Price reports record income $24.5 million posted in second quarter up 34% from 1995

July 27, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Money from investors continued flowing into T. Rowe Price Associates Inc. as the company reported yesterday record net income of $24.5 million in the second quarter, up 34 percent from the same period a year ago.

Revenues grew 37 percent, to $143.7 million in the 1996 quarter, and earnings per share jumped to 40 cents, 33 percent more than in the 1995 quarter, exceeding even the most aggressive estimates by 2 cents a share, according to analysts surveyed by Zack's Investment Research.

Price shares closed at $25 yesterday, up 75 cents.

"Basically, the market has continued to do well, certainly in the second quarter," said George A. Roche, Price's chief financial officer, who is scheduled to become chief executive next year when George J. Collins, president and chief executive, retires. "I think the remainder of the year looks reasonably good."

Collins said in a statement that recent drops in the stock market and the November presidential election "leave us somewhat cautious about growth prospects for the remainder of the year."

The first half of the year has been a spectacular one for the Baltimore-based mutual fund company. It earned a record $44.9 million, or 73 cents a share, for the first six months of the year, up from $33.2 million in 1995, or 55 cents a share.

"Very strong numbers," said Carol Festa, an analyst with New York-based Smith Barney. "T. Rowe has a lot of very strong funds. They are good performers; they are very competitive in terms of their fees."

Like other Baltimore-based brokerage and investment banking firms, Price has benefited from a strong stock market and from investors and corporations that have chosen the company to manage billions of dollars in retirement money.

Assets managed by Price rose to $57.3 billion, $14.8 billion more than a year ago, and net cash inflow totaled $2.3 billion in the quarter, bringing the year-to-date total to nearly $5.5 billion, shattering the company's full-year record set in 1993.

But net cash inflow in the second quarter slowed from nearly $3.2 billion in the first quarter of the year. Roche said he expects money to continue flowing into the company, but at a slower pace.

He said drops in the stock market last week did little to shake the confidence of people who have placed money with Price.

Redemptions "were not big; they were not anything that was not easily handled," he said.

Total assets managed by Price grew $20.7 billion, to $87.3 billion, at the end of the second quarter, compared with the same quarter a year ago. International assets rose $6.4 billion, to $26.5 billion.

Price's operating expenses jumped 39 percent in the quarter, to $96.5 million. Compensation was up 21 percent, to $43.2 million, and advertising and promotion more than doubled, to $14.4 million.

The company has no plans to rein in advertising, Roche said. "The money is still positive, and the advertising will remain at a very high level," Roche said.

Pub Date: 7/27/96

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