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EXCEL - IDEA: XBRL DOCUMENT - PRICE T ROWE GROUP INC | Financial_Report.xls |
EX-32 - EXHIBIT 32 - PRICE T ROWE GROUP INC | w82427exv32.htm |
EX-15 - EXHIBIT 15 - PRICE T ROWE GROUP INC | w82427exv15.htm |
EX-31.(I).1 - EXHIBIT 31(I).1 - PRICE T ROWE GROUP INC | w82427exv31wxiyw1.htm |
10-Q - 10-Q - PRICE T ROWE GROUP INC | w82427e10vq.htm |
EX-31.(I).2 - EXHIBIT 31(I).2 - PRICE T ROWE GROUP INC | w82427exv31wxiyw2.htm |
Exhibit 99.1
T. ROWE PRICE GROUP REPORTS FIRST QUARTER 2011 RESULTS
Assets Under Management Reach Record Level of $510 Billion
BALTIMORE (April 21, 2011) T. Rowe Price Group, Inc. (NASDAQ-GS: TROW) today reported its first
quarter 2011 results, including net revenues of $682.4 million, net income of $194.6 million, and
diluted earnings per common share of $.72, an increase of 26% from the $.57 per share in the
comparable 2010 quarter. Net revenues were $556.2 million in the first quarter of 2010, and net
income was $153.0 million.
Assets under management increased $27.9 billion from $482.0 billion at December 31, 2010, to a
record $509.9 billion at March 31, 2011, including $300.2 billion in the T. Rowe Price mutual funds
distributed in the United States and $209.7 billion in other managed investment portfolios. Net
cash inflows in the first quarter 2011 totaled $5.8 billion, and market appreciation and income
added $22.1 billion to assets under management. As a result, investment advisory revenues increased
25%, or $117 million, from the comparable 2010 quarter.
Financial Highlights
Relative to the 2010 first quarter, investment advisory revenues earned from the T. Rowe Price
mutual funds distributed in the U.S. increased 23%, or $75.1 million, to $400.5 million. Average
mutual fund assets under management in the first quarter 2011 were $292.0 billion, an increase of
23% from the average for the comparable 2010 quarter. Mutual fund assets at March 31, 2011 were
$300.2 billion, an increase of $17.6 billion, or 6%, from the end of 2010. The firm voluntarily
waived money market fund fees of $7.0 million in the first quarter 2011 in order to maintain a
positive yield for fund investors, compared to fee waivers of $6.8 million in the comparable 2010
quarter.
Net inflows to the sponsored mutual funds were $4.4 billion during the first quarter 2011,
including $2.9 billion added to the stock and blended asset funds and $1.8 billion added to the bond funds.
The money market funds had net outflows of $.3 billion. The Equity Income, New Income, Growth
Stock, Institutional Mid-Cap Equity Growth, and Overseas Stock funds each added more than $.4
billion during the 2011 quarter. Market appreciation and income increased mutual fund assets under
management by $13.2 billion during the first quarter of 2010.
Investment advisory revenues earned on the other investment portfolios that the firm manages
increased $41.9 million, or 29%, from the first quarter 2010, to $188.3 million. Average assets in
these portfolios were $206.4 billion during the first quarter 2011, an increase of $46.8 billion,
or 29%, from the 2010 quarter. Ending assets at March 31, 2011 were $209.7 billion, up $10.3
billion from the end of 2010. Net inflows were $1.4 billion for the first quarter 2011. Strong net
inflows into sub-advised funds from third party financial intermediaries and into other sponsored
portfolios were partially offset by net outflows from a few institutional investors who
restructured their equity investment portfolios. Market appreciation and income increased assets
under management in these portfolios by $8.9 billion. Investors domiciled outside the United States
accounted for 12% of the firms assets under management at March 31, 2011.
The target-date retirement investment portfolios continue to be a steady source of assets under
management. During the first quarter 2011, net inflows of $2.9 billion originated in these
portfolios. Assets in the target-date retirement portfolios were $65.4 billion at March 31, 2011,
accounting for nearly 13% of the firms assets under management and 20% of its mutual fund assets.
Operating expenses were $370.9 million in the first quarter of 2011, up $53.4 million from the 2010
quarter. Compensation and related costs increased $35.2 million, or 17%, from the comparable 2010
quarter, due primarily to an increase in the accrual for the firms annual variable compensation
program, salaries, and related benefits. At March 31, 2011, we employed 5,104 associates, up
slightly from the 5,052 associates employed at the end of 2010.
Advertising and promotion expenditures were up $1.9 million compared to the first quarter 2010. The
firm currently expects that its advertising and promotion expenditures for the second quarter 2011
will be about $2 million higher than the comparable 2010 quarter, and spending for the full year
2011 could increase about 15% from 2010 levels. The firm varies its level of spending based on
market conditions and investor demand as well as its efforts to expand its investor base in the
United States and abroad.
Other operating expenses increased $13.1 million, or 29%, from the first quarter of 2010, including
$2.5 million in higher distribution expenses recognized on greater fund assets under management
that are sourced from financial intermediaries, which offsets the same increase in administrative
revenues from 12b-1 fees. Additionally, consulting and professional fees, information services, and
other costs have all risen in the 2011 quarter to meet increased business demands.
-1-
The first quarter 2011 provision for income taxes as a percentage of pretax income has been
recognized using an estimated 38.3% rate. Higher anticipated state income taxes have pushed the
current estimate for the full year 2011 to 38.3%, up from the prior estimate of 37.8%.
Management Commentary
James A.C. Kennedy, the companys chief executive officer and president, commented: The firms
long-term investment advisory results relative to our peers remain very strong, with 89% of the T.
Rowe Price funds across their share classes outperforming their comparable Lipper averages on a
total return basis for the three- and five-year periods ended March 31, 2011, 81% outperforming for
the 10-year period, and 65% outperforming for the one-year period. In addition, T. Rowe Price
stock, bond and blended asset funds that ended the quarter with an overall rating of four or five
stars from Morningstar account for nearly 78% of our rated funds assets under management.
Continuing the momentum from last year, solid net client inflows and market gains combined to
boost the firms assets under management at the end of the first quarter to another record high.
Our quarterly net revenues, net income, and earnings are also at record levels. This first quarter
financial performance was achieved during a strong, albeit volatile, period for world equity
markets. Market gains through mid-February and a strong rally in the latter half of March
sandwiched a significant sell-off in which unrest in North Africa and the Middle East, as well as
the unfolding tragedy in Japan, rattled world markets.
Our strong capital position gives us the flexibility to continue to invest in our people,
infrastructure, technology, and general capabilities. We remain debt-free with substantial
liquidity, including cash and mutual fund investment holdings exceeding $1.8 billion. Based on
current strategic projects and plans, the companys capital expenditures for all of 2011 are
estimated to be about $110 million. These cash expenditures are funded from our available liquid
resources. Through March 31, we have expended $31 million to repurchase 500,000 shares of our common stock.
Market Commentary
Although markets remain volatile, improving sentiment has led investors to largely shrug off
recent geopolitical and economic uncertainties. The U.S. economic recovery is slowly picking up
steam, corporate earnings are strong, and mergers and acquisitions activity should continue.
Meanwhile, equity valuations are still reasonably attractive. Nonetheless, strong cross-currents
remain, including higher energy costs, a still-depressed U.S. housing market, the ongoing political
debate regarding the U.S. federal budget, and an inflation threat in many emerging economies that
could dampen global consumer spending. Global political turmoil also remains a concern, as do
lingering European sovereign debt challenges, although growth in the developing world still looks
fairly robust. Upward pressure on global interest rates will likely persist and challenge bond
market returns in future periods.
Closing Comment
In closing, Mr. Kennedy said: On April 2 of this year we celebrated our silver anniversary as a
public company. Of the 630 associates we employed 25 years ago, 102 of them are still active
employees today. We thank each of them for their long-tenured and valuable service. Now with more
than 5,100 talented and dedicated associates, a healthy balance sheet, and globally diversified
investment and distribution expertise, we feel we are very well positioned for the future. Our
focus will continue to be adding value for our clients and shareholders.
Other Matters
The financial results presented in this release are unaudited. The firm expects that it will file
its Form 10-Q Quarterly Report for the first quarter 2011 with the U.S. Securities and Exchange Commission
later today. The Form 10-Q will include additional information on the firms unaudited financial
results at March 31, 2011.
Certain statements in this press release may represent forward-looking information, including
information relating to anticipated changes in revenues, net income and earnings per common share,
anticipated changes in the amount and composition of assets under management, anticipated expense
levels, estimated tax rates, and expectations regarding financial results, future transactions,
investments, capital expenditures, and other market conditions. For a discussion concerning risks
and other factors that could affect future results, see the firms 2010 Form 10-K reports.
Founded in
1937, Baltimore-based T. Rowe Price (troweprice.com) is a global investment management
organization that provides a broad array of mutual funds, sub-advisory 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 Prices disciplined, risk-aware investment approach focuses on
diversification, style consistency, and fundamental research.
-2-
Unaudited Condensed Consolidated Statements of Income
(in millions, except per-share amounts)
(in millions, except per-share amounts)
Three months ended | ||||||||
3/31/2010 | 3/31/2011 | |||||||
Revenues |
||||||||
Investment advisory fees |
$ | 471.8 | $ | 588.8 | ||||
Administrative fees |
83.6 | 93.1 | ||||||
Investment income of savings bank subsidiary |
1.7 | 1.3 | ||||||
Total revenues |
557.1 | 683.2 | ||||||
Interest expense on savings bank deposits |
0.9 | 0.8 | ||||||
Net revenues |
556.2 | 682.4 | ||||||
Operating expenses |
||||||||
Compensation and related costs |
207.7 | 242.9 | ||||||
Advertising and promotion |
23.5 | 25.4 | ||||||
Depreciation and amortization of property and equipment |
15.4 | 16.6 | ||||||
Occupancy and facility costs |
25.7 | 27.7 | ||||||
Other operating expenses |
45.2 | 58.3 | ||||||
Total operating expenses |
317.5 | 370.9 | ||||||
Net operating income |
238.7 | 311.5 | ||||||
Non-operating investment income |
5.3 | 3.9 | ||||||
Income before income taxes |
244.0 | 315.4 | ||||||
Provision for income taxes |
91.0 | 120.8 | ||||||
Net income |
$ | 153.0 | $ | 194.6 | ||||
Earnings per share on common stock |
||||||||
Basic |
$ | 0.59 | $ | 0.75 | ||||
Diluted |
$ | 0.57 | $ | 0.72 | ||||
Dividends declared per share |
$ | 0.27 | $ | 0.31 | ||||
Weighted average shares |
||||||||
Outstanding |
258.2 | 258.7 | ||||||
Outstanding assuming dilution |
266.2 | 268.5 | ||||||
-3-
Three months ended | ||||||||
3/31/2010 | 3/31/2011 | |||||||
Investment Advisory Revenues (in millions) |
||||||||
Sponsored mutual funds in the U.S. |
||||||||
Stock and blended asset |
$ | 262.8 | $ | 327.0 | ||||
Bond and money market |
62.6 | 73.5 | ||||||
325.4 | 400.5 | |||||||
Other portfolios |
||||||||
Stock and blended asset |
120.3 | 154.8 | ||||||
Bond, money market and stable value |
26.1 | 33.5 | ||||||
146.4 | 188.3 | |||||||
Total |
$ | 471.8 | $ | 588.8 | ||||
Average during | ||||||||||||||||
the first quarter | As of | |||||||||||||||
2010 | 2011 | 12/31/2010 | 3/31/2011 | |||||||||||||
Assets Under Management (in billions) |
||||||||||||||||
Sponsored mutual funds in the U.S. |
||||||||||||||||
Stock and blended asset |
$ | 175.6 | $ | 220.8 | $ | 212.4 | $ | 227.8 | ||||||||
Bond and money market |
61.7 | 71.2 | 70.2 | 72.4 | ||||||||||||
Total |
237.3 | 292.0 | 282.6 | 300.2 | ||||||||||||
Other portfolios |
||||||||||||||||
Stock and blended asset |
117.5 | 154.6 | 148.2 | 157.3 | ||||||||||||
Bond, money market and stable value |
42.1 | 51.8 | 51.2 | 52.4 | ||||||||||||
159.6 | 206.4 | 199.4 | 209.7 | |||||||||||||
Total |
$ | 396.9 | $ | 498.4 | $ | 482.0 | $ | 509.9 | ||||||||
Stock and blended asset portfolios |
$ | 360.6 | $ | 385.1 | ||||||||||||
Fixed income portfolios |
121.4 | 124.8 | ||||||||||||||
Total |
$ | 482.0 | $ | 509.9 | ||||||||||||
Three months ended | ||||||||
3/31/2010 | 3/31/2011 | |||||||
Condensed Consolidated Cash Flows Information (in millions) |
||||||||
Cash provided by operating activities |
$ | 256.7 | $ | 336.0 | ||||
Cash used in investing activities, including $(11.7) for additions to
property and equipment in 2011 |
(174.4 | ) | (17.0 | ) | ||||
Cash used in financing activities, including common stock repurchases
of $(31.3) and dividends paid of $(80.7) in 2011 |
(61.5 | ) | (67.2 | ) | ||||
Net change in cash during the period |
$ | 20.8 | $ | 251.8 | ||||
12/31/2010 | 3/31/2011 | |||||||
Condensed Consolidated Balance Sheet Information (in millions) |
||||||||
Cash and cash equivalents |
$ | 813.1 | $ | 1,064.9 | ||||
Investments in sponsored mutual funds |
747.9 | 774.0 | ||||||
Other investments |
209.7 | 211.1 | ||||||
Property and equipment |
560.3 | 551.8 | ||||||
Goodwill |
665.7 | 665.7 | ||||||
Accounts receivable and other assets |
645.3 | 618.5 | ||||||
Total assets |
3,642.0 | 3,886.0 | ||||||
Total liabilities |
345.5 | 430.1 | ||||||
Stockholders equity, 259.6 common shares outstanding in 2011,
including net unrealized holding gains of $151.2 in 2011 |
$ | 3,296.5 | $ | 3,455.9 | ||||
-4-