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T. Rowe Price Group Reports Fourth Quarter And Annual 2012 Results

      T. Rowe Price Group Reports Fourth Quarter And Annual 2012 Results

Assets Under Management Increase to $576.8 Billion

PR Newswire

BALTIMORE, Jan. 29, 2013

BALTIMORE, Jan.29, 2013 /PRNewswire/ --T. Rowe Price Group, Inc. (NASDAQ-GS:
TROW) today reported its fourth quarter of 2012 results, including net
revenues of $787.3 million, net income of $232.0 million, and diluted earnings
per common share of $.88. On a comparable basis, net revenues were $671.6
million, net income was $188.4 million, and diluted earnings per common share
was $.73 in the fourth quarter of 2011.

Investment advisory revenues for the fourth quarter of 2012 increased $107.1
million to $677.6 million from the comparable 2011 period, as average assets
under management were up $86.2 billion, or 18%. Assets under management at
December31, 2012 totaled a record $576.8 billion, an increase of $2.4 billion
from $574.4 billion at September30, 2012. Market appreciation and income
during the fourth quarter of 2012 of $6.6 billion were partially offset by net
cash outflows of $4.2 billion.

Year-end assets under management of $576.8 billion increased $87.3 billion
from $489.5 billion at the end of 2011, and include $346.9 billion in T. Rowe
Price mutual funds distributed in the United States, and $229.9 billion in
other managed investment portfolios. Net cash inflows from investors in 2012
totaled $17.2 billion, including $10.1 billion originating in the target-date
retirement portfolios. Market appreciation and income, net of distributions
not reinvested, increased assets under management by $70.1 billion from the
end of 2011. The firm's target-date retirement portfolios had assets under
management at December31, 2012 of $88.9 billion, including $80.2 billion in
target-date retirement funds and $8.7 billion in target-date retirement
trusts. Investors domiciled outside the United States accounted for 9.5% of
the firm's assets under management at December31, 2012.

Annual results for 2012 include net revenues of $3.0 billion, net income of
$883.6 million, and diluted earnings per common share of $3.36, an increase of
15% from the $2.92 per share earned in 2011.

From an investment performance standpoint, 78% 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 December31, 2012, 84%
outperformed for the five-year period, 78% outperformed for the 10-year
period, and 74% 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 76% 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 December31, 2012.

Financial Highlights

Investment advisory revenues earned in the fourth quarter of 2012 from the T.
Rowe Price mutual funds distributed in the United States were $472.0 million,
an increase of $80.8 million, or 21%, from the comparable 2011 quarter.
Average mutual fund assets under management in the fourth quarter of 2012 were
$343.0 billion, an increase of 20% from the average for the fourth quarter of
2011. Money market advisory fees voluntarily waived by the firm to maintain
positive yields for fund investors in the fourth quarter of 2012 were $9.5
million, a decrease of $.9 million from the comparable 2011 quarter. During
2012, the firm waived $35.0 million in such fees compared with $36.4 million
in the 2011 year. The firm expects that these fee waivers will continue in
2013.

Mutual fund assets at December31, 2012 were $346.9 billion, an increase of
$4.0 billion from September30, 2012. Market appreciation and income of $4.4
billion was partially offset by net cash outflows of $.4 billion during the
fourth quarter of 2012. Net cash inflows of $.7 billion into the bond funds
and $.3 billion into the money market funds were more than offset by $1.4
billion in net cash outflows from the stock and blended asset funds.

Investment advisory revenues earned in the fourth quarter of 2012 on the other
investment portfolios increased $26.3 million compared to the 2011 quarter to
$205.6 million, as average assets under management increased $28.7 billion, or
14%, to $228.0 billion. Ending assets in these portfolios at December31, 2012
were $229.9 billion, a decrease of $1.6 billion from the end of September
2012. Market appreciation and income of $2.2 billion during the fourth quarter
of 2012 was more than offset by net cash outflows of $3.8 billion. These net
outflows were primarily from certain institutional separate account portfolios
outside the United States that have experienced investment performance
challenges, or changes in clients' investment objectives.

Operating expenses were $426.1 million in the fourth quarter of 2012, up $48.1
million from the 2011 quarter due primarily to increases in compensation and
related costs, distribution and servicing costs, occupancy and facility costs
and depreciation. The increase in compensation and related costs of $35.1
million is primarily attributable to higher bonus compensation, salaries, and
the cost of employee benefits. The firm has increased its average staff size
by 1.9% from the fourth quarter of 2011, and employed 5,372 associates at
December31, 2012.

Advertising and promotion expenditures were $26.7 million in the fourth
quarter of 2012 compared to $25.8 million in the comparable 2011 period. The
firm currently expects that its advertising and promotion expenditures for the
full year 2013 will be similar to 2012 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.

Distribution and servicing costs paid to third-party intermediaries that
source assets into the Advisory, R, and variable annuity classes of the firm's
sponsored portfolios in the fourth quarter of 2012 increased $5.6 million over
the comparable 2011 quarter, as higher distribution expenses were recognized
on greater fund assets under management. These costs offset the same increase
in distribution and servicing fees earned from 12b-1 plans of the same share
classes noted above.

Occupancy and facility costs together with depreciation and amortization
expense were $53.5 million in the fourth quarter of 2012, up $5.3 million
compared to the fourth 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.

Net non-operating investment income in the fourth quarter of 2012 increased
$4.0 million from the 2011 quarter due primarily to higher gains recognized on
our other investment portfolio.

The provision for income taxes as a percentage of pretax income for the fourth
quarter of 2012 is 38.6%, slightly higher than the 38.4% effective tax rate
for the full year 2012. The firm's effective rate for 2013 is expected to be
38.5%.

T. Rowe Price remains debt-free with ample liquidity, including cash and
sponsored portfolio investment holdings of $2.0 billion. During 2012, the firm
paid a regular annual dividend of $1.36 per share to our stockholders,
expended $135.2 million to repurchase 2.3 million shares of its common stock
and invested $76.9 million in capitalized technology and facilities. In
addition, the firm paid a $1.00 per share special dividend on December 28,
2012. The firm currently expects total capital expenditures for property and
equipment for 2013 to be approximately $125 million, which will be funded from
operating resources.

Management Commentary

James A.C. Kennedy, the company's chief executive officer and president,
commented: "Most equity and fixed income markets performed well in 2012,
especially in the emerging markets.This was despite another year of
relatively subdued global economic growth and persistently high unemployment
in many developed economies.Consumer and corporate confidence ebbed and
flowed through the year, mostly in response to varying hopes that political
leadership might move from dysfunction to logical decision making.The fourth
quarter was no exception to the volatility of expectations.Most world markets
produced negative returns in the quarter – at least until the last week of the
year, when negotiations in Washington gained momentum and the U.S. 'fiscal
cliff' was temporarily sidestepped.

"Meanwhile, we remain cautiously optimistic on the fundamentals of many
corporations around the globe.Company balance sheets are generally in good
shape, and many corporations are generating strong cash flow.Political,
economic and growth uncertainties remain, so volatility should be
expected.However, expectations and valuations in the equity markets remain
reasonable. The fixed income markets are less appealing, with yields driven to
near record lows by a series of governmental stimulus programs.Savers have
been hurt by these low rates, and risk-takers rewarded.Opportunities still
exist in the fixed income markets, but risks are now rising; consequently,
credit research and selectivity will be more and more important.

"In closing, we remain proud of our firm's continued strong investment and
client service performance.As we reflect back on 2012, our 75^th year, we
believe our guiding principle of always doing what is right for our clients
will continue to benefit our clients, associates, and stockholders alike."

Other Matters

The financial results presented in this release are unaudited. KPMG is
currently completing its audits of the company's 2012 financial statements and
internal controls over financial reporting at December31, 2012. The company
expects that KPMG will complete its work in early February and it will then
file its Form 10-K Annual Report for 2012 with the U.S. Securities and
Exchange Commission. The Form 10-K will include additional information,
including the firm's audited financial statements, management's report on
internal controls over financial reporting at December31, 2012, and the
reports of KPMG.

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 Form 10-K and Form 10-Q 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, 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      Year ended
Revenues                        12/31/2011  12/31/2012  12/31/2011  12/31/2012
  Investment advisory fees      $  570.5    $  677.6    $ 2,349.0   $ 2,592.0
  Administrative fees           80.3        83.6        321.2       332.6
  Distribution and servicing    20.2        25.8        74.6        96.1
  fees
  Net revenue of savings bank   .6          .3          2.3         1.8
  subsidiary
  Net revenues                  671.6       787.3       2,747.1     3,022.5
Operating expenses
  Compensation and related      226.5       261.6       969.8       1,047.6
  costs
  Advertising and promotion     25.8        26.7        90.8        89.8
  Distribution and servicing    20.2        25.8        74.6        96.1
  costs
  Depreciation and amortization
  of property and               19.0        21.3        72.0        80.9
  equipment
  Occupancy and facility costs  29.2        32.2        115.0       124.7
  Other operating expenses      57.3        58.5        198.0       219.1
  Total operating expenses      378.0       426.1       1,520.2     1,658.2
Net operating income            293.6       361.2       1,226.9     1,364.3
Non-operating investment income 12.9        16.9        23.7        70.8
Income before income taxes      306.5       378.1       1,250.6     1,435.1
Provision for income taxes      118.1       146.1       477.4       551.5
Net income                      $  188.4    $  232.0    $ 773.2     $ 883.6
Net income allocated to common
stockholders
  Net income                    $  188.4    $  232.0    $ 773.2     $ 883.6
  Less: net income allocated to
  outstanding restricted        (.9)        (2.1)       (3.5)       (5.5)
  stock and stock unit holders
  Net income allocated to       $  187.5    $  229.9    $ 769.7     $ 878.1
  common stockholders
Earnings per share on common
stock
  Basic                         $  .74      $  .90      $ 3.01      $ 3.47
  Diluted                       $  .73      $  .88      $ 2.92      $ 3.36
Dividends declared per share,
including $1.00 per share       $  .31      $  1.34     $ 1.24      $ 2.36
special dividend paid on
December 28, 2012
Weighted average common shares
  Outstanding                   252.0       254.2       255.6       253.4
  Outstanding assuming dilution 258.2       262.0       263.3       261.0

Investment Advisory Revenues    Three months ended      Year ended
(in millions)
                                12/31/2011  12/31/2012  12/31/2011  12/31/2012
Sponsored mutual funds in the
U.S.
    Stock and blended asset     $  314.8    $  378.0    $ 1,304.5   $ 1,437.6
    Bond and money market       76.4        94.0        303.1       352.7
                                391.2       472.0       1,607.6     1,790.3
Other portfolios
    Stock and blended asset     143.5       163.0       604.8       635.1
    Bond, money market and      35.8        42.6        136.6       166.6
    stable value
                                179.3       205.6       741.4       801.7
Total                           $  570.5    $  677.6    $ 2,349.0   $ 2,592.0

                                Three months ended      Year ended
Average Assets Under Management 12/31/2011  12/31/2012  12/31/2011  12/31/2012
(in billions)
Sponsored mutual funds in the
U.S.
     Stock and blended asset    $  209.3    $  253.0    $  217.6    $  241.6
     Bond and money market      76.2        90.0        74.5        85.0
                                285.5       343.0       292.1       326.6
Other portfolios
     Stock and blended asset    141.2       161.6       149.6       158.0
     Bond, money market, and    58.1        66.4        55.4        64.8
     stable value
                                199.3       228.0       205.0       222.8
Total                           $  484.8    $  571.0    $  497.1    $  549.4
                                                        As of
Assets Under Management (in                             12/31/2011  12/31/2012
billions)
Sponsored mutual funds in the
U.S.
     Stock and blended asset                            $  211.7    $  256.9
     Bond and money market                              77.7        90.0
                                                        289.4       346.9
Other portfolios
     Stock and blended asset                            140.7       164.2
     Bond, money market, and                            59.4        65.7
     stable value
                                                        200.1       229.9
Total                                                   $  489.5    $  576.8
Stock and blended asset                                 $  352.4    $  421.1
portfolios
Fixed income portfolios                                 137.1       155.7
Total                                                   $  489.5    $  576.8

                                                        Year ended
Condensed Consolidated Cash Flows Information (in       12/31/2011  12/31/2012
millions)
Cash provided by operating activities, including        $  948.4    $  902.8
$104.1 of stock-based compensation in 2012
Cash used in investing activities, including ($76.9)
for additions to property and equipment and ($280.4)    (165.0)     (310.1)
for net sponsored mutual fund investments in 2012
Cash used in financing activities, including common
stock repurchases of ($135.2) and dividends paid of     (698.6)     (611.5)
($603.4) in 2012
Net change in cash during the period                    $  84.8     $  (18.8)

Condensed Consolidated Balance Sheet                    12/31/2011  12/31/2012
Information (in millions)
Cash and cash equivalents                               $ 897.9     $ 879.1
Accounts receivable and accrued revenue                 304.5       353.9
Investments in sponsored funds                          764.5       1,140.1
Property and equipment                                  567.4       561.0
Goodwill                                                665.7       665.7
Debt securities held by savings bank subsidiary,        570.3       603.0
other investments and other assets
Total assets                                            3,770.3     4,202.8
Total liabilities                                       349.6       356.7
Stockholders' equity, 257,018,000 common shares
outstanding in 2012, including net unrealized           $ 3,420.7   $ 3,846.1
holding gains of $144.5 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, or
Heather McDonold, +1-410-345-6617 all with T. Rowe Price Group
 
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