Skip to content
AnalystLens

Price T Rowe Group Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed February 8, 2007
Period End
December 31, 2006
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 8, 2007. Cited figures are marked; the original filing is the authoritative source.

T.

Rowe Price Group, Inc. reported record results for fiscal 2006. Total assets under management ended the year at a record $334.7 billiona, up 24% or $65.2 billion, driven by net inflows of $27.8 billion and market appreciation and income of $37.4 billion. Net revenues rose to $1.815 billion from $1.512 billion, net operating income increased 20% to $787 million, and net income increased 23% to $529.6 million, or $1.90 diluted earnings per share.

The filing states the operating margin was 43.4%. Investment advisory revenues were up 22% to $1.5 billionb, with the T. Rowe Price mutual funds distributed in the U.S. contributing nearly $1.1 billion.

Mutual fund net inflows were $12.9 billionc, including $6.6 billion from the target-date Retirement Funds, whose assets reached $17.3 billion at year-end. The filing highlights strong relative investment performance, with 80% of the Price funds across share classes surpassing their Lipper averages on a total return basis over five years, and 78 stock and bond funds rated four or five stars by Morningstar. The 2006 results include a $59.2 million non-cash stock option expense from the adoption of SFAS 123R, which reduced diluted earnings per share by approximately $.14.

The company also declared quarterly dividends of $.17 per share in the fourth quarter and expects to maintain that rate for the first three quarters of 2007. Stockholders' equity increased to $2.4 billiond, and cash and investment holdings were $1.4 billion at year-end. Risks highlighted in the filing include the dependence of revenue on asset values, which fluctuate with market conditions and investor withdrawals, and the fact that a significant majority of revenues come from Price fund contracts terminable on 60 days' notice.

The filing also notes that about 30% of assets under management come from third-party financial intermediaries, and that the company faces intense competition. Management also announced leadership changes: James A.C.

Kennedy became Chief Executive Officer and President and Brian C. Rogers became Chairman, both effective in 2007.

02—Key points

Key Highlights

  1. Assets under management reached a record $334.7 billion at December 31, 2006, up $65.2 billion (24%) during the year, with net inflows of $27.8 billion.
  2. Net revenues rose 20% to $1.815 billion; net operating income increased 20% to $787 million, with an operating margin of 43.4%.
  3. Net income increased 23% to $529.6 million, and diluted earnings per share rose 20% to $1.90 from $1.58.
  4. Mutual fund net inflows were $12.9 billion, including $6.6 billion from target-date Retirement Funds, whose assets grew to $17.3 billion.
  5. Stock option expense of $59.2 million under SFAS 123R reduced diluted earnings per share by approximately $.14 in 2006.
  6. Quarterly dividends rose to $.17 per share in Q4 2006, and the company expects to pay $.17 for the first three quarters of 2007.
  7. Stockholders' equity increased to $2.4 billion, with cash and investment holdings of $1.4 billion at year-end; the company repurchased 4,501,152 shares for $171.0 million during May through July 2006.

03—Questions

Frequently Asked Questions

  1. What drove the growth in assets under management in 2006?

    Assets under management increased $65.2 billion to $334.7 billion. Net inflows contributed $27.8 billion, and higher market valuations and income added $37.4 billion. The filing attributes strong inflows to relative investment performance and brand awareness, and to the Retirement Funds series.

  2. How much of the company's revenue depends on the T. Rowe Price funds?

    The filing states that a significant majority of revenues are based on contracts with the Price funds, which can be terminated without cause on 60 days' notice. The five largest Price funds accounted for 27% of 2006 investment advisory revenues.

  3. What were the key risks to investors identified in the filing?

    The main risks are declines in market values that reduce asset-based fees, investor withdrawals, intense competition, dependence on Price fund contracts, reliance on third-party intermediaries for about 30% of assets, and regulatory and litigation exposure. The filing also notes a pending class action related to market timing in the T. Rowe Price International Stock Fund.

  4. What leadership changes were announced?

    James A.C. Kennedy became Chief Executive Officer and President in 2007, having previously been a Vice President. Brian C. Rogers became Chairman in 2007, and Edward C. Bernard became Vice Chairman in 2007.

04—Continue

← View all 10-K filings