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T. Rowe Price Group, Inc. (NASDAQ: TROW) today reported its second quarter 2009 results, including net revenues of $442.2 million, net income of $100.0 million, and diluted earnings per share on common stock of $.38. Net revenues in the second quarter of 2008 were $586.5 million when net income was $162.2 million and diluted earnings per share was $.59. The previously reported 2008 second quarter diluted earnings per
share on common stock of $.60 was adjusted to reflect the retrospective application of new financial reporting guidance.
James A.C. Kennedy, the company’s Chief Executive Officer and President, commented: “The firm’s investment advisory results relative to our peers remain strong, with at least 84% of the T. Rowe Price funds across their share classes surpassing their comparable Lipper averages on a total return basis for the one-, three- and five-year periods ended June 30, 2009, and 78% outperforming for the 10-year period. In addition, T. Rowe Price stock, bond and blended asset funds that ended the quarter with an overall rating of four or five stars from Morningstar account for more than 67% of our rated funds’ assets under management.
“Our second quarter results were achieved during an improving investment environment, with the market rally which began in early March signaling that we may have passed the bottom in the markets. Nevertheless, the severe downturn in global financial markets since mid-2008 has had a dramatic effect on our comparative financial results. Although we have not experienced a fundamental change in our business model like many other financial services companies, the global market declines have significantly reduced our assets under management, related advisory revenues, the value of our corporate mutual fund investments, and our net income.”
“We remain debt-free with substantial liquidity, including cash and mutual fund investment holdings of $1.2 billion that affords us the opportunity to invest for the future. We have expended $55 million so far this year to repurchase 2.0 million of our common shares. Based on current strategic projects and plans, the firm’s property and equipment additions for all of 2009 are estimated to be $170 million, including $65 million already invested this year. These cash expenditures have been funded from our available liquid resources.”
“As worldwide government efforts to mitigate the fallout from the financial crisis begin to take hold, credit markets continue to revive, and the economy slowly begins to stabilize and recover, we are cautiously optimistic that the worst of the global economic and market downturn is behind us,” Mr. Kennedy said. “Our optimism, however, is tempered given that economic recovery will likely be uneven and varying in degree across the globe. The second half of 2009 will likely continue to be challenging for both consumers and companies around the world; nevertheless, investors should be encouraged about the prospects for a gradual return to longerterm financial stability and global growth.”
In closing, Mr. Kennedy said: “Although the dislocation in the financial markets has affected us, our very strong financial position has helped us manage through the crisis and enabled us to stay focused on our clients. While we continue to be vigilant about controlling expenses, our financial stability allows us to take advantage of attractive growth opportunities, invest in key capabilities including investment professionals and technologies and, most importantly, continue to provide our clients with investment management expertise and high-quality service. We are encouraged by continued investor interest and demand across our diversified investment strategies and distribution channels. Despite the challenges of the past year, the long-term outlook for T. Rowe Price remains strong. Our time-tested disciplined investment process, consistent and competitive performance over time, and dedicated associates continue to add value for our clients and stockholders.”
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