Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2011

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

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



	September 30, 2011								December 31, 2010
	Fair Value Measurements Using								Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial Assets
Cash and cash equivalents	$	132,796	$	0	$	0	$	132,796	$	198,756	$	0	$	0	$	198,756
Available-for-sale equity securities¹	153,568		0		0		153,568		105,724		0		0		105,724
Trading securities – equity¹	23,493		4,660		0		28,153		6,937		4,431		0		11,368
Trading securities – debt¹	557		7,115		0		7,672		10,016		7,777		0		17,793
Foreign currency forward contract²	0		0		0		0		0		68		0		68
Total financial assets	$	310,414	$	11,775	$	0	$	322,189	$	321,433	$	12,276	$	0	$	333,709
Financial Liabilities
Interest rate swap³	$	0	$	16,776	$	0	$	16,776	$	0	$	11,734	$	0	$	11,734
SunTrust Acquisition future consideration payments liability	0		0		18,358		18,358		0		0		20,058		20,058
Foreign currency forward contract⁴	0		181		0		181		0		0		0		0
Total financial liabilities	$	0	$	16,957	$	18,358	$	35,315	$	0	$	11,734	$	20,058	$	31,792


¹	Amount included in Investments on the Consolidated Balance Sheets.


²	Amount included in Receivables – other on the Consolidated Balance Sheets. Pricing is determined by interpolating a value by utilizing the spot foreign exchange rate and forward points (based on the spot rate and currency interest rate differentials), which are all inputs that are observable in active markets.


³	Amount included in Other current liabilities on the Consolidated Balance Sheets. Pricing is determined based on a third-party, model-derived valuation in which all significant inputs are observable in active markets including the Eurodollar future rate and yields for three- and thirty-year Treasury securities. See Note (10) for more information regarding the swap.


⁴	Amount included in Accounts payable and accrued expenses on the Consolidated Balance Sheets. Pricing is determined by interpolating a value by utilizing the spot foreign exchange rate and forward points (based on the spot rate and currency interest rate differentials), which are all inputs that are observable in active markets.

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

The following table presents a reconciliation of the beginning and ending fair value measurements of Federated’s liability for future consideration payments related to the SunTrust Acquisition (a Level 3 financial liability measured at fair value on a recurring basis):



(in thousands)
Balance at December 31, 2010	$	20,058
Adjustment to reflect final valuation¹	(2,600		)
Changes in fair value²	900
Contingent consideration payments	0
Balance at September 30, 2011	$	18,358


¹	As a result of finalizing the valuation relating to the SunTrust Acquisition this adjustment was required to revise the preliminary estimate of fair value.


²	Amounts included in Intangible asset related expense on the Consolidated Statements of Income.

- Definition

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

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