**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

** **
| x                                                                               | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**    |
|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|
|                                                                            |                                                                                                  |
| **For the quarterly period ended  March 31, 2009**                         |
|                                                                            |                                                                                                  |
| **OR**                                                                          |
|                                                                            |                                                                                                  |
| o                                                                               | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d)****OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                                                            |                                                                                                  |
| **for the transition period  from       to** |
|                                                                            |                                                                                                  |
| **Commission File Number  001-15253**                                           |

 

****

 

**Janus Capital Group Inc.**

(Exact name of registrant as specified in itscharter)

 

| **Delaware**                              | ** ** | **43-1804048**      |
|-------------------------------------------|------------|---------------------|
| (State or other  jurisdiction of          |       | (I.R.S. Employer    |
| incorporation or  organization)           |       | Identification No.) |
|                                      |       |                |
| **151 Detroit Street, Denver,  Colorado** | ** ** | **80206**           |
| (Address of principal  executive offices) |       | (Zip Code)          |

 

**(303) 333-3863**

(Registrant’s telephone number, including area code)

 

**Not applicable**

(Former name, former address and former fiscal year, if changed sincelast report)

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the Company was required to file such reports), and (2) has beensubject to the filing requirements for the past 90 days.  Yes x No o

 

Indicate by check mark whether the registrant hassubmitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (orfor such shorter period that the registrant was required to submit and postsuch files).  Yes o No o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company.  See the definitions of “large acceleratedfiler,” “accelerated filer,” “non-accelerated filer” and “smaller reportingcompany” in Rule 12b-2 of the Exchange Act.

 

| Large Accelerated Filer x |   | Accelerated Filer o         |
|---------------------------|--------|-----------------------------|
|                      |   |                        |
| Non-Accelerated Filer o   |   | Smaller Reporting Company o |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes o No x

 

As of May 5, 2009, therewere 161,249,954 shares of the Company’s common stock, $.01 par value pershare, issued and outstanding.

 

 

 

----

 

**PART I - FINANCIAL INFORMATION**

** **

**Item 1. Financial Statements**

 

**JANUSCAPITAL GROUP INC.**

 

**CONSOLIDATEDBALANCE SHEETS (UNAUDITED)**

**(Dollars inMillions)**

 
| ** **                                      | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                      | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| **ASSETS**                                      |       |               |       |                  |       |
| ** **                                      |       |               |       |                  |       |
| **Current assets:**                             |       |               |       |                  |       |
| Cash and cash equivalents                       |       | $                  | 232.1      |                  | $          | 282.6 |   |
| Marketable securities                           |       | 108.4              |       | 125.3                 |       |
| Accounts receivable                             |       | 90.2               |       | 101.1                 |       |
| Income taxes receivable                         |       | 21.2               |       | 16.4                  |       |
| Other current assets                            |       | 73.8               |       | 58.5                  |       |
| Total current assets                            |       | 525.7              |       | 583.9                 |       |
|                                            |       |               |       |                  |       |
| **Other assets:**                               |       |               |       |                  |       |
| Other assets                                    |       | 69.2               |       | 60.2                  |       |
| Property and equipment, net                     |       | 52.0               |       | 51.1                  |       |
| Intangibles, net                                |       | 1,208.3            |       | 1,321.2               |       |
| Goodwill                                        |       | 574.6              |       | 1,320.3               |       |
|                                            |       |               |       |                  |       |
| Total assets                                    |       | $                  | 2,429.8    |                  | $          | 3,336.7 |   |
|                                            |       |               |       |                  |       |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**   |       |               |       |                  |       |
|                                            |       |               |       |                  |       |
| **Current liabilities:**                        |       |               |       |                  |       |
| Accounts payable                                |       | $                  | 2.3        |                  | $          | 0.5 |   |
| Accrued compensation and benefits               |       | 24.1               |       | 90.0                  |       |
| Current portion of long-term debt               |       | 22.0               |       | 22.0                  |       |
| Other accrued liabilities                       |       | 53.7               |       | 44.1                  |       |
| Total current liabilities                       |       | 102.1              |       | 156.6                 |       |
|                                            |       |               |       |                  |       |
| **Other liabilities:**                          |       |               |       |                  |       |
| Long-term debt                                  |       | 1,106.0            |       | 1,106.0               |       |
| Deferred income taxes                           |       | 349.6              |       | 388.1                 |       |
| Other liabilities                               |       | 62.3               |       | 62.4                  |       |
| Total liabilities                               |       | 1,620.0            |       | 1,713.1               |       |
|                                            |       |               |       |                  |       |
| Commitments and contingencies                   |       |               |       |                  |       |
|                                            |       |               |       |                  |       |
| Redeemable noncontrolling interests             |       | 105.0              |       | 106.8                 |       |
|                                            |       |               |       |                  |       |
| **STOCKHOLDERS’ EQUITY**                   |       |               |       |                  |       |
|                                            |       |               |       |                  |       |
| Preferred stock                                 |       | —             |       | —                |       |
| Common stock                                    |       | 1.6                |       | 1.6                   |       |
| Retained earnings                               |       | 697.2              |       | 1,510.6               |       |
| Accumulated other comprehensive income          |       | (2.6               | )          | (5.3                  | )          |
| Total JCG stockholders’ equity             |       | 696.2              |       | 1,506.9               |       |
| Noncontrolling interests                        |       | 8.6                |       | 9.9                   |       |
| Total stockholders’ equity                 |       | 704.8              |       | 1,516.8               |       |
|                                            |       |               |       |                  |       |
| Total liabilities and stockholders’ equity |       | $                  | 2,429.8    |                  | $          | 3,336.7 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

----

 

**JANUSCAPITAL GROUP INC.**

 

**CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)**

**(Dollars in Millions, Except PerShare Data)**

 
| ** **                                                                      | ** ** | **Three months ended** | ** ** |
|---------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                      | ** ** | **March 31,**               | ** ** |
| ** **                                                                      | ** ** | **2009**                         | ** ** | **2008** | ** ** |
|                                                                            |       |                             |       |   |   |
| **Revenues:**                                                                   |       |                             |       |   |   |
| Investment management fees                                                      |       | $                                | 136.8      |   | $ | 225.5 |   |
| Performance fees                                                                |       | 3.4                              |       | 5.6 |   |
| Shareowner servicing fees and other                                             |       | 30.1                             |       | 50.1 |   |
| Total                                                                           |       | 170.3                            |       | 281.2 |   |
|                                                                            |       |                             |       |   |   |
| **Operating Expenses:**                                                         |       |                             |       |   |   |
| Employee compensation and benefits                                              |       | 62.2                             |       | 91.8 |   |
| Long-term incentive compensation                                                |       | 13.4                             |       | 12.1 |   |
| Marketing and advertising                                                       |       | 5.6                              |       | 7.8 |   |
| Distribution                                                                    |       | 20.1                             |       | 36.3 |   |
| Depreciation and amortization                                                   |       | 8.9                              |       | 9.9 |   |
| General, administrative and occupancy                                           |       | 33.2                             |       | 33.8 |   |
| Goodwill and intangible asset impairments                                       |       | 856.7                            |       | — |   |
| Total                                                                           |       | 1,000.1                          |       | 191.7 |   |
|                                                                            |       |                             |       |   |   |
| **Operating income (loss)**                                                     |       | (829.8                           | )          | 89.5 |   |
|                                                                            |       |                             |       |   |   |
| Interest expense                                                                |       | (19.9                            | )          | (18.9 | ) |
| Investment losses, net                                                          |       | (7.2                             | )          | (9.5 | ) |
| Other income, net                                                               |       | —                           |       | 4.2 |   |
| Income (loss) before taxes and equity earnings                                  |       | (856.9                           | )          | 65.3 |   |
|                                                                            |       |                             |       |   |   |
| Income tax provision                                                            |       | 41.3                             |       | (24.5 | ) |
| Equity in earnings of unconsolidated affiliate                                  |       | —                           |       | 2.0 |   |
|                                                                            |       |                             |       |   |   |
| Income (loss) from continuing operations                                        |       | (815.6                           | )          | 42.8 |   |
|                                                                            |       |                             |       |   |   |
| Loss from discontinued operations                                               |       | —                           |       | (1.6 | ) |
|                                                                            |       |                             |       |   |   |
| Net income (loss)                                                               |       | (815.6                           | )          | 41.2 |   |
| Noncontrolling interest                                                         |       | (2.5                             | )          | (3.8 | ) |
|                                                                            |       |                             |       |   |   |
| **Net income (loss) attributable to JCG**                                       |       | $                                | (818.1     | ) | $ | 37.4 |   |
|                                                                            |       |                             |       |   |   |
| **Basic earnings (loss) per share attributable to  JCG common shareholders:**   |       |                             |       |   |   |
| Income (loss) from continuing operations                                        |       | $                                | (5.22      | ) | $ | 0.24 |   |
| Loss from discontinued operations                                               |       | —                           |       | (0.01 | ) |
| Net income (loss)                                                               |       | $                                | (5.22      | ) | $ | 0.23 |   |
|                                                                            |       |                             |       |   |   |
| **Diluted earnings (loss) per share attributable  to JCG common shareholders:** |       |                             |       |   |   |
| Income (loss) from continuing operations                                        |       | $                                | (5.22      | ) | $ | 0.24 |   |
| Loss from discontinued operations                                               |       | —                           |       | (0.01 | ) |
| Net income (loss)                                                               |       | $                                | (5.22      | ) | $ | 0.23 |   |
|                                                                            |       |                             |       |   |   |
| **Amounts attributable to JCG common shareholders:**                            |       |                             |       |   |   |
| Income (loss) from continuing operations                                        |       | $                                | (818.1     | ) | $ | 39.0 |   |
| Loss from discontinued operations                                               |       | —                           |       | (1.6 | ) |
| Net income (loss)                                                               |       | $                                | (818.1     | ) | $ | 37.4 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

2

----

 

**JANUS CAPITAL GROUP INC.**

** **

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS (UNAUDITED)**

**(Dollarsin Millions)**

 
| ** **                                                  | ** ** | **Three months ended** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                  | ** ** | **March 31,**               | ** ** |
| ** **                                                  | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| **CASH FLOWS PROVIDED BY (USED FOR):**                      |       |                             |       |   |   |
| **Continuing Operations**                                   |       |                             |       |   |   |
| **Operating Activities:**                                   |       |                             |       |   |   |
| Net income (loss)                                           |       | $                                | (815.6     | ) | $ | 42.8 |   |
| Adjustments to net income:                                  |       |                             |       |   |   |
| Depreciation and amortization                               |       | 8.9                              |       | 9.9 |   |
| Deferred income taxes                                       |       | (37.7                            | )          | 10.9 |   |
| Amortization of stock-based compensation                    |       | 9.0                              |       | 8.6 |   |
| Investment losses, net                                      |       | 7.2                              |       | 9.4 |   |
| Goodwill and intangible asset impairments                   |       | 856.7                            |       | — |   |
| Payment of deferred commissions, net                        |       | (1.1                             | )          | (1.8 | ) |
| Other, net                                                  |       | 0.1                              |       | 0.1 |   |
| Changes in working capital items:                           |       |                             |       |   |   |
| Accounts receivable                                         |       | 10.9                             |       | 21.3 |   |
| Other current assets                                        |       | (7.1                             | )          | — |   |
| Accounts payable and accrued compensation payable           |       | (64.1                            | )          | (81.4 | ) |
| Other liabilities                                           |       | 5.4                              |       | (17.9 | ) |
| Net operating                                               |       | (27.4                            | )          | 1.9 |   |
|                                                        |       |                             |       |   |   |
| **Investing Activities:**                                   |       |                             |       |   |   |
| Purchase of property and equipment                          |       | (4.2                             | )          | (4.2 | ) |
| Acquisitions                                                |       | (1.2                             | )          | (60.7 | ) |
| Purchase of marketable securities                           |       | (39.5                            | )          | (47.4 | ) |
| Proceeds from sales and maturities of marketable securities |       | 27.3                             |       | 35.9 |   |
| Net investing                                               |       | (17.6                            | )          | (76.4 | ) |
|                                                        |       |                             |       |   |   |
| **Financing Activities:**                                   |       |                             |       |   |   |
| Proceeds from stock plans                                   |       | 0.2                              |       | 7.5 |   |
| Excess tax benefit from equity-based compensation           |       | —                           |       | 3.2 |   |
| Repurchase of common stock                                  |       | —                           |       | (142.5 | ) |
| Repurchase of noncontrolling interest                       |       | (0.7                             | )          | — |   |
| Distributions to noncontrolling interest                    |       | (5.0                             | )          | (4.1 | ) |
| Net financing                                               |       | (5.5                             | )          | (135.9 | ) |
|                                                        |       |                             |       |   |   |
| **Cash and Cash Equivalents:**                              |       |                             |       |   |   |
| Net decrease                                                |       | (50.5                            | )          | (210.4 | ) |
| At beginning of period                                      |       | 282.6                            |       | 480.7 |   |
| At end of period                                            |       | $                                | 232.1      |   | $ | 270.3 |   |
|                                                        |       |                             |       |   |   |
| **Discontinued Operations:**                                |       |                             |       |   |   |
| Operating activities                                        |       | $                                | —     |   | $ | (0.6 | ) |
| Investing activities                                        |       | —                           |       | (0.2 | ) |
|                                                        |       |                             |       |   |   |
| Cash and Cash Equivalents:                                  |       |                             |       |   |   |
| Net increase (decrease)                                     |       | —                           |       | (0.8 | ) |
| At beginning of period                                      |       | 0.4                              |       | 4.3 |   |
| At end of period                                            |       | $                                | 0.4        |   | $ | 3.5 |   |
|                                                        |       |                             |       |   |   |
| **Supplemental Cash Flow Information:**                     |       |                             |       |   |   |
| Cash paid for interest                                      |       | $                                | 8.4        |   | $ | 8.1 |   |
| Cash paid for income taxes                                  |       | $                                | 4.3        |   | $ | 19.6 |   |

 

The accompanying notes are an integral part of these consolidated financialstatements.

 

3

----

 

**JANUSCAPITAL GROUP INC.**

 

**CONSOLIDATEDSTATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)**

**(Amounts inMillions, Except Per Share Data)**

 
| ** **                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | **Accumulated**   | ** ** | ** **         | ** ** | ** **             | ** ** |
|------------------------------------------------------------------------------|------------|------------|------------|------------|------------|--------------|------------|-------------------|------------|--------------------|------------|------------------------|------------|
| ** **                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | **Other**         | ** ** | **Nonredeemable**  | ** ** | **Total**              | ** ** |
| ** **                                                                   | ** ** | ** ** | ** ** | **Common** | ** ** | **Retained** | ** ** | **Comprehensive** | ** ** | **Noncontrolling** | ** ** | **Stockholders’** | ** ** |
| ** **                                                                   | ** ** | **Shares** | ** ** | **Stock**  | ** ** | **Earnings** | ** ** | **Income**        | ** ** | **Interest**       | ** ** | **Equity**             | ** ** |
|                                                                         |       |       |       |       |       |         |       |              |       |               |       |                   |       |
| **Balance at December 31, 2007**                                        |       | 166.3      |       | $          | 1.7        |         | $          | 1,717.0           |       | $                  | 4.8        |                   | $          | — |   | $ | 1,723.5 |   |
| Cumulative-effect adjustment for the adoption of a new accounting  principle |       | —     |       | —     |       | (236.7       | )          | —            |       | 7.1                |       | (229.6                 | )          |
| **Balance at January 1, 2008**                                          |       | 166.3      |       | 1.7        |       | 1,478.1      |       | 4.8               |       | 7.1                |       | 1,491.7                |       |
|                                                                         |       |       |       |       |       |         |       |              |       |               |       |                   |       |
| Net income                                                                   |       |       |       |       |       | 136.9        |       |              |       | 2.4                |       | 139.3                  |       |
| Net unrealized loss on marketable securities                                 |       |       |       |       |       |         |       | (3.8              | )          |               |       | (3.8                   | )          |
| Amortization of net loss on cash flow hedge                                  |       |       |       |       |       |         |       | 0.5               |       |               |       | 0.5                    |       |
| Reclassification for net gains included in net income                        |       |       |       |       |       |         |       | (0.9              | )          |               |       | (0.9                   | )          |
| Foreign currency translation adjustment                                      |       |       |       |       |       |         |       | (5.9              | )          |               |       | (5.9                   | )          |
| *Comprehensive income*                                                       |       |       |       |       |       |         |       |              |       |               |       | 129.2                  |       |
| Amortization of stock-based compensation                                     |       |       |       |       |       | 29.3         |       |              |       | 2.1                |       | 31.4                   |       |
| Issuance and forfeitures of restricted stock awards                          |       | 1.6        |       |       |       |         |       |              |       |               |       | —                 |       |
| Tax impact of stock-based compensation                                       |       |       |       |       |       | 3.4          |       |              |       |               |       | 3.4                    |       |
| Stock option exercises                                                       |       | 1.1        |       |       |       | 21.6         |       |              |       |               |       | 21.6                   |       |
| Common stock repurchased                                                     |       | (11.1      | )          | (0.1       | )          | (291.6       | )          |              |       |               |       | (291.7                 | )          |
| Noncontrolling interest in consolidated investment products                  |       |       |       |       |       |         |       |              |       | 1.4                |       | 1.4                    |       |
| Noncontrolling interests repurchased                                         |       |       |       |       |       |         |       |              |       | (0.3               | )          | (0.3                   | )          |
| Distributions to noncontrolling interests                                    |       |       |       |       |       |         |       |              |       | (2.5               | )          | (2.5                   | )          |
| Change in value of redeemable noncontrolling interest                        |       |       |       |       |       | 137.2        |       |              |       |               |       | 137.2                  |       |
| Common stock dividends ($0.04 per share)                                     |       |       |       |       |       | (6.5         | )          |              |       |               |       | (6.5                   | )          |
| **Balance at December 31, 2008**                                        |       | 157.9      |       | 1.6        |       | 1,510.6      |       | (5.3              | )          | 9.9                |       | 1,516.8                |       |
|                                                                         |       |       |       |       |       |         |       |              |       |               |       |                   |       |
| Net loss                                                                     |       |       |       |       |       | (818.1       | )          |              |       |               |       | (818.1                 | )          |
| Net unrealized gain on marketable securities                                 |       |       |       |       |       |         |       | 3.0               |       | 0.6                |       | 3.6                    |       |
| Amortization of net loss on cash flow hedge                                  |       |       |       |       |       |         |       | 0.1               |       |               |       | 0.1                    |       |
| Foreign currency translation adjustment                                      |       |       |       |       |       |         |       | (0.4              | )          |               |       | (0.4                   | )          |
| *Comprehensive income*                                                       |       |       |       |       |       |         |       |              |       |               |       | (814.8                 | )          |
| Amortization of stock-based compensation                                     |       |       |       |       |       | 8.0          |       |              |       | 1.0                |       | 9.0                    |       |
| Issuance and forfeitures of restricted stock awards                          |       | 3.4        |       |       |       |         |       |              |       |               |       | —                 |       |
| Tax impact of stock-based compensation                                       |       |       |       |       |       | (3.5         | )          |              |       |               |       | (3.5                   | )          |
| Stock option exercises                                                       |       |       |       |       |       | 0.2          |       |              |       |               |       | 0.2                    |       |
| Noncontrolling interest in consolidated investment products                  |       |       |       |       |       |         |       |              |       | (1.2               | )          | (1.2                   | )          |
| Noncontrolling interests repurchased                                         |       |       |       |       |       |         |       |              |       | (0.7               | )          | (0.7                   | )          |
| Distributions to noncontrolling interests                                    |       |       |       |       |       |         |       |              |       | (1.0               | )          | (1.0                   | )          |
| **Balance at March 31, 2009**                                           |       | 161.3      |       | $          | 1.6        |         | $          | 697.2             |       | $                  | (2.6       | )                      | $          | 8.6 |   | $ | 704.8 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

4

----

** **

**JANUS CAPITAL GROUP INC.**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 

***(Unaudited)***

 

**Note 1 — Basis of Presentation**

 

In the opinion of Janus Capital Group Inc.(collectively, “JCG” or the “Company”) management, the accompanying unauditedinterim consolidated financial statements contain all adjustments necessary tofairly present the financial position, results of operations and cash flows ofthe Company in accordance with accounting principles generally accepted in theUnited States of America (“GAAP”).  Allsuch adjustments are of a normal recurring nature.  Such unaudited interim financial statementshave been prepared in accordance with the instructions to Form 10-Qpursuant to the rules and regulations of the Securities and ExchangeCommission (“SEC”).  Certain informationand footnote disclosures normally included in financial statements prepared inaccordance with GAAP have been condensed or omitted pursuant to such rules andregulations.  These consolidatedfinancial statements should be read in conjunction with the Company’s AnnualReport on Form 10-K for the year ended December 31, 2008.

 

The accompanying consolidated financial statementshave been prepared on a consistent basis with the accounting policies describedin Note 2 to the consolidated financial statements that are presented in theCompany’s Annual Report on Form 10-K for the year ended December 31,2008, except as discussed in Note 7.

 

**Note 2 — Recent AccountingPronouncements**

 

In April 2009, theFinancial Accounting Standards Board (“FASB”) issued Staff Position 157-4, “DeterminingFair Value When the Volume and Level of Activity for the Asset or LiabilityHave Significantly Decreased and Identifying Transactions That Are Not Orderly”(“FSP 157-4”), which provides additional guidance on estimating fair value andidentifying transactions that are not representative of fair value.  FSP 157-4 is effective for JCG’s secondquarter 2009.  JCG is assessing theimpact of FSP 157-4 on its consolidated financial statements.

 

In April 2009, theFASB issued Staff Position 115-2, “Recognition and Presentation ofOther-Than-Temporary Impairments” (“FSP 115-2”), which amends the presentationand disclosure of other-than-temporary impairment charges on debt and equitysecurities as well as amending the recognition and measurement guidance forother-than-temporary impairments on debt securities.  FSP 115-2 is effective for JCG’s secondquarter 2009.  JCG is assessing theimpact of FSP 115-2 on its consolidated financial statements.

 

In April 2009, theFASB issued Staff Position 107-1, “Interim Disclosures about Fair Value ofFinancial Instruments” (“FSP 107-1”), which requires the disclosure of the fairvalue of financial instruments in quarterly financial statements.  Such disclosures were previously requiredonly in annual financial statements.  FSP107-1 is effective for JCG’s second quarter 2009.  JCG expects to provide disclosures similar tothose made in its 2008 Form 10-K regarding its outstanding debt in futurequarterly financial statements beginning with the second quarter 2009.

 

**Note 3 — Acquisition**

 

Each fiscal year through 2012, each of the twofounding members of INTECH Investment Management LLC (“INTECH”) has the optionto require JCG to purchase from him an ownership interest up to approximately 1.5%of INTECH (“Annual Option Shares”) at fair value.  On April 30, 2009, the two INTECHfounding members exercised their put rights and JCG increased its ownership ofINTECH to approximately 92% by purchasing an additional 3% interest for $25.3million in cash.  As a result of theadoption of the amended provisions of Emerging Issues Task Force Topic D-98 “Classificationand Measurement of Redeemable Securities” (“EITF D-98”) effective January 1,2009, the additional interest in INTECH will result in a reduction ofredeemable noncontrolling interests on the Consolidated Balance Sheets in anamount equal to the purchase price.  Noassets will be recognized as a result of the April 2009 acquisition of anadditional interest in INTECH or future acquisitions from noncontrollinginterests. The pro forma results of operations have not been presented as theywould not have been materially different from reported amounts.

 

**Note 4 — Marketable Securities**

 

JCG evaluates thecarrying value of securities classified as available for sale on a quarterlybasis and recognizes an impairment charge in investment gains (losses) if anunrealized loss is considered other-than-temporary.  In determining if

 

5

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an other-than-temporaryimpairment exists, JCG considers a number of factors, including the durationand extent of any decline in fair value and the Company’s intent to sell orhold a security. Based on the analysis performed as of March 31, 2009,other-than-temporary impairment charges of $5.2 million were recognized.

 

**Note 5 — Goodwill and IntangibleAssets**

 

JCG’s goodwill andintangible assets are summarized below *(in millions)*:

 
| ** **                          | ** ** | **December 31,** | ** **  | **Impairment** | ** ** | ** **    | ** ** | **March 31,** | ** ** |
|-------------------------------------|------------|-----------------------|-------------|----------------|------------|---------------|------------|--------------------|------------|
| ** **                          | ** ** | **2008**              | ** **  | **Charges**    | ** ** | **Additions** | ** ** | **2009**           | ** ** |
| ** **                          | ** ** | ** **            | ** **  | ** **     | ** ** | ** **    | ** ** | ** **         | ** ** |
| **Goodwill**                        | ** ** | **$**                 | **1,320.3** | ** **     | **$**      | **(747.0**    | **)**      | **$**              | **1.3**    | ** ** | **$** | **574.6** | ** ** |
|                                |       |                  |        |           |       |          |       |               |       |
| Indefinite-lived intangible assets: |       |                  |        |           |       |          |       |               |       |
| Mutual fund advisory contracts      |       | $                     | 943.1       |           | $          | (109.7        | )          | $                  | —     |   | $ | 833.4 |   |
| Brand name and trademark            |       | 270.5                 |        | —         |       | —        |       | 270.5              |       |
| Amortized intangible assets:        |       |                  |        |           |       |          |       | —             |       |
| Client relationships                |       | 162.5                 |        | —         |       | —        |       | 162.5              |       |
| Accumulated amortization            |       | (54.9                 | )           | —         |       | (3.2          | )          | (58.1              | )          |
| **Net intangible assets**           | ** ** | **$**                 | **1,321.2** | ** **     | **$**      | **(109.7**    | **)**      | **$**              | **(3.2**   | **)** | **$** | **1,208.3** | ** ** |

 

JCG conducts impairmentanalyses of goodwill and indefinite-lived intangible assets annually as of October 1st or morefrequently if events or circumstances indicate that the carrying value may notbe recoverable.  Indefinite-livedintangible assets represent mutual fund advisory contracts, brand name andtrademark.  In addition, amortizedintangible assets are evaluated for impairment when events or circumstancesindicate that the carrying value may not be recoverable.  JCG’s amortized intangible assets representclient relationships.  The October 2008tests of indefinite-lived intangible assets and goodwill indicated thatestimated fair values exceeded their respective book values and no impairmentcharges were recognized.

 

In response tosignificant declines in global markets, JCG’s stock price, assets under managementand revenues during the fourth quarter 2008, JCG re-evaluated goodwill,indefinite-lived intangible assets and amortized intangible assets forimpairment as of December 31, 2008. The results of the assessments as of December 31, 2008, indicatedthat the estimated fair values of goodwill, indefinite-lived intangible assetsand amortized intangible assets continued to exceed book value, requiring noimpairment charges.

 

Based on further declinesin global markets, JCG’s stock price, assets under management and revenuessubsequent to December 31, 2008, JCG revised its operating forecastdownward and again evaluated goodwill, indefinite-lived intangible assets andamortized intangible assets for impairment as of March 31, 2009.  As a result of these assessments, impairmentcharges of $747.0 million and $109.7 million were recognized on goodwill andmutual fund advisory contracts, respectively, in the first quarter 2009.  The partially impaired assets were originallyrecognized in 2001 in connection with the contractual obligation to buy outJanus Capital Management LLC’s founder.

 

**Note 6 — Fair Value Measurements**

 

Measurements of fairvalue are classified within a hierarchy based upon the transparency of inputsused in the valuation of an asset or liability.  Classification within the hierarchy is basedupon the lowest level of input that is significant to the fair valuemeasurement. The valuation hierarchy contains three levels:

 

·                  Level 1 — Valuation inputs are unadjustedquoted market prices for identical assets or liabilities in activemarkets.

·                  Level 2 — Valuation inputs are quotedprices for identical assets or liabilities in markets that are not active,quoted market prices for similar assets and liabilities in active markets andother observable inputs directly or indirectly related to the asset orliability being measured.

·                  Level 3 — Valuation inputs areunobservable and significant to the fair value measurement.

 

6

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The following table presents assets and liabilitiescarried at fair value as of March 31, 2009 *(inmillions)*:

 
| ** **                               | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|-----------|------------|
| Trading securities                       |       | $                | 48.1       |             | $          | 0.4              |       | $         | —     |   | $ | 48.5 |   |
|                                     |       |             |       |             |       |             |       |      |       |
| Available-for-sale securities            |       |             |       |             |       |             |       |      |       |
| Investments in advised funds             |       | 6.1              |       | 5.1              |       | —           |       | 11.2      |       |
| Structured investment vehicle securities |       | —           |       | —           |       | 48.7             |       | 48.7      |       |
| Total marketable securities              |       | 54.2             |       | 5.5              |       | 48.7             |       | 108.4     |       |
|                                     |       |             |       |             |       |             |       |      |       |
| Other assets                             |       |             |       |             |       |             |       |      |       |
| Mutual fund unit award hedge asset       |       | 52.5             |       | —           |       | —           |       | 52.5      |       |
| Deferred compensation hedge asset        |       | 16.0             |       | —           |       | —           |       | 16.0      |       |
|                                     |       |             |       |             |       |             |       |      |       |
| Intangibles, net                         |       |             |       |             |       |             |       | —    |       |
| Mutual fund advisory contracts           |       | —           |       | —           |       | 833.4            |       | 833.4     |       |
|                                     |       |             |       |             |       |             |       |      |       |
| Goodwill                                 |       | —           |       | —           |       | 574.6            |       | 574.6     |       |
|                                     |       |             |       |             |       |             |       |      |       |
| Total assets carried at fair value       |       | $                | 122.7      |             | $          | 5.5              |       | $         | 1,456.7    |   | $ | 1,584.9 |   |
|                                     |       |             |       |             |       |             |       |      |       |
| Redeemable noncontrolling interests      |       | —           |       | —           |       | 105.0            |       | 105.0     |       |
|                                     |       |             |       |             |       |             |       |      |       |
| Total liabilities carried at fair value  |       | $                | —     |             | $          | —           |       | $         | 105.0      |   | $ | 105.0 |   |

 

JCG’s Level 1 and Level 2fair value measurements consist of exchange-traded equity and debt securitiesunderlying separate accounts and consolidated mutual funds, and shares ofunconsolidated mutual funds.

 

JCG’s Level 3 recurring fair value measurementsinclude securities issued by Stanfield Victoria Funding LLC (“Stanfieldsecurities”) and redeemable noncontrolling interests.  Nonrecurring Level 3 fair value measurementsas of March 31, 2009 include intangible assets and goodwill.  Because of the significance of theunobservable inputs in the fair value measurements of these assets andliabilities, such measurements have been classified as Level 3.

 

The Stanfield securities were issued by a structuredinvestment vehicle that purchased high grade medium- and long-term fixed-incomeinstruments financed by issuing low-cost, short-term senior debt instrumentssuch as asset-backed commercial paper and asset-backed medium-term notes.  To measure fair value, JCG undertook adetailed analysis of the assets underlying the Stanfield securities andbenchmarked those assets against instruments of a similar type with comparableyields, maturities and credit ratings for which quoted market prices arereadily available.  Discounts have beenapplied to the quoted market prices of the benchmark instruments to adjust forvarying yields, credit ratings or other distinguishing characteristics.  The valuation methodology for the Stanfieldsecurities has been consistently applied since its acquisition in 2007.

 

JCG measured the fairvalue of the Stanfield securities as of March 31, 2009, and determinedthat the valuation was consistent with the previously reported amount of $52.2million as of December 31, 2008. JCG received distributions totaling $3.5 million in the first quarter2009, which reduced the carrying value of the Stanfield securities.  A new legal structure is expected to beannounced in 2009 at which time JCG may elect to receive its proportionateshare of the underlying assets or participate in the new structure.

 

Redeemable noncontrollinginterests in INTECH are measured at fair value using a discounted cash flowmethodology.  Significant inputs to thediscounted cash flow analysis include forecasted operating results, discountrate and terminal multiple of cash flows. Redeemable noncontrolling interests in Perkins are measured by acontractual formula intended to yield an amount representative of fairvalue.  See Note 7 for a furtherdiscussion of redeemable noncontrolling interests.

 

7

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The changes in carrying value of JCG’s recurring Level3 fair value measurements are as follows *(in millions)*:

 
| ** **                               | ** ** | ** **     | ** ** | **Redeemable**     | ** ** |
|------------------------------------------|------------|----------------|------------|--------------------|------------|
| ** **                               | ** ** | **Stanfield**  | ** ** | **noncontrolling** | ** ** |
| ** **                               | ** ** | **securities** | ** ** | **interests**      | ** ** |
| Carrying value at December 31, 2008 |       | $              | 52.2       |               | $          | 106.8 |   |
| Distributions                            |       | (3.5           | )          | (4.0               | )          |
| Current earnings                         |       | —         |       | 2.2                |       |
| Change in redemption value               |       | —         |       | —             |       |
|                                     |       |           |       |               |       |
| Carrying value at March 31, 2009    |       | $              | 48.7       |               | $          | 105.0 |   |

 

JCG measured the fairvalue of goodwill and intangible assets using discounted cash flow methodologyin connection with impairment analyses performed as of March 31,2009.  Significant inputs to thediscounted cash flow analysis include JCG’s forecasted operating results,discount rate and terminal multiple of cash flows.  See Note 5 for further discussion of theimpairment analyses and the changes in carrying value of goodwill andintangible assets.

 

**Note 7 — Noncontrolling Interests**

 

JCG adopted theprovisions of Statement of Financial Accounting Standards No. 160, “NoncontrollingInterests in Consolidated Financial Statements, an amendment of AccountingResearch Bulletin No 51” (“SFAS 160”) and the amended provisions of EITF D-98,effective January 1, 2009.  Theprovisions of SFAS 160 and EITF D-98 have been retrospectively applied toreported prior periods.  As a result ofthe implementation of SFAS 160, noncontrolling interests that are not subjectto put rights have been reclassified to permanent equity with no change in themeasurement principles previously applied to these interests.  Under the provisions of EITF D-98, redeemablenoncontrolling interests remain classified in mezzanine equity and are measuredat estimated fair value as of the balance sheet date.  Earnings attributable to noncontrollinginterests that are and are not subject to put rights have been combined in theconsolidated statements of income. Presentation of the noncontrolling interests in the ConsolidatedStatements of Income has been changed to reflect net income with and withoutconsideration of the noncontrolling interests. Earnings per share continues to be calculated after consideration of thenoncontrolling interest.

 

***NoncontrollingInterests that Are Not Subject to Put Rights***

 

Noncontrolling intereststhat are not subject to put rights consist of third party investors inconsolidated investment products, and certain INTECH and Perkins interestsgranted to employees and undistributed earnings of $3.5 million attributable tosuch interests.  Certain of the INTECHand Perkins interests will become subject to put rights upon vesting.

 

***RedeemableNoncontrolling Interests***

 

Redeemable noncontrollinginterests consist of INTECH and Perkins interests that are currently puttableto JCG or will become puttable at certain future dates and undistributedearnings of $5.0 million attributable to such interests.  The recognition of the fair value of theredeemable noncontrolling interests was effected through an increase toredeemable noncontrolling interests and a charge to retained earnings.  Future changes in fair value will be recognizedas increases or decreases to retained earnings.

 

*INTECH*

 

Each fiscal year through2012, each of the two INTECH founding members has the option to require JCG topurchase from him an ownership interest up to approximately 1.5% of INTECH atfair value.  At March 31, 2009, thetwo founders have an aggregate ownership interest of approximately 8% inINTECH.  Subsequent to the April 30,2009 sale to JCG, the founders have an aggregate ownership of approximately5%.  In the event that either INTECHfounder does not fully exercise his annual voluntary sale option in a givenyear, JCG has the option to require the INTECH founder to sell the remainingbalance of the Annual Option Shares for that year at fair value.

 

In addition, the founderscan require JCG to purchase their INTECH interests when the founder’semployment is terminated.  The purchaseprice of the departing founder’s INTECH interests will be based on fairvalue.  Each founder is entitled toretain approximately 1% of INTECH’s shares then outstanding after employmentuntil his death unless he is terminated for cause or leaves voluntarily whilenot in good standing.  An INTECH founderwill be deemed to be in good standing if he voluntarily leaves on or after January 1,2009, after providing 12 months’ prior notice and cooperation with the transition.  Total INTECH interests held by the twofounders are currently valued at approximately $67.5 million.

 

8

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Interests held by otherINTECH employees subject to put rights are valued at $3.2 million as of March 31,2009.

 

*Perkins*

 

JCG also has the optionto acquire any or all of the remaining 22.2% interest of Perkins at fair valueon the third, fifth, seventh or each subsequent anniversary of closing.  The minority owners of Perkins have the optionto require JCG to purchase any or all of their remaining interests on thefourth or sixth anniversary of closing at fair value.  The total Perkins minority interest iscurrently valued at approximately $29.4 million, based on a contractual formuladriven by revenue and investment performance of products managed byPerkins.  The formula is intended toyield an amount representative of fair value.

 

**Note 8 — Long-Term Incentive Compensation**

 

JCG granted $70.9 million in long-term incentiveawards during the first three months of 2009, which will generally berecognized ratably over a four-year period and are not subject toperformance-based accelerated vesting. The 2009 awards consisted of $19.4 million of restricted stock (3.6million shares at a weighted average price of $5.55 per share), $15.1 millionof stock options and $36.4 million of mutual fund units.

 

A total of 6.3 millionstock options with a grant date fair value of $2.41 per option were awarded aspart of the February 2009 grant. The grant date fair value of stock options was determined using theBlack-Scholes model with the following assumptions: expected volatility of 54%,dividend yield of 0.75%, risk-free interest rate of 1.85% and an expected lifeof five years.

 

In addition to the awardsabove, Perkins granted $5.0 million of interests that vest ratably over fouryears.  The grant represents 2.8% oftotal Perkins interests.  INTECH granted$5.2 million of interests which generally vest over 10 years.  This grant represents less than 1.0% of totalINTECH interests.

 

**Note 9 — Other Income, Net**

 

The components of otherincome are as follows *(in millions)*:

 
| ** **                        | ** ** | **Three months ended** | ** ** |
|-----------------------------------|------------|----------------------------------|------------|
| ** **                        | ** ** | **March 31,**               | ** ** |
| ** **                        | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| Dividend income                   |       | $                                | 0.2        |   | $ | 0.7 |   |
| Interest income                   |       | —                           |       | 2.5 |   |
| Translation gains and losses, net |       | (0.2                             | )          | 1.0 |   |
| Total                             |       | $                                | —     |   | $ | 4.2 |   |

 

9

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**Note 10 — Earnings Per Share**

 

Basic earnings per common share is calculated bydividing net income attributable to JCG common shareholders by the weightedaverage number of common shares outstanding during the period.  Diluted earnings per common share adjusts theweighted average shares outstanding by the dilutive impact of shares underlyingstock options and unvested restricted stock awards.  The following is a summary of the earningsper share calculation *(in millions, except pershare data)*:

 
| ** **                                                                                      | ** ** | **Three months ended** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                                      | ** ** | **March 31,**               | ** ** |
| ** **                                                                                      | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| **Amounts attributable to JCG common shareholders:**                   |       |                             |       |   |   |
| Income (loss) from continuing operations                                                        |       | $                                | (818.1     | ) | $ | 39.0 |   |
| Loss from discontinued operations                                                               |       | —                           |       | (1.6 | ) |
|                                                                                            |       |                             |       |   |   |
| **Net income (loss)**                                                                           |       | $                                | (818.1     | ) | $ | 37.4 |   |
|                                                                                            |       |                             |       |   |   |
| **Basic earnings (loss) per share attributable to  JCG common shareholders:**                   |       |                             |       |   |   |
| Weighted average common shares outstanding                                                      |       | 156.6                            |       | 162.5 |   |
|                                                                                            |       |                             |       |   |   |
| Income (loss) from continuing operations                                                        |       | $                                | (5.22      | ) | $ | 0.24 |   |
| Loss from discontinued operations                                                               |       | —                           |       | (0.01 | ) |
|                                                                                            |       |                             |       |   |   |
| Basic earnings (loss) per share                                                                 |       | $                                | (5.22      | ) | $ | 0.23 |   |
|                                                                                            |       |                             |       |   |   |
| **Diluted earnings per share attributable to JCG  common shareholders:**                        |       |                             |       |   |   |
| Weighted average common shares outstanding                                                      |       | 156.6                            |       | 162.5 |   |
|                                                                                            |       |                             |       |   |   |
| Dilutive effect of stock options and unvested restricted stock using  the treasury stock method |       | —                           |       | 1.5 |   |
| Weighted average diluted common shares outstanding                                              |       | 156.6                            |       | 164.0 |   |
|                                                                                            |       |                             |       |   |   |   |   |
| Income (loss) from continuing operations                                                        |       | $                                | (5.22      | ) | $ | 0.24 |   |
| Loss from discontinued operations                                                               |       | —                           |       | (0.01 | ) |
|                                                                                            |       |                             |       |   |   |
| Diluted earnings (loss) per share                                                               |       | $                                | (5.22      | ) | $ | 0.23 |   |

 

The following stock options and unvestedrestricted stock are anti-dilutive and have not been included in the weightedaverage diluted shares outstanding calculation *(inmillions)*:

 
| ** **                | ** ** | **Three months ended** | ** ** |
|---------------------------|------------|----------------------------------|------------|
| ** **                | ** ** | **March 31,**               | ** ** |
| ** **                | ** ** | **2009**                         | ** ** | **2008** | ** ** |
| Stock options             |       | 17.9                             |       | 5.6 |   |
| Unvested restricted stock |       | 4.9                              |       | 1.2 |   |

 

As a result of JCG’s net loss for the threemonths ended March 31, 2009, all stock options and unvested restrictedstock are considered anti-dilutive.

 

**Note 11 —Legal Proceedings**

 

JCGis subject to various legal proceedings arising from normal businessoperations. Although there can be no assurances, based on information currentlyavailable, management believes that it is probable that the ultimate outcome ofeach of the actions described below will not have a material adverse effect onJCG’s consolidated financial condition. However, an adverse outcome in any ofthe actions could have a material adverse effect on the Company’s financialposition or results of operations for the period in which it is recorded. JCGestablished a $7.5 million litigation reserve for the first quarter 2009 as aresult of an adverse decision in a case brought by a former portfolio manager.JCG has not established any additional reserves.

 

10

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***Market Timing Litigation***

 

Followingthe market timing investigations by the New York Attorney General (“NYAG”) andthe SEC in 2003, JCG and certain affiliates were named as defendants in aconsolidated lawsuit in the U.S. District Court in Baltimore, Maryland (*Case No. MDL No. 1586, 04-MD-15863*).  Five amended complaints were originally filedin these coordinated proceedings, four of which remain, including: (i) claimsby a putative class of Janus fund investors asserting claims on behalf of theinvestor class (*Marini, et al. v. Janus Investment Fund, etal., U.S. District Court, District of Maryland, Case No. 04-CV-00497*);  (ii) derivative claims by investors inthe Janus funds ostensibly on behalf of the Janus funds (*Steinberg etal. v. Janus Capital Management, LLC et al., U.S. District Court, District ofMaryland, Case No. 04-CV-00518*); (iii) claims on behalf ofparticipants in the JCG 401(k) plan (*Wangberger v. JanusCapital Group Inc., 401(k) Advisory Committee, et al., U.S. DistrictCourt, District of Maryland, Case No. JFM-05-2711*); and (iv) claimsby a putative class of JCG shareholders asserting claims on behalf of theshareholders (*Wiggins, et al. v. Janus Capital Group Inc.,et al.*, *U.S. District Court,District of Maryland, Case No. 04-CV-00818).*

 

InAugust 2005, the U.S. District Court entered orders dismissing most of theclaims asserted against the Company and its affiliates by fund investors in the*Marini* and *Steinberg*cases described above, except certain claims under Section 10(b) ofthe Securities Exchange Act of 1934 and under Section 36(b) of theInvestment Company Act of 1940.  On December 30,2008, the court granted, at least in part, summary judgment in the Company’sfavor with respect to plaintiffs’ damage demands in the *Marini*and*Steinberg*cases**as it relatesto “approved” market timing because there was no evidence that investorssuffered damages that exceed the $50 million they are entitled to receive underthe regulatory settlement.  The court didnot grant summary judgment on the remaining causes of action and requested theparties to submit additional briefing with respect to “unapproved” markettiming.  The parties have completed thesupplemental briefing and are awaiting a ruling from the court.  In the *Wiggins*matter,the U.S. District Court also entered an order dismissing all claims in the *Wiggins* lawsuit. Plaintiffs appealed that dismissal to the U.S. Court of Appeals for theFourth Circuit.  In May 2009, the FourthCircuit reversed the order of dismissal and remanded the case back to the U.S.District Court for further proceedings. That appeal is currently pending. In August 2006, the U.S. District Court in the *Wangberger*401(k) plan class action dismissed the action with prejudice, and theplaintiff appealed the dismissal to the U.S. Court of Appeals for the FourthCircuit.  In June 2008, the FourthCircuit reversed the U.S. District Court’s order of dismissal and remanded thecase to the U.S. District Court for further proceedings.  As a result of the above events, the Companyand Janus are the remaining defendants, in some capacity, in one or more of theactions described in the preceding paragraph.

 

TheAuditor of the State of West Virginia, in his capacity as securitiescommissioner, initiated administrative proceedings against many of thedefendants in the market timing cases (including JCG) and seeks disgorgementand other monetary relief based on similar market timing allegations (*In the Matter of Janus Capital Group Inc. et al., Before the SecuritiesCommissioner, State of West Virginia, Summary Order No. 05-1320*).  In September 2006, JCG filed its answerto the Auditor’s summary order instituting proceedings, as well as a Motion toDischarge Order to Show Cause.  Thisaction is still pending.

 

***Miscellaneous Proceedings***

 

During 2007, two former portfoliomanagers filed suit against a JCG subsidiary alleging that it implementedcertain changes to their compensation arrangements in violation of prioragreements *(Edward Keely v. Janus Management HoldingsCorporation, Denver District Court, Case No. 2007 CV 7366* and *Tom Malley v. Janus Management Holdings Corporation, Denver DistrictCourt, Case No. 2007 CV 10719)*. These complaints allege some or all of the following claims in additionto other allegations: (1) breach of contract; (2) willful and wantonbreach of contract; (3) breach of good faith and fair dealing; and (4) estoppel.  JCG answered the complaints, denying anyliability and challenging the merits of Mr. Keely’s and Mr. Malley’sallegations.  On May 8, 2009, the Juryfound in favor of Mr. Keely.  The Courtentered judgment in Mr. Keely’s favor for $4.8 million in damages plus anestimated $2.7 million of pretrial interest, attorneys’ fees and damageenhancement under the Colorado Wage Act JCG is evaluating all of it options,including the possibility of an appeal.  Mr. Malley’strial was scheduled to commence in December 2008 but subsequently re-setfor April 2009.  At the request of Mr. Malleythe trial was again continues.  No newtrial date has yet been scheduled.  JCGis evaluating the effect, if any, the Keely verdict may have on the Malleycase.

 

11

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**Item 2.    Management’s Discussion and Analysis of Financial Condition and Resultsof Operations**

 

**FORWARD-LOOKING STATEMENTS**

 

*This Quarterly Report on Form 10-Qcontains “forward-looking statements” within the meaning of the PrivateSecurities Litigation Reform Act of 1995. In addition, Janus Capital Group Inc. (collectively, “JCG” or the “Company”)may make other written and oral communications from time to time that containsuch statements.  Forward-lookingstatements include statements as to industry trends and future expectations ofthe Company and other matters that do not relate strictly to historical factsand are based on certain assumptions by management.  These statements are often identified by theuse of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,”“could,” “should,” “estimate” or “continue,” and similar expressions orvariations.  These statements are basedon the beliefs and assumptions of Company management based on informationcurrently available to management.  Suchforward-looking statements are subject to risks, uncertainties and otherfactors that could cause actual results to differ materially from future resultsexpressed or implied by such forward-looking statements. Important factors thatcould cause actual results to differ materially from the forward-lookingstatements include, among others, the risks described in the Company’s filingswith the Securities and Exchange Commission, including those in Part I,Item 1A, Risk Factors, and elsewhere in JCG’s Annual Report on Form 10-Kfor the year ended December 31, 2008.  JCG cautions readers to carefully consider such factors.  Furthermore, such forward-looking statementsspeak only as of the date on which such statements are made.  Except as required by applicable law, JCGundertakes no obligation to update any forward-looking statements to reflectevents or circumstances after the date of such statements.*

 

**AVAILABLE INFORMATION**

 

Copies of Janus CapitalGroup Inc.’s (collectively, “JCG” or the “Company”) filings with the Securitiesand Exchange Commission (“SEC”) can be obtained from the SEC’s Public ReferenceRoom at 100 F Street, N.E., Washington, D.C. 20549.  Information can be obtained about theoperation of the Public Reference Room by calling the SEC at1-800-SEC-0330.  The SEC also maintainsan Internet site that contains reports, proxy and information statements, andother information regarding issuers that file electronically with the SEC athttp://www.sec.gov.

 

JCG makes available freeof charge its annual reports on Form 10-K, quarterly reports on Form 10-Qand current reports on Form 8-K and amendments thereto as soon asreasonably practical after such filing has been made with the SEC.  Reports may be obtained through the InvestorRelations section of JCG’s website (http://ir.janus.com) or by contacting JCGat (888) 834-2536.  The contents ofJCG’s website are not incorporated herein for any purpose.

 

JCG’s Officer Code ofEthics for Principal Executive Officer and Senior Financial Officers (includingits chief executive officer, chief financial officer and controller) (the “OfficerCode”); Corporate Code of Business Conduct and Ethics for all employees;corporate governance guidelines; and the charters of key committees of theBoard of Directors (including the Audit, Compensation, Nominating and CorporateGovernance, and Planning and Strategy committees) are available on its website(http://ir.janus.com/governance.cfm), and printed copies are available to anyshareholder upon request by calling JCG at (888) 834-2536.  Any futureamendments to or waivers of the Officer Code will be posted to the InvestorRelations section of JCG’s website.

 

**RESULTS OF OPERATIONS**

 

**Overview**

 

JCG provides investment management and administrativeservices to mutual funds, separate accounts and institutional clients in bothdomestic and international markets through its primary subsidiaries, JanusCapital Management LLC (“Janus”), INTECH Investment Management LLC (“INTECH”)and Perkins Investment Management LLC (“Perkins”).

 

Revenues are generallybased upon a percentage of the market value of assets under management and arecalculated as a percentage of the daily average asset balance in accordancewith contractual agreements with the Company’s mutual funds, separate accountsand subadvised relationships (collectively referred to herein as “investmentproducts”).  Certain investment productsare also subject to performance fees which vary based on their relative performanceas compared to a benchmark index and the level of assets subject to suchfees.  Assets under management primarilyconsist of domestic and international equity and debt securities.  Accordingly, fluctuations in domestic andinternational financial markets, relative investment performance, sales andredemptions of investment products, and changes in the composition of assetsunder management are all factors that have a direct effect on JCG’s operatingresults.

 

12

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**INVESTMENT MANAGEMENT OPERATIONS (CONTINUINGOPERATIONS)**

 

**First Quarter 2009 Summary**

 

Market conditions furtherdeteriorated during the first quarter 2009, leading to a decline in endingassets under management of $12.6 billion, or 10.2%, from December 31,2008, and further declines in revenues and operating margin. These declines,combined with continuing market uncertainty and volatility, caused JCG torevise its operating forecast downward. As a result of revising the operating forecast and JCG’s net book valuecontinuing to exceed market capitalization, JCG reassessed goodwill andintangible assets for impairment.

 

Subsequentto March 31, 2009, JCG finalized the goodwill and intangible asset impairmentassessments and recognized non-cash impairment charges totaling $856.7 million.In addition, JCG established a litigation reserve of $7.5 million as a resultof an adverse decision in a case brought by a former portfolio manager. Theimpairment charges and litigation reserve are reflected in the results ofoperations for the three months ended March 31, 2009.

 

**Investment Performance**

 

Investment products aregenerally evaluated based on their investment performance relative to otherinvestment products with similar disciplines and strategies.  Despite challenging market conditions, JCG’srelative investment performance continues to outperform the majority of peersover multiple time periods.

 

·                  Relative long-term investment performanceremained strong with approximately 51%, 73% and 87% of JCG’s mutual funds inthe top half of their Lipper categories on a one-, three- and five-year totalreturn basis, respectively, as of March 31, 2009.  (See Exhibit 99.1 for complete Lipperrankings.)

·                  INTECH’s relative investment performanceremained strong, with 83%, 56%, 86% and 100% of product strategies with atleast a one-, three-, five- and ten-year performance track record,respectively; outperforming their respective benchmarks during each of thoseperiods ended March 31, 2009.

·                  The Perkins Mid Cap Value and Small CapValue mutual funds ranked in the top 11% of their Lipper categories on a one-,three- and five-year total-return basis, respectively, as of March 31,2009.

 

**Assets Under Management and Flows**

 

***Valuation***

 

The value of assetsunder management is derived from the cash and investment securities underlyingJCG’s investment products.  Investmentsecurity values are determined using unadjusted or adjusted quoted marketprices and independent third-party price quotes in active markets. For debtsecurities with maturities of 60 days or less, the amortized cost method isused to determine the value.  Securitiesfor which market prices are not readily available or are considered unreliable,are internally valued using appropriate methodologies for each security type orby engaging third-party specialists. Despite recent economic events andincreased market volatility, the value of the great majority of the securitiesunderlying JCG’s investment products continue to be derived from readilyavailable and reliable market price quotations.

 

The pricing policies formutual funds advised by JCG’s subsidiaries (the “Funds”) are established by theFunds’ Independent Board of Trustees and are designed to test and validate fairvalue measurements.  Responsibility forpricing securities held within separate and subadvised accounts may bedelegated by the separate or subadvised client to JCG or another party.

 

***TotalCompany Assets and Flows***

 

Total Company assetsunder management at March 31, 2009 decreased $76.7 billion, or 40.9%, fromthe end of the first quarter 2008.  Thedecrease was primarily driven by adverse market conditions in the last half of2008 and first quarter 2009.

 

The decline in moneymarket flows assets reflect Janus’ previously announced plan to exit itsinstitutional money market business by April 30, 2009.  Janus will continue offering retail moneymarket funds.

 

13

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The following tablepresents the components of JCG’s assets under management *(inbillions)*:

 
| ** **                                  | ** ** | **Three months ended March 31,** | ** ** |
|---------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                  | ** ** | **2009**                                             | ** ** | **2008** | ** ** |
|                                        |       |                                                 |       |   |   |
| Beginning of period assets                  |       | $                                                    | 123.5      |   | $ | 206.7 |   |
| Long-term sales                             |       |                                                 |       |   |   |
| Janus                                       |       | 3.7                                                  |       | 8.2 |   |
| INTECH                                      |       | 0.9                                                  |       | 1.8 |   |
| Perkins                                     |       | 1.4                                                  |       | 1.3 |   |
| Long-term redemptions                       |       |                                                 |       |   |   |
| Janus                                       |       | (4.4                                                 | )          | (9.1 | ) |
| INTECH                                      |       | (1.4                                                 | )          | (2.9 | ) |
| Perkins                                     |       | (1.1                                                 | )          | (0.8 | ) |
| Long-term net flows *                       |       |                                                 |       |   |   |
| Janus                                       |       | (0.7                                                 | )          | (0.9 | ) |
| INTECH                                      |       | (0.5                                                 | )          | (1.1 | ) |
| Perkins                                     |       | 0.3                                                  |       | 0.5 |   |
| Total long-term net flows                   |       | (0.9                                                 | )          | (1.5 | ) |
| Net money market flows                      |       | (5.3                                                 | )          | (0.6 | ) |
| Market / fund performance                   |       | (6.4                                                 | )          | (17.0 | ) |
| End of period assets                        |       | $                                                    | 110.9      |   | $ | 187.6 |   |
|                                        |       |                                                 |       |   |   |
| Long-term net flows by distribution channel |       |                                                 |       |   |   |
| Retail intermediary                         |       | $                                                    | (0.5       | ) | $ | 0.5 |   |
| Institutional                               |       | (0.5                                                 | )          | (2.3 | ) |
| International                               |       | 0.1                                                  |       | 0.3 |   |
| Total                                       |       | $                                                    | (0.9       | ) | $ | (1.5 | ) |
|                                        |       |                                                 |       |   |   |
| Average assets under management             |       |                                                 |       |   |   |
| Janus                                       |       | $                                                    | 61.0       |   | $ | 104.3 |   |
| INTECH                                      |       | 39.0                                                 |       | 63.1 |   |
| Perkins                                     |       | 8.6                                                  |       | 9.9 |   |
| Money market                                |       | 4.5                                                  |       | 12.4 |   |
| Total                                       |       | $                                                    | 113.1      |   | $ | 189.7 |   |

 

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*                 Excludes moneymarket flows. Sales and redemptions of money market funds are presented net ona separate line due to the short-term nature of the investments.

 

Subsequent to March 31, 2009, market gainsresulted in an increase in ending assets under management of approximately 17.0%as of May 8, 2009.

 

14

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***Assets and Flows by InvestmentDiscipline***

 

JCG, through its primary subsidiaries, offersinvestment products based on a diversified set of investment disciplines.  Janus offers growth/blend andglobal/international equity, as well as fixed income, alternative and moneymarket investment products.  INTECHoffers mathematical based investment products and Perkins offers valuedisciplined investments.  Assets andflows by investment discipline are as follows *(inbillions)*:

 
| ** **                 | ** ** | **Three Months Ended March 31,** | ** ** |
|----------------------------|------------|------------------------------------------------------|------------|
| ** **                 | ** ** | **2009**                                             | ** ** | **2008** | ** ** |
| **Growth/Blend**           |       |                                                 |       |   |   |
| Beginning of period assets |       | $                                                    | 49.5       |   | $ | 83.5 |   |
| Sales                      |       | 2.4                                                  |       | 5.9 |   |
| Redemptions                |       | 3.4                                                  |       | 5.6 |   |
| Net sales (redemptions)    |       | (1.0                                                 | )          | 0.2 |   |
| Market / fund performance  |       | (2.0                                                 | )          | (6.9 | ) |
| End of period assets       |       | $                                                    | 46.6       |   | $ | 76.8 |   |
|                       |       |                                                 |       |   |   |
| **Global/International**   |       |                                                 |       |   |   |
| Beginning of period assets |       | $                                                    | 10.9       |   | $ | 24.9 |   |
| Sales                      |       | 0.5                                                  |       | 1.1 |   |
| Redemptions                |       | 0.6                                                  |       | 1.8 |   |
| Net sales (redemptions)    |       | (0.1                                                 | )          | (0.7 | ) |
| Market / fund performance  |       | (0.1                                                 | )          | (2.1 | ) |
| End of period assets       |       | $                                                    | 10.7       |   | $ | 22.1 |   |
|                       |       |                                                 |       |   |   |
| **Fixed Income**           |       |                                                 |       |   |   |
| Beginning of period assets |       | $                                                    | 3.2        |   | $ | 4.9 |   |
| Sales                      |       | 0.8                                                  |       | 0.5 |   |
| Redemptions                |       | 0.3                                                  |       | 1.6 |   |
| Net sales (redemptions)    |       | 0.5                                                  |       | (1.1 | ) |
| Market / fund performance  |       | —                                               |       | — |   |
| End of period assets       |       | $                                                    | 3.7        |   | $ | 3.8 |   |
|                       |       |                                                 |       |   |   |
| **Mathematical**           |       |                                                 |       |   |   |
| Beginning of period assets |       | $                                                    | 42.4       |   | $ | 69.7 |   |
| Sales                      |       | 0.9                                                  |       | 1.8 |   |
| Redemptions                |       | 1.4                                                  |       | 2.9 |   |
| Net sales (redemptions)    |       | (0.5                                                 | )          | (1.1 | ) |
| Market / fund performance  |       | (3.5                                                 | )          | (7.5 | ) |
| End of period assets       |       | $                                                    | 38.3       |   | $ | 61.2 |   |
|                       |       |                                                 |       |   |   |
| **Alternatives**           |       |                                                 |       |   |   |
| Beginning of period assets |       | $                                                    | 0.5        |   | $ | 0.8 |   |
| Sales                      |       | —                                               |       | 0.7 |   |
| Redemptions                |       | 0.1                                                  |       | 0.1 |   |
| Net sales (redemptions)    |       | (0.1                                                 | )          | 0.6 |   |
| Market / fund performance  |       | (0.1                                                 | )          | — |   |
| End of period assets       |       | $                                                    | 0.4        |   | $ | 1.4 |   |
|                       |       |                                                 |       |   |   |
| **Value**                  |       |                                                 |       |   |   |
| Beginning of period assets |       | $                                                    | 9.1        |   | $ | 10.1 |   |
| Sales                      |       | 1.4                                                  |       | 1.3 |   |
| Redemptions                |       | 1.1                                                  |       | 0.8 |   |
| Net sales (redemptions)    |       | 0.3                                                  |       | 0.5 |   |
| Market / fund performance  |       | (0.8                                                 | )          | (0.5 | ) |
| End of period assets       |       | $                                                    | 8.6        |   | $ | 10.1 |   |

 

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| ** **                 |       | **Three Months Ended March 31,** |   |
|----------------------------|------------|---------------------------------------|--------|
| ** **                 | ** ** | **2009**                              |   | **2008** |   |
| **Money Market**           |       |                                  |   |   |   |
| Beginning of period assets |       | $                                     | 7.9    |   | $ | 12.8 |   |
| Sales                      |       | 3.0                                   |   | 24.9 |   |
| Redemptions                |       | 8.3                                   |   | 25.5 |   |
| Net sales (redemptions)    |       | (5.3                                  | )      | (0.6 | ) |
| Market / fund performance  |       | —                                |   | — |   |
| End of period assets       |       | $                                     | 2.6    |   | $ | 12.2 |   |

 

**Results of Investment Management Operations**

 

##### ***Three Months Ended March 31, 2009, Comparedwith Three Months Ended March 31, 2008***

##### *** ***

***Revenues***

 

Investment management fees decreased $88.7 million, or39.3%, primarily as a result of the decrease in average assets undermanagement.

 

Performance fee revenueis derived from certain mutual funds and separate accounts.  The $2.2 million decrease in performance feerevenue was principally due to lower mutual fund performance fees as a resultof a decline in short-term relative investment performance.

 

Shareowner servicing feesand other revenue declined $20.0 million, or 39.9%, over the comparable prioryear period primarily as a result of a decrease in transfer agent fees.  Transfer agent fees are based on averageassets under management in Janus’ retail fund series (Janus Investment Fund),excluding money market assets, which decreased 44.7% over the comparable priorperiod.

 

***Expenses***

 

Employee compensation andbenefits decreased $29.6 million, or 32.2%, principally due to lower incentivecompensation.  Investment teamcompensation decreased $14.6 million as a result of lower revenue and a declinein short-term relative investment performance. The investment team compensation plan is linked to individual investmentperformance, but also ties the aggregate level of compensation to revenue.  Sales commissions decreased $5.5 million dueto lower sales and the annual company-wide bonus accrual decreased $5.1 millionas a result of anticipated lower 2009 operating results.

 

Long-term incentivecompensation increased $1.3 million, or 10.7%, as a result of new awardsgranted in 2009 partially offset by the vesting of previous awards.  Long-term incentive awards granted in 2009totaled $81.1 million and will generally be recognized ratably over fouryears.  Awards granted in 2009 are notsubject to performance-based acceleration.

 

Distribution expensedecreased $16.2 million, or 44.6%, resulting from a similar decrease in assetsunder management subject to third-party concessions.  Distribution fees are calculated based on acontractual percentage of the market value of assets under managementdistributed through third-party intermediaries.

 

General, administrativeand occupancy expense decreased slightly, as a result of cost reduction measuresimplemented in the fourth quarter 2008 offset by the establishment of a $7.5million litigation reserve.

 

Goodwill and intangibleasset impairment charges of $747.0 million and $109.7 million, respectively,were recognized as of March 31, 2009. JCG revised its operating forecast downward as a result of continueddeterioration in global market conditions, assets under management and revenuesduring the first quarter 2009.  Theseconditions combined with JCG’s market capitalization remaining below net bookvalue caused management to reassess goodwill and all intangible assets forimpairment as of March 31, 2009. Based on these assessments, JCG partially impaired goodwill and mutualfund advisory contracts associated with the 2001 contractual obligation to buyout Janus’ founder.  The goodwillimpairment charge is not deductible for income tax purposes.  A tax benefit of $40.6 million was recognizedas a result of the impairment of mutual fund advisory contracts.

 

16

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The impairment analysesof goodwill, indefinite-lived intangible assets and amortized intangible assetswere generally based on discounted or undiscounted cash flow models as requiredby applicable accounting guidance. Significant assumptions utilized in the discounted cash flow modelsinclude operating forecasts, discount rates and terminal multiples appropriateunder current economic conditions.  Forpurposes of testing goodwill for impairment, JCG has identified one reportingunit based on the similar economic characteristics of the reporting unit’sunderlying components.  Undiscounted cashflow models were used to determine the recoverability of amortized intangibleassets and are dependent upon operating forecasts for each group of assets.  Significant further deterioration in marketconditions, JCG’s stock price, assets under management, revenues or adversechanges in key assumptions utilized in the impairment analyses may result inadditional impairment charges.

 

Net investment losses of$7.2 million for the three months ended March 31, 2009 include a $6.6million impairment charge primarily on securities classified as available forsale.

 

For the three monthsended March 31, 2009, mark-to-market losses on trading securities werelargely offset by gains generated by a hedging strategy implemented in late2008.

 

**LIQUIDITY AND CAPITAL RESOURCES**

 

**CashFlows**

 

A summary of cashflow data from continuing operations for the three-month periods ended March 31,2009 and 2008 is as follows *(in millions)*:

 
| ** **                                                  | ** ** | **2009** | ** ** | **2008** | ** ** |
|-------------------------------------------------------------|------------|----------|------------|----------|------------|
| Cash flows provided by (used for): |       |     |       |     |       |
| Operating activities                                        |       | $        | (27.4      | )        | $          | 1.9 |   |
| Investing activities                                        |       | (17.6    | )          | (76.4    | )          |
| Financing activities                                        |       | (5.5     | )          | (135.9   | )          |
| Net change in cash and cash equivalents                     |       | (50.5    | )          | (210.4   | )          |
| Balance beginning of period                                 |       | 282.6    |       | 480.7    |       |
| Balance end of period                                       |       | $        | 232.1      |     | $          | 270.3 |   |

 

On an annual basis, JCG’scash flow from operations historically has been positive and sufficient to fundordinary operations and capital requirements. Fluctuations in operating cash flows are attributable to changes in netincome and working capital items, which can vary from period to period based onthe on the amount and timing of cash receipts and payments.  The decline in cash flow from operations fromthe comparable prior year period was driven by lower revenues as a result ofthe decline in average assets under management.

 

Cash used for investingactivities for the three months ended March 31, 2009, primarily represents$12.2 million for the net purchase of investments.  Purchases and sales of investments arerelated to seed capital as well as hedging and vesting of mutual fund shareawards.  Cash used for investingactivities for the comparable prior year period includes $60.7 million for thepurchase of an additional 3% interest in INTECH and $11.5 million for the netpurchase of investments.

 

Cash used for financingactivities for the three months ended March 31, 2009, primarily represents$5.0 million of distributions to noncontrolling interests.  Cash used for financing activities for thecomparable prior period primarily represents stock buybacks of $142.5million.  Stock buybacks were suspendedin during the third quarter 2008 to preserve liquidity.

 

**Other Sources of Liquidity**

 

*Credit Facility*

 

JCG has a $350 millionFive-Year Competitive Advance and Revolving Credit Facility Agreement (the “CreditFacility”) with a syndicate of banks. The Credit Facility contains two financial covenants: a specified maximumfinancing leverage ratio and minimum interest coverage ratio.  At March 31, 2009, JCG was in compliancewith all covenants and there were no borrowings under the Credit Facility.

 

17

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The covenants and thecalculation of the ratios, as defined in the Credit Facility, are as follows *(in millions)*:

 
| ** **                                                       | ** ** | **Last Four**           | ** ** |
|------------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                       | ** ** | **Quarters Ended**      | ** ** |
| ** **                                                       | ** ** | **March 31, 2009** | ** ** |
|                                                             |       |                         |       |
| Net income (loss)                                                |       | $                            | (713.9     | ) |
| Deduct:                                                          |       |                         |       |
| Extraordinary gains                                              |       | —                       |       |
| Gains from sales of assets or subsidiaries                       |       | (2.8                         | )          |
| Add back:                                                        |       |                         |       |
| Goodwill and intangible asset impairment charges                 |       | 856.7                        |       |
| Interest expense                                                 |       | 76.5                         |       |
| Income tax provision                                             |       | 5.9                          |       |
| Depreciation and amortization                                    |       | 39.2                         |       |
| Long-term incentive compensation                                 |       | 44.8                         |       |
| Adjusted EBITDA                                                  |       | $                            | 306.4      |   |
|                                                             |       |                         |       |
| Debt                                                             |       | $                            | 1,128.0    |   |
|                                                             |       |                         |       |
| Leverage Ratio (Debt divided by Adjusted EBITDA)                 |       | 3.68                         |       |
| **Cannot exceed 3.75**                                           |       |                         |       |
|                                                             |       |                         |       |
| Interest Coverage Ratio                                          |       |                         |       |
| (Adjusted EBITDA divided by Last Four Quarters Interest Expense) |       | 4.0                          |       |
| **Must equal or exceed 4.0**                                     |       |                         |       |

 

JCG does not expect to bein compliance with one or more financial covenants at the end of the secondquarter 2009 if assets under management remain at current levels.  In a addition, all interest and principalpayments due on JCG’s other long-term debt must be made in accordance with thecontractual terms of such debt. A breach of one or more covenants will preventJCG from accessing the Credit Facility but will not impact the terms of JCG’s otherlong-term debt.  To allow for continuedaccess to the Credit Facility, JCG is seeking less restrictive covenants fromthe syndicate of banks.  There is noguarantee that JCG’s efforts to renegotiate the terms of the Credit Facilitywill be successful.

 

*Shelf Registration*

 

The Company has effectivea Shelf Registration Statement with the SEC, under which JCG could register thesale of an indeterminate amount of JCG’s common stock, preferred stock and debtsecurities.

 

**Item 3.     Quantitative and Qualitative Disclosuresabout Market Risk**

 

The Company has had nomaterial changes in its exposure to market risks from that previously reportedin the Company’s Annual Report on Form 10-K for the year ended December 31,2008.

 

**Item4.     Controls and Procedures**

 

JCG’s management evaluated the effectiveness of thedesign and operation of its disclosure controls and procedures (as such term isdefined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)as of March 31, 2009.  Disclosurecontrols and procedures are the controls and other procedures that the Companydesigned to ensure that it records, processes, summarizes and reports in a timelymanner the information it must disclose in reports that it files with orsubmits to the SEC.  Gary D. Black, ChiefExecutive Officer, and Gregory A. Frost, Executive Vice President and ChiefFinancial Officer, reviewed and participated in this evaluation.  Based on this evaluation, Messrs. Blackand Frost concluded that as of the date of their evaluation, JCG’s disclosurecontrols and procedures were effective.

 

There has been no changein JCG’s internal controls over financial reporting (as such term is defined inRules 13a-15(e) and 15d-15(e) under the Exchange Act) during thethree months ended March 31, 2009, that has materially affected, or isreasonably likely to materially affect, JCG’s internal controls over financialreporting.

 

18

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**PART II— OTHER INFORMATION**

 

**Item1.     Legal Proceedings**

 

See Part I, Item 1.Financial Statements, Note 11 — Legal Proceedings.

 

**Item1A.     Risk Factors**

 

The Company has had no material changes in its riskfactors from those previously reported in the Company’s Annual Report on Form 10-Kfor the year ended December 31, 2008.

 

**Item2.     Unregistered Sales of EquitySecurities and Use of Proceeds**

 

On July 22, 2008,the Board of Directors authorized a fifth $500 million stock repurchase programto take effect when the current authorization is utilized.  Given the current market conditions, JCGsuspended stock buybacks in the fourth quarter 2008 to preserve liquidity.  The amount that may yet be repurchased underthe current authorizations as of March 31, 2009 is $521 million.  There were no share repurchases for the threemonths ended March 31, 2009 under the current authorization or fromemployees as part of the share withholding program (established under Rule 10b5-1of the Securities Exchange Act of 1934). JCG no longer purchases shares from employees under Rule 10b5-1.  Tax withholdings on vesting employeestock-based compensation are satisfied by employees selling shares on the openmarket.

 

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**Item6.     Exhibits**

 
| 31.1   |   | Certification of Gary  D. Black, Chief Executive Officer of Registrant                                                                                                                                                       |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                         |
| 31.2   |   | Certification of  Gregory A. Frost, Executive Vice President and Chief Financial Officer of  Registrant                                                                                                                      |
|   |   |                                                                                                                                                                                                                         |
| 32.1   |   | Certification of Gary  D. Black, Chief Executive Officer of Registrant, pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002                                 |
|   |   |                                                                                                                                                                                                                         |
| 32.2   |   | Certification of  Gregory A. Frost, Executive Vice President and Chief Financial Officer of  Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 |
|   |   |                                                                                                                                                                                                                         |
| 99.1   |   | Lipper Rankings                                                                                                                                                                                                              |

 

20

 

**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

Date: May 11,2009

 

 
|   | Janus Capital Group  Inc.              |   |
|--------|----------------------------------------|--------|
|   |                                   |   |
|   |                                   |   |
|   | /s/ Gary D.  Black                     |   |
|   | Gary D. Black,Chief Executive  Officer |   |
|   |                                   |   |
|   | /s/ Gregory A.  Frost                  |   |
|   | Gregory A.  Frost,                     |   |
|   | Executive Vice  President and          |   |
|   | Chief Financial  Officer               |   |
|   | (Principal  Financial Officer and      |   |
|   | Principal  Accounting Officer)         |   |

 

21

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**JANUS CAPITAL GROUP INC.**

**INDEX TO EXHIBITS**

 
| **Exhibit  No.** | ** ** | **Document**                                                                                                                                                                                                                 | ** ** | **Regulation S-K  Item 601(b)  Exhibit No.** |
|------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------|
| 31.1             |       | Certification of  Gary D. Black, Chief Executive Officer of Registrant                                                                                                                                                       |       | 31                                                |
|             |       |                                                                                                                                                                                                                         |       |                                              |
| 31.2             |       | Certification of  Gregory A. Frost, Executive Vice President and Chief Financial Officer of  Registrant                                                                                                                      |       | 31                                                |
|             |       |                                                                                                                                                                                                                         |       |                                              |
| 32.1             |       | Certification of  Gary D. Black, Chief Executive Officer of Registrant, pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002                                 |       | 32                                                |
|             |       |                                                                                                                                                                                                                         |       |                                              |
| 32.2             |       | Certification of  Gregory A. Frost, Executive Vice President and Chief Financial Officer of  Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 |       | 32                                                |
|             |       |                                                                                                                                                                                                                         |       |                                              |
| 99.1             |       | Lipper Rankings                                                                                                                                                                                                              |       | 99                                                |

 

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