EXHIBIT 99.3
Media Contact: Kekst & Co. STILWELL
Robert Siegfried (212-521-4832) FINANCIAL INC.
Michael Herley (212-521-4897)
920 Main Street, 21st Floor
Kansas City, Missouri 64105
Investors Contact: NYSE Symbol: SV
Landon H. Rowland (816-218-2416)
Chairman, President and CEO
Douglas E. Pittman (816-218-2415) Release No. 2001-05 January 30, 2001
Manager of Investor Relations
{NEWS RELEASE}
STILWELL FINANCIAL INC.
REPORTS BEST FOURTH QUARTER EVER AND
RECORD FULL YEAR RESULTS -
REVENUES SURPASS $2 BILLION
Kansas City, Missouri
Stilwell Financial Inc. ("Stilwell" or the "Company") announced record fourth
quarter earnings, capping a year in which Stilwell reported its highest earnings
and revenues. Stilwell reported fourth quarter 2000 earnings of 66(cent) per
diluted share (net income of $153.2 million) compared to 43(cent) per diluted
share (net income of $98.5 million) in fourth quarter 1999. Exclusive of the
fourth quarter 2000 nonrecurring items discussed below, ongoing earnings were
64(cent) per diluted share (net income of $147.0 million), a 49% increase period
to period. For full year 2000, consolidated earnings increased to $2.90 per
diluted share (net income of $663.7 million) from $1.38 per diluted share (net
income of $313.1 million) in 1999. Exclusive of certain nonrecurring items
during 2000, ongoing earnings totaled $2.67 per diluted share (net income of
$610.8 million).
A 37% increase in average assets under management in fourth quarter 2000 versus
1999 fueled the 49% improvement in ongoing earnings period to period. Due to
this asset growth, revenues improved $144.9 million, or 38%. Operating income
grew to $243.2 million for fourth quarter 2000 compared to $172.8 million in
fourth quarter 1999, primarily due to higher revenues and improved operating
margins, particularly at Stilwell's largest subsidiary, Janus Capital
Corporation ("Janus"). Exclusive of the one-time items noted below, Stilwell's
equity in the net earnings of DST Systems, Inc. ("DST") increased 21% in fourth
quarter 2000 versus 1999, continuing the positive growth trend experienced by
DST throughout 2000.
For the year ended December 31, 2000, the 95% increase in ongoing net income
reflects an 84% increase in average assets under management year to year.
Revenues, which surpassed $2 billion for the first time in Company history,
increased 85% and operating income nearly doubled over 1999. Equity in ongoing
net earnings of DST increased $14.0 million, which is a 32% increase over 1999.
Janus reported aggregate net cash inflows of $66.9 billion during 2000, which
exceeded 1999's then-record $56.4 billion of inflows by 19% and led all mutual
fund companies in the industry.
During 2000, non-recurring gains contributed approximately 23(cent) per diluted
share to Stilwell's consolidated net income. These gains included the following:
i) a first quarter after-tax gain of approximately $27.3 million resulting from
the settlement of litigation with a former equity affiliate; ii) a first quarter
$15.1 million after-tax gain associated with the Company's sale of 192,408
shares of its Janus common stock to Janus for use in connection with the Janus
incentive programs; iii) approximately $4.3 million (after-tax) in gains
representing the Company's proportionate share of a litigation settlement and
sales of marketable securities recorded by DST in the first half of 2000; and
iv) approximately $6.2 million (after-tax) in fourth quarter 2000 gains
representing the Company's proportionate share of sales of marketable securities
recorded by DST during the quarter.
Diluted Earnings Per Share, Assets Under Management and Margin Comparisons
Fourth Quarter Year
-------------- ----
1999 2000 1999 2000
---- ---- ---- ----
Diluted Earnings Per Share (1):
Ongoing Operations $ 0.43 $ 0.64 $ 1.38 $ 2.67
Gain on litigation settlement -- -- -- 0.12
Gain on sale of Janus common stock -- -- -- 0.07
Proportionate share of DST items -- 0.02 -- 0.04
---------- ---------- ---------- ----------
Total $ 0.43 $ 0.66 $ 1.38 $ 2.90
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Average Assets Under Management (in billions) $ 208.5 $ 284.7 $ 164.2 $ 301.9
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Operating margins 44.8% 45.8% 42.8% 46.1%
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<FN>
(1) All per share information included herein reflects a stock split declared by
the Stilwell Board of Directors on June 13, 2000 to accommodate the spin-off
of Stilwell from Kansas City Southern Industries, Inc. (KCSI) on July 12,
2000. For every one share of KCSI common stock, two shares of Stilwell
common stock were issued to KCSI shareholders of record as of June 28, 2000.
Stock options are included in the respective periods for the proportionate
number of days outstanding during each period.
</FN>
Fourth Quarter:
Stilwell, which includes Janus, Berger LLC, Nelson Money Managers Plc and an
approximate 33% equity investment in DST, reported $257.8 billion in assets
under management as of December 31, 2000 compared to $257.4 billion as of
December 31, 1999. Average assets under management totaled $284.7 billion during
fourth quarter 2000 compared to $208.5 billion in prior year's fourth quarter,
$324.2 billion in third quarter 2000 and $304.2 billion in second quarter 2000.
For the quarter, market depreciation of $57.0 billion and slight net cash
outflows (less than $1 billion) resulted in an 18% decline in assets under
management. This decline in assets under management generally reflected the net
effect to the Company of the widely varied fourth quarter 2000 results for the
key market indexes (e.g., an approximately 33% decline in the NASDAQ, an 8%
decline in the Russell 2000, a 1% increase in the Dow Jones Industrial Average).
Shareowner accounts increased by approximately two million compared to December
31, 1999 and totaled approximately 6.3 million as of December 31, 2000.
Operating margins improved in fourth quarter 2000 versus the comparable 1999
period. This improvement is attributable to the 38% increase in revenues, as
well as continued success in maintaining an efficient cost structure. Operating
expenses of $287.3 million for fourth quarter 2000 exceeded comparable 1999 by
$74.5 million, or 35%, but were 9% below third quarter 2000 expenses. The
increase in expenses over prior year occurred in the following key categories:
i) compensation, primarily related to an increase in the number of employees;
ii) third party concession fees resulting from a higher level of assets under
management through these distribution arrangements; iii) depreciation and
amortization arising from Janus's infrastructure enhancement efforts over the
last two years and deferred commission payments in connection with the growth in
the Janus World Funds Plc; and iv) professional services fees associated with
ongoing web development and maintenance efforts.
Exclusive of the one-time gains associated with DST's sale of securities, fourth
quarter 2000 equity earnings from DST were $15.2 million versus $12.6 million in
fourth quarter 1999. This improvement was largely attributable to higher
earnings in DST's financial services and output solutions segments. Consolidated
DST revenues increased 9% due to a higher number of shareowner accounts serviced
(totaling 72.1 million at December 31, 2000 versus 56.4 million at December 31,
1999 and 65.1 million at September 30, 2000) and images produced and statements
mailed (increases of 14.5% and 1.7%, respectively, since prior year fourth
quarter). As highlighted in DST's fourth quarter 2000 earnings news release, DST
successfully converted approximately 5.8 million mutual fund shareowner accounts
from new customers during the fourth quarter. Consolidated DST operating margins
improved to 20.3% during fourth quarter 2000 versus 15.7% in comparable 1999.
Other income increased to $11.6 million for the three months ended December 31,
2000 versus $8.9 million in comparable 1999. This increase was primarily
attributable to interest income on money market accounts. The Company's
effective tax rate decreased quarter to quarter, primarily due to a higher
proportionate share of equity earnings from DST and a reduction in state income
tax rates.
Full Year:
For the year ended December 31, 2000, net cash inflows of assets totaled $68.4
billion (of which Janus contributed $66.9 billion). This industry-leading total
was substantially offset by market depreciation of $68.0 billion. Average assets
under management increased $137.7 billion, or 84%, compared to the average for
the year ended December 31, 1999, resulting in a more than $1 billion
improvement in revenues.
Operating margins improved from 42.8% to 46.1% year to year, mirroring the
strong improvement quarter to quarter. Higher operating expenses were evident in
the same cost components noted in the quarterly discussion above. Compensation
and third party concession costs were approximately 36% of total revenues during
the year ended December 31, 2000 compared to approximately 38% in 1999. With
numerous infrastructure enhancements completed throughout 1999 and 2000 and a
132% increase in deferred commission payments resulting from the growth of
Janus' offshore funds, depreciation and amortization grew nearly 130% in 2000
versus 1999. The rapid increase in assets under management during the first half
of the year generated significant shareowner activity, thereby requiring
substantial temporary employee help, which is recorded as professional services
fees. The rate of increase in the remaining operating expenses on a combined
basis (approximately 51%) continues to trail the rate of revenue growth, thereby
contributing to Stilwell's competitive operating margins.
Equity earnings from DST totaled $69.8 million for full year 2000 versus $44.4
million in 1999. Exclusive of Stilwell's $11.4 million (pretax) share of
non-recurring DST items, the equity in net earnings of DST improved 32% over
1999. Improvements in revenues and operating margins, together with the
non-recurring items discussed above, drove this increase period to period.
Other income of $43.7 million in 2000 exceeded the prior year period by $16.3
million, primarily due to interest income and gains from sales of investments,
including investments in advised funds. The effective tax rate declined compared
to the prior year due to the non-taxable gain on the sale of Janus common stock
to Janus and a reduction in state income tax rates.
OTHER MATTERS
Company Strategy
Stilwell, as a growth-minded, independent organization, plans to continue its
historical approach of enhancing and strengthening its existing businesses and
also to focus on opportunities that will diversify Stilwell and its subsidiaries
in the financial services industry. The Company plans to aggressively pursue
strategic partnerships, acquisitions and other transactions to accomplish these
goals. The Company also expects to continue its previously announced repurchase
program.
Purchase of Janus Shares
As reported on January 25, 2001, Stilwell announced that it will purchase
600,000 shares of Janus common stock from Thomas H. Bailey, Chairman, President
and Chief Executive Officer of Janus. The total cost of this purchase is
expected to be approximately $610 million. While Stilwell has adequate resources
available to fund the purchase, Stilwell is also considering other financing
alternatives. As a result of this transaction, Mr. Bailey will own approximately
6% of Janus and Stilwell's ownership will increase to approximately 88.7%.
Annual Meeting of Stockholders
Stilwell also announced that its Annual Meeting of Stockholders will be held on
May 10, 2001 at 10:00 am CDT in the Harvest Room at the Kansas City Marriott
Downtown Hotel, 200 W. 12th Street, Kansas City, Missouri, 64105.
BUSINESS OUTLOOK
Landon H. Rowland, Stilwell's Chairman, President and Chief Executive Officer,
said, "We are pleased to report Stilwell's record quarterly and full year
earnings. For the year, Stilwell's revenues, operating income and net income
each grew by more than 85% compared to 1999. These results demonstrate the
fantastic achievements of our subsidiaries and highlight the ongoing efforts,
diligence and dedication of their management teams.
Movements in Stilwell's assets under management during the fourth quarter
generally followed the markets, with market depreciation comprising virtually
the entire decline in assets during the quarter. While net flows of cash were
essentially flat during fourth quarter, the $68.4 billion in net inflows for the
year were best in the mutual fund industry. During 2000, Janus closed five funds
- - including its flagship Janus Fund - with the objective of ensuring ongoing
success for existing fund shareowners. These funds totaled nearly 50% of Janus's
total assets under management. We are also pleased with the ability of the
subsidiaries to develop alternative distribution and service options for
shareholders and the contributions of these actions to year-end results.
We believe Stilwell is well-positioned to build on the momentum generated during
1999 and 2000. Each of Stilwell's investments - Janus, Berger, Nelson and DST -
continues to develop and promote its brand name and its comparative advantages.
During the third and fourth quarters of 2000, as part of Stilwell's $1 billion
stock repurchase program, the Company repurchased more than 7 million shares of
its common stock through open market transactions. We believe that this
investment, much like the investment in our various subsidiaries and affiliates,
will prove to be value-enhancing to our existing shareholders. Additionally, we
believe the purchase of Janus stock from Tom Bailey will provide an outstanding
opportunity to enhance the management incentives at Janus.
We are honored to have Robert Skidelsky join the Stilwell Board. His
international status in economics and open-market reform will contribute greatly
to Stilwell as an increasingly global and diversified financial services
organization."
Shareholders and other interested parties are invited to listen to Stilwell's
fourth quarter earnings presentation by calling (800) 289-0437, code #417248, at
least ten minutes prior to the 1:00 EST start time of the presentation. The
accompanying slides to the presentation are expected to be available on the
Stilwell web site (http://www.stilwellfinancial.com). Additionally, a replay of
the presentation will be available for one week by calling (719) 457-0820 or
(888) 203-1112, code #417248.
* * * * * * * * * *
This press release includes statements concerning potential future events
involving the Company, which could materially differ from the events that
actually occur. The differences could be caused by a number of factors including
those factors identified in Stilwell's Registration Statement on Form 10 dated
June 15, 2000 and filed by the Company with the Securities and Exchange
Commission (Commission file no. 001-15253). The Company will not update any
forward-looking statements in this press release to reflect future events or
developments.
(Financial Information Attached)
............. The End
STILWELL FINANCIAL INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------------- ------------------------
1999 2000 1999 2000
---- ---- ---- ----
Revenues:
Investment management fees $ 317.1 $ 435.8 $ 992.8 $1,850.7
Shareowner servicing fees 60.3 78.6 191.4 338.2
Other 8.2 16.1 28.1 59.2
-------- ------- -------- --------
Total 385.6 530.5 1,212.3 2,248.1
-------- ------- -------- --------
Operating Expenses:
Compensation 97.8 103.2 316.5 490.5
Marketing and promotion 19.6 26.5 71.5 103.5
Alliance and third party administrator fees 46.8 77.8 143.0 314.9
Depreciation and amortization 10.7 24.2 35.4 81.2
Professional services 6.5 18.7 25.8 67.7
Other 31.4 36.9 101.8 154.0
-------- ------- -------- --------
Total 212.8 287.3 694.0 1,211.8
-------- ------- -------- --------
Operating Income 172.8 243.2 518.3 1,036.3
Equity in earnings of unconsolidated affiliates 12.6 21.9 46.7 70.8
Interest Expense - Kansas City
Southern Industries, Inc. (3.5) - (5.9) (0.7)
Interest Expense - third parties - (1.9) - (7.0)
Gain on litigation settlement - - - 44.2
Gain on sale of Janus common stock - - - 15.1
Other, net 8.9 11.6 27.4 43.7
-------- ------- -------- --------
Income before taxes and minority interest 190.8 274.8 586.5 1,202.4
Income tax provision 73.6 96.2 216.1 427.0
Minority interest in consolidated earnings 18.7 25.4 57.3 111.7
-------- ------- -------- --------
Net Income $ 98.5 $ 153.2 $ 313.1 $ 663.7
-------- ------- -------- --------
Per Share Data:
- --------------
Weighted Average Common
shares outstanding (in thousands) (1) 223,000 220,668 223,000 222,445
-------- ------- -------- --------
Basic Earnings per Common Share $ 0.44 $ 0.69 $ 1.40 $ 2.98
-------- -------- -------- --------
Diluted Common
shares outstanding (in thousands) (1) 223,000 226,689 223,000 225,423
-------- ------- -------- --------
Diluted Earnings per Common Share $ 0.43 $ 0.66 $ 1.38 $ 2.90
-------- ------- -------- --------
<FN>
(1) All share and per share information included herein reflects a stock split
declared by the Stilwell Board of Directors on June 13, 2000 to accommodate
the spin-off of Stilwell from Kansas City Southern Industries, Inc. ("KCSI")
on July 12, 2000. For every one share of KCSI common stock, two shares of
Stilwell common stock were issued to KCSI shareholders of record as of June
28, 2000. Stock options are included in the respective periods for the
proportionate number of days outstanding during each period. In connection
with the spin-off, Stilwell issued stock options for Stilwell common stock
to holders of KCSI stock options. There were no dilutive securities
outstanding during 1999; accordingly, the number of basic and dilutive
common shares for earnings per share computations are the same.
Additionally, the accumulations of Basic and Diluted Earnings per Common
Share for the three quarters in 1999 and 2000 do not necessarily total the
Basic and Diluted Earnings per Common Share for the nine months ended
September 30, 1999 and 2000, respectively.
</FN>