T. Rowe Price posts record '95 Earnings rise 23%

more modest growth expected this year

January 26, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Strong financial markets helped T. Rowe Price Associates Inc. rack up record revenues of $439.3 million for the year, up 15 percent from 1994, the company said yesterday.

Net income jumped 23 percent to a new high of $75.4 million, or $2.47 a share in 1995.

"The financial markets were quite strong in 1995, and our domestic stock funds enjoyed significant appreciation and cash inflows," said George J. Collins, president of T. Rowe Price. "Based on our current outlook for the financial markets, however, we expect growth in 1996 will be at a more modest pace."

T. Rowe Price's stock closed yesterday at $47 a share, up 25 cents.

The results for the year include a $1 million extraordinary charge in the third quarter relating to the company's long-term, fixed-rate debt.

That charge decreased per-share earnings by 3 cents.

Net income for the fourth quarter was $21.7 million, up 34.8 percent from the comparable period in 1994.

Total assets under management grew by $17.6 billion during the year to a record $75.4 billion.

Mutual fund assets jumped to $48.6 billion, up from $37.3 billion.

George A. Roche, T. Rowe Price's chief financial officer, said the company's mutual funds added $1.4 billion in 1996, boosting fund assets under management to $50 billion.

"The cash flows have remained very positive in the new year," he said. "I think the most important thing for us is that the reinvestment results were so strong last year for a number of our mutual funds."

The funds experienced net cash inflows of $3.8 billion from investors for the year, up from $3.4 billion in 1994.

Advertising and promotion expenses grew to $34.8 million for the year, up 11.5 percent, and jumped 71 percent, to $13.7 million, for the quarter.

Carol Festa, an analyst with Smith Barney Inc., said she likes the fact that T. Rowe Price is aggressively building its 401(k) business, which is booming.

"They have quite a large 401(k) base," she said.

"Even if the markets don't go up, you are going to have a steady inflow of assets. To the degree that it gets bigger, the more stability it will bring to their earnings," she said.

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