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Janus Capital Group Inc · 10-12B/A · On 1/19/0 · EX-99.1

Filed On 1/19/0 · SEC File 1-15253 · Accession Number 1013816-0-3

  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 1/19/00  Janus Capital Group Inc           10-12B/A               6:203                                    1013816

Amendment to Registration of Securities (General Form) · Form 10
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-12B/A    Amendment No. 3 to Form 10                             6±    28K 
 2: EX-3.1.1    Form of Cert of Incorporation                         11±    51K 
 3: EX-3.2      Form of Amended & Restated Bylaws                     15±    62K 
 4: EX-8.1      Irs Private Letter Ruling                             11±    44K 
 5: EX-99.1     Information Statement                                156±   684K 
 6: EX-99.2     Solvency & Surplus Opinion                             4±    20K

EX-99.1 · Information Statement
Exhibit Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Additional Information Asset Impairment Charges Available for Sale Background Background and Reasons for the Distribution Berger Berger LLC Business Capitalization Capital Structure Certain Antitakeover Effects Certain Relationships and Related Transactions Committees of Stilwell's Board of Directors Common Stock Compensation of Stilwell's Directors Competition Composition of Stilwell's Board of Directors Description of Capital Stock Description of the Credit Facilities Differences in Rights of Stockholders Arising from Differences Between the Certificates and Bylaws of Stilwell and KCSI Directors and Executive Officers Distribution, The Dividend Policy DST Systems, Inc Earnings per Share Employee Benefits Employees Employment Agreements with the Named Executive Officers Executive Compensation Financing Indemnification Agreements Index to Financial Statements Information Statement Intercompany Agreement Introduction Janus Janus Advised Funds Janus Capital Corporation Janus Sub-Advised Funds and Private Accounts Legal Matters Liquidity Management Management's Discussion and Analysis of Financial Condition and Results of Operations Manner of Effecting the Distribution Material Federal Income Tax Consequences Minority Purchase Agreements Modification or Abandonment of the Distribution Mr. Bailey Need for Additional Financing Nelson Nelson Money Managers Plc New Credit Facility Other Compensatory Plans and Arrangements Overview of Stilwell's Business and Strategy Overview of the Distribution Preferred Stock Principal Stockholders and Stock Owned Beneficially by Stilwell's Directors and Certain Executive Officers Properties Regulation Relationship Between KCSI and Stilwell After the Distribution Report of Independent Accountants Results of the Distribution Risk Factors Selected Financial and Operating Data Significant Developments Solvency and Surplus Opinion of Financial Advisor Stilwell Business Strategy Stilwell ESOP Stilwell Financial, Inc Stilwell's Inability to Attract and Retain Key Personnel Could Have a Material Adverse Effect on Its Future Success Stilwell's Principal Subsidiaries and Equity Investments Stilwell Stock Option Plan Stockholders' Rights Plan Summary Summary Financial and Operating Data Tax Disaffiliation Agreement The Distribution Trading Trading of Stilwell Common Stock Transfer Agent 1998 Aggregate Option Exercises and Year-End Option Values 1998 Option/SAR Grants In Last Fiscal Year
1	1st Page
"	Information Statement
3	Summary
"	Overview of the Distribution
4	Overview of Stilwell's Business and Strategy
"	Background
"	Stilwell Financial, Inc
"	Stilwell's Principal Subsidiaries and Equity Investments
"	Janus Capital Corporation
"	Berger LLC
"	Nelson Money Managers Plc
"	DST Systems, Inc
"	Stilwell Business Strategy
5	Summary Financial and Operating Data
6	Introduction
"	Risk Factors
"	Stilwell's Inability to Attract and Retain Key Personnel Could Have a Material Adverse Effect on Its Future Success
7	The Distribution
"	Background and Reasons for the Distribution
"	Manner of Effecting the Distribution
"	Results of the Distribution
"	Differences in Rights of Stockholders Arising from Differences Between the Certificates and Bylaws of Stilwell and KCSI
"	Material Federal Income Tax Consequences
"	Trading of Stilwell Common Stock
"	Modification or Abandonment of the Distribution
"	Solvency and Surplus Opinion of Financial Advisor
8	Relationship Between KCSI and Stilwell After the Distribution
"	Intercompany Agreement
"	Tax Disaffiliation Agreement
"	Employee Benefits
9	Financing
"	Description of the Credit Facilities
"	Need for Additional Financing
10	Capitalization
11	Dividend Policy
12	Selected Financial and Operating Data
13	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Significant Developments
"	Asset Impairment Charges
"	Janus Advised Funds
"	Berger
"	Janus
"	Nelson
"	Liquidity
"	Capital Structure
"	Minority Purchase Agreements
14	Business
15	Janus Sub-Advised Funds and Private Accounts
19	Properties
"	Employees
"	Competition
"	Regulation
"	Legal Matters
20	Management
"	Directors and Executive Officers
"	Composition of Stilwell's Board of Directors
"	Committees of Stilwell's Board of Directors
"	Compensation of Stilwell's Directors
"	Executive Compensation
22	1998 Option/SAR Grants In Last Fiscal Year
23	1998 Aggregate Option Exercises and Year-End Option Values
24	Employment Agreements with the Named Executive Officers
"	Mr. Bailey
"	Indemnification Agreements
"	Other Compensatory Plans and Arrangements
"	Stilwell Stock Option Plan
"	Stilwell ESOP
25	Principal Stockholders and Stock Owned Beneficially by Stilwell's Directors and Certain Executive Officers
"	Certain Relationships and Related Transactions
26	Description of Capital Stock
"	Common Stock
"	Preferred Stock
"	Certain Antitakeover Effects
"	Stockholders' Rights Plan
"	Transfer Agent
"	Additional Information
27	Index to Financial Statements
"	Report of Independent Accountants
33	Earnings per Share
"	Available for Sale
"	Trading
34	New Credit Facility

EX-99.1 1st "Page" of 34 TOC Top Previous Next Bottom Just 1st
Sponsored Ads...

PRELIMINARY COPY
SUBJECT TO COMPLETION OR AMENDMENT, DATED JANUARY 19, 2000

INFORMATION STATEMENT
STILWELL FINANCIAL, INC.
Common Stock, par value $.01 per share

This information statement (the "Information Statement") is being
furnished by Kansas City Southern Industries, Inc., a Delaware corporation
("KCSI"), in connection with the distribution (the "Distribution") to holders
of record of common stock of KCSI ("KCSI Common Stock"), on [________], 2000
(the "Record Date") of two shares of common stock, par value $.01 per share,
including certain attached preferred stock purchase rights (collectively, the
"Stilwell Common Stock"), of Stilwell Financial, Inc., a Delaware corporation
("Stilwell"), for every one share of KCSI Common Stock outstanding on the
Record Date. The Distribution will result in all of the outstanding shares of
Stilwell Common Stock being distributed to holders of KCSI Common Stock on a
pro-rata basis. Stilwell was formed recently by KCSI as a holding company for
the group of businesses and investments that comprise the financial services
segment of KCSI. Stilwell's principal subsidiary is Janus Capital Corporation
("Janus"), an investment advisory company, which represented approximately 95%
of the revenues and approximately 88% of the net income of KCSI's financial
services segment for the nine months ended September 30, 1999. The following
table, which presents summary financial information for KCSI (excluding
Stilwell) and Stilwell as of, and for the nine months ended September 30, 1999,
should be read in conjunction with, and is qualified in its entirety by
reference to, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the financial statements and notes thereto included
elsewhere in this Information Statement. The summary financial data set forth
below does not necessarily reflect the financial position and results of
operations of the two companies if they had been operated as separate stand-
alone entities during the period presented.

STOCKHOLDERS' OPERATING NET
EQUITY ASSETS REVENUES INCOME INCOME
----------- ------ -------- --------- ------
(In Millions)

KCSI $ 478.8 $ 1,887.5 $ 449.7 $ 58.7 $ 17.4

Stilwell 681.9 1,016.1 826.7 345.5 214.6
-----------------------------------------------------------------

Total $ 1,160.7 $ 2,903.6 $ 1,276.4 $ 404.2 $ 232.0
===================================================================

Recently, there have been strained relations between Stilwell and Janus as
a result of a disagreement over whether there should be a separate spin-off of
Janus. See "Summary-Stilwell Financial, Inc.-Background." Stillwell does not
believe that this disagreement will cause any key employees of Janus to resign,
but these employees are not subject to any noncompete agreements that would
preclude them from participating in a competing financial services business.
See "Risk Factors-Continuation of Strained Relations Between Stilwell and Janus
Management Could Have a Material Adverse Effect on Stilwell." Stilwell may be
required under certain agreements to purchase the interests in Janus owned by
certain minority stockholders at the option of those holders at a purchase
price equal to fifteen times the net after-tax earnings per share of Janus over
the period indicated in the relevant agreement, or in some circumstances at a
purchase price as determined by an independent appraisal. If Stilwell had been
required to make such purchase based on the value of the stock at a fifteen
times multiple as of September 30, 1999, it would have been required to pay
approximately $481 million. Stilwell is also required under certain agreements
to purchase the interests in Janus owned by other minority stockholders at the
option of those holders upon the occurrence of certain changes in ownership of
KCSI or Stilwell at a purchase price equal to fifteen times the net after-tax
earnings per share of Janus over the period indicated in the relevant agreement
or as otherwise negotiated between the parties or determined by Janus' Stock
Option Committee. If Stilwell were required to make such purchase based on the
value of the stock at a fifteen times multiple as of September 30, 1999, it
would have been required to pay approximately $692 million. Stilwell might
require additional financing if these options were exercised. See "Risk
Factors-Stilwell May Be Required to Purchase or Sell Janus Common Stock" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Minority Purchase Agreements."

The Distribution will be effective on [________, 2000], (the "Distribution
Date"), and it is expected that certificates representing Stilwell Common Stock
will be mailed within [____] days following the Distribution Date (the "Mailing
Date").

No consideration will be paid by KCSI's stockholders for the shares of
Stilwell Common Stock to be received by them in the Distribution nor will they
be required to surrender or exchange shares of KCSI Common Stock or take any
other action in order to receive Stilwell Common Stock.

There has been no established trading market for the shares of Stilwell
Common Stock, although it is expected that a "when-issued" trading market will
develop near the Record Date. [Stilwell has received approval, subject to
official notice of issuance, to have the Stilwell Common Stock listed on the
New York Stock Exchange under the symbol "SV."]

IN REVIEWING THIS INFORMATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER
THE MATTERS DESCRIBED UNDER THE CAPTION "RISK FACTORS" WHICH BEGINS ON
PAGE 17.
____________________

NO VOTE OF STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THIS
DISTRIBUTION. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
____________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________

THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. ANY SUCH OFFERING MAY
ONLY BE MADE BY MEANS OF A SEPARATE PROSPECTUS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND OTHERWISE IN COMPLIANCE WITH APPLICABLE LAW.

THE DATE OF THIS INFORMATION STATEMENT IS [___________], 2000.

EX-99.1 2nd "Page" of 34 TOC 1st Previous Next Bottom Just 2nd

TABLE OF CONTENTS
Page
----
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Overview of the Distribution . . . . . . . . . . . . . . . . . . . . . 6
Overview of Stilwell's Business and Strategy . . . . . . . . . . . . . 10
Summary Financial and Operating Data . . . . . . . . . . . . . . . . 15
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
THE DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Background and Reasons for the Distribution. . . . . . . . . . . . . . 31
Manner of Effecting the Distribution . . . . . . . . . . . . . . . . . 34
Results of the Distribution. . . . . . . . . . . . . . . . . . . . . . 35
Differences in Rights of Stockholders Arising from Differences
Between the Certificates and Bylaws of Stilwell and KCSI. . . . . 35
Material Federal Income Tax Consequences . . . . . . . . . . . . . . . 36
Trading of Stilwell Common Stock . . . . . . . . . . . . . . . . . . . 38
Modification or Abandonment of the Distribution. . . . . . . . . . . . 39
Solvency and Surplus Opinion of Financial Advisor. . . . . . . . . . . 39
RELATIONSHIP BETWEEN KCSI AND STILWELL AFTER THE DISTRIBUTION . . . . . . 44
Intercompany Agreement . . . . . . . . . . . . . . . . . . . . . . . . 44
Tax Disaffiliation Agreement . . . . . . . . . . . . . . . . . . . . . 44
Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Description of the Credit Facilities . . . . . . . . . . . . . . . . 48
Need for Additional Financing. . . . . . . . . . . . . . . . . . . . . 49
CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SELECTED FINANCIAL AND OPERATING DATA . . . . . . . . . . . . . . . . . . 52
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . 55
BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Stilwell Financial, Inc. . . . . . . . . . . . . . . . . . . . . . . . 82
Stilwell's Principal Subsidiaries and Equity Investments . . . . . . . 82
Janus Capital Corporation . . . . . . . . . . . . . . . . . . . 82
Berger LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Nelson Money Managers Plc . . . . . . . . . . . . . . . . . . . 97
DST Systems, Inc. . . . . . . . . . . . . . . . . . . . . . . . 98
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Stilwell Business Strategy . . . . . . . . . . . . . . . . . . . . . . 100
Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . 103
Composition of Stilwell's Board of Directors . . . . . . . . . . . . . 105
Committees of Stilwell's Board of Directors. . . . . . . . . . . . . . 105
Compensation of Stilwell's Directors . . . . . . . . . . . . . . . . . 106
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . 106
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . 107
1998 Option/SAR Grants In Last Fiscal Year . . . . . . . . . . . . . . 110
1998 Aggregate Option Exercises and Year-End Option
Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Employment Agreements with the Named Executive Officers. . . . . . . . 113
Indemnification Agreements . . . . . . . . . . . . . . . . . . . . . . 116
Other Compensatory Plans and Arrangements. . . . . . . . . . . . . . . 117
PRINCIPAL STOCKHOLDERS AND STOCK OWNED BENEFICIALLY
BY STILWELL'S DIRECTORS AND CERTAIN EXECUTIVE OFFICERS. . . . . . . . . 121
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . . . . 123
DESCRIPTION OF CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . 124
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Certain Antitakeover Effects . . . . . . . . . . . . . . . . . . . . . 125
Stockholders' Rights Plan. . . . . . . . . . . . . . . . . . . . . . . 129
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 130
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . F-1

EX-99.1 3rd "Page" of 34 TOC 1st Previous Next Bottom Just 3rd

SUMMARY

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS INFORMATION STATEMENT. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION SET FORTH IN THIS
INFORMATION STATEMENT, WHICH SHOULD BE READ IN ITS ENTIRETY. UNLESS OTHERWISE
STATED OR THE CONTEXT OTHERWISE REQUIRES, REFERENCES IN THIS INFORMATION
STATEMENT TO (i) KCSI AND STILWELL INCLUDE KCSI'S AND STILWELL'S RESPECTIVE
DIRECT AND INDIRECT SUBSIDIARIES AND EQUITY INVESTMENTS, (ii) STILWELL PRIOR TO
THE DISTRIBUTION DATE REFER TO KCSI'S FINANCIAL SERVICES SEGMENT (AS DESCRIBED
BELOW) AND (iii) BERGER (AS DEFINED HEREIN) PRIOR TO SEPTEMBER 30, 1999 REFER
TO BERGER ASSOCIATES, INC.

OVERVIEW OF THE DISTRIBUTION

Corporation Making the Kansas City Southern Industries, Inc., a
Distribution Delaware corporation.

Corporation and Business
Being Distributed Stilwell Financial, Inc., a Delaware corporation
and wholly-owned subsidiary of KCSI. Stilwell is
a holding company for the group of businesses
and investments that comprise the KCSI financial
services segment. These businesses, the most
significant of which is Janus Capital
Corporation, offer a variety of asset management
and related financial services to registered
investment companies, retail investors,
institutions and individuals. See "Business."

Business to be Retained
By KCSI Rail transportation. Through its principal
subsidiaries and joint ventures, KCSI owns and
operates a rail network of approximately 6,000
miles of main and branch lines that link the key
commercial and industrial markets of the United
States and Mexico and plans to rebuild and
operate the trans-isthmus railroad in Panama.

Primary Purpose of the
Distribution Separation of the financial services business,
to be owned solely by Stilwell, from the rail
transportation business, to be owned solely by
KCSI. To allow each company to (i) focus on
adopting strategies and pursuing objectives
appropriate to its specific business; (ii) focus
attention and financial resources on the
development and management of growth in each of
their respective core businesses; (iii)
eliminate time and resources spent resolving
differences between the businesses relating to
utilization of KCSI resources, available
capital, capitalization, management style,
organizational structure and long-term and
short-term strategies and goals; (iv) minimize
the exposure of each business to the liabilities
arising from the operations of the other; (v)
issue its own securities to implement more
focused stock-based compensation programs keyed
more directly to its earnings and performance;
and (vi) issue its own securities to pursue
acquisitions or strategic relationships. See
"The Distribution-Background and Reasons for the
Distribution."

Number of Shares of Two shares of Stilwell Common Stock, including
Stilwell Common Stock certain attached preferred stock purchase
To Be Received By Each rights, for every one share of KCSI Common Stock
KCSI Stockholder held on the Record Date. No consideration will
need to be paid by KCSI's stockholders for the
shares of Stilwell Common Stock to be received
by them in the Distribution nor will they be
required to surrender or exchange shares of KCSI
Common Stock or take any other action in order
to receive Stilwell Common Stock. See "The
Distribution-Manner of Effecting the
Distribution" and "Description of Capital Stock-
Stockholders' Rights Plan."

Total Number of Shares to Will depend on the number of shares of KCSI
be Distributed Common Stock outstanding on the Record Date.
Based on the number of shares of KCSI Common
Stock outstanding as of September 30, 1999,
approximately 221,000,000 shares of Stilwell
Common Stock will be distributed. The shares of
Stilwell Common Stock to be distributed will
constitute all of the outstanding shares of
Stilwell Common Stock on the Distribution Date.
See "The Distribution-Manner of Effecting the
Distribution" and "The Distribution-Results of
the Distribution."

Distribution Agent UMB Bank, N.A. (the "Distribution Agent"), 1010
Grand Avenue, Kansas City, Missouri 64106.

KCSI's Board's Power The Distribution may be amended, modified
to Modify or Abandon or abandoned at any time prior to the Record
by, and in the sole discretion of,
KCSI's Board of Directors.
See "The Distribution-Modification or
Abandonment of the Distribution."

No Fractional Shares No fractional shares of Stilwell Common Stock
will be distributed in the Distribution. See
"The Distribution-Manner of Effecting the
Distribution."

No Established Trading There has been no established trading market for
Market for Stilwell Stilwell Common Stock, although a "when-issued"
Common Stock trading market is expected to develop near the
Record Date. [Stilwell has received approval,
subject to official notice of issuance, to have
the Stilwell Common Stock listed on the New York
Stock Exchange under the symbol "SV."] See "The
Distribution-Trading of Stilwell Common Stock."

Record Date Close of business on [______] (the "Record
Date").

Distribution Date Certificates representing the shares of Stilwell
Common Stock will be delivered to the
Distribution Agent on [__________] (the
"Distribution Date") and the Distribution will be
effective on that date.

Date Certificates are to
Be Mailed Certificates representing the shares of
Stilwell Common Stock are expected to be mailed
by the Distribution Agent to KCSI stockholders
within [____] days following the Distribution
Date (the "Mailing Date"). See "The
Distribution-Manner of Effecting the
Distribution."

Tax Ruling Indicates KCSI has received a tax ruling (the "Tax
Distribution Will B Ruling") from the Internal Revenue Service (the
Tax-Free "IRS") to the effect that for United States
federal income tax purposes, the Distribution
qualifies as a tax-free distribution under
Section 355 of the Internal Revenue Code of
1986, as amended (the "Code") and thus no gain
or loss will be recognized by KCSI or Stilwell
from the Distribution or by the holders of KCSI
Common Stock upon receipt of the Stilwell Common
Stock in the Distribution. See "Risk Factors-
Material Inaccuracy of Representations or
Assumptions Underlying the Tax Ruling Could
Cause the Distribution not to be Tax-Free,
Resulting in Substantial Corporate Taxable Gain,
and Certain Post-Distribution Transactions Could
Subject KCSI or Stilwell to Substantial Tax and
Indemnification Obligations" and "The
Distribution-Material Federal Income Tax
Consequences."

KCSI and Stilwell Following the Distribution, KCSI and Stilwell
to be Operated as will be operated separately as independent
Separate Companies companies. They will continue to have a
limited relationship, including a common
director, during a transitional period.
See "The Distribution-Results of the
Distribution," "Relationship Between KCSI and
Stilwell After the Distribution," and "Certain
Relationships and Related Transactions."

Stilwell Anticipates To date, Stilwell has not declared or paid any
Paying Cash Dividends dividends on the Stilwell Common Stock, but
anticipates paying cash dividends following the
Distribution. The payment of dividends by
Stilwell is subject to the discretion of its
Board of Directors, and various factors may
prevent it from paying dividends. These factors
include Stilwell's financial position, its
capital requirements and liquidity, the
existence of a stock repurchase program,
contractual and legal requirements, results of
operations and such other factors as Stilwell's
Board of Directors may consider relevant. As a
holding company, Stilwell's ability to pay
dividends is dependent on the dividends and
income it receives from its subsidiaries. At
the present time Stilwell's primary source of
cash is dividends received from Janus. The
payment of dividends by Janus is subject to the
discretion of its Board of Directors and
although Stilwell has a contractual obligation
to cause such payment, another party has the
right to nominate a majority of that Board. See
"Risk Factors-Various Factors May Hinder the
Declaration and Payment of Dividends by Stilwell
Following the Distribution" and "Dividend
Policy."

Risk Factors To Be Stockholders should carefully consider the
Considered matters discussed in the section entitled "Risk
Factors" for a complete discussion of the
matters that should be considered in owning
Stilwell Common Stock.

Provisions Which May Have
Antitakeover Effects Provisions of Stilwell's certificate of
incorporation (the "Certificate") and bylaws
(the "Bylaws"), certain agreements, Stilwell's
Stockholders' Rights Plan (the "Rights Plan"),
and provisions of the Delaware General
Corporation Law and the Code, may have the
effect of delaying, deterring or preventing a
change in control of Stilwell. See "Risk
Factors," "The Distribution-Material Federal
Income Tax Consequences" and "Description of
Capital Stock."

* * *

EX-99.1 4th "Page" of 34 TOC 1st Previous Next Bottom Just 4th

OVERVIEW OF STILWELL'S BUSINESS AND STRATEGY

BACKGROUND

KCSI is a holding company that has owned and managed, through its
direct and indirect subsidiaries, two principal business segments: rail
transportation and financial services. ONLY THE FINANCIAL SERVICES
SEGMENT IS INCLUDED IN THE DISTRIBUTION. The primary entities comprising
the financial services segment are Janus, an approximately 82% owned
subsidiary; Berger LLC ("Berger"), of which Stilwell owns 100% of Berger
preferred limited liability company interests and approximately 86% of
the Berger regular limited liability company interests; Nelson Money
Managers Plc ("Nelson"), an 80% owned subsidiary; DST Systems, Inc.
("DST"), an equity investment in which KCSI holds an approximately 32%
interest, and miscellaneous other subsidiaries and equity investments
(the "Miscellaneous Corporations"). Janus is the principal business of
the financial services segment of KCSI, representing 96% of assets under
management at September 30, 1999 and 95% of revenues and 88% of net
income for the nine months ended September 30, 1999. The businesses
which comprise the financial services segment offer a variety of asset
management and related financial services to registered investment
companies, retail investors, institutions and individuals.

After extensive review and discussion, the Board of Directors of KCSI
concluded that it is in the best interests of KCSI and its stockholders
for KCSI to focus on the rail transportation business and for a separate
company to focus on the financial services business and determined that
the Distribution was the best way to accomplish a separation of the two
businesses. KCSI formed Stilwell as a holding company for the group of
businesses and investments that comprise KCSI's financial services
segment. In connection with the Distribution, KCSI transferred to
Stilwell KCSI's investments in Janus, Berger, Nelson, DST, the
Miscellaneous Corporations and certain other financial services-related
assets, and Stilwell assumed all of KCSI's liabilities associated with
the assets transferred, effective July 1, 1999.

On March 26, 1999, a number of minority stockholders and employees of
Janus, including members of Janus' management, its chief executive
officer, its chief investment officer, portfolio managers and assistant
portfolio managers who own a material number of Janus shares, five of the
six Janus directors and others (the "Janus Minority Group"), proposed
that KCSI consider in addition to the Distribution, a separate spin-off
of Janus. Members of the Janus Minority Group met with the KCSI Board of
Directors on June 23, 1999 and urged the Board to consider their separate
spin-off proposal.

After considering the information presented by the Janus Minority
Group, KCSI's Board of Directors decided it was in the best interests of
KCSI and its stockholders to proceed with the Distribution in the manner
previously contemplated and as described herein. In arriving at this
decision, KCSI's Board of Directors took into consideration a number of
factors, including that: (i) a favorable tax ruling on the
Distribution had been received from the Internal Revenue Service,
(ii) the presentation by the Janus Minority Group was not persuasive,
in the Board's view, as to the advantages of the alternative proposal
as compared to the Distribution, (iii) there was a lack of certainty
that a favorable tax ruling could be obtained in a timely manner, or at
all, with respect to the alternative proposal, and (iv) the
Distribution was more consistent with the strategic direction of
Stilwell. See "The Distribution-Background and Reasons for the
Distribution."

Recently, press reports have appeared in which certain Janus
employees have expressed objections to the Distribution and other
disagreements with Stilwell's structure and direction. Representatives
of Stilwell and of the Janus Minority Group have met and held discussions
regarding resolution of these disagreements and while not all
disagreements have been resolved, agreements have been made under which
Stilwell sold to Janus 192,408 shares of Janus common stock to be used to
provide long-term incentives to Janus personnel. In return, Janus agreed
not to grant phantom stock, stock appreciation rights, or similar rights,
for so long as Janus common stock is available for use under its Long-
Term Incentive Plan. The availability of Janus common stock for this
purpose will depend upon the number of such shares granted or sold from
time to time by Janus and upon the number acquired from holders by
voluntary sale or upon the death, retirement or termination of
employment of employees of Janus. For the year 2000, a grant to Janus
employees of 30,182 shares of Janus common stock has been approved, but
the number of shares awarded in future years may be more or less than
that amount. KCSI and Stilwell have also agreed to waive certain rights
of first refusal and options to purchase other outstanding shares of
Janus common stock so that such shares may be available for awards under
the Long-Term Incentive Plan. Finally, KCSI, Stilwell and Janus have
agreed to increase an intercompany credit line available to Janus and to
the assignment to Stilwell of the Janus Stock Purchase Agreement. See
"The Distribution-Background and Reasons for the Distribution."

STILWELL FINANCIAL, INC.

Stilwell is a holding company that manages its investments in the
principal subsidiaries and equity investments more particularly
described below and elsewhere in this Information Statement. The
functions performed by Stilwell include consolidated accounting;
consolidated tax return preparation and filing; corporate secretarial
functions; banking and financing; administration of retirement and
stock option plans; internal auditing; investor relations; analysis and
evaluation of acquisition and strategic business opportunities;
insurance assessment and coverage and holding company legal services.

STILWELL'S PRINCIPAL SUBSIDIARIES AND EQUITY INVESTMENTS

JANUS CAPITAL CORPORATION
-------------------------

Janus and its adviser subsidiaries are investment advisers
registered with the U.S. Securities and Exchange Commission (the "SEC")
or other regulatory bodies, and are the investment advisers of the
Janus Investment Fund, Janus Aspen Series and Janus World Funds plc
(collectively, the "Janus Advised Funds"). Additionally, Janus is the
adviser or sub-adviser to other investment companies and institutional
and individual private accounts, including pension, profit-sharing and
other employee-benefit plans, trusts, charitable organizations,
endowments, foundations and others (collectively, "Janus Sub-Advised
Funds and Private Accounts"). As of September 30, 1999, Janus had
total assets under management of $165.0 billion, of which $132.8
billion are in the Janus Advised Funds and the remainder are in Janus
Sub-Advised Funds and Private Accounts. Janus primarily offers equity
portfolios to its investors, which comprised approximately 95% of total
assets under management for Janus and its affiliates at September 30,
1999. At that date, funds advised by Janus had more than 3.7 million
shareowner accounts. For the five-year period ended September 30,
1999, Janus' total assets under management increased 629 percent. See
"Business-Stilwell's Principal Subsidiaries and Equity Investments-
Janus Capital Corporation."

BERGER LLC
----------

Berger is the successor entity to which Berger Associates, Inc.
contributed its operating assets and business as part of a restructuring
consummated as of September 30, 1999. Berger is an investment adviser
registered with the SEC and serves as an investment adviser to a group of
registered investment companies known as the Berger Advised Funds (as
defined in "Business--Stilwell's Principal Subsidiaries and Equity
Investments-Berger LLC"). Berger also serves as investment sub-adviser
to a group of registered investment companies and separate accounts known
as the Berger Sub-Advised Funds (as defined in "Business--Stilwell's
Principal Subsidiaries and Equity Investments-Berger LLC"). In addition,
Berger owns 50% of BBOI Worldwide LLC, a Delaware limited liability
company ("BBOI"), a joint venture with the Bank of Ireland Asset
Management (U.S.) Limited ("BIAM"). Berger and BIAM are currently
negotiating the sale of Berger's interest in BBOI to BIAM and,
alternatively, the dissolution of BBOI. BBOI serves as the investment
adviser and sub-administrator to the Berger/BIAM Funds (as defined in
"Business--Stilwell's Principal Subsidiaries and Equity Investments-
Berger LLC"). Moreover, BBOI acts as investment adviser to certain
separate accounts (the "BBOI Sub-Advised Funds"). Berger owns 80% of
Berger/Bay Isle LLC, a Delaware limited liability company ("B/B Isle"),
which is a joint venture with Bay Isle Financial Corporation. B/B Isle
acts as investment adviser to privately managed separate accounts (the
"B/B Isle Separate Accounts"). As of September 30, 1999, the Berger
Complex (as defined in "Business--Stilwell's Principal Subsidiaries and
Equity Investments-Berger LLC") had total assets under management of $4.9
billion. Of this amount, Berger managed $3.8 billion in the Berger
Advised Funds and $0.4 billion in the Berger Sub-Advised Funds; BBOI
managed $0.3 billion in the Berger/BIAM Funds and $0.4 billion in the
BBOI Sub-Advised Funds; and B/B Isle managed less than $0.1 billion in
the B/B Isle Separate Accounts. As of September 30, 1999, funds included
in the Berger Complex had more than 243,000 shareowner accounts. For the
five-year period ended September 30, 1999, assets under management in the
Berger Complex increased by 68 percent. See "Business-Stilwell's
Principal Subsidiaries and Equity Investments-Berger LLC."

NELSON MONEY MANAGERS PLC
-------------------------

Nelson provides investment advice and investment management services
in the United Kingdom, primarily to individuals who are retired or
contemplating retirement. In order to reach these clients, Nelson has
traditionally performed financial planning seminars for employees of
companies in the United Kingdom. More recently, Nelson has also been
offering services directly to the public via advertisements in the media.
For individuals interested in Nelson's services, Nelson assigns a
specific investment adviser to have a one-on-one consultation. The
investment adviser works with each client to conduct an analysis of the
client's investment objectives and then recommends in writing the
construction of a portfolio to meet those objectives. Recommendations
for the design and ongoing maintenance of the portfolio structure are the
responsibility of the investment adviser. The selection and management
of the instruments which constitute the portfolio are the responsibility
of Nelson's investment management team. At September 30, 1999, Nelson
employed approximately 40 investment advisers and managed approximately
$1.2 billion ((Pound)750 million) in assets. At September 30, 1999,
Nelson managed assets for more than 13,000 individuals. For the five-
year period ended September 30, 1999, Nelson's total assets under
management increased by 105 percent. See "Business-Stilwell's Principal
Subsidiaries and Equity Investments-Nelson Money Managers Plc."

DST SYSTEMS, INC.
-----------------

DST, together with its subsidiaries and joint ventures, provides
information processing, printing and mailing and computer software
services and products to mutual funds, investment managers,
communications industries and other service industries through business
units organized into three operating segments: Financial Services,
Customer Management and Output Solutions. DST's Financial Services
segment serves primarily mutual funds, insurance companies, banks and
other financial services organizations. DST's Customer Management
segment provides services and products to cable television, direct
broadcast satellite, wireless and wire-line telephony, utility and multi-
service providers. DST's Output Solutions segment provides statement
processing and solutions to customers of DST's other segments and to
other customers. See "Business-Stilwell's Principal Subsidiaries and
Equity Investments-DST Systems, Inc."

STILWELL BUSINESS STRATEGY

Stilwell believes that it has established a strong platform to
support future growth in revenues, deriving its strength in large part
from the experience and capabilities of Stilwell's subsidiaries and
equity investments as full service providers of asset management and
related financial services. The strength of Stilwell's subsidiaries and
equity investments is based on core investment professionals, solid
investment performance results, sophisticated distribution systems,
quality customer service, talented support and service staff and product
expertise and systems. In addition, Stilwell believes that it will
benefit from the brand name equity associated with the names JANUS,
BERGER, NELSON and DST. Opportunities for growth for Stilwell are
expected to come, principally through its subsidiaries and equity
investments, from new and existing clients, strategic acquisitions and
alliances and strengthening the brand name and brand image of Stilwell's
subsidiaries and equity investments.

MAINTAIN AND ENHANCE EXISTING CLIENT RELATIONSHIPS. As one of its
primary business objectives, Stilwell intends to maintain and enhance
existing client relationships by continuing to provide a high level of
quality service to existing clients through strong support and service
staff, excellent customer service and product expertise and systems.

GENERATE GROWTH FROM NEW AND EXISTING CLIENTS. Stilwell will pursue
growth from new clients through on-going sales and marketing efforts.
Additionally, Stilwell will seek to increase its share of existing
clients' managed assets.

To encourage growth, Stilwell intends to continue compensation
programs with equity incentives for key management employees of its
principal subsidiaries to provide incentives through ownership of stock
in the enterprises in which they are employed. Stilwell seeks to
facilitate the acquisition of such ownership through such compensation
programs and by making such programs competitive with, if not superior
to, compensation programs of other financial services companies.

PURSUE STRATEGIC ACQUISITIONS AND ALLIANCES. Stilwell plans to
regularly evaluate strategic acquisitions, joint ventures and alliances
and pursue those that appear appropriate as a means of expanding the
range of its product offerings and distribution, as well as for
increasing its sales and marketing capabilities.

STRENGTHEN BRAND NAME AND BRAND IMAGE. Stilwell intends to continue
developing several independent financial services businesses with
autonomous management and separate brand names. Stilwell believes it
has a strong starting position for this strategy, based on its existing
ownership of Janus, Berger and Nelson, as well as its equity investment
in DST. Management of each of Stilwell's affiliates has general
autonomy over its respective day-to-day operations, allowing each
business to develop a separate public identity, satisfy legal
requirements regarding separation of investment decisions and maintain
compliance with certain minority stockholder agreements.

ORGANIZATIONAL STRUCTURE

The following chart shows the organizational structure of Stilwell's
principal subsidiaries and equity investments.

[Organizational Chart Inserted Here]

EX-99.1 5th "Page" of 34 TOC 1st Previous Next Bottom Just 5th

SUMMARY FINANCIAL AND OPERATING DATA

The following table presents summary financial data of Stilwell. The
information set forth below should be read in conjunction with, and is
qualified in its entirety by reference to, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and notes thereto included elsewhere in this Information Statement.
The summary financial data for the five years ended December 31, 1998 was
derived from the audited consolidated financial statements of Stilwell. The
summary financial data as of and for the nine months ended September 30, 1998
and 1999 was derived from the unaudited consolidated financial statements of
Stilwell, which were prepared on the same basis as the historical audited
financial statements.

The summary financial data set forth below may not be indicative of
Stilwell's future performance and does not necessarily reflect the financial
position and results of operations of Stilwell had Stilwell operated as a
separate, stand-alone entity during each of the periods presented. In
addition to historical earnings per share data based on the Stilwell capital
structure as of September 30, 1999 (1,000 shares outstanding), pro forma
earnings per share information is presented for the year ended December 31,
1998 and for the nine months ended September 30, 1998 and 1999. This pro
forma information is presented for comparison purposes to future years and
was derived assuming an issuance of two shares of Stilwell Common Stock for
every one outstanding share of KCSI Common Stock as of September 30, 1999.
In addition, dilutive options were included based on the number of dilutive
KCSI stock options assumed to be exercised as of September 30, 1999 in
connection with the determination of KCSI's diluted earnings per share
computations. Pro forma basic and diluted earnings per share reflect
adjustments for interest expense (at an assumed rate of 6.5%), net of income
taxes assumed to be incurred as if the assumption of $125 million of
indebtedness from KCSI had occurred as of January 1, 1998 and 1999,
respectively. See "Financing--Description of the Credit Facilities." The
results for the nine months ended September 30, 1999 are not necessarily
indicative of the results for the full fiscal year.

· Enlarge/Download Table

Nine Months
Ended
Year Ended December 31, September 30,
-------------------------------------------------- ----------------
1994(i) 1995(ii) 1996(iii) 1997 1998(iv) 1998 1999
---- ---- ---- ---- ---- ---- ----
(Dollars in Millions, except per share data)

FINANCIAL DATA:
--------------
INCOME STATEMENT
DATA:
Revenues $583.8 $236.7 $329.6 $485.1 $670.8 $490.1 $826.7
Operating expenses 515.2 156.5 197.8 285.9 390.2 280.1 481.2
------ ------ ------ ------ ------ ------ ------
Operating Income 68.6 80.2 131.8 199.2 280.6 210.0 345.5

Equity in earnings
of unconsolidated
affiliates 24.8 29.6 68.6 24.9 25.8 23.8 34.1
Reduction in
ownership of DST -- -- -- -- (29.7) -- --
Gain on sale
of DST -- 296.3 -- -- -- -- --
Other, net 0.4 3.7 8.2 5.8 12.6 10.5 16.1
------ ------ ------ ------ ------ ----- -----
Pretax Income 93.8 409.8 208.6 229.9 289.3 244.3 395.7
Income tax
provision 31.4 181.3 58.2 87.0 103.7 88.6 142.5
Minority interest 5.3 10.5 15.8 24.9 33.4 25.8 38.6
------ ------ ------ ------ ------ ----- -----
Net Income $ 57.1 $218.0 $134.6 $118.0 $152.2 $129.9 $214.6
====== ====== ====== ====== ====== ===== ======

Per Share Data:

Weighted Average
Common shares
outstanding 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Basic Earnings
per share $57,100 $218,000 $134,600 $118,000 $152,200 $129,900 $214,600
Diluted Earnings
per share 57,100 218,000 134,000 117,400 149,900 128,900 211,200

Pro Forma
Per Share Data:
Common shares
outstanding (in
thousands) 221,038 221,038 221,038

Basic Earnings per share $ 0.67 $ 0.57 $ 0.95

Diluted Common
shares outstanding
(in thousands) 228,585 228,585 228,585

Diluted Earnings per share $ 0.63 $ 0.55 $ 0.91

· Enlarge/Download Table

December 31, September 30,
---------------------------------------------- ----------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----

BALANCE SHEET DATA:

Total Assets $672.4 $475.2 $548.2 $672.6 $822.9 $799.2 $1,016.1
Long term obligations:
Third Parties 38.5 0.4 0.1 -- -- -- --
KCSI 223.1 -- 117.3 84.1 16.6 19.7 --

Cash dividends per
Common share n/a n/a n/a n/a n/a n/a n/a

OPERATING DATA:
--------------

Total Assets Under
Management
(in billions) 25.9 $ 34.5 $ 50.3 $ 71.6 $113.5 $ 88.5 $171.1

Total Shareowner
Accounts
(in millions) 2.4 2.5 2.5 2.7 3.0 3.0 4.0

<FN>
<F1>
(i) Reflects DST as a consolidated subsidiary. See (ii) below for discussion of DST
public offering in 1995.

<F2>
(ii) Reflects DST as an unconsolidated affiliate as of January 1, 1995 due to the DST
public offering and associated transactions completed in November 1995, which reduced
Stilwell's ownership of DST to approximately 41% and resulted in deconsolidation of
DST from Stilwell's consolidated financial statements. The public offering and
associated transactions resulted in a $144.6 million after-tax gain to Stilwell.

<F3>
(iii) Includes a one-time after-tax gain of $47.7 million, representing Stilwell's
proportionate share of the one-time gain recognized by DST in connection with the
merger of The Continuum Company, Inc. ("Continuum"), formerly a DST equity affiliate,
with Computer Sciences Corporation ("CSC")in a tax-free share exchange.

<F4>
(iv) Includes a one-time non-cash charge of $36.0 million ($23.2 million after-tax)
resulting from the merger of a wholly-owned subsidiary of DST with USCS
International, Inc. ("USCS"). The merger was accounted for by DST under the pooling
of interests method. The charge reflects Stilwell's reduced ownership of DST (from
41% to approximately 32%), together with Stilwell's proportionate share of DST and
USCS fourth quarter merger-related costs.

</FN>

EX-99.1 6th "Page" of 34 TOC 1st Previous Next Bottom Just 6th

INTRODUCTION

KCSI formed Stilwell on January 23, 1998 as a holding company for the
group of businesses and investments that comprise the financial services
business of KCSI and to effect the Distribution. Such businesses include
Janus, Berger, Nelson, DST and the Miscellaneous Corporations. In connection
with the Distribution, KCSI transferred to Stilwell KCSI's investments in these
businesses and certain other financial services-related assets and Stilwell
assumed all of KCSI's liabilities associated with the assets transferred,
effective July 1, 1999.

On [January _____, 2000], the Board of Directors of KCSI gave final
approval to the Distribution, payable to holders of record of KCSI Common Stock
on the Record Date, of two shares of Stilwell Common Stock for every one share
of KCSI Common Stock outstanding on the Record Date. As a result of the
Distribution, all of the outstanding shares of Stilwell Common Stock will be
distributed to holders of KCSI Common Stock on a pro-rata basis (including the
holders of KCSI Common Stock through accounts in the KCSI ESOP, the Stilwell
ESOP, the DST ESOP and the KCSI Profit Sharing Plan (as each is defined
herein)). No fractional shares of Stilwell Common Stock will be distributed in
the Distribution. Certificates representing shares of Stilwell Common Stock
are expected to be mailed by the Distribution Agent to KCSI stockholders on the
Mailing Date.

Stockholders of KCSI with inquiries relating to the Distribution should
contact: The Office of the Corporate Secretary; 114 West 11th Street, Kansas
City, MO 64105, telephone (816) 983-1237.

RISK FACTORS

Stockholders of KCSI should carefully consider and evaluate all of the
information set forth in this Information Statement, including the risk factors
listed below. In addition to the historical information included herein, the
discussion set forth below, as well as other portions of this Information
Statement, contains comments not based upon historical fact. Such forward-
looking comments are based upon information currently available to management
and management's perception thereof as of the date of this Information
Statement. Readers can identify these forward-looking comments by their use of
such verbs as "expects," "anticipates," "believes" or similar verbs or
conjugations of such verbs. The actual results of operations of Stilwell could
materially differ from those indicated in forward-looking comments. The
differences could be caused by a number of factors or combination of factors.
Readers are strongly encouraged to consider the following risk factors when
evaluating any such forward-looking comments. Stilwell will not update any
forward-looking comments set forth in this Information Statement.

RISKS RELATED TO THE DISTRIBUTION

STILWELL'S LACK OF OPERATING HISTORY AS A STAND-ALONE COMPANY MAKES IT
DIFFICULT TO PREDICT ITS FUTURE RESULTS

Stilwell was formed only recently as a holding company for the group of
businesses and investments that comprise the financial services business of
KCSI, and has never operated as a stand-alone company. Following the
Distribution, KCSI will have no obligation to provide financial or other
assistance to Stilwell except as described in an intercompany agreement (the
"Intercompany Agreement") and a tax disaffiliation agreement (the "Tax
Disaffiliation Agreement") between KCSI and Stilwell. See "Relationship
Between KCSI and Stilwell After the Distribution," "Financing" and "Business."
The historical financial information included in this Information Statement may
not be indicative of Stilwell's future performance, and does not necessarily
reflect the financial position, results of operations and cash flows of
Stilwell had Stilwell operated as a separate stand-alone entity during each of
the periods presented. In addition, the financial information included herein
does not reflect any changes that may occur in the financial condition and
operations of Stilwell as a result of the Distribution. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations" and
Stilwell's consolidated financial statements.

THERE HAS BEEN NO PRIOR MARKET FOR STILWELL COMMON STOCK AND IT IS IMPOSSIBLE
TO PREDICT THE PRICES AT WHICH THOSE SECURITIES MIGHT TRADE

There has been no established trading market for Stilwell Common Stock,
and there can be no reliable prediction as to the prices at which it will trade
after completion of the Distribution. While it is expected that a "when-
issued" trading market will develop near the Record Date, until the Stilwell
Common Stock is fully distributed and an orderly trading market develops, the
prices at which trading in Stilwell Common Stock occurs may fluctuate
significantly. Trading in Stilwell Common Stock on a "when-issued" basis
exposes such traders to a risk of loss if the Distribution does not occur. See
"The Distribution-Trading of Stilwell Common Stock." The prices at which
shares of Stilwell Common Stock trade will be determined by the marketplace and
may be influenced by many factors, including, among others, Stilwell's
performance and prospects, the depth and liquidity of the market for Stilwell
Common Stock, investor perception of Stilwell and its businesses and the
industry in which Stilwell operates, Stilwell's dividend policy, general
financial and other market conditions, domestic and international economic
conditions and the impact of factors described in this "Risk Factors" section.
See "The Distribution-Trading of Stilwell Common Stock."

SUBSTANTIAL SALES OF STILWELL COMMON STOCK FOLLOWING THE DISTRIBUTION OR THE
PERCEPTION THAT SUCH SALES MIGHT OCCUR COULD DEPRESS THE MARKET PRICE OF
STILWELL COMMON STOCK

Substantially all of the shares of Stilwell Common Stock issued in the
Distribution will be eligible for immediate resale in the public market. Any
sales of substantial amounts of Stilwell Common Stock in the public market, or
the perception that such sales might occur, whether as a result of the
Distribution or otherwise, could depress the market price of Stilwell Common
Stock. Stilwell is unable to predict whether substantial amounts of Stilwell
Common Stock will be sold in the open market following the Distribution. See
"The Distribution-Trading of Stilwell Common Stock."

MATERIAL INACCURACY OF REPRESENTATIONS OR ASSUMPTIONS UNDERLYING THE TAX RULING
COULD CAUSE THE DISTRIBUTION NOT TO BE TAX-FREE, RESULTING IN SUBSTANTIAL
CORPORATE TAXABLE GAIN, AND CERTAIN POST-DISTRIBUTION TRANSACTIONS COULD
SUBJECT KCSI OR STILWELL TO SUBSTANTIAL TAX AND INDEMNIFICATION OBLIGATIONS

The Tax Ruling is based on factual representations and assumptions
provided by KCSI. If these factual representations or assumptions were
incorrect in any material respect, the ability of KCSI and Stilwell to rely on
the Tax Ruling would be jeopardized. Neither KCSI nor Stilwell is aware of any
facts or circumstances which should cause such representations and assumptions
to be untrue.

If the Distribution were not to qualify as a tax-free distribution within
the meaning of Section 355 of the Code, KCSI would recognize taxable gain equal
to the excess of the fair market value of the Stilwell Common Stock distributed
to KCSI's stockholders over KCSI's tax basis in the Stilwell Common Stock.
Such corporate taxable gain could amount to $4-5 billion or more. In addition,
each KCSI stockholder who receives the Stilwell Common Stock in the
Distribution would generally be treated as receiving a taxable distribution in
an amount equal to the fair market value of the Stilwell Common Stock.

If the Distribution qualified under Section 355 of the Code but was
disqualified as tax-free to KCSI because of certain post-Distribution
circumstances, such as an acquisition of Stilwell or of KCSI under certain
circumstances within two years after the Distribution, KCSI would recognize
taxable gain. Such corporate taxable gain to KCSI could amount to $4-5 billion
or more.

In the Tax Disaffiliation Agreement, KCSI and Stilwell each agreed not to
take any action which would cause the Distribution to fail to qualify as a tax-
free distribution under Code Section 355 unless required to do so by law. KCSI
and Stilwell have agreed to indemnify each other with respect to any tax
liability resulting from their respective failures to comply with such
provisions. In addition, KCSI and Stilwell are each required to indemnify the
other for any taxes resulting from any changes in their respective ownership.
See "Relationship Between KCSI and Stilwell After the Distribution-Tax
Disaffiliation Agreement."

THE INTERCOMPANY AGREEMENT AND THE TAX DISAFFILIATION AGREEMENT CONTAIN
INDEMNIFICATION OBLIGATIONS OF KCSI AND STILWELL THAT KCSI OR STILWELL MAY NOT
BE ABLE TO SATISFY, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON KCSI OR
STILWELL

The Intercompany Agreement and the Tax Disaffiliation Agreement allocate
responsibility between KCSI and Stilwell for various liabilities and
obligations. However, the availability of such indemnities will depend upon
the future financial strength of KCSI and Stilwell. KCSI or Stilwell may not
be in a financial position to fund such indemnities if they should arise, which
could have a material adverse effect on KCSI or Stilwell. The Intercompany
Agreement provides that each party will indemnify the other against claims
relating to or arising out of their respective businesses before and after the
Distribution. The Tax Disaffiliation Agreement provides that each party will
indemnify the other with respect to taxes attributable to their respective
businesses arising before or after the Distribution, taxes or losses caused by
their respective breach of the Tax Disaffiliation Agreement and taxes and
claims relating to their respective businesses caused by KCSI's or Stilwell's
actions, failure to act, any party's actions with respect to KCSI or Stilwell,
inaccurate or incomplete information provided by KCSI or Stilwell in the ruling
request or any actions taken by KCSI or Stilwell that negatively impact the Tax
Ruling. See "Relationship Between KCSI and Stilwell after the Distribution."

ACQUISITIONS, WHICH ARE PART OF STILWELL'S BUSINESS STRATEGY, INVOLVE INHERENT
RISKS WHICH COULD RESULT IN ADVERSE EFFECTS ON STILWELL'S OPERATING RESULTS AND
FINANCIAL CONDITION AND DILUTE THE HOLDINGS OF CURRENT STOCKHOLDERS

As part of its business strategy, Stilwell intends to consider
acquisitions of similar or complementary businesses. See "Business-Stilwell
Business Strategy." If Stilwell is not correct when it assesses the value,
strengths, weaknesses, liabilities and potential profitability of acquisition
candidates or if it is not successful in integrating the operations of the
acquired businesses, that could have a material adverse effect on Stilwell's
operating results and financial condition. Any future acquisitions will be
accompanied by the risks commonly associated with acquisitions. These risks
include, among others, potential exposure to unknown liabilities of acquired
companies and to acquisition costs and expenses, the difficulty and expense of
integrating the operations and personnel of the acquired companies, the
potential disruption to the business of the combined company and potential
diversion of management's time and attention, the impairment of relationships
with and the possible loss of key employees and clients as a result of the
changes in management, the occurrence of amortization expenses if an
acquisition is accounted for as a purchase, and dilution to the stockholders of
the combined company if the acquisition is made for stock of the combined
company. In addition, products, technologies or businesses of acquired
companies may not be effectively assimilated into Stilwell's business and
product offerings of the combined company may not have a positive effect on the
combined company's revenues or earnings. The combined company may also incur
significant expense to complete acquisitions and to support the acquired
products and businesses. Further, any such acquisitions may be funded with
cash, debt or equity, which could have the effect of diluting or otherwise
adversely affecting the holdings or the rights of stockholders acquiring
Stilwell Common Stock in the Distribution. Finally, Stilwell may not be
successful in identifying attractive acquisition candidates or completing
acquisitions on favorable terms.

PROVISIONS OF STILWELL'S GOVERNING DOCUMENTS, ITS RIGHTS PLAN AND RESTRICTIONS
RELATING TO THE TAX RULING COULD HAVE THE EFFECT OF DELAYING OR PREVENTING A
CHANGE IN CONTROL OF STILWELL, WHICH MAY HAVE AN ADVERSE EFFECT ON THE MARKET
PRICE OF STILWELL COMMON STOCK

Some provisions of Stilwell's Certificate and Bylaws, the Rights Plan and
restrictions relating to the Tax Ruling may delay or make more difficult
acquisitions or changes in control of Stilwell, which may have an adverse
effect on the market price of Stilwell Common Stock. For example, Stilwell's
Certificate and Bylaws authorize blank series preferred stock, require a
supermajority stockholder vote for approval of certain types of business
combinations, establish a staggered Board of Directors and impose certain
procedural and other requirements for some corporate actions. Stilwell's
Rights Plan could significantly dilute the interest in Stilwell of persons
seeking to acquire control of Stilwell without prior approval of Stilwell's
Board of Directors. Further, income taxes that could be imposed by the Code as
a result of ownership changes of Stilwell made in conjunction with the
Distribution may have the effect of delaying or making more difficult changes
in control of Stilwell. See "Description of Capital Stock" and "The
Distribution-Material Federal Income Tax Consequences."

STILWELL HAS A SIGNIFICANT NUMBER OF AUTHORIZED BUT UNISSUED SHARES WHICH IF
ISSUED COULD DILUTE THE EQUITY INTERESTS OF EXISTING STILWELL STOCKHOLDERS AND
ADVERSELY AFFECT EARNINGS PER SHARE

If more shares of Stilwell Common Stock are issued following the
Distribution, the equity interests of existing Stilwell stockholders could be
diluted and the earnings per share of Stilwell Common Stock could be adversely
affected. Stilwell is authorized to issue one billion shares of Stilwell
Common Stock. Approximately 221,000,000 shares of Stilwell Common Stock will
be distributed and outstanding after the Distribution. See "Capitalization"
and "Description of Capital Stock." The Board of Directors of Stilwell has
full discretion to issue shares of Stilwell Common Stock at any time in the
future, subject to applicable legal, stock exchange and other regulatory
requirements.

VARIOUS FACTORS MAY HINDER THE DECLARATION AND PAYMENT OF DIVIDENDS BY STILWELL
FOLLOWING THE DISTRIBUTION

The payment of dividends by Stilwell is subject to the discretion of its
Board of Directors, and various factors may prevent it from paying dividends.
Such factors include Stilwell's financial position, its capital requirements
and liquidity, the existence of a stock repurchase program, any loan agreement
restrictions, state corporate law requirements, results of operations and such
other factors as Stilwell's Board of Directors may consider relevant. In
addition, as a holding company, Stilwell's ability to pay dividends is
dependent on the dividends and income it receives from its subsidiaries. At
the present time Stilwell's primary source of cash is dividends received from
Janus. The payment of dividends by Janus is subject to the discretion of its
Board of Directors and although Stilwell has a contractual obligation to cause
such payment, another party has the right to nominate a majority of that
Board. See "Dividend Policy."

THE COMBINED POST-DISTRIBUTION MARKET VALUE OF KCSI COMMON STOCK AND STILWELL
COMMON STOCK MAY NOT EQUAL OR EXCEED THE PRE-DISTRIBUTION MARKET VALUE OF KCSI
COMMON STOCK

The combined market value of KCSI Common Stock and Stilwell Common Stock
immediately after the Distribution may not be equal to or greater than the
market value of KCSI Common Stock immediately prior to the Distribution. After
the Distribution, KCSI expects that the KCSI Common Stock will continue to be
listed for trading on the New York Stock Exchange. As a result of the
Distribution, absent other action, the trading prices of KCSI Common Stock are
expected to be significantly lower than the trading prices of KCSI Common Stock
immediately prior to the Distribution. In an attempt to address this issue,
KCSI's Board of Directors intends to effect, after the Record Date, a reverse
stock split whereby every two shares of KCSI Common Stock then outstanding will
be combined into one share of KCSI Common Stock. See "The Distribution-Trading
of Stilwell Common Stock."

CONTINUATION OF STRAINED RELATIONS BETWEEN STILWELL AND JANUS MANAGEMENT COULD
HAVE A MATERIAL ADVERSE EFFECT ON STILWELL

Relations between Stilwell and the management of its key subsidiary,
Janus, have been strained recently, primarily as the result of disagreements
over the structure of the Distribution. See "The Distribution-Background and
Reasons for the Distribution." Although not expected, continuation of these
strained relations could result in the loss of key Janus employees and Janus
management which could have a material adverse effect on Stilwell. The
portfolio managers and other key employees of Janus are not subject to any
noncompete agreements that would preclude them from participating in a
competing financial services business, although they are subject to agreements
that prohibit them for a specific period of time following the end of their
employment from soliciting any investment advisory or investment management
clients of Janus or hiring or soliciting employees to leave the employ of
Janus. It is also possible that the publicity surrounding the disagreements
between Stilwell and members of the Janus Minority Group could have an adverse
effect on Janus' business and on Stilwell's ability to attract or retain
qualified personnel. See "Stilwell's Inability to Attract and Retain Key
Personnel Could Have a Material Adverse Effect on Its Future Success."

STILWELL MAY BE REQUIRED TO PURCHASE OR SELL JANUS COMMON STOCK

Under mandatory put rights contained in certain agreements, Stilwell may
be required to purchase the interests in Janus owned by certain minority
stockholders. Under the mandatory put rights, KCSI or Stilwell would be
required to purchase the interests of such stockholders at a purchase price
equal to fifteen times the net after-tax earnings over a specified period, or
in some circumstances at a purchase price determined by an independent
appraisal. The period used to calculate net after-tax earnings per share is
the fiscal year ended immediately prior to the date that the put rights are
exercised or the last four complete calendar quarters ended immediately prior
to the date that the put rights are exercised. If Stilwell had been required
to make such purchases based on the value of the stock at a fifteen times
multiple as of September 30, 1999, Stilwell would have been required to pay
approximately $481 million. Under these and other agreements, Stilwell may be
required to purchase the interests in Janus owned by certain minority
stockholders upon certain changes in ownership of KCSI or Stilwell. If
Stilwell had been required to make such purchases based on the value of the
stock at a fifteen times multiple as of September 30, 1999, Stilwell would have
been required to pay approximately $692 million. Stilwell could require
additional financing to make these purchases. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Minority Purchase
Agreements." If such purchases included a reduction in ownership of Janus
common stock held by its Chief Executive Officer, to below 5%, this could be
deemed to constitute a change of control which may result in an assignment
and termination of Janus' investment advisory agreements. See "Risk Factors-
Stilwell's Business is Dependent on Investment Advisory Agreements Which Are
Subject to Termination or Non-Renewal."

Under a stock purchase agreement with Thomas H. Bailey, Janus' Chairman,
President and Chief Executive Officer, and another Janus stockholder (the
"Janus Stock Purchase Agreement"), upon the occurrence of a Change in Ownership
(as defined below) of Stilwell, Stilwell may be required, at such holders'
option, to sell its stock of Janus to such minority stockholders, or to
purchase such holders' Janus stock. The purchase price in either instance is
equal to fifteen times the net after-tax earnings per share of Janus for the
fiscal year ending immediately after the Change in Ownership, or as otherwise
negotiated between the parties. Under other stock purchase agreements and
restriction agreements with other minority stockholders, upon the occurrence of
a Change in Ownership of KCSI or Stilwell, Stilwell may be required, at such
stockholders' option, to purchase such minority stockholders' Janus stock at a
purchase price equal to fifteen times the net after-tax earnings over the
period indicated in the relevant agreement, or in some circumstances at a
purchase price as determined by Janus' Stock Option Committee. The period used
to calculate net after-tax earnings per share is the fiscal year ended
immediately prior to the date that the put rights are exercised or the last
four complete calendar quarters ended immediately prior to the date that
notice of the Change in Ownership is given by KCSI or Stilwell. A Change in
Ownership of KCSI or Stilwell is deemed to occur in either instance if (i) a
person or entity without the prior approval of KCSI or Stilwell acquires a
significant percentage of stock with the intent to acquire control of KCSI or
Stilwell or (2) upon certain changes in the composition of KCSI's or Stilwell's
Board of Directors. The Janus Stock Purchase Agreement and its amendments are
filed as exhibits to the Registration Statement on Form 10 to which this
Information Statement is an exhibit. The Janus Stock Purchase Agreement and
many of these other agreements have been assigned to Stilwell, but some of the
agreements have not yet been amended to change the reference to Change in
Ownership from KCSI to Stilwell. However, pursuant to the Intercompany
Agreement, Stilwell is obligated to KCSI in the same manner that KCSI is
obligated under these agreements and Stilwell has the right to any benefits and
assets received by KCSI under such agreements. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations-Minority Purchase
Agreements" and "Financing."

RISKS RELATED TO THE BUSINESS OF STILWELL FINANCIAL, INC.

A DECLINE IN THE PERFORMANCE OF THE SECURITIES MARKETS COULD ADVERSELY AFFECT
STILWELL'S REVENUES

The results of operations of Stilwell are affected by many economic
factors, including the performance of the U.S. securities markets. A decline in
the securities markets, failure of the securities markets to sustain their
recent levels of growth, or short-term volatility in the securities markets
could result in investors withdrawing assets from the markets or decreasing
their rate of investment, either of which could adversely affect Janus, Berger
and Nelson. Because most of Stilwell's revenues are based on the value of
assets under management, a decline in the value of those assets would adversely
affect revenues of Stilwell. Favorable performance by the U.S. securities
markets over the last several years has attracted a substantial increase in the
investments in these markets. Partly as a result of this financial
environment, the assets under management of Janus and Berger have increased
significantly and levels of profitability have grown. The growth rate of
Stilwell's subsidiaries and equity investments has varied from year to year,
and the high average growth rates sustained in the recent past may not
continue. In addition, in periods of slowing growth or declining revenues,
profits and profit margins are adversely affected because certain expenses
remain relatively fixed.

POOR INVESTMENT PERFORMANCE OF FUNDS MANAGED BY STILWELL'S SUBSIDIARIES COULD
ADVERSELY AFFECT STILWELL'S REVENUES

Success for Stilwell is dependent to a significant extent on the
investment performance of the mutual funds and other accounts (the "Funds")
managed by its subsidiaries, especially Janus. Failure of the Funds to perform
well could have an adverse effect on the revenues of Stilwell. Good
performance stimulates sales of the Funds' shares and tends to keep redemptions
low. Increased sales of the Funds' shares generate higher revenues for
Stilwell (which are directly related to assets under management). Conversely,
poor performance tends to result in decreased sales and increased redemptions
of the Funds' shares, with corresponding decreases in revenues to Stilwell.
Similarly, success for Nelson is partly dependent on attaining consistently
reasonable investment returns for the assets managed by Nelson.

STILWELL'S BUSINESS IS DEPENDENT ON INVESTMENT ADVISORY AGREEMENTS WHICH ARE
SUBJECT TO TERMINATION OR NON-RENEWAL

Most of the revenues of Janus and Berger are derived pursuant to
investment advisory agreements with their respectively managed Funds. Any
termination of or failure to renew a significant number of these agreements
could have a material adverse impact on Janus or Berger. These investment
advisory agreements may be terminated by either party with notice, are
terminated in the event of an "assignment" (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")), and must be approved and
renewed annually by the disinterested members of each fund's board of directors
or trustees, or its shareowners, as required by law.

Generally, any change in control of Janus or Berger would constitute an
"assignment" under the 1940 Act. The Distribution is not expected to result in
a change of control of Janus or Berger and therefore under the applicable rules
of the Securities and Exchange Commission would not constitute such an
assignment. However, a material reduction in the ownership of Janus common
stock by its chief executive officer may result in an assignment by virtue of
certain provisions in an agreement with him. See "Risk Factors-Stilwell May Be
Required to Purchase or Sell Janus Common Stock." The Boards of Trustees or
Directors of the Janus Advised Funds ("Trustees") generally may terminate the
investment advisory agreements upon written notice for any reason, including if
they believe the Distribution may adversely affect the funds. See "Summary-
Stilwell Financial, Inc. - Background" and "Business."

ANY EVENT THAT NEGATIVELY AFFECTS THE U.S. MUTUAL FUND INDUSTRY COULD HAVE A
MATERIAL ADVERSE EFFECT ON STILWELL

Any event affecting the U.S. mutual fund industry which results in a
general decrease in assets under management or a significant general decline in
the number of U.S. mutual fund industry clients or accounts could have a
material adverse effect on Janus, Berger and DST. The future growth and
success of Janus, Berger and DST depend in part upon the continued growth of
the mutual fund industry in the United States, which has experienced
significant growth over the last several years. Janus and Berger derive a
substantial portion of their revenues from assets under management in U.S.
mutual funds. DST derives a substantial portion of its revenues from the
delivery of services and products to U.S. mutual fund industry clients.

STILWELL'S INABILITY TO ATTRACT AND RETAIN KEY PERSONNEL COULD HAVE A MATERIAL
ADVERSE EFFECT ON ITS FUTURE SUCCESS

The loss of the services of one or more of Stilwell's key employees or its
failure to attract, retain and motivate qualified personnel could have a
material adverse impact on Stilwell's business, financial condition, results of
operations and future prospects. As with other investment management
businesses, Stilwell's future performance depends to a significant degree upon
the continued contributions of certain officers, portfolio managers and other
key management personnel. Stilwell's business is also similar to other
investment management businesses in that it is dependent on its ability to
attract, retain and motivate highly skilled, and often highly specialized,
technical and management personnel. There is substantial competition for
qualified technical and management personnel. Further, relations between
Stilwell and the management of its key subsidiary, Janus, have been strained
recently, primarily as the result of disagreements over the structure of the
Distribution. See "Risk Factors-Continuation of Strained Relations Between
Stilwell and Janus Management Could Have a Material Adverse Effect on Stilwell"
and "Management."

INCREASED COMPETITION COULD REDUCE THE DEMAND FOR STILWELL'S PRODUCTS AND
SERVICES WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON STILWELL'S BUSINESS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS PROSPECTS

STILWELL'S CREDIT FACILITIES IMPOSE RESTRICTIONS ON ITS ABILITY TO CONDUCT
BUSINESS AND MAY NOT BE SUFFICIENT TO SATISFY STILWELL'S CAPITAL AND OPERATING
REQUIREMENTS

Stilwell's credit facilities impose restrictions on its ability to conduct
business and may not be sufficient to satisfy Stilwell's capital and operating
requirements. These credit facilities contain covenants that, among other
things, restrict the ability of Stilwell to transfer assets, merge, incur debt
and create liens. In addition, the credit facilities require Stilwell to
maintain specified financial ratios, including maximum leverage, minimum net
worth and minimum interest coverage. The ability of Stilwell to comply with
such provisions may be affected by events beyond Stilwell's control. The
breach of any of these covenants would result in a default under the credit
facilities. In the event of any such default, lenders party to the credit
facilities could elect to declare all amounts borrowed under the credit
facilities, together with accrued interest and other fees, to be due and
payable. If any indebtedness under the credit facilities is accelerated,
Stilwell may not have sufficient assets to repay such indebtedness in full.

The timing of Stilwell's future capital requirements will depend on a
number of factors, including the ability of Stilwell to successfully implement
its business strategy. In addition, Stilwell, as a continuation of its
practice of providing credit facilities to its subsidiaries, has provided an
intercompany credit facility to Janus for use by Janus for general corporate
purposes, effectively reducing the amount of the credit facilities available
for Stilwell's other purposes. Stilwell may require additional capital sooner
than anticipated to the extent that Stilwell's operations do not progress as
anticipated or if certain put rights are exercised by Janus stockholders.
Stilwell intends to seek to obtain any additional financing for general
corporate purposes on substantially the same terms and conditions as its
existing credit facilities. There may not be any required additional capital
available on acceptable terms, or at all, and the failure to obtain any such
required capital could have a material adverse effect on Stilwell's
operations. See "Financing" and "Management's Discussion and Analysis of
Financial Conditions and Results of Operations-Minority Purchase Agreements."

STILWELL'S BUSINESS IS SUBJECT TO PERVASIVE REGULATION WITH ATTENDANT COSTS OF
COMPLIANCE AND SERIOUS CONSEQUENCES FOR VIOLATIONS

Virtually all aspects of Stilwell's business are subject to various laws
and regulations. Violations of such laws or regulations could subject Stilwell
and/or its employees to disciplinary proceedings or civil or criminal
liability, including revocation of licenses, censures, fines or temporary
suspension or permanent bar from the conduct of their business. Any such
proceeding or liability could have a material adverse effect upon Stilwell's
business, financial condition, results of operations and business prospects.
These laws and regulations generally grant regulatory agencies and bodies broad
administrative powers, including, in some cases, the power to limit or restrict
Stilwell from operating its businesses in the event it fails to comply with
such laws and regulations. Due to the extensive regulations and laws to which
Stilwell is subject, management of Stilwell is required to devote substantial
time and effort to legal and regulatory compliance issues.

In addition, the regulatory environment in which Stilwell operates is
subject to change. Stilwell may be adversely affected as a result of new or
revised legislation or regulations or by changes in the interpretation or
enforcement of existing laws and regulations. See "Business-Regulation."

STILWELL'S BUSINESS IS VULNERABLE TO SYSTEMS FAILURES WHICH COULD HAVE A
MATERIAL ADVERSE EFFECT ON STILWELL'S BUSINESS, FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Any delays or inaccuracies in securities pricing information or
information processing could give rise to claims against Janus, Berger, Nelson
or DST, which could have a material adverse effect on Stilwell's business,
financial condition and results of operations. Janus, Berger, Nelson and DST
are highly dependent on communications and information systems and on third
party vendors for securities pricing information and updates from certain
software. In addition, DST's processing services are dependent on the
Winchester and Poindexter Data Centers, DST's facilities for computer
operations, information processing and image processing. Stilwell's
subsidiaries and equity investments may suffer a systems failure or
interruption, whether caused by an earthquake, fire, other natural disaster,
power or telecommunications failure, unauthorized access, act of God, act of
war or otherwise and Stilwell's back-up procedures and capabilities may not be
adequate or sufficient to eliminate the risk of extended interruptions in
operations.

CERTAIN AGREEMENTS PROVIDE THE CHIEF EXECUTIVE OFFICER OF JANUS SUBSTANTIAL
INFLUENCE OVER THE INVESTMENT POLICIES OF JANUS

The Janus Stock Purchase Agreement with Thomas H. Bailey ("Mr. Bailey"),
Chairman, President and Chief Executive Officer of Janus and the holder of
12% of Janus common stock, provides that so long as Mr. Bailey is a holder of
at least 5% of the shares of Janus and continues to be employed as President
of Janus, he shall continue to establish and implement policy with respect to
the investment advisory and portfolio management activity of Janus. In
furtherance of such objective, such agreement provides that in those
circumstances Stilwell will vote its shares of Janus stock to elect directors
of Janus, at least the majority of whom are selected by Mr. Bailey, subject
to Stilwell's approval, which approval may not be unreasonably withheld. The
agreement also provides that any change in management philosophy, style or
approach with respect to investment advisory and portfolio management
policies of Janus shall be mutually agreed upon by Stilwell and Mr. Bailey.
In addition, Janus is party to employment agreements with certain key
employees of Janus that provide that in the event that (i) Mr. Bailey, James
P. Craig, Vice Chairman and Chief Investment Officer of Janus, or an
individual mutually agreed to by Mr. Bailey and the Board of Directors of
Janus, no longer serves as the Chief Executive Officer of Janus, or (ii) Mr.
Bailey ceases to have the foregoing rights with respect to selection of a
majority of the Board of Directors of Janus, these employees would be
entitled to additional benefits following certain terminations of their
employment.

STILWELL'S BUSINESS IS SUBJECT TO INTERNATIONAL MARKET RISKS OF EVENTS WHICH
COULD HAVE A MATERIAL ADVERSE EFFECT ON STILWELL'S BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Certain portions of the managed portfolios of Janus and Berger as well as
assets managed by Nelson are invested from time to time in various securities
of corporations located or doing business in foreign trading markets and
developing regions of the world commonly known as emerging markets. These
portfolios and assets, and revenues derived from the management of such
portfolios and assets, are subject to various risks of events which could have
a material adverse effect on Stilwell's business, financial condition and
results of operations. Such risks include unfavorable political and diplomatic
developments, currency fluctuations, social instability, changes in
governmental policies, expropriation, nationalization, confiscation of assets
and changes in legislation relating to foreign ownership. In addition, foreign
trading markets, particularly in some emerging market countries, are often
smaller, less liquid, less regulated and significantly more volatile.

IF STILWELL HAS NOT FULLY RESOLVED ITS YEAR 2000 ISSUES, STILWELL'S RESULTS OF
OPERATIONS, FINANCIAL POSITION AND CASH FLOWS COULD BE ADVERSELY AFFECTED

Many existing computer programs and microprocessors that use only two
digits (rather than four) to identify a year could fail or create erroneous
results with respect to dates after December 31, 1999 if not corrected to read
all four digits. It is too soon to determine if Stilwell will experience any
material adverse consequences as a result of the Year 2000 problem. The Year
2000 problem could result in significant difficulties in processing and
completing fundamental transactions. In such event, Stilwell's results of
operations, financial position and cash flows could be materially adversely
affected. Stilwell has been working with project teams comprised of employees
and third party consultants to identify and resolve the numerous issues
surrounding the Year 2000 with respect to Stilwell.

These Year 2000 related issues are of particular importance to Stilwell.
Stilwell depends upon its computer and other systems and the computers and
other systems of third parties (including DST) to conduct and manage its
business. Additionally, Stilwell's products and services are heavily dependent
upon using accurate dates in order to function properly. These Year 2000
related issues may also adversely affect the operations and financial
performance of one or more of Stilwell's customers and suppliers as well as the
companies in which Janus, Berger and Nelson invest. As a result, the failure
of Stilwell's computer and other systems, products or services, the computer
systems and other systems upon which Stilwell depends, Stilwell's customers,
suppliers or the companies in which Janus, Berger and Nelson invest to be Year
2000 ready could have a material adverse impact on Stilwell's results of
operations, financial position and cash flows. Stilwell is unable to assess
the extent or duration of that impact at this time, but it could be
substantial.

Areas that could be affected include, but are not limited to, the
ability to accurately track pricing and trading information, obtain, process
and complete customer orders and investor transactions, order and obtain
critical supplies, and operate equipment and control systems. In addition,
the investment performance of various funds could be adversely affected if
the trading prices of the capital stock of a number of companies within such
funds are lower as a result of Year 2000 related issues. Stilwell has no
basis to form an estimate of possible costs or lost revenues at this time.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

* * *

THIS INFORMATION STATEMENT IS BEING FURNISHED SOLELY TO PROVIDE
INFORMATION TO KCSI STOCKHOLDERS WHO WILL RECEIVE SHARES OF STILWELL COMMON
STOCK IN THE DISTRIBUTION. IT IS NOT AN INDUCEMENT OR ENCOURAGEMENT TO BUY OR
SELL ANY SECURITIES OF KCSI OR STILWELL. THE INFORMATION CONTAINED IN THIS
INFORMATION STATEMENT IS ACCURATE AS OF THE DATE SET FORTH ON ITS COVER.
CHANGES MAY OCCUR AFTER THAT DATE, AND NEITHER KCSI NOR STILWELL WILL UPDATE
THE INFORMATION EXCEPT IN THE NORMAL COURSE OF THEIR RESPECTIVE REQUIRED PUBLIC
DISCLOSURES.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS INFORMATION
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.

EX-99.1 7th "Page" of 34 TOC 1st Previous Next Bottom Just 7th

THE DISTRIBUTION

BACKGROUND AND REASONS FOR THE DISTRIBUTION

KCSI was incorporated in 1962 as a holding company for its rail
transportation business. Following its formation, KCSI engaged in a series of
transactions aimed at diversifying beyond the railroad business. KCSI entered
the mutual fund industry in 1963 when it acquired a Chicago-based mutual fund
manager, later named Supervised Investor Services, Inc. ("SIS").

During the late 1960s, mutual funds began to experience difficulty in
securing accurate and timely recordkeeping for their shareowners as the volume
of mutual fund transactions increased. Using computer and data processing
capabilities developed for its railroad business, KCSI in cooperation with SIS
management developed specialized data processing systems and computer software
services and products designed specifically for mutual funds. In 1968, DST
(originally called "DATA-SYS-TANCE") was incorporated by KCSI to own, enhance
and market these systems to the financial services industry. DST's financial
services business eventually expanded to provide information processing and
computer software services and products to mutual funds, investment managers
and other financial services organizations.

KCSI sold SIS in 1970 and subsequently reduced its ownership in DST to
32%. Through a series of transactions starting in 1984, KCSI acquired an
approximately 82% ownership interest in Janus. KCSI further expanded its
mutual fund business when it acquired a minority interest in Berger in 1992,
and later increased that interest to over 80%. In 1998, KCSI acquired an 80%
interest in Nelson.

For the last few years, KCSI management has considered a number of
proposals for separating the financial services and transportation segments.
These proposals included a combination or a public offering of its rail
transportation segment and a spin-off separating the rail transportation and
financial services segments. KCSI management retained investment bankers and
other advisors to examine KCSI's structure and to advise on various aspects of
separating the two businesses. After extensive review and discussion, KCSI's
Board of Directors determined that the Distribution was the best way to
accomplish a separation of the rail transportation and financial services
businesses. On February 3, 1998, KCSI announced that its Board of Directors
intended to pursue a strategic restructuring plan to effect the Distribution
after receipt of a favorable tax ruling from the IRS.

On February 27, 1998, KCSI filed a ruling request with the IRS requesting
that the IRS rule that the Distribution qualifies as a tax-free distribution
under Code Section 355. On April 29, 1998, KCSI's Board of Directors approved
the Distribution, which it indicated it would effect after declaration of the
dividend of Stilwell Common Stock at a later date, receipt of a favorable tax
ruling from the IRS and satisfaction of other conditions.

On July 15, 1998, the stockholders of KCSI approved a reverse stock split
of KCSI Common Stock to be effective after the Record Date and a benefit plan
for Stilwell Financial, Inc. in contemplation of KCSI completing the
Distribution. No further stockholder vote is required in connection with the
Distribution.

When KCSI determined that the IRS might not rule favorably on the
Distribution without changes in the planned structure for Stilwell's
subsidiaries and equity investments, the ruling request was withdrawn. A
revised ruling request was submitted to the IRS by letter dated January 26,
1999.

On March 26, 1999, without any prior consultation with KCSI management,
the Janus Minority Group delivered a proposal to the Chief Executive Officer
of KCSI suggesting that KCSI's Board of Directors consider an alternative to
the Distribution. The Janus Minority Group's proposal indicated, that while
they strongly supported the separation of KCSI's financial services
operations from its rail operations, they preferred that an additional,
separate spin-off of Janus be considered. The Janus Minority Group argued
that their alternative to the Distribution would enhance shareholder value,
better achieve the business purposes of the separation and be more
advantageous from a tax and accounting point of view. In response to their
suggestion that a meeting be held to discuss their proposal, a special
meeting of KCSI's Board of Directors was held on June 23, 1999. At that
meeting, KCSI's Board of Directors received a presentation from the Janus
Minority Group and their representatives regarding the details of the
alternative proposal.

KCSI's Board of Directors considered and discussed the information
presented by the Janus Minority Group and information provided by Stilwell
management regarding the advantages and disadvantages of the two methods of
achieving the separation. The principal advantages for an additional spin-off
of Janus cited by some members of the Janus Minority Group were that
Stilwell's stock, unlike that of Janus, would trade in the market at a
holding company discount and that a separate Janus spin-off would provide a
structure for better equity incentives to Janus employees. The Board
considered the presentation to them as contradictory on the question of a
holding company discount, as some information suggested Stilwell would not be
perceived as a holding company because of the large proportion of its
revenues being derived from Janus. In addition, the Board determined that
there was sufficient Janus stock available from Stilwell and from Mr. Bailey
to meet Janus' reasonable needs for equity incentives for several years.
Moreover, the Board believed that going forward with the spin-off of Stilwell
would not preclude later consideration of a spin-off or other restructuring
of Janus if that were to be found to be appropriate. Therefore, in the
absence of any compelling reason to change direction and experience further
delay in the long planned separation of KCSI's principal business segments,
KCSI's Board of Directors decided that the Distribution should go forward on
the basis originally contemplated and as set forth herein. In arriving at
this decision, KCSI's Board of Directors took into consideration a number of
factors, including that: (i) a favorable tax ruling on the Distribution had
been received from the Internal Revenue Service, (ii) the presentation by the
Janus Minority Group was not persuasive, in the Board's view, as to the
advantages of the alternative proposal as compared to the Distribution,
(iii) there was a lack of certainty that a favorable tax ruling could be
obtained in a timely manner, or at all, with respect to the alternative
proposal, and (iv) the Distribution was more consistent with the strategic
direction of Stilwell.

The Janus Fund Trustees (William D. Stewart, Gary O. Loo, Dennis B.
Mullen, Martin H. Waldinger and James T. Rothe) expressed support on March
26, 1999 for the proposal of the Janus Minority Group, indicating that, based
on their discussions with members of that group, the Trustees believed the
proposal would provide superior equity ownership opportunities for key Janus
employees and could help assure continuity of management for the Janus Funds.
Stilwell management assured the Trustees of their support for equity
incentive arrangements for key Janus personnel, but believed these incentives
could be achieved without a separate spin-off of Janus. The Trustees have
continued to express their support for equity incentive arrangements for the
key Janus personnel, but have indicated that they intend to remain neutral
with respect to the particular proposals of Janus and Stilwell and other
disagreements between Stilwell and the Janus Minority Group. The Trustees
have strongly encouraged the parties to resolve their disagreements as soon
as possible so that they would not be a distraction to the management of the
Janus Funds.

Recently, press reports have appeared in which certain Janus employees
have expressed objections to the Distribution and other disagreements with
Stilwell's structure and direction. Representatives of Stilwell and of the
Janus Minority Group have met and held discussions regarding resolution of
these disagreements and while not all disagreements have been resolved,
agreements have been made under which Stilwell sold to Janus 192,408 shares of
Janus common stock to be used to provide long-term incentives to Janus
personnel. In return, Janus agreed not to grant phantom stock, stock
appreciation rights, or similar rights, for so long as Janus common stock is
available for use under its Long-Term Incentive Plan. The availability of
Janus common stock for this purpose will depend upon the number of such
shares granted or sold from time to time by Janus and upon the number
acquired from holders by voluntary sale or upon the death, retirement or
termination of employment of employees of Janus. For the year 2000, a grant
to Janus employees of 30,182 shares of Janus common stock has been approved,
but the number of shares awarded in future years may be more or less than
that amount. KCSI and Stilwell have also agreed to waive certain rights of
first refusal and options to purchase other outstanding shares of Janus common
stock so that such shares may be available for awards under Janus' Long-Term
Incentive Plan. Finally, KCSI, Stilwell and Janus have agreed to increase an
intercompany credit line available to Janus and to the assignment to Stilwell
of the Janus Stock Purchase Agreement.

The Distribution is intended to accomplish several purposes. First, it is
intended to separate the financial services business of Stilwell from the rail
transportation business of KCSI, each such business having its own distinct
financial, investment and operating characteristics, so that each can focus on
adopting strategies and pursuing objectives more appropriate to its specific
business than is possible with Stilwell's businesses consolidated with those of
KCSI.

In addition, KCSI's Board of Directors believes that the Distribution will
better enable management of each business segment to focus attention and
financial resources on the development and management of growth in each of
their respective core businesses, without regard to the corporate objectives,
policies, challenges and investment criteria of the other.

KCSI's two segments have different dynamics and business cycles, serve
different marketplaces and customer bases, are subject to different competitive
forces and regulations, have different organizational structures and management
styles and must be managed with different long-term and short-term strategies
and goals. KCSI management believes that separating the two businesses into
independent companies, each with its own management team and board of
directors, is necessary to address management and competitive issues and
considerations that result from operating these diverse businesses under a
single holding company structure. Separating the two segments also will help
resolve differences between them over utilization of KCSI's resources,
available capital and capitalization.

Further, KCSI's rail transportation business is subject to risks of
environmental liabilities and catastrophe, collision or property loss and
currency and other risks of conducting business outside the United States while
its financial services business is subject to risks arising from market
volatility, exposure to derivatives and hedges and other regulatory and
operating conditions specific to the financial services industry. Separating
the two businesses is intended to eliminate the exposure of each to liabilities
arising from operations of the other.

Finally, as separate companies, KCSI and Stilwell will be able to issue
their own respective securities to develop more focused stock-based
compensation programs keyed more directly to their respective earnings and
performance. The Board of Directors of KCSI believes that such programs should
enhance KCSI's and Stilwell's ability to attract, motivate and retain key
employees for the further development and growth of the rail transportation
business and financial services business, respectively. Stilwell and KCSI will
each also have greater ability to effect acquisitions or strategic
relationships by issuing their own respective securities.

MANNER OF EFFECTING THE DISTRIBUTION

Prior to the Distribution, Stilwell will issue additional shares of
Stilwell Common Stock to KCSI pursuant to a stock split effected in the form of
a dividend to provide a sufficient number of shares for the Distribution. KCSI
will effect the Distribution on the Distribution Date by delivering all of the
outstanding shares of Stilwell Common Stock to the Distribution Agent for
distribution to the stockholders of record of KCSI Common Stock on the Record
Date. The Distribution will be made on the basis of two shares of Stilwell
Common Stock for every one share of KCSI Common Stock held on the Record Date.
This ratio was established because of the large contribution of Stilwell to the
earnings of KCSI. Given this factor, it was believed that the distribution
ratio should be more than 1 to 1 and that fractional shares should be avoided.
Using more shares than 2 for 1 might have had the effect of causing Stilwell
Common Stock to have a market price that would be too low on a per share basis
in the Board's view. The 2 for 1 distribution ratio was established in an
attempt to have Stilwell Common Stock trade at an initial trading range that
was slightly less than half of the trading price of KCSI Common Stock
immediately prior to the Distribution. The shares of Stilwell Common Stock to
be distributed will constitute all of the outstanding shares of Stilwell Common
Stock on the Distribution Date. The shares of Stilwell Common Stock will be
fully paid and non-assessable and the holders thereof will not be entitled to
preemptive rights. See "Description of Capital Stock-Common Stock." The
shares of Stilwell Common Stock will also be distributed with certain attached
preferred stock purchase rights. See "Description of Capital Stock-
Stockholders' Rights Plan." Certificates representing shares of Stilwell
Common Stock are expected to be mailed by the Distribution Agent to KCSI
stockholders on the Mailing Date.

No holder of KCSI Common Stock will be required to pay any consideration
for the shares of Stilwell Common Stock to be received by them in the
Distribution, to surrender or exchange any shares of KCSI Common Stock, or to
take any other action in order to receive the shares of Stilwell Common Stock
to which they are entitled in the Distribution. No fractional shares of
Stilwell Common Stock will be distributed in the Distribution.

RESULTS OF THE DISTRIBUTION

Stilwell will be a separate, independent company after the Distribution.
Based on the number of shares of KCSI Common Stock outstanding as of September
30, 1999 and the number of stockholders as of September 30, 1999, approximately
221,000,000 shares of Stilwell Common Stock will be distributed to
approximately 5,500 KCSI stockholders in the Distribution on a pro-rata basis
(including the holders of KCSI Common Stock through accounts in the KCSI ESOP,
the Stilwell ESOP, the DST ESOP and the KCSI Profit Sharing Plan). The total
number of shares of Stilwell Common Stock that will be distributed will be
determined as of the Record Date. The Distribution will not affect the number
of outstanding shares of KCSI Common Stock.

DIFFERENCES IN RIGHTS OF STOCKHOLDERS ARISING FROM DIFFERENCES BETWEEN THE
CERTIFICATES AND BYLAWS OF STILWELL AND KCSI

Following the Distribution, the rights of Stilwell's stockholders will
be governed by Stilwell's Certificate and Bylaws, which contain differences
from the certificate of incorporation and bylaws of KCSI, including the
following:

Stilwell's Certificate provides that the holders of Stilwell voting
stock are not able to cumulate votes for the election of directors, whereas,
pursuant to the KCSI Certificate, holders of KCSI voting stock are entitled,
in general, to cumulate votes for the election of directors.

Stilwell's Certificate requires a supermajority vote of at least 70% of
the then-outstanding shares of capital stock of Stilwell entitled to vote
generally in the election of directors (the "Voting Stock") to approve
certain transactions with a person or entity (or affiliate thereof) holding
more than 20% of the Voting Stock, including, but not limited to, a merger,
consolidation, disposition of Stilwell's assets, or adoption of a plan of
liquidation ("Certain Transactions"). Stilwell's Certificate also requires a
supermajority vote of at least 70% of the Voting Stock to approve an
amendment to the Stilwell Certificate provisions relating to, (a) the
directors' ability to set the number of directors within a prescribed range
and to fill vacancies on Stilwell's Board of Directors, (b) the existence of
a staggered board, (c) the removal of directors, (d) calling meetings of
Stilwell's stockholders, (e) stockholder nominations of directors and
business to be brought by stockholders, (f) prohibiting stockholder action by
written consent in lieu of a meeting and (g) the amendment of Stilwell's
Certificate. Additionally, on and after the date on which a person or entity
(or affiliate thereof) becomes the holder of more than 20% of Stilwell's
Voting Stock, Stilwell's Certificate requires a supermajority vote of at
least 70% of Stilwell's Voting Stock to approve (i) an amendment to the
Stilwell Bylaws by stockholder action, (ii) the removal of a director for
cause, or (iii) an amendment to provisions of the Stilwell Certificate
relating to (a) the number, powers and preferences of Stilwell Common Stock
and Stilwell Preferred Stock, (b) amending the Stilwell Bylaws, (c) approving
Certain Transactions with a person or entity (or affiliate thereof) holding
more than 20% of the Voting Stock, (d) factors to be considered in evaluating
offers relating to tender offers, mergers, or the purchase or acquisition of
all or substantially all of the properties and assets of Stilwell, (e)
indemnification of officers, directors and others and (f) liability of
directors. KCSI's certificate of incorporation requires a supermajority vote
of at least 70% of the KCSI voting stock to approve (i) a merger or
consolidation with, or disposition of KCSI's assets to, a person or entity
(or affiliate thereof) holding more than 5% of KCSI's outstanding voting
stock, and (ii) an amendment to the KCSI certificate of incorporation
increasing the number of directors above 18, abolishing cumulative voting for
directors, abolishing the division of the board into three classes, or (iii)
to amend the super majority voting requirement for approval of a merger,
consolidation or disposition of assets of KCSI.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

KCSI received the Tax Ruling to the effect that for United States federal
income tax purposes, the Distribution qualifies as a tax-free distribution
under Code Section 355 and thus no gain or loss will be recognized by KCSI or
Stilwell from the Distribution or by the holders of KCSI Common Stock upon
receipt of the Stilwell Common Stock in the Distribution. The Tax Ruling is
based upon the accuracy of factual representations and assumptions provided by
KCSI. The following discussion describes the material United States federal
income tax consequences if the transaction qualifies as a tax-free
transaction. It further discusses the material United States federal income
tax consequences if the Distribution were not to qualify as a tax-free
transaction for any reason, including inaccuracy in the factual
representations and assumptions in the Tax Ruling. See "Risk Factors-Material
Inaccuracy of Representations or Assumptions Underlying the Tax Ruling Could
Cause the Distribution not to be Tax-Free, Resulting in Substantial Corporate
Taxable Gain, and Certain Post-Distribution Transactions Could Subject KCSI
or Stilwell to Substantial Tax and Indemnification Obligations." Finally,
the discussion describes the material United States federal tax consequences
of certain ownership changes of KCSI or Stilwell after the Distribution.
The discussion is based on the Code, United States Treasury regulations
promulgated thereunder, and judicial and administrative interpretations
thereof, all as in effect on the date hereof, and is subject to any changes
in these or other laws occurring after such date. The discussion generally
does not address the effects of any state, local or foreign tax laws.
In addition, the discussion set forth below may not be applicable to certain
KCSI stockholders who, among other limitations, received their shares of
KCSI Common Stock as compensation, who are not citizens or residents of the
United States or who are otherwise subject to special treatment under the
Code.

CONSEQUENCES OF QUALIFICATION AS A TAX-FREE DISTRIBUTION. Subject to
certain special circumstances that may apply to certain KCSI stockholders, the
Distribution will have the following federal income tax consequences if treated
as non-taxable under Code Section 355:

(1) A KCSI stockholder will not recognize gain or loss, and no
amount will be included in the income of a KCSI stockholder upon the receipt
of Stilwell Common Stock by such stockholder as a result of the
Distribution.

(2) A KCSI stockholder's tax basis in the KCSI Common Stock with
respect to which Stilwell Common Stock is received will be apportioned
between such stockholder's KCSI Common Stock and the shares of Stilwell
Common Stock received by such stockholder in proportion to the relative fair
market values of such stockholder's KCSI Common Stock and Stilwell Common
Stock.
(3) A KCSI stockholder's holding period for Stilwell Common Stock
received in the Distribution will include the period during which such
stockholder held the KCSI Common Stock with respect to which the Stilwell
Common Stock is distributed, provided that such KCSI Common Stock is held as
a capital asset by such holder on the Distribution Date.

Current United States Treasury regulations require that each KCSI
stockholder who receives shares of Stilwell Common Stock pursuant to the
Distribution attach a statement to such stockholder's federal income tax return
for the taxable year in which the Distribution occurs, providing certain
information with respect to the applicability of Code Section 355 to the
Distribution. KCSI has agreed that it will provide each KCSI stockholder as of
the Record Date information necessary to comply with this requirement.

CONSEQUENCES OF FAILURE TO QUALIFY AS A TAX-FREE DISTRIBUTION. If the
Distribution ultimately were determined not to qualify as a tax-free
transaction pursuant to Code Section 355, the following federal income tax
consequences would result:

(1) Each KCSI stockholder would be considered to have received a
distribution in an amount equal to the fair market value, when distributed,
of the shares of Stilwell Common Stock received by such stockholder. Such a
distribution would be taxed as a dividend to such stockholder to the extent
of KCSI's current and accumulated earnings and profits for federal income
tax purposes (which current earnings and profits, if any, would be increased
by any gain recognized by KCSI as a result of the Distribution (as discussed
below)). To the extent that the aggregate fair market value of the shares of
Stilwell Common Stock distributed exceeded such earnings and profits, such
excess would be treated first as a non-taxable reduction in the tax basis of
a stockholder's KCSI Common Stock to the extent of such tax basis, and
thereafter as short-term or long-term capital gain, provided the KCSI Common
Stock were held by the stockholder as a capital asset.

(2) A KCSI stockholder's tax basis in the shares of Stilwell
Common Stock received in the Distribution would equal the fair market value
of the Stilwell Common Stock on the Distribution Date, and the stockholder's
holding period for the shares of Stilwell Common Stock would begin on such
date. In such event, a KCSI stockholder's tax basis in such stockholder's
KCSI Common Stock would not be affected by the Distribution, unless, as
described above, the amount of the Distribution were to exceed the current
and accumulated earnings and profits of KCSI and were treated as a non-
taxable reduction in tax basis. Upon a subsequent sale of the shares of
Stilwell Common Stock, a stockholder would recognize gain or loss measured
by the difference between the amount realized on such sale and the
stockholder's tax basis in the shares of Stilwell Common Stock sold.

(3) KCSI would recognize gain in an amount equal to the
difference between the fair market value of the shares of Stilwell Common
Stock distributed and KCSI's basis in the shares of Stilwell Common Stock.

CONSEQUENCES OF CERTAIN OWNERSHIP CHANGES AFTER THE DISTRIBUTION. Code
Section 355 would require KCSI to recognize gain for federal income tax
purposes as of the Distribution Date equal to the difference between the fair
market value and adjusted basis of the Stilwell Common Stock if 50 percent or
more of the total combined interests (by vote or value) of KCSI or Stilwell
were acquired, directly or indirectly, subsequent to the Distribution (but
including transactions up to two years before the Distribution) in an
acquisition which is part of a plan that included the Distribution (which would
be presumed if such an acquisition were within two years of the Distribution).
Under the Tax Disaffiliation Agreement, Stilwell is required to indemnify KCSI
for any taxes resulting from any changes in ownership of Stilwell. See
"Relationship Between KCSI and Stilwell After the Distribution-Tax
Disaffiliation Agreement."

THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE MAY NOT BE
APPLICABLE TO STOCKHOLDERS WHO RECEIVED THEIR SHARES OF KCSI COMMON STOCK
THROUGH THE EXERCISE OF AN OPTION OR OTHERWISE AS COMPENSATION, WHO ARE NOT
CITIZENS OR RESIDENTS OF THE UNITED STATES OR WHO ARE OTHERWISE SUBJECT TO
SPECIAL TREATMENT UNDER THE CODE. ALL STOCKHOLDERS SHOULD CONSULT THEIR OWN
TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM,
INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.

TRADING OF STILWELL COMMON STOCK

There has been no established trading market for the Stilwell Common
Stock. A "when-issued" trading market in the Stilwell Common Stock is expected
to develop near the Record Date. The term "when-issued" means trading in
shares prior to the time certificates are actually available or issued. None
of these trades, however, can be finally settled until after the Distribution
Date, when regular trading in the Stilwell Common Stock has begun. If the
Distribution does not occur, all when-issued trading will be null and void.
Prices at which shares of the Stilwell Common Stock may trade, on a when-issued
basis or after the Distribution, cannot be predicted. Until the Stilwell
Common Stock is fully distributed and an orderly trading market develops, the
prices at which trading in such stock occurs may fluctuate significantly. In
addition, an active trading market in Stilwell Common Stock may not develop or
be sustained in the future. [Stilwell has received approval, subject to
official notice of issuance, to have the Stilwell Common Stock listed on the
New York Stock Exchange under the symbol "SV."] In the event trading does
occur, the prices at which shares of Stilwell Common Stock trade will be
determined by the marketplace and may be influenced by many factors, including,
among others, Stilwell's performance and prospects, the depth and liquidity of
the market for Stilwell Common Stock, investor perception of Stilwell and its
businesses and the industry in which Stilwell operates, Stilwell's dividend
policy, general financial and other market conditions, domestic and
international economic conditions and the impact of factors referred to in
"Risk Factors." In addition, the stock market has experienced price and volume
fluctuations that have affected the market price of many stocks and that, at
times, could be viewed as unrelated or disproportionate to the operating
performance of such companies. Such volatility and other factors may have a
material adverse effect on the market price for shares of Stilwell Common
Stock. See "Risk Factors-There Has Been No Prior Market for Stilwell Common
Stock and it is Impossible to Predict the Prices at Which Those Securities
Might Trade."

As a result of the Distribution, absent other action, the trading prices
of KCSI Common Stock are expected to be significantly lower than the trading
prices of KCSI Common Stock immediately prior to the Distribution. In an
attempt to address the effect of the Distribution on KCSI Common Stock's
trading price on the New York Stock Exchange and in contemplation of the
Distribution, KCSI's Board of Directors received stockholder approval to
effect, after the Record Date, a reverse stock split, whereby every two shares
of KCSI Common Stock then outstanding will be combined into one share of KCSI
Common Stock. No further stockholder approval is required for the
Distribution. Nevertheless, even after such reverse stock split, the combined
trading prices of KCSI Common Stock and Stilwell Common Stock after the
Distribution may be less than, equal to, or greater than, the trading price of
KCSI Common Stock immediately prior to the Distribution. Such prices may also
be affected by certain provisions of Stilwell's Certificate and Bylaws, certain
agreements, the Rights Plan, the Code and the DGCL, all of which may have an
antitakeover effect. See "Risk Factors-The Combined Post-Distribution Market
Value of KCSI Common Stock and Stilwell Common Stock May Not Equal or Exceed
the Pre-Distribution Market Value of KCSI Common Stock," "Risk Factors-
Provisions of Stilwell's Governing Documents, its Rights Plan and Restrictions
Relating to the Tax Ruling could have the Effect of Delaying or Preventing a
Change in Control of Stilwell which may have an Adverse Effect on the Market
Price of Stilwell Common Stock," and "Description of Capital Stock."

Shares of Stilwell Common Stock distributed to KCSI stockholders will be
freely transferable, except for shares received by persons who may be deemed to
be "affiliates" of Stilwell under the Securities Act of 1933, as amended (the
"Securities Act"). Persons who may be deemed to be affiliates of Stilwell
after the Distribution will generally include individuals or entities that
control, are controlled by, or are under common control with Stilwell and may
include certain officers and directors of Stilwell as well as principal
stockholders of Stilwell. Persons who are affiliates of Stilwell will be
permitted to sell their shares of Stilwell Common Stock only pursuant to an
effective registration statement under the Securities Act or an exemption from
the registration requirements of the Securities Act, such as the exemptions
afforded by Section 4(2) of the Securities Act and Rule 144 thereunder.

MODIFICATION OR ABANDONMENT OF THE DISTRIBUTION

The Distribution may be amended, modified or abandoned at any time prior
to the Record Date by, and in the sole discretion of, KCSI's Board of
Directors.

SOLVENCY AND SURPLUS OPINION OF FINANCIAL ADVISOR

KCSI has engaged Duff & Phelps, LLC ("Duff & Phelps") as its financial
advisor in connection with the Distribution. Duff & Phelps is a nationally
recognized financial advisory firm active in the valuation of businesses and
securities and in rendering advisory services in connection with a variety of
corporate and securities matters. Duff and Phelps was retained, based on its
qualifications, expertise and reputation in providing such financial advice to
companies, by KCSI to provide certain opinions to KCSI's Board of Directors as
to the solvency and capitalization of KCSI following the Distribution.
Specifically, KCSI has requested Duff & Phelps to render opinions to KCSI's
Board of Directors that after effecting the Distribution (i) the fair salable
value of KCSI's assets exceeds the stated value of KCSI's liabilities
(including contingent liabilities); (ii) KCSI will not have an unreasonably
small amount of capital for the operation of the businesses in which it is
engaged; (iii) KCSI will be able to pay its stated liabilities (including
contingent liabilities) as they mature; and (iv) the fair salable value of
KCSI's assets exceeds the stated value of KCSI's liabilities (including all
contingent liabilities) by an amount greater than the sum of the aggregate par
value of its issued capital stock and all amounts allocated to capital by
KCSI's Board of Directors. Duff & Phelps and its affiliates have not provided
any financial advisory services to KCSI during the past two years, but Duff &
Phelps has been engaged to provide valuation services to Stilwell in connection
with Stilwell's stockholders' rights plan. Duff & Phelps has reported that it
does not own beneficially and has never owned beneficially any interest in
KCSI.

There were no limitations placed by KCSI on Duff & Phelps in conducting
its analysis or in issuing its opinion. Duff & Phelps' qualitative analysis
was based on discussions with senior management concerning the history, current
operations and future outlook of the remaining business of KCSI after the
Distribution - the rail transportation segment of KCSI - which primarily
includes The Kansas City Southern Railway Company ("KCSR"). Duff & Phelps also
toured representative operating facilities. The financial analysis was based
on historical financial statements for the rail transportation segment to the
extent available, as well as internal operating documents, including financial
projections. Duff & Phelps also reviewed documents relating to the
Distribution. Industry information and data on comparable companies used as
background for the analysis was obtained from regularly published sources.

The financial projections used by Duff & Phelps in their analysis were
prepared by and are the responsibility of the management of KCSI and KCSR,
and not the management of Stilwell. Those projections and the prospective
financial information set forth in the following tables are based upon
estimates and assumptions that, while presented with numerical specificity
and considered reasonable by KCSI and KCSR, are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the control of KCSI and KCSR. Actual
results will vary from those used and set forth in the tables, and those
variations may be material. PricewaterhouseCoopers has neither examined nor
compiled the accompanying prospective financial information nor the financial
projections from which it was derived and, accordingly, does not express an
opinion or any other form of assurance with respect thereto. The
PricewaterhouseCoopers report included in this Information Statement relates
only to Stilwell's historical financial information and does not extend to
any prospective financial information.

The following is a summary of the various analyses performed by Duff &
Phelps in arriving at the conclusions set forth in the opinion.

DISCOUNTED CASH FLOW ANALYSIS. Duff & Phelps reviewed KCSI's financial
performance data and other information to conduct a discounted cash flow
analysis. In performing this analysis, Duff & Phelps examined the projected
cash available to invest in the business and to service debt. In addition,
discount rates were determined using a combination of theoretical models.
Following is the financial ratio analysis produced by the discounted cash flow
analysis.

-----------------------------------------------------------------------------

YEAR
Ratio 2000 2001 2002 2003 2004
-----------------------------------------------------------------------------

EBITDA/Interest Expense 2.55x 2.64x 2.79x 3.12x 3.53x

Funded Debt/EBITDA 4.38x 3.92x 3.51x 3.11x 2.71x

EBITDA/Interest Expense 2.2x 0.6x 1.7x 1.8x 2.1x
+ Current Maturities

Funded Debt/Total Capital 53.7% 51.2% 47.9% 43.9% 39.3%
-----------------------------------------------------------------------------

EBITDA = Earnings before interest, taxes, depreciation and amortization

ANALYSIS OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES. Duff & Phelps
compared certain financial and operating information and projected financial
performance data of KCSI with similar information and data of six publicly
traded railroad companies that Duff & Phelps deemed comparable to KCSI in terms
of qualitative and quantitative factors. No single company utilized in the
analysis of the railroad companies is identical to KCSI. Following is the list
of the comparable companies used in the analysis of KCSI.

-----------------------------------------------------------------------------
Market Cap.(1) LTM Revenues LTM Revenue LTM EBITDA
Company (millions) (millions) Growth Margin,
Adj.(2)
-----------------------------------------------------------------------------

Burlington Northern
Santa Fe Corp. $15,823 $ 8,983 1.7% 40.0%

Canadian National
Railway (3) 7,925 3,499 29.8 NA

CSX Corporation 13,143 10,574 4.6 27.0

Norfolk Southern
Corp. 15,686 4,752 11.7 36.4

Union Pacific Corp. 20,667 11,090 -0.4 35.0

Wisconsin Central
Transportation Corp. 980 358 5.0 41.0

KCSI NA $601 -2.9% 31.9%
(Transportation Segment)
-----------------------------------------------------------------------------

LTM = latest twelve months as of September 30, 1999
EBITDA = earnings before interest, taxes, depreciation and amortization
(1) Market capitalization as of January 4, 2000
(2) Adds back rent expense related to operating leases
(3) Canadian National's LTM revenue is proforma to account for June 1999
acquisition of Illinois Central

Duff & Phelps compared each company's enterprise value (equity value plus
the value of debt and preferred stock, less cash) to EBITDA and revenues.
Following are the key valuation multiples of the comparable railroad companies.

-----------------------------------------------------------------------------
Enterprise Value as a Multiple of Adj. Ent. Val./
Company LTM Projected LTM Adj. LTM
EBITDA EBITDA Revenues EBITDA(1)
-----------------------------------------------------------------------------
Burlington Northern
Santa Fe Corp. 5.1x 4.8x 1.8x 6.0x

Canadian National
Railway (2) 6.1 5.3 2.3 NA

CSX Corporation 7.3 6.2 1.2 8.8

Norfolk Southern
Corp. 9.7 9.7 3.3 9.8

Union Pacific Corp. 6.5 5.5 1.9 7.3

Wisconsin Central 8.4 6.8 2.7 9.0
Transportation Corp.

Median 6.9x 5.8x 2.1x 8.8x
-----------------------------------------------------------------------------

LTM = latest twelve months as of September 30, 1999
EBITDA = earnings before interest, taxes, depreciation and amortization
(1) Operating lease rent expense added back to EBITDA; debt grossed up
by capitalizing operating lease expense
(2) Financial performance for Canadian National is proforma to account
for June 1999 acquisition of Illinois Central

ANALYSIS OF INDUSTRY TRANSACTIONS. Duff & Phelps compared transactions
involving railroad companies that Duff & Phelps deemed comparable in terms of
qualitative and quantitative factors. Duff & Phelps noted that the most recent
announced transaction in the railroad industry, involving the proposed merger
of Burlington Northern Santa Fe Corp. and Canadian National Railway, did not
include a control premium.

Duff & Phelps used and relied on the information provided by and on behalf
of KCSI without independent verification thereof by Duff & Phelps. Duff &
Phelps assumed no responsibility for the accuracy or completeness of any
information provided by or on behalf of KCSI or any other information regarding
KCSI or the Distribution provided or otherwise made available to Duff &
Phelps. Duff & Phelps used generally accepted valuation and analytical
techniques as the basis for its opinions.

Duff & Phelps delivered such opinion on January 10, 2000, a copy of which
is included as an exhibit to the Registration Statement on Form 10 of which
this Information Statement is a part. Duff & Phelps received customary fees,
including reimbursement of certain out-of-pocket expenses, for its services as
a financial advisor related to the Distribution. KCSI has agreed to indemnify
Duff & Phelps against certain liabilities and expenses in connection with its
services as a financial advisor.

EX-99.1 8th "Page" of 34 TOC 1st Previous Next Bottom Just 8th

RELATIONSHIP BETWEEN KCSI AND STILWELL
AFTER THE DISTRIBUTION

For the purpose of governing certain of the limited ongoing relationships
between KCSI and Stilwell during a transitional period after the Distribution
and providing for an orderly transition of Stilwell to a separate company, KCSI
and Stilwell have entered into various agreements and relationships, including
those described in this section regarding certain transition services,
indemnification, tax matters and other matters relating to the Distribution.

INTERCOMPANY AGREEMENT

KCSI and Stilwell have entered into an Intercompany Agreement which
generally provides for a number of matters relating to the Distribution and
certain other matters involving a limited ongoing relationship between KCSI and
Stilwell during a transitional period, including certain indemnification
rights, insurance matters, access to records and information and certain
transitional support services.

Under the Intercompany Agreement, each of the parties has agreed to
indemnify the other against certain claims relating to or arising out of their
respective businesses before and after the Distribution and to have joint
responsibility for obligations, if any, of KCSI which relate neither to
Stilwell nor KCSI's respective businesses (unless KCSI and Stilwell otherwise
agree). The Intercompany Agreement provides that Stilwell is obligated to KCSI
with respect to all of KCSI's agreements relating to the financial services
segment that were not assigned to Stilwell in the same manner that KCSI is
obligated under such agreements, and Stilwell has the right to any benefits and
assets received by KCSI under such agreements. The Intercompany Agreement also
provides for the continuation of KCSI's medical, dental, vision, life insurance
and long-term disability insurance coverage for Stilwell-related individuals
who retire through that date. The Intercompany Agreement also grants Stilwell
access to historical financial and accounting information regarding Stilwell.
In addition, KCSI and Stilwell will provide each other with access to business
records, materials and personnel for appropriate purposes and agreed to certain
document retention arrangements. Pursuant to the Intercompany Agreement, KCSI
shall provide Stilwell with inquiry-only access to its computer system and data
available regarding Stilwell on that system for a transitional period after the
Distribution Date. In addition, for a limited time, KCSI will provide Stilwell
with certain office space and make normal office services (including fax,
photocopy, telephone, computers, maintenance and cleaning) available during the
time Stilwell occupies any of KCSI's office space. The cost associated with the
services and facilities to be provided by KCSI will be a fixed dollar amount or
percentage based on the estimated cost to KCSI of providing such services and
facilities. All such transitional and ongoing relationships will be on an
arm's-length basis. Stilwell believes that the amounts to be paid to KCSI for
services or facilities will not exceed the amounts that would have to be paid
if such services and facilities were provided by third parties. Finally, the
Intercompany Agreement outlines mediation and arbitration procedures to resolve
any disputes between the parties relating to the subjects included in the
agreements between KCSI and Stilwell.

TAX DISAFFILIATION AGREEMENT

KCSI and Stilwell have entered into a Tax Disaffiliation Agreement which
provides for their respective obligations concerning various tax liabilities
and the procedures for preparing and filing consolidated and combined tax
returns for the periods prior to and including the Distribution Date. The Tax
Disaffiliation Agreement further provides that KCSI will indemnify and hold
harmless Stilwell with respect to all federal, state, local and foreign income,
franchise and similar taxes ("Taxes") attributable to the income, operations or
assets of the transportation division of KCSI for any taxable period, whether
arising before or after the Distribution Date. It also provides that Stilwell
will indemnify and hold harmless KCSI with respect to all Taxes attributable to
the income, operations or assets of Stilwell for any taxable period, whether
arising before or after the Distribution Date. The Tax Disaffiliation
Agreement also provides for payments between the two companies for tax
adjustments, carrybacks and refunds. Further, the Tax Disaffiliation Agreement
provides for cooperation with respect to certain tax matters, including the
preparation of income tax returns, the exchange of information, the handling of
tax audits and other proceedings and the retention of records which may affect
the income tax liability of either party.

Additionally, KCSI and Stilwell each agree not to take any action which
would cause the Distribution to fail to qualify as a tax-free distribution
under Code Section 355 unless required to do so by law. KCSI and Stilwell have
agreed to indemnify each other with respect to any tax liability resulting from
their respective failures to comply with such provisions. KCSI and Stilwell
have also agreed to indemnify each other if either should cause the
Distribution to fail to qualify as a tax-free spin-off under Code Section 355
because of a change of ownership of their respective companies. See "Risk
Factors-The Intercompany Agreement and the Tax Disaffiliation Agreement Contain
Indemnification Obligations of KCSI and Stilwell that KCSI and Stilwell May Not
be Able to Satisfy, Which Could Have a Material Adverse Effect on KCSI or
Stilwell."

EMPLOYEE BENEFITS

Pursuant to the Intercompany Agreement, Stilwell will retain or assume, as
the case may be, sole responsibility as employer for all employees of KCSI
designated to become Stilwell employees, and will use reasonable efforts to
cause any employee of Stilwell who is then a party to any employment, change in
control or other employment-related agreement (other than any stock option
agreements) with KCSI to terminate such agreement or agreements not later than
the Distribution Date.

KCSI provides benefits to its employees under the KCSI Profit Sharing Plan
and Trust Agreement (the "KCSI Profit Sharing Plan"), The Employee Stock
Ownership Plan and Trust Agreement of KCSI (the "KCSI ESOP"), The KCSI 401(k)
Plan and Trust Agreement (the "KCSI 401(k) Plan") and The Employee Stock
Purchase Plan of KCSI (the "KCSI Purchase Plan"). Options to purchase KCSI
Common Stock are also currently outstanding pursuant to the KCSI 1991 Amended
and Restated Stock Option and Performance Award Plan (the "KCSI Stock Option
Plan"). KCSI and Stilwell have agreed to adjust each existing KCSI employee
benefit or award in the following manner:

- PROFIT SHARING PLAN. The Stilwell Financial, Inc. 401(k) Plan (the
"Stilwell 401(k) Plan") has a profit sharing portion for accounts of
participants and for future contributions (the "Profit Sharing Portion").
The trustee for the KCSI Profit Sharing Plan, the KCSI 401(k) Plan and the
KCSI ESOP (the "Trustee") will divide the KCSI Profit Sharing Plan as of
the Distribution and will transfer the accounts of participants of
Stilwell Financial, Inc. to the Profit Sharing Portion in a plan-to-plan
transfer of assets. An investment manager will manage the participant
accounts in the Profit Sharing Portion. The Profit Sharing Portion
provides generally the same eligibility and vesting requirements and
distribution provisions as the KCSI Profit Sharing Plan.

- STILWELL 401(K) PLAN. As of the Distribution, the Trustee will transfer
the accounts of the Stilwell participants who will participate in the
401(k) portion of the Stilwell 401(k) Plan (the "401(k) Portion") to the
401(k) Portion. The 401(k) Portion provides generally the same investment
options and the same eligibility and vesting requirements and distribution
provisions as the KCSI 401(k) Plan. The trustee for the Stilwell 401(k)
Plan will accept the transferred accounts from the KCSI 401(k) Plan and
participants' elections under the KCSI 401(k) Plan will remain in effect
under the 401(k) Portion until changed by the Stilwell participants.

- STILWELL STOCK OPTION PLAN. As part of the Distribution, KCSI and
Stilwell plan to substitute options for KCSI non-qualified stock options
held by KCSI and Stilwell employees, former KCSI employees and KCSI
directors (including former directors) to provide for the equitable
adjustment of the stock options as allowed by the KCSI Stock Option Plan.
Specifically, as part of the Distribution, all KCSI non-qualified stock
options outstanding as of the Record Date ("Options") will remain
outstanding with an adjusted exercise price ("New KCSI Options"), and
holders of the Options will receive separately exercisable options to buy
Stilwell Common Stock ("New Stilwell Options") (collectively, the New KCSI
Options and the New Stilwell Options are referred to as "Substituted
Options"). New Stilwell Options for approximately 17,000,000 shares will
be issued to current and former employees and directors of KCSI and
Stilwell and will result in the dilution of ownership of Stilwell
stockholders.

The exercise prices of the Substituted Options will be a prorated amount
of the exercise price for the related Options based on the ratio of the
trading price of Stilwell Common Stock to the total of the trading prices
of both KCSI Common Stock (excluding Stilwell) and Stilwell Common Stock.
For this purpose, the trading prices will be the closing prices of the
stocks on the New York Stock Exchange on the Distribution Date. The other
terms of the Substituted Options will be the same as for the Options.

The New Stilwell Options will be granted in the same proportion as the
distribution of Stilwell Common Stock in the Distribution; i.e., two New
Stilwell Options for each Option held. New KCSI Options and New Stilwell
Options which will be substituted for Options which were subject to time
vesting (under the KCSI Stock Option Plan, vesting means the Options
become exercisable; therefore, Options which time vest are Options which
become exercisable after the passage of a specified period of time) will
vest at the time the Options for which they were substituted would have
vested. The 1998 Amended and Restated Long Term Incentive Stock Plan
("Stilwell Stock Option Plan") will govern the New Stilwell Options.

The substitution of New KCSI Options and New Stilwell Options for Options
is provided for in the Intercompany Agreement under which (1) the New KCSI
Options and New Stilwell Options will be established with the exercise
prices determined as described above based on an allocation of the
exercise price of the Options; and (2) KCSI and Stilwell assume the
obligation to issue shares of their Common Stock upon the exercise of the
New KCSI Options and the New Stilwell Options, respectively.

- STILWELL ESOP. Stilwell has adopted the Employee Stock Ownership Plan of
Stilwell (the "Stilwell ESOP") and, the Trustee has transferred the
Stilwell participant accounts to the Stilwell ESOP. The KCSI ESOP and the
Stilwell ESOP will participate in the Distribution. Immediately after the
Distribution, participants in the Stilwell ESOP will have two shares of
Stilwell Common Stock for each one share of KCSI Common Stock in their
accounts. To allow Stilwell participants to retain the KCSI Common Stock
in their respective Stilwell ESOP accounts, Stilwell participants will
have an election with respect to the portion of each Stilwell
participant's account allocated to KCSI Common Stock to keep the KCSI
Common Stock in their accounts or to have the trustee for the Stilwell
ESOP sell the KCSI Common Stock in their accounts and reinvest the
proceeds in either Stilwell Common Stock or in a guaranteed investment
contract fund. The election may be a partial election; however, once a
participant elects to have the KCSI Common Stock held in his or her ESOP
account sold, the participant may not reinvest in KCSI Common Stock, nor
may a participant elect to sell any of the Stilwell Common Stock in his or
her account to invest in the guaranteed investment contract fund. For any
participant who does not affirmatively elect to retain the KCSI Common
Stock in his or her account, the trustee for the Stilwell ESOP will sell
the KCSI Common Stock from his or her account and will reinvest the
proceeds in Stilwell Common Stock.

- STILWELL STOCK PURCHASE PLAN. The main provisions of the Stilwell Stock
Purchase Plan are substantially similar to the KCSI Purchase Plan:
eligible employees may purchase during certain periods Stilwell Common
Stock at 85% of the average market price on either the exercise date or
the grant date, whichever is lower, but in no event at less than the par
value of the shares. Eligible Stilwell employees may elect to have up to
a board-determined maximum percentage of annualized base pay applied to
purchase Stilwell Common Stock, and the purchase price will be collected
via employee payroll deductions. With certain exceptions, all employees
of Stilwell or any eligible Stilwell affiliates who work at least 20 hours
per week for five months of the year will be eligible to participate in
the Stilwell Stock Purchase Plan. The Stilwell Stock Purchase Plan will
be administered by Stilwell's Board of Directors or Stilwell's
Compensation Committee.

EX-99.1 9th "Page" of 34 TOC 1st Previous Next Bottom Just 9th

FINANCING

DESCRIPTION OF THE CREDIT FACILITIES

On May 14, 1999, KCSI renewed a $100 million, 364-day senior unsecured
competitive advance/revolving credit facility (the "Credit Facility") with
several banks and institutional lenders (the "Lenders"). The Credit Facility
has been transferred to Stilwell. The Credit Facility contains interest rates
below prime and terms which can be fixed up to the expiration date.

KCSI has arranged a new $200 million 364-day senior unsecured competitive
Advance/Revolving Credit Facility ("New Credit Facility"). KCSI borrowed $125
million under this facility and used the proceeds to retire other debt
obligations. Stilwell has assumed the New Credit Facility, including the $125
million borrowed thereunder, thereby reducing its stockholders' equity. Upon
such assumption, KCSI was released from all obligations, and Stilwell became
the sole obligor, under the New Credit Facility. Stilwell may assign and
delegate all or a portion of its rights and obligations under the New Credit
Facility to one or more of its domestic subsidiaries.

Two borrowing options are available under the New Credit Facility: a
competitive advance option, which is uncommitted, and a committed revolving
credit option. Interest on the competitive advance option is based on rates
obtained from bids as selected by Stilwell in accordance with the lender's
standard competitive auction procedures. Interest on the revolving credit
option accrues based on the type of loan (e.g., Eurodollar, Swingline, etc.),
with rates computed using LIBOR plus 0.35% per annum or, alternatively, the
highest of the prime rate, the Federal Funds Effective Rate plus 0.005% or the
Base Certificate of Deposit Rate plus 1%.

The New Credit Facility includes a facility fee of 0.15% per annum and a
utilization fee of 0.125% on the amount of outstanding loans under the New
Credit Facility for each day on which the aggregate utilization of the New
Credit Facility exceeds 33% of the aggregate commitments of the various
lenders.

The credit facilities include customary covenants that, among other
things, restrict the ability of Stilwell to create liens, incur debt, enter
into certain sale and lease-back transactions and transactions with affiliates,
transfer assets, merge, maintain specified financial assets and otherwise
restrict corporate activities. The credit facilities also contain various
financial covenants, including the requirement for Stilwell to maintain
specified financial ratios such as maximum leverage, minimum net worth and
minimum interest coverage. Because of such financial covenants, maximum
utilization of Stilwell's available lines of credit may be restricted.

The credit facilities contain customary events of default, including, but
not limited to, failure by Stilwell to satisfy its obligations under the credit
facilities, a change of control of Stilwell, events of bankruptcy, insolvency
and reorganization and other material indebtedness defaults by Stilwell. See
"Risk Factors-Stilwell's Credit Facilities Impose Restrictions on Stilwell's
Ability to Conduct Business and may not be Sufficient to Satisfy Stilwell's
Capital and Operating Requirements" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

NEED FOR ADDITIONAL FINANCING

The timing of Stilwell's future capital requirements will depend on a
number of factors, including the ability of Stilwell to successfully implement
its business strategy. In addition, Stilwell, as a continuation of its
practice of providing credit facilities to its subsidiaries, has provided an
intercompany credit facility to Janus for use by Janus for general corporate
purposes, effectively reducing the amount of the credit facilities available
for Stilwell's other purposes. Stilwell may also require additional capital
sooner than anticipated to the extent that Stilwell's operations do not
progress as anticipated or if certain put rights are exercised by Janus
stockholders. Stilwell intends to obtain any additional financing for general
corporate purposes on terms and conditions substantially similar to the Credit
Facility and New Credit Facility. There may not be any required additional
capital available on acceptable terms, or at all, and the failure to obtain any
such required capital could have a material adverse effect on Stilwell's
operations. See "Risk Factors-Stilwell's Credit Facilities Impose Restrictions
on Stilwell's Ability to Conduct Business and may not be Sufficient to Satisfy
Stilwell's Capital and Operating Requirements" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Minority Purchase
Agreements."

EX-99.1 10th "Page" of 34 TOC 1st Previous Next Bottom Just 10th

CAPITALIZATION

Set forth below is the capitalization of Stilwell as of September 30, 1999
and on a pro forma basis to give effect to the Distribution as if the
Distribution and related transactions had occurred on that date. The table set
forth below should be read in conjunction with the financial statements set
forth elsewhere in this Information Statement. The pro forma information may
not reflect the capitalization of Stilwell in the future or as it would have
been had Stilwell been a separate, independent company.

September 30, 1999
Actual Pro Forma
------ ---------
(in millions)

Debt obligations(1) $ -- $ 125.0
Equity:
Preferred Stock, $1.00 par value;
10,000,000 shares authorized; no shares issued or
outstanding (no shares, as adjusted) -- --

Common Stock, $.01 par value; 1,000,000,000
shares authorized; 1,000 issued and outstanding;
(221,037,978 issued and outstanding,
as adjusted) (2) -- 2.2

Net investment by KCSI 106.8 0
Retained Earnings 499.9 374.9

Accumulated other comprehensive income 75.2 75.2

Additional paid-in capital -- 104.6
------ ------
Total Equity 681.9 556.9
------ ------
Total Capitalization $ 681.9 $681.9
======= ======

(1) KCSI has arranged a new $200 million 364-Day Senior Unsecured
Competitive Advance/Revolving Credit Facility which has been assumed by
Stilwell. Approximately $125 million was outstanding upon assumption of
the New Credit Facility. See "Financing-Description of the Credit
Facilities."

(2) Based on an assumed two shares of Stilwell Common Stock for every one
share of KCSI Common Stock. There were 110,518,989 shares of KCSI
Common Stock issued and outstanding at September 30, 1999. Excludes an
estimated 17,240,864 shares of Stilwell Common Stock reserved for
issuance upon the exercise of New Stilwell Options granted in connection
with the Distribution (assuming that two Stilwell options are granted
for every one KCSI stock option).

EX-99.1 11th "Page" of 34 TOC 1st Previous Next Bottom Just 11th

DIVIDEND POLICY

To date, Stilwell has not declared or paid any dividends on the Stilwell
Common Stock, but it anticipates paying cash dividends following the
Distribution. The payment of dividends by Stilwell is subject to the
discretion of its Board of Directors, and various factors may prevent it from
paying dividends. These factors include Stilwell's financial position, its
capital requirements and liquidity, the existence of a stock repurchase
program, contractual and legal requirements, results of operations and such
other factors as Stilwell's Board of Directors may consider relevant. As a
holding company, Stilwell's ability to pay dividends is dependent on the
dividends and income it receives from its subsidiaries. At the present time
Stilwell's primary source of cash is dividends received from Janus. The
payment of dividends by Janus is subject to the discretion of its Board of
Directors and although Stilwell has a contractual obligation to cause such
payment, another party has the right to nominate a majority of that Board. See
"Risk Factors-Various Factors May Hinder the Declaration and Payment of
Dividends by Stilwell Following the Distribution."

EX-99.1 12th "Page" of 34 TOC 1st Previous Next Bottom Just 12th

SELECTED FINANCIAL AND OPERATING DATA

The following table presents selected financial data of Stilwell. The
information set forth below should be read in conjunction with, and is
qualified in its entirety by reference to, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and notes thereto included elsewhere in this Information Statement.
The selected financial data for the five years ended December 31, 1998 was
derived from the audited consolidated financial statements of Stilwell. The
selected financial data as of and for the nine months ended September 30, 1998
and 1999 was derived from the unaudited consolidated financial statements of
Stilwell, which were prepared on the same basis as the historical audited
financial statements.

The selected financial data set forth below may not be indicative of
Stilwell's future performance, and does not necessarily reflect the financial
position and results of operations of Stilwell had Stilwell operated as a
separate, stand-alone entity during each of the periods presented. In addition
to historical earnings per share data based on the Stilwell capital structure
as of September 30, 1999 (1,000 shares outstanding), pro forma earnings per
share information is presented for the year ended December 31, 1998 and for
the nine months ended September 30, 1998 and 1999. This pro forma
information is presented for comparison purposes to future years and was
derived assuming an issuance of two shares of Stilwell Common Stock for every
one outstanding share of KCSI Common Stock as of September 30, 1999. In
addition, dilutive options were included based on the number of dilutive KCSI
stock options assumed to be exercised as of September 30, 1999 in connection
with the determination of KCSI's diluted earnings per share computations.
Pro forma basic and diluted earnings per share reflect adjustments for
interest expense (at an assumed rate of 6.5%), net of income taxes assumed to
be incurred as if the assumption of $125 million of indebtedness from KCSI
had occurred as of January 1, 1998 and 1999, respectively. See "Financing-
Description of the Credit Facilities." The results for the nine months ended
September 30, 1999 are not necessarily an indication of the results for the
full fiscal year.

· Enlarge/Download Table

Nine Months
Ended
Year Ended December 31, September 30,
----------------------------------------------------- --------------
1994 (i) 1995 (ii) 1996 (iii) 1997 1998 (iv) 1998 1999
---- ---- ---- ---- ---- ---- ----
(Dollars in Millions, except per share data)

Income tax
provision 31.4 181.3 58.2 87.0 103.7 88.6 142.5
Minority interest 5.3 10.5 15.8 24.9 33.4 25.8 38.6
------ ------ ------ ------ ------ ----- -----
Net Income $ 57.1 $218.0 $134.6 $118.0 $152.2 $129.9 $214.6

====== ====== ====== ====== ====== ===== ======
Per Share Data:

Weighted Average
Common shares
outstanding 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Basic Earnings
per share $57,100 $218,000 $134,600 $118,000 $152,200 $129,900 $214,600
Diluted Earnings
per share 57,100 218,000 134,000 117,400 149,900 128,900 211,200

Pro Forma
Per Share Data:
Common shares
outstanding (in
thousands) 221,038 221,038 221,038

Basic Earnings per share $ 0.67 $ 0.57 $ 0.95

Diluted Common
shares outstanding
(in thousands) 228,585 228,585 228,585

Diluted Earnings per share $ 0.63 $ 0.55 $ 0.91

· Enlarge/Download Table

December 31, September 30,
---------------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----

BALANCE SHEET DATA:

Total Assets $672.4 $475.2 $548.2 $672.6 $822.9 $799.2 $1,016.1

Long term obligations:
Third Parties 38.5 0.4 0.1 -- -- -- --
KCSI 223.1 -- 117.3 84.1 16.6 19.7 --

Cash dividends per
Common share n/a n/a n/a n/a n/a n/a n/a

OPERATING DATA:
--------------
Total Assets Under
Management
(in billions) $ 25.9 $ 34.5 $ 50.3 $ 71.6 $113.5 $ 88.5 $171.1

Total Shareowner
Accounts
(in millions) 2.4 2.5 2.5 2.7 3.0 3.0 4.0

<FN>
<F1>
(i) Reflects DST as a consolidated subsidiary. See (ii) below for discussion of DST
public offering in 1995.

<F3>
(iii) Includes a one-time after-tax gain of $47.7 million, representing Stilwell's
proportionate share of the one-time gain recognized by DST in connection with the
merger of Continuum, formerly a DST equity affiliate, with CSC in a tax-free share
exchange.

<F4>
(iv) Includes a one-time non-cash charge of $36.0 million ($23.2 million after-tax)
resulting from the merger of a wholly-owned subsidiary of DST with USCS. The merger
was accounted for by DST under the pooling of interests method. The charge reflects
Stilwell's reduced ownership of DST (from 41% to approximately 32%), together with
Stilwell's proportionate share of DST and USCS fourth quarter merger-related costs.

</FN>

EX-99.1 13th "Page" of 34 TOC 1st Previous Next Bottom Just 13th

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

INTRODUCTION

The discussion set forth below, as well as other portions of this
Information Statement, contains comments not based upon historical fact.
Such forward-looking comments are based upon information currently available
to management and management's perception thereof as of the date of this
Information Statement. Readers can identify these forward-looking comments
by the use of such verbs as "expects," "anticipates," "believes" or similar
verbs or conjugations of such verbs. The actual results of operations of
Stilwell could materially differ from those indicated in forward-looking
comments. The differences could be caused by those factors identified in the
section of this Information Statement which identifies risk factors, which
are hereby incorporated by reference herein or by other factors which
Stilwell has not yet identified. Readers are strongly encouraged to consider
these factors when evaluating any forward-looking comments. Stilwell will
not update any forward-looking comments set forth in this Information
Statement.

This discussion and the financial statements included in this Information
Statement were prepared by attributing the historical data for the financial
services segment of KCSI to Stilwell utilizing accounting policies consistent
with those applied to the preparation of KCSI's historical financial
statements. Since the financial services business was operated as part of KCSI
during the period presented, such financial information and statements may not
necessarily reflect the results of operations or financial position of Stilwell
or what the results of operations would have been if Stilwell had been a
separate, independent company during those periods.

As a result, within this Management's Discussion and Analysis of
Financial Condition and Results of Operations, historical transactions and
events involving KCSI's financial services segment are discussed as if
Stilwell were the entity involved in the transaction or event, unless
otherwise indicated. Unless otherwise stated or the context otherwise
requires, references herein to Stilwell include Stilwell's direct and
indirect subsidiaries and equity investments. Also, intercompany
transactions between Stilwell and KCSI during the periods covered herein are
reflected as transfers from or dividends to KCSI.

The discussion herein is intended to clarify and focus on Stilwell's
results of operations, certain changes in its financial position, liquidity,
capital structure and business developments for the periods covered by the
consolidated financial statements included in this Information Statement.
This discussion should be read in conjunction with these consolidated
financial statements, the related notes and the Report of Independent
Accountants thereon, and is qualified in its entirety by reference thereto.

RESULTS OF OPERATIONS

SIGNIFICANT DEVELOPMENTS

Consolidated operating results from 1996 to September 30, 1999 were
affected by the following significant developments.

BERGER MANAGEMENT REALIGNMENT. In second quarter 1999, Berger appointed a
new president and chief executive officer and realigned the management of
several of its advised funds. Two existing Berger portfolio managers assumed
the responsibility for Berger's largest fund, the Berger One Hundred Fund which
had $1.3 billion of assets under management at September 30, 1999.
Additionally, changes in portfolio management were made for the Berger Balanced
Fund and the Berger Select Fund.

DST MERGER. On December 21, 1998, DST and USCS announced the completion
of the merger of USCS with a wholly-owned DST subsidiary. Under the terms of
the merger, USCS became a wholly-owned subsidiary of DST. The merger,
accounted for as a pooling of interests by DST, expands DST's presence in the
output solutions and customer management software and services industries.
DST issued approximately 13.8 million shares of its common stock in the
transaction, reducing Stilwell's ownership interest from 41% to approximately
32%. Stilwell recorded a one-time pretax non-cash charge of approximately
$36.0 million ($23.2 million after-tax), reflecting Stilwell's reduced
ownership of DST and Stilwell's proportionate share of DST and USCS costs
incurred in the fourth quarter related to the merger. Stilwell accounts for
its investment in DST under the equity method.

ACQUISITION OF NELSON. On April 20, 1998, Stilwell completed the
acquisition of 80% of Nelson, an investment adviser and manager based in the
United Kingdom. Nelson provides investment advice and investment management
services in the United Kingdom primarily to individuals who are retired or
contemplating retirement. Nelson managed approximately $1.2 billion
((Pound)696 million) in assets as of December 31, 1998. The acquisition,
which was accounted for as a purchase, was completed using a combination of
cash, KCSI Common Stock and notes payable. The KCSI Common Stock issued in
connection with the transaction has been reflected as a contribution from
KCSI to Stilwell in the consolidated financial statements. The total
purchase price was approximately $33 million, and the amount in excess of the
fair market value of the net tangible and identifiable intangible assets
received was recorded as goodwill, to be amortized over a period of 20 years.
If the acquisition of Nelson had been completed January 1, 1998, inclusion of
Nelson's results on a pro forma basis would not have been material to
Stilwell's consolidated results of operations for the year ended December 31,
1998.

ASSET IMPAIRMENT CHARGES. In connection with Stilwell's review of its
accounts for the year ended December 31, 1997 in accordance with its
established accounting policies, $15.7 million of asset impairment charges
were recorded during fourth quarter 1997. After consideration of related tax
effects, these charges reduced consolidated earnings by $14.6 million. The
asset impairment charges included a $12.7 million impairment of goodwill
associated with Stilwell's investment in Berger. This charge was recorded
because management determined that a portion of the carrying value of the
investment in Berger, including identifiable intangible assets and goodwill,
was not recoverable, primarily due to below-peer performance and growth of
the core Berger funds. In addition, the charges included a $3.0 million
allowance for a non-core cost investment reflecting recoverability issues.

BERGER OWNERSHIP INTEREST. In January and December 1997, Berger purchased,
for treasury, the common stock of minority stockholders. In December 1997,
Stilwell also acquired additional Berger shares from a minority stockholder
through the issuance of shares of KCSI Common Stock. The shares of KCSI Common
Stock are reflected as a contribution from KCSI to Stilwell in the financial
statements of Stilwell. As a result of such transactions, Stilwell increased
its ownership in Berger to 100% from approximately 80% at December 31, 1996.
The various 1997 transactions resulted in approximately $17.8 million of
goodwill, which is being amortized over 15 years. However, see discussion of
impairment of a portion of this goodwill in "Asset Impairment Charges" above.

Stilwell's acquisition of a 100% interest in Berger included several
transactions under a stock purchase agreement (the "Berger SPA") covering a
period ending no later than October 1999. Pursuant to the Berger SPA, Stilwell
made additional purchase price payments of $3.0 million during third quarter
1999. No additional payments will be made thereafter. In 1996 and 1997,
Stilwell made additional purchase price payments of $23.9 and $3.1 million,
respectively. Stilwell made no payments under the Berger SPA during 1998.
These goodwill amounts are being amortized over 15 years.

DST'S INVESTMENT IN CONTINUUM. On August 1, 1996, Continuum, formerly
an approximately 23% owned DST equity affiliate, merged with CSC in a tax-
free share exchange. In exchange for its ownership interest in Continuum,
DST received common stock in CSC, which DST accounts for as "available for
sale" securities as defined in Statement of Financial Accounting Standards
No. 115 "Accounting for Certain Investments in Debt and Equity Securities"
("FAS 115").

As a result of the transaction, Stilwell's earnings for the year ended
December 31, 1996 include Stilwell's $47.7 million after-tax share of the
one-time gain recognized by DST in connection with the merger. Continuum
ceased to be an equity affiliate of DST, thereby eliminating any future
equity earnings or losses from Continuum.

See also "The Distribution - Background and Reasons for the
Distribution" and "Business - Berger LLC."

OVERVIEW

On January 23, 1998, KCSI formed Stilwell as a holding company for the
group of businesses and investments that comprised the financial services
segment of KCSI. The primary entities comprising the financial services
segment are Janus, an 82% owned subsidiary; Berger, of which Stilwell owns
100% of Berger preferred limited liability company interests and approximately
86% of the Berger regular limited liability company interests; Nelson, an 80%
owned subsidiary; DST, an equity investment in which KCSI holds an
approximate 32% interest; and the Miscellaneous Corporations. KCSI
transferred to Stilwell KCSI's investments in Janus, Berger, Nelson, DST, the
Miscellaneous Corporations and certain other financial services-related
assets, and Stilwell assumed all of KCSI's liabilities associated with the
assets transferred, effective July 1, 1999.

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1998

Stilwell's revenues, operating income and net income (including amortization
and interest costs attributed to the respective subsidiary) were as follows
(in millions):

Nine Months
Ended September 30,
-----------------------
1998 1999
---- ----

Revenues
Janus $ 457.0 $ 786.6
Berger 25.8 27.9
Other 7.3 12.2
-------- --------
Total $ 490.1 $ 826.7
======== ========

Operating income (loss):
Janus $ 220.1 $ 360.3
Berger 0.5 (3.2)
Other (10.6) (11.6)
-------- --------
Total $ 210.0 $ 345.5
======== ========
Net income (loss):
Janus $ 119.5 $ 188.3
Berger (2.6) (0.9)
Other 13.0 27.2
-------- --------
Total $ 129.9 $ 214.6
======== ========

Assets under management as of September 30, 1998 and 1999 were as follows (in
billions):

September 30,
-----------------------
1998 1999
---- ----
JANUS

Janus Advised Funds:
Janus Investment Funds (i) $60.0 $114.6
Janus Aspen Series (ii) 4.7 10.9
Janus Money Market Funds 3.5 6.5
Janus World Funds (iii) -- 0.8
------- ------
Total Janus Advised Funds 68.2 132.8

Janus Sub-Advised Funds
and Private Accounts 15.8 32.2
------- ------
Total Janus 84.0 165.0
------- ------

BERGER

Berger Advised Funds 2.6 3.8
Berger/BIAM Funds 0.2 0.3
Berger and BBOI Sub-Advised Funds 0.6 0.8
------- ------
Total Berger 3.4 4.9
------- ------

NELSON 1.1 1.2
------- ------

Total Assets Under Management $88.5 $171.1
======= ======

(i) Excludes money market funds

(ii) The Janus Aspen Series consists of eleven portfolios offered through
variable annuity and variable life insurance contracts, and certain
qualified pension plans.

(iii) The Janus World Funds are a group of Ireland-domiciled funds introduced
in December 1998.

For the nine months ended September 30, 1999, Stilwell reported
consolidated earnings of $214.6 million, an $84.7 million increase over
comparable 1998. Exclusive of an after-tax $4.4 million gain resulting from
Janus' sale of IDEX Management, Inc. ("IDEX") in second quarter 1998,
earnings improved 71% period to period. Stilwell consolidated revenues
reached $826.7 million, an increase of 69% over prior year, fueling a 65%
increase in operating income (to $345.5 million).

Net sales of $34.8 billion and appreciation of $22.8 billion resulted in
a 51% increase in assets under management during the nine months ended
September 30, 1999. Average assets under management for the current nine
month period were 74% higher than the same period in 1998. In addition,
shareowner accounts grew more than 33% during the nine months ended
September 30, 1999, surpassing 4.0 million as of period end.

A 72% increase in operating expenses through September 30, 1999 compared
to 1998 resulted in slightly lower operating margins period to period (from
42.8% to 41.8%). The increase in expenses reflects higher costs associated
with the significant growth in revenues, as well as an increase in
discretionary expenses.

Higher expenses occurred in the following key areas: i) salaries and
wages, resulting from investment performance-based incentive compensation, an
increase in the number of employees and associated training, and a one-time
noncash compensation charge resulting from the formation of Berger, LLC; ii)
marketing and promotion, resulting from efforts to strengthen brand names and
to capitalize on favorable investment performance; and iii) alliance fees
under mutual fund "supermarket" distribution arrangements, resulting from an
increase in average assets under management through these channels period to
period. These three expense components were approximately 44% of total
Stilwell revenues during the nine months ended September 30, 1999 versus
approximately 42% in 1998 and 44% through June 30, 1999. Additionally,
infrastructure initiatives throughout 1998 and 1999 to ensure the ongoing
quality and reliability of customer service resulted in higher depreciation
and various other expenses.

Year to date 1999 equity earnings from DST totaled $32.4 million, a 43%
increase over the same period in 1998. This growth was driven by increased
operating earnings in DST's financial services and output solutions segments
(partly due to revenue growth of 11% and 17%, respectively), required
capitalization of software development costs, higher equity earnings of
unconsolidated DST affiliates and improved operating margins. Consolidated
DST revenues through September 30, 1999 increased 11% compared to the prior
year as a result of a higher number of shareowner accounts processed (54.8
million at September 30, 1999 versus 49.8 million at December 31, 1998),
images produced and statements mailed.

The 16% increase in Other, net is attributable to the following: i)
realized gains by Janus and Berger on the sale of short-term investments; ii)
higher interest income resulting from an increase in cash; and iii) gains
resulting from the issuance of Janus shares to certain of its employees,
which reduced Stilwell's ownership of Janus. Year to date 1998 includes the
gain resulting from Janus' sale of IDEX during second quarter 1998.

Year to date 1999 interest expense declined $3.0 million from the same
1998 period due to lower average debt balances.

A brief discussion of significant Janus, Berger and Nelson items during
the nine months ended September 30, 1999 follows:

Janus
-----
Janus assets under management increased $56.7 billion (52%) during the
nine months ended September 30, 1999. Since September 30, 1998, Janus
assets under management have nearly doubled and shareowner accounts
have grown by more than 40%, reflecting ongoing favorable investment
performance by the various funds/portfolios within the Janus group of
mutual funds, continued growth through net sales and competitive levels
of expenses and fees compared to industry standards.

Berger
------
Berger assets under management increased 23% (to $4.9 billion) during
the nine months ended September 30, 1999, and 44% compared to the $3.4
billion assets under management at September 30, 1998. Shareowner
accounts declined approximately 12% (primarily in the Berger One
Hundred Fund) during the nine months ended September 30, 1999; however,
net sales of $163 million - primarily in Berger's newer fund offerings
- offset the cash outflows that accompanied shareowner departures. In
connection with efforts to revitalize the core Berger funds (e.g.,
those introduced prior to 1997), certain senior management personnel
changes were undertaken during second quarter 1999, resulting in one-
time severance costs.

Nelson
------

Stilwell acquired Nelson in April 1998. Accordingly, results for 1998
include only six months of activity compared to the nine month period
ended September 30, 1999. Nelson's assets under management increased
8% to (Pound) 750 million as of September 30, 1999 from (Pound) 696
million at December 31, 1998. Beginning in late first quarter 1999,
Nelson initiated expansion efforts throughout the United Kingdom. This
project will be ongoing and Stilwell expects that during this phase of
Nelson's development, Nelson will operate at a loss. These losses,
however, are not expected to have a material impact on Stilwell's
results of operations or financial position.

YEAR TO YEAR COMPARISONS

Stilwell's revenues, operating income and net income (including
amortization and interest costs attributed to the respective subsidiary) were
as follows (in millions):

December 31,
1996 (i) 1997 1998 (ii)
------- ---- ---------

REVENUES:
Janus $295.3 $450.1 $626.2
Berger 34.6 34.9 33.5
Other (0.3) 0.1 11.1
------ ------ ------
Total $329.6 $485.1 $670.8
====== ====== ======

OPERATING INCOME (LOSS):
Janus $136.6 $224.4 $294.1
Berger 5.7 (14.3) 0.4
Other (10.5) (10.9) (13.9)
------ ------ ------
Total $131.8 $199.2 $280.6
====== ====== ======

NET INCOME (LOSS):
Janus $ 70.3 $117.7 $161.4
Berger (1.2) (17.8) (3.2)
Other 65.5 18.1 (6.0)
------ ------ ------
Total $134.6 $118.0 $152.2
====== ====== ======

(i) Includes a one-time after-tax gain of $47.7 million representing
Stilwell's proportionate share of the one-time gain recognized by DST in
connection with the merger of Continuum with CSC in a tax-free share
exchange.

(ii) Includes a one-time non-cash charge of $36.0 million ($23.2 million
after-tax) resulting from the merger of a wholly-owned subsidiary of DST
with USCS. The merger was accounted for by DST under the pooling of
interests method. The charge reflects Stilwell's reduced ownership of
DST (from 41% to approximately 32%), together with Stilwell's
proportionate share of DST and USCS costs in the fourth quarter related
to the merger.

Assets under management as of December 31, 1996, 1997 and 1998 were as
follows (in billions):

December 31,
1996 1997 1998
---- ---- ----

JANUS
Janus Advised Funds
Janus Investment Funds $33.2 $47.5 $ 75.9
Janus Aspen Series 1.4 3.3 6.2
Janus Money Market Funds 2.5 3.8 4.8
Janus World Funds plc -- -- 0.1
----- ----- -----
Total Janus Advised Funds 37.1 54.6 87.0
Janus Sub-Advised Funds
and Private Accounts 9.6 13.2 21.3
----- ----- -----
Total Janus 46.7 67.8 108.3
----- ----- -----

BERGER
Berger Advised Funds 3.3 3.2 3.3
Berger/BIAM Funds -- 0.1 0.2
Berger and BBOI Sub-Advised
Funds 0.3 0.5 0.5
----- ----- ------
Total Berger 3.6 3.8 4.0
----- ----- -----

NELSON -- -- 1.2
----- ----- -----
Total Assets Under Management $50.3 $71.6 $113.5
===== ===== ======

Stilwell reported earnings of $152.2 million in 1998 versus $118.0
million in 1997. Exclusive of the one-time items recorded in both years as
discussed in the "Significant Developments" section above, earnings were
$38.4 million, or 29%, higher than 1997. Revenues increased $185.7 million,
or 38%, over 1997, leading to higher operating income. While operating
income increased, efforts to ensure an adequate infrastructure to provide for
consistent, reliable and accurate service to investors caused a decrease in
operating margins in 1998, from 44% for the year ended December 31, 1997
(exclusive of one-time charges) to 42% for the year ended December 31, 1998.
Total assets under management increased $41.9 billion, or 59%, during 1998,
reaching $113.5 billion at December 31, 1998. Total shareowner accounts
exceeded three million as of December 31, 1998, a 12% increase over 1997.

Stilwell earned $118.0 million in 1997, a $16.6 million decline from
1996. Exclusive of certain one-time items in 1997 and 1996 as discussed in
"Significant Developments" above, earnings improved 53%. Revenues increased
$155.5 million over 1996, leading to higher operating income and improved
operating margins. Operating margins increased from 40% for the year ended
December 31, 1996 to 44% for 1997 (exclusive of one-time charges). Assets
under management increased 42% during 1997, reaching $71.6 billion at
December 31, 1997. Further, shareowner accounts grew to approximately 2.7
million as of December 31, 1997.

Increases in Stilwell's revenue and operating income are a direct result
of growth in assets under management. Assets under management and shareowner
accounts have grown in recent years from a combination of new money
investments (i.e., fund sales) and market appreciation. Fund sales have
risen in response to marketing efforts, favorable fund performance,
introduction and market reception of new products and the current popularity
of no-load mutual funds. Market appreciation has resulted from increases in
investment values.

Following is a detailed discussion of the operating results of the
primary subsidiaries of Stilwell.

JANUS CAPITAL CORPORATION

1998

In 1998, assets under management increased 59.7% to $108.3 billion as a
result of net fund sales of $13.4 billion and market appreciation of $27.1
billion. Approximately $87.0 billion was invested in the Janus Advised Funds
with the remainder held by the Janus Sub-Advised Funds and Private Accounts.
Equity portfolios comprised 94% of total assets under management at December
31, 1998.

Excluding money market funds, 1998 net sales of the Janus Investment
Funds, Janus Aspen Series and Janus World Funds were $11.3 billion and net
sales of Janus Sub-Advised Funds and Private Accounts totaled $1.6 billion.
Total Janus shareowner accounts increased 353,000, or 15%, to 2.7 million.

Janus' revenues, derived largely from fees based upon a percent of
assets under management, increased $176.1 million (39%) to $626.2 million in
1998, driven by the significant growth in assets under management year to
year.

Exclusive of $2.7 and $2.2 million in amortization costs attributed to
Janus in 1998 and 1997, respectively, operating expenses increased 47% from
$223.5 million in 1997 to $329.4 million in 1998. This increase reflects the
significant growth in assets under management and revenues, as well as Janus'
efforts to develop its infrastructure to ensure consistent quality of
service. Approximately 47% of Janus' 1998 operating expenses were variable
items such as incentive compensation and mutual fund supermarket fees, 19%
were discretionary items such as marketing and pension plan contributions and
the remainder were fixed. The levels of profitability sustained in the
recent past may not continue.

A brief discussion of key expense increases follows:

- Employee compensation and benefits increased $45 million, or 40%, in
1998 compared to 1997 due to an increased number of employees
(including senior investment management, marketing and administration
employees, as well as additional shareowner servicing and technology
support personnel) and incentive compensation. Incentive compensation
increased principally due to growth in assets under management combined
with strong investment performance. In particular, portfolio
management incentive compensation - formulated to reward top investment
performance - approached its highest possible rate in 1998 as a result
of more than 93% of assets under management ending 1998 in the top
quartile of investment performance compared to their respective peer
groups (as defined pursuant to compensation agreements).

- Alliance and mutual fund supermarket fees increased 65% in 1998 to
$62.3 million. This increase was principally due to an increase in
assets under management being distributed through these channels, from
$19.0 billion at December 31, 1997 to $32.3 billion at December 31,
1998.

- Marketing, promotional and advertising expenditures increased $17.5
million during 1998 to capitalize on generally favorable market
conditions, to respond to market volatility and to continue
establishing the Janus brand.

- Depreciation and amortization increased $2.3 million in 1998 compared
to 1997 due to increased infrastructure spending as discussed below.

1997

Assets under management increased 45% during 1997 to $67.8 billion as a
result of net fund sales of $10.7 billion and market appreciation of $10.4
billion. Approximately $54.6 billion was invested in the Janus Advised Funds
with the remainder held by Janus Sub-Advised Funds and Private Accounts.
Equity portfolios comprised 92% of total assets under management at December
31, 1997. Total shareowner accounts grew 10% during 1997 to 2.4 million.

Driven by the increase in assets under management from 1996 to 1997,
Janus revenues improved 52% during 1997. Additionally, as a result of a
slower rate of growth in expenses compared to revenues during 1997, operating
margins improved to 50% versus 46% in 1996. Approximately 43% of Janus' 1997
operating expenses consisted of variable costs, 18% were discretionary and
the remainder represented fixed costs. The following discussion highlights
changes in key expense categories.

- Salaries and wages increased year to year, primarily from a higher number
of employees in 1997 compared to 1996 and variable compensation tied to
investment and financial performance.

- Alliance and mutual fund supermarket fees were higher in 1997 as a result
of a greater amount of assets being distributed through these channels -
approximately 28% of Janus' December 31, 1997 assets under management
were generated through these distribution arrangements compared to 23% as
of December 31, 1996.

GENERAL

The 60% and 45% increases in assets under management in 1998 and 1997,
respectively, are attributable to several factors including, among others:
(i) strong securities markets, particularly equities; (ii) strong investment
performance across all of Janus' products; (iii) strategic marketing and
public relations; (iv) effective use of third party distribution channels for
both retail and sub-advised products; and (v) a strong brand awareness.

During December 1998, Janus introduced the Janus World Funds, a group of
offshore multiclass funds modeled after certain of the Janus Investment Funds
and domiciled in Dublin, Ireland. There are currently seven investment
portfolios offered for sale, including two equity portfolios, three fixed
income portfolios, a balanced portfolio and a money market portfolio. Total
assets at December 31, 1998 were $66 million. More than 80% of sales were
made into the funds' class B shares, which require Janus to advance sales
commissions to various financial intermediaries. Payment of these
commissions, although minor as of December 31, 1998 in relation to Janus'
investment holdings, may impact future liquidity and cash resources. See
"Liquidity" and "Capital Structure."

Janus introduced the following domestic funds during the three year
period ended December 31, 1998:

- 1998 - Janus Global Technology Fund; Janus Global Life Sciences Fund;
Janus Aspen Growth and Income Portfolio
- 1997 - Janus Aspen Capital Appreciation Portfolio; Janus Aspen Equity
Income Portfolio
- 1996 - Janus Aspen High Yield Portfolio; Janus Equity Income Fund; Janus

Special Situations Fund

In 1997 and 1998, Janus spent $11 and $41 million, respectively, on its
infrastructure to ensure uninterrupted service to shareowners; to provide up-
to-the-minute investment and securities trading data; to improve operating
efficiency; to integrate information systems; and to obtain additional
physical space for expansion. These efforts produced, among other things:

- an enterprise-wide reporting system, producing more efficient and
timely management reporting and allowing full integration of portfolio
management, human resources, budgeting and financial systems;

- a second investor service and data center opened in Austin, Texas in
1998, including redundant data and telephone connections to allow the
facility to operate in the event that Denver facilities and personnel
become unavailable;

- an upgrade of Janus' web site, providing shareowners the opportunity to
customize their personal Janus home page and to process most
transactions on-line; and

- improvements of physical facilities, producing a more efficient
workspace and allowing Janus to accommodate additional growth and
technology.

BERGER

1998

Berger reported 1998 net earnings of $3.9 million compared to $2.7 million
in 1997, exclusive of interest and amortization charges attributed to Berger in
both years and the 1997 one-time charges discussed in "Significant
Developments" above. Including the interest and amortization charges in both
years, Berger reported a net loss of $3.2 million in 1998 versus a loss of $5.1
million in 1997 (exclusive of the 1997 one-time charges). Total assets under
management held by the Berger Complex increased to $4.0 billion as of December
31, 1998, a 5% increase over comparable 1997. This increase was attributable
to market appreciation of $0.9 billion, largely offset by net redemptions of
$0.7 billion. While total Berger shareowner accounts decreased approximately
13% during 1998, primarily within the Berger One Hundred Fund, the number of
accounts in the funds introduced during 1997 and 1998 increased 88% year to
year. These fluctuations in shareowner accounts generally are indicative of
recent performance compared to peer groups.

As a result of fluctuations in the level of assets under management
throughout 1998, revenues decreased approximately 4% in 1998 from 1997.
Berger's 1998 operating expenses were essentially even with 1997. While
reductions in marketing costs resulted from a more targeted advertising
program, these savings were offset by higher salaries and wages resulting
from an increased average number of employees during 1998 versus 1997.
Amortization expense attributed to Berger was lower in 1998 due to reduced
goodwill from the 1997 impairment discussed previously.

Berger recorded $1.5 million in equity earnings from its joint venture
investment, BBOI, for the year ended December 31, 1998 compared to $0.6 million
in 1997. This increase reflects continued growth in BBOI assets under
management, which totaled $522 million at December 31, 1998 versus $161 million
at December 31, 1997.

1997

Berger reported net earnings of $2.7 million in 1997 compared to $5.2
million in 1996, excluding interest and amortization charges attributed to
Berger in both years and the one-time 1997 charges. Including interest and
amortization, Berger reported net losses of $5.1 and $1.2 million in 1997 and
1996, respectively. Assets under management increased to $3.8 billion at
December 31, 1997 from $3.6 billion at December 31, 1996. Shareowner accounts
declined 16% from 1996, totaling 317,400 at December 31, 1997. This decrease
generally reflects shareowner reaction to below-peer performance by certain of
the larger funds.

Due to higher average assets under management during 1997, Berger
experienced a slight increase in revenues year to year. Operating costs,
however, increased more than revenues, resulting in a higher net loss than the
prior year. Higher expenses (e.g., consulting fees and advertising) reflected
Berger's efforts to enhance product awareness and acceptance. Additionally,
during 1997, Stilwell increased its ownership in Berger to 100% through several
transactions by Berger and Stilwell. Stilwell recorded approximately $17.8
million in goodwill as a result of these transactions. Accordingly,
amortization expense was higher in 1997 than in 1996.

In connection with Stilwell's review of the recoverability of its assets,
Stilwell determined that $12.7 million of goodwill associated with its Berger
investment was not recoverable as of December 31, 1997, primarily due to below-
peer performance and growth of the core Berger funds. Accordingly, a portion
of the goodwill recorded in connection with the repurchase of Berger minority
interest was charged to expense.

GENERAL

During 1998 and 1997, Berger introduced five new equity funds: the Berger
Mid Cap Value Fund; the Berger Small Cap Value Fund; the Berger Balanced Fund;
the Berger Mid Cap Growth Fund; and the Berger Select Fund. These funds held
approximately $493 million of assets under management at December 31, 1998,
more than three times the $155 million at December 31, 1997.

While the core Berger Funds (i.e., those introduced prior to 1997)
experienced declines in assets under management during 1998 and 1997, the newer
Berger offerings, as noted above, reported a growth in assets. Berger made
certain changes in the portfolio management of these core equity funds during
1998 and 1997 and believes these changes improve Berger's opportunity for
growth in the future.

At December 31, 1997 and 1998, approximately 26.3% and 27.6%,
respectively, of Berger's total assets under management were generated through
mutual fund "supermarkets."

OTHER SUBSIDIARIES / AFFILIATES AND HOLDING COMPANY COMPONENTS

NELSON MONEY MANAGERS PLC

As noted in the "Significant Developments" section above, Stilwell
acquired Nelson in April 1998. Nelson contributed $0.6 million to
consolidated earnings in 1998, exclusive of charges attributed to Nelson
relating to the amortization of intangibles recorded in connection with the
acquisition. Including the amortization costs, Nelson reported a net loss of
$0.7 million for the period from acquisition to December 31, 1998. Nelson
revenues - $11.1 million for the period from acquisition to year end 1998 -
were earned based on a percentage of funds under management for ongoing
management and administration of each client's portfolio, together with a fee
on the client's initial investment. Operating expenses, exclusive of
amortization of intangibles, totaled $9.9 million. The intangible amounts
associated with the acquisition of Nelson are being amortized over a 20 year
period.

EQUITY IN EARNINGS OF DST

Exclusive of the one-time fourth quarter merger-related charges
resulting from the DST and USCS merger, equity earnings from DST increased
$6.3 million to $30.6 million for the year ended December 31, 1998. This
improvement over 1997 was attributable to revenue growth resulting from a
10.7% increase in mutual fund shareowner accounts serviced (reaching 49.8
million at December 31, 1998), improved international operating results and
higher operating margins year to year (15.1% versus 14.2% in 1997).

As discussed in the "Significant Developments" section above, fourth
quarter and year ended 1998 include a one-time $23.2 million (after-tax) non-
cash charge resulting from the merger of a wholly-owned subsidiary of DST and
USCS. This charge reflects Stilwell's reduced ownership of DST (from 41% to
approximately 32%), together with Stilwell's proportionate share of DST and
USCS fourth quarter merger-related costs.

Equity in net earnings of DST for the year ended December 31, 1997 totaled
$24.3 million. Exclusive of the 1996 one-time gain on the Continuum merger
discussed in "Significant Developments" above, equity earnings from DST
increased 48% year to year. This increase in DST earnings reflects an increase
in 1997 DST revenues compared to 1996 (improvements in both domestic and
international revenues) and improved operating margins in 1997 (14.2% versus
9.8% in 1996).

INTEREST EXPENSE AND OTHER, NET

Fluctuations in interest expense from 1996 through 1998 reflect changes in
the average debt balances during the respective years. In 1998, average debt
balances were lower than 1997 as repayments reduced outstanding balances early
in 1998; accordingly, 1998 interest expense declined from 1997. Interest
expense in 1997 was higher than 1996 as a result of borrowings in connection
with KCSI's Common Stock repurchase program.

Other, net increased in 1998 versus 1997 as a result of an $8.8 million
(pretax) gain on the sale of Janus' 50% interest in IDEX. Janus continues as
sub-adviser to the five portfolios in the IDEX group of mutual funds it
served prior to the sale. This gain was partially offset by reduced 1998
other income recorded at Stilwell Financial, Inc. relating to a sales
agreement with a former affiliate. The change in other, net between 1997 and
1996 was not material.

TRENDS AND OUTLOOK

Future growth of Stilwell's revenues and operating income will be
largely dependent on prevailing financial market conditions, relative
performance of Janus, Berger and Nelson products, introduction and market
reception of new products, as well as other factors, including changes in the
stock and bond markets, increases in the rate of return of alternative
investments, increasing competition as the number of mutual funds continues
to grow and changes in marketing and distribution channels.

As a result of the rapid revenue growth during the last two years,
Stilwell's operating margins have been strong. Management expects that
Stilwell will experience margin pressures in the future as the various
subsidiaries strive to ensure that the operational and administrative
infrastructure continues to meet the high standards of quality and service
historically provided to investors. Additionally, a higher rate of growth in
costs compared to revenues is expected in connection with Nelson's efforts to
expand its operations.

Stilwell expects to continue to participate in the earnings or losses from
its DST investment.

LIQUIDITY

Summary cash flow data is as follows (in millions):

· Enlarge/Download Table

Nine Months
Year Ended December 31, Ended September 30,

1996 1997 1998 1998 1999
----- ---- ---- ---- ----

Cash flows provided by (used for):
Operating activities $41.0 $147.0 $176.0 $136.4 $240.6
Investing activities (56.1) (45.0) (92.8) (67.9) (35.6)
Financing activities 8.9 (91.1) (95.3) (86.8) (123.3)
----- ----- ------ ----- -----
Net increase (decrease) in cash
and cash equivalents (6.2) 10.9 (12.1) (18.3) 81.7
Cash and cash equivalents at beginning
of period 29.0 22.8 33.7 33.7 21.6
----- ----- ----- ----- -----
Cash and cash equivalents at end
of period $22.8 $33.7 $21.6 $15.4 $ 103.3
===== ===== ===== ===== =====

OPERATING CASH FLOWS. Stilwell's cash flow from operations has
historically been positive and sufficient to fund operations, property
acquisitions, and investments in and loans with affiliates. Borrowings from
KCSI, when necessary, have typically been used in connection with
acquisitions and the KCSI Common Stock repurchase program.

The following table summarizes consolidated operating cash flow information.

· Download Table

(in millions):
Nine Months
Year Ended December 31, Ended September 30,
1996 1997 1998 1998 1999
------ ------- ------ ---- ----

Net income $ 134.6 $ 118.0 $ 152.2 $129.9 $ 214.6
Depreciation and amortization 12.9 13.1 16.8 10.9 24.7
Equity in undistributed earnings (64.9) (24.7) (24.7) (23.1) (33.8)
Reduction in ownership of DST -- -- 29.7 -- --
Asset impairment charges -- 15.7 -- -- --
Employee deferred compensation 18.3 8.7 3.8 (2.8) 1.9
Deferred income taxes 3.0 (4.4) (12.4) 5.0 10.8
Minority interest in consolidate
earnings 15.8 24.9 33.4 25.8 38.6
Change in working capital items (71.1) (4.2) (12.3) 0.2 11.2
Prepaid Commissions -- -- -- -- (22.9)
Other (7.6) (0.1) (10.5) (9.5) (4.5)
------ ------ ----- ----- ----
Net operating cash flow $ 41.0 $ 147.0 $ 176.0 $136.4 $240.6
====== ====== ====== ==== =====

Operating cash flow for the nine months ended September 30, 1999
increased by $104.2 million from September 30, 1998. This increase is
attributable to higher earnings driven by revenue growth, offset partially by
payments of prepaid commissions in connection with the Janus World Funds B
shares arrangement. 1998 operating cash flows increased by approximately
$29.0 million from 1997. This increase was primarily due to higher ongoing
earnings in 1998, partially offset by various changes in working capital
items.

Operating cash flows for the year ended December 31, 1997 exceeded 1996
by nearly $106 million, largely because of the 1996 payment of approximately
$74 million in federal and state income taxes resulting from the taxable
gains associated with the DST public stock offering and associated
transactions completed in November 1995. Also, ongoing earnings were
approximately $45.7 million higher in 1997 than in 1996.

INVESTING CASH FLOWS. Due to timing of operational needs and Janus
quarterly dividends, net sales of investments in advised funds of $3.8
million occurred for the nine months ended September 30, 1999 (compared to
net investment of $26.5 million through September 30, 1998). Due to growth
in operating cash flows throughout the 1996 to 1998 period (largely due to
increasing ongoing earnings), Janus and Berger had invested an additional
$40, $31 and $43 million in investments in advised funds at December 31,
1996, 1997 and 1998, respectively.

Cash was used for property acquisitions of $1.4, $5.8, and $35.0 million
in 1996, 1997, and 1998, respectively, and $28.3 and $28.6 million for the
nine months ended September 30, 1998 and 1999, respectively. The significant
increase in property acquisitions in 1998 and 1999 reflects the
infrastructure enhancements at Janus.

Cash was also used for investments in and loans with affiliates of $27.2
million in 1996 (primarily the additional payment to Berger under the Berger
SPA), $12.0 million in 1997, and $24.3 million in 1998 as a result of the
acquisition of Nelson. Approximately $21.1 and $17.2 million of cash was
used for investments in and loans with affiliates through September 30, 1998
and 1999, respectively, primarily relating to the 1998 investment in Nelson
and 1999 Janus treasury stock transactions.

FINANCING CASH FLOWS. For the period ending September 30, 1999, the net
activity with KCSI (which includes the change in long-term debt and note
receivable together with the amounts treated as net transfers from and
dividends to KCSI) resulted in cash to KCSI of $89.8 million. This cash
outflow represents dividends received by Stilwell (from Janus) that were
treated as passed through to KCSI (to the extent that Stilwell did not
require use of the cash for operational or strategic needs), as well as
repayment of indebtedness owed to KCSI. For the comparable 1998 period, the
net activity with KCSI was an outflow of $52.5 million reflecting the
repayment of indebtedness to KCSI, partially offset by amounts treated as
transfers to Stilwell from KCSI. These transfers were used, among other
things, in connection with the 1998 acquisition of 80% of Nelson.

For the year ended December 31, 1998, the net activity with KCSI
resulted in cash to KCSI of $55.1 million. This outflow was attributable to
repayment of indebtedness to KCSI, offset partially by amounts treated as
transfers to Stilwell from KCSI. These transfers were used primarily in
connection with the 1998 acquisition of 80% of Nelson.

In 1997, the net cash outflow to KCSI was $73.7 million, reflecting
dividends received by Stilwell from Janus and Berger treated as passed
through to KCSI (after satisfaction of ongoing Stilwell operational
obligations), as well as partial repayment of indebtedness to KCSI.

The net activity with KCSI for the year ended December 31, 1996 resulted
in a net inflow to Stilwell of $19.1 million. This net inflow was
attributable to: (i) repayment by KCSI of $70.4 million owed to Stilwell;
and (ii) borrowing by Stilwell from KCSI in connection with KCSI's Common
Stock repurchase program and for additional investment in Berger. Those net
inflows were largely offset by dividends received by Stilwell from Janus and
Berger that were treated as passed through to KCSI.

During the period from 1996 through September 30, 1999, the amount of
distributions to minority stockholders has continued to grow based on
improved earnings at Janus. During that period, Janus distributed at least
90% of its net income to its stockholders each year.

See discussion under "Minority Purchase Agreements" for information
relative to existing contingencies.

CAPITAL STRUCTURE

CAPITAL REQUIREMENTS. Capital requirements, when necessary, for Janus,
Berger, Nelson and other subsidiaries have been funded with cash flows from
operations and negotiated term financing.

During 1998, Janus opened a new facility in Austin, Texas as an investor
service and data center for transfer agent operations, allowing for
continuous service in the event the Denver facility is unavailable. Also,
throughout the period from 1996 to September 30, 1999, Janus has continued
efforts to upgrade and expand its information technology and facilities
infrastructure (as discussed in detail above). These efforts were generally
funded with existing cash flows.

CAPITAL

Components of capital are shown as follows (in millions):

· Download Table

December 31, September 30,
1996 1997 1998 1999
---- ---- ---- ----

Debt due within one year $ 0.3 $ 0.1 $ -- $ --
Long-term debt (third parties and KCSI) 117.4 84.1 16.6 --
------ ----- ----- -----
Total debt (third parties and KCSI) 117.7 84.2 16.6

Stockholder's equity 234.8 348.3 540.2 681.9
------ ------ ------ -----
Total debt plus equity $352.5 $432.5 $556.8 $681.9
====== ====== ====== =====
Total debt as a percent of
total debt plus equity 33.3% 19.5% 3.0% 0.0%
====== ====== ====== =====

During the period from December 31, 1996 to 1998, Stilwell's
consolidated debt ratio (total debt as a percent of total debt plus equity)
declined as a result of debt repayments and increased earnings. Also,
positive non-cash equity adjustments related to unrealized gains (net of
deferred income tax) on "available for sale" securities held by Stilwell and
DST contributed to higher equity.

Management anticipates that the debt ratio will remain low as a result
of profitable operations and positive operating cash flows (subject to, among
others, any stock repurchase programs approved by Stilwell's Board of
Directors, acquisitions using debt and/or any required funding pursuant to
mandatory put rights under the Janus minority purchase agreements -- see
below). Note, however, that unrealized gains on "available for sale"
securities held by Stilwell and DST, which are included net of deferred
income taxes as accumulated other comprehensive income, are contingent on
market conditions and thus, are subject to significant fluctuations in value.
Significant declines in the value of these securities would negatively impact
stockholder's equity and impact Stilwell's debt ratio.

STILWELL / KCSI CREDIT AGREEMENTS. In May 1998, KCSI established the
Credit Facility assumable by Stilwell for its use upon separation of KCSI's two
business segments. On May 14, 1999 KCSI renewed the Credit Facility. The
Credit Facility has been transferred to Stilwell. The Credit Facility contains
interest rates below prime and terms which can be fixed up to the expiration
date. At September 30, 1999, the full $100 million was available under the
Credit Facility.

Two borrowing options are available under the New Credit Facility: a
competitive advance option, which is uncommitted, and a committed revolving
credit option. Interest on the competitive advance option is based on rates
obtained from bids as selected by Stilwell in accordance with the lender's
standard competitive auction procedures. Interest on the revolving credit
option accrued based on the type of loan (e.g., Eurodollar, Swingline, etc.),
with rates computed using LIBOR plus 0.35% per annum or, alternatively, the
highest of the prime rate, the Federal Funds Effective Rate plus 0.005% or the
Base Certificate of Deposit Rate plus 1%.

Stilwell, as a continuation of its practice of providing credit facilities
to its subsidiaries, has provided an intercompany credit facility to Janus for
use by Janus for general corporate purposes, effectively reducing the amount of
the credit facilities available for Stilwell's other purposes. Stilwell may
also require additional capital sooner than anticipated to the extent that
Stilwell's operations do not progress as anticipated or if certain put rights
are exercised by Janus stockholders. Stilwell intends to obtain any additional
financing for general corporate purposes on substantially the same terms and
conditions as the Credit Facility and New Credit Facility.

The credit facilities contain a number of covenants, including various
financial covenants. With respect to the Credit Facility, Stilwell was in
compliance with these various provisions, including the financial covenants, as
of December 31, 1998 and September 30, 1999. Because of certain financial
covenants contained in the credit facilities, however, maximum utilization of
Stilwell's lines of credit may be restricted.

MINORITY PURCHASE AGREEMENTS. The Janus Stock Purchase Agreement and
certain restriction agreements with other Janus minority stockholders
contain, among other provisions, mandatory put rights whereby at the election
of such minority stockholders, KCSI or Stilwell would be required to purchase
the minority interests of such Janus minority stockholders at a purchase
price equal to fifteen times the net after-tax earnings over the period
indicated in the relevant agreement, or in some circumstances at a purchase
price as determined by an independent appraisal. These agreements have been
assigned to Stilwell. If all of the puts under such Janus minority
stockholder agreements were exercised, Stilwell would have been required to
pay approximately $481 million as of September 30, 1999, compared to (in
millions) $220, $337 and $456 at December 31, 1996, 1997 and 1998,
respectively. Payment for the purchase of the respective minority interests
is to be made under the Janus Stock Purchase Agreement 30 days after
receiving notification of exercise of the put rights. Under the restriction
agreements, payment for the purchase of the respective minority interests is
to be made 30 days after the later to occur of (i) receiving notification of
exercise of the put rights or (ii) determination of the purchase price
through the independent appraisal process.

The Janus Stock Purchase Agreement and certain stock purchase agreements
and restriction agreements with other minority stockholders also contain
provisions whereby upon the occurrence of a Change in Ownership (as defined
in such agreements) of Stilwell (as to the Janus Stock Purchase Agreement) or
(as to the other agreements) KCSI (which will not be affiliated with Stilwell
following the Distribution), Stilwell may be required to purchase such
holders' Janus stock or, as to the stockholders that are parties to the Janus
Stock Purchase Agreement, at such holders' option, to sell its stock of Janus
to such minority stockholders. The purchase price for such minority holders'
Janus stock would be equal to fifteen times the net after-tax earnings over
the period indicated in the relevant agreement, or in some circumstances at a
purchase price as determined by Janus' Stock Option Committee. If Stilwell
were required to purchase the holders' Janus stock, Stilwell would have been
required to pay approximately $692 million as of September 30, 1999.

Management is currently exploring various financing alternatives for,
among other things, the payment of the purchase price if Stilwell were to
purchase the holders' Janus stock, including the use of existing cash and
holding company short-term investments, borrowings under the Credit Facility,
and financing opportunities utilizing the relative strength of Stilwell's
balance sheet.

OVERALL LIQUIDITY. Stilwell's cash management approach generally
reflects efforts to minimize cash balances through debt repayment, when
applicable. Cash not required for immediate operating or investing activities
will be utilized to repay indebtedness under lines of credit. This approach is
used to help mitigate Stilwell's floating-rate debt exposure to fluctuations in
interest rates. If all indebtedness has been paid, Stilwell generally invests
this cash in a money market or similar account.

Pursuant to a contractual agreement, Janus has distributed at least 90%
of its net income to its stockholders each year. Stilwell uses its portion
of these dividends in accordance with its strategic plans, which have
included, among others, repayment of indebtedness to KCSI, funding in
connection with KCSI's Common Stock repurchase program, and investments in
affiliates.

Purchases of class B shares in the Janus World Funds require a
commission to be advanced by Janus. Prepaid commissions were not material to
the December 31, 1998 consolidated financial statements. Funding during the
nine months ended September 30, 1999 totaled $22.9 million. As funding
requirements grow in future years, Janus expects to obtain a credit line
either through assignment of the Credit Facility (see above) or from third
parties.

Stilwell believes it has adequate resources available - including a
sufficient line of credit (within the financial covenants referred to above)
and businesses which have historically been positive cash flow generators -
to satisfy its operating and capital requirements, and the continuing
business needs of Stilwell.

OTHER

Year 2000.

GENERAL. The Year 2000 discussion below contains forward-looking
statements, including those concerning Stilwell's plans and expected completion
dates, cost estimates, assessments of Year 2000 readiness for Stilwell as well
as for third parties, and the potential risks of any failure on the part of
Stilwell or third parties to be Year 2000 ready on a timely basis. Forward-
looking statements involve a number of risks and uncertainties that could cause
actual results to differ from those projected. See additional information in
the opening paragraph under "Introduction" in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the opening
paragraph under "Risk Factors" in this Information Statement.

Stilwell and its subsidiaries experienced no material year 2000 related
issues when the date moved to January 1, 2000, nor have any issues arisen as
of the date of this Information Statement. Although this initial transition
to year 2000 occurred without adverse effects, there still exists possible
year 2000 issues for those applications, systems, processes and system
hardware which have yet to be used in live activities and transactions.
Stilwell continues to evaluate and pursue discussions with its various
customers, partners and vendors with respect to Year 2000 issues, all such
parties may not be Year 2000 ready. While Stilwell cannot fully determine
its impact, the inability of its computer systems to operate properly in year
2000 could result in significant difficulties in processing and completing
fundamental transactions. In such events, Stilwell's results of operations,
financial position and cash flows could be materially adversely affected.

Many existing computer programs and microprocessors that use only two
digits (rather than four) to identify a year could fail or create erroneous
results with respect to dates after December 31, 1999 if not corrected to
read all four digits. This computer program flaw is expected to affect all
companies and organizations, either directly (through a company's own
computer programs or systems that use computer programs, such as telephone
systems) or indirectly (through customers and vendors of the company).

These Year 2000 related issues are of particular importance to Stilwell.
Stilwell (including its subsidiaries and affiliates) depends upon its
computer and other systems and the computers and other systems of third
parties to conduct and manage its businesses. Additionally, Stilwell's
products and services are heavily dependent upon using accurate dates in
order to function properly. These Year 2000 related issues may also
adversely affect the operations and financial performance of one or more of
Stilwell's customers and suppliers as well as the companies in which Janus,
Berger and Nelson invest. As a result, the failure of Stilwell's computer
and other systems, products or services, the computer systems and other
systems upon which Stilwell depends, or Stilwell's customers, suppliers or
the companies in which Janus, Berger and Nelson invest to be Year 2000 ready
could have a material adverse impact on Stilwell's results of operations,
financial position and cash flows. Stilwell is unable to assess the extent
or duration of that impact at this time, but they could be substantial.

In 1997, Stilwell and its key subsidiaries formed project teams
comprised of employees and third party consultants to identify and resolve
the numerous issues surrounding the Year 2000. The project teams, which are
supervised by members of senior management, regularly report their progress
toward remediating Year 2000 issues to management and appropriate boards of
directors and committees of such boards. The areas in which the project
teams focused most of their efforts include information technology ("IT")
systems, non-IT systems and third party issues.

KEY AREAS AND PROGRESS. The following provides a summary of each area and
the progress toward identifying and resolving Year 2000 issues:

IT SYSTEMS. The IT systems (including mission critical and significant
non-critical operating, accounting and supporting systems) and underlying
hardware for Stilwell have operated in the year 2000 and no material failures
or problems have arisen.

NON-IT SYSTEMS. All equipment that contains an internal clock or embedded
micro-processor has been analyzed for Year 2000 and replacement and upgrades of
this type of equipment is completed.

THIRD PARTY SYSTEMS. Stilwell depends heavily on third party systems in
the operation of its businesses. As part of the Year 2000 project, significant
third party relationships were evaluated to determine the status of their Year
2000 readiness and the potential impact on Stilwell's operations if those
significant third parties fail to become Year 2000 ready.

Both Janus and Berger participated in various industry-wide efforts and
were required to periodically report to the SEC their progress with respect to
Year 2000 preparedness. Transactions and other activities have been
successfully performed in the year 2000 for certain third party entities.
Stilwell will continue to monitor its third party relationships for Year 2000
issues.

TESTING AND DOCUMENTATION PROCEDURES. All material modifications to IT
and non-IT systems are being documented and maintained by the project teams for
purposes of tracking the Year 2000 project and as a part of Stilwell's due
diligence process.

YEAR 2000 RISKS. Stilwell continues to evaluate the principal risks
associated with its IT and non-IT systems, as well as third party systems if
they were not to operate properly in the Year 2000. Areas that could be
affected include, but are not limited to, the ability to accurately track
pricing and trading information, obtain and process customer orders and
investor transactions, order and obtain critical supplies, and operate
equipment and control systems. In addition, the investment performance of
various funds could be adversely affected if the trading prices of the
capital stock of a number of companies within such funds are lower as a
result of Year 2000 related issues. Stilwell has no basis to form an
estimate of costs or lost revenues at this time.

Stilwell believes, however, that the risks involved with the successful
completion of its Year 2000 conversion relate primarily to available
resources and third party readiness. Stilwell has allocated substantial
resources to the Year 2000 project and believes that it is adequately staffed
by employees, consultants and contractors.

Based on work performed and information received, Stilwell believes its
key suppliers, customers and other significant third party relationships are
prepared for the Year 2000 in all material respects (or that acceptable
alternatives are available); however, management of Stilwell makes no
assurances that all such parties are Year 2000 compliant.

In the event that Stilwell or key third parties are not Year 2000 ready,
Stilwell's results of operations, financial position and cash flows could be
materially adversely affected.

CONTINGENCY PLANS. Stilwell and its subsidiaries have identified
alternative plans in the event that the Year 2000 project is not completed on
a timely basis or otherwise does not meet anticipated needs. Stilwell has
made alternative arrangements in the event that critical suppliers,
customers, utility providers and other significant third parties are not Year
2000 ready.

YEAR 2000 COSTS. Through September 30, 1999, Stilwell has spent
approximately $12 million in connection with ensuring that all computer
programs are compatible with Year 2000 requirements. In addition, Stilwell
anticipates future spending of approximately $1 million in connection with
this process. Current accounting principles require all costs associated
with Year 2000 issues to be expensed as incurred. A portion of these costs
will not result in an increase in expense to Stilwell because existing
employees and equipment are being used to complete the project.

FOREIGN EXCHANGE MATTERS AND OTHER FINANCIAL INSTRUMENTS. In connection
with Stilwell's investment in Nelson, an 80% owned subsidiary operating in
the United Kingdom, matters arise with respect to financial accounting and
reporting for foreign currency transactions and for translating foreign
currency financial statements into U.S. dollars. Stilwell follows the
requirements outlined in Statement of Financial Accounting Standards No. 52
"Foreign Currency Translation", and related authoritative guidance.

Nelson's financial statements are accounted for using the British pound
as the functional currency. Any gains or losses arising from transactions
not denominated in the British pound are recorded as a foreign currency gain
or loss and included in the results of operations of Nelson. The translation
of Nelson's financial statements from the British pound into the U.S. dollar
results in an adjustment to accumulated other comprehensive income. At
December 31, 1998 and September 30, 1999, the cumulative translation
adjustment was not material.

Stilwell continues to evaluate existing alternatives with respect to
utilizing foreign currency instruments to hedge its U.S. dollar investment in
Nelson as market conditions change or exchange rates fluctuate. At September
30, 1999, Stilwell had no outstanding foreign currency hedging instruments.
Stilwell intends to respond to evolving business and market conditions in
order to manage risks and exposures associated with Stilwell's various
operations.

NEW ACCOUNTING PRONOUNCEMENTS

DERIVATIVE INSTRUMENTS. In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("FAS
133"). FAS 133 establishes accounting and reporting standards for derivative
financial instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires recognition of all
derivatives as either assets or liabilities measured at fair value. Pursuant
to an amendment by the FASB, FAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000 and should not be retroactively
applied to financial statements of periods prior to adoption.

PENSIONS AND OTHER POSTRETIREMENT BENEFITS. Statement of Financial
Accounting Standards No. 132 "Employers' Disclosure about Pensions and Other
Postretirement Benefits -- an amendment of FASB Statements No. 87, 88, and
106" ("FAS 132") was adopted by Stilwell in 1998. FAS 132 establishes
standardized disclosure requirements for pension and other postretirement
benefit plans, requires additional information on changes in the benefit
obligations and fair values of plan assets, and eliminates certain
disclosures that are no longer useful. The standard does not change the
measurement or recognition of pension or postretirement benefit plans. The
adoption of FAS 132 did not have a material impact on Stilwell's disclosures.

SEGMENT DISCLOSURES. In 1998, Stilwell adopted the provisions of
Statement of Financial Accounting Standards No. 131 "Disclosures about
Segments of an Enterprise and Related Information" ("FAS 131"). FAS 131
establishes standards for the manner in which public business enterprises
report information about operating segments in annual financial statements
and requires disclosure of selected information about operating segments in
interim financial reports issued to stockholders. FAS 131 also establishes
standards for related disclosures about products and services, geographic
areas and major customers. The adoption of FAS 131 did not have a material
impact on the disclosures of Stilwell.

COMPREHENSIVE INCOME. Effective January 1, 1998, Stilwell adopted the
provisions of Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income" ("FAS 130"), which establishes standards for reporting
and disclosure of comprehensive income and its components in the financial
statements. Prior year information has been included pursuant to FAS 130.
Stilwell's other comprehensive income consists primarily of unrealized gains
and losses relating to investments held by Stilwell and DST as "available for
sale" securities as defined by FAS 115. Stilwell records its proportionate
share of any unrealized gains or losses related to these investments, net of
deferred income taxes, in stockholder's equity as accumulated other
comprehensive income. The unrealized gain related to these investments
increased $30.1, $42.6 and $40.3 million ($18.5, $25.9 and $24.1 million, net
of deferred income taxes) for the years ended December 31, 1996, 1997 and
1998, respectively, and $24.1 and $6.0 million ($15.9 and $3.6 million, net
of deferred income taxes) for the nine months ended September 30, 1998 and
1999, respectively.

MINORITY RIGHTS. In Issue No. 96-16, the Emerging Issues Task Force
("EITF 96-16") of the FASB, reached a consensus that substantive
"participating" minority rights which provide the minority stockholder with
the right to effectively control significant decisions in the ordinary course
of an investee's business could impact whether the majority stockholder
should consolidate the investee. Management evaluated the rights of the
minority stockholders of its consolidated subsidiaries and concluded that
application of EITF 96-16 did not affect Stilwell's consolidated financial
statements.

INTERNALLY DEVELOPED SOFTWARE. In 1998, Stilwell adopted the guidance
outlined in American Institute of Certified Public Accountant's Statement of
Position 98-1 "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 requires that computer
software costs incurred in the preliminary project stage, as well as training
and maintenance costs be expensed as incurred. This guidance also requires
that direct and indirect costs associated with the application development
stage of internal use software be capitalized until such time that the
software is substantially complete and ready for its intended use.
Capitalized costs are to be amortized on a straight line basis over the
useful life of the software. The adoption of this guidance did not have a
material impact on Stilwell's results of operations, financial position or
cash flows.

LITIGATION. From time to time Stilwell is involved in various legal
actions arising in the normal course of business. While the outcome of the
various legal proceedings involving Stilwell cannot be predicted with
certainty, it is the opinion of management (after consultation with legal
counsel) that the litigation reserves of Stilwell are adequate and that legal
actions involving Stilwell and ultimate resolution of these matters will not
be material to Stilwell's consolidated financial position, results of
operations or cash flows.

REGULATORY INFLUENCE. Virtually all aspects of Stilwell's business is
subject to various laws and regulations. Applicable laws include the 1940
Act, the Investment Advisers Act of 1940, as amended (the "Advisers Act"),
the Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), Employee Retirement Income Security Act of 1974, as amended
("ERISA") and various state securities and related laws (including laws in
the United Kingdom). Applicable regulations include, but are not limited to,
in the United States, the rules and regulations of the SEC, the Department of
Labor (the "DOL"), securities exchanges and the National Association of
Securities Dealers (the "NASD") and in the United Kingdom, the Investment
Management Regulatory Organization Limited ("IMRO"), the Personal Investment
Authority ("PIA") and the Financial Services Authority ("FSA"). While
management of Stilwell is required to devote substantial time and effort in
regulatory compliance issues, Stilwell does not foresee that such compliance
under present statutes will impair its competitive capability or result in
any material effect on results of operations.

INFLATION. Inflation has not had a significant impact on Stilwell's
operations in the past three years. Generally accepted accounting principles
require the use of historical costs. Replacement cost and related
depreciation expense of Stilwell's property would be higher than the
historical costs reported. Any increase in expenses from these fixed costs,
coupled with variable cost increases due to significant inflation, would be
difficult to recover through price increases given the competitive
environments of Stilwell's principal subsidiaries.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Stilwell utilizes various financial instruments which entail certain
inherent market risks. Generally, these instruments have not been entered
into for trading purposes. The following information, together with information
included in other parts of this Management's Discussion and Analysis of
Financial Condition and Results of Operations, describe the key aspects of
certain financial instruments which have market risk to Stilwell.

INTEREST RATE SENSITIVITY

Stilwell's interest sensitive liabilities include its long-term floating-
rate debt obligations. At December 31, 1998 and September 30, 1999, Stilwell
had no indebtedness outstanding under any line of credit.

FOREIGN EXCHANGE SENSITIVITY

Stilwell owns 80% of Nelson, a United Kingdom based financial services
corporation. In connection with this investment, matters arise with respect to
financial accounting and reporting for foreign currency transactions and for
translating foreign currency financial statements into U.S. dollars.
Therefore, Stilwell is exposed to fluctuations in the value of the British
pound.

As the relative price of the British pound fluctuates versus the U.S.
dollar, Stilwell's proportionate share of the earnings or losses of Nelson is
affected. The following table provides an example of the potential impact of a
10% change in the price of the British pound assuming that Nelson has earnings
of $1,000 and using its ownership interest at December 31, 1998. The British
pound is Nelson's functional currency.

Assumed Nelson Earnings (Pound) 1,000
Exchange Rate (to U.S. $) 0.5 to 1
---------
Converted U.S. Dollars $2,000
Stilwell Ownership Percentage of Nelson 80%
---------
Assumed Earnings $1,600

Assumed 10% increase in Exchange Rate 0.55 to 1
---------
Converted to U.S. Dollars $1,818
Stilwell Ownership Percentage of Nelson 80%
---------
Assumed Earnings $1,454
-------
Effect of 10% increase in
Exchange Rate $ (146)
=======

The impact of changes in exchange rates on the balance sheet are
reflected in a cumulative translation adjustment account as a part of
accumulated other comprehensive income and do not affect earnings.

While not currently utilizing foreign currency instruments to hedge its
U.S. dollar investment in Nelson, Stilwell continues to evaluate existing
alternatives as market conditions and exchange rates fluctuate.

AVAILABLE FOR SALE INVESTMENT SENSITIVITY

Both Janus and Berger invest a portion of the revenues earned from
providing investment advisory services in certain of their respective
sponsored funds. These investments are classified as available for sale
securities pursuant to FAS 115. Accordingly, these investments are carried
in Stilwell's consolidated financial statements at fair market value and are
subject to the investment performance of the underlying sponsored fund. Any
unrealized gain or loss is recognized upon the sale of the investment.

Additionally, DST, a 32% owned equity investment, holds available for
sale investments which may affect Stilwell's consolidated financial
statements. Similarly to the Janus and Berger securities, any changes to the
market value of the DST available for sale investments are reflected, net of
deferred income tax, in DST's "accumulated other comprehensive income"
component of its equity. Accordingly, Stilwell records its proportionate
share of this amount as part of the investment in DST. While these changes
in market value do not result in any impact to Stilwell's consolidated
results of operations currently, upon disposition by DST of these
investments, Stilwell will record its proportionate share of the gain or loss
as a component of equity earnings.

EQUITY PRICE SENSITIVITY

As noted above, Stilwell owns 32% of DST, a publicly traded company.
While changes in the market price of DST are not reflected in Stilwell's
consolidated results of operation or financial position, they may affect the
perceived value of the Stilwell Common Stock. Specifically, the market value
of DST shares at any given point in time multiplied by the number of shares
owned by Stilwell provides an amount, which when divided by the outstanding
number of shares of Stilwell Common Stock, derives a per share "value"
presumably attributable to Stilwell's investment in DST. Fluctuations in
this "value" as a result of changes in the DST market price may affect
Stilwell's stock price.

The revenues earned by Janus, Berger and Nelson are dependent on the
underlying assets under management in the funds to which investment advisory
services are provided. The portfolio of investments included in these
various funds include combinations of equity, bond, annuity and other types
of securities. Fluctuations in the value of these various securities are
common and are generated by numerous factors, including, among others, market
volatility, the overall economy, inflation, changes in investor strategies,
availability of alternative investment vehicles, government regulations and
others. Accordingly, declines in any one or a combination of these factors,
or other factors not separately identified, may reduce the value of
investment securities and, in turn, the underlying assets under management on
which Stilwell revenues are earned.

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BUSINESS
BACKGROUND

KCSI is a holding company that has owned and managed, through its direct
and indirect subsidiaries, two principal business segments: rail
transportation and financial services. ONLY THE FINANCIAL SERVICES SEGMENT
IS INCLUDED IN THE DISTRIBUTION. The primary entities comprising the
financial services segment are Janus, an approximately 82% owned subsidiary;
Berger LLC ("Berger"), of which Stilwell owns 100% of Berger preferred limited
liability company interests and approximately 86% of the Berger regular limited
liability company interests; Nelson, an 80% owned subsidiary; DST, an equity
investment in which KCSI holds an approximately 32% interest, and the
Miscellaneous Corporations. Janus is the principal business of the financial
services segment of KCSI, representing 96% of assets under management at
September 30, 1999 and 95% of revenues and 88% of net income for the nine
months ended September 30, 1999. The businesses which comprise the financial
services segment offer a variety of asset management and related financial
services to registered investment companies, retail investors, institutions
and individuals.

After extensive review and discussion, the Board of Directors of KCSI
concluded that it is in the best interests of KCSI and its stockholders for
KCSI to focus on the rail transportation business and for a separate company
to focus on the financial services business. See "The Distribution-
Background and Reasons for the Distribution." On January 23, 1998, KCSI
formed Stilwell as a holding company for the group of businesses and
investments that comprised the financial services segment of KCSI. In
connection with the Distribution, KCSI transferred to Stilwell KCSI's
investments in Janus, Berger, Nelson, DST, the Miscellaneous Corporations and
certain other financial services-related assets, and Stilwell assumed all of
KCSI's liabilities associated with the assets transferred, effective July 1,
1999.

STILWELL FINANCIAL, INC.

Stilwell Financial, Inc. is a holding company that manages its
investments in the principal subsidiaries and equity investments more
particularly described below and elsewhere in this Information Statement.
The functions performed by Stilwell Financial, Inc. include consolidated
accounting; consolidated tax return preparation and filing; corporate
secretarial functions; banking and financing; administration of retirement
and stock option plans; internal auditing; investor relations; analysis and
evaluation of acquisition and strategic business opportunities; insurance
assessment and coverage and holding company legal services.

STILWELL'S PRINCIPAL SUBSIDIARIES AND EQUITY INVESTMENTS

JANUS CAPITAL CORPORATION
-------------------------

Janus and its adviser subsidiaries are investment advisers registered with
the SEC or other regulatory bodies, and are the investment advisers or sub-
advisers to the Janus Advised Funds and Janus Sub-Advised Funds and Private
Accounts. As of September 30, 1999, Janus had total assets under management of
$165.0 billion, of which $132.8 billion were in the Janus Advised Funds and the
remainder were in the Janus Sub-Advised Funds and Private Accounts. Janus
primarily offers equity portfolios to investors, which comprised approximately
95% of total assets under management for Janus and its affiliates at September
30, 1999. At that date, funds advised by Janus had more than 4.0 million
shareowner accounts. For the five-year period ended September 30, 1999, Janus'
total assets under management increased 629 percent.

Janus Management Corporation was formed in 1969 by Thomas H. Bailey
(Janus' current president and chairman) and served as the initial investment
adviser to the Janus Advised Funds, which began selling shares in 1970. Janus
Capital Corporation was incorporated on June 27, 1978 as Bailey & Griffiths,
Ltd. (Bailey & Griffiths, Ltd. was the successor to an investment adviser
partnership which originally was named Logan Capital Management). In 1984,
Janus Management Corporation was merged into Janus Capital Corporation. In
1984 and 1985, KCSI acquired an 80% ownership interest in Janus. Subsequent
sales of stock in 1995, 1997, 1998 and 1999 resulted in approximately 6% of
Janus being owned by approximately 63 employees (subject to vesting), in
addition to the 12% owned by Mr. Bailey, as of September 30, 1999.

Janus has three wholly-owned subsidiaries. One such subsidiary, Janus
Service Corporation ("Janus Service"), provides administrative and shareowner
services to the Janus Advised Funds, and is a registered transfer agent.
Another subsidiary, Janus Distributors, Inc. ("Janus Distributors"), serves as
a distributor of the Janus Advised Funds and is a registered broker-dealer.
The other wholly-owned subsidiary, Janus Capital International, Ltd. ("Janus
International"), executes securities trades from London and is a registered
company with IMRO.

The following table sets forth (in millions) beginning assets, the changes
during each period and ending assets for the Janus Advised Funds and the Janus
Sub-Advised Funds and Private Accounts.

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Nine Months
Year Ended December 31, Ended September 30,
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----

Janus Advised Funds:
Beginning Assets $17,739.5 $18,013.2 $24,633.7 $37,123.0 $54,572.2 $54,572.2 $86,983.3
Net Sales 438.4 1,487.8 7,487.0 9,141.6 11,848.0 9,052.7 28,630.7
Appreciation
(depreciation) (164.7) 5,132.7 5,002.3 8,307.6 20,563.1 4,574.2 17,170.8
-------- --------- --------- --------- -------- -------- --------
Ending Assets 18,013.2 24,633.7 37,123.0 54,572.2 86,983.3 68,199.1 132,784.8
-------- --------- --------- --------- -------- -------- --------

Janus Sub-Advised Funds
and Private Accounts:
Beginning Assets 4,434.1 4,848.2 6,495.3 9,551.2 13,224.6 13,224.6 21,274.3
Net Sales (redemptions) 667.8 (148.0) 1,812.4 1,576.1 1,529.3 523.1 6,013.5
Appreciation
(depreciation) (253.7) 1,795.1 1,243.5 2,097.3 6,520.4 2,084.5 4,850.0
-------- ------- ------- -------- --------- -------- --------
Ending Assets 4,848.2 6,495.3 9,551.2 13,224.6 21,274.3 15,832.2 32,137.8
-------- ------- ------- -------- --------- -------- --------

Total assets
under management $22,861.4 $31,129.0 $46,674.2 $67,796.8 $108,257.6 $84,031.3 $164,922.6
========= ========= ========= ========= ========== ========= ==========

EX-99.1 16th "Page" of 34 TOC 1st Previous Next Bottom Just 16th

JANUS INVESTMENT MANAGEMENT

Pursuant to investment advisory agreements with each of the Janus Advised
Funds and the Janus Sub-Advised Funds and Private Accounts, Janus provides
overall investment management services. The investment advisory agreements
generally provide that Janus will furnish continuous advice and recommendations
concerning investments and reinvestments in conformity with the investment
objectives and restrictions of the applicable fund or account. With respect to
the Janus Advised Funds and the Janus Sub-Advised Funds, each investment
advisory agreement must be approved and renewed annually by the fund's Board of
Directors or Trustees who are not "interested persons" (as defined in the 1940
Act) of any such party. Amendments to such agreements generally must be
approved by a majority of the shareowners of the affected fund and a majority
of the Trustees or Board of Directors of the affected fund, including the
Trustees or Directors who are not "interested persons" of that fund or Janus.
Each agreement automatically terminates in the event of its "assignment" (as
defined in the 1940 Act or the Advisers Act) and either party may terminate the
agreement without penalty after written notice. The Distribution is not
expected to result in a change of control of Janus and therefore under the
applicable rules of the SEC would not constitute such an assignment.

Janus derives its revenue and net income primarily from diversified
investment advisory services provided to the Janus Advised Funds and the Janus
Sub-Advised Funds and Private Accounts. For the year ended December 31, 1998,
Janus derived approximately $508 million in revenue from investment advisory
services, representing approximately 81% of total revenue for Janus.
Investment advisory fees for the Janus Advised Funds and the Janus Sub-Advised
Funds and Private Accounts are negotiated separately and subject to extreme
market pressures. Such fees vary depending on the type of the fund or account
and the size of the assets managed, with fee rates above specified asset levels
being reduced. The fees for the Janus Advised Funds generally range from .20%
to .75% depending on the type of portfolio and the amount of assets under
management. With respect to the Janus Advised Funds, Janus may from time to
time agree to waive all or a portion of its management fees, agree to expense
caps and/or waive all or a portion of the operating expenses for marketing
reasons. Additional information on the services provided to and all fees
payable by the Janus Advised Funds and the Janus Sub-Advised Funds is contained
in the prospectus for each of the funds, copies of which are available from
Janus. The Private Accounts' fees generally are computed on the basis of the
market value of the assets managed at the end of the preceding month and
generally are paid in arrears on a monthly basis.

The Janus Advised Funds and the Janus Sub-Advised Funds generally bear the
expenses associated with the operation of each fund and the issuance and
redemption of its securities, except that advertising, promotional, and sales
expenses of the Janus Advised Funds are assumed by Janus. In particular, the
expenses for the Janus Advised Funds and the Janus Sub-Advised Funds include
but are not limited to investment advisory fees; shareowner servicing fees and
expenses; transfer agent fees and expenses; custodian fees and expenses; legal
and auditing fees; expenses of preparing, printing, and mailing prospectuses
and shareowner reports distributed to existing shareowners; registration fees
and expenses; proxy and annual meeting expenses (if any); and outside
directors' fees and expenses. Certain of these services are furnished to the
Janus Advised Funds by Janus Service. The investment advisory agreements with
the Janus Advised Funds provide that the Janus Advised Funds reimburse Janus
for expenses incurred by Janus in providing certain services to the Janus
Advised Funds.

JANUS DISTRIBUTION SERVICES AND THIRD PARTY DISTRIBUTION

Pursuant to a distribution agreement, Janus Distributors acts as
principal underwriter for and distributes the Janus Advised Funds. Janus
expends substantial resources in media advertising and direct mail
communications to its existing and potential Janus Advised Funds' shareowners
and in providing a staff and telecommunications equipment to respond to
inquiries via toll-free telephone lines. Such expenses, particularly
advertising, are expected to continue to increase.

Janus Distributors acts pursuant to distribution agreements that must be
approved and renewed annually by the Trustees or by vote of a majority of the
outstanding securities of the Janus Investment Fund or, with respect to the
retirement shares class of the Janus Aspen Series, the Janus Aspen Series,
and, in any case, by vote of a majority of the Trustees who are not
"interested persons" (as that term is defined in the 1940 Act) of the Janus
Advised Funds. The distribution agreements are subject to termination by
each fund or Janus Distributors (or, with respect to the retirement shares
class of the Janus Aspen Series, by an individual portfolio) on 60 days'
written notice and terminate automatically in the event of their "assignment"
(as defined in the 1940 Act). The Distribution is not expected to result in a
change of control of Janus and therefore under the applicable rules of the SEC
would not constitute such an assignment. Janus Investment Fund does not
compensate Janus Distributors for its services under the distribution
agreement, but Janus Distributors may be reimbursed by Janus for certain
expenses in distributing shares.

Many of the Janus funds are available through mutual fund supermarkets
and other third party distribution channels. Such distribution channels
provide an alternative to the direct sales approach utilized by Janus with
most of its funds. All shareowner accounting and servicing is handled by the
mutual fund supermarket or third party sponsor and Janus pays a fee equal to
a percentage of the assets under management acquired through such
distribution channels to the appropriate sponsor for these services. As of
December 31, 1997 and 1998, approximately 28% and 30%, respectively, of total
Janus assets under management were generated through these third party
distribution channels.

JANUS ADMINISTRATIVE AND SHAREOWNER SERVICES

Pursuant to transfer agency agreements with each of the Janus Advised
Funds, Janus Service performs accounting, recordkeeping and shareowner
services for the funds and their shareowners. Each fund pays Janus Service
fees for these services. Complete information on the services provided to
and all fees payable by the Janus Advised Funds is contained in the
prospectus for each of the funds, copies of which are available from Janus.
The accounting services provided include maintaining all shareowner accounts;
mailing shareowner reports and prospectuses; withholding taxes on nonresident
alien and foreign corporation accounts; backup withholding for pension and
deferred income; preparing and mailing checks for disbursement of income
dividends and capital gains distributions; preparing and filing various U.S.
Treasury Department forms (such as Form 1099-DIV and B) for all shareowners;
preparing and mailing confirmation forms to shareowners and dealers with
respect to all purchases and redemptions of shares and other transactions in
shareowner accounts for which confirmations are required; recording
reinvestments of dividends and distributions in shares; and, as necessary,
preparing shareowner meeting lists; mailing proxies; and receiving and
tabulating proxies.

Shareowner servicing functions include maintenance of a staff to respond
to all telephone inquiries from existing shareowners. Janus Service has
purchased or leased sophisticated telecommunications systems to handle
inquiries from existing shareowners. "Intelligent" workstation applications,
document imaging, an automated work distributor and an automated call
management system are used by customer service and back office personnel.
Additionally, Janus Service offers investors access to their accounts, with
the ability to perform certain transactions, using touch tone telephones or
personal computers. These services are supported through a distributed
automated voice response system and an interactive Internet web site called
www.janus.com.

In addition, Janus Service provides all administrative and operational
support for the Janus Advised Funds, including accounting, tax reporting,
compliance, institutional sales, in-house legal, marketing, public relations,
and federal and blue sky registration and reporting.

The transfer agency agreements with each of the Janus Advised Funds must
be approved and renewed annually by the Trustees of the Janus Advised Funds
or by an affirmative vote of a majority of the outstanding voting securities
of each of the Janus Advised Funds and in either case by vote of a majority
of the Boards of Trustees who are not "interested persons" (as defined in the
1940 Act) of any such party. Amendments to the agreements of the Janus
Advised Funds generally must be approved by a majority of the Trustees of the
affected fund. Each agreement may only be assigned with the prior written
consent of the other party and either party may terminate the agreement
without penalty after written notice of at least 60 days.

From time to time, Janus Service contracts with DST to provide fund
accounting and shareowner recordkeeping services to the Janus funds. In
addition, DST Securities, Inc., a wholly-owned subsidiary of DST, is designated
as an introductory broker on certain portfolio transactions.

JANUS PORTFOLIO MANAGEMENT AND RESEARCH

Janus' investment philosophy embraces a belief that the earnings growth
of individual companies ultimately determines the valuation of their stock.
For this reason, Janus' proprietary analysis is geared to understanding the
earnings potential of the companies in which it invests. Janus believes that
intensive research, focusing on the fundamental factors affecting the
business prospects of companies, can uncover growth opportunities.

Janus portfolios are constructed one security at a time rather than in
response to preset regional, country, economic sector, or industry
diversification guidelines. Security selection is based on the earnings
growth outlook for individual companies, wherever they may exist, with all
other factors being a residual of the investment process. Likewise, cash
position is a function of the ability to find attractive investment
opportunities at reasonable valuations. Cash may occasionally build during
periods of high equity valuations when otherwise appealing investments appear
to be expensive relative to their growth prospects.

Emphasizing the propriety work of Janus' own analysts, more than 90% of
research is performed in-house. Securities analysts follow a large universe
of stocks, reviewing earnings reports, corporate and industry developments,
trading activity, research reports and other data. For a smaller universe of
companies, very close and continuing scrutiny is applied, including direct
contacts with corporate management, analysis of contracts with competitors,
customers and suppliers, frequent on-site visitation of facilities, media
coverage, and other qualitative factors. Hundreds of individual companies
are visited each year, and many more visit Janus' offices in Denver and
London. Particularly close attention is paid to a company's stock on
occasions when earnings estimates differ significantly from the rest of the
investment community.

Janus does not employ a committee system of portfolio management.
Subject to general oversight by the senior officer of the investment
management group, each portfolio manager has autonomy in security selection
and is able to implement portfolio decisions immediately with the goal of
providing timeliness in trade execution.

Janus focuses on common stocks of two types of companies - those
experiencing or expected to experience above-average unit growth relative to
their peer group or the economy generally; and those realizing or expected to
realize positive change as a result of catalysts such as new product
development, an improved regulatory environment, changing demographics or
strong management team. Restructurings, acquisitions or divestitures are
also significant factors in analyzing a company's potential growth.

BERGER LLC
----------

Berger is an investment adviser registered with the SEC and serves as an
investment adviser to the Berger One Hundred Fund, the Berger Growth and
Income Fund, the Berger Investment Portfolio Trust (comprising the Berger
Small Company Growth Fund, the Berger New Generation Fund, the Berger
Balanced Fund, the Berger Select Fund, the Berger Mid Cap Growth Fund, the
Berger Mid Cap Value Fund and the Berger Information Technology Fund
(offering investor and institutional share classes)), the Berger Omni
Investment Trust (comprising the Berger Small Cap Value Fund (offering
investor and institutional share classes)) and a portion of the Berger
Institutional Products Trust (with respect to the Berger IPT-100 Fund, Berger
IPT-Growth and Income Fund and Berger IPT-Small Company Growth Fund)
(collectively, the "Berger Advised Funds"). Berger also serves as investment
adviser to certain registered mutual funds and separate accounts
(collectively, the "Berger Sub-Advised Funds"). Berger owns 50% of BBOI in a
joint venture with BIAM. Berger and BIAM are currently negotiating the sale of
Berger's interest in BBOI to BIAM and, alternatively, the dissolution of BBOI.
BBOI serves as the investment adviser and sub-administrator to the
Berger/BIAM Worldwide Portfolios Trust (which serves as a master portfolio
for the Berger/BIAM International Fund, the International Equity Fund and the
Berger/BIAM International Core Fund, all series of the Berger/BIAM Worldwide
Funds Trust) and the Berger/BIAM IPT International Fund (a series of the
Berger Institutional Products Trust), all open end management investment
companies, as well as administrator to the Berger/BIAM Worldwide Funds Trust
(collectively, the "Berger/BIAM Funds"). Moreover, BBOI acts as investment
adviser to the BBOI Sub-Advised Funds. Berger owns 80% of B/B Isle in a
joint venture with Bay Isle Financial Corporation. B/B Isle serves as
investment adviser to the B/B Isle Separate Accounts. The Berger Advised
Funds and Berger Sub-Advised Funds are collectively referred to as the
"Berger Funds." The Berger Advised Funds, Berger Sub-Advised Funds,
Berger/BIAM Funds, BBOI Sub-Advised Funds and B/B Isle Separate Accounts are
collectively referred to as the "Berger Complex." As of September 30, 1999,
the Berger Complex (as defined in "Business--Stilwell's Principal Subsidiaries
and Equity Investments-Berger LLC") had total assets under management of $4.9
billion. Of this amount, Berger managed $3.8 billion in the Berger Advised
Funds and $0.4 billion in the Berger Sub-Advised Funds; BBOI managed $0.3
billion in the Berger/BIAM Funds and $0.4 billion in the BBOI Sub-Advised
Funds; and B/B Isle managed less than $0.1 billion in the B/B Isle Separate
Accounts. As of September 30, 1999, funds included in the Berger Complex had
more than 243,000 shareowner accounts. For the five-year period ended
September 30, 1999, assets under management in the Berger Complex increased by
68%. See "Business-Stilwell's Principal Subsidiaries and Equity Investments-
Berger LLC."

Berger was incorporated on April 23, 1973 as Robert Fleming Services
Corp. On May 22, 1973, Robert Fleming Services Corp. changed its name to
Fleming Berger Associates, Inc. On February 23, 1975 the name was changed to
Berger Associates, Inc. In 1974, Berger's predecessors began managing the
Berger One Hundred Fund and the Berger One Hundred and One Fund (renamed the
Berger Growth and Income Fund in 1996). KCSI acquired a minority interest in
Berger in 1992, which interest KCSI increased to over 80% in 1994, and then
to 100% in 1997. During 1996, Berger entered into a joint venture agreement
with BIAM, forming BBOI to develop and market a series of international and
global mutual funds. In late 1998, Berger entered into a joint venture
arrangement with Bay Isle Financial Corporation, forming B/B Isle to manage
separate accounts, primarily large cap value accounts. The Berger Complex
currently maintains eleven retail mutual fund products and eight
institutional mutual fund products of which BBOI advises one and three,
respectively. On September 30, 1999, Berger Associates, Inc. assigned and
transferred its operating assets and business to its subsidiary, Berger LLC,
and then changed its name to Stilwell Management, Inc. Stilwell Management,
Inc. owns 100% of the preferred limited liability company interests and
approximately 86% of the regular limited liability company interests of
Berger LLC. The remaining 14% of regular limited liability company interests
was issued to key Stilwell Management, Inc. and Berger LLC employees,
resulting in a noncash compensation charge. Stilwell Management, Inc. also
holds the 32% equity investment in DST.

Berger Distributors LLC, a wholly-owned subsidiary of Berger LLC
("Berger Distributors"), which converted from a Colorado corporation to a
Colorado limited liability company on September 30, 1999 serves as
distributor of the Berger Advised Funds and Berger/BIAM Funds and is a
limited registered broker-dealer.

The following table sets forth (in millions) beginning assets, the
changes during each period and ending assets for the Berger Advised Funds,
the Berger/BIAM Funds, the Berger Sub-Advised Funds and BBOI Sub-Advised
Funds.

EX-99.1 17th "Page" of 34 TOC 1st Previous Next Bottom Just 17th
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Nine Months
Year Ended December 31, Ended September 30,
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ----- ---- ---- ----

Berger Advised Funds:
Beginning assets $3,062.7 (a) $2,870.6 $3,134.1 $3,272.7 $3,178.8 $3,178.8 $3,274.0
Net sales (redemptions) (22.7) (340.3) (225.4) (559.9) (284.8) (262.8) 80.6
Appreciation (depreciation)(169.4) 603.8 364.0 466.0 380.0 (292.3) 483.1
------- ------- ------- ------- ------- ------- -------
Ending assets 2,870.6 3,134.1 3,272.7 3,178.8 3,274.0 2,623.7 3,837.7
------- ------- ------- ------- ------- ------- -------
Berger/BIAM Funds:
Beginning assets -- -- -- 38.6 127.4 127.4 209.8
Net sales -- -- 36.7 87.1 57.8 59.7 32.0
Appreciation -- -- 1.9 1.7 24.6 (9.6) 19.7
------- ------- ------- ------- ------- ------- -------
Ending assets -- -- 38.6 127.4 209.8 177.5 261.5
------- ------- ------- ------- ------- ------- -------
Berger and BBOI Sub-Advised Funds:
Beginning assets 113.7 (a) 118.9 188.0 342.2 487.4 487.4 507.3
Net sales (redemptions) 13.4 53.6 119.1 31.0 (444.4) (208.9) 60.4
Appreciation
(depreciation) (8.2) 15.5 35.1 114.2 464.3 333.1 279.2
------- ------- ------- ------- ------- ------- -------
Ending assets 118.9 188.0 342.2 487.4 507.3 611.6 846.9
------- ------- ------- ------- ------- ------- -------
Total assets under
management $2,989.5 $3,322.1 $3,653.5 $3,793.6 $3,991.1 $3,412.8 $4,946.1
======== ======== ======== ======== ======== ======== ========

<FN>
<F1>
(a) Balance as of 10/31/94 as KCSI acquired controlling interest in Berger
on 10/14/94
</FN>

EX-99.1 18th "Page" of 34 TOC 1st Previous Next Bottom Just 18th

BERGER INVESTMENT MANAGEMENT

Berger provides investment advisory services to the Berger Funds. In
addition, BBOI serves as the investment adviser to the Berger/BIAM Funds.
Such investment advisory services for both retail and institutional funds are
provided pursuant to investment advisory agreements which have been approved
by, and the continuation of which is approved on an annual basis by, each of
the Board of Directors or Trustees of the Berger Funds or Berger/BIAM Funds
or by an affirmative vote of a majority of the outstanding voting securities
of each of the Berger Funds or Berger/BIAM Funds and in either case by vote
of a majority of the Board of Directors or Trustees who are not "interested
persons" (as that term is defined in the 1940 Act) of the Berger Funds, the
Berger/BIAM Funds, Berger or BBOI. The investment advisory agreements
generally provide that Berger and BBOI manage the investment and reinvestment
of assets of the Berger Funds and Berger/BIAM Funds, respectively, in
conformity with their investment objectives and restrictions. Amendments to
such investment advisory agreements generally must by approved by a majority
of the shareowners of the affected fund and a majority of the Trustees or
Board of Directors of the affected fund, including the Trustees or Directors
who are not "interested persons" (as defined in the 1940 Act) of that fund or
Berger. The investment advisory agreements with the Berger Funds and
Berger/BIAM Funds are generally terminable without penalty by either party
with written notice. Each agreement automatically terminates in the event of
its "assignment" (as defined in the 1940 Act). The Distribution is not
expected to result in a change of control of Berger and therefore under the
applicable rules of the SEC would not constitute such an assignment.

Berger and BBOI derive revenue primarily from investment advisory
services provided to the Berger Advised Funds and Berger/BIAM Funds,
respectively. For the year ended December 31, 1998, Berger derived
approximately $26.7 million in revenue from investment advisory services
provided to the Berger Advised Funds, representing approximately 80% of total
revenue of Berger. For the year ended December 31, 1998, BBOI derived
approximately $2.7 million in revenue from investment advisory services
provided to the Berger/BIAM Funds, representing approximately 90% of total
revenue of BBOI. Berger's and BBOI's revenues from investment advisory fees
for each of the Berger Advised Funds and Berger/BIAM Funds are negotiated
separately with each fund. The investment advisory fees for these funds vary
depending on the type of fund. They generally range from .70% to .90%
depending on the type of fund. Berger and BBOI from time to time may agree
to waive all or a portion of their investment advisory fees and/or assume all
or a portion of the operating expenses of a Berger Advised Fund or
Berger/BIAM Fund for competitive reasons. Additional information on the
services provided to and all fees payable by the Berger Advised Funds and
Berger/BIAM Funds is contained in the prospectus for each of the funds,
copies of which are available from Berger. The management fees for the
Berger Sub-Advised Funds, BBOI Sub-Advised Funds and B/B Isle Separate
Accounts vary depending upon the type of fund or account and, in some
circumstances, size of assets managed, with fee rates above specified asset
levels being reduced.

Berger and BBOI generally pay most expenses incurred in connection with
Berger's and BBOI's provision of investment management and advisory services
to the Berger Funds and the Berger/BIAM Funds, respectively. All charges and
expenses other than those specifically assumed by Berger and BBOI are paid by
the Berger Funds and Berger/BIAM Funds. Such expenses include, but are not
limited to, brokerage commissions, custodian and transfer agency fees, legal
and accounting expenses, administrative expenses, interest charges and the
expenses of printing and distributing reports to shareowners.

BERGER ADMINISTRATIVE SERVICES

Under a separate administrative services agreement with respect to each
of the Berger Funds, Berger performs certain administrative and recordkeeping
services not otherwise performed by the Berger Fund's custodian and
recordkeeper, including the supervision of the Funds' vendors and the
preparation of financial statements and reports to be filed with the SEC and
state regulatory authorities. Each Berger fund pays Berger fees for these
services in addition to the investment advisory fees paid under the
investment advisory agreements. The administrative services fees may be
changed by each fund's Board of Directors or Trustees without shareowner
approval.

Under administrative services agreements with the Berger/BIAM Funds,
BBOI serves as the administrator of the Berger/BIAM Funds. In this capacity,
BBOI is responsible for administering and managing all aspects of the
Berger/BIAM Fund's day-to-day operations, subject to the oversight of the
Trustees or Board of Directors of the Berger/BIAM Funds. BBOI is
responsible, at its expense, for furnishing (or procuring other parties to
furnish) all administrative services reasonably necessary for the operation
of the Berger/BIAM Funds, including but not limited to recordkeeping and
pricing services, custodian services and transfer agency and dividend
disbursing services. The Berger/BIAM Funds pay BBOI fees for these services
in addition to the investment advisory fees paid under the investment
advisory agreements.

Under a sub-administration agreement between BBOI and Berger, Berger has
been delegated the responsibility to perform certain of the administrative
and recordkeeping services required under BBOI's administrative services
agreements and to procure, at BBOI's expense, third parties to provide the
services not provided by Berger. Under the sub-administration agreement,
Berger is paid certain fees by BBOI for its services. During certain
periods, Berger may voluntarily waive all or a portion of its fee from BBOI,
which will not affect the fee paid by the Berger/BIAM Funds to BBOI under the
administrative services agreement. Additional information on the services
provided to and the fees payable by the Berger Advised Funds and Berger/BIAM
Funds is contained in the prospectus for each of the funds, copies of which
are available from Berger.

The administrative services agreements for the Berger/BIAM Funds must be
approved and renewed annually by the Board of Directors or Trustees of the
Berger/BIAM Funds or by an affirmative vote of a majority of the outstanding
voting securities of each of the Berger/BIAM Funds and in either case by vote
of a majority of the Board of Directors or Trustees who are not "interested
persons" (as defined in the 1940 Act) of any such party. Amendments to the
agreements of the Berger Funds and Berger/BIAM Funds generally must be
approved by a majority of the Trustees or Board of Directors of the affected
fund. Each agreement may only be assigned with the prior written consent of
the other party and either party may terminate the agreement without penalty
after written notice.

BERGER DISTRIBUTION SERVICES AND THIRD PARTY DISTRIBUTION

Berger Distributors, as the distributor of the Berger Advised Funds and
Berger/BIAM Funds, is the principal underwriter of all the shares of such
funds. Berger Distributors is registered with the NASD and the SEC as a
limited registered broker-dealer. Berger Distributors acts as the agent of
the Berger Advised Funds and Berger/BIAM Funds in connection with the sale of
each fund's shares in all states in which the shares are eligible for sale
and in which Berger Distributors is qualified as a broker-dealer. Berger
Distributors continuously offers shares of the Berger Funds and Berger/BIAM
Funds and solicits orders to purchase shares at net asset value. In its
capacity as distributor, Berger Distributors utilizes Berger to perform such
distribution services. Berger Distributors supervises Berger in this
capacity.

Berger Distributors acts pursuant to a distribution agreement that must
be approved and renewed annually by the Board of Directors or Trustees or by
vote of a majority of the outstanding securities of the Berger Advised Funds
and Berger/BIAM Funds and in either case by vote of a majority of the Board
of Directors or Trustees who are not "interested persons" (as defined in the
1940 Act) of the Berger Advised Funds, Berger/BIAM Funds or Berger
Distributors. The distribution agreement is subject to termination by each
fund or Berger Distributors on written notice and terminates automatically in
the event of its "assignment" (as defined in the 1940 Act). The Distribution
is not expected to result in a change of control of Berger and therefore under
the applicable rules of the SEC would not constitute such an assignment. Berger
Distributors is not compensated for its services under the distribution
agreement, but is reimbursed by Berger for its costs in distributing shares.

Since 1992, Berger has participated in arrangements with broker-dealers,
recordkeepers and administrators to provide sub-accounting and/or other
services to investors purchasing shares of the funds in the Berger Complex
through investment programs, such as no-transaction fee programs and mutual
fund supermarkets. Many of the Berger funds are available through mutual fund
supermarkets and other third party distribution channels. Such distribution
channels provide an alternative to the direct sales approach utilized by
Berger with most of its funds. All shareowner accounting and servicing is
handled by the mutual fund supermarket or third party sponsor and Berger pays
a fee equal to a percentage of the assets under management acquired through
such distribution channels to the appropriate sponsor for these services. As
of December 31, 1997 and 1998, approximately 26% and 28%, respectively, of
total Berger assets under management were generated through these third party
distribution channels.

BERGER MARKETING SERVICES

Marketing within Berger is balanced between institutional and retail
distribution opportunities. Retail marketing, which traces back to the
inception of Berger, is focused on serving and cross-selling to existing fund
shareowners. Institutional marketing, an effort that began in late 1995,
pursues opportunities with pension, profit-sharing and high net worth investors
through relationships with consulting, advisory and brokerage firms, insurance
companies and banks. Institutional assets now comprise one-third of Berger's
assets under management.

The Berger Funds and Berger/BIAM Funds are sold as no-load funds and
distributed primarily through direct marketing and third party
intermediaries, such as broker-dealers, and retirement plan administrators.
Certain of the Berger Funds and Berger/BIAM Funds sold in retail markets have
approved distribution plans ("12b-1 Plans") pursuant to Rule 12b-1 under the
1940 Act. The 12b-1 Plans provide that Berger shall engage in activities
that are intended to result in sales of the shares of the Berger Funds or
Berger/BIAM Funds. Such activities include advertising, marketing and
promotion, printing and distributing prospectuses and sales literature and
support services. In addition, Berger, BBOI and certain mutual funds for
whom they serve as an administrator or sub-administrator have entered into
agreements with certain broker-dealers or other organizations (such as
recordkeepers and administrators) to provide subtransfer agency,
recordkeeping, shareowner communications, subaccounting and/or other services
to investors who have purchased shares of the Berger Funds or Berger/BIAM
Funds through investment programs or pension plans established or serviced by
such organizations. As a result, Berger, BBOI or a fund (if approved by its
Board of Directors or Trustees) may pay fees to such companies for their
services. The agreements pursuant to which such services are performed are
generally terminable upon 90 days written notice. However, fees under such
agreements are generally continual despite such termination so long as the
contracted services are provided to those shareowners who purchased shares
under the program. Complete information on the services provided to and the
fees payable by the Berger Advised Funds and Berger/BIAM Funds is contained
in the prospectus for each of the funds, copies of which are available from
Berger. The 12b-1 Plans must be approved and renewed on an annual basis by
each of the Board of Directors or Trustees of the Berger Funds or Berger/BIAM
Funds and by an affirmative vote of those members of the Board of Directors
or Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Berger Funds or Berger/BIAM Funds, as the case may be, and have no direct
or indirect financial interest in the operations of the 12b-1 Plans or any
related agreements. Amendments to such agreements generally must be approved
by a majority of the shareowners of the affected Fund and a majority of the
Board of Directors or Trustees of the affected Fund who are not "interested
person" (as defined in the 1940 Act) and have no direct or indirect financial
interest in the operations of the 12b-1 Plans or any related agreements.
Each 12b-1 Plan may be terminated by a vote of a majority of the Board of
Directors or Trustees of the Fund or a majority of the Fund's outstanding
voting securities.

Berger maintains a sales staff funded by Berger to market directly to
new institutional investors and to serve current investors in the
institutional funds. Sales of the institutional funds are made directly or
through banks and other financial institutions. In addition, certain banks
and financial institutions invest in institutional funds through financial
intermediaries such as broker-dealers. Neither Berger nor BBOI has any
marketing responsibility for Berger Sub-Advised Funds or BBOI Sub-Advised
Funds. Berger also has marketing responsibility for B/B Isle Separate
Accounts.

BERGER SHAREOWNER SERVICES

The Berger Advised Funds and Berger/BIAM Funds have agreements with a
trust company to provide accounting, recordkeeping and pricing services,
custody services, transfer agency, dividend disbursing and shareowner
services. The trust company has engaged DST as sub-agent to provide transfer
agency and dividend disbursing services for the Berger Advised Funds and
Berger/BIAM Funds.

As recordkeeping and pricing agent, the trust company calculates the
daily net asset value of each of the Berger Advised Funds and Berger/BIAM
Funds and performs certain accounting and recordkeeping functions required by
the Berger Advised Funds and Berger/BIAM Funds. The trust company, as
custodian, and its subcustodians have custody and provide for the safekeeping
of the securities and cash of the Berger Advised Funds and Berger/BIAM Funds,
and receive and remit the income thereon as directed by the management of the
Berger Advised Funds and Berger/BIAM Funds. As sub-transfer agent and
dividend disbursing agent, the trust company (through DST, as sub-agent)
maintains all shareowner accounts of record; assists in mailing all reports,
proxies and other information to the shareowners of the Berger Advised Funds
and Berger/BIAM Funds; calculates the amount of, and delivers to the
shareowners of the Berger Advised Funds and Berger/BIAM Funds, proceeds
representing all dividends and distributions; and performs other related
services.

In addition to these services, investors have access to their accounts
with the ability to perform certain transactions using personal computers.
These services are supported through an Internet site called
www.bergerfunds.com. At this site, investors may also obtain account
information and learn general history and information regarding Berger, the
Berger Funds and the Berger/BIAM Funds.

BERGER PORTFOLIO MANAGEMENT AND RESEARCH

Berger's principal method of securities evaluation is based on growth-
style investing, using a "bottom-up" fundamental research and valuation
analysis undertaken by its internal staff of full-time research analysts,
supplemented by research undertaken by Berger's portfolio managers. Berger's
growth-style approach toward equity investing requires the companies in which
Berger invests to have high relative earnings per share growth potential, to
participate in large and growing markets, to have a strong management team,
to have strong overall financial characteristics, and to have above average
expected total returns. Analysts and portfolio managers of Berger often meet
personally with the management of the companies in which Berger invests. The
main sources of information Berger uses include financial publications and
on-line services, inspections of activities (including company visits and
interviews), research materials prepared in-house and by others, corporate
rating services, SEC filings and company press releases. Berger holds
frequent investment strategy meetings in which portfolio managers and
research analysts discuss investment strategy.

Berger and BIAM formed BBOI to bring international investment products
to investors. These investment products focus on long-term capital
appreciation pursued by investing in a portfolio consisting primarily of
common stocks of well-established foreign companies. The investment manager
for these funds identifies economic and business themes that are believed to
provide a favorable framework for selecting stocks and selects individual
companies best positioned to take advantage of opportunities presented by
these themes. The investment manager generally looks for companies with
securities that are fundamentally undervalued relative to their long-term
prospective earnings growth rates, their historic valuation levels and their
competitors. In addition, the investment manager searches for companies with
business operations predominantly in well-regulated and more stable foreign
markets and companies with substantial size and liquidity, strong balance
sheets, proven management and diversified earnings.

Certain of the Berger Advised Funds emphasize value-style investing.
These investment products focus on capital appreciation. In pursuit of that
goal, these funds primarily invest in companies that are out of favor with
markets or otherwise believed to be undervalued. The investment managers of
these funds generally look for companies with low prices relative to their
assets, earnings and cash flows or companies with competitive advantages
because of quality products and services, strong balance sheets and
exceptional management. The B/B Isle Separate Accounts also emphasize value-
style investing. This product focuses on companies with strong fundamentals
and management that are at discounts to their estimated fair value and are
expected to outperform their peers.

EX-99.1 19th "Page" of 34 TOC 1st Previous Next Bottom Just 19th

NELSON MONEY MANAGERS PLC
-------------------------

Founded in Chester, England as a general brokerage firm in 1970, Nelson
began specializing in the provision of investment advice and planning in
1980. In 1988, a separate asset management division was incorporated and
regulatory approval was obtained to carry on the investment management
business. At the same time, Nelson began an expansion program and since that
time has opened regional offices in Durham, Bath, York, London and Lichfield
in England and Stirling in Scotland. In April 1998, KCSI purchased an 80%
equity interest in Nelson.

Nelson provides investment advice and investment management services in
the United Kingdom, primarily to individuals who are retired or contemplating
retirement. In order to reach these clients, Nelson has traditionally
performed financial planning seminars for employees of companies in the
United Kingdom. At these seminars, Nelson's investment advisers outline the
range of investment strategies and instruments available to individual
investors. At a subsequent meeting, Nelson's investment advisers discuss the
advantages and disadvantages of these strategies and instruments and
recommendations are made in writing. More recently, Nelson has also been
offering services directly to the public via advertisements in the media. At
September 30, 1999, Nelson employed approximately 40 investment advisers and
managed approximately $1.2 billion ((Pound)750 million) in assets. At
September 30, 1999, Nelson managed assets for more than 13,000 individuals.
For the five-year period ended September 30, 1999, Nelson's total assets
under management increased by 105 percent. See "Business-Stilwell's
Principal Subsidiaries and Equity Investments-Nelson Money Managers Plc."

For individuals interested in Nelson's services, Nelson assigns a
specific investment adviser to have a one-on-one consultation. The
investment adviser works with each client individually to conduct an analysis
of the client's investment objectives and then recommends the construction of
a portfolio to meet those objectives. These recommendations are contained in
a personal investment report for the client which discusses and outlines the
client's investment portfolio. Recommendations for the design and ongoing
maintenance of the portfolio structure are the responsibility of the
investment adviser. The selection and management of the instruments which
constitute the portfolio are the responsibility of Nelson's investment
management team. Taking into account the client's attitude towards risk,
Nelson's investment managers utilize a "top down" investment methodology in
structuring investment portfolios, beginning with an analysis of macro-
economic and capital market conditions. Nelson's investment managers
undertake quantitative analyses, including asset/liability analyses, yield
curve analyses and asset allocation modeling to examine these areas. Using
this information, Nelson's investment managers construct an investment
portfolio that adheres to each client's objectives as well as Nelson's
investment strategy.

Nelson, through continued investment in technology, has developed
proprietary systems delivering economies of scale to provide a broad range of
investment instruments used by Nelson's investment managers to construct a
balanced investment portfolio. Nelson's investment managers invest in fixed
interest securities, international and domestic securities, sterling
deposits, sterling commercial paper, floating rate notes, certificates of
deposit and tax-free and fixed income corporate bonds. Nelson also invests
directly in equities, unit trusts and investment trusts with characteristics
ranging from conservative to aggressive.

After establishment of a client's portfolio, Nelson provides several
services aimed at establishing a long-term relationship with each client.
Each investment adviser meets periodically with each client to discuss
reinvestment of maturing investments as they arise and to ensure that the
balance of deposits, bonds and equities in each investor's portfolio
continues to meet the investor's investment strategy. Nelson also maintains
a staff to respond to inquiries from clients. In addition, Nelson
distributes a personal investment portfolio report to each investor every six
months which details his or her current portfolio investments and outlines
all transactions that have taken place in the prior six months together with
a commentary from the investment management team. Furthermore, Nelson
distributes investment and budget newsletters to investors. Finally, Nelson
regularly holds investment road shows throughout the United Kingdom so that
clients can meet Nelson's directors, investment managers and staff.

For providing investment advice, Nelson charges an initial fee
calculated as a percentage of capital invested into each individual
investment portfolio. Nelson also charges annual fees for the ongoing
management and administration of each investment portfolio. These fees are
based on the type of investments and amount of assets contained in each
investor's portfolio. The fee schedules typically provide lower incremental
fees for assets under management above certain levels.

Nelson maintains an internal investment research staff which provides
several sources of information for making investment decisions. In addition,
Nelson utilizes research provided by London's leading investment houses,
certain credit rating agencies, Moody's Investor Service and Standard and
Poor's. Nelson holds frequent investment strategy meetings with senior
management, portfolio managers and research analysts to discuss investment
strategy.

DST SYSTEMS, INC.
-----------------

DST FINANCIAL SERVICES

DST's financial services segment serves primarily mutual funds,
investment managers, insurance companies, banks and other financial services
organizations. DST's proprietary software systems include shareowner
accounting and recordkeeping systems offered to the U.S. mutual fund
industry; shareowner accounting and recordkeeping systems offered to non-U.S.
mutual funds and unit trusts; a securities transfer system offered primarily
to corporate trustees and securities transfer agents; portfolio accounting
and investment management systems offered to U.S. and international fund
accountants and investment managers; image-based work management system
offered primarily to mutual funds, insurance companies and other financial
services organizations; and securities exchange and broker order systems
offered to brokers and companies involved in the exchange of equity, bond and
derivative securities primarily outside the U.S. DST was a pioneer in the
development of on-line automated recordkeeping and accounting for U.S. mutual
fund shareowner accounts. As discussed above, DST provides full-service
shareowner accounting and recordkeeping to Berger. In addition, DST provides
remote services to Janus, primarily shareowner recordkeeping and other
shareowner services.

DST CUSTOMER MANAGEMENT

DST's Customer Management segment provides sophisticated customer
management processing and computer software services and products to cable
television, direct broadcast satellite, wireless and wire-line telephony,
utilities and multi-service providers. Its proprietary software systems
enables clients to manage customer relationship functions, including new
account set-up, order processing, customer support, management reporting and
marketing analysis.

DST OUTPUT SOLUTIONS

DST's Output Solutions segment provides bill and statement processing
services and solutions, including electronic presentment and generation of
customized statements. Output processing services and solutions are provided
to customers of DST's other segments as well as to other industries.

DST INVESTMENTS

DST also held significant investments in equity securities with a market
value of approximately $1.0 billion at December 31, 1998, including
approximately 8.6 million shares of CSC, with a market value of $554.6
million, and 6.0 million shares of State Street Corporation, with a market
value of $420.9 million.

DST common stock is listed on the New York Stock Exchange and the
Chicago Stock Exchange under the symbol "DST."

PROPERTIES

In the opinion of management, the various facilities, office space and
other properties owned by and/or leased by Stilwell are adequate for existing
operating needs.

Janus leases approximately 340,000 square feet of office space in three
facilities for investment, administrative, marketing, information technology,
and shareowner processing operations, and approximately 33,500 square feet
for mail processing and storage requirements. These corporate offices and
mail processing facilities are located in Denver, Colorado. In
September 1998, Janus opened a 51,500 square foot investor service and data
center in Austin, Texas. Janus also leases 2,800 square feet of office space
in Westport, Connecticut for development of the Janus World Funds and 1,500
square feet of office space in London, England for securities research and
trading.

Berger leases approximately 29,800 square feet of office space in
Denver, Colorado for its administrative and corporate functions.

Nelson leases 8,000 square feet of office space in Chester, England, the
location of its corporate headquarters, investment operations and one of its
marketing offices. During 1998, Nelson acquired additional office space
adjacent to its Chester location to accommodate expansion efforts. Also,
Nelson leases or owns six branch marketing offices totaling approximately
8,500 square feet in the following locations in England: London, Lichfield,
Bath, York and Durham as well as a location in Stirling, Scotland.

EMPLOYEES

As of September 30, 1999, Janus had approximately 2,050 employees,
Berger had approximately 75 employees, Nelson had approximately 180 employees
and Stilwell Financial, Inc. had 17 employees. None of the employees of
Stilwell are represented by a labor union.

STILWELL BUSINESS STRATEGY

Stilwell believes that it has established a strong platform to support
future growth in revenues, deriving its strength in large part from the
experience and capabilities of Stilwell's subsidiaries and equity investments
as full service providers of asset management and related financial services.
The strength of Stilwell's subsidiaries and equity investments is based on
core investment professionals, solid investment performance results,
sophisticated distribution systems, quality customer service, talented
support and service staff and product expertise and systems. In addition,
Stilwell believes that it will benefit from the brand name equity associated
with the names JANUS, BERGER, NELSON and DST. Opportunities for growth for
Stilwell are expected to come, principally through its subsidiaries and
equity investments, from new and existing clients, strategic acquisitions and
alliances and strengthening the brand name and brand image of Stilwell's
subsidiaries and equity investments.

MAINTAIN AND ENHANCE EXISTING CLIENT RELATIONSHIPS. As one of its primary
business objectives, Stilwell intends to maintain and enhance existing client
relationships by continuing to provide a high level of quality service to
existing clients through strong support and service staff, excellent customer
service and product expertise and systems.

To encourage growth, Stilwell intends to continue compensation programs
with equity incentives for key management employees of its principal
subsidiaries to provide incentives through ownership of stock in the
enterprises in which they are employed. Stilwell seeks to facilitate the
acquisition of such ownership through such compensation programs and by making
such programs competitive with, if not superior to, compensation programs of
other financial services companies.

PURSUE STRATEGIC ACQUISITIONS AND ALLIANCES. Stilwell plans to regularly
evaluate strategic acquisitions, joint ventures and alliances and pursue those
that appear appropriate as a means of expanding the range of its product
offerings and distribution, as well as for increasing its sales and marketing
capabilities.

STRENGTHEN BRAND NAME AND BRAND IMAGE. Stilwell intends to continue
developing several independent financial services businesses with autonomous
management and separate brand names. Stilwell believes it has a strong starting
position for this strategy, based on its existing ownership of Janus, Berger
and Nelson, as well as its equity investment in DST. Management of each of
Stilwell's affiliates has general autonomy over its respective day-to-day
operations, allowing each business to develop a separate public identity,
satisfy legal requirements regarding separation of investment decisions and
maintain compliance with certain minority stockholder agreements.

COMPETITION

Stilwell is subject to substantial and growing competition in all
aspects of its business. Such competition could reduce the demand for
Stilwell's products and services and could have a material adverse effect on
Stilwell's business, financial condition, results of operations and business
prospects. Janus and Berger compete with hundreds of other mutual fund
management distribution and service companies that distribute their fund
shares through a variety of methods including affiliated and unaffiliated
sales forces, broker-dealers, and direct sales to the public. Nelson
competes with other money managers in obtaining new client business. DST
competes with third party providers, in-house systems and broker-dealers for
the provision of processing services. In addition, Stilwell's subsidiaries
and equity investments compete with brokerage and investment banking firms,
insurance companies, banks, and other financial institutions in all aspects
of its business. Although no one company or group of companies dominates the
financial services industry, many are larger, better known and have greater
resources than Stilwell. Stilwell believes that competition in the mutual
fund industry will increase as a result of increased flexibility afforded to
banks and other financial institutions to sponsor mutual funds and distribute
mutual fund shares, and as a result of consolidation and acquisition activity
within the industry. In addition, the mutual fund industry, in general,
faces significant competition as the number of mutual funds continues to
increase, marketing and distribution channels become more creative and
complex, and investors place greater emphasis on published fund
recommendations and investment category rankings. Barriers to entry to the
investment management business are relatively few, and management of Stilwell
anticipates Janus, Berger and Nelson will face a growing number of
competitors. Competition for Janus and Berger is based on the methods of
distribution of fund shares, the ability to meet the changing needs of
investors, the ability to achieve superior investment management performance,
the type and quality of shareowner services, and the success of marketing
efforts. Competition for Nelson is based on the ability to achieve
reasonable investment management returns, the quality of investor services
and the success of marketing efforts. DST's ability to compete is based on
the quality of service and features offered, including the ability to handle
rapidly changing transaction volumes, commitment to hardware capacity and
software development and price.

While Stilwell's subsidiaries and equity investments have implemented
programs to improve performance in all of these areas, Stilwell's
subsidiaries and equity investments may not be able to compete successfully
against current and future competitors. In addition, competitive pressures
faced by Stilwell's subsidiaries and equity investments may materially and
adversely affect Stilwell's business, financial condition, results of
operations and business prospects.

REGULATION

Virtually all aspects of Stilwell's business are subject to various laws
and regulations. Applicable laws include the 1940 Act, the Advisers Act, the
Securities Act, the Exchange Act, ERISA and various state securities and
related laws (including laws in the United Kingdom). Applicable regulations
include, but are not limited to, in the United States, the rules and
regulations of the SEC, the NASD and other securities exchanges and the DOL,
and generally in the United Kingdom, IMRO, PIA and FSA. These laws and
regulations generally grant regulatory agencies and bodies broad
administrative powers, including in some cases the power to limit or restrict
Stilwell from operating its businesses in the event it fails to comply with
such laws and regulations. Due to the extensive regulations and laws to
which Stilwell is subject, management of Stilwell is required to devote
substantial time and effort to legal and regulatory compliance issues.
Violations of such laws or regulations could subject Stilwell and/or its
employees to disciplinary proceedings or civil or criminal liability,
including revocation of licenses, censures, fines or temporary suspension or
permanent bar from the conduct of their business. Stilwell believes that it
is in substantial compliance with all material laws and regulations.

Janus and Berger are registered with the SEC as investment advisers
under the Advisers Act and with the appropriate authorities in each of the
states in which registration is required. Each of the funds of Janus and
Berger is registered with the SEC under the 1940 Act. Nelson is regulated by
IMRO, PIA and FSA and Janus International is regulated by IMRO. Various
regulations also cover certain investment strategies that may be used by
Janus, Berger and Nelson for hedging purposes. To the extent that Janus and
Berger purchase futures contracts, Janus and Berger may be subject to the
commodities and futures regulations of the Commodity Futures Trading
Commission. Under the rules and regulations of the SEC promulgated pursuant
to the federal securities laws, Stilwell is subject to periodic examination
by the SEC. Stilwell is also subject to periodic examination by the NASD.

LEGAL MATTERS

From time to time Stilwell is involved in various legal actions arising
in the normal course of business. While the ultimate outcome of the various
legal proceedings involving Stilwell cannot be predicted with certainty, it
is the opinion of management (after consultation with legal counsel) that the
litigation reserves of Stilwell are adequate and that legal actions involving
Stilwell and ultimate resolution of these matters currently are not material
to Stilwell's consolidated financial position, results of operations or cash
flows.

EX-99.1 20th "Page" of 34 TOC 1st Previous Next Bottom Just 20th

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information concerning the individuals who
are the directors and executive officers of Stilwell. Stilwell's Board of
Directors is comprised of four directors, as indicated in the table below,
and is divided into three classes. The initial term of the first class of
directors ("Class I Directors") will expire at the 2000 annual meeting of
stockholders, the initial term of the second class of directors ("Class II
Directors") will expire at the conclusion of the 2001 annual meeting of
stockholders and the initial term of the third class of directors ("Class III
Directors") will expire at the conclusion of the 2002 annual meeting of
stockholders. Commencing with the 2000 annual meeting of stockholders,
directors elected to succeed the initial directors whose terms expire will be
elected to serve a three-year term of office. Officers serve at the
discretion of Stilwell's Board of Directors.

NAME AGE POSITION AND OFFICES
---- --- --------------------

Landon H. Rowland 62 Director; Chairman of the Board, President
and Chief Executive Officer

Joseph D. Monello 54 Executive Vice President

Danny R. Carpenter 53 Vice President and Secretary

Anthony P. McCarthy 53 Vice President and Treasurer

Morton I. Sosland 74 Director

James E. Barnes 65 Director

A. Edward Allinson 64 Director

Gwen E. Royle 39 Vice President and Tax Counsel

Douglas E. Nickerson 34 Vice President and Comptroller

LANDON H. ROWLAND (Class III Director) has been a director of KCSI since
1983. He has been President of KCSI since July 1983, Chief Executive Officer
of KCSI since January 1987 and Chairman of KCSI's Board of Directors since
May 1997. Mr. Rowland is also a director of Janus, Berger, Nelson,
Transportacion Maritima Mexicana, S.A. de C.V. and Grupo Transportacion
Ferroviaria Mexicana, S.A. de C.V.

JOSEPH D. MONELLO has continuously served as Vice President and Chief
Financial Officer of KCSI since March 1994. From October 1992 to March 1994,
he served as Vice President-Finance. Mr. Monello is also a director of
Berger and Nelson.

DANNY R. CARPENTER has continuously served as Vice President-Finance of KCSI
since November 1996, and served as Vice President-Finance and Tax of KCSI
from May 1995 to November 1996, and as Vice President-Tax of KCSI from June
1993 to May 1995. Prior to June 1993, he was a member in the law firm of
Watson & Marshall, L.C., Kansas City, Missouri. Mr. Carpenter is also a
director of Berger and Nelson.

ANTHONY P. MCCARTHY has continuously served as Vice President and Treasurer
of KCSI since May 1996. He was Treasurer of KCSI from December 1989 to May
1996.

MORTON I. SOSLAND (Class I Director) has been a director of KCSI since 1976.
He has been Chairman of the Sosland Companies, Inc. (the "Sosland
Companies"), Kansas City, Missouri, since January 1993 and was President from
July 1968 through December 1992. He has also served as Chairman of Sosland
Publishing Company, Kansas City, Missouri, since 1984. The Sosland Companies
are publishers and venture capital investors. Mr. Sosland is also a director
of H&R Block, Inc., Kansas City, Missouri.

JAMES E. BARNES (Class III Director) has been a director of KCSI since 1986.
Prior to retirement, Mr. Barnes was Chairman of the Board of Directors,
President and Chief Executive Officer of MAPCO Inc., Tulsa, Oklahoma. He was
Chairman of the Board of Directors and Chief Executive Officer from December
1991 to September 1995 and Chairman of the Board of Directors, President and
Chief Executive Officer from May 1986 to December 1991. MAPCO processes,
transports, stores, purchases and sells petroleum and natural gas liquid
products. Mr. Barnes is also a director of BOK Financial Corporation, Tulsa,
Oklahoma; SBC Communications Inc., San Antonio, Texas; and Parker Drilling
Co., Tulsa, Oklahoma.

A. EDWARD ALLINSON (Class II Director) has been a director of KCSI since
1990. He has been an Executive Vice President of State Street Bank and Trust
Company, Chairman of the Board of Directors of Boston Financial Data
Services, Inc. ("BFDS") and Executive Vice President of State Street
Corporation since March 1990. BFDS provides full service shareowner
accounting and recordkeeping services to mutual funds, selected services to
certain retirement plans and certain securities transfer services. DST owns
50% of BFDS. Mr. Allinson is also a director of DST.

GWEN E. ROYLE has continuously served as Senior Assistant Vice President and
Tax Counsel of KCSI since November 1996. She was Tax Counsel of KCSI from
July 1995 to November 1996. She was a member in the law firm Slagle, Bernard
& Gorman, P.C. from 1991 to July 1995.

DOUGLAS E. NICKERSON has continuously served as Assistant Comptroller of KCSI
since September 1997, and served as Manager of Financial Reporting of KCSI
from October 1995 to September 1997. From January 1995 to October 1995, Mr.
Nickerson was financial reporting manager of Ferrellgas Partners, L.P.
Ferrellgas Partners, L.P. is engaged in the sale, distribution, marketing and
trading of propane and other natural gas liquids. From May 1992 to January
1995, he was a marketing representative with Hoffmann-LaRoche, which is an
international manufacturer and distributor of pharmaceuticals.

There are no arrangements or understandings between the directors or
executive officers and any other person pursuant to which the director or
executive officer was or is to be selected as a director or officer, except
with respect to the executive officers who have employment agreements with
Stilwell. None of the above directors or officers are related to one another
by family.

COMPOSITION OF STILWELL'S BOARD OF DIRECTORS

Stilwell's Board of Directors will consist of not fewer than 3 nor more
than 18 directors with the number of directors fixed exclusively from time to
time by a majority of Stilwell's entire Board of Directors. Stilwell's Board
of Directors is divided into three classes. The initial term of the first
class expires at the conclusion of the 2000 annual meeting of stockholders,
the initial term of the second class expires at the conclusion of the 2001
annual meeting of stockholders and the initial term of the third class
expires at the conclusion of the 2002 annual meeting of stockholders.
Commencing with the 2000 annual meeting of stockholders, directors elected to
succeed the initial directors whose terms expire will be elected to serve a
three-year term of office. Directors hold office until the next annual
meeting of stockholders at which their terms expire and until their
successors are duly elected and qualified. As a result, approximately one-
third of Stilwell's Board of Directors will be elected each year. Officers
are elected by Stilwell's Board of Directors and serve until their successors
are duly elected or appointed and qualified or until they shall die, resign
or be removed. See "Description of Capital Stock-Certain Antitakeover
Effects."

COMMITTEES OF STILWELL'S BOARD OF DIRECTORS

Stilwell's Board of Directors has established an Executive Committee
(which also nominates individuals to serve as directors of Stilwell), an
Audit Committee and a Compensation Committee. Commencing with the 2000
annual meeting of stockholders, the members of the committees will be elected
at the annual meeting of Stilwell's Board of Directors. Pursuant to the
Bylaws of Stilwell, Stilwell's Board of Directors may also establish other
committees from time to time in its discretion.

EXECUTIVE COMMITTEE. The Executive Committee consists of directors
elected by Stilwell's Board of Directors to serve one-year terms. When
Stilwell's Board of Directors is not in session, the Executive Committee has
all powers and rights necessary to exercise the full authority of Stilwell's
Board of Directors in the management of the business and affairs of Stilwell,
except as provided in the DGCL, the Certificate or the Bylaws of Stilwell.
The Executive Committee has full power to act as the Nominating Committee
which, when acting as such, has the power and duty to make recommendations to
Stilwell's Board of Directors as to suitable nominees for election to
Stilwell's Board of Directors by the stockholders or by the remaining members
of Stilwell's Board of Directors, to fill newly created directorships and to
fill any vacancies which shall occur. When acting as the Nominating
Committee, it has the power to meet with and consider suggestions from such
other members of Stilwell's Board of Directors, stockholders, members of
management, consultants and other persons, firms or corporations as they deem
necessary or advisable to assist them in making such recommendations.

AUDIT COMMITTEE. The Audit Committee consists of outside directors
elected by Stilwell's Board of Directors to serve staggered three-year terms.
The Audit Committee meets with and considers suggestions from members of
management and members of Stilwell's internal audit staff, as well as
Stilwell's independent accountants, concerning the financial operations of
Stilwell. The Audit Committee also has the power to review audited financial
statements of Stilwell and consider and recommend the employment of, and
approve the fee arrangement with, independent accountants for both audit
functions and for advisory and other consulting services.

COMPENSATION COMMITTEE. The Compensation Committee consists of outside
directors elected by Stilwell's Board of Directors to serve one-year terms.
The Compensation Committee has the power: to authorize and determine all
salaries for the officers and supervisory employees of Stilwell Financial,
Inc.; to administer the incentive compensation plans of Stilwell Financial,
Inc. in accordance with the powers and authority granted in such plans; to
determine any incentive allowances to be made to officers and staff of
Stilwell Financial, Inc.; to administer all stock option plans, stock
purchase plans and other equity ownership, compensation, retirement and
benefit plans of Stilwell Financial, Inc.; to approve the performance-based
compensation of individuals pursuant to Code Section 162(m); and to
administer all other matters relating to the compensation or benefits of
Stilwell Financial, Inc.

COMPENSATION OF STILWELL'S DIRECTORS

Directors who are employees of Stilwell do not receive any fees or other
compensation for service on Stilwell's Board of Directors or its committees.
Members of Stilwell's Board of Directors who do not receive compensation as
officers or employees of Stilwell receive a fee of $4,000 for each meeting of
Stilwell's Board of Directors attended, a fee of $2,000 for attendance at any
committee meeting, and a fee of $2,000 or $1,000 for participation in any
telephonic Board of Directors or committee meeting, respectively. In
addition, all members of Stilwell's Board of Directors are reimbursed for
reasonable travel expenses in connection with attending Board of Directors
and committee meetings. The chairman of a committee receives an additional
$500 for each committee meeting attended. Directors will also receive a
discretionary grant of options to purchase shares of Stilwell Common Stock on
an annual basis immediately following each annual meeting of Stilwell's
stockholders. To date, the Board of Directors of Stilwell has not taken any
action with respect to such discretionary grants of options.

EXECUTIVE COMPENSATION

Although Stilwell has entered into employment agreements with certain of
Stilwell's executive officers effective as of the Distribution Date, to date,
no compensation has been paid pursuant to such agreements and the executive
officers have received compensation pursuant to their existing employment
arrangements with KCSI. The information under this heading therefore
summarizes compensation paid by KCSI to the individual that is Stilwell's
Chief Executive Officer and individuals who, based upon employment and
compensation paid by KCSI during the fiscal year ended December 31, 1998, are
the four individuals initially expected to be the most highly compensated
executive officers of Stilwell. Stilwell expects to review the Stilwell
employment agreements and enter into revised employment agreements in the
year 2000. As a result, the compensation described below does not
necessarily reflect the compensation such executive officers will receive
following the Distribution. The principal positions listed below are those
that will be held by the executive officers in Stilwell following the
Distribution.

EX-99.1 21st "Page" of 34 TOC 1st Previous Next Bottom Just 21st
· Enlarge/Download Table

SUMMARY COMPENSATION TABLE*
Long Term
Annual Compensation Compensation Awards
------------------------------------------ --------------------
Securities
Other Annual Underlying All Other
Name and Principal Compensation Options/ Compensation
Position Year Salary($) Bonus($) ($) SARs(#)<6> ($)
-------------------------------------------------------------------------------------------------------------

Landon H. Rowland 1998 750,000 --- 53,877<F1> 6,138 26,632<F1>
Director; Chairman 1997 750,000 --- 57,900 --- 114,801
of the Board, 1996 500,004 --- 52,252 459,000 88,816
President and Chief
Executive Officer

Thomas H. Bailey 1998 900,000 833,000<F2> --- --- 109,000<F2>
Chairman of the 1997 900,000 675,000 --- --- 75,667
Board, President 1996 585,000 400,000 --- --- 74,747
and Chief Executive
Officer of Janus

Joseph D. Monello 1998 250,008 --- --- 65,000 43,754<F3>
Executive Vice 1997 250,008 --- --- --- 62,640
President 1996 250,008 --- --- --- 63,637

Danny R. Carpenter 1998 190,008 --- --- 31,481 16,000<F4>
Vice President 1997 190,008 --- --- --- 43,751
and Secretary 1996 190,008 --- --- --- 48,697

Anthony P. McCarthy 1998 110,004 --- --- 10,000 11,052<F5>
Vice President 1997 110,004 --- --- --- 11,394
and Treasurer 1996 110,004 --- --- --- 10,241

*Reflects compensation paid by KCSI.

<FN>
<F1>
Other Annual Compensation for Mr. Rowland includes premiums on disability insurance policy of $53,877. All
other compensation for Mr. Rowland for 1998 is comprised of: (i) contributions to his account under the
KCSI ESOP of $6,400; (ii) interest on deferred directors' fees of $4,314; (iii) an estimated contribution
to his account under KCSI's 401(k) plan of $4,800; (iv) an estimated contribution to his account under
KCSI's profit sharing plan of $4,800; and (v) premiums on group term life insurance of $6,318. As of
December 31, 1998, Mr. Rowland held no shares of restricted stock.

<F2>
The bonus for Mr. Bailey for 1998 was under a performance based incentive compensation plan approved by
KCSI stockholders in 1997. All other compensation for Mr. Bailey for 1998 is comprised of: (i) directors'
fees in the amount of $27,000 and $66,000, paid to Mr. Bailey in his capacity as director of Janus Capital
Corporation and Janus Investment Fund and the Janus Aspen Series, respectively; (ii) a contribution to his
account under the KCSI ESOP of $6,400; (iii) an estimated contribution to his account under KCSI's 401(k)
plan of $4,800; and (iv) an estimated contribution to his account under Janus' profit sharing plan of
$4,800. As of December 31, 1998, Mr. Bailey held no shares of restricted stock.

<F3>
All other compensation for Mr. Monello for 1998 is comprised of: (i) a contribution to his account under
the KCSI ESOP of $6,400; (ii) an estimated contribution to his account under KCSI's 401(k) plan of $4,800;
(iii) an estimated contribution to his account under KCSI's profit sharing plan of $4,800; and (iv) an
amount estimated to be credited to his account under the KCSI Executive Plan of $27,754. As of December
31, 1998, Mr. Monello held no shares of restricted stock.

<F4>
All other compensation for Mr. Carpenter for 1998 is comprised of: (i) a contribution to his account under
the KCSI ESOP of $6,400; (ii) an estimated contribution to his account under KCSI's 401(k) plan of $4,800;
and (iii) an estimated contribution to his account under KCSI's profit sharing plan of $4,800. As of
December 31, 1998, Mr. Carpenter held no shares of restricted stock.

<F5>
All other compensation for Mr. McCarthy for 1998 is comprised of: (i) a contribution to his account under
the KCSI ESOP of $4,587; (ii) an estimated contribution to his account under KCSI's 401(k) plan of $3,025;
(iii) an estimated contribution to his account under KCSI's profit sharing plan of $3,440. As of December
31, 1998, Mr. McCarthy held no shares of restricted stock.

<F6>
All option award information relates to options to purchase shares of KCSI Common Stock. In connection
with the Distribution, all Options will remain outstanding with an adjusted exercise price and the holders
of the Options will be granted New Stilwell Options. As a result, the value of the options to purchase
Stilwell Common Stock will depend on the future value of Stilwell Common Stock. See "Relationship Between
KCSI and Stilwell After the Distribution-Employee Benefits" and "Management-Other Compensatory Plans and
Arrangements."

</FN>

EX-99.1 22nd "Page" of 34 TOC 1st Previous Next Bottom Just 22nd
· Enlarge/Download Table

1998 OPTION/SAR GRANTS IN LAST FISCAL YEAR

-----------------------------------------------------------------------------------------
Grant Date
Individual Grants Value
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees in Price Expiration Present
Name Granted (#)<5> Fiscal Year<2> ($/Sh)<3> Date Value $<4>
-----------------------------------------------------------------------------------------

Landon H. Rowland 6,138<1> * 28.4063 01/27/08 45,843
Thomas H. Bailey -- --
Joseph D. Monello 65,000<2> 5.5% 42.3125 11/16/08 896,353
Danny R. Carpenter 1,481<1> * 28.4063 01/27/08 11,061
30,000<2> 2.5% 42.3125 11/16/08 413,701
Anthony P. McCarthy 10,000<2> * 42.3125 11/16/08 137,900

* Less than one percent of the total options granted.
<FN>
<F1>
The options were granted under the KCSI Stock Option Plan in connection with KCSI's
Executive Plan. Under the Executive Plan, the participants may elect to receive their
accumulated balance and annual benefit either in cash or in non-qualified stock options
with an estimated value (using the Black-Scholes' valuation mode) equal to 125 percent of
the annual cash benefit. These options were granted on January 28, 1998 and became
exercisable on January 28, 1999. Limited stock appreciation rights ("LSARs") were
granted in tandem with these options. All of the LSARs are automatically exercised upon
a change in control of KCSI that is not approved by the incumbent board of KCSI (as such
terms are defined in the 1991 Plan). All the options expire at the end of ten years,
subject to earlier termination as provided in the individual's option agreement. Holders
of options have the right to satisfy the minimum tax withholding requirements in shares
of stock.

<F2>
The options were granted under the KCSI Stock Option Plan on November 17, 1998 and become
exercisable on January 1, 2000. If there is a change in control of KCSI that is approved
by the incumbent board of KCSI (as such terms are defined in the 1991 Plan), however, the
options become immediately exercisable. LSARs were granted in tandem with these options.
All of the LSARs are automatically exercised upon a change in control that is not
approved by the incumbent board of KCSI (as such terms are defined in the 1991 Plan).
All the options expire at the end of ten years, subject to earlier termination as
provided in the individual's option agreement. Holders of options have the right to
satisfy the minimum tax withholding requirements in shares of stock.

<F3>
Average of the high and low prices of the Common Stock on the date of grant as reported
on the NYSE.

<F4>
Valuation determined using Black-Scholes' option pricing model with the following
assumptions for the grant dates indicated parenthetically: market price of stock is equal
to the exercise price of options; stock volatility (based on 3-year monthly data): 30.37%
and 41.63% (1/28/98 and 11/17/98, respectively); annualized risk-free interest rate:
5.36% and 4.74% (1/28/98 and 11/17/98, respectively); option term (in years) 3; and
stock's dividend yield: 0.56% and 0.38% (1/28/98 and 11/17/98, respectively).

<F5>
All option award information relates to options to purchase shares of KCSI Common Stock.
In connection with the Distribution, all Options will remain outstanding with an adjusted
exercise price and the holders of the Options will be granted New Stilwell Options. As a
result, the value of the options to purchase Stilwell Common Stock will depend on the
future value of Stilwell Common Stock. See "Relationship Between KCSI and Stilwell After
the Distribution-Employee Benefits" and "Management-Other Compensatory Plans and
Arrangements."

</FN>

EX-99.1 23rd "Page" of 34 TOC 1st Previous Next Bottom Just 23rd

1998 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table sets forth information with respect to the aggregate
option exercises during 1998 by the executive officers and the number and value
of options held by such officers as of December 31, 1998 (the last trading day
of the year).

· Download Table

-----------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End
(#) ($)
Shares
Acquired
on Value
Exercise Realized<1> Exercisable/ Exercisable/
Name (#) ($) Unexercisable<2> Unexercisable<1>
------------------------------------------------------------------------------------

Landon H. Rowland 0 N/A 2,763,000/ 114,043,374/
6,138 118,732
Thomas H. Bailey 0 N/A 0/0 N/A
Joseph D. Monello 141,000 5,588,811 330,000/ 10,667,511/
65,000 353,438
Danny R. Carpenter 0 0 261,000/ 8,557,256/
31,481 191,773
Anthony P. McCarthy 0 N/A 74,250/ 2,515,424/
10,000 54,375

<FN>
<F1>
The dollar value in columns (c) and (e) is calculated by determining the difference
between the fair market value of the securities underlying the options and the
exercise price of the options on the date of exercise or December 31, 1998 (the last
trading day of 1998), respectively, times the number of options exercised or held at
year end.

<F2>
All option award information relates to options to purchase shares of KCSI Common
Stock. In connection with the Distribution, all Options will remain outstanding
with an adjusted exercise price, and the holders of the Options will be granted New
Stilwell Option. As a result, the value of the options to purchase Stilwell Common
Stock will depend on the future value of Stilwell Common Stock. See "Relationship
Between KCSI and Stilwell After the Distribution-Employee Benefits" and
"Management--Other Compensatory Plans and Arrangements."

</FN>

EX-99.1 24th "Page" of 34 TOC 1st Previous Next Bottom Just 24th

EMPLOYMENT AGREEMENTS WITH THE NAMED EXECUTIVE OFFICERS

Certain executive officers of Stilwell have entered into employment
agreements with Stilwell that are effective as of the Distribution Date.
Stilwell expects to enter into revised employment agreements with such
executive officers in the year 2000. Such revised employment agreements may
vary significantly from the current Stilwell employment agreements. For
example, Stilwell's Compensation Committee may make significant adjustments
to the salaries of the executive officers based on a study of competitive
executive officer salaries in the mutual fund industry. However, several
terms are expected to be similar to the current Stilwell employment
agreements. For example, it is expected that following the effective date of
the revised employment agreements, the salaries of the executive officers
will not be increased for a certain period and cannot be decreased except in
certain circumstances, the executive officers will not be able to participate
in incentive compensation plans for a period of time and a one-time grant of
stock options will be made as part of the compensation packages pursuant to
the revised employment agreements. The Compensation Committee of the Board of
Directors of Janus, with the aid of an independent compensation consultant,
sets Mr. Bailey's base salary and recommends incentive compensation.
Stilwell's Compensation Committee also approves such incentive compensation.

MR. ROWLAND. Stilwell entered into an employment agreement with Mr.
Rowland effective as of the Distribution Date, which provides for Mr.
Rowland's employment as Chairman of the Board, President and Chief Executive
Officer of Stilwell.

The employment agreement provides that Mr. Rowland is to serve at the
pleasure of Stilwell's Board of Directors and does not contain a fixed term
of employment. Pursuant to the employment agreement, Mr. Rowland receives a
fixed annual base salary of $750,000, which is not to be reduced except by
mutual agreement of Stilwell and Mr. Rowland or except as part of a general
salary reduction program applicable to all officers of Stilwell. Mr. Rowland
was not entitled to participate in any Stilwell incentive compensation plan
during 1999, but continues to participate in other benefit plans or programs
of Stilwell generally available to executive employees and is provided with
certain disability insurance coverage and life insurance payable to
beneficiaries designated by him. Under the employment agreement the value of
Mr. Rowland's annual compensation is fixed at $875,000 for purposes of cash
compensation based benefit plans.

The employment agreement provides for twenty-four (24) months of
severance pay at an annual rate equal to Mr. Rowland's base salary and for
certain health and life insurance benefits in the event of the termination of
his employment without cause, other than in connection with a change in
control of Stilwell (as defined in the employment agreement), unless such
benefits are provided by another employer. In the year in which termination
occurs, Mr. Rowland shall remain eligible to receive benefits under the
Stilwell Incentive Compensation Plan, if any, and the Stilwell Executive
Plan. After termination, Mr. Rowland shall not be entitled to accrue or
receive any benefits under any other employee benefit plan, except he will be
entitled to participate in the Stilwell Profit Sharing Plan, the Stilwell
Employee Stock Ownership Plan and the Stilwell 401(k) Plan in the year of
termination if he meets the requirements for participation in such
termination year.

As part of the employment agreement, Mr. Rowland has agreed not to use
or disclose any Stilwell trade secret (as defined in the employment
agreement) after any termination of his employment and not to engage in, or
manage, a business in competition with any business conducted by Stilwell or
its subsidiaries, in any country or jurisdiction in which Stilwell or any of
its subsidiaries conduct business, for a period of three years following Mr.
Rowland's resignation or termination of his employment for cause or due to
his disability.

During the period of his employment under the employment agreement, Mr.
Rowland has agreed to retain ownership in himself or members of his immediate
family of at least a majority of the number of shares of (i) Stilwell Common
Stock received in the Distribution and (ii) Stilwell Common Stock acquired
upon exercise of stock options granted in connection with the Distribution
(other than shares transferred to Stilwell to pay the purchase price upon the
exercise of stock options or used to satisfy tax withholding requirements).

If there is a change in control of Stilwell or its Significant
Subsidiaries (as defined in the employment agreement) during the term of the
employment agreement, Mr. Rowland's employment, executive capacity, salary
and benefits would be continued for a three-year period at levels in effect
on the Control Change Date (as defined in the employment agreement) at a rate
not less than twelve times the highest monthly base salary paid or payable to
him in the twelve months prior to any change in control. During such three-
year period, Mr. Rowland would also be eligible to participate in all benefit
plans generally made available to executives of his level or to the employees
of Stilwell generally, would be eligible to participate in any Stilwell
incentive compensation plan, and would be entitled to immediately exercise
all outstanding stock options and receive a lump-sum cash payment equal to
the fair market value of all non-vested options. If the amounts payable
during this three-year period are discretionary, the benefits continued shall
not be less than the average annual amount for the three years prior to the
change in control and incentive compensation shall not be less than 75% of
the maximum amount which could have been paid to Mr. Rowland under the terms
of the incentive compensation plan. With respect to unfunded employer
obligations under the benefit plans, Mr. Rowland would be entitled to a
discounted cash payment of amounts to which he is entitled. Mr. Rowland's
employment may be terminated after the Control Change Date, but where it is
other than For Cause (as defined in the employment agreement) he would be
entitled to payment of his base salary through termination plus a discounted
cash severance payment equal to 175% of three times his annual base salary
and continuation or payment of benefits for a three-year period at levels in
effect on the Control Change Date. Mr. Rowland also is permitted to resign
employment after a change in control upon Good Reason (as defined in the
employment agreement) and advance written notice, and to receive the same
payments and benefits as if his employment had been terminated by Stilwell.
Mr. Rowland's employment agreement also provides for payments to him
necessary to relieve him of certain adverse federal income tax consequences
if amounts received under the employment agreement involve "parachute
payments" under Code Section 4999.

MESSRS. CARPENTER, MONELLO AND MCCARTHY. Stilwell has entered into
employment agreements with Messrs. Carpenter, Monello and McCarthy effective
as of the Distribution Date. These employment agreements provide,
respectively, for Mr. Carpenter's employment as Vice President and Secretary
of Stilwell, Mr. Monello's employment as Executive Vice President of Stilwell
and Mr. McCarthy's employment as Vice President and Treasurer of Stilwell.
The employment agreements are subject to termination under certain
circumstances.

Pursuant to their employment agreements, Messrs. Carpenter, Monello and
McCarthy receive as compensation for their services an annual base salary at
the rate approved on November 17, 1998. Such salary shall not be reduced
except as agreed to by the parties or as part of a general salary reduction
by Stilwell applicable to all officers of Stilwell. Under the employment
agreements, none of Mr. Carpenter, Mr. Monello nor Mr. McCarthy was entitled
to participate in any Stilwell incentive compensation plan during 1999, but
all are eligible to participate in other benefit plans or programs generally
made available to executive employees of Stilwell. The employment agreements
provide that the value of Messrs. Carpenter's, Monello's, and McCarthy's
annual compensation is fixed at 175%, 167%, and 160%, respectively, of their
annual base salaries for purposes of cash compensation based benefit plans.

In the event of termination without cause by Stilwell, Messrs.
Carpenter, Monello and McCarthy would be entitled to twelve months of
severance pay at an annual rate equal to their base salary and for
reimbursement for the costs of continuing or obtaining comparable health and
life insurance benefits unless such benefits are provided by another
employer. In the year in which termination occurs, Messrs. Carpenter,
Monello and McCarthy shall remain eligible to receive benefits under the
Stilwell Incentive Compensation Plan, if any, and the Stilwell Executive
Plan. After termination, the officers shall not be entitled to accrue or
receive benefits under any other employee benefit plan, except the officers
will be entitled to participate in the Stilwell Profit Sharing Plan, the
Stilwell Employee Stock Ownership Plan and the Stilwell 401(k) Plan in the
year of termination if such officers meet the requirements for participation
in such termination year.

As part of their employment agreements, Messrs. Carpenter, Monello and
McCarthy have agreed not to use or disclose any Stilwell trade secret (as
defined in the employment agreements) after any termination of their
employment and shall, immediately upon termination of employment, return to
Stilwell or its subsidiaries or affiliates any trade secrets in their
possession which exist in tangible form.

If there is a change in control of Stilwell or its Significant
Subsidiaries (as defined in the employment agreements) during the term of the
employment agreements, the officers' employment, executive capacity, salary
and benefits would be continued for a three-year period at levels in effect
on the Control Change Date (as that term is defined in the employment
agreements). During the three-year period, salary is to be paid at a rate
not less than twelve times the highest monthly base salary paid or payable to
the officers by Stilwell in the twelve months immediately prior to any change
in control. During the three-year period, the officers also would be
eligible to participate in all benefit plans generally made available to
executives of their level or to the employees of Stilwell generally, would be
eligible to participate in any Stilwell incentive compensation plan and would
be entitled to immediately exercise all outstanding stock options and receive
a lump-sum cash payment equal to the fair market value of all non-vested
options. If the amounts payable during this three-year period are
discretionary, the benefits continued shall not be less than the average
annual amount for the three years prior to the change in control and
incentive compensation shall not be less than 75% of the maximum amount which
could have been paid to the officers under the terms of the incentive
compensation plan. With respect to unfunded employer obligations under
benefit plans, the officers would be entitled to a discounted cash payment of
amounts to which they are entitled. The officers' employment may be
terminated after the Control Change Date, but where it is other than For
Cause (as defined in the employment agreements) they would be entitled to
payment of their base salary through termination plus Messrs. Carpenter,
Monello and McCarthy would receive a discounted cash severance payment equal
to 175% for Mr. Carpenter and 166.67% for Mr. Monello of three times their
annual base salaries, and for Mr. McCarthy 160% of two times his annual base
salary, continuation of payment of benefits for a three-year period at the
Control Change Date and certain health, prescription and dental benefits for
the remainder of their lives unless such benefits are otherwise provided by a
subsequent employer. In addition, the officers receive continuation or
payment of benefits for a three-year period at levels in effect on the
Control Change Date. The officers also are permitted to resign employment
after a change in control upon Good Reason (as that term is defined in the
employment agreements) and advance written notice, and to receive the same
payments and benefits as if their employment had been terminated. The
employment agreements also provide for payments to such officers necessary to
relieve them of certain adverse federal income tax consequences if amounts
received under the agreements involve "parachute payments" under Code Section
4999.

MR. BAILEY. Mr. Bailey has the right under the Janus Stock Purchase
Agreement to require KCSI to purchase his shares of stock of Janus at a per
share price equal to fifteen times the net after-tax earnings per share of
Janus for the year ended immediately prior to the date of notice, or, a price
per share equal to fifteen times the after-tax earnings per share of Janus
for the year ended December 31, 1987, whichever is greater. Under that
agreement, Mr. Bailey is also entitled, upon a termination of his employment
within one year of a defined change of ownership of KCSI, to receive a
payment equal to his prior year's current and deferred compensation.

INDEMNIFICATION AGREEMENTS

Stilwell entered into indemnification agreements with its officers and
directors effective as of the Distribution Date (the "Stilwell
Indemnification Agreements"). Such agreements are intended to supplement
Stilwell's officers' and directors' liability insurance and to provide the
officers and directors with specific contractual assurance that the
protection provided by Stilwell's Certificate will continue to be available
regardless of, among other things, an amendment to the Certificate or a
change in management or control of Stilwell. The Stilwell Indemnification
Agreements provide for prompt indemnification to the fullest extent permitted
by law and for the prompt advancement of expenses, including attorney's fees
and all other costs and expenses incurred in connection with any action, suit
or proceeding in which the director or officer is a witness or other
participant, or to which the director or officer is a party, by reason (in
whole or in part) of service in certain capacities. The Stilwell
Indemnification Agreements provide a mechanism to seek court relief if
indemnification or expense advances are denied or not received within the
periods provided in the Stilwell Indemnification Agreements. Indemnification
and advancement of expenses are also provided with respect to a court
proceeding initiated for a determination of rights under the Stilwell
Indemnification Agreements or of certain other matters. Stilwell has entered
into such indemnification agreements with all current directors and officers
of Stilwell.

OTHER COMPENSATORY PLANS AND ARRANGEMENTS

STILWELL STOCK PURCHASE PLAN. The main provisions of the Stilwell Stock
Purchase Plan are substantially similar to the KCSI Purchase Plan: eligible
employees may purchase during certain periods Stilwell Common Stock at 85% of
the average market price on either the exercise date or the grant date,
whichever is lower, but in no event at less than the par value of the shares.
Eligible Stilwell employees may elect to have up to a board-determined maximum
percentage of annualized base pay applied to purchase Stilwell Common Stock,
and the purchase price will be collected via employee payroll deductions. With
certain exceptions, all employees of Stilwell or any eligible Stilwell
affiliates who work at least 20 hours per week for five months of the year will
be eligible to participate in the Stilwell Stock Purchase Plan. The right to
participate in the Stilwell Stock Purchase Plan will terminate immediately upon
the date the participant ceases employment with Stilwell or any eligible
Stilwell affiliate except in certain circumstances.

STILWELL EXECUTIVE PLAN. The Stilwell Executive Plan is a non-
qualified plan for participants who are certain officers of Stilwell and is
designed to provide benefits in addition to the annual contributions
permitted under the Stilwell qualified retirement plans.

The annual benefit provided on behalf of each participant in the
Stilwell Executive Plan equals the amount which would have been contributed
to the Stilwell qualified retirement plans for such participant based on the
participant's compensation under the Stilwell qualified retirement plans
without regard to statutory contribution limitations or eligibility
requirements, less the amount participants were entitled to receive under
such plans (assuming, with respect to the 401(k) Portion, that the
participant was entitled to receive the maximum matching contribution). Each
participant may irrevocably elect in advance to receive the annual benefit
available under the Stilwell Executive Plan either in cash or through a grant
of non-qualified stock options to purchase shares of Stilwell Common Stock
(using a Black-Scholes valuation model which values the stock options at 125
percent of the annual cash benefit). For purposes of the Stilwell Executive
Plan, compensation includes base compensation plus cash incentive
compensation; certain participants have agreed that their compensation is a
fixed amount or a certain percentage of their annual base salaries, pursuant
to their employment agreements.

After the Distribution, those Stilwell employees in the KCSI Executive
Plan will no longer be eligible to participate in the KCSI Executive Plan,
but their KCSI compensation for the year including the Distribution will be
credited under the Stilwell Executive Plan.

STILWELL STOCK OPTION PLAN. The Stilwell Stock Option Plan provides for
the grant, at the discretion of Stilwell's Board of Directors or of a
committee appointed by Stilwell's Board of Directors (in either case, the
"Committee") of various types of equity incentive awards, including options
(incentive and non-statutory), restricted shares, bonus shares, SARS
(freestanding and tandem) and LSARs (including, in each case, dividend
equivalents), performance units and performance shares. Awards may be made
to any employee director or consultant of Stilwell or of any Stilwell
subsidiary. A maximum of 30,000,000 shares of Stilwell Common Stock may be
issued under the Stilwell Stock Option Plan (subject to adjustment in the
event of stock splits, recapitalizations, reorganizations or similar events),
approximately 17,000,000 of which shares will be subject to New Stilwell
Options. The Committee administers the Stilwell Stock Option Plan and has
broad discretionary powers to designate grantees, determine the number and
type of awards, prescribe the terms and conditions of each award and to
modify the terms and conditions of individual awards. The Committee's
discretionary powers extend to awards granted to outside directors as well as
to employees and consultants.

The Stilwell Stock Option Plan will govern the New Stilwell Options as
well as Stilwell stock options and other incentive awards granted pursuant to
the Stilwell Stock Option Plan in connection with and after the Distribution.
As part of the Distribution, KCSI and Stilwell plan to substitute options for
Options held by KCSI and Stilwell employees, former KCSI employees and KCSI
directors (including former directors) to provide for the equitable
adjustment of the Options as allowed by the KCSI Stock Option Plan.
Specifically, as part of the Distribution, all Options will remain
outstanding with an adjusted exercise price as New KCSI Options, and holders
of the Options will receive New Stilwell Options.

The exercise prices of the Substituted Options will be a prorated amount
of the exercise price for the related Options based on the ratio of the
trading price of Stilwell Common Stock to the total of the trading prices of
both KCSI Common Stock (excluding Stilwell) and Stilwell Common Stock. For
this purpose, the trading prices will be the closing prices of the stocks on
the New York Stock Exchange on the Distribution Date. The other terms of the
Substituted Options will be the same as for the Options.

The New Stilwell Options will be granted in the same proportion as the
distribution of Stilwell Common Stock in the Distribution; i.e., two New
Stilwell Options for each Option held. New KCSI Options and New Stilwell
Options which will be substituted for Options which were subject to time
vesting (under the KCSI Stock Option Plan, vesting means the Options become
exercisable; therefore, Options which time vest are Options which become
exercisable after the passage of a specified period of time) will vest at the
time the Options for which they were substituted would have vested.

The substitution of New KCSI Options and New Stilwell Options for
Options is provided for in the Intercompany Agreement under which (1) the New
KCSI Options and New Stilwell Options will be established with the exercise
prices determined as described above based on an allocation of the exercise
price of the Options; and (2) KCSI and Stilwell assume the obligation to
issue shares of their Common Stock upon the exercise of the New KCSI Options
and the New Stilwell Options, respectively.

STILWELL 401(k) PLAN (WITH PROFIT SHARING PORTION). The 401(k) Portion
is a qualified voluntary self-directed employee contribution plan, and the
Profit Sharing Portion is a qualified, non-contributory defined contribution
profit sharing plan. New employees of Stilwell and of Stilwell affiliates
which participate in the Stilwell 401(k) Plan, other than certain excluded
employees as defined in the Stilwell 401(k) Plan ("Eligible Employees"), may
elect to participate in the 401(k) Portion on the first plan entry date on or
after the commencement of their employment. Under the 401(k) Portion,
Eligible Employees may defer up to 10% of their compensation through payroll
deduction, up to certain limits prescribed by the Code. Stilwell will
contribute matching contributions to each participant's account, up to 3% of
the employee's compensation, again subject to certain Code-prescribed limits.
Participants in the 401(k) Portion may choose to invest their 401(k) Portion
accounts in any one or more of 11 diversified investment options. A
participant is always fully vested in his or her contributions to the 401(k)
Portion.

As of the Distribution, the Trustee will transfer the accounts of the
Stilwell participants who will participate in the 401(k) Portion to the
401(k) Portion. The trustee for the Stilwell 401(k) Plan will accept the
transferred accounts from the KCSI 401(k) Plan, and participants' elections
under the KCSI 401(k) Plan will remain in effect under the 401(k) Portion
until changed by the Stilwell participants.

With respect to the Profit Sharing Portion, the Trustee will divide the
KCSI Profit Sharing Plan as of the Distribution and will transfer the
accounts of Stilwell Financial, Inc. participants to the Profit Sharing
Portion in a plan-to-plan transfer of assets. An investment manager will
manage the participant accounts in the Profit Sharing Portion.

With respect to the employer contributions made to the Stilwell 401(k)
Plan, participants vest at the rate of 25% at three years of service, 50% at
four years of service and 100% at five years of service. The Stilwell 401(k)
Plan will treat all service credited with respect to an employee under the
KCSI 401(k) Plan, for the 401(k) Portion, and the KCSI Profit Sharing Plan,
for the Profit Sharing Portion, prior to the Distribution as service with
Stilwell. A participant's interest in employer contributions also becomes
fully vested at retirement, death, disability or a change in control of
Stilwell. Distributions under the Stilwell 401(k) Plan will be made in
connection with a participant's death, disability, retirement or other
termination of employment. A participant has the right to elect whether
payment of his or her benefits will be in a lump sum, in installments, or in
a combination thereof.

Stilwell's Board of Directors has appointed a trustee to hold the assets
of the Stilwell 401(k) Plan in a trust fund. The Stilwell Compensation
Committee has appointed a Stilwell 401(k) Plan Advisory Committee (the
"Advisory Committee") to administer the Stilwell 401(k) Plan. Stilwell's
Board of Directors and Stilwell's Compensation Committee may amend the
Stilwell 401(k) Plan, although any amendment may not adversely affect any
person's accrued benefits under the Stilwell 401(k) Plan.

STILWELL ESOP. New employees of Stilwell and of Stilwell affiliates
which participate in the Stilwell ESOP (other than excluded employees as
defined in the Stilwell ESOP), will be eligible to participate in the
Stilwell ESOP on the first plan entry date on or after the commencement of
their employment. The Stilwell ESOP does not permit participant contributions
or rollover contributions.

The KCSI ESOP and the Stilwell ESOP will participate in the
Distribution. Immediately after the Distribution, participants in the
Stilwell ESOP will have two shares of Stilwell Common Stock for each one
share of KCSI Common Stock in their accounts.

To allow Stilwell participants to retain the KCSI Common Stock in their
respective Stilwell ESOP accounts, Stilwell participants will have an
election with respect to the portion of each Stilwell participant's account
allocated to KCSI Common Stock to keep the KCSI Common Stock in their
accounts or to have the trustee for the Stilwell ESOP sell the KCSI Common
Stock in their accounts and reinvest the proceeds in either Stilwell Common
Stock or in a guaranteed investment contract fund. The election may be a
partial election; however, once a participant elects to have the KCSI Common
Stock held in his or her ESOP account sold, the participant may not reinvest
in KCSI Common Stock, nor may a participant elect to sell any of the Stilwell
Common Stock in his or her account to invest in the guaranteed investment
contract fund. For any participant who does not affirmatively elect to
retain the KCSI Common Stock in his or her account, the trustee for the
Stilwell ESOP will sell the KCSI Common Stock from his or her account and
will reinvest the proceeds in Stilwell Common Stock.

Stilwell's Compensation Committee will appoint an advisory committee
(the "Stilwell ESOP Advisory Committee") to administer the Stilwell ESOP.
Stilwell's Board of Directors and Stilwell's Compensation Committee may amend
the Stilwell ESOP, although any amendment may not adversely affect any
person's accrued benefits under the Stilwell ESOP. A participant's interest
in Stilwell contributions is 100% vested upon five years of service, with no
vesting prior to that time, but becomes fully vested at retirement, death,
disability or a change in control of Stilwell.

EX-99.1 25th "Page" of 34 TOC 1st Previous Next Bottom Just 25th

PRINCIPAL STOCKHOLDERS AND STOCK OWNED BENEFICIALLY BY
STILWELL'S DIRECTORS AND CERTAIN EXECUTIVE OFFICERS

The table below sets forth beneficial ownership of Stilwell Common Stock
as if the Distribution had occurred on September 30, 1999, based upon
beneficial ownership of KCSI's Common Stock as of September 30, 1999 by: (i)
beneficial owners of more than 5% of the outstanding Stilwell Common Stock
that have publicly disclosed their ownership of KCSI Common Stock; (ii) the
members of Stilwell's Board of Directors and certain executive officers; and
(iii) all Stilwell officers and directors as a group. The table includes
shares of Stilwell Common Stock that would be deemed beneficially owned by
each such person in connection with the treatment of the Options in the
Distribution. See "Relationship Between KCSI and Stilwell After the
Distribution--Employee Benefits" and "Management--Other Compensatory Plans
and Arrangements." No officer or director of Stilwell Financial, Inc. owns
any equity securities of any subsidiary of Stilwell. Beneficial ownership is
generally either the sole or shared power to vote or dispose of the shares.
Neither KCSI nor Stilwell is aware of any arrangement which would at a
subsequent date result in a change in control of Stilwell.

Common Percent of
Name Stock (1) Outstanding (1)
---- --------- ---------------

UMB Bank, N.A., as trustee 11,063,452(2) 4.85%
of certain fiduciary accounts (2)

Amvescap, Inc. and certain 15,704,570(3) 6.89%
affiliates

A. Edward Allinson 146,936(1)(4) *
Director

Thomas H. Bailey 58,262(4) *
Chairman of the Board,
President and Chief Executive
Officer of Janus

James E. Barnes 180,000(1)(5) *
Director

Danny R. Carpenter 578,460(1)(4) *
Vice President and Secretary

Anthony P. McCarthy 396,254(1)(4) *
Vice President and Treasurer

Joseph D. Monello 815,250(1)(4) *
Executive Vice President

Landon H. Rowland 7,090,598(1)(4) 3.13%
Chairman of the
Board, President and Chief Executive Officer

Morton I. Sosland 472,962(1)(5) *
Director

All Directors and Executive 9,757,418(1)(4) 4.3%
Officers as a Group
(10 Persons)
------------------------------------------------
* Less than 1% of the outstanding shares.

(1) Percentage ownership is based on the number of shares outstanding as of
September 30, 1999 plus any Additional Shares (as defined below). The
holders may disclaim beneficial ownership of shares included under
certain circumstances. Except as noted, the holders have sole voting and
dispositive power over the shares. Under applicable law, shares that may
be acquired upon the exercise of options or other convertible securities
that are exercisable on the Record Date or will become exercisable within
60 days of that date (the "Additional Shares") are considered
beneficially owned. The Additional Shares included in the amounts shown
above are as follows: Mr. Allinson, 134,800; Mr. Barnes, 162,000; Mr.
Carpenter, 526,922; Mr. McCarthy, 148,500; Mr. Monello, 660,000;
Mr. Rowland 5,538,276; Mr. Sosland, 6,000; and all directors and
executive officers as a group, 7,187,838. Certain directors and
executive officers disclaim beneficial ownership of 355,400 of these
shares.

(2) Based on information reported in Amendment No. 12 to Schedule 13G, dated
February 16, 1999 jointly filed by UMB Financial Corporation ("UMBFC"),
its wholly-owned subsidiary UMB Bank, N.A. and the KCSI ESOP and
subsequent correspondence. UMB Bank, N.A. is the trustee of the KCSI
ESOP and the DST Systems, Inc. Employee Stock Ownership Plan (the "DST
ESOP"), which also holds some KCSI Common Stock. Shares reported as held
by UMB Bank, N.A. include the shares held as trustee of the KCSI ESOP and
DST ESOP. Voting and dispositive power over the shares held by these
ESOPs that are allocated to participant accounts are vested in the ESOP
participants (they have the right to direct the voting of all allocated
shares and the tendering of such shares in response to offers to
purchase). Under the terms of the trust agreement, any unallocated
shares are to be voted by the trustee in the same proportion as the
allocated shares. All shares of Stilwell Common Stock have been
allocated to participants' accounts. Therefore, UMB Bank, N.A., the KCSI
ESOP and the DST ESOP disclaim beneficial ownership of all shares held in
the KCSI ESOP and DST ESOP. The amount shown for UMB Bank, N.A. does not
include 1,136,312 shares held by UMB Bank, N.A. in custody accounts for
which UMB Bank, N.A. does not have voting or dispositive power. UMBFC
reports that it does not beneficially own any shares of KCSI or Stilwell
Common Stock held by UMB Bank, N.A. in various capacities because UMBFC
is prohibited by law from directing voting or disposition of such shares
and therefore excludes the shares held by UMB Bank, N.A. in various
capacities. The address for UMB Bank, N.A. is 1010 Grand Boulevard,
Kansas City, Missouri 64106.

(3) Based upon information in Schedule 13G filed February 12, 1999, the
address for Amvescap, Inc. is 11 Devonshire Square, London EC2M 4YR,
England. The reporting persons expressly declared that the filing of the
information on Schedule 13G shall not be construed as an admission that
they are the beneficial owners of any securities covered by such
statement.

(4) Under applicable law, shares that are held indirectly are also considered
beneficially owned. Such shares included in the amounts shown above are
as follows: Mr. Allinson owns 4,800 shares in a Keogh Plan; Mr. Bailey
owns 43,552 shares through the KCSI ESOP; Mr. Carpenter owns 16,904
shares through the KCSI ESOP; Mr. McCarthy owns 54,212 and 7,806 shares
through the KCSI ESOP and KCSI's Profit Sharing Plan, respectively.
Mr. Monello owns 68,378 shares through the KCSI ESOP; Mr. Rowland owns
122,942 and 954 shares through the KCSI ESOP and KCSI's Profit Sharing
Plan, respectively; and all directors and executive officers as a group
own indirectly 677,904 shares.

(5) Directors and Executive Officers may also be deemed to own beneficially
shares held in other capacities as follows: Mr. Barnes, 18,000 shares
held jointly with his wife; and Mr. Sosland, 9,600 shares held in trust
over which he has sole voting and dispositive power as trustee, 24,000
shares held by his wife, and 321,800 shares over which he has shared
voting and/or dispositive power but as to which beneficial ownership is
disclaimed, which shares are held as follows: 72,000 shares held by
certain companies of which he is a director, 217,800 shares held as co-
trustee of certain testamentary trusts, and 32,000 shares in a charitable
foundation of which he is a director.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

KCSI will have a transitional relationship with Stilwell as a result of
the Intercompany Agreement, the Tax Disaffiliation Agreement and certain other
agreements and relationships. In addition, Mr. Landon Rowland, who serves as
Chairman of the Board of Directors of Stilwell, will serve as Chairman of the
Board of Directors of KCSI for a transitional period. Mr. Rowland will have no
executive position with KCSI. It is expected that he will be the only director
common to the boards of both KCSI and Stilwell, and KCSI and Stilwell will have
no common employees. Except as contemplated by such agreements or as otherwise
described in this Information Statement, KCSI and Stilwell are not expected to
have any other material relationships with each other. See "Relationship
Between KCSI and Stilwell After the Distribution."

EX-99.1 26th "Page" of 34 TOC 1st Previous Next Bottom Just 26th

DESCRIPTION OF CAPITAL STOCK

The Certificate provides that the authorized capital stock of Stilwell
consists of 1,010,000,000 shares, of which 1,000,000,000 shares is Common Stock
and 10,000,000 shares is preferred stock. The following summary of the terms
and provisions of Stilwell's capital stock does not purport to be complete and
is qualified in its entirety by reference to the Certificate and the Bylaws,
copies of which are included as exhibits to the Registration Statement on Form
10 of which this Information Statement is a part, and applicable law.

COMMON STOCK

Following the Distribution, and based upon the ownership of KCSI Common
Stock on September 30, 1999, it is anticipated that there will be approximately
221,000,000 shares of Stilwell Common Stock, par value $.01 per share, issued
and outstanding, held of record by approximately 5,500 stockholders. The
holders of Stilwell Common Stock are entitled to one vote for each share on all
matters submitted to a vote of stockholders and may not cumulate votes for the
election of directors. Accordingly, the owners of a majority of the shares of
Stilwell Common Stock outstanding has the power to elect all of Stilwell's
Board of Directors. Each share of Stilwell Common Stock outstanding is
entitled to participate equally in any distribution of net assets made to the
stockholders in liquidation, dissolution or winding up of Stilwell and is
entitled to participate equally in dividends as and when declared by Stilwell's
Board of Directors. There are no redemption, sinking fund, conversion or
preemptive rights with respect to the shares of Stilwell Common Stock. All
shares of Stilwell Common Stock have equal rights and preferences. The rights,
preferences and privileges of the holders of Stilwell Common Stock are subject
to and may be adversely affected by the rights of holders of shares of any
series of preferred stock that Stilwell may designate and issue in the future.

PREFERRED STOCK

Stilwell is authorized to issue 10,000,000 shares of preferred stock, par
value $1.00 per share (the "Stilwell Preferred Stock"). The Certificate
authorizes Stilwell's Board of Directors, subject to certain limitations
prescribed by law, to establish one or more series of Stilwell Preferred Stock,
and by filing a certificate pursuant to the DGCL ("Certificate of
Designation"), to establish from time to time the number of shares to be
included in each such series, and to fix or alter from time to time the
designations, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof, including without
limitation the dividend rights, dividend rates, conversion rights, voting
rights, liquidation preferences and the number of shares constituting any
series or designation of such series. Stilwell believes that the ability of
Stilwell's Board of Directors to issue one or more series of Stilwell Preferred
Stock provides Stilwell with flexibility in structuring possible future
financings and acquisitions, and in meeting other corporate needs which might
arise. The authorized shares of Stilwell Preferred Stock, as well as shares of
Stilwell Common Stock, are available for issuance without further action by
Stilwell's stockholders, unless such action is required by applicable law or
the rules of any stock exchange or automated quotation system on which
Stilwell's securities may be listed or traded, or pursuant to the terms of any
Certificate of Designation. If the approval of Stilwell's stockholders is not
required for the issuance of shares of Stilwell Preferred Stock or Stilwell
Common Stock, Stilwell's Board of Directors may determine not to seek
stockholder approval.

Stilwell's Board of Directors could issue a series of preferred stock that
could, depending on the terms of such series, delay, defer or prevent a change
in control of Stilwell. Stilwell's Board of Directors will make any
determination to issue such shares based on its judgment as to the best
interests of Stilwell and its stockholders. Stilwell's Board of Directors, in
so acting, could issue Stilwell Preferred Stock having terms that could
discourage an acquisition attempt through which an acquiror may be able to
change the composition of Stilwell's Board of Directors, including a tender
offer or other transaction that some, or a majority, of Stilwell's stockholders
might believe to be in their best interests or in which stockholders might
receive a premium for their stock over the then-current market price of such
stock.

CERTAIN ANTITAKEOVER EFFECTS

Stockholders' rights and related matters are governed by the DGCL, the
Certificate and the Bylaws. Certain provisions of Stilwell's Certificate,
Bylaws, Rights Plan and Delaware statutory law described in this section may
delay or make more difficult acquisitions or changes in control of Stilwell.
Such provisions may also adversely affect prevailing market prices for Stilwell
Common Stock, although such transactions might be considered desirable by
Stilwell's stockholders. Stilwell believes that such provisions are necessary
to enable Stilwell to develop its business in a manner that will foster its
long-term growth without disruption caused by the threat of a takeover not
deemed by Stilwell's Board of Directors to be in the best interests of Stilwell
and its stockholders. See "Risk Factors-Provisions of Stilwell's Governing
Documents, its Rights Plan and Restrictions Relating to the Tax Ruling could
have the Effect of Delaying or Preventing a Change in Control of Stilwell which
may have an Adverse Effect on the Market Price of Stilwell Common Stock."

BOARD OF DIRECTORS. The Certificate provides that the number of directors
of Stilwell will be fixed from time to time exclusively by a majority of the
entire Board of Directors of Stilwell, but cannot be fewer than three nor more
than eighteen. Stilwell's Board of Directors, other than those who may be
elected by the holders of Stilwell Preferred Stock, is divided into three
classes, as nearly equal in number as possible, with one class to be elected
for a term expiring at the annual meeting of stockholders to be held in 2000,
another class to be elected for a term expiring at the annual meeting of
stockholders to be held in 2001, and another class to be elected for a term
expiring at the annual meeting of stockholders to be held in 2002. Commencing
with the 2000 annual meeting of stockholders, successors to Stilwell's Board of
Directors whose terms expire at the annual meeting will be elected for a three-
year term, with each director to hold office until a successor has been duly
elected and qualified. As a result, approximately one-third of Stilwell's
Board of

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Janus Capital Group Inc · 10-12B/A · On 1/19/0 · EX-99.1

Filed On 1/19/0 · SEC File 1-15253 · Accession Number 1013816-0-3

Amendment to Registration of Securities (General Form) · Form 10Filing Table of Contents

EX-99.1 · Information StatementExhibit Table of Contents

Amendment to Registration of Securities (General Form) · Form 10
Filing Table of Contents

EX-99.1 · Information Statement
Exhibit Table of Contents