Assets Under Management Total $212 Billion; Diluted Earnings Per Share up
almost 22%
BALTIMORE, Oct. 26 /PRNewswire-FirstCall/ -- T. Rowe Price Group, Inc.
(Nasdaq: TROW) today reported its 2004 third quarter results, including record
quarterly net revenues of $316 million, net income of $82.5 million, and
diluted earnings per share of $.62. Comparatively, the reported results
versus the third quarter of 2003 represent a 22% increase in net revenues from
$258 million, a 25% increase in net income from $66 million, and nearly a 22%
increase in diluted earnings per share from $.51. Assets under management
increased to a record of $212.0 billion at September 30, 2004, up 2.5% from
$206.8 billion at the end of June 2004 and up 25.5% from $168.9 billion at
September 30, 2003.
For the first nine months of 2004, year-to-date results include net
revenues of nearly $932 million, net income of $240 million, and diluted
earnings per share of $1.80, all records for the first nine months of a year.
Financial Highlights
Investment advisory revenues were up 24% or $49.5 million in the third
quarter of 2004 versus the 2003 quarter. Increased assets under management was
the primary cause of the change as average mutual fund assets under management
exceeded $126 billion, nearly $23 billion higher than the $103 billion average
of the third quarter of 2003. Average assets in other managed portfolios were
$78.4 billion in the third quarter of 2004, up $15.4 billion versus the
average of $63.0 billion in the 2003 quarter.
The $212 billion of assets under management at September 30, 2004 include
$130.3 billion in the T. Rowe Price mutual funds distributed in the United
States and $81.7 billion in other managed portfolios consisting of
institutional separate accounts, sub-advised funds, sponsored mutual funds
which are offered to non-U.S. investors, and variable annuity portfolios. The
$5.2 billion increase in assets under management from $206.8 billion at June
30, 2004 includes $5.8 billion of net investor inflows, with almost $2.8
billion added to the mutual funds and more than $3.0 billion to other managed
portfolios, and net market depreciation during the third quarter of nearly
$600 million. When added to the first half of 2004, net cash flows total
$16.4 billion for the year-to-date period, with $9.3 billion into the mutual
funds and $7.1 billion into the other managed investment portfolios. Assets
under management have increased 11.6% from the beginning of 2004, including
8.6% from net cash flows during the first nine months of 2004.
Mutual fund net inflows in the 2004 third quarter were supported broadly
by the individual direct, defined contribution retirement plans, and financial
intermediary channels, and were concentrated in the U.S. domestic stock mutual
funds with over 75% of the total going to the Growth Stock, Equity Income,
Mid-Cap Value and Capital Appreciation funds, each rated either four or five
stars by Morningstar. Strong net cash inflows into other managed portfolios
resulted from increased investment activity through financial intermediaries
in the United States and Japan, and from institutional investors in Australia
and Europe.
Operating expenses in the third quarter of 2004 increased $32.6 million
from the previous year's quarter to $185.3 million. Increases in compensation
and related employment costs, in advertising and promotion costs, and in other
operating expenses were the primary reasons for the change. On a sequential
basis, operating expenses were up about $3.7 million from the second quarter
of 2004, as increases in compensation costs were partially offset by
reductions of other expenses, primarily advertising and promotion. At
September 30, 2004, the firm employed more than 4,000 associates, up almost 7%
since the beginning of the year to accommodate increased volume-related
activities across the firm. The firm expects its advertising and promotion
expenditures in the fourth quarter of 2004 will be up about 15% versus the
comparable 2003 fourth quarter. The firm continues to monitor financial
market conditions and will adjust its future advertising and promotion
spending accordingly.
Chairman Commentary
George A. Roche, the company's chairman and president, commented: "The
firm's investment advisory results relative to our peers remain very strong,
with more than 81% of the T. Rowe Price funds and their share classes
surpassing their Lipper averages on a total return basis for the one-, three-,
and five-year periods ended September 30, 2004, and 78% outperforming the
average for the 10-year period. In addition, 64% of our rated retail funds
ended the quarter with an overall rating of four or five stars from
Morningstar, compared with 32.5% for the overall industry.
"We continue to be encouraged by net cash inflows across our multiple
distribution channels into our mutual funds and separate and sub-advised
accounts. Our global expansion continues and investors outside the United
States now account for more than 5% of our assets under management."
In closing, Mr. Roche said: "The economy continues to grow and corporate
earnings remain strong. Despite the headwinds of geopolitical uncertainty,
concerns about rising interest rates, and higher energy prices, we expect the
economy to improve at a moderate pace after the election, and we maintain a
positive long-term outlook for the markets and our company."
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 2 of the company's Form 10-
Q Report for the period ended June 30, 2004. The Form 10-Q report for the
third 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 Nine months ended
Revenues 9/30/2003 9/30/2004 9/30/2003 9/30/2004
Investment advisory fees $205,176 $254,689 $553,461 $748,700
Administrative fees and other
income 52,947 61,403 160,525 182,414
Investment income of savings
bank subsidiary 977 944 2,908 2,870
Total revenues 259,100 317,036 716,894 933,984
Interest expense on savings bank
deposits 832 808 2,446 2,433
Net revenues 258,268 316,228 714,448 931,551
Operating expenses
Compensation and related costs 97,441 117,955 283,931 340,819
Advertising and promotion 9,885 12,952 38,622 50,128
Depreciation and amortization of
property and equipment 11,287 10,083 34,843 30,054
Occupancy and facility costs 15,285 16,968 46,791 49,151
Other operating expenses 18,840 27,356 55,471 79,610
152,738 185,314 459,658 549,762
Net operating income 105,530 130,914 254,790 381,789
Other investment income 588 1,519 791 3,611
Other interest and credit facility
expenses 332 93 1,312 893
Net non-operating income (expense) 256 1,426 (521) 2,718
Income before income taxes 105,786 132,340 254,269 384,507
Provision for income taxes 39,495 49,815 95,429 144,379
Net income $66,291 $82,525 $158,840 $240,128
Earnings per share
Basic $0.53 $0.65 $1.29 $1.89
Diluted $0.51 $0.62 $1.25 $1.80
Dividends declared per share $0.17 $0.19 $0.51 $0.57
Weighted average shares
Outstanding 124,013 127,429 122,993 126,836
Assuming dilution 130,072 133,305 127,495 133,531
Investment Advisory Revenues (in thousands)
Three months ended Nine months ended
9/30/2003 9/30/2004 9/30/2003 9/30/2004
Sponsored mutual funds in the U.S.
Stock $115,871 $148,295 $306,255 $436,990
Bond and money market 31,430 33,609 91,763 99,330
147,301 181,904 398,018 536,320
Other portfolios 57,875 72,785 155,443 212,380
$205,176 $254,689 $553,461 $748,700
Assets Under Management (in billions)
Average during Average during
the third the first nine
quarter months
2003 2004 2003 2004
Sponsored mutual funds in the U.S.
Stock $75.1 $96.1 $67.3 $95.0
Bond and money market 28.4 30.0 28.0 29.7
103.5 126.1 95.3 124.7
Other portfolios 63.0 78.4 57.9 76.6
$166.5 $204.5 $153.2 $201.3
12/31/2003 9/30/2004
Sponsored mutual funds in the U.S.
Stock $88.4 $99.8
Bond and money market 29.1 30.5
117.5 130.3
Other portfolios 72.5 81.7
$190.0 $212.0
Equity securities $135.5 $154.5
Debt securities 54.5 57.5
$190.0 $212.0
Condensed Consolidated Cash Flows
Information (in thousands) Nine months ended
9/30/2003 9/30/2004
Cash provided by operating activities $236,023 $343,598
Cash used in investing activities,
including ($34,878) for additions to
property and equipment in 2004 (29,218) (45,632)
Cash used in financing activities,
including stock options exercised
of $45,207 and common shares
repurchased of ($18,334) in 2004 (91,717) (44,438)
Net increase in cash during the period $115,088 $253,528
Condensed Consolidated Balance Sheet
Information (in thousands) 12/31/2003 9/30/2004
Cash and cash equivalents $236,533 $490,061
Accounts receivable 121,295 140,361
Investments in sponsored mutual funds 162,283 178,947
Debt securities held by savings bank
subsidiary 110,962 110,984
Property and equipment 201,094 205,682
Goodwill 665,692 665,692
Other assets 48,718 51,615
Total assets 1,546,577 1,843,342
Total liabilities, including savings
bank deposits of $96,858 in 2004 217,497 276,872
Stockholders' equity, 127,830,178
common shares outstanding in 2004,
including net unrealized holding
gains of $31,553 in 2004 $1,329,080 $1,566,470
SOURCE T. Rowe Price Group, Inc.
 back to top
Related links:
http://www.troweprice.com
CONTACT:
Brian Lewbart, +1-410-345-2242, Steve
Norwitz, +1-410-345-2124 or Rajiv Vyas, +1-410-345-6559, all of
T. Rowe Price Group
|
