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Janus Capital Group Inc. Announces Fourth Quarter 2012 Results

Stocks in this article: JNS

Janus Capital Group Inc. (“JCG”) (NYSE: JNS) today reported fourth quarter net income of $31.2 million, or $0.17 per diluted share, compared with third quarter 2012 net income of $25.1 million, or $0.14 per diluted share, and net income of $35.7 million, or $0.19 per diluted share, in the fourth quarter 2011.

Fourth quarter 2012 net income included an intangible asset impairment charge of $0.02 per share related to the redemption of a sub-advised account. Third quarter 2012 net income included an intangible asset impairment charge of $0.01 per share also related to the redemption of a sub-advised account.

For the full-year 2012, net income totaled $102.3 million, or $0.55 per diluted share, compared with net income of $142.9 million, or $0.78 per diluted share, for 2011.

Flows and Assets Under Management

Average assets under management during the fourth quarter 2012 were $155.6 billion compared with $155.5 billion during the third quarter 2012 and $149.2 billion during the fourth quarter 2011.

At December 31, 2012, JCG’s total assets under management were $156.8 billion compared with $158.2 billion at September 30, 2012 and $148.2 billion at December 31, 2011.

The decrease in complex-wide assets during the fourth quarter 2012 primarily reflects long-term net outflows of $3.6 billion offset by net market appreciation of $2.1 billion. Fundamental equity and mathematical equity long-term net outflows totaled $2.7 billion and $1.6 billion, respectively, while fixed income long-term net inflows totaled $0.7 billion. The increase in year-over-year assets under management was the result of $20.6 billion of net market appreciation offset by $12.0 billion of long-term net outflows.

Investment Performance

As of December 31, 2012, 50% of complex-wide mutual funds had a 4- or 5-star Overall Morningstar Rating TM. 1

As of December 31, 2012, 68%, 20% and 48% of fundamental equity mutual fund assets ranked in the top half of their Morningstar categories on a one-, three- and five-year total return basis, respectively. 2

Fixed income mutual funds continue to generate strong long-term relative investment performance with 54%, 75% and 100% of mutual fund assets ranked in the top half of their Morningstar categories on a one-, three- and five-year total return basis as of December 31, 2012. 3

Mathematical equity relative investment performance has continued to be strong, with 63%, 87% and 67% of strategies surpassing their respective benchmarks, net of fees, over the one-, three- and five-year periods, respectively, as of December 31, 2012. 4

Financial Discussion

Financial Highlights
(dollars in millions, except per share data or as noted)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
2012 2012 2012 2011
Average Assets ( in billions) $ 155.6 $ 155.5 $ 156.3 $ 162.3
Ending AUM ( in billions) $ 156.8 $ 158.2 $ 156.8 $ 148.2
Revenues $ 216.6 $ 209.0 $ 850.0 $ 981.9
Operating Expenses $ 158.6 $ 161.1 $ 635.5 $ 670.1
Operating Income $ 58.0 $ 47.9 $ 214.5 $ 311.8
Operating Margin 26.8 % 22.9 % 25.2 % 31.8 %
Net Income Attributable to JCG $ 31.2 $ 25.1 $ 102.3 $ 142.9
Diluted Earnings per Share   $ 0.17     $ 0.14     $ 0.55     $ 0.78  

Fourth quarter 2012 revenues of $216.6 million increased from third quarter 2012, primarily due to higher private account performance fees. Fourth quarter 2012 operating expenses of $158.6 million decreased $2.5 million, or 1.6%, from third quarter 2012, primarily due to lower compensation expenses partially offset by an intangible asset impairment of $5.0 million and an increase in discretionary expenses.

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