T. Rowe Price Group Reports Third Quarter 2012 Results

            T. Rowe Price Group Reports Third Quarter 2012 Results

Assets Under Management Increase to $574.4 billion

PR Newswire

BALTIMORE, Oct. 24, 2012

BALTIMORE, Oct.24, 2012 /PRNewswire/ --T. Rowe Price Group, Inc. (NASDAQ-GS:
TROW) today reported its third quarter of 2012 results, including net revenues
of $769.7 million, net income of $247.3 million, and diluted earnings per
common share of $.94. These results include realized gains of $31.2 million,
or $.07 per share after income taxes, from the sale of certain of the firm's
investments in sponsored mutual funds to seed sponsored portfolios in support
of the firm's distribution efforts outside the United States. On a comparable
basis, net revenues were $679.4 million, net income was $185.5 million, and
diluted earnings per common share was $.71 in the third quarter of 2011.

Investment advisory revenues for the third quarter of 2012 increased $83.4
million to $661.4 million from the comparable 2011 period, as average assets
under management were up $67.3 billion, or 14%. Assets under management at
September30, 2012 totaled a record $574.4 billion, an increase of $32.7
billion from $541.7 billion at June30, 2012. Net cash inflows in the third
quarter of 2012 were $4.3 billion, including $2.2 billion originating in the
target-date retirement portfolios. Market appreciation and income increased
assets under management by $28.4 billion.

At September30, 2012, assets under management included $342.9 billion in T.
Rowe Price mutual funds distributed in the United States, and $231.5 billion
in other managed investment portfolios. The firm's target-date retirement
portfolios had assets under management at September30, 2012 of $86.1 billion,
including $77.6 billion in target-date retirement funds and $8.5 billion in
target-date retirement trusts.

Results for the first nine months of 2012 include net revenues of $2.2
billion, net income of $651.6 million, and diluted earnings per common share
of $2.48, an increase of 13% from the $2.20 per share in the first nine months
of 2011. Net cash inflows of $21.4 billion and market appreciation and income
of $63.5 billion increased assets under management $84.9 billion, or 17%, from
$489.5 billion at the end of 2011.

From an investment performance standpoint, 76% of the T. Rowe Price mutual
funds across their share classes outperformed their comparable Lipper averages
on a total return basis for the three-year period ended September30, 2012,
82% outperformed for the five-year period, 77% outperformed for the 10-year
period, and 77% outperformed 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 75% of the
firm's rated funds' assets under management. The firm's target-date retirement
funds - which are designed to provide straight-forward investment and
retirement planning solutions for clients - continue to deliver very
attractive long-term performance, with 97% of these funds outperforming their
comparable Lipper averages on a total return basis for the three- and
five-year periods ended September30, 2012.

Financial Highlights

Investment advisory revenues earned in the third quarter of 2012 from the T.
Rowe Price mutual funds distributed in the United States were $458.1 million,
an increase of $60.3 million, or 15%, from the comparable 2011 quarter.
Average mutual fund assets under management in the third quarter of 2012 were
$332.5 billion, an increase of 15% from the average for the third quarter of
2011. Money market advisory fees voluntarily waived by the firm to maintain
positive yields for fund investors in the third quarter of 2012 were $8.9
million, a decrease of $1.8 million from the comparable 2011 quarter. During
the first nine months of 2012, the firm waived $25.5 million in such fees
compared with $26.0 million in the comparable 2011 period.

Mutual fund assets at September30, 2012 were $342.9 billion, an increase of
$21.2 billion from June30, 2012. Net cash inflows during the third quarter of
2012 were $4.5 billion, including $2.2 billion into the stock and blended
asset funds, $2.1 billion into the bond funds, and $.2 billion into the money
market funds. Market appreciation and income increased mutual fund assets
under management by $16.7 billion during the third quarter of 2012.

Investment advisory revenues earned in the third quarter of 2012 on the other
investment portfolios increased $23.1 million compared to the 2011 quarter to
$203.3 million, as average assets under management increased $23.1 billion, or
11%, to $225.3 billion. Assets under management in these portfolios at
September30, 2012 were $231.5 billion, an increase of $11.5 billion from
June30, 2012. Market appreciation and income of $11.7 billion during the
third quarter of 2012 was slightly offset by $.2 billion in net cash outflows.
Investors domiciled outside the United States accounted for nearly 10% of the
firm's assets under management at September30, 2012.

Operating expenses were $410.8 million in the third quarter of 2012, up $26.6
million from the 2011 quarter due primarily to increases in compensation and
related costs, distribution and servicing costs and other operating expenses.
Higher compensation and related costs of $12.2 million are primarily
attributable to an increase in the firm's number of associates, base salaries
and the cost of employee benefits. The firm has increased its average staff
size by 1.4% from the third quarter of 2011, and employed 5,295 associates at
September30, 2012.

Advertising and promotion expenditures were $17.5 million in the third quarter
of 2012 compared to $19.0 million in the comparable 2011 period. The firm
currently expects that its advertising and promotion expenditures for the full
year 2012 will be similar to 2011 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.

Occupancy and facility costs together with depreciation and amortization
expense were $51.6 million in the third quarter of 2012, up $3.9 million
compared to the third quarter of 2011. The change includes the added costs
incurred to expand our facilities around the world as well as update our
technology capabilities to meet increasing business demands.

Other operating expenses were $53.5 million in the third quarter of 2012, an
increase of $8.1 million from the comparable 2011 period. The increase is
primarily attributable to $5.4 million in certain third-party servicing costs
incurred in the third quarter of 2012 in which the comparable 2011 period
costs were reported as reductions of advisory and administrative fee revenues.

In addition to the $31.2 million in investment gains realized on the sale of
certain sponsored mutual fund investments in the third quarter of 2012, the
firm recognized $4.0 million in gains from other investments compared with
losses of $1.2 million in the comparable 2011 quarter.

The provision for income taxes as a percentage of pretax income for the third
quarter of 2012 is 38.2%, slightly lower than the 38.4% effective tax rate for
the first nine months of 2012. The firm currently estimates its effective rate
for 2012 will be 38.4%.

T. Rowe Price remains debt-free with ample liquidity, including cash and
mutual fund investment holdings of $2.3 billion. The firm has expended $135.2
million to repurchase 2.3 million shares of its common stock and has invested
$55.7 million in capitalized technology and facilities during the first nine
months of 2012. Total capital expenditures for property and equipment are
expected to be about 100 million in 2012. These cash expenditures are being
funded from operating resources.

Management Commentary

James A.C. Kennedy, the company's chief executive officer and president,
commented: "Despite global economic worries, equity markets rose during the
third quarter sparked by a wave of central bank actions and strong corporate
earnings growth. Bond markets also posted solid gains amid demand for
lower-risk assets. The resulting market appreciation, combined with healthy
total net inflows, boosted the firm's ending and quarterly average assets
under management to record highs for a quarter-end period.

"Corporate balance sheets generally remain healthy, equity valuations are
largely reasonable, and U.S. economic growth, though subdued, is steady.
Nevertheless, clarity on key fiscal issues in the U.S. and Europe and greater
comfort about the global economic outlook are likely needed for stocks to
extend their rally. Likewise, the environment of low yields and tighter credit
spreads remains challenging for bond investors. While there is still value in
some areas of the fixed income markets, total returns are likely to be lower
in the coming years.

"Although it is difficult, if not impossible, to forecast global political and
economic developments, we are cautiously optimistic that additional progress
will be made on the eurozone sovereign debt front and can only hope that in
the U.S. both parties begin to seriously address the country's looming fiscal
challenges. Regardless of the outcome of the U.S. election, an agreement will
need to be reached to delay major tax increases and spending reductions and
for the time being keep the country from going over the proverbial 'fiscal
cliff.' While this would prevent a very near-term hit to the economy, failing
to address the fundamentals underlying the deficit would leave the federal
government's budget on an unsustainable path for the long term and continue to
weigh on business and investor sentiment."

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 third quarter
of 2012 with the U.S. Securities and Exchange Commission later today. The Form
10-Q Quarterly Report will include additional information on the firm's
unaudited financial results at September30, 2012.

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 firm's 2011 Form 10-K Annual Report.

Founded in 1937, Baltimore-based T. Rowe Price (troweprice.com) 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.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per-share amounts)
                                  Three months ended    Nine months ended
Revenues                          9/30/2011  9/30/2012  9/30/2011   9/30/2012
 Investment advisory fees         $  578.0   $  661.4   $ 1,778.5   $ 1,914.4
 Administrative fees              80.3       83.4       240.9       249.0
 Distribution and servicing fees  20.5       24.4       54.4        70.3
 Net revenue of savings bank      .6         .5         1.7         1.5
 subsidiary
 Net revenues                     679.4      769.7      2,075.5     2,235.2
Operating expenses
 Compensation and related costs   251.6      263.8      743.3       786.0
 Advertising and promotion        19.0       17.5       65.0        63.1
 Distribution and servicing costs 20.5       24.4       54.4        70.3
 Depreciation and amortization of
 property and                     18.5       20.6       53.0        59.6

 equipment
 Occupancy and facility costs     29.2       31.0       85.8        92.5
 Other operating expenses         45.4       53.5       140.7       160.6
 Total operating expenses         384.2      410.8      1,142.2     1,232.1
Net operating income              295.2      358.9      933.3       1,003.1
Non-operating investment income   1.3        41.4       10.8        53.9
Income before income taxes        296.5      400.3      944.1       1,057.0
Provision for income taxes        111.0      153.0      359.3       405.4
Net income                        $  185.5   $  247.3   $ 584.8     $ 651.6
Net income allocated to common
stockholders
 Net income                       $  185.5   $  247.3   $ 584.8     $ 651.6
 Less: net income allocated to
 outstanding restricted           (.9)       (1.6)      (2.6)       (3.8)

 stock and stock unit holders
 Net income allocated to common   $  184.6   $  245.7   $ 582.2     $ 647.8
 stockholders
Earnings per share on common
stock
 Basic                            $  .73     $  .97     $ 2.27      $ 2.56
 Diluted                          $  .71     $  .94     $ 2.20      $ 2.48
Dividends declared per share      $  .31     $  .34     $ .93       $ 1.02
Weighted average common shares
 Outstanding                      253.7      253.0      256.7       253.2
 Outstanding assuming dilution    260.0      260.3      265.0       260.7

Investment Advisory Revenues (in  Three months ended    Nine months ended
millions)
                                  9/30/2011  9/30/2012  9/30/2011   9/30/2012
Sponsored mutual funds in the
U.S.
     Stock and blended asset      $  321.5   $  368.1   $ 989.7     $ 1,059.6
     Bond and money market        76.3       90.0       226.7       258.7
                                  397.8      458.1      1,216.4     1,318.3
Other portfolios
     Stock and blended asset      145.7      160.2      461.3       472.1
     Bond, money market and       34.5       43.1       100.8       124.0
     stable value
                                  180.2      203.3      562.1       596.1
Total                             $  578.0   $  661.4   $ 1,778.5   $ 1,914.4
                                  Three months ended    Nine months ended
Average Assets Under Management   9/30/2011  9/30/2012  9/30/2011   9/30/2012
(in billions)
Sponsored mutual funds in the
U.S.
     Stock and blended asset      $  212.4   $  246.4   $ 220.4     $ 237.8
     Bond and money market        75.9       86.1       73.9        83.3
                                  288.3      332.5      294.3       321.1
Other portfolios
     Stock and blended asset      145.0      159.2      152.5       156.9
     Bond, money market, and      57.2       66.1       54.5        64.2
     stable value
                                  202.2      225.3      207.0       221.1
Total                             $  490.5   $  557.8   $ 501.3     $ 542.2
                                                        As of
Assets Under Management (in                             12/31/2011  9/30/2012
billions)
Sponsored mutual funds in the
U.S.
     Stock and blended asset                            $ 211.7     $ 254.7
     Bond and money market                              77.7        88.2
                                                        289.4       342.9
Other portfolios
     Stock and blended asset                            140.7       164.4
     Bond, money market, and                            59.4        67.1
     stable value
                                                        200.1       231.5
Total                                                   $ 489.5     $ 574.4
Stock and blended asset                                 $ 352.4     $ 419.1
portfolios
Fixed income portfolios                                 137.1       155.3
Total                                                   $ 489.5     $ 574.4

                                                          Nine months ended
Condensed Consolidated Cash Flows Information (in         9/30/2011  9/30/2012
millions)
Cash provided by operating activities, including          $  940.5   $  861.0
$77.3 of stock-based compensation in 2012
Cash used in investing activities, including ($55.7)
for additions to property and equipment and ($176.6)      (131.9)    (202.2)
for net sponsored mutual fund investments in 2012
Cash used in financing activities, including common
stock repurchases of ($135.2) and dividends paid of       (620.3)    (321.7)
($259.7) in 2012
Net change in cash during the period                      $  188.3   $  337.1

Condensed Consolidated Balance Sheet                    12/31/2011  9/30/2012
Information (in millions)
Cash and cash equivalents                               $ 897.9     $ 1,235.0
Accounts receivable and accrued revenue                 304.5       332.2
Investments in sponsored mutual funds                   764.5       1,024.2
Property and equipment                                  567.4       561.0
Goodwill                                                665.7       665.7
Debt securities held by savings bank subsidiary,        570.3       587.5
other investments and other assets
Total assets                                            3,770.3     4,405.6
Total liabilities                                       349.6       546.7
Stockholders' equity, 254,828,000 common shares
outstanding in 2012, including net unrealized           $ 3,420.7   $ 3,858.9
holding gains of $137.1 in 2012



SOURCE T. Rowe Price Group, Inc.

Website: http://www.troweprice.com
Contact: Brian Lewbart, +1-410-345-2242, Bill Benintende, +1-410-345-3482, and
Robert Benjamin, +1-410-345-2205, all with T. Rowe Price Group
 
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