Janus Announces First Quarter 2008 Results

Business Wire,  April 24, 2008  

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First quarter earnings from continuing operations of $0.24 per diluted share

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More than 85% of Janus' mutual funds outperformed their Lipper peer group medians for 1, 3 and 5 years (1)

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Long-term net outflows of $1.5 billion for the quarter

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$134 million of stock buybacks during the first quarter, reducing shares outstanding by 2.1%

DENVER -- Janus Capital Group Inc. (NYSE: JNS) today reported first quarter net income from continuing operations of $39.0 million, or $0.24 per diluted share, compared with net income from continuing operations of $51.6 million, or $0.30 per diluted share,2 in the fourth quarter 2007 and $38.0 million, or $0.20 per diluted share, in the first quarter 2007. The company's operating margin from continuing operations for the first quarter 2008 was 31.8% compared with 29.0% for the fourth quarter 2007 and 27.8% for the first quarter 2007.

Flows and Assets Under Management

Average assets under management during the first quarter decreased 8.6% to $189.7 billion compared with $207.6 billion during the fourth quarter 2007. At March 31, 2008, the company's total assets under management were $187.6 billion compared with $206.7 billion at December 31, 2007. The decrease in assets during the first quarter reflects $17.0 billion of net market depreciation and fund performance, long-term net outflows of $1.5 billion and money market net outflows of $0.6 billion.

Janus' INTECH subsidiary had long-term net outflows of $1.1 billion during the first quarter 2008 compared with long-term net inflows of $0.1 billion in the fourth quarter last year. Excluding INTECH, Janus had long-term net outflows during the first quarter this year of $0.4 billion compared with long-term net inflows of $3.1 billion in the previous quarter. The first quarter long-term net outflows included the redemption of a $1.1 billion fixed-income mandate.

Investment Management

Despite challenging market conditions, Janus' relative investment performance remained strong during the first quarter, with approximately 86%, 85% and 87% of Janus' mutual funds in the top half of their Lipper categories on a one-, three- and five-year total-return basis, respectively, as of March 31, 2008.3 In addition, 77% of Janus mutual funds have a 4- or 5-star Overall Morningstar Rating(TM) at March 31, 2008.4

Of the Janus-managed equity funds that were launched during the last three years or that have new managers, 82% rank in the top Lipper quartile on a since portfolio manager inception basis, as of March 31, 2008.

"The last several months have been tough for most money managers, but we're encouraged that our products have weathered the turbulence well," said CEO Gary Black. "Our investment team continues to deliver strong relative performance over multiple time periods."

Financial Discussion

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Continuing Operations

First quarter 2008 revenues of $281.2 million decreased 9.7% from the previous quarter due to lower average assets under management driven primarily by declining markets. Operating expenses decreased $29.6 million, or 13.4%, from the previous quarter as a result of lower revenue-based compensation, long-term incentive compensation and distribution expenses. The decline in long-term incentive compensation is attributable to a fourth quarter charge of $17.0 million associated with departure-related accelerated vesting of awards. Fourth quarter operating expenses also included a $5.0 million insurance recovery for legal expenses incurred in prior periods.

Non-operating items for the first quarter 2008 were impacted by a mark-to-market loss of $9.5 million on Janus' consolidated seed capital investments while the fourth quarter 2007 included a $17.6 million mark-to-market gain. Fourth quarter 2007 non-operating items also reflect an $18.2 million impairment charge associated with an investment in securities issued by Stanfield Victoria Funding LLC.

Acquisition / Disposition

On March 31, 2008, Janus increased its ownership of INTECH to approximately 89.5% with the acquisition of an additional 3% interest for $60.7 million.

On April 9, 2008, Rapid Solutions Group's ("RSG") digital print operations were sold to Bowne & Co., Inc. The disposition of RSG's digital and offset operations is not expected to have a material impact on Janus' second quarter 2008 results.

Capital and Liquidity

At March 31, 2008, Janus had stockholders' equity of $1.6 billion, cash and investments of $473 million and $1.1 billion of outstanding debt. As part of its capital and liquidity management, Janus reduced its outstanding shares by 2.1% during the first quarter by repurchasing 5.2 million shares of its common stock at an average price of $25.75 per share and a total cost of $134 million.

First Quarter 2008 Earnings Call Information

Janus will discuss its results during a conference call on Thursday, April 24 at 10 a.m. Eastern Daylight Time. The call-in number will be 877-301-7574. Anyone outside the U.S. or Canada should call 706-643-3623. The slides used during the presentation will be available in the investor relations section of the Janus Capital Group Web site (www.janus.com/ir) approximately one hour prior to the call. For those unable to join the conference call at the scheduled time, an audio replay will be available on www.janus.com/ir.