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Janus Capital Group Inc. Announces Second Quarter 2013 Results

Stocks in this article: JNS

Janus Capital Group Inc. (“JCG”) (NYSE: JNS) today reported second quarter net income of $15.8 million, or $0.08 per diluted share, compared with first quarter 2013 net income of $28.0 million, or $0.15 per diluted share, and net income of $23.4 million, or $0.13 per diluted share, in the second quarter 2012. Second quarter 2013 included a charge of $0.04 per share from the early extinguishment of debt associated with the exchange of $110.0 million of JCG’s 3.25% convertible senior notes due 2014 for $116.6 million of newly issued 0.75% convertible senior notes due 2018 and a charge of $0.02 per share (or a $0.04 per share decline quarter over quarter) primarily due to the mark-to-market impact on our seed capital program.

Flows and Assets Under Management

Average assets under management during the second quarter 2013 were $164.2 billion compared with $161.8 billion during the first quarter 2013 and $155.0 billion during the second quarter 2012.

At June 30, 2013, JCG’s total assets under management were $160.6 billion compared with $163.8 billion at March 31, 2013 and $152.4 billion at June 30, 2012.

The decrease in complex-wide assets during the second quarter 2013 reflects long-term net outflows of $5.4 billion offset by net market appreciation of $2.2 billion. Fundamental equity and mathematical equity long-term net outflows totaled $4.3 billion and $1.2 billion, respectively, while fixed income long-term net inflows totaled $0.1 billion.

Investment Performance

As of June 30, 2013, 50% of complex-wide mutual funds had a 4- or 5-star Overall Morningstar Rating TM. 1

As of June 30, 2013, 45%, 37% and 40% 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%, 100% 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 June 30, 2013. 3

Mathematical equity relative investment performance declined, with 33%, 57% and 55% of strategies surpassing their respective benchmarks, net of fees, over the one-, three- and five-year periods, respectively, as of June 30, 2013. 4

Financial Discussion

Financial Highlights
(dollars in millions, except per share data or as noted)
Three Months Ended
June 30, March 31, June 30,
2013 2013 2012
Average Assets ( in billions) $ 164.2 $ 161.8 $ 155.0
Ending AUM ( in billions) $ 160.6 $ 163.8 $ 152.4
Revenues $ 215.8 $ 214.2 $ 206.0
Operating Expenses $ 157.4 $ 159.5 $ 153.9
Operating Income $ 58.4 $ 54.7 $ 52.1
Operating Margin 27.1 % 25.5 % 25.3 %
Net Income Attributable to JCG $ 15.8 $ 28.0 $ 23.4
Diluted Earnings per Share $ 0.08 $ 0.15 $ 0.13

Second quarter 2013 revenues of $215.8 million increased from first quarter 2013, primarily due to higher investment management fee revenue, partially offset by lower private account performance fees. Second quarter 2013 operating expenses of $157.4 million decreased $2.1 million, or 1.3%, from first quarter 2013, primarily due to lower long-term incentive compensation expenses.

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