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Price T Rowe Group Annual Report, Year Ended Dec 31, 2011

Filing Date
Filed February 3, 2012
Period End
December 31, 2011
Security
TROW
One revenue dollarkept$0.28
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 3, 2012. Cited figures are marked; the original filing is the authoritative source.

T.

Rowe Price Group, Inc. (NASDAQ: TROW) reported in its 10-K for 2011 that assets under management rose $7.5 billiona during the year to end at $489.5 billion, driven by net inflows of $14.1 billion, mainly sourced from third-party financial intermediaries, partly offset by market depreciation and distributions not reinvested of $6.6 billion. Net revenues increased 16.0% to $2.7 billion, net operating income rose 18.4% to $1.2 billion, and net income increased 15.0% to $773.2 million, with diluted earnings per share of $2.92 versus $2.53 in 2010. The operating margin improved to 44.7% from 43.8%.

Revenue is driven primarily by investment advisory fees tied to assets under management. Target-date retirement portfolios contributed $8.0 billionb of 2011 net inflows and held $66.9 billion at year-end. The filing notes that the average annualized fee rate declined to 47.3 basis points from 48.0, largely because of $36.4 million in voluntarily waived money market fees.

The company expects these waivers to continue in 2012. Risk factors highlighted include the revocable, short-notice nature of Price fund advisory contracts, market-driven asset fluctuations, and the potential impact of the proposed Volcker Rule on the savings bank subsidiary. Balance sheet strength is evident, with cash and cash equivalents of $897.9 millionc, total stockholders' equity of $3.42 billion, and no external source of liquidity needed.

The company repurchased 8,695,229 shares during 2011 and paid dividends of $1.24d per share, up from $1.08 in 2010. Management indicated that 2012 quarterly dividends are expected to exceed the 2011 total.

02—Key points

Key Highlights

  1. Assets under management ended 2011 at $489.5 billion, up $7.5 billion, with net inflows of $14.1 billion.
  2. Net revenues rose 16.0% to $2.7 billion; net operating income increased 18.4% to $1.2 billion; operating margin reached 44.7%.
  3. Net income increased 15.0% to $773.2 million; diluted EPS was $2.92 versus $2.53 in 2010.
  4. Target-date retirement portfolios drew $8.0 billion of net inflows and ended the year at $66.9 billion in assets.
  5. Average annualized fee rate declined to 47.3 basis points from 48.0, reflecting $36.4 million in voluntarily waived money market fees.
  6. Cash and cash equivalents were $897.9 million; stockholders' equity was $3.42 billion; 8.7 million shares were repurchased for $479.7 million.
  7. Cash dividends declared rose to $1.24 per share in 2011 from $1.08 in 2010.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2011, Price T Rowe Group kept $0.28.

  1. Revenue$2.75B100.0%
  2. Cost of revenue$-00.0%
  3. Gross profit$2.75B100.0%
  4. Operating costs−$1.52B55.3%
  5. Operating income$1.23B44.7%
  6. Interest, other & tax−$453.7M16.5%
  7. Net income$773.2M28.1%
Computed from 10-KFY2011filed February 3, 2012Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2011 revenue went

$2.75B
  • Operating costs: $1.52B, 55% of revenue
  • Net income: $773.2M, 28% of revenue
  • Interest, other & tax: $453.7M, 17% of revenue
  • Cost of revenue: $0, 0.0% of revenue

Kept 28% as net incomeCost of revenue $0 · 0.0%

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2011filed February 3, 2012
Revenue$2.75B100.0% Gross MarginNet Income$773.20M28.1% Net MarginEPS (Diluted)$2.92Total Assets$3.77BCash & Equivalents$897.90MFree Cash Flow$866.10M

Financial Statements

FY2011 against FY2010

Line itemFY2011FY2010Change
Revenue$2.75B$2.37B+15.9%
Gross Profit$2.75B$2.37B+16.0%
Operating Expenses$1.52B$1.33B+14.2%
Operating Income$1.23B$1.04B+18.4%
Net Income$773.20M$672.20M+15.0%
EPS (Basic)$3.01$2.60+15.8%
EPS (Diluted)$2.92$2.53+15.4%
Shares Outstanding (Basic)255.60M257.20M−0.6%
Shares Outstanding (Diluted)263.30M265.10M−0.7%

05—Questions

Frequently Asked Questions

  1. What drove the growth in assets under management in 2011?

    Net cash inflows of $14.1 billion, sourced primarily from third-party financial intermediaries, more than offset market depreciation and distributions not reinvested of $6.6 billion, producing a $7.5 billion increase to $489.5 billion.

  2. How much of the company's revenue depends on fund contracts that can be terminated on short notice?

    The filing states that a significant majority of revenues are based on contracts with the Price funds that are subject to termination without cause and on 60-day notice. Investment advisory fees were $2.35 billion in 2011.

  3. Is the company's fee income under pressure?

    The average annualized fee rate fell to 47.3 basis points from 48.0 basis points, mainly due to money market fee waivers of $36.4 million in 2011 versus $25.1 million in 2010. The firm expects these waivers to continue in 2012.

  4. What is the company's dividend and share repurchase posture?

    Cash dividends declared were $1.24 per share in 2011, and management plans to declare quarterly dividends in 2012 that together will exceed that amount. The company repurchased 8,695,229 shares in 2011, and the board had authorization for up to 13,715,681 additional shares at year-end.

06—Continue

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