Period-end Assets Under Management Top $200 Billion;
Diluted Earnings Per Share up 87%
BALTIMORE, April 27 /PRNewswire-FirstCall/ -- T. Rowe Price Group, Inc.
(Nasdaq: TROW) today reported 2004 first quarter net revenues of nearly
$306 million, net income of $77.3 million, and diluted earnings per share of
$.58, equaling the record diluted earnings per share reported in the first
quarter of 2000 when equity market valuations peaked and the three-year market
downturn began. Comparatively, the reported results versus the first quarter
of 2003 represent a 40% increase in net revenues from nearly $219 million, a
near doubling of net income from $39 million, and an 87% increase in diluted
earnings per share from $.31. Assets under management increased to a record
$201 billion at March 31, 2004, up nearly 6% from $190 billion at the end of
2003 and up more than 43% from $140 billion at March 31, 2003.
Financial Highlights
Investment advisory revenues were up 49% or $80.6 million in the first
quarter of 2004 versus the 2003 quarter. Increased assets under management
drove the change as average mutual fund assets under management were nearly
$123 billion, $36 billion higher than the $87 billion average of the first
quarter of 2003. Average assets in other managed portfolios were
$74.7 billion in the first quarter of 2004, up more than $21 billion versus
the average of $53.1 billion in the 2003 quarter.
The $201 billion of assets under management at March 31, 2004 include
$125 billion in the T. Rowe Price mutual funds distributed in the United
States and $76 billion in other managed portfolios consisting of separately
managed accounts, sub-advised funds, sponsored mutual funds which are offered
to non-U.S. investors, and variable annuity portfolios. The $11 billion
increase in assets under management during the quarter included $6.4 billion
of net investor inflows, with more than $4.7 billion added to the mutual funds
and almost $1.7 billion to other managed portfolios. Net market appreciation
and income added the remaining nearly $4.7 billion to assets under management
in the first quarter of 2004. Comparatively, the largest quarterly net flows
of 2003 came in the fourth quarter when investors added $4.6 billion to their
investment portfolios.
Mutual fund net inflows in the 2004 first quarter were concentrated in the
U.S. domestic stock mutual funds with about 55% of the total going to the
Mid-Cap Value, Equity Income, Growth Stock, Mid-Cap Growth, and Capital
Appreciation funds. Other managed U.S. equity portfolios benefited from third
party distribution efforts and from institutional investor cash flows.
Operating expenses increased $28.5 million from the previous year's
quarter to nearly $183 million. Increases in compensation and related
employment costs, in advertising and promotion costs, and in other operating
expenses drove the increase. The firm expects its advertising and promotion
expenditures in the second quarter of 2004 will be up $4 million versus the
comparable 2003 quarter while spending for all of 2004 could be up 20-25%
versus 2003. The firm continues to monitor financial market conditions and
will adjust its spending in the future accordingly.
Chairman Commentary
George A. Roche, the company's chairman and president, commented: "The
firm's investment results continue to be strong relative to our peers, with
69% of the T. Rowe Price funds and their share classes surpassing their Lipper
averages on a total return basis for the one-year period ended March 31, 2004,
and at least 76% outperforming the average for the three-, five-, and ten-year
periods. In addition, 67% of our rated retail funds ended the quarter with an
overall rating of four or five stars from Morningstar, a slight increase from
the prior quarter.
"We continue to be encouraged by net cash inflows into our mutual funds
and managed accounts during the first quarter, including strong net cash flows
from our third party distribution efforts. Our target-date Retirement Funds
continued to draw interest from investors, and recently topped $1 billion in
total assets. During the quarter, the firm also enhanced its lineup of these
funds by adding four additional portfolios and implementing a new asset
allocation strategy within this group of funds. Our Retirement Funds were
first offered in October 2002.
"The positive economic and market backdrop of the first quarter continued
to be tarnished by ongoing industry issues. I would like to once again state
emphatically that T. Rowe Price unequivocally condemns the abuses that have
involved some firms in our industry and opposes inappropriate trading."
In closing, Mr. Roche said: "The economy continues to improve, but we
need to see further gains in employment in order to ensure satisfactory growth
in the second half of the year. Continued growth is also contingent on there
being no large external shocks caused by international developments, monetary
developments, or other factors. As the economy improves, interest rates are
likely to move higher, which will put downward pressure on bond prices. We
continue to see a high level of investor interest in the equity markets.
Given the overall environment, we believe the outlook for our company remains
very good."
Founded in 1937, Baltimore-based T. Rowe Price is a global investment
management organization that provides a broad array of mutual funds,
subadvisory services, and separate account management for individual and
institutional investors, retirement plans, and financial intermediaries. The
organization also offers a variety of sophisticated investment planning and
guidance tools. T. Rowe Price's disciplined, risk-aware investment approach
focuses on diversification, style consistency, and fundamental research. More
information is available at http://www.troweprice.com.
Certain statements in this press release may represent "forward-looking
information," including information relating to anticipated growth in
revenues, net income and earnings per share, anticipated changes in the amount
and composition of assets under management, anticipated expense levels, and
expectations regarding financial and other market conditions. For a
discussion concerning risks and other factors that could affect future
results, see "Forward-Looking Information" in Item 7 of the company's Form
10-K Annual Report for 2003. The Form 10-Q report for the first quarter of
2004 will be filed shortly with the U.S. Securities and Exchange Commission
and will include more complete information on the company's interim financial
results.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per-share amounts)
Three months ended March 31,
Revenues 2004 2003
Investment advisory fees $245,009 $164,389
Administrative fees and other income 60,465 54,145
Investment income of savings bank subsidiary 1,002 980
Total revenues 306,476 219,514
Interest expense on savings bank deposits 825 796
Net revenues 305,651 218,718
Operating expenses
Compensation and related costs 109,780 92,147
Advertising and promotion 21,059 16,345
Depreciation and amortization of property
and equipment 10,128 11,851
Occupancy and facility costs 15,658 16,521
Other operating expenses 26,165 17,410
182,790 154,274
Net operating income 122,861 64,444
Other investment income (loss) 1,153 (1,645)
Other interest and credit facility expenses 332 500
Net non-operating income (loss) 821 (2,145)
Income before income taxes 123,682 62,299
Provision for income taxes 46,343 23,525
Net income $77,339 $38,774
Earnings per share
Basic $0.61 $0.32
Diluted $0.58 $0.31
Dividends declared per share $0.19 $0.17
Weighted average shares outstanding 126,096 122,442
Weighted average shares outstanding
assuming dilution 133,777 125,519
Investment Advisory Fees (in thousands)
Sponsored mutual funds in the U.S.
Stock $142,481 $89,504
Bond and money market 33,027 29,283
175,508 118,787
Other portfolios 69,501 45,602
Total investment advisory fees $245,009 $164,389
Q1 2004 Avg Q1 2003 Avg 3/31/2004 12/31/2003
Assets Under Management (in billions)
Sponsored mutual funds
Stock $93.2 $59.7 $95.3 $88.4
Bond and money market 29.6 27.1 29.9 29.1
Total 122.8 86.8 125.2 117.5
Other portfolios 74.7 53.1 75.8 72.5
$197.5 $139.9 $201.0 $190.0
Equity securities $144.6 $135.5
Debt securities 56.4 54.5
$201.0 $190.0
Three months ended
3/31/2004 3/31/2003
Condensed Consolidated Cash Flows Information
(in thousands)
Cash provided by operating activities $90,723 $78,386
Cash used in investing activities, including
($8,714) for additions to property and equipment
in 2004 (6,768) (11,423)
Cash used in financing activities, including
stock options exercised of $10,353 and dividends
paid of ($23,724) in 2004 (13,569) (45,509)
Net increase in cash during the period $70,386 $21,454
3/31/2004 12/31/2003
Condensed Consolidated Balance Sheet Information
(in thousands)
Cash and cash equivalents $306,919 $236,533
Accounts receivable 132,905 121,295
Investments in sponsored mutual funds 166,036 162,283
Debt securities held by savings bank subsidiary 111,280 110,962
Property and equipment 199,423 201,094
Goodwill 665,692 665,692
Other assets 51,768 48,718
Total assets 1,634,023 1,546,577
Total liabilities, including savings bank
deposits of $96,078 in 2004 214,071 217,497
Stockholders' equity, 126,484,379 common shares
outstanding in 2004, including net unrealized
holding gains of $32,240 in 2004 $1,419,952 $1,329,080
SOURCE T. Rowe Price Group, Inc.
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Related links:
http://www.troweprice.com
CONTACT:
Steve Norwitz, +1-410-345-2124, or Brian
Lewbart, +1-410-345-2242, both of T. Rowe Price Group, Inc.
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