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Stilwell Attributes 13% Decline In Earnings to Lower Assets

Stilwell Financial, the parent company of Janus Capital Management and Berger Funds, reported a 13% decline in first-quarter earnings today. Stilwell posted net income of $97.2 million, or 42 cents a share, down from $111.4 million, or 48 cents a share, in the first quarter of last year.

The company attributed the decline to lower assets under management. Stilwell had $190.5 billion in assets under management as of March 31, down 7.5% from the $205.9 billion the company had under management in the first quarter of 2001. Assets declined less than 1% from the $192.2 billion in assets that Stilwell had in the fourth quarter of last year.

While the decline in Stilwell assets was not that sharp, the company's revenues from investment management fees and shareowner servicing fees were off markedly. These revenues declined 27% to $328 million in the first quarter of this year, down from $449 million in the first quarter of 2001.

Stilwell said it was able to offset these declines in assets and revenues through an acquisition and reduced expenses. While Stilwell's assets declined in the first quarter due to net redemptions of $4 billion and market depreciation of $3.7 billion, the company was able to partially make up for these declines through Berger Funds' acquisition of Enhanced Investment Technologies.

Stilwell also cut compensation by 29% to $70.8 million in the first quarter of this year, down from $99.3 million in the comparable quarter of a year ago. Furthermore, Stilwell cut its marketing costs by 50% due to the current market environment, the company said, spending $12.1 million on marketing, down from $24.4 million in the first quarter of 2001.