon renewals, and the effects of obsolescence, demand, competition and other economic factors that could impact the assets' fair value. The fair value of the rights to manage fund assets is determined using the excess earnings method, under the income approach. The fair value of the trade name is determined using the relief from royalty method, under the income approach. Federated has aggregated multiple indefinite-lived assets into three units of accounting for purposes of indefinite-lived intangible impairment testing. The determination to group indefinite-lived intangible assets into three units of accounting is not a one-time evaluation. Rather, it is subject to reconsideration and may change depending on the facts and circumstances. On a quarterly basis, indefinite-lived intangible assets are reviewed for potential changes in useful life. In addition, an annual impairment test is performed at the accounting unit level, or when indicators of a potential impairment exist. Management may use a qualitative or quantitative approach which requires the weighting 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. In 2019, management used a quantitative approach. Management considers macroeconomic and entity-specific factors, including the asset's estimated useful life, projected AUM, projected revenue growth rates, projected pre-tax profit margins, tax rates, discount rates and, in the case of a trade name valuation, a royalty rate. If Federated's carrying amount of its accounting unit exceeds its fair value, an impairment loss would be recognized in an amount equal to the excess of the carrying value over the fair value. |
Property and Equipment | (k) 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 15 years. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or their respective lease terms. Depreciation and amortization expense is recorded in Office and Occupancy on the Consolidated Statements of Income. As property and equipment are taken out of service, the cost and related accumulated depreciation and amortization are removed. The write-off of any residual net book value is reflected as a loss in Operating Expenses – Other on 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 on the Consolidated Statements of Income . |
Costs of Computer Software Developed or Obtained for Internal Use | (l) 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, including software licenses in a cloud computing arrangement, are capitalized in accordance with the applicable accounting guidance relating to Intangibles - Goodwill and Other - Internal-Use Software. 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 estimated useful life of the software, typically four years |
Leases | (m) Leases Prior to the adoption of the new lease guidance effective January 1, 2019, Federated classified leases as either capital or operating. All leases for the periods presented prior to January 1, 2019 were classified as operating leases. Rent expense under noncancelable operating leases with scheduled rent increases or rent holidays was 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 was recorded as a deferred liability. The liability was then reduced when scheduled payments were in excess of the straight-line rent expense. Build-out allowances and other such lease incentives were recorded as deferred credits, and were amortized on a straight-line basis as a reduction of rent expense beginning in the period they were deemed to have been earned, which generally coincided with the effective date of the lease. The current portion of remaining deferred lease costs and unamortized build-out allowances was included in Other Current Liabilities and the long-term portion was included in Other Long-Term Liabilities on the Consolidated Balance Sheets as of and prior to December 31, 2018. Following the adoption of the new lease guidance effective January 1, 2019, Federated classifies leases as either operating or financing, and records a ROU asset and a lease liability on the Consolidated Balance Sheets. The lease liability is initially measured at the present value of the unpaid lease payments remaining at the lease commencement date. The ROU asset is initially measured as the lease liability, adjusted for lease payments made prior to the lease commencement date and lease incentives received. ROU assets are reviewed for impairment when events or circumstances indicate that the carrying amount may not be recoverable. In determining the present value of the lease liability, a lessee must use the interest rate implicit in the lease or, if that rate is not readily determinable, its incremental borrowing rate ( IBR ). All leases for the periods presented are classified as operating leases. Management has made the following accounting policy elections: (1) not to separate lease components from non-lease components for all asset classes and (2) to apply the short-term lease exception, which does not require the capitalization of leases with terms of 12 months or less. Rent expense is recorded on a straight-line basis over the lease term, beginning on the earlier of the effective date of the lease or the date Federated obtains control of the asset. The lease term may include options to extend the lease when they are reasonably certain of being exercised. Management judgments are used when reviewing new and/or materially-modified contracts to determine (1) whether the contract is, or contains, a lease, and (2) the IBR . Management was unable to determine the rates implicit in Federated's leases based on the information available at the commencement date, therefore, management calculated an IBR for each lease. In order to calculate the IBR , management began with readily observable unsecured rates, and adjusted for the following assumptions: (1) collateralization, (2) remaining lease term and (3) the type of ROU asset. |
Equity Method Investments | (n) Equity Method Investments The equity method of accounting is used to account for equity investments in which Federated does not control the investee and is not the primary beneficiary of a VIE, but has the ability to exercise significant influence over the financial and operating policies of the investee. Significant influence is generally considered to exist when Federated's ownership interest is between 20% and 50%. Equity method investments are initially recorded at cost in Other Long-Term Assets on the Consolidated Balance Sheets . Federated's proportionate share of the investee's net income or loss is recorded in Other, net - Nonoperating Income (Expenses) on the Consolidated Statements of Income . The investments are reviewed for impairment if events or changes in circumstance indicate that the carrying amount exceeds its fair value. If the carrying amount of an investment exceeds fair value and the decline in fair value is deemed to be other-than-temporary, the equity method investment will be adjusted to fair value and an impairment loss recorded equal to the difference. |
Loss Contingencies | (o) 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 lawsuit, claim or proceeding 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 on the Consolidated Statements of Income when receipt is deemed probable, or when final approval is received by the insurance carrier. |
Treasury Stock | (q) Treasury Stock Federated accounts for acquisitions of treasury stock at cost and reports total treasury stock held as a deduction from Federated Hermes, Inc. 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 and any further required reductions are recorded to Retained Earnings on the Consolidated Balance Sheets . |
Accumulated Other Comprehensive Loss | (r) Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss), net of tax is reported on the Consolidated Balance Sheets and the Consolidated Statements of Changes in Equity and includes unrealized gains and losses on foreign currency translation adjustments. Prior to January 1, 2018, Accumulated Other Comprehensive Income (Loss), net of tax included unrealized gains and losses on equity securities available for sale. Following the adoption of the new financial instruments guidance effective January 1, 2018, unrealized gains and losses on these securities are recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income |
Foreign Currency Translation | (s) Foreign Currency Translation The balance sheets of certain foreign subsidiaries of Federated, certain consolidated foreign-denominated investment products and all other foreign-denominated cash or investment balances are translated at the current exchange rate as of the end of the reporting 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 Income (Loss), net of tax on the Consolidated Balance Sheets . Foreign currency transaction gains and losses are reflected in Operating Expenses – Other on the Consolidated Statements of Income . |
Share-Based Compensation | (t) Share-Based Compensation Federated issues shares for share-based awards from treasury stock. Federated recognizes compensation costs based on grant-date fair value for all share-based awards. For restricted stock awards, the grant-date 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 generally recognized on a straight-line basis over the requisite service period of the award and is adjusted for actual forfeitures as they occur. For 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 required age for retirement. Compensation and Related expense also includes dividends paid on forfeited awards. Excess tax benefits and deficiencies (including tax benefits from dividends paid on unvested restricted stock awards) are recognized in the Income Tax Provision in the Consolidated Statements of Income . Effective July 2, 2018, Federated established a non-public subsidiary share-based compensation plan for certain employees of that subsidiary . The subsidiary grants equity awards in the form of restricted nonpublic subsidiary stock to certain members of the subsidiary's management and other key employees. The grant date fair value of the awards is recognized as Compensation and Related expense in the Consolidated Statements of Income on a straight-line basis over the requisite service period of the awards and is adjusted for actual forfeitures as they occur, with a corresponding adjustment to Redeemable Noncontrolling Interest in Subsidiaries in the Consolidated Balance Sheets . As a result of the grant of the equity awards in a nonpublic consolidated subsidiary, the shares are not included in the attribution of the subsidiary's income and losses to noncontrolling interest holders until the awards vest. Therefore, Federated initially recognized the fair value of 33 percent of Hermes as Redeemable Noncontrolling Interest in Subsidiaries on the Consolidated Balance Sheets . The attribution of the subsidiary's income and loss is recognized in Net Income (Loss) Attributable to the Noncontrolling Interests in Subsidiaries on the Consolidated Statements of Income |
Advertising Costs | (u) 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 |
Income Taxes | (v) 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. Federated has elected to account for taxes related to temporary basis differences expected to reverse as Global Intangible Low-Taxed Income ( GILTI ) as tax expense in the period incurred, rather than factoring it into the measurement of deferred taxes. |
Earnings Per Share | (w) Earnings Per Share Basic and diluted earnings per share are calculated under the two-class method. Pursuant to the two-class method, unvested restricted shares of Federated's Class B common stock with nonforfeitable rights to dividends are considered participating securities and are required to be considered in the computation of earnings per share. These unvested restricted shares, as well as the related dividends paid and their proportionate share of undistributed earnings, if any, are excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, net income available to unvested shareholders of a nonpublic consolidated subsidiary is excluded from the computation of diluted earnings per share. |
Business Segments | (x) Business Segments Business or operating segments are defined as a component of an enterprise that engages in activities from which it may earn revenue and incur expenses for which discrete financial information is available and is regularly evaluated by Federated's Chief Executive Officer ( CEO ), who is the chief operating decision maker, in deciding how to allocate resources and assess performance. Federated operates in one operating segment, the investment management business , which is primarily conducted within the U.S. Federated's CEO utilizes a consolidated approach to assess performance and allocate resources. |
Recently Adopted Accounting Guidance and Recently Issued Accounting Guidance Not Yet Adopted | Recently Adopted Accounting Guidance (a) Leases On February 25, 2016, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update ( ASU ) 2016-02, Leases ( Topic 842 ). Its core principle is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet, while retaining a distinction between financing and operating leases. In the third quarter of 2018, the FASB issued ASU 2018-10, which provides improvements to narrow aspects of the guidance and ASU 2018-11, which provides an optional alternative transition method to initially apply the new leases standard at the adoption date (collectively, with ASU 2016-02, Topic 842). Effective January 1, 2019, Federated adopted Topic 842 using the alternative transition method, which did not require the restatement of prior years. In connection with the adoption of Topic 842, management has elected the package of practical expedients, which allows entities to not reassess (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Management did not elect the hindsight practical expedient to determine the lease term. Upon adoption, Federated recorded $133.7 million as a lease liability and, after the reclassification of certain lease-related liabilities into the ROU asset, $112.2 million as a ROU asset on the Consolidated Balance Sheets , which consists primarily of Federated's operating real estate leases. The adoption did not have a material impact on Federated's results of operations or cash flows. (b) Goodwill Impairment During the second quarter of 2019, Federated adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, effective January 1, 2019. Under this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the ASU retains the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The ASU required the prospective adoption method. The adoption did not have an impact to Federated's Consolidated Financial Statements. Recently Issued Accounting Guidance Not Yet Adopted (c) Credit Losses On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology with a current expected credit loss (CECL) model. CECL requires an entity to estimate lifetime expected credit losses based on relevant information about historical events, current conditions and reasonable and supportable forecasts. The update is effective for Federated on January 1, 2020. The update requires the modified retrospective adoption method. The adoption will not have a material impact to Federated's Consolidated Financial Statements. (d) Fair Value Measurement On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update remove, modify or add disclosure requirements for fair value measurements to improve the effectiveness of disclosures. The update is effective for Federated on January 1, 2020, and requires either the prospective or retrospective adoption method, depending on the amendment. The adoption will not have a material impact to Federated's Consolidated Financial Statements. (e) Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement On August 29, 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The update is effective for Federated on January 1, 2020, and allows for either the prospective or retrospective adoption method. Management plans to elect the prospective adoption approach, which does not require the restatement of prior years. The adoption will not have a material impact to Federated's Consolidated Financial Statements. |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Summary of Final Purchase Price Allocation | The following table summarizes the final purchase price allocation determined as of the purchase date: (in millions) Cash and Cash Equivalents $ 175.8 Other Current Assets 1 53.7 Goodwill 2 114.1 Intangible Assets 3 320.0 Other Long-Term Assets 4 40.1 Less: Long-Term Deferred Tax Liability, net (28.7 ) Less: Liabilities Acquired 5 (162.3 ) Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary 6 (169.2 ) Total Purchase Price Consideration $ 343.5 1 Includes $31.9 million of receivables, all of which has been collected. 2 The goodwill recognized is attributable to enhanced revenue and AUM growth opportunities from future investors and the assembled workforce of Hermes. In this instance, goodwill is not deductible for tax purposes. 3 Includes $71.6 million for customer relationships with a weighted-average useful life of 8.5 years , $198.5 million for indefinite-lived rights to manage fund assets and $49.9 million for an indefinite-lived trade name, all of which are recorded in Intangible Assets, net on the Consolidated Balance Sheets . 4 Includes $11.2 million of Property and Equipment, net . 5 Includes $130.3 million related to Accrued Compensation and Benefits . 6 The fair value of the noncontrolling interest was determined utilizing the market approach and consideration of the overall business enterprise value. |
Summary of Unaudited Pro Forma Financial Information | The pro forma results include adjustments for the effect of acquisition-related expenses (including compensation and related expense, income tax expense and amortization related to newly acquired intangibles) as well as adjustments to conform to Federated's U.S. GAAP accounting policies. (in millions) 2018 Revenue $ 1,230.5 Net Income 1 $ 241.4 1 Excludes a $29.0 million loss on foreign currency forward transactions entered into in order to hedge against foreign exchange rate fluctuations associated with the payment for the Hermes Acquisition . |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents Federated's revenue disaggregated by asset class: (in thousands) 2019 2018 Equity $ 533,749 $ 470,436 Money Market 529,340 414,746 Fixed-Income 179,102 180,152 Other 1 84,703 70,343 Total Revenue $ 1,326,894 $ 1,135,677 1 Includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), Multi-Asset and, beginning in the third quarter of 2018, stewardship services revenue. The following table presents Federated's revenue disaggregated by performance obligation: (in thousands) 2019 2018 Asset Management 1 $ 907,605 $ 773,418 Administrative Services 245,887 199,269 Distribution 2 151,106 146,595 Other 3 22,296 16,395 Total Revenue $ 1,326,894 $ 1,135,677 1 The performance obligation may include administrative, distribution and other services recorded as a single asset management fee under Topic 606, as it is part of a unitary fee arrangement with a single performance obligation. 2 The performance obligation is satisfied at a point in time. A portion of this revenue relates to a performance obligation that has been satisfied in a prior period. 3 Includes shareholder service fees and, beginning in the third quarter of 2018, stewardship services revenue. The following table presents Federated's revenue disaggregated by product type: (in thousands) 2019 2018 Federated Funds $ 1,093,157 $ 942,037 Separate Accounts 221,756 187,585 Other 1 11,981 6,055 Total Revenue $ 1,326,894 $ 1,135,677 1 Includes stewardship services revenue beginning in the third quarter of 2018. |
Remaining Unsatisfied Performance Obligations | Based on existing contracts and the exchange rates as of December 31, 2019 , Federated may recognize future fixed revenue from stewardship services as presented in the following table: (in thousands) 2020 $ 7,777 2021 3,315 2022 1,625 2023 and Thereafter 1,035 Total Remaining Unsatisfied Performance Obligations $ 13,752 |
Concentration Risk (Tables)
Concentration Risk (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Schedules of Concentrations | The following table presents Federated's revenue concentration by asset class over the last three years: 2019 2018 2017 Equity Assets 40 % 41 % 38 % Money Market Assets 40 % 37 % 41 % Fixed-Income Assets 14 % 16 % 17 % (b) Revenue Concentration by Investment Strategy/Fund The following table presents Federated's revenue concentration by investment strategy/fund over the last three years: 2019 2018 2017 Federated Strategic Value Dividend strategy 1 11 % 15 % 18 % Federated Government Obligations Fund 10 % 9 % 10 % Federated Kaufmann Mid-Cap Growth strategy 2 9 % 10 % 9 % 1 Strategy includes Federated Funds and Separate Accounts . 2 Strategy includes Federated Funds . |
Consolidation (Tables)
Consolidation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Federated Funds VIEs | The following table presents the balances related to the consolidated Federated Fund VIEs that were included on the Consolidated Balance Sheets as well as Federated's net interest in the consolidated Federated Fund VIEs at December 31: (in millions) 2019 2018 Investments—Consolidated Investment Companies $ 13.3 $ 21.2 Receivables 0.3 0.4 Less: Liabilities 0.1 0.3 Less: Redeemable Noncontrolling Interest in Subsidiaries 9.3 11.2 Federated's Net Interest in Federated Fund VIEs $ 4.2 $ 10.1 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Gains and Losses Recognized in Gain (Loss) on Securities, Net | The following table presents gains and losses recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income in connection with Federated's investments: (in thousands) 2019 2018 2017 Investments—Consolidated Investment Companies Unrealized Gains (Losses) $ 4,759 $ (3,142 ) $ 771 Net Realized Gains (Losses) 1 (1,243 ) (374 ) 2,245 Net Gains (Losses) on Investments—Consolidated Investment Companies 3,516 (3,516 ) 3,016 Investments—Affiliates and Other Unrealized Gains (Losses) 2,156 (1,180 ) 118 Net Realized Gains (Losses) 1 (706 ) 339 4,938 Net Gains (Losses) on Investments—Affiliates and Other 1,450 (841 ) 5,056 Gain (Loss) on Securities, net $ 4,966 $ (4,357 ) $ 8,072 1 Realized gains and losses are computed on a specific-identification basis. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents fair value measurements for classes of Federated's financial assets and liabilities measured at fair value on a recurring basis at December 31: (in thousands) Level 1 Level 2 Level 3 Total 2019 Financial Assets Cash and Cash Equivalents $ 249,174 $ 0 $ 0 $ 249,174 Investments—Consolidated Investment Companies Equity Securities 7,245 18,383 0 25,628 Debt Securities 0 38,898 0 38,898 Investments—Affiliates and Other Equity Securities 23,667 335 12 24,014 Debt Securities 0 2,610 311 2,921 Other 1 2,901 3,177 0 6,078 Total Financial Assets $ 282,987 $ 63,403 $ 323 $ 346,713 Total Financial Liabilities 2 $ 6 $ 0 $ 2,081 $ 2,087 2018 Financial Assets Cash and Cash Equivalents $ 156,832 $ 0 $ 0 $ 156,832 Investments—Consolidated Investment Companies Equity Securities 1,269 633 0 1,902 Debt Securities 0 20,896 0 20,896 Investments—Affiliates and Other Equity Securities 6,963 403 38 7,404 Debt Securities 0 3,456 0 3,456 Other 597 0 70 667 Total Financial Assets $ 165,661 $ 25,388 $ 108 $ 191,157 Total Financial Liabilities 2 $ 53 $ 3,852 $ 385 $ 4,290 1 Amounts primarily consist of a derivative asset and security deposits. 2 Amounts primarily consist of acquisition-related future contingent consideration liabilities and derivative liabilities. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Finite-lived intangible assets represent customer relationships and consist of the following at December 31: (in thousands) 2019 2018 Cost $ 71,853 $ 96,598 Accumulated Amortization (12,856 ) (11,203 ) Carrying Value $ 58,997 $ 85,395 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following at December 31: (in thousands) Estimated Useful Life 2019 2018 Computer Software and Hardware 1 to 7 years $ 87,443 $ 85,894 Leasehold Improvements Up to term of lease 35,348 33,379 Transportation Equipment 3 to 12 years 17,851 17,851 Office Furniture and Equipment 4 to 15 years 5,849 6,042 Total Cost 146,491 143,166 Accumulated Depreciation (94,766 ) (89,937 ) Property and Equipment, net $ 51,725 $ 53,229 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Activity of Non-Vested Restricted Stock Awards | The following table summarizes activity of non-vested restricted stock awards for the year ended December 31, 2019 : Restricted Shares Weighted- Average Grant- Date Fair Value Non-vested at January 1, 2019 3,960,560 $ 25.59 Granted 1 928,324 30.10 Vested (966,258 ) 26.73 Forfeited (141,431 ) 23.91 Non-vested at December 31, 2019 3,781,195 $ 26.47 1 During 2019 , Federated awarded 498,324 shares of restricted 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 2019 , Federated awarded 430,000 shares of restricted Class B common stock to certain key employees. These restricted stock awards generally vest over a ten -year period. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Provision | Income Tax Provision consisted of the following expense/(benefit) components for the years ended December 31: (in thousands) 2019 2018 2017 Current: Federal $ 67,745 $ 54,447 $ 106,710 State 10,158 7,359 9,446 Foreign 2,791 (188 ) 217 Total Current 80,694 61,618 116,373 Deferred: Federal 6,395 7,616 (59,517 ) State 1,427 1,750 638 Foreign (370 ) 2,891 (393 ) Total Deferred 7,452 12,257 (59,272 ) Total $ 88,146 $ 73,875 $ 57,101 |
Effective Income Tax Rate Reconciliation | The reconciliation between the statutory income tax rate and the effective tax rate consisted of the following for the years ended December 31: 2019 2018 2017 Expected Federal Statutory Income Tax Rate 21.0 % 21.0 % 35.0 % Increase/(Decrease): State and Local Income Taxes, net of Federal Benefit 2.4 2.4 1.9 Non-Deductible Executive Compensation 0.9 1.1 0.0 Federal Rate Adjustment to Deferred Taxes 1 0.0 0.0 (20.2 ) Other (0.2 ) 0.4 (0.5 ) Effective Tax Rate 24.1 % 24.9 % 16.2 % 1 Represents the impact of revaluing the net deferred tax liability due to the enactment of the Tax Act , and includes the federal tax benefit of any state and local deferred taxes. |
Deferred Tax Assets and Liabilities | 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) 2019 2018 Deferred Tax Assets Tax Net Operating Loss Carryforwards $ 71,724 $ 74,213 Compensation Related 15,994 12,514 Other 2,897 2,553 Total Deferred Tax Assets 90,615 89,280 Valuation Allowance (57,790 ) (56,925 ) Total Deferred Tax Asset, net of Valuation Allowance $ 32,825 $ 32,355 Deferred Tax Liabilities Intangible Assets $ 191,595 $ 174,812 Property and Equipment 5,493 4,646 Other 1,119 1,061 Total Gross Deferred Tax Liability $ 198,207 $ 180,519 Net Deferred Tax Liability $ 165,382 $ 148,164 |
Earnings Per Share Attributab_2
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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 for the years ended December 31: (in thousands, except per share data) 2019 2018 2017 Numerator Net Income Attributable to Federated Hermes, Inc. 1 $ 272,339 $ 220,297 $ 291,341 Less: Total Net Income Available to Participating Unvested Restricted Shareholders 2 (10,234 ) (8,555 ) (11,420 ) Total Net Income Attributable to Federated Common Stock - Basic 1 $ 262,105 $ 211,742 $ 279,921 Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary (872 ) (794 ) 0 Total Net Income Attributable to Federated Common Stock - Diluted 1 $ 261,233 $ 210,948 $ 279,921 Denominator Basic Weighted-Average Federated Common Stock 3 97,259 96,949 97,411 Dilutive Potential Shares from Stock Options 0 0 1 Diluted Weighted-Average Federated Common Stock 3 97,259 96,949 97,412 Earnings Per Share Net Income Attributable to Federated Common Stock - Basic and Diluted 3,4 $ 2.69 $ 2.18 $ 2.87 1 2017 includes a $70.4 million reduction to the income tax provision resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act , thereby increasing net income. 2 Includes dividends paid on unvested restricted Federated Class B Common shares and their proportionate share of undistributed earnings attributable to Federated shareholders. 3 Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share. 4 2017 includes a $0.69 increase to earnings per share resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act . |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Reconciliation of Future Minimum Undiscounted Payments to Operating Lease Liabilities | The following table reconciles future minimum undiscounted payments to the operating lease liabilities recorded on the Consolidated Balance Sheets as of December 31, 2019 : (in millions) 2020 $ 17.9 2021 17.5 2022 18.3 2023 18.5 2024 17.8 2025 and Thereafter 53.1 Total Undiscounted Lease Payments $ 143.1 Present Value Adjustment 1 (22.0 ) Net Operating Lease Liabilities $ 121.1 1 Calculated using the IBR for each lease. |
Other Information Related to Operating Leases | The following information relates to the operating leases recorded on the Consolidated Balance Sheets as of December 31, 2019 : Weighted-average remaining lease term (in years) 8.6 Weighted-average discount rate (IBR) 3.8 % Year-to-date cash paid for the amounts included in the measurement of lease liabilities (in millions) $ 18.2 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of Accumulated Other Comprehensive Income (Loss), net of tax attributable to Federated shareholders are as follows: (in thousands) Unrealized Gain (Loss) on Equity Securities 1 Foreign Currency Translation (Loss) Gain Total Balance at December 31, 2016 $ 908 $ (1,431 ) $ (523 ) Other Comprehensive Income (Loss) Before Reclassifications and Tax 2,546 775 3,321 Tax Impact (904 ) (163 ) (1,067 ) Reclassification Adjustment, before tax (3,854 ) 0 (3,854 ) Tax Impact 1,333 0 1,333 Net Current-Period Other Comprehensive Income (Loss) (879 ) 612 (267 ) Balance at December 31, 2017 $ 29 $ (819 ) $ (790 ) Other Comprehensive Income (Loss) Before Reclassifications and Tax 0 (13,607 ) (13,607 ) Reclassification Adjustment, before tax 2 (80 ) (242 ) (322 ) Tax Impact 2 51 51 102 Net Current-Period Other Comprehensive Income (Loss) (29 ) (13,798 ) (13,827 ) Balance at December 31, 2018 $ 0 $ (14,617 ) $ (14,617 ) Other Comprehensive Income (Loss) Before Reclassifications and Tax 0 14,368 14,368 Net Current-Period Other Comprehensive Income (Loss) 0 14,368 14,368 Balance at December 31, 2019 $ 0 $ (249 ) $ (249 ) 1 Other than described in note two below, amounts reclassified from Accumulated Other Comprehensive Income (Loss), net of tax were recorded in Gain (Loss) on Securities, net on the Consolidated Statements of Income. 2 Amount represents the reclassification from Accumulated Other Comprehensive Income (Loss), net of tax to Retained Earnings on the Consolidated Balance Sheets as a result of the adoption of new accounting guidance in 2018. |
Redeemable Noncontrolling Int_2
Redeemable Noncontrolling Interest in Subsidiaries (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Noncontrolling Interest [Abstract] | |
Summary of Changes in Redeemable Noncontrolling Interest in Subsidiaries | The following table presents the changes in Redeemable Noncontrolling Interest in Subsidiaries : (in thousands) Consolidated Investment Companies Hermes Total Balance at January 1, 2017 $ 31,362 $ 0 $ 31,362 Net Income (Loss) 3,084 0 3,084 Subscriptions—Redeemable Noncontrolling Interest Holders 4,687 0 4,687 Consolidation/(Deconsolidation) (67 ) 0 (67 ) Distributions to Noncontrolling Interest in Subsidiaries (8,903 ) 0 (8,903 ) Balance at December 31, 2017 $ 30,163 $ 0 $ 30,163 Net Income (Loss) (1,095 ) 3,097 2,002 Other Comprehensive Income (Loss), net of tax 0 (6,009 ) (6,009 ) Subscriptions—Redeemable Noncontrolling Interest Holders 2,801 0 2,801 Consolidation/(Deconsolidation) (1,751 ) 0 (1,751 ) Stock Award Activity 0 4,239 4,239 Distributions to Noncontrolling Interest in Subsidiaries (18,492 ) 0 (18,492 ) Business Acquisition 0 169,560 169,560 Balance at December 31, 2018 $ 11,626 $ 170,887 $ 182,513 Net Income (Loss) 2,016 2,770 4,786 Other Comprehensive Income (Loss), net of tax 0 6,907 6,907 Subscriptions—Redeemable Noncontrolling Interest Holders 9,356 0 9,356 Consolidation/(Deconsolidation) 454 0 454 Stock Award Activity 0 7,888 7,888 Distributions to Noncontrolling Interest in Subsidiaries (3,580 ) 0 (3,580 ) Business Acquisition 0 (386 ) (386 ) Change in Estimated Redemption Value of Redeemable Noncontrolling Interests 0 4,148 4,148 Balance at December 31, 2019 $ 19,872 $ 192,214 $ 212,086 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Minimum Noncancelable Payments Contractually Due under Federated's Significant Service Contracts | The following table summarizes minimum noncancelable payments contractually due under Federated's significant service contracts: Payments due in After (in millions) 2020 2021 2022 2023 2024 2024 Total Purchase Obligations 1 $ 31.9 $ 9.6 $ 5.8 $ 5.4 $ 3.7 $ 8.6 $ 65.0 Other Obligations 2.7 0.5 0.0 0.0 0.0 0.0 3.2 Total $ 34.6 $ 10.1 $ 5.8 $ 5.4 $ 3.7 $ 8.6 $ 68.2 1 Federated is a party to various contracts pursuant to which it receives certain services, including services for 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 require payments through the year 2027. Costs for such services are expensed as incurred. |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Revenue from U.S. and Non-U.S. Operations | Federated's revenues from U.S. and non-U.S. operations were as follows for the years ended December 31: (in thousands) 2019 2018 2017 U.S. $ 1,098,975 $ 1,005,948 $ 1,069,567 Non-U.S. 1 227,919 129,729 33,357 Total Revenue $ 1,326,894 $ 1,135,677 $ 1,102,924 1 This represents revenue earned by non-U.S. domiciled subsidiaries, primarily in the UK. |
Schedule of Right-of-Use Assets, Net and Property and Equipment, Net by Geographic Area | Federated's Right-of-Use Assets, net and Property and Equipment, net for U.S. and non-U.S. operations was as follows at December 31: (in thousands) 2019 2018 U.S. 1 $ 129,322 $ 42,666 Non-U.S. 1,2 22,917 10,563 Total Right-of-Use Assets, net and Property and Equipment, net 1 $ 152,239 $ 53,229 1 Amounts for 2019 include Right-of-Use Assets recorded in connection with the adoption of Topic 842 . 2 This represents net assets of non-U.S. domiciled subsidiaries, primarily in the UK. |
Supplementary Quarterly Finan_2
Supplementary Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Data | (in thousands, except per share data, for the quarters ended) March 31 June 30 September 30 December 31 2019 1 Revenue $ 307,050 $ 321,479 $ 340,340 $ 358,025 Operating Income $ 70,889 $ 84,940 $ 89,307 $ 102,791 Net Income Including the Noncontrolling Interests in Subsidiaries $ 54,611 $ 63,840 $ 73,585 $ 85,089 Amounts Attributable to Federated Hermes, Inc. Net Income $ 54,546 $ 62,724 $ 72,962 $ 82,107 Earnings Per Common Share – Basic and Diluted $ 0.54 $ 0.62 $ 0.72 $ 0.81 2018 1 Revenue $ 263,852 $ 255,993 $ 308,616 $ 307,216 Operating Income $ 79,671 $ 80,757 $ 81,898 $ 87,954 Net Income Including the Noncontrolling Interests in Subsidiaries 2 $ 60,006 $ 38,667 $ 61,994 $ 61,632 Amounts Attributable to Federated Hermes, Inc. Net Income 2 $ 60,331 $ 38,822 $ 59,608 $ 61,536 Earnings Per Common Share – Basic and Diluted $ 0.60 $ 0.38 $ 0.59 $ 0.61 1 The financial results of Hermes have been included in Federated's Consolidated Financial Statements from the July 1, 2018 effective date of the acquisition. 2 The quarter ended June 30, 2018 includes a $29.0 million loss related to two derivative financial instruments associated with the Hermes Acquisition (see Note (9) for additional information). |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - segment | 12 Months Ended | |
Dec. 31, 2019 | Jul. 01, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Number of operating segments | 1 | |
Hermes | ||
Property, Plant and Equipment [Line Items] | ||
Fair value of Redeemable noncontrolling interest | 33.00% | |
Software and Software Development Costs | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 4 years | |
Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 1 year | |
Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 15 years |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease liability | $ 121,100 | |
Right-of-use asset | $ 100,514 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease liability | $ 133,700 | |
Right-of-use asset | $ 112,200 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||||||
Drawdown from existing revolving credit facility | $ 8,800 | $ 87,650 | $ 0 | ||||
Derivative loss | 29,000 | ||||||
Hermes | |||||||
Business Acquisition [Line Items] | |||||||
Remaining interest contributed to employee benefit trust | 10.50% | ||||||
Hermes | BTPS | |||||||
Business Acquisition [Line Items] | |||||||
Ownership interest retained | 29.50% | ||||||
Hermes | |||||||
Business Acquisition [Line Items] | |||||||
Payments to acquire business | $ 344,300 | $ 343,500 | |||||
Cash received from acquisition | $ 800 | ||||||
Drawdown from existing revolving credit facility | $ 18,000 | ||||||
Transaction costs expensed | 13,300 | ||||||
Foreign exchange gain | $ 1,700 | ||||||
Increase in Intangible Assets | 43,800 | ||||||
Increase in Other Long-Term Assets | 5,000 | ||||||
Increase in Long-Term Deferred Tax Liability | 8,200 | ||||||
Decrease in Goodwill | $ 41,800 | ||||||
Revenue | 100,800 | 198,300 | |||||
Net income | $ 9,600 | $ 10,400 |
Business Combinations - Summary
Business Combinations - Summary of Final Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 774,534 | $ 809,608 | |
Hermes | |||
Business Acquisition [Line Items] | |||
Cash and Cash Equivalents | $ 175,800 | ||
Other Current Assets | 53,700 | ||
Goodwill | 114,100 | ||
Intangible Assets | 320,000 | ||
Other Long-Term Assets | 40,100 | ||
Less: Long-Term Deferred Tax Liability, net | (28,700) | ||
Less: Liabilities Assumed | (162,300) | ||
Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary | (169,200) | ||
Total Purchase Price Consideration | 343,500 | ||
Receivables | 31,900 | ||
Property and Equipment, net | 11,200 | ||
Accrued Compensation and Benefits | 130,300 | ||
Hermes | Investment Advisory Contracts | |||
Business Acquisition [Line Items] | |||
Indefinite-lived intangible assets | 198,500 | $ 65,800 | |
Hermes | Trade Name | |||
Business Acquisition [Line Items] | |||
Indefinite-lived intangible assets | 49,900 | ||
Hermes | Customer Relationships | |||
Business Acquisition [Line Items] | |||
Customer relationships | $ 71,600 | ||
Weighted-average useful life | 8 years 6 months |
Business Combinations - Summa_2
Business Combinations - Summary of Unaudited Pro Forma Financial Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Business Acquisition [Line Items] | |
Loss on foreign currency forward transactions | $ 29 |
Hermes | |
Business Acquisition [Line Items] | |
Revenue | 1,230.5 |
Net Income | $ 241.4 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue by Asset Class (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | $ 358,025 | $ 340,340 | $ 321,479 | $ 307,050 | $ 307,216 | $ 308,616 | $ 255,993 | $ 263,852 | $ 1,326,894 | $ 1,135,677 | $ 1,102,924 |
Equity | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 533,749 | 470,436 | |||||||||
Money Market | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 529,340 | 414,746 | |||||||||
Fixed-Income | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 179,102 | 180,152 | |||||||||
Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | $ 84,703 | $ 70,343 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Disaggregation of Revenue by Performance Obligation (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | $ 358,025 | $ 340,340 | $ 321,479 | $ 307,050 | $ 307,216 | $ 308,616 | $ 255,993 | $ 263,852 | $ 1,326,894 | $ 1,135,677 | $ 1,102,924 |
Asset Management | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 907,605 | 773,418 | |||||||||
Administrative Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 245,887 | 199,269 | |||||||||
Distribution | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 151,106 | 146,595 | |||||||||
Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | $ 22,296 | $ 16,395 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Disaggregation of Revenue by Product Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | $ 358,025 | $ 340,340 | $ 321,479 | $ 307,050 | $ 307,216 | $ 308,616 | $ 255,993 | $ 263,852 | $ 1,326,894 | $ 1,135,677 | $ 1,102,924 |
Federated Funds | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 1,093,157 | 942,037 | |||||||||
Separate Accounts | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | 221,756 | 187,585 | |||||||||
Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Revenue | $ 11,981 | $ 6,055 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Narrative (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract terms | Generally, contracts are billed in arrears on a quarterly basis and have a three year duration, after which the customer can terminate the agreement with a three to twelve month notice. |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Termination period | 3 months |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Termination period | 12 months |
Revenue from Contracts with C_7
Revenue from Contracts with Customers - Remaining Unsatisfied Performance Obligations (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 13,752 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 7,777 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 3,315 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 1,625 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Total Remaining Unsatisfied Performance Obligations | $ 1,035 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction |
Concentration Risk - Schedule o
Concentration Risk - Schedule of Revenue Concentration by Asset Class (Details) - Product Concentration Risk | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity Assets | |||
Concentration Risk [Line Items] | |||
Concentration risk | 40.00% | 41.00% | 38.00% |
Money Market Assets | |||
Concentration Risk [Line Items] | |||
Concentration risk | 40.00% | 37.00% | 41.00% |
Fixed-Income Assets | |||
Concentration Risk [Line Items] | |||
Concentration risk | 14.00% | 16.00% | 17.00% |
Concentration Risk - Schedule_2
Concentration Risk - Schedule of Revenue Concentration by Investment Strategy/Fund (Details) - Product Concentration Risk | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Federated Strategic Value Dividend strategy | |||
Concentration Risk [Line Items] | |||
Concentration risk | 11.00% | 15.00% | 18.00% |
Federated Government Obligations Fund | |||
Concentration Risk [Line Items] | |||
Concentration risk | 10.00% | 9.00% | 10.00% |
Federated Kaufmann Mid-Cap Growth strategy | |||
Concentration Risk [Line Items] | |||
Concentration risk | 9.00% | 10.00% | 9.00% |
Concentration Risk - Narrative
Concentration Risk - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Customer Concentration Risk | The Bank of New York Mellon Corporation | |||
Concentration Risk [Line Items] | |||
Concentration risk | 11.00% | 13.00% | 16.00% |
Consolidation - Narrative (Deta
Consolidation - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Variable Interest Entity [Line Items] | |||
Accounts receivable from Federated Funds | $ 37,600,000 | $ 35,000,000 | |
Fee Waivers | 427,300,000 | 358,200,000 | $ 345,500,000 |
Investments, deconsolidation | 6,200,000 | ||
Non-Consolidated Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
AUM for nonconsolidated Federated Funds | 9,600,000,000 | ||
Non-Consolidated Variable Interest Entity, Not Primary Beneficiary | Cash and Cash Equivalents | |||
Variable Interest Entity [Line Items] | |||
Federated's maximum risk of loss in non-consolidated investment companies | 111,900,000 | ||
Non-Consolidated Variable Interest Entity, Not Primary Beneficiary | Accounts Receivable | |||
Variable Interest Entity [Line Items] | |||
Federated's maximum risk of loss in non-consolidated investment companies | 15,400,000 | 16,200,000 | |
Financial Support, Fee Waivers | |||
Variable Interest Entity [Line Items] | |||
Money market funds which meet the scope exception of the consolidation guidance | 311,600,000 | 242,900,000 | 222,100,000 |
Financial Support, Capital Contributions | |||
Variable Interest Entity [Line Items] | |||
Money market funds which meet the scope exception of the consolidation guidance | $ 0 | $ 0 | $ 0 |
Consolidation - Consolidated Fe
Consolidation - Consolidated Federated Fund VIEs (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Variable Interest Entity [Line Items] | ||
Federated's Net Interest in Federated Fund VIEs | $ 4.2 | $ 10.1 |
Variable Interest Entity, Primary Beneficiary, Aggregated Disclosure | ||
Variable Interest Entity [Line Items] | ||
Less: Liabilities | 0.1 | 0.3 |
Less: Redeemable Noncontrolling Interest in Subsidiaries | 9.3 | 11.2 |
Variable Interest Entity, Primary Beneficiary, Aggregated Disclosure | Investments—Consolidated Investment Companies | ||
Variable Interest Entity [Line Items] | ||
Consolidated VIE assets | 13.3 | 21.2 |
Variable Interest Entity, Primary Beneficiary, Aggregated Disclosure | Receivables | ||
Variable Interest Entity [Line Items] | ||
Consolidated VIE assets | $ 0.3 | $ 0.4 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | $ 26,935 | $ 10,860 |
Investments - consolidated investment companies | 64,526 | 22,798 |
Debt Securities | ||
Schedule of Investments [Line Items] | ||
Investments - consolidated investment companies | 38,900 | 20,900 |
Stocks of large U.S. and international companies | ||
Schedule of Investments [Line Items] | ||
Investments - consolidated investment companies | 22,600 | 1,600 |
Federated Funds | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | 20,100 | 4,100 |
Separate Accounts | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | 6,800 | 6,800 |
Separate Accounts | Debt Securities | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | 2,600 | 3,500 |
Separate Accounts | Equity | ||
Schedule of Investments [Line Items] | ||
Investments—Affiliates and Other | $ 3,000 | $ 2,700 |
Investments - Gains and Losses
Investments - Gains and Losses Recognized in Gain (Loss) on Securities, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Gain (Loss) on Securities [Line Items] | |||
Gain (Loss) on Securities, net | $ 4,966 | $ (4,357) | $ 8,072 |
Investments—Consolidated Investment Companies | |||
Gain (Loss) on Securities [Line Items] | |||
Unrealized Gains (Losses) | 4,759 | (3,142) | 771 |
Net Realized Gains (Losses) | (1,243) | (374) | 2,245 |
Gain (Loss) on Securities, net | 3,516 | (3,516) | 3,016 |
Investments—Affiliates and Other | |||
Gain (Loss) on Securities [Line Items] | |||
Unrealized Gains (Losses) | 2,156 | (1,180) | 118 |
Net Realized Gains (Losses) | (706) | 339 | 4,938 |
Gain (Loss) on Securities, net | $ 1,450 | $ (841) | $ 5,056 |
Fair Value Measurements - Class
Fair Value Measurements - Classes of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financial Assets | ||
Cash and Cash Equivalents | $ 249,174 | $ 156,832 |
Investments—Consolidated Investment Companies | ||
Equity Securities | 25,628 | 1,902 |
Debt Securities | 38,898 | 20,896 |
Investments—Affiliates and Other | ||
Equity Securities | 24,014 | 7,404 |
Debt Securities | 2,921 | 3,456 |
Other | 6,078 | 667 |
Total Financial Assets | 346,713 | 191,157 |
Total Financial Liabilities | 2,087 | 4,290 |
Level 1 | ||
Financial Assets | ||
Cash and Cash Equivalents | 249,174 | 156,832 |
Investments—Consolidated Investment Companies | ||
Equity Securities | 7,245 | 1,269 |
Debt Securities | 0 | 0 |
Investments—Affiliates and Other | ||
Equity Securities | 23,667 | 6,963 |
Debt Securities | 0 | 0 |
Other | 2,901 | 597 |
Total Financial Assets | 282,987 | 165,661 |
Total Financial Liabilities | 6 | 53 |
Level 2 | ||
Financial Assets | ||
Cash and Cash Equivalents | 0 | 0 |
Investments—Consolidated Investment Companies | ||
Equity Securities | 18,383 | 633 |
Debt Securities | 38,898 | 20,896 |
Investments—Affiliates and Other | ||
Equity Securities | 335 | 403 |
Debt Securities | 2,610 | 3,456 |
Other | 3,177 | 0 |
Total Financial Assets | 63,403 | 25,388 |
Total Financial Liabilities | 0 | 3,852 |
Level 3 | ||
Financial Assets | ||
Cash and Cash Equivalents | 0 | 0 |
Investments—Consolidated Investment Companies | ||
Equity Securities | 0 | 0 |
Debt Securities | 0 | 0 |
Investments—Affiliates and Other | ||
Equity Securities | 12 | 38 |
Debt Securities | 311 | 0 |
Other | 0 | 70 |
Total Financial Assets | 323 | 108 |
Total Financial Liabilities | $ 2,081 | $ 385 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Mutual Fund | NAV | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Other financial assets | $ 3.7 | |
Money Market | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Cash and cash equivalents | $ 222.1 | $ 135.7 |
Derivatives (Details)
Derivatives (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($)instrument | Dec. 31, 2019USD ($) | Dec. 31, 2019GBP (£) | Dec. 31, 2018GBP (£)instrument | |
Derivative [Line Items] | ||||
Receivables | $ 60,094 | $ 64,492 | ||
Derivative loss | $ 29,000 | |||
Foreign Currency Forward | ||||
Derivative [Line Items] | ||||
Notional amount | £ | £ 53,000,000 | |||
Receivables | $ 3,100 | |||
Notional amount | £ | £ 46,000,000 | |||
Number of foreign currency forward transactions | instrument | 2 | 2 | ||
Foreign Currency Forward | Other Current Liabilities | ||||
Derivative [Line Items] | ||||
Derivative liability | $ 3,800 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Millions | Nov. 18, 2019 | Jul. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-lived Intangible Assets | |||||
Amortization expense for finite-lived intangible assets | $ 7.5 | $ 6.2 | $ 0.6 | ||
Expected aggregate annual amortization expense for finite-lived intangible assets in 2020 | 8.6 | ||||
Expected aggregate annual amortization expense for finite-lived intangible assets in 2021 | 8.6 | ||||
Expected aggregate annual amortization expense for finite-lived intangible assets in 2022 | 8.6 | ||||
Expected aggregate annual amortization expense for finite-lived intangible assets in 2023 | 8.6 | ||||
Expected aggregate annual amortization expense for finite-lived intangible assets in 2024 | 8.6 | ||||
Rights to Manage Fund Assets | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Indefinite-lived intangible assets | 335.2 | 204.1 | |||
Rights to Manage Fund Assets | Hermes | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Increase of indefinite-lived intangible assets | $ 198.5 | 65.8 | |||
Trade Name | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Indefinite-lived intangible assets | $ 52 | $ 50.1 | |||
Trade Name | Hermes | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Increase of indefinite-lived intangible assets | $ 49.9 | ||||
PNC Capital Advisors LLC | Rights to Manage Fund Assets | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Increase of indefinite-lived intangible assets | $ 58 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - Customer Relationships - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 71,853 | $ 96,598 |
Accumulated Amortization | (12,856) | (11,203) |
Carrying Value | $ 58,997 | $ 85,395 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Total Cost | $ 146,491 | $ 143,166 |
Accumulated Depreciation | (94,766) | (89,937) |
Property and Equipment, net | $ 51,725 | 53,229 |
Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 1 year | |
Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 15 years | |
Computer Software and Hardware | ||
Property, Plant and Equipment [Line Items] | ||
Total Cost | $ 87,443 | 85,894 |
Computer Software and Hardware | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 1 year | |
Computer Software and Hardware | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 7 years | |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total Cost | $ 35,348 | 33,379 |
Transportation Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total Cost | $ 17,851 | 17,851 |
Transportation Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 3 years | |
Transportation Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 12 years | |
Office Furniture and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total Cost | $ 5,849 | $ 6,042 |
Office Furniture and Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 4 years | |
Office Furniture and Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 15 years |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 16.5 | $ 12.9 | $ 11.1 |
Debt (Details)
Debt (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jun. 05, 2017 | |
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 375,000,000 | ||
Optional increase (or an accordion feature) | 200,000,000 | ||
Amounts outstanding under the revolving credit facility | $ 100,000,000 | $ 135,000,000 | |
Interest rate | 2.816% | 3.474% | |
Commitment fee percentage | 0.125% | ||
Available for borrowings | $ 275,000,000 | ||
Swing Line | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 25,000,000 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution | 5.00% | 4.50% | 4.00% |
Matching contributions recorded in compensation and related expense | $ 6.6 | $ 5.7 | $ 5 |
Number of hours of service for vesting, per year | 1000 hours | ||
Number of years of service for vesting | 2 years | ||
Annual vesting percentage | 20.00% | ||
Number of years for incremental percentage vesting until participant fully vested in company's matching contribution | 4 years | ||
Maximum number of shares of Class B common stock for Employee Stock Purchase Plan | 750,000 | ||
Employee stock purchase plan, maximum annual contributions per employee, Percent | 10.00% | ||
Number of shares purchased by employees | 7,611 | ||
Number of shares purchased by employees since inception | 201,835 | ||
First Salary Deferral Contribution | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution | 100.00% | 100.00% | 100.00% |
Percent of employees' gross pay | 4.00% | 3.00% | 2.00% |
Second Salary Deferral Contribution | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution | 50.00% | 50.00% | 50.00% |
Percent of employees' gross pay | 2.00% | 3.00% | 4.00% |
Minimum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Salary deferral contributions rate | 1.00% | ||
Maximum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Salary deferral contributions rate | 50.00% |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized under Stock Incentive Plan | 30,600,000 | ||
Number of shares available for grant under Stock Incentive Plan | 3,500,000 | ||
Share-based compensation expense | $ 25,057 | $ 23,893 | $ 22,508 |
Tax benefit from share-based compensation | 6,000 | $ 5,600 | $ 8,400 |
Nonvested awards, total compensation cost not yet recognized | $ 75,000 | ||
Nonvested awards, total compensation cost not yet recognized, period for recognition | 6 years | ||
Restricted stock granted in period (in shares) | 928,324 | 899,269 | 946,570 |
Restricted stock granted in period, weighted average grant date fair value (usd per share) | $ 30.10 | $ 28.30 | $ 27.20 |
Restricted stock, vested in period, total fair value | $ 28,400 | $ 24,000 | $ 23,900 |
Class B Common Stock Bonus | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award requisite service period | 3 years | ||
Restricted stock granted in period (in shares) | 498,324 | ||
Class B Common Stock Key Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award requisite service period | 10 years | ||
Restricted stock granted in period (in shares) | 430,000 | ||
Subsidiary Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Nonvested awards, total compensation cost not yet recognized | $ 30,000 | ||
Nonvested awards, total compensation cost not yet recognized, period for recognition | 4 years | ||
Compensation and Related expense | $ 7,900 | $ 4,200 |
Share-Based Compensation - Nonv
Share-Based Compensation - Nonvested Restricted Stock Units (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Restricted Shares | |||
Non-vested, beginning balance (in shares) | 3,960,560 | ||
Granted (in shares) | 928,324 | 899,269 | 946,570 |
Vested (in shares) | (966,258) | ||
Forfeited (in shares) | (141,431) | ||
Non-vested, ending balance (in shares) | 3,781,195 | 3,960,560 | |
Weighted- Average Grant- Date Fair Value | |||
Non-vested, beginning balance (usd per share) | $ 25.59 | ||
Granted (usd per share | 30.10 | $ 28.30 | $ 27.20 |
Vested (usd per share) | 26.73 | ||
Forfeited (usd per share) | 23.91 | ||
Non-vested, ending balance (usd per share) | $ 26.47 | $ 25.59 | |
Class B Common Stock Bonus | |||
Restricted Shares | |||
Granted (in shares) | 498,324 | ||
Weighted- Average Grant- Date Fair Value | |||
Vesting period, years | 3 years | ||
Class B Common Stock Key Employees | |||
Restricted Shares | |||
Granted (in shares) | 430,000 | ||
Weighted- Average Grant- Date Fair Value | |||
Vesting period, years | 10 years |
Common Stock (Details)
Common Stock (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2016 | |
Class of Stock [Line Items] | ||||
Dividends paid | $ 109,147 | $ 106,943 | $ 101,511 | |
Amount paid for repurchase of common stock | $ 15,740 | $ 29,100 | $ 46,957 | |
Treasury | ||||
Class of Stock [Line Items] | ||||
Repurchased shares | 614,077 | 1,205,790 | 1,841,800 | |
Amount paid for repurchase of common stock | $ 15,740 | $ 29,100 | $ 46,957 | |
Class B | ||||
Class of Stock [Line Items] | ||||
Number of shares authorized under share repurchase program | 4,000,000 | |||
Remaining number of shares authorized to be repurchased | 547,000 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
Federal | $ 67,745 | $ 54,447 | $ 106,710 |
State | 10,158 | 7,359 | 9,446 |
Foreign | 2,791 | (188) | 217 |
Total Current | 80,694 | 61,618 | 116,373 |
Deferred: | |||
Federal | 6,395 | 7,616 | (59,517) |
State | 1,427 | 1,750 | 638 |
Foreign | (370) | 2,891 | (393) |
Total Deferred | 7,452 | 12,257 | (59,272) |
Total | $ 88,146 | $ 73,875 | $ 57,101 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Expected Federal Statutory Income Tax Rate | 21.00% | 21.00% | 35.00% |
Increase/(Decrease): | |||
State and Local Income Taxes, net of Federal Benefit | 2.40% | 2.40% | 1.90% |
Non-Deductible Executive Compensation | 0.90% | 1.10% | 0.00% |
Federal Rate Adjustment to Deferred Taxes | 0.00% | 0.00% | (20.20%) |
Other | (0.20%) | 0.40% | (0.50%) |
Effective Tax Rate | 24.10% | 24.90% | 16.20% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 24.10% | 24.90% | 16.20% |
Reduction of deferred tax liability | $ 70,400 | ||
Federal statutory income tax rate | 21.00% | 21.00% | 35.00% |
Increase (decrease) in other deferred liability | $ 17,200 | ||
Net operating loss carryforwards | 71,724 | $ 74,213 | |
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance, amount | 57,790 | 56,925 | |
Unrecognized tax benefits | 0 | 0 | |
State Tax Net Operating Losses | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance, amount | $ 49,400 | $ 49,100 | |
Percent of deferred tax asset for which valuation allowance has been recognized | 100.00% | 100.00% | |
Foreign Tax Net Operating Losses | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance, amount | $ 8,400 | $ 7,800 | |
Percent of deferred tax asset for which valuation allowance has been recognized | 38.00% | 31.00% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Tax Assets | ||
Tax Net Operating Loss Carryforwards | $ 71,724 | $ 74,213 |
Compensation Related | 15,994 | 12,514 |
Other | 2,897 | 2,553 |
Total Deferred Tax Assets | 90,615 | 89,280 |
Valuation Allowance | (57,790) | (56,925) |
Total Deferred Tax Asset, net of Valuation Allowance | 32,825 | 32,355 |
Deferred Tax Liabilities | ||
Intangible Assets | 191,595 | 174,812 |
Property and Equipment | 5,493 | 4,646 |
Other | 1,119 | 1,061 |
Total Gross Deferred Tax Liability | 198,207 | 180,519 |
Net Deferred Tax Liability | $ 165,382 | $ 148,164 |
Earnings Per Share Attributab_3
Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator | |||||||||||
Net Income Attributable to Federated Hermes, Inc. | $ 82,107 | $ 72,962 | $ 62,724 | $ 54,546 | $ 61,536 | $ 59,608 | $ 38,822 | $ 60,331 | $ 272,339 | $ 220,297 | $ 291,341 |
Less: Total Net Income Available to Participating Unvested Restricted Shareholders | (10,234) | (8,555) | (11,420) | ||||||||
Total Net Income Attributable to Federated Common Stock - Basic | 262,105 | 211,742 | 279,921 | ||||||||
Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary | (872) | (794) | 0 | ||||||||
Total Net Income Attributable to Federated Common Stock - Diluted | $ 261,233 | $ 210,948 | $ 279,921 | ||||||||
Denominator | |||||||||||
Basic Weighted-Average Federated Common Stock (in shares) | 97,259 | 96,949 | 97,411 | ||||||||
Dilutive Potential Shares from Stock Options (in shares) | 0 | 0 | 1 | ||||||||
Diluted Weighted-Average Federated Common Stock (in shares) | 97,259 | 96,949 | 97,412 | ||||||||
Earnings Per Share | |||||||||||
Net Income Attributable to Federated Common Stock - Basic and Diluted (usd per share) | $ 0.81 | $ 0.72 | $ 0.62 | $ 0.54 | $ 0.61 | $ 0.59 | $ 0.38 | $ 0.60 | $ 2.69 | $ 2.18 | $ 2.87 |
Reduction to income tax provision | $ 70,400 | ||||||||||
Earnings per share impact of revaluation of net deferred tax liability (usd per share) | $ 0.69 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Leases [Abstract] | |||
Operating lease costs | $ 17.7 | ||
Operating lease costs | $ 14.7 | $ 13.8 |
Leases - Reconciliation of Futu
Leases - Reconciliation of Future Minimum Undiscounted Payments to Operating Lease Liabilities (Details) $ in Millions | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 17.9 |
2021 | 17.5 |
2022 | 18.3 |
2023 | 18.5 |
2024 | 17.8 |
2025 and Thereafter | 53.1 |
Total Undiscounted Lease Payments | 143.1 |
Present Value Adjustment | (22) |
Net Operating Lease Liabilities | $ 121.1 |
Leases - Other Information Rela
Leases - Other Information Related to Operating Leases (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Weighted-average remaining lease term (in years) | 8 years 7 months 6 days |
Weighted-average discount rate (IBR) | 3.80% |
Year-to-date cash paid for the amounts included in the measurement of lease liabilities | $ 18.2 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) Attributable to Federated Hermes, Inc. Shareholders (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | $ 857,121 | $ 761,215 | $ 595,784 |
Other Comprehensive Income (Loss) Before Reclassifications and Tax | 14,368 | (13,607) | 3,321 |
Tax Impact | (1,067) | ||
Reclassification Adjustment, before tax | (322) | (3,854) | |
Tax Impact | 102 | 1,333 | |
Other Comprehensive Income (Loss), net of tax | 21,275 | (19,836) | (267) |
Ending balance | 1,041,280 | 857,121 | 761,215 |
Total | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (14,617) | (790) | (523) |
Other Comprehensive Income (Loss), net of tax | 14,368 | (13,827) | (267) |
Ending balance | (249) | (14,617) | (790) |
Unrealized Gain (Loss) on Equity Securities | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | 0 | 29 | 908 |
Other Comprehensive Income (Loss) Before Reclassifications and Tax | 0 | 0 | 2,546 |
Tax Impact | (904) | ||
Reclassification Adjustment, before tax | (80) | (3,854) | |
Tax Impact | 51 | 1,333 | |
Other Comprehensive Income (Loss), net of tax | 0 | (29) | (879) |
Ending balance | 0 | 0 | 29 |
Foreign Currency Translation (Loss) Gain | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (14,617) | (819) | (1,431) |
Other Comprehensive Income (Loss) Before Reclassifications and Tax | 14,368 | (13,607) | 775 |
Tax Impact | (163) | ||
Reclassification Adjustment, before tax | (242) | 0 | |
Tax Impact | 51 | 0 | |
Other Comprehensive Income (Loss), net of tax | 14,368 | (13,798) | 612 |
Ending balance | $ (249) | $ (14,617) | $ (819) |
Redeemable Noncontrolling Int_3
Redeemable Noncontrolling Interest in Subsidiaries - Summary of Changes in Redeemable Noncontrolling Interest in Subsidiaries (Details) - Redeemable Noncontrolling Interest in Subsidiaries/ Temporary Equity - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Temporary equity, beginning balance | $ 182,513 | $ 30,163 | $ 31,362 |
Net Income (Loss) | 4,786 | 2,002 | 3,084 |
Other Comprehensive Income (Loss), net of tax | 6,907 | (6,009) | |
Subscriptions—Redeemable Noncontrolling Interest Holders | 9,356 | 2,801 | 4,687 |
Consolidation/(Deconsolidation) | 454 | (1,751) | (67) |
Stock Award Activity | 7,888 | 4,239 | |
Distributions to Noncontrolling Interest in Subsidiaries | (3,580) | (18,492) | (8,903) |
Business Acquisition | (386) | 169,560 | |
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | 4,148 | ||
Temporary equity, ending balance | 212,086 | 182,513 | 30,163 |
Consolidated Investment Companies | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Temporary equity, beginning balance | 11,626 | 30,163 | 31,362 |
Net Income (Loss) | 2,016 | (1,095) | 3,084 |
Subscriptions—Redeemable Noncontrolling Interest Holders | 9,356 | 2,801 | 4,687 |
Consolidation/(Deconsolidation) | 454 | (1,751) | (67) |
Distributions to Noncontrolling Interest in Subsidiaries | (3,580) | (18,492) | (8,903) |
Temporary equity, ending balance | 19,872 | 11,626 | $ 30,163 |
Hermes | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Temporary equity, beginning balance | 170,887 | ||
Net Income (Loss) | 2,770 | 3,097 | |
Other Comprehensive Income (Loss), net of tax | 6,907 | (6,009) | |
Stock Award Activity | 7,888 | 4,239 | |
Business Acquisition | (386) | 169,560 | |
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests | 4,148 | ||
Temporary equity, ending balance | $ 192,214 | $ 170,887 |
Redeemable Noncontrolling Int_4
Redeemable Noncontrolling Interest in Subsidiaries - Narrative (Details) - Redeemable Noncontrolling Interest in Subsidiaries/ Temporary Equity $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Noncontrolling Interest [Line Items] | |
Change in redemption value | $ 4,148 |
Hermes | |
Noncontrolling Interest [Line Items] | |
Change in redemption value | $ 4,148 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Millions | Dec. 31, 2019USD ($) |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
2020 | $ 34.6 |
2021 | 10.1 |
2022 | 5.8 |
2023 | 5.4 |
2024 | 3.7 |
After 2024 | 8.6 |
Total | 68.2 |
Purchase Obligations | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
2020 | 31.9 |
2021 | 9.6 |
2022 | 5.8 |
2023 | 5.4 |
2024 | 3.7 |
After 2024 | 8.6 |
Total | 65 |
Other Obligations | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
2020 | 2.7 |
2021 | 0.5 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
After 2024 | 0 |
Total | $ 3.2 |
Segment and Geographic Inform_3
Segment and Geographic Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Number of operating segments | segment | 1 | ||||||||||
Total Revenue | $ 358,025 | $ 340,340 | $ 321,479 | $ 307,050 | $ 307,216 | $ 308,616 | $ 255,993 | $ 263,852 | $ 1,326,894 | $ 1,135,677 | $ 1,102,924 |
Total Right-of-Use Assets, net | 152,239 | 152,239 | |||||||||
Total Property and Equipment, net | 51,725 | 53,229 | 51,725 | 53,229 | |||||||
U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Revenue | 1,098,975 | 1,005,948 | 1,069,567 | ||||||||
Total Right-of-Use Assets, net | 129,322 | 129,322 | |||||||||
Total Property and Equipment, net | 42,666 | 42,666 | |||||||||
Non-U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Revenue | 227,919 | 129,729 | $ 33,357 | ||||||||
Total Right-of-Use Assets, net | $ 22,917 | $ 22,917 | |||||||||
Total Property and Equipment, net | $ 10,563 | $ 10,563 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 14, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 30, 2020 |
Subsequent Event [Line Items] | |||||
Dividends paid | $ 109,147 | $ 106,943 | $ 101,511 | ||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends declared (usd per share) | $ 0.27 | ||||
Dividends paid | $ 27,300 |
Supplementary Quarterly Finan_3
Supplementary Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 358,025 | $ 340,340 | $ 321,479 | $ 307,050 | $ 307,216 | $ 308,616 | $ 255,993 | $ 263,852 | $ 1,326,894 | $ 1,135,677 | $ 1,102,924 |
Operating Income | 102,791 | 89,307 | 84,940 | 70,889 | 87,954 | 81,898 | 80,757 | 79,671 | 347,927 | 330,280 | 341,508 |
Net Income Including the Noncontrolling Interests in Subsidiaries | 85,089 | 73,585 | 63,840 | 54,611 | 61,632 | 61,994 | 38,667 | 60,006 | 277,125 | 222,299 | 294,901 |
Amounts Attributable to Federated Hermes, Inc. | |||||||||||
Net Income | $ 82,107 | $ 72,962 | $ 62,724 | $ 54,546 | $ 61,536 | $ 59,608 | $ 38,822 | $ 60,331 | $ 272,339 | $ 220,297 | $ 291,341 |
Earnings Per Common Share—Basic and Diluted (usd per share) | $ 0.81 | $ 0.72 | $ 0.62 | $ 0.54 | $ 0.61 | $ 0.59 | $ 0.38 | $ 0.60 | $ 2.69 | $ 2.18 | $ 2.87 |
Derivative loss | $ 29,000 |
Uncategorized Items - fii-10kfy
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (129,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 125,000 |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (254,000) |
Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (129,000) |