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Price T Rowe Group Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed February 16, 2006
Period End
December 31, 2005
Security
TROW
In the record · 2016–202610-K1110-Q338-K83

TROW filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 83 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Leadership change8-K · Jun ’19Jun ’19
  3. Deal closed8-K · Dec ’21Dec ’21
  4. Leadership change8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed February 16, 2006. Cited figures are marked; the original filing is the authoritative source.

T.

Rowe Price Group, Inc. (NASDAQ: TROW) reported record year-end 2005 results in its Form 10-K filed February 16, 2006. Total assets under management rose $34.3 billiona during 2005 to a record $269.5 billion, including $208.3 billion of equity securities and $61.2 billion of debt securities. Net cash inflows were $16.1 billion, down from a record $20.7 billion in 2004, and market appreciation and income added $18.2 billion.

The company derives its revenue primarily from investment advisory fees earned on the T. Rowe Price mutual funds ($170.2 billionb at year-end) and other investment portfolios ($99.3 billion). Financially, net revenues rose to $1.51 billion, net operating income increased to $655 million from $525 million, and net income reached $430.9 million, up from $337.3 million, with diluted earnings per share of $3.15 versus $2.51 in 2004.

Operating cash flow was $539 million, and stockholders' equity grew to $2.04 billionc. The filing notes that revenues depend heavily on asset values and composition, that a significant majority of revenues come from Price fund contracts terminable on 60 days' notice, and that the company will adopt SFAS 123R on January 1, 2006, with its effective tax rate expected to rise to 37.2% in 2006.

The filing highlights strong relative performance, with at least 70%d of Price funds beating Lipper peer averages over the one-, three-, five- and 10-year periods, and 59% of rated U.S. mutual funds earning four or five Morningstar stars. Management expects 2006 advertising and promotion spending to be 5% to 10% higher than in 2005.

02—Key points

Key Highlights

  1. Record total assets under management of $269.5 billion at December 31, 2005, up $34.3 billion during the year.
  2. Net cash inflows of $16.1 billion in 2005, down from a record $20.7 billion in 2004.
  3. Net revenues rose to $1.51 billion from $1.28 billion; net operating income increased to $655.0 million from $525.3 million.
  4. Net income of $430.9 million, up 28% from $337.3 million; diluted EPS of $3.15 versus $2.51.
  5. Quarterly dividend raised to $.28 per share in December 2005, the twentieth consecutive annual increase since the company went public in April 1986.
  6. At least 70% of T. Rowe Price funds beat Lipper peer group averages over the one-, three-, five- and 10-year periods; 59% of rated U.S. funds earned four or five Morningstar stars.
  7. Filing flags risks including revenue dependence on asset values, Price fund contracts terminable on 60 days' notice, and a pending SFAS 123R adoption on January 1, 2006.

03—Questions

Frequently Asked Questions

  1. How did T. Rowe Price's assets under management and net flows change in 2005?

    Assets under management reached a record $269.5 billion at year-end 2005, up $34.3 billion. Net cash inflows were $16.1 billion, below the $20.7 billion record in 2004, and higher market valuations and income added $18.2 billion.

  2. How concentrated is the company's revenue?

    The company states that its five largest Price funds (Equity Income, Mid-Cap Growth, Growth Stock, Blue Chip Growth and Small-Cap Stock) represent 24% of assets under management and nearly 30% of 2005 investment advisory revenues. Its largest client relationship, excluding the Price funds, accounted for 4% of investment advisory revenues in 2005.

  3. What are the main risks the filing identifies for investors?

    The filing cites revenue sensitivity to market declines and changes in asset composition, the ability of Price fund boards to terminate contracts on 60-day notice, intense competition, dependence on key personnel, reliance on third-party intermediaries (about 30% of assets), and regulatory and technology risks.

  4. What is the outlook for expenses and taxes in 2006?

    Management expects advertising and promotion expenditures for 2006 to be 5% to 10% higher than in 2005. The effective tax rate is expected to rise to 37.2% in 2006 with the adoption of SFAS 123R, and the company expects to pay its $.28 quarterly dividend for the first three quarters of 2006.

04—Continue

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