Help with uc and lc and utf8

I am not able to lower case a Ä. I am sure I am missing something simple 
but I have spent many hours researching and trying different things to 
no avail.

Any help would be appreciated!!

Summary of my perl5 (revision 5.0 version 8 subversion 0) configuration:
Platform:
osname=linux, osvers=2.4.21-1.1931.2.393.entsmp, 
archname=i386-linux-thread-multi
uname='linux por'

LC_CTYPE = en_US.UTF-8

$fname = 'KÄThe'
@dec = unpack('C*', $fname);
@dec = 75 196 84 104 101
@hex = unpack('C*', $fname);
@hex = 4b c4 54 68 65

$lc_fname = lc($fname);
$lc_fname = kÄthe

@lc_dec = unpack('C*', $lc_fname);
@lc_dec = 107 196 116 104 101
@lc_hex = unpack('H*', $lc_fname);
@lc_hex = 6b c4 74 68 65