T. Rowe Price (TROW) 10-Q 2005 Q3 Quarterly report

Exhibit 99

T. ROWE PRICE GROUP REPORTS RECORD QUARTERLY RESULTS

Assets Under Management up 5% during the quarter to nearly $258 billion

BALTIMORE (October 26, 2005) — T. Rowe Price Group, Inc. (Nasdaq: TROW) today reported record quarterly results for its third quarter 2005 that include net revenues of $388.7 million, net income of $116.3 million, and diluted earnings per share of $.85, an increase of 37% from the $.62 per share reported for the third quarter of 2004, and a 12% increase over the prior record of $.76 per share achieved in the second quarter of this year. Comparable net revenues in the third quarter of 2004 were $316.2 million, and net income was $82.5 million.

Investment advisory revenues were up nearly 26%, or about $65 million more than the 2004 quarter. Assets under management increased to a record $257.6 billion at September 30, 2005, up $22.4 billion from the end of 2004, and $12.8 billion from June 30, 2005. Record average assets under management were $254.1 billion for the quarter, more than $49 billion higher than the average of the 2004 quarter.

Operating expenses for the 2005 quarter were up $24 million or 13% to $209 million. Net operating income was $180 million, up $49 million or 37% compared to the 2004 period. Net non-operating income increased $3 million in the 2005 quarter.

For the first nine months of 2005, results include net revenues of $1.1 billion, net income of $313 million and diluted earnings per share of $2.30, an increase of 28% from the $1.80 per share reported for the comparable 2004 period.

Financial Highlights
Investment advisory revenues earned from the T. Rowe Price mutual funds distributed in the United States increased almost $53 million. Mutual fund assets ended September 2005 at $165.3 billion, up $10.8 billion during the 2005 quarter. Investors added net inflows of $3.5 billion to the mutual funds during the quarter while market appreciation and income added $7.3 billion.

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Net cash inflows were spread among the funds, with the U.S. stock funds adding $2.3 billion, the international stock funds adding $.7 billion and the bond and money market funds adding $.5 billion. The Growth Stock and Capital Appreciation funds together added nearly $1.1 billion of the net inflows, while the New Income, Value, and Equity Income funds each added more than $250 million. Cash inflows during the third quarter of 2005 also included nearly $400 million resulting from the merger of the TD Waterhouse Index Funds into four of the T. Rowe Price index funds. In addition, our series of target date Retirement Funds, which are designed to provide shareholders with single, diversified portfolios that invest in underlying T. Rowe Price funds and automatically shift asset allocations between funds as the investor ages, continue to be responsible for a significant part of our asset growth with net inflows of more than $800 million during the third quarter. Total assets in the Retirement Funds reached $6.4 billion at September 30, 2005.

Investment advisory revenues earned from other managed investment portfolios, consisting of institutional separate accounts, sub-advised funds, sponsored mutual funds which are offered to non-U.S. investors, and variable insurance portfolios, increased nearly $13 million to more than $85 million. Ending assets in these portfolios were $92.3 billion, up $2.0 billion from June 30, 2005. Market value appreciation added more than $3.3 billion to these portfolios during the quarter while investors made net withdrawals of $1.3 billion.

Operating expenses in the 2005 quarter were nearly $24 million more than in the 2004 quarter. Our largest expense, compensation and related costs, increased $14 million from the third quarter of 2004. The number of our associates, their total compensation costs, and the costs of their employee benefits have all increased. The firm has increased its staff size by about 7% since July 1, 2004 and, at September 30, 2005, employed 4,278 associates across the globe.

Advertising and promotion expenditures were up $2.4 million versus the 2004 period. The firm varies its level of spending based on market conditions and investor demand. For the fourth quarter of 2005, the firm expects that these costs will increase about $13 million from the third quarter of this year.

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Net non-operating income in the 2005 quarter increased nearly $3 million over the 2004 period as a result of larger cash balances and higher interest rates.

The third quarter 2005 provision for income taxes as a percentage of pretax income was 36.9%, basically unchanged from the 36.8% rate for the year 2004. The firm estimates that its effective tax rate for the full year 2005 will decrease to 36.7%.

Chairman Commentary
George A. Roche, the company’s chairman and president, commented: “The firm’s investment advisory results relative to our peers remain strong, with at least 78% of the T. Rowe Price funds across their share classes surpassing their respective Lipper averages on a total return basis for the three- and five-year periods ended September 30, 2005, and more than 67% outperforming the average for the one- and 10-year periods. In addition, 58.5% of the firm’s funds and their share classes that are rated by Morningstar ended the quarter with an overall rating of four or five stars. This compares with 32.5% for the overall industry.

“We continue to be encouraged by the strong net cash inflows into our funds and the relative performance of our managed investment portfolios. The broad diversification of our assets under management and our distribution channels, along with strong investment management results, underpins the company’s solid performance. In addition, our corporate earnings and cash flows remain very strong and give us substantial financial flexibility.

“Solid performance over the quarter was achieved against a backdrop of two devastating hurricanes, sharp increases in energy prices, and higher short-term interest rates. The risk of higher inflation and a further tightening of monetary policy by the Federal Reserve could make the market environment more challenging in the months ahead. We are encouraged, however, that corporations are generally in good financial shape and profitability is robust. Longer-term prospects for the economy, corporate earnings, and the stock market remain favorable, and we believe investors will continue to be well served by our investment approach. The outlook for our company remains strong and we believe the combination of investment management excellence, world-class service and guidance, and a diversified business model has us well-positioned for the future.”

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Other Matters
The financial results presented in this release are unaudited. The company expects that it will file its Form 10-Q Report for the third quarter of 2005 with the SEC later today. The Form 10-Q will include more complete information on the company’s recent financial results.

Certain statements in this press release may represent “forward-looking information,” including information relating to anticipated growth in revenues, net income and earnings per share, anticipated changes in the amount and composition of assets under management, anticipated expense levels, and expectations regarding financial and other market conditions. For a discussion concerning risks and other factors that could affect future results, see “Forward-Looking Information” in Item 2 of the company’s Form 10-Q Report.

Founded in 1937, Baltimore-based T. Rowe Price is a global investment management organization that provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The organization also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research. More information is available atwww.troweprice.com.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)

	Three months ended				Nine months ended
	9/30/2005		9/30/2004		9/30/2005		9/30/2004
Revenues
Investment advisory fees	$	319,967	$	254,689	$	904,501	$	748,700
Administrative fees and other income		68,561		61,403		204,397		182,414
Investment income of savings bank subsidiary		1,077		944		3,126		2,870
Total revenues		389,605		317,036		1,112,024		933,984
Interest expense on savings bank deposits		902		808		2,704		2,433
Net revenues		388,703		316,228		1,109,320		931,551
Operating expenses
Compensation and related costs		132,011		117,955		389,276		340,819
Advertising and promotion		15,394		12,952		57,688		50,128
Depreciation and amortization of property and equipment		10,795		10,083		31,069		30,054
Occupancy and facility costs		18,646		16,968		55,131		49,151
Other operating expenses		32,005		27,356		93,502		79,610
		208,851		185,314		626,666		549,762
Net operating income		179,852		130,914		482,654		381,789
Other investment income		4,464		1,519		12,041		3,611
Credit facility expenses		95		93		286		893
Net non-operating income		4,369		1,426		11,755		2,718
Income before income taxes		184,221		132,340		494,409		384,507
Provision for income taxes		67,886		49,815		181,028		144,379
Net income	$	116,335	$	82,525	$	313,381	$	240,128
Earnings per share
Basic	$	0.89	$	0.65	$	2.41	$	1.89
Diluted	$	0.85	$	0.62	$	2.30	$	1.80
Dividends declared per share	$	0.23	$	0.19	$	0.69	$	0.57
Weighted average shares
Outstanding		130,006		127,429		130,028		126,836
Assuming dilution		136,432		133,305		136,295		133,531

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	Three months ended				Nine months ended
	9/30/2005		9/30/2004		9/30/2005		9/30/2004
Investment Advisory Revenues (in thousands)
Sponsored mutual funds in the U.S.
Stock	$	198,379	$	148,295	$	551,026	$	436,990
Bond and money market		36,246		33,609		105,926		99,330
		234,625		181,904		656,952		536,320
Other portfolios		85,342		72,785		247,549		212,380
	$	319,967	$	254,689	$	904,501	$	748,700
Average Assets Under Management (in billions)
Sponsored mutual funds
Stock	$	129.0	$	96.1	$	120.9	$	95.0
Bond and money market		32.6		30.0		32.0		29.7
Total		161.6		126.1		152.9		124.7
Other portfolios		92.5		78.4		89.7		76.6
	$	254.1	$	204.5	$	242.6	$	201.3

	9/30/2005		12/31/2004
Assets Under Management (in billions)
Sponsored mutual funds
Stock	$	132.5	$	114.3
Bond and money market		32.8		31.2
Total		165.3		145.5
Other portfolios		92.3		89.7
	$	257.6	$	235.2
Equity securities	$	197.0	$	176.0
Debt securities		60.6		59.2
	$	257.6	$	235.2
Condensed Consolidated Balance Sheet Information (in thousands)
Cash and cash equivalents	$	772,374	$	499,750
Accounts receivable		167,481		158,342
Investments in sponsored mutual funds		255,041		215,159
Debt securities held by savings bank subsidiary		113,117		114,075
Property and equipment		210,791		203,807
Goodwill		665,692		665,692
Other assets		53,104		72,000
Total assets		2,237,600		1,928,825
Total liabilities, including savings bank deposits of $100,447 in 2005		326,944		231,525
Stockholders’ equity, 130,303,494 common shares outstanding in 2005, including net unrealized holding gains of $48,252 in 2005	$	1,910,656	$	1,697,300

	Nine months ended
	9/30/2005			9/30/2004
Condensed Consolidated Cash Flows Information (in thousands)
Cash provided by operating activities	$	475,960		$	343,598
Cash used in investing activities, including $38,383 for additions to property and equipment and $28,586 for mutual fund and other investments in 2005		(66,764	)		(45,632	)
Cash used in financing activities, including repurchases of common stock for $75,853, dividends paid of $89,577, and stock option exercise receipts of $28,838 in 2005		(136,572	)		(44,438	)
Net increase in cash during the period	$	272,624		$	253,528

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