EXHIBIT 99.1
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. 2001-11 April 23, 2001
Manager of Investor Relations
{News Release}
STILWELL FINANCIAL INC. REPORTS
FIRST QUARTER RESULTS
(Page 1)
Kansas City, Missouri
Stilwell Financial Inc. ("Stilwell" or the "Company") reported first quarter
2001 earnings per share of 48(cent) per diluted share (net income of $111.4
million) compared to 84(cent) per diluted share (net income of $188.7 million)
in first quarter 2000. Approximately 20(cent) per diluted share in first quarter
2000 was attributable to certain one-time items, which are discussed below.
Lower 2001 earnings per share reflect reduced revenues due to lower asset under
management levels, an increase in non-cash depreciation and amortization
associated with the technology infrastructure development at Janus Capital
Corporation ("Janus") and interest expense associated with funding purchases of
Janus common stock.
A 16% decrease in average assets under management during first quarter 2001
versus 2000 led to lower revenues ($448.5 million from $545.1 million). Stilwell
and its subsidiaries experienced the anticipated downward pressure on operating
margins, but continued to maintain a very competitive level of 40.8% in first
quarter 2001 compared to 44.9% in first quarter 2000. Exclusive of the one-time
items noted below, Stilwell's equity in the net earnings of DST Systems, Inc.
("DST") increased 24% during first quarter 2001 versus 2000, continuing the
strong growth trends experienced by DST over the last several quarters.
Non-recurring gains during 2000 included the following: i) an after-tax gain of
approximately $27.3 million resulting from the settlement of litigation with a
former equity affiliate; ii) a $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
the Janus employee stock incentive programs; and iii) approximately $3.4 million
(after-tax) in gains representing the Company's proportionate share of a
litigation settlement and sales of marketable securities recorded by DST.
Diluted Earnings per Share, Assets Under Management And Margin Comparisons
First Quarter
2000 2001
---- ----
Diluted Earnings Per Share (1):
Ongoing Operations, exclusive of amortization of
Goodwill and Intangibles $ 0.65 $ 0.50
Non-cash amortization of Goodwill and Intangibles (0.01) (0.02)
-------------- --------------
Ongoing Operations 0.64 0.48
2000 gains - litigation settlement, sale of
Janus stock and proportionate share of DST 0.20 --
-------------- --------------
items
Total $ 0.84 $ 0.48
============== ==============
Ongoing EBITDA (Earnings before interest,
taxes, depreciation and amortization) - in $ 258.2 $ 213.5
millions ============== ==============
Average Assets Under Management (in billions) $ 294.4 $ 246.6
============== ==============
Operating margins 44.9% 40.8%
============== ==============
(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.
- --------------------------------------------------------------------------------
Stilwell, which includes Janus, Berger LLC, Nelson Money Managers plc and an
approximate 33% equity investment in DST, reported $205.9 billion in assets
under management as of March 31, 2001 compared to $257.8 billion as of December
31, 2000 and $324.9 billion as of March 31, 2000. Average assets under
management totaled $246.6 billion during first quarter 2001 compared to $284.7
billion in fourth quarter 2000 and $294.4 billion in first quarter 2000. For the
quarter, market depreciation of $48.3 billion comprised over 93% of the asset
decline since December 31, 2000 with net cash outflows of approximately $3.6
billion comprising the remainder. The 20% decline in assets under management
during the quarter reflects the general downturn in the various markets and
indexes (e.g., NASDAQ, the Dow Jones Industrial Average, Standards & Poors 500).
Shareowner accounts, totaling approximately 6.3 million, held relatively steady
during the quarter and were 11% above shareowner accounts on March 31, 2000.
Operating income for the three months ended March 31, 2001 was $182.8 million
versus $244.9 million in 2000. As mentioned above, this decline reflects the
margin pressures expected due to the lower level of assets under management and
resulting lower revenue totals, as well as to higher depreciation and
amortization and certain components of expenses that are fixed. Despite these
reduced levels, however, consolidated margins remained above industry standards,
demonstrating the relative flexibility of the Company's cost structure,
particularly at Janus.
Operating expenses of $265.7 million for first quarter 2001 were lower than
comparable 2000 by $34.5 million, or 11%, and were 8% below fourth quarter 2000
expenses. Reduced expenses compared to first quarter 2000 occurred in the
following key categories: i) compensation, primarily due to reduced investment
performance-based incentive compensation and the reversal of stock bonus
accruals that were no longer payable (as a result of the sale of shares of Janus
common stock by various employees to Stilwell on March 16, 2001), partially
offset by approximately $6.4 million in severance costs associated with the
Janus work force reduction announced in February 2001; and ii) third party
concession fees resulting from a lower level of assets under management through
these distribution arrangements. Offsetting these decreases, however, was a $9.3
million increase in depreciation and amortization arising from Janus's
technology and operational infrastructure efforts over the last two years, the
aggregate cost of which totaled $175 million, and deferred commission payments
in connection with the growth in the Janus World Funds plc. The increase in
these non-cash expenses had the effect of reducing margins by nearly two
percentage points.
Exclusive of the one-time gains recorded by DST in first quarter 2000, equity
earnings from DST in first quarter 2001 improved $3.4 million to $17.8 million.
This improvement was largely attributable to higher earnings in DST's financial
services segment. Consolidated DST revenues increased 9% due to a higher number
of shareowner accounts serviced (totaling 73.8 million at March 31, 2001 versus
72.1 million at December 31, 2000 and 61.0 million at March 31, 2000) and images
produced and statements mailed (increases of 11% and 3%, respectively, since
prior year first quarter). Consolidated DST operating margins improved to 20.9%
during first quarter 2001 versus 18.7% in comparable 2000.
Interest expense increased by $3.1 million as a result of accrued interest
associated with the pending acquisition of shares of Janus common stock from
Thomas H. Bailey, the Chairman, President and Chief Executive Officer of Janus.
The Company's effective tax rate increased quarter to quarter, primarily due to
the non-taxable gain in 2000 on the sale of Janus common stock to Janus.
OTHER MATTERS
Purchase of Janus shares
As reported on January 25, 2001, Stilwell announced that it expects to purchase
600,000 shares of Janus common stock from Mr. Bailey at a cost of approximately
$603 million. This transaction, which will occur in May 2001, will increase the
Company's ownership of Janus to approximately 90.2%. The Company has sufficient
resources (i.e., available cash and credit facilities) to fund this acquisition.
Stilwell continues, however, to evaluate alternative financing methods for this
transaction.
The pending purchase of 600,000 shares of Janus common stock from Mr. Bailey, as
well as Stilwell's purchase on March 16, 2001 of 199,042 shares of Janus common
stock from other minority stockholders of Janus, will increase amortization
expense, while reducing the minority interest participation in Janus earnings.
Higher amortization will be attributable to the significant goodwill and other
intangibles expected to result from such purchase transactions in the asset
management industry.
Accounting for these purchases on an unaudited pro forma basis as if they had
occurred on January 1, 2000, exclusive of any consideration of the financing
approach to be used by Stilwell to purchase Mr. Bailey's shares, Stilwell
estimates that it would have recorded in its Statement of Income an additional
$46 million of amortization expense (resulting in total depreciation and
amortization expenses of approximately $127 million) and a $59 million reduction
in minority interest in consolidated earnings (resulting in total minority
interest in consolidated earnings of approximately $53 million) for the year
ended December 31, 2000. Accounting for these same transactions as if they had
occurred on December 31, 2000, Stilwell estimates that it would have recorded in
its Balance Sheet an increase of $926 million in intangibles and other assets
(for a total of approximately $1,217 million) and a $34 million reduction in
minority interest (for a total of approximately $39 million) as of such date.
The unaudited pro forma information is based on preliminary information related
to the Janus stock acquisitions; the actual purchase adjustments will differ
from those included above. Stilwell expects to have an independent valuation
completed in order to determine the actual allocation of purchase price for the
shares acquired, which will affect the levels of goodwill and other intangibles,
as well as the periods over which these assets are required to be amortized
under current accounting rules.
Janus Work Force Reduction
On April 20, 2001, Janus announced a work force reduction that would affect
approximately 546 employees and result in closing of its Austin, Texas facility.
This action reflects a return to a more normalized level of shareowner activity,
significant technological advancements that provide capacity to adjust to
business fluctuations and the evolution in shareowner approaches to inquiries
and investments. Stilwell expects that severance, business closing and related
costs will result in a non-recurring charge of approximately 6(cent) to 8(cent)
per share in second quarter 2001. Reduced costs due to lower employee numbers,
operational efficiencies and associated benefits are expected to positively
affect annual Stilwell earnings by at least 8(cent) to 10(cent) per share.
Current Assets Under Management
Stilwell preliminary consolidated assets under management as of the close of
market on April 23, 2001 totaled approximately $224.5 billion.
BUSINESS OUTLOOK
Landon H. Rowland, Stilwell's Chairman, President and Chief Executive Officer,
said, "First quarter 2001 was a test for our Company. While results were not at
the level we have come to expect, several points are worth noting.
First, the decline in Stilwell's assets under management during the first
quarter generally reflected the distressed market conditions in the period, with
market depreciation comprising nearly all of the decline in assets during the
quarter. Net cash outflows during this challenging period were less than $4
billion, representing less than 1.5% of total Stilwell assets under management,
and the number of shareowner accounts decreased less than 1%.
Second, the Company demonstrated its ability to maintain operating margins above
40%, which exceeds the industry average. While margins did decrease from the
record margins experienced in 2000, the investment in technology and continued
evolution in the delivery of client service, together with the variability in
our subsidiaries' core cost structures, position Stilwell to capitalize on
positive market periods through efficiencies and to adjust to weaker markets.
Janus's capacity building in electronic infrastructure over the past two years
has given Janus the ability to adjust to the continuously changing market
conditions in an efficient and prudent manner.
Third, Stilwell used its available cash resources to acquire an additional
ownership interest in Janus. We welcomed the opportunity to increase Stilwell's
stake in Janus and to provide the long-term value we expect that such an
investment will generate both for Stilwell and for the Janus stock ownership
plans. Much like our initial investment in Janus in 1984, we believe in the
fundamental investment approach and strategy of Janus and the many possibilities
that exist with its well-respected brand.
As we continue to evaluate competitive financing alternatives for completing the
acquisition of an additional 600,000 shares of Janus common stock, we believe
the Company has unique flexibility for evaluating growth opportunities and is
prepared to build on the momentum generated during the last decade. Each of
Stilwell's investments - Janus, Berger, Nelson and DST - offers different
strengths and associated growth capabilities. Together with these entities,
Stilwell continues to focus on ideas and strategies intended to improve the
long-term value and stability of the Stilwell common stock."
Shareholders and other interested parties are invited to listen to Stilwell's
first quarter earnings presentation by calling (800) 818-5264 (domestically) or
(913) 981-4910 (internationally), code #637196, at least ten minutes prior to
the 1:00 pm EDT start time of the presentation on April 25, 2001. The
accompanying slides to the presentation are expected to be available on the
Stilwell web site (http://www.stilwellfinancial.com) on the morning of April 25,
2001. Additionally, a replay of the presentation will be available by calling
(719) 457-0820 or (888) 203-1112, code #637196. The replay will be available for
one week.
* * * * * * * * * *
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 Stilwell's Annual Report on Form 10-K for the year ended
December 31, 2000, both on file 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 CONDENSED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(Unaudited)
Three Months Ended March 31,
-------------------------------------
2000 2001
------------ ------------
Revenues:
Investment management fees $ 449.9 $ 367.8
Shareowner servicing fees 83.6 64.1
Other 11.6 16.6
------------ ------------
Total 545.1 448.5
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Operating expenses:
Compensation 124.9 95.3
Marketing and promotion 28.8 24.4
Third party concession fees 72.3 66.0
Depreciation and amortization 15.6 24.9
Professional services 15.2 16.7
Other 43.4 38.4
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Total 300.2 265.7
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Operating Income 244.9 182.8
Equity in earnings of unconsolidated affiliates 18.8 17.8
Interest expense - Kansas City Southern Industries, Inc. (0.7)
Interest expense - third parties (1.9) (5.0)
Gain on litigation settlement 44.2
Gain on sale of Janus common stock 15.1
Other, net 9.9 6.8
------------ ------------
Income before taxes and minority interest 330.3 202.4
Income tax provision 114.3 72.2
Minority interest in consolidated earnings 27.3 18.8
------------ ------------
Net Income $ 188.7 $ 111.4
============ ============
Per Share Data (1):
- ---------------------------------------------------------------------------------------------------
Weighted Average Common shares outstanding (in thousands) 223,000 219,042
------------ ------------
Basic Earnings per Common Share $ 0.85 $ 0.51
============ ============
Diluted Common shares outstanding (in thousands) 223,000 224,666
------------ ------------
Diluted Earnings per Common Share $ 0.84 $ 0.48
============ ============
- ---------------------------------------------------------------------------------------------------
(1) All share and per share information 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. In connection with the spin-off, Stilwell issued
stock options for Stilwell common stock to holders of KCSI stock options.
Stock options are included in the respective periods for the proportionate
number of days outstanding during each period.
STILWELL FINANCIAL INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
(Unaudited)
December 31, 2000 March 31, 2001
----------------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $ 364.3 $ 335.4
Accounts receivable 194.4 164.9
Investments in advised funds 30.2 25.8
Other current assets 52.2 65.8
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Total current assets 641.1 591.9
Investments held for operating
purposes 511.1 423.9
Property and equipment, net 137.7 129.8
Intangibles and other assets, net 291.1 617.0
---------- -----------
Total Assets $ 1,581.0 $ 1,762.6
========== ===========
LIABILITIES and STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts and wages payable $ 27.3 $ 24.4
Accrued compensation and benefits 98.0 54.5
Other accrued liabilities 70.8 132.7
---------- -----------
Total current liabilities 196.1 211.6
Long-term debt 100.0
Deferred income taxes 211.1 261.6
Other liabilities 42.7 33.5
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Total Liabilities 449.9 606.7
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Minority interest in consolidated
subsidiaries 73.3 33.8
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Stockholders' Equity
Common stock 2.2 2.2
Retained earnings 952.3 1,071.7
Accumulated other comprehensive 103.3 48.2
income ---------- -----------
Total Stockholders' Equity 1,057.8 1,122.1
---------- -----------
Total Liabilities and Stockholders'
Equity $ 1,581.0 $ 1,762.6
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