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Janus Capital Group Inc. Announces First Quarter 2012 Results

Janus Capital Group Inc. (“JCG”) (NYSE: JNS) today reported first quarter net income of $22.6 million, or $0.12 per diluted share, compared with fourth quarter 2011 net income of $35.7 million, or $0.19 per diluted share (which included an operating benefit of $0.05 per share from the reversal of previously accrued compensation expenses). First quarter 2012 includes a charge of $0.03 per share associated with the previously disclosed debt tender and a change in the long-term incentive compensation forfeiture estimate. First quarter 2011 net income totaled $37.9 million, or $0.21 per diluted share, and included a charge of $0.03 per share from the early extinguishment of debt.

Flows and Assets Under Management

Average assets under management during the first quarter 2012 were $158.9 billion compared with $149.2 billion during the fourth quarter 2011 and $172.5 billion during the first quarter 2011.

At March 31, 2012, the company’s total assets under management were $164.0 billion compared with $148.2 billion at December 31, 2011 and $173.5 billion at March 31, 2011.

The increase in complex-wide assets during the first quarter 2012 primarily reflects net market appreciation of $18.3 billion offset by long-term net outflows of $2.5 billion. Mathematical equity and fundamental equity long-term net outflows totaled $1.8 billion and $1.9 billion, respectively, while fixed income long-term net inflows totaled $1.2 billion.

Investment Performance

Relative investment performance in fundamental equity strategies continues to be challenged, with 39%, 32% and 78% of mutual fund assets ranked in the top half of their Lipper categories on a one-, three- and five-year total return basis, respectively, as of March 31, 2012. 1

Fixed income mutual funds continue to generate strong long-term relative investment performance with 100%, 33% and 100% of mutual fund assets ranked in the top half of their Lipper categories on a one-, three- and five-year total return basis, respectively, as of March 31, 2012. 2

Mathematical equity relative investment performance has declined, with 41%, 21% and 46% of strategies surpassing their respective benchmarks, net of fees, over the one-, three- and five-year periods, respectively, as of March 31, 2012. 3

In addition, 58% of complex-wide mutual funds have a 4- or 5-star Overall Morningstar Rating TM at March 31, 2012. 4

1 References Lipper relative performance on an asset-weighted basis. For the 10-year period ending March 31, 2012, 80% of the 24 fundamental equity mutual funds outperformed the majority of their Lipper peers on an asset-weighted basis. For the 1-, 3-, 5- and 10-year periods ending March 31, 2012, 46%, 51%, 75% and 71% of the 37, 35, 32 and 24 fundamental equity mutual funds outperformed the majority of their Lipper peers based on total returns.

2 References Lipper relative performance on an asset-weighted basis. For the 10-year period ending March 31, 2012, 100% of the 4 fixed income mutual funds outperformed the majority of their Lipper peers on an asset-weighted basis. For the 1-, 3-, 5- and 10-year periods ending March 31, 2012, 100%, 50%, 100% and 100% of the 5, 4, 4 and 4 fixed income mutual funds outperformed the majority of their peers based on total returns.

3 For the period ending March 31, 2012, 25%, 25%, 33% and 20% of the mathematical equity mutual funds were beating their benchmarks on a 1-, 3-, 5-year and since-fund inception basis. Funds included in the analysis and their inception dates are: INTECH U.S. Growth Fund – Class S (1/03); INTECH U.S. Core Fund – Class T (2/03); INTECH U.S. Value Fund – Class I (12/05); INTECH International Fund – Class I (5/07); INTECH Global Dividend Fund – Class I (12/11).

4 For the period ending March 31, 2012, 28%, 44% and 61% of complex-wide mutual funds had a 4- or 5-star Morningstar rating for the 3-, 5- and 10-year periods based on risk-adjusted returns for 43, 39 and 28 funds, respectively. 43 funds were included in the analysis for the overall period.

Financial Discussion

  Financial Highlights
(dollars in millions, except per share data or as noted)
                                 
Three Months Ended
March 31, December 31, March 31,
2012 2011 2011
 
 
Average Assets ( in billions) $ 158.9 $ 149.2 $ 172.5
Ending AUM ( in billions) $ 164.0 $ 148.2 $ 173.5
Revenues $ 218.4 $ 215.6 $ 265.4
Operating Expenses $ 161.9 $ 145.0 $ 180.2
Operating Income $ 56.5 $ 70.6 $ 85.2
Operating Margin 25.9% 32.7% 32.1%
 
Net Income $ 22.6 $ 35.7 $ 37.9
 
Diluted Earnings per Share $ 0.12 $ 0.19 $ 0.21
                                       
 

First quarter 2012 revenues of $218.4 million increased $2.8 million, or 1.3%, from fourth quarter 2011, primarily due to higher average assets under management driven by market appreciation, partially offset by an increase in negative mutual fund performance fees. First quarter 2012 operating expenses of $161.9 million increased $16.9 million, or 11.7%, primarily from compensation accrual reversals of $13.2 million made in the fourth quarter 2011 and higher long-term incentive compensation. There were no compensation accrual reversals in the first quarter 2012.

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