01—Abstract
Summary
Summary of the 10-K filed March 1, 2004. Cited figures are marked; the original filing is the authoritative source.
T.
Rowe Price Group, Inc. reported a record year in 2003, with total assets under management rising $49.4 billiona to an all-time high of $190.0 billion, including $135.5 billion in equity securities and $54.5 billion in debt securities. Improving financial markets added more than $36 billion to assets, and net investor inflows added more than $13 billion, with $7.5 billion going to the T. Rowe Price mutual funds for U.S. investors and $5.8 billion to other investment portfolios.
Net income rose to $227.5 millionb, or $1.77 diluted earnings per share, from $194.3 million, or $1.52, in 2002, and net revenues increased to $996 million from $924 million. Operating results improved as net operating income grew to $365.0 million from $320.5 million, while compensation costs rose to $383 million. The company repaid its remaining $56.7 million of debt during 2003, ended the year with debt of zero, and increased stockholders' equity to $1.33 billion.
The quarterly dividend was raised to $.19 per share in December 2003, the eighteenth consecutive annual increase, and management expects to maintain that rate for the first three quarters of 2004. The filing also flags risks. Management expects financial market growth in 2004 to be lower than in 2003, and advisory revenues depend heavily on the Price funds, which can be terminated by their boards on 60 days' notice.
Two purported class actions related to alleged market timing in the T. Rowe Price International Stock and New Asia Funds were filed in 2003, and the company says they are without merit. Management also expects advertising spending to rise in 2004 as it pursues new investors.
02—Key points
Key Highlights
- Total assets under management reached an all-time record of $190.0 billion at December 31, 2003, up $49.4 billion during the year.
- Net income increased $33.2 million, or 17%, to $227.5 million; diluted EPS rose 16% to $1.77 from $1.52.
- Net revenues increased $72 million to $996 million, and net operating income rose nearly $45.5 million, or 14%, to $365.0 million.
- Net investor inflows of more than $13 billion in 2003 included the largest quarterly inflows in the fourth quarter, at $4.6 billion.
- The company retired its remaining $56.7 million of debt in 2003 and ended the year with no debt outstanding; stockholders' equity rose to $1.33 billion.
- The quarterly dividend was raised to $.19 per share in December 2003, the eighteenth consecutive annual increase, and cash dividends declared rose to $.70 per share for the year.
- Two market-timing class actions filed in 2003 relate to the T. Rowe Price International Stock and New Asia Funds; management believes the allegations are without merit.
03—Questions
Frequently Asked Questions
How much did T. Rowe Price's assets under management grow in 2003?
Total assets under management increased $49.4 billion during 2003 to an all-time record of $190.0 billion. Market appreciation and income added more than $36 billion, and net investor inflows added more than $13 billion.
How did earnings change in 2003?
Net income rose to $227.5 million from $194.3 million in 2002, an increase of 17%. Diluted earnings per share increased 16% to $1.77 from $1.52.
What are the main risks mentioned in the filing?
Revenues depend on the total value and composition of assets under management, so market declines directly reduce advisory revenues. The Price funds' boards can terminate advisory agreements on 60 days' notice, which could materially affect results. Management also expects financial market growth in 2004 to be lower than in 2003, and new industry regulation following mutual fund trading abuses is expected.
What is the company's dividend policy?
The quarterly dividend rate was increased to $.19 per share in December 2003, the eighteenth consecutive annual increase since the company became public in April 1986. The company expects to pay $.19 per share quarterly for the first three quarters of 2004.
Are there any pending legal proceedings?
Two purported class actions were filed in 2003 against T. Rowe Price International and the T. Rowe Price International Funds. They allege that the funds did not make appropriate value adjustments to foreign securities, benefiting market timers. The company says the allegations are wholly without merit and will defend the cases vigorously.
04—Continue