Executives: Ray Hanley - President of Federated Investors Management Company Chris Donahue - CEO and President Tom Donahue - CFO Saker Nusseibeh - CEO, Hermes Debbie Cunningham - Chief Investment Officer-Money Market Group

Analysts: Michael Carrier - Bank of America Bill Katz - Citi Patrick Davitt - Autonomous Research Ari Ghosh - Credit Suisse Ken Worthington - JPMorgan Kenneth Lee - RBC Robert Lee - KBW

Operator: Greetings, and welcome to the Federated Investors Second Quarter 2018 Analyst Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Ray Hanley, President of Federated Investors Management. Thank you. Please go ahead.

Ray Hanley: Good morning, and welcome. Leading today's call will be Chris Donahue, Federated's CEO and President; Tom Donahue, Chief Financial Officer; and joining us for the Q&A are Saker Nusseibeh, CEO of Hermes; and Debbie Cunningham, our Chief Investment Officer for the Money Markets Group. During today's call, we will make forward-looking statements, and we want to note that Federated's actual results may be materially different than the results implied by such statements. We invite you to review the risk disclosures in our SEC filings. No assurance can be given as to future results and Federated assumes no duty to update any of these forward-looking statements. Chris?

Chris Donahue: Thank you, and good morning. I will briefly review Federated’s business performance and Tom will comment on our financial results. For our remarks today, all data excludes Hermes results unless otherwise indicated. Looking first at equities. We closed the quarter with $63 billion in assets down about $1 billion from Q1 due to net outflows partially offset by market gains. However, we had 14 equity funds with positive net sales in the second quarter. Our small cap funds continue to show strong performance and solid flows. The Kaufmann Small Cap growth fund had top decile performance in its Morningstar category for the trailing 1, 3, 5 and 10 years at the end of Q2. The Fund had positive net sales of 270 million in the second quarter to reach nearly $1.5 billion at quarter end. MDT Small Cap core with its top 1% Morningstar category ranking for the trailing 3 and 5 years at the end of the second quarter had positive net sales of $177 million to reach almost $750 million in assets at quarter end. MDT Small Cap growth had top decile performance for the trailing 3 and 5 years at the end of the second quarter and posted positive net sales of $81 million to reach over $500 million in assets at the end of the quarter. Other Funds with positive net sales in the second quarter included International Leaders, MDT's Mid Cap Growth balance and All Cap Core and Muni Stock Advantage. Using Morningstar data for the trailing three years at the end of the second quarter, 7 federated equity funds 30% of the total were in the top decile and 12, 52% were in the top quartile. Trailing one-year rankings shows 7, 28% of the funds in the top decile, 11 funds 44% in the top quartile, and 16 funds about two-thirds above median. Looking at the strategic value dividend strategy. Its objective is to provide high and growing dividend income stream from high-quality companies. The domestic funds 12 month distribution yield of 3.55% ranked it in the second percentile of its Morningstar category at the end of the quarter. The fund had a return of 2.4% in the second quarter. It ranked in the top quartile of its Morningstar assigned large-cap value category for the second quarter and 98 percentile for the trailing one year and 54 percentile for the trailing three years. The domestic strategic value dividend strategy had combined mutual fund and SMA outflows of about $2.3 billion in the second quarter compared to an outflow of $1.5 billion in the first quarter. Looking at the early third quarter results, combined fund and SMA net redemptions were about $192 million for the first three weeks of July. For all federated equity funds in the first three weeks of July, net redemptions were approximately $108 million and equity SMA redemptions were about $69 million. Turning now to fixed income. Assets decreased by $769 million in the second quarter to $61.5 billion due to net outflows from funds of just under $600 million of net redemptions and net exchanges and market decreases of $383 million partially offset by net sales of little over $200 million in separate accounts. Consistent with industry trends, our High Yield Funds had net redemptions of about $400 million up from a little over $200 million in the first quarter. We saw inflows in the total return bond fund of just over $100 million and in various short duration strategies. Our fixed income business has a variety of strategies that are performing well. At quarter end using Morningstar data, our Total Return Bond, Institutional High Yield Bond and Federated Bond Funds were all in the top quartile for the trailing three years. In total, we had six fixed income strategies with top quartile three-year records at quarter end and 21 funds two-thirds of the total in the top half for the trailing three years. Fixed income fund net sales are negative early in the third quarter, a little over $100 million due mainly to a redemption of approximately $150 million from the government Ultrashort Fund. We have continued to see net sales in the Total Return Bond Fund, the Institutional High Yield Fund and - for the first three weeks of July. Looking now at money markets. Total money market assets decreased by about $11 billion with funds down about $10 billion in separate accounts down about $1 billion. Much of the fund decrease about $9 billion was due to withdrawals related to client M&A activity. This is usual business. We also had one client redeem a significant amount about $8 billion in April due to a change in their cash management process and we saw asset decreases around tax payment periods in both April and in June. These decreases were partially offset by three clients each adding more than $1 billion adding to about $5 billion, as well as net increases from other clients. Interestingly, prime money fund assets increased about 4% in the second quarter to $31.3 billion. Taking a look at our most recent asset totals, excluding Hermes. As of July 25 managed assets were approximately $384 billion, including $258 billion in money markets, $64 billion in equities, $62 billion in fixed income. Money market mutual fund assets were $174 billion. In the institutional channel, RFP and related activity levels continue to be solid and diversified with interest in MDT and dividend income for equities and high yield core broad and low duration for fixed income. We begin the third quarter with about $700 million in fixed income institutional wins yet to fund mostly in separate accounts. On the international side, as you know we recently closed the acquisition of a 60% controlling interest in Hermes investment management from BT pension scheme. As we develop our global strategy that can leverage the strengths of each company, we are excited by the breath of opportunities presented by the combination of Hermes leading ESC integrated investment strategies and methods, and federated strong investment capabilities broad product line all back by our respective distribution strengths. Hermes is demonstrated the value of EST insights through its integration into the investment process strengthening the risk management of investment portfolios and providing an additional source of insight into enhanced returns. Federated will expand its ESG capabilities learning from Hermes global leadership in this area. In keeping with our fiduciary duty, our goal is to identify ESG factors that are material to investment risk in order to more deeply understand the forward outlook for the company's we invest in and in order to accomplish outcomes beyond performance. We're working towards a full launch of a number of Hermes strategies for the U.S. institutional market and are planning to register mutual funds to offer some of Hermes best investment ideas to our customers in 2019. We're looking at how we can help to grow the successful Hermes EOS business that features leading ESG stewardship services to institutional asset owners. We are also working with Hermes to evaluate opportunities for them to offer federated strategies to their clients. Hermes managed assets at June 30 were in pounds, £35.3 billion up £1.6 billion from £33.6 billion pounds from the first quarter. Hermes net sales for the second quarter were £816 million. We're making solid progress on business development in the Asia-Pac region with a focus on opportunities in Greater China, Korea and Japan. We are actively working to establish strategic relationships with selected financial institutions, and add regional distribution to Federated's investment strategies. This effort complements our European, U.K. and Canadian operations. Managed assets in these markets totaled about $15 billion at quarter end up from $14.5 billion at the end of the first quarter. We continue to seek additional alliances and acquisitions to advance our business. Tom?

Tom Donahue: Thank you, Chris. Total revenue decreased by about $8 million from the prior quarter due mainly to lower average assets and higher money market fund waivers partially offset by an additional day in Q2. Reported revenue was down about $17 million compared to Q2 of last year of which $8.2 million was due to the impact of the adoption of the revenue recognition standard. Higher waivers primarily from money market fund and changes in asset mix of average money market assets also impacted revenues. Operating expenses decreased $8.9 million compared to the prior quarter and $13.3 million from Q2 of 2017. The decreases from the prior quarter was due to lower compensation and related expense from payroll tax seasonality and to lower incentive compensation. Distribution expense decreased mainly due to lower money market fund assets. The decrease from Q2 of 2017 was primarily due to lower distribution expense due mainly through changes in the mix of average money market fund assets. The adoption of the revenue recognition standard also reduced distribution expense by $7.4 million and other expense by $1 million compared to Q2 2017. When we announced the Hermes deal, we estimated that we would incur about $22 million in transaction-related expenses in 2018 including hedging costs. We incurred about $2.8 million in operating expenses year-to-date 2018 including $1.3 million in Q2. An additional $1.2 million of non-operating expense related to the derivative transactions was incurred in Q2 and is included in the $27.2 million net expense in the press release. For Q3 we estimate that we will incur about $11 million in transaction-related costs, an additional approximately $5 million in expenses to be incurred in Q4. For 2018, a total of approximately $19 million in transaction related operating expense. We will continue to - or we will consolidate Hermes for the reporting purposes beginning in Q3. At quarter end, cash and investments were $418 million, of which about $396 million was available to us. On July 2, we used approximately $327 million of cash and $18 million from our existing revolving credit agreement, to fund the purchase price and related obligations of approximately $345 million for the Hermes acquisition. We've already repaid the amount borrowed for the Hermes acquisition and currently have $215 million in unused capacity on a revolving credit line, which does not include the additional $200 million available to us from the accordion feature. Brenda, that concludes our prepared remarks. And we would now like to open the call up for questions.

Operator: [Operator Instructions] Our first question comes from the line of Michael Carrier with Bank of America.

Michael Carrier: Maybe first one, just on the equity for the business, it seems like on the small-cap side, you're seeing decent some momentum. Just wanted to get your take, seems like you have enough products there, but just from a capacity standpoint, in the industry we're seeing a lot that are closing just given where assets are trending. So just some outlook on the small mid cap where you're seeing some of the strength and flows?

Chris Donahue: Yes, the first point is, we are not threatening capacity in any of those mandates at this point. It is a important thing that gets reviewed, it gets reviewed in terms of portfolio manager input, trading impact, size, position of securities, and percentage of ownership. And so, at this point, we are not threatening any capacity in any of those mandates.

Michael Carrier: And then Tom, just a quick on, just on the expenses more in the core items, just anything that we should be thinking for the rest of the year? I understand the transaction cost, but on the core line, do you think maybe like other you have seen bit light - you mentioned comp came in a little bit better. I'm just saying is it unusual or that we should be thinking about from modeling standpoint in the second half?

Tom Donahue: The other is light because part of the hedging, there was a gain in there. So, that kind of made that look light. And so, I'd go back and look at last quarter and the quarter year before and average number is something like that. The $11 million is going to be spread out in a bunch of different areas. So, that's where it's going to be spread out, basically in professional service fees, comp, and then, again spread out. The new number is coming in from Hermes. We're not really going to go through where those expenses are going to show up. We'll all see them at the end of Q3.

Operator: Our next question is coming from the line of Bill Katz with Citi.

Bill Katz: So first question, you mentioned in your prepared remarks and also in the press release about fee waivers on the money market business. So, I'm wondering now, where we are with sort of short-term rates? Why that's happening and how should we think about maybe the fee rate mix on money markets as you go forward if you're still employing fee waivers?

Chris Donahue: These are different fee waivers than those that were done in order to maintain a positive yield back in the day. So, let's set that aside, and I know you know that. What occasions - these particular waivers are simply competitive forces in the marketplace in order to maintain these products at a competitive level.

Ray Hanley: Bill, it's Ray. You can look through our disclosure. I mean, we've - prior to even the low point of the rate cycle, we would report in their hundreds of millions of dollars worth of fee waivers. So as Chris said this is really a continuation of a long-term trend of waving portions of our fee for competitive purposes.

Bill Katz: Just couple of more follow-ups. Thanks for taking questions this morning. Second question I have is, as you think about the comp relative to the gross sales dynamics, so gathering that the comp came in below the prior range because of the sort of more sluggish gross in net sales. I guess, I wanted to confirm if that is the case, and if it is the case how do we think about the key to operating margin improvement from here so if you would get improvement in sales, would that get absorbed by a pickup in variable compensation?

Chris Donahue: You are exactly right. And if you remember last quarter we had a uptick in comp because we had uptick in sales. So this quarter we are having a downtick in sales and a downtick in comp. If we have another uptick in sales, which we hope to do, we will get what I used to call a success item higher expense in the intent of comp plan.

Tom Donahue: But bill that's not to say the margin can expand. You have noise in any period obviously with the timing of incentive comp accruals and payments. So, we would take a longer look at it, longer view of it than that quarterly tweaking.

Bill Katz: And then just last question again, thanks again. So Chris, just going back to your opening commentary about sort of how you’re positioning in a strategic value fund, but then when we look at the attrition, it doesn't not really box up against how you're sought of thinking about it. So, what is the disconnect in the retail marketplace particularly SMA side and what are you doing trying to reeducate people relative to sort of stumping some of the redemption pressure?

Chris Donahue: I don't think there is a disconnect at all at the first point and that is because we have been very thorough at explaining exactly what the mandate was on that fund that is different in that category. The reason why the redemptions continue is because of the confluence of factors that occurred early in the year, which now is an exactly the case, but anyway a 3% tenure T-bill and then the securities that were owned in those funds were not the favored securities by the marketplace. And so you see in the reason I pointed those jump around numbers on performance was so that if you could get a sense of what we said all along because that fund is focused on high and growing dividend income stream. The performance on a Morningstar basis jumps around and I mean if even go into another factor for the month of June that fund was in the top 3% and through so far in July, it's in the 96%. And so if people are now focused on that kind of performance numbers as opposed to the 3.5% yield, then we are going continue to have the redemptions. So if you look at the redemptions, yes they are continuing and I can't make a very good case that they are lessening, however, I will note that in April the total redemptions were $509 million. In May the redemptions were $481 million. In June they were $440 million and so far in July they were $202 million. Now, you can double July or do whatever you want its three weeks, but it's not enough for me to make all well the trend is really good. Those numbers are very, very small. And overall if you look at the year, we have lost $2 billion out of that fund. And the only good thing about redemption in the circumstance like this is it can't happen twice and as the base I think as I said on this call before that at some point we are getting to the base where the shareholders are in there, our shareholders for dividends and not shareholders who came in, in the early part of through '16 because of the number one performance that was going on at that time. Where that exactly is, is very difficult to say and as regards to the SMA, it's basically the same dynamic and we saw that there were some instances where some of our clients because of the performance of that mandate, we're putting large chunks to include even big chunks of their customers SMA entirely in that portfolio. And we're seeing them over time reducing that or eliminating the position but that wasn't exactly use of that fund for a customer. What we're doing in answer to your question, we are spending a lot of time PMs, a lot of helpers, talking to clients about exactly what this mandate does. Daniel Peris's new book his third book is just come out which is basically an articulation of the dividend method of investing. And this is just another effort of us to repeat the sounding joy of what this mandate is and communicate it to clients.

Tom Donahue: Bill I’ll just add one other thing we have seen some institutional interest viewing that as we keep saying that the dividend cash stream from this strategy has been effectively put on sale by the sector rotation and the rate spike that we saw earlier in the year. So the numbers are small relative to the mutual fund and the SMA, but we had positive institutional separate account flows in the strategy in the second quarter and we are seeing institutional interest in the income strategy.

Operator: Our next question has come from the line of Patrick Davitt with Autonomous Research.

Patrick Davitt: The July flow picture you gave did that include or exclude Hermes and if not could you give other Hermes flows for July?

Chris Donahue: It excluded Hermes and we don't have Hermes month to date the flow information. What we gave you for Hermes was the full second quarter.

Patrick Davitt: Right, okay.

Tom Donahue: I mean to say Patrick I did mention that Hermes net sales for the second quarter were £816 million.

Patrick Davitt: And then following up on I think it was call - deal there were some discussion around some legacy BT assets that would be coming out over the years is there any update on the timing and size of those outflows?

Chris Donahue: Saker you are more than welcome to comment on this.

Saker Nusseibeh: Sure. So we still manage a sizable amount of assets for the BT pension scheme and we had a plan over the long-term for a controlled decrease of those assets. They’re in fact spreads across a variety of our funds not just one or two and the decline has been exactly on schedule. So nothing is out of what we expected when we did the deal and it remains online. If you’re looking at the second quarter just to give you a flavor, we had small net outflows from the BT of about £600 million in Q2 and that's pretty much as part of the plan that we’ve had over the long-term.

Operator: And your next question is coming from the line of Ari Ghosh with Credit Suisse. Please go ahead.

Ari Ghosh: On the urban sales trends that you just mentioned as well. So of that 800 that you saw in 2Q, it looks like the retail side of it is still in flowing really nicely. So curious if the institutional flows were a bit weaker in the second quarter. Any color on that would be helpful. And also I think in 2017 around 25% of the sales of Hermes was from the U.K. region. So any updates on that in early 2018, is it still a business usual or have you seen anything change?

Chris Donahue: Saker, could you hear the question.

Saker Nusseibeh: I heard the second half, can you repeat the first half again, I am so sorry.

Ari Ghosh: You got it, can you hear me now?

Saker Nusseibeh: Yes.

Ari Ghosh: So just looking for little more color on the sales trends in 2Q, I believe it was around net of 800 million in the net sales for Hermes and based on some of the information that we look at in the data that we track, it looked like the retail side was in flowing nicely. So just curious if the institutional flows were a bit weaker and what the outlook there is?

Saker Nusseibeh: Thank you for that. And the answer is no, the flow between institutional and non-institutional remains on track as before, there is no change there. The institutional flow obviously there’s timing issues. So sometimes you'll see the retail flow comes stronger in one quarter more than another simply because of the timing that’s the whole thing that and we tend to play into. And if I look at the commitments that we have got in the second half which is yet to fund there is very strong institutional flow within that. So again no change from where the plan is. In terms of regional distribution, we have filed the majority flows are seen within Europe including the U.K. which is not surprising given this our home market and if you think about that. So that’s again no change from where we were. Does that answer your question?

Ari Ghosh: And then just a quick follow-on. Back to expenses, excluding comp and other expense in 2Q that you added some color on is, are the core items a good run rate and starting point as we think about the next six months and this obviously excludes any impact from Hermes so just Federated on a standalone is 2Q a good sort of run rate. And then on the cost side, you mentioned a few institutional and mutual fund launches that you have planned, is all of this baked in to sort of the accretion numbers that you initially provided, was it part of the original plan or should we think about any incremental cost moving forward in 2018 and 2019?

Tom Donahue: The run rate for June and what we expect for Q3 without talking about the Hermes expenses. I don't have anything to add that I talked about before in terms of the other results because of the hedging the comp and the distribution lines and professional service fees related to the 11 million that we’re expecting in Q3 as an estimate. So I’m not really going to change that. In terms of expenses related to bringing out new products with Hermes, that's part of when we talk about the 5 million in Q4. And actually some of the money some of the 11 million in Q3 that we don't know what those numbers are. We keep saying they’re estimates and that should cover what we’re talking about doing for Hermes. Will that drag into 2019, we had to come up with estimates. We want to try to start at that 22 that we did when we announced the deal and as you see we have that down to 19 not including the hedging. And it’s our best estimate. We don't know we’ll carry into 2019 will we use all of it in Q3 and Q4, we’ll see.

Operator: Our next question is coming from the line of Ken Worthington with JPMorgan.

Ken Worthington: First on the competitive waivers obviously this has been a part of the business for a long time. It's the first time I can hear from you guys calling out the competitive waivers in the release. So to what extent were they more severe this quarter than you've seen in the past and whether waivers more meaningful on a particular product say like prime versus Govie or in a particular distribution channel? Thanks

Ray Hanley: Ken, it’s Ray. I don’t know that they were more severe I think that when we were doing attribution to those line items they stood out as - significant enough to mention it may just been with their work very many other changes to surround them. So, I don't know that I would call them more severe. And in terms of area of product, no they kind of go across the different types within money market. So they would correlate more to asset levels then to the - in terms of the financial impact and not necessarily to the type of asset.

Ken Worthington: And I can’t remember if Debbie is on the call, if she is maybe what are you seeing in terms of investor transition from banks to money market funds. Is there any evidence of that happening yet and in particular we’re looking at sort of the bank trust channel, what sort happening there in this migration from bank to money fund and money fund to bank? Thanks

Debbie Cunningham: Sure Ken, this is Debbie. Yes, we are seeing that, we started seeing that in the second half of 2017, and it is certainly continuing into 2018 as you well know I’m sure the deposit data with banks is very low in an upward trending interest rate environment which we've been in now for several years. And I think - certainly, the institutional side of the marketplace has recognized that and has started to transition into money funds, some of their deposit, product, cash, liquidity, little slower on the retail side. So, from a bank's trust perspective, I'd say it's less and maybe lagging a little bit there but it certainly has started. And it's interesting; the flows have gone both into the government funds as well as the prime funds. The government fund is more from a sweep product perspective because those products do not have gates and fees associated with them. For the Prime and Muni product, it seems to be more on a ticket trade basis, but substantial size from those businesses.

Operator: Our next question is from the line of Kenneth Lee with RBC. Please go ahead.

Kenneth Lee: Just a follow-up on that question about the money market funds. Are you seeing any clients shift from money market funds towards a direct ownership of paper? Just want to see about that dynamic. Thanks.

Chris Donahue: Go ahead, Debbie. You're on a roll.

Debbie Cunningham: That is not a trend that we've been seeing. It seems as though with repo, the biggest direct switch from funds into a product in the market, was to switch into repo. And repo is just not that accessible any longer. There's fewer participants in the marketplace, although the rates in the second quarter offered was a little bit better than it has been over the previous quarters compared to where other short-term interest rates like commercial paper and CD rates are. It still is something that is contractual, it's got a lot of legal associates with it, and as such, we've not seen too much of a switch into the direct marketplace. Some of our very large clients that have some of the M&A activity, potentially some of repatriation activity, they have taken some cash and put it into the direct commercial paper and CD marketplace. But it's not a big trend, its more sort of the supersized players in the market that have gone that route.

Kenneth Lee: And just one follow-up, if I can. Just in terms of the Hermes, I know that in the past you've talked about in terms of new product registration - things of the nature like, a private market strategy. Wondering if there's any other additional product that you'd like to highlight that could be coming online in 2019? Thanks.

Chris Donahue: Well I will let's talk second comment too, but at this point we're not prepared to articulate any given product. We have an array of ideas on many of Hermes various mandates and we have a longer term view towards the beauty of bringing property, infrastructure, private equity, as well, but in a later phase. I'll let Saker take an attempt if he wants to highlight any of the products.

Saker Nusseibeh : I'll not highlight any of the products. We're doing a joint study of the market to see which is the most appropriate. The only thing I'd say about the products that Hermes brings to the table is, and you can see them because they're all on public domain. They have very strong performance, very high active share, which means high active products across the board in public markets. And the record of sales in the U.K. and Europe historically has been incredibly strong, and diplomacy is incredibly strong. And we think that in the right format, these would be equally effective in the U.S. market. The second thing that is worth pointing out is that, again, this is matter of public record, and you can look it up on our website. But where we've launched new products, we've quite often manage to receive them from clients coming into very early as [carbon tool] and these are done really well including in areas which are new in the market. Like SDG fund, like and impact fund, as well as and certain aspects of unconstrained credit funds. So, we've got a strong portfolio. Now, we and our colleagues in Federated are working hard to understand which are the best opportunities to bring to the marketplace in the United States. And in time, we'll come back and be able to share that with you. But I want to also emphasize that a big part of this is knowledge sharing. We have over the last 30 years, pioneered the way that you can integrate ESG to increase the ability to mitigate risk and understand the underlying stock positions better. I’m not pleased with the launch of something we call the carbon tool that lets you go down to specific company level and understand the risk associated with carbon with that specific company that you’re looking at. That's a sort of knowledge-based that we’ll be sharing with our colleague across the board, across Federated. And we think that is quite powerful in own right within the firm, as well as having new offerings to offer to third-parties. And with that I think I will hand back to you guys.

Tom Donahue: And I would only underscore our enthusiasm for the year's equity ownership services as something that we are looking at and have talked about before as to how to structure it and how to build it up for presentation more robustly in the United States which I don't have the answers to those questions. But it is something that we have articulated that we are quite interested in doing.

Operator: And our next question is coming from the line of Robert Lee with KBW.

Robert Lee: I was just wondering going to the Hermes deal - now that you’ve closed on it, I don’t know if there is any update to how you're thinking about the financial impact. I think originally you thought maybe couple of pennies GAAP dilutive but cash accretive. So any change to that and then maybe as a follow-up to that, what your thoughts are about altering your reporting going forward to include an adjusted number that may reflect any kind of non-cash expenses intangible amortization, tax benefits et cetera?

Chris Donahue: What we came out with at the announcement of the deal and including the expectation of the $22 million and the 19 of $0.02 dilutive in EPS and so on. We’re not updating that. We’re not changing that. We try to give that to everybody as something to have a view of our expectation of what we thought was going to happen at the time. And so we don't want to go in and update the number change them look at what we think as Hermes is going to do for the July, August, September and redo those numbers. So we're just not going to do that. I did take you through the 22 million and the reduction there. And we will update you on that next quarter of how much we can attribute to the deal and so on. What was the second part of the question?

Robert Lee: While since you have the acquisition I assume though you'll now have some non-cash items maybe there is some tax benefits so?

Chris Donahue: Internally we're not planning on doing that as of right now, and we think - so we don't have the valuations of course because we have to hire the evaluation company and have them go through that. So we’ll have that by the end of Q3 but we’re not - we think it's going to be readily available to see the amortization and so we’re not planning on doing a cash item and we’re trying to just stick to GAAP that’s our plan right now. Thank you very much.

Robert Lee: Just a follow-up, it is possible so we can kind of touch up our models what Hermes assets were at closing?

Chris Donahue: Yes, - remarks and we’re just giving them back to you here wait a second.

Robert Lee: Yes, I got on a little late so I may have missed it?

Tom Donahue: Assets at June 30 were 35.3 billion in pounds PS up £1.6 billion from 33.6 at Q1.

Operator: Thank you. We reached the end of our question-and-answer session. I like to turn the floor back over to management for closing comments.

Chris Donahue: Well that will conclude our comments for today and we thank you for joining us.

Operator: Thank you. Ladies and gentlemen this concludes today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.