10-Q 1 0001.txt 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended: JUNE 30, 2000. Commission file number: 000-14282. Exact name of registrant as specified in its charter: T. ROWE PRICE ASSOCIATES, INC. State of incorporation: MARYLAND. I.R.S. Employer Identification No.: 52-0556948. Address and Zip Code of principal executive offices: 100 EAST PRATT STREET, BALTIMORE, MARYLAND 21202. Registrant's telephone number, including area code: (410) 345-2000. Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X]. No [ ]. Indicate the number of shares outstanding of the issuer's common stock ($.20 par value), as of the latest practicable date. 121,308,413 SHARES AT JULY 25, 2000. Exhibit index is at Item 6(a) on pages 14 - 15. 2 PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. T. ROWE PRICE ASSOCIATES, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) 12/31/99 06/30/00 ________ __________ ASSETS Cash and cash equivalents $358,472 $ 505,892 Accounts receivable 121,637 135,592 Investments in sponsored mutual funds 233,924 185,689 Other investments 44,986 63,934 Property and equipment 210,302 234,265 Other assets 28,718 18,934 ________ __________ $998,039 $1,144,306 ________ __________ ________ __________ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable and accrued expenses $ 37,712 $ 43,498 Accrued compensation and related costs 64,774 75,386 Income taxes payable 31,819 22,482 Dividends payable 15,614 15,764 Debt 17,716 17,127 Minority interests in consolidated subsidiaries 60,220 71,824 ________ __________ Total liabilities 227,855 246,081 ________ __________ Commitments and contingent liabilities Stockholders' equity Preferred stock, undesignated, $.20 par value - authorized and unissued 20,000,000 shares -- -- Common stock, $.20 par value - authorized 500,000,000 shares; issued 120,107,818 shares in 1999 and 121,275,210 shares in 2000 24,022 24,255 Capital in excess of par value 48,057 63,217 Retained earnings 649,378 762,301 Accumulated other comprehensive income 48,727 48,452 ________ __________ Total stockholders' equity 770,184 898,225 ________ __________ $998,039 $1,144,306 ________ __________ ________ __________ See the accompanying notes to the condensed consolidated financial statements. 3 T. ROWE PRICE ASSOCIATES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per-share amounts) Three months Six months ended ended _________________ _________________ 06/30/99 06/30/00 06/30/99 06/30/00 ________ ________ ________ ________ Revenues Investment advisory fees $191,545 $226,373 $382,423 $460,534 Administrative fees 48,379 57,178 97,596 118,025 Investment and other income 5,847 17,131 11,578 38,454 ________ ________ ________ ________ 245,771 300,682 491,597 617,013 ________ ________ ________ ________ Expenses Compensation and related costs 82,932 92,665 164,395 185,632 Advertising and promotion 16,268 21,071 36,493 46,181 Occupancy and equipment 21,402 27,440 42,349 53,346 International investment research fees 12,581 14,690 24,725 30,704 Other operating expenses 17,115 24,318 32,925 49,861 ________ ________ ________ ________ 150,298 180,184 300,887 365,724 ________ ________ ________ ________ Income before income taxes and minority interests 95,473 120,498 190,710 251,289 Provision for income taxes 36,657 45,591 72,945 94,795 ________ ________ ________ ________ Income from consolidated companies 58,816 74,907 117,765 156,494 Minority interests in consolidated subsidiaries 5,126 5,568 10,662 12,121 ________ ________ ________ ________ Net income $ 53,690 $ 69,339 $107,103 $144,373 ________ ________ ________ ________ ________ ________ ________ ________ Basic earnings per share $ .44 $ .57 $ .89 $ 1.20 ________ ________ ________ ________ ________ ________ ________ ________ Diluted earnings per share $ .41 $ .54 $ .82 $ 1.12 ________ ________ ________ ________ ________ ________ ________ ________ Dividends declared per share $ .10 $ .13 $ .20 $ .26 ________ ________ ________ ________ ________ ________ ________ ________ Weighted average shares outstanding 121,152 120,930 120,834 120,674 ________ ________ ________ ________ ________ ________ ________ ________ Weighted average shares outstanding- assuming dilution 130,062 129,335 129,827 128,867 ________ ________ ________ ________ ________ ________ ________ ________ See the accompanying notes to the condensed consolidated financial statements. 4 T. ROWE PRICE ASSOCIATES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Six months ended __________________ 06/30/99 06/30/00 ________ ________ Cash flows from operating activities Net income $107,103 $144,373 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization of property and equipment 15,421 19,651 Minority interests in consolidated subsidiaries 10,662 12,121 Other changes in assets and liabilities (1,545) (9,501) ________ ________ Net cash provided by operating activities 131,641 166,644 ________ ________ Cash flows from investing activities Investments in sponsored mutual funds (1,018) (4,894) Dispositions of sponsored mutual funds -- 56,750 Other investments (23,792) (6,053) Distributions from other investments 10,002 227 Additions to property and equipment (31,500) (40,678) ________ ________ Net cash used in investing activities (46,308) 5,352 ________ ________ Cash flows from financing activities Purchases of stock (3,669) -- Receipts relating to stock issuances 5,186 8,796 Proceeds of bank borrowing 15,019 -- Dividends paid to stockholders (24,100) (31,300) Cost of bank credit facility -- (1,576) Distributions to minority interests (23) (496) ________ ________ Net cash used in financing activities (7,587) (24,576) ________ ________ Cash and cash equivalents Net increase during period 77,746 147,420 At beginning of year 283,838 358,472 ________ ________ At end of period $361,584 $505,892 ________ ________ ________ ________ See the accompanying notes to the condensed consolidated financial statements. 5 T. ROWE PRICE ASSOCIATES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (dollars in thousands) Accumu- Capital lated Common in other Total stock excess compre- stock- - par of par Retained hensive holders' value value earnings income equity _______ _______ ________ ________ ________ Balance at December 31, 1999, 120,107,818 common shares $24,022 $48,057 $649,378 $48,727 $770,184 Comprehensive income Net income 144,373 Change in unrealized security holding gains (275) Total comprehensive income 144,098 1,167,392 common shares issued under stock-based compensation plans 233 15,160 15,393 Dividends declared (31,450) (31,450) _______ _______ ________ _______ ________ Balance at June 30, 2000, 121,275,210 common shares $24,255 $63,217 $762,301 $48,452 $898,225 _______ _______ ________ _______ ________ _______ _______ ________ _______ ________ See the accompanying notes to the condensed consolidated financial statements. 6 T. ROWE PRICE ASSOCIATES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - THE COMPANY AND BASIS OF PREPARATION. T. Rowe Price Associates derives its consolidated revenues and net income primarily from investment advisory services provided to individual and institutional investors in the sponsored T. Rowe Price mutual funds and other investment portfolios. We also provide our investment advisory clients with related administrative services, including mutual fund transfer agent, accounting and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; discount brokerage; and trust services. The investors that we serve are primarily domiciled in the United States. Investment advisory revenues depend largely on the total value and composition of assets under management. Accordingly, fluctuations in financial markets and in the composition of assets under management impact our revenues and results of operations. These unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature. The unaudited interim financial information contained in these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our 1999 Annual Report. NOTE 2 - INFORMATION ABOUT REVENUES AND SERVICES. Our revenues (in thousands) from advisory services provided under agreements with our sponsored mutual funds and other investment clients for the six months ended June 30 were: 1999 2000 ________ ________ Sponsored mutual funds Stock and blended Domestic $167,659 $209,092 International 57,199 75,696 Bond and money market 48,855 46,390 ________ ________ 273,713 331,178 Other portfolios 108,710 129,356 ________ ________ Total investment advisory fees $382,423 $460,534 ________ ________ ________ ________ 7 The following table summarizes the various investment portfolios and assets under management (in billions) on which we earn advisory fees. Average during first 6 months _______________ 1999 2000 12/31/99 06/30/00 ______ ______ ________ ________ Sponsored mutual funds Stock and blended Domestic $ 58.4 $ 71.7 $ 71.2 $ 73.2 International 16.3 21.0 21.4 20.4 Bond and money market 22.3 21.7 21.9 21.7 ______ ______ ______ ______ 97.0 114.4 114.5 115.3 Other portfolios 54.4 64.6 65.4 63.7 ______ ______ ______ ______ $151.4 $179.0 $179.9 $179.0 ______ ______ ______ ______ ______ ______ ______ ______ Fees for advisory-related administrative services provided to the funds were $72,137,000 and $87,530,000 for the first six months of 1999 and 2000, respectively. Accounts receivable from the funds totaled $71,282,000 at June 30, 2000. NOTE 3 - PENDING TRANSACTIONS. On April 11, 2000, we entered into an agreement with Robert Fleming Holdings Limited to purchase its 50% interest in Rowe Price-Fleming International for a fixed price of $780 million. Rowe Price-Fleming was formed in 1979 and is a 50% owned consolidated subsidiary of T. Rowe Price Associates. It primarily provides U.S. investors with international investment advisory services and, at June 30, 2000, managed $39.2 billion. Our acquisition of the remaining interest in Rowe Price-Fleming is expected to close in August 2000 after The Chase Manhattan Corporation completes its acquisition of Robert Fleming Holdings. The acquisition will likely be modestly dilutive to earnings per share near-term and somewhat accretive to income before goodwill charges. We expect to finance this acquisition with available cash resources including the borrowings of approximately $300 million from a five-year, $500 million syndicated bank credit facility that we obtained in June 2000. On June 30, 2000, our stockholders approved the one-for-one exchange of their shares of our outstanding common stock for that of our newly-organized holding company, T. Rowe Price Group, Inc. The share exchange is subject to receipt of regulatory approvals and is expected to occur before the end of 2000. The exchange will result in Price Group becoming the sole owner of Price Associates and our stockholders becoming the stockholders of Price Group. The exchange will be accounted for similar to a pooling-of-interests transaction. Subsequent to the share exchange, Price Group will succeed to Price Associates' obligation for periodic public reporting. 8 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of T. Rowe Price Associates, Inc. We have reviewed the condensed consolidated financial statements of T. Rowe Price Associates, Inc. and its subsidiaries as of June 30, 2000 and for the three- and six-month periods ended June 30, 1999 and June 30, 2000, appearing on pages two through seven of this Form 10-Q Quarterly Report. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States. We previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet as of December 31, 1999, and the related consolidated statements of income, of cash flows, and of stockholders' equity for the year then ended (not presented herein), and in our report dated January 25, 2000, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1999, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ PricewaterhouseCoopers LLP Baltimore, Maryland July 24, 2000 THE ABOVE REPORT IS NOT A "REPORT" WITHIN THE MEANING OF SECTIONS 7 AND 11 OF THE SECURITIES ACT OF 1933 AND THE INDEPENDENT ACCOUNTANTS' LIABILITY PROVISIONS OF SECTION 11 OF THE ACT DO NOT APPLY. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL. Our revenues and net income are derived primarily from investment advisory services provided to U.S. individual and institutional investors in our sponsored mutual funds and other investment portfolios. We manage a broad range of domestic and international stock, bond, and money market mutual funds and other investment portfolios which meet the varied needs and objectives of individual and institutional investors. Investment advisory revenues depend largely on the total value and composition of assets under management. Accordingly, fluctuations in financial markets and in the composition of assets under management impact our revenues and results of operations. Total assets under our management were $179.0 billion at June 30, 2000, including $139.2 billion in equity securities. RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2000 VERSUS 1999. Net income increased $15.6 million or 29% to $69.3 million and diluted earnings per share rose from $.41 to $.54. Total revenues increased 22% from $246 million to $301 million, led by increases of $34.8 million in investment advisory fees and $11.3 million in investment income. Investment advisory revenues earned from the T. Rowe Price mutual funds increased $23.6 million as average fund assets under management during the quarter were $113.8 billion, $14.2 billion more than in the second quarter of 1999. Fund assets fell $4.1 billion during the three months ended June 30, 2000 and totaled $115.3 billion at quarter end, including $93.6 billion in stock and blended assets funds. The decrease in fund assets during the quarter was primarily attributable to market depreciation. Further, net cash inflows of $321 million into domestic stock funds were more than offset by outflows during the quarter of $547 million from international stock funds and $466 million from bond and money market funds. Growth stock funds generally had net inflows while value funds had net outflows. Greater assets in other managed investment portfolios, including variable annuity and other subadvised funds, resulted in the balance of our advisory revenue gains totaling $11.2 million. Performance-related advisory fees were $2.4 million higher this quarter than the comparable quarter last year but were down $3.2 million from the first quarter 2000. We earn these performance-related fees primarily on venture capital investments that we manage and, though recurring, these fees will vary significantly as market conditions change. Assets under management in the other investment portfolios that we manage were $63.7 billion at June 30, 2000, up $7.1 billion from June 30, 1999 but down $2.1 billion from March 31, 2000. Administrative fees from advisory-related services that we provide to the funds and their shareholders rose $8.8 million from the second quarter of 1999 to $57.2 million. This increase is primarily attributable to transfer 10 agency and recordkeeping services that we provide to defined contribution retirement plans and the T. Rowe Price mutual funds. These revenues are largely offset by the costs that we incur in providing the services. Investment and other income rose $11.3 million from the second quarter of 1999, including $3.0 million from our larger money market fund balances and $3.2 million from venture capital investments. Additionally, we realized gains of $4.1 million on sales of our mutual fund holdings totaling $56.8 million. These sales proceeds have been added to our cash holdings which will be used to partially fund the Rowe Price-Fleming acquisition. We expect that investment income will decrease from the second to the third quarter this year and be significantly lower next year. Operating expenses increased 20% to $180 million. Greater compensation and related costs, which were up $9.7 million or 12%, were attributable to increases in our rates of compensation, including performance-related bonuses, and a 3% increase in our staff size primarily to support the growing investment-related administrative services and technology-based operations. As of June 30, 2000, we employed more than 3,700 associates. Our advertising and promotion expenditures increased 30% to $21 million. We expect that our promotional spending will continue to moderate in the third quarter of 2000, though remain at a level higher than the comparable 1999 period. Occupancy and equipment expense was $6 million higher due primarily to the expansion of our operating facilities in Owings Mills. International investment research fees were up $2.1 million as international assets under management increased $5.9 billion from June 30, 1999 to $39.2 billion this period end. Other operating expenses increased $7.2 million due to the expansion of our operations. RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2000 VERSUS 1999. Net income increased $37.3 million or 35% to $144.4 million and diluted earnings per share rose from $.82 to $1.12. Total revenues increased 26% from $492 million to $617 million, led by increases of $78.1 million in investment advisory fees and $26.9 million in investment income. Investment advisory revenues earned from the T. Rowe Price mutual funds increased $57.5 million as average fund assets under management during the first six months were $114.4 billion, $17.4 billion more than in the first half of 1999. Fund assets increased $837 million during the first six months of 2000 and totaled $115.3 billion at June 30, including $93.6 billion in stock and blended assets funds. Net cash outflows from the funds during the first six months totaled $519 million. Outflows of $210 million from international stock funds and $670 million from bond and money market funds were partially offset by inflows of $361 million into domestic stock funds. Greater assets in other managed investment portfolios resulted in the balance of our advisory revenue gains totaling $20.6 million. Performance-related advisory fees were $9.7 million in the first half of 2000, up $.9 million from the first six months of 1999. 11 Administrative fees from advisory-related services rose $20.4 million from the first half of 1999 to $118.0 million. This increase is mostly attributable to transfer agency and recordkeeping services that we provide to defined contribution retirement plans and the T. Rowe Price mutual funds. Discount brokerage commissions contributed $1.9 million of the revenue increase. Investment and other income rose $26.9 million from the first six months of 1999, including $5.6 million from our larger money market fund balances, $4.1 million from mutual fund dispositions in the second quarter of 2000, and $16.0 million from our venture capital investments. The strong IPO markets of late 1999 and early 2000 produced significant market gains and distributions from our venture investments this year. Operating expenses increased 22% to about $366 million. International investment research fees were up $6.0 million as international assets under management increased $5.9 billion from June 30, 1999. CAPITAL RESOURCES AND LIQUIDITY. We expect to finance the Rowe Price-Fleming International acquisition discussed in Note 3 on page 7 of this Form 10-Q from available cash resources, including current cash holdings of more than $500 million and borrowings of approximately $300 million from the five-year, $500 million syndicated bank credit facility that we obtained in June 2000. We have also obtained a complementary $100 million, 364-day syndicated bank credit facility. FORWARD-LOOKING INFORMATION. From time-to-time, information or statements provided by or on behalf of T. Rowe Price, including those within this Form 10-Q Quarterly Report, may contain certain "forward-looking information," including information relating to anticipated growth in our revenues or earnings, anticipated changes in the amount and composition of assets under management, our anticipated expense levels, and our expectations regarding financial market and other conditions. Readers are cautioned that any forward-looking information provided by or on behalf of T. Rowe Price is not a guarantee of future performance. Actual results may differ materially from those in forward-looking information as a result of various factors, including but not limited to those discussed below. Further, such forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. Our future revenues will fluctuate due to many factors, such as the total value and composition of assets under our management and related cash inflows 12 or outflows in the T. Rowe Price mutual funds and other investment portfolios; fluctuations in worldwide financial markets, including those in emerging countries, resulting in appreciation or depreciation of assets under our management; the relative investment performance of the Pric mutual funds and other investment portfolios as compared to competing offerings and market indices; the extent to which we earn performance-based investment advisory fees; the expense ratios of the Price mutual funds; investor sentiment and investor confidence; the ability to maintain our investment management and administrative fees at appropriate levels; competitive conditions in the mutual fund, asset management, and broader financial services sectors; our introduction of new mutual funds and investment portfolios; our ability to contract with the Price mutual funds for payment for investment advisory-related administrative services provided to the funds and their shareholders; the continuation of trends in the retirement plan marketplace favoring defined contribution plans and participant-directed investments; and the amount and timing of income recognized on our venture capital and other investments. Our revenues are substantially dependent on fees earned under contracts with the Price funds and could be adversely affected if the independent directors of one or more of the Price funds determined to terminate or significantly alter the terms of the investment management or related administrative services agreements. Our future operating results are also dependent upon the level of our operating expenses, which are subject to fluctuation for the following or other reasons: changes in the level of advertising expenses in response to market conditions or other factors; variations in the level of compensation expense due to, among other things, performance-based bonuses, changes in our employee count and mix, and competitive factors; changes in expense levels resulting from our pending acquisition of the minority interests in Rowe Price-Fleming International, including goodwill charges and interest expense, and from differences in the manner in which we provide support for our international investment advisory services; expenses and capital costs, such as technology assets, depreciation, amortization and research and development, incurred to maintain and enhance our administrative and operating services infrastructure including Internet capabilities; unanticipated costs that may be incurred to protect investor accounts and the goodwill of our clients; and disruptions of services, including those provided by third parties such as communications, power, and the mutual fund transfer agent system. Our business is also subject to substantial governmental regulation, and changes in legal, regulatory, accounting, tax, and compliance requirements may have a substantial effect on our operations and results, including but not limited to effects on costs we incur and effects on investor interest in mutual funds and investing in general or in particular classes of mutual funds or other investments. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Since December 31, 1999, there has been no material change in the information provided in Item 7A of the 1999 Form 10-K Annual Report. 13 PART II. OTHER INFORMATION. ITEM 1. LEGAL PROCEEDINGS. On July 6, 1998, Rowe Price-Fleming, the T. Rowe Price International Stock Fund and the fund's five directors were named as defendants in Migdal v. Rowe Price-Fleming International, Inc., et al., filed in the United States District Court for the District of Maryland. The Complaint sought to invalidate the advisory agreement between Rowe Price-Fleming and the International Stock Fund, and sought recovery of an unspecified amount of advisory fees paid by the International Stock Fund to Rowe Price-Fleming. Plaintiffs alleged that the International Stock Fund does not have a sufficient number of independent directors, as required by the Investment Company Act of 1940, as amended, because its independent directors serve on multiple boards of directors within the T. Rowe Price mutual fund complex and receive substantial compensation in the form of director fees. On October 12, 1998, the plaintiffs filed an Amended Complaint adding as a plaintiff Linda B. Rohrbaugh, a shareholder in the T. Rowe Price Growth Stock Fund. The Amended Complaint also added as defendants the T. Rowe Price Growth Stock Fund, T. Rowe Price Associates and certain of its subsidiaries which provide services to the funds, as well as five directors of the T. Rowe Price Growth Stock Fund. On January 21, 1999, the Amended Complaint was dismissed with leave for plaintiffs to re-file. On February 16, 1999, the plaintiffs filed a Second Amended Complaint, but the fund directors were excluded as defendants. The Second Amended Complaint alleged a claim under Section 36(b) of the Investment Company Act of 1940. The Complaint sought to invalidate the advisory and service agreements negotiated between the corporate defendants and certain T. Rowe Price funds based on a claim that (i) the fees paid to the corporate defendants were excessive and (ii) the advisory agreements were not negotiated at arm's length because each of the boards of directors of the Price funds is not independent as required under the Investment Company Act of 1940. On March 19, 1999, we and the other defendants filed a Motion to Dismiss the Second Amended Complaint. In an order dated March 20, 2000, our motion was granted and the case dismissed with prejudice. On April 6, 2000, the plaintiffs filed a Notice of Appeal of the Dismissal of the case. On June 16, 2000, we and the other defendants filed a Brief with the United States Court of Appeals (Fourth Circuit) to affirm the District Court's judgment. From time to time, claims arise in the ordinary course of our business, including employment-related claims. After consulting with counsel, we believe it unlikely that any adverse determination in one or more pending claims would have a material adverse effect on our financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. A special meeting of our stockholders was held on June 30, 2000. The proxy statement and solicitation pertaining to this meeting were previously filed with the Commission. Shares eligible to vote were 120,748,550 as of the record date of April 24, 2000. 14 The Agreement and Plan of Share Exchange by and between T. Rowe Price Associates and T. Rowe Price Group provides that Price Associates shall become a wholly-owned subsidiary of Price Group, and each outstanding share of Price Associates' common stock shall be exchanged for one share of Price Group's common stock. The Agreement was approved by a vote of 85,475,059 for; 760,669 against; and 375,400 abstentions. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The following exhibits required to be filed by Item 601 of Regulation S-K are filed herewith and incorporated by reference herein. Exhibits 10.06 through 10.11 are compensatory plan arrangements. 2.01 Agreement and Plan of Exchange as of April 30, 2000 between T. Rowe Price Associates, Inc. and T. Rowe Price Group, Inc. (Incorporated by reference from Form 424B3; Accession No. 0001113169-00-000003.) 2.02 Form of Articles of Share Exchange between T. Rowe Price Associates, Inc. and T. Rowe Price Group, Inc. (Incorporated by reference from Form 424B3; Accession No. 0001113169-00-000003.) 2.03 Stock Purchase Agreement dated as of April 11, 2000 by and between Robert Fleming Holdings Limited and its wholly owned subsidiaries Jardine Fleming International Holdings Limited and Copthall Overseas Limited, T. Rowe Price Associates, Inc., and The Chase Manhattan Corporation. 3.(i) Composite Restated Charter of T. Rowe Price Associates, Inc. as of April 16, 1998. (Incorporated by reference from Form 10-Q Report for the quarterly period ended March 31, 1998; Accession No. 0000080255-98-000361.) 3.(ii) Amended and Restated By-Laws of T. Rowe Price Associates, Inc. as of April 17, 1997. (Incorporated by reference from Form 10-Q Report for the quarterly period ended June 30, 1997; Accession No. 0000080255-97-000369.) 4.01 $500,000,000 Five-Year Credit Agreement among T. Rowe Price Associates, Inc., the several lenders, and The Chase Manhattan Bank, as administrative agent. 10.01 Representative Investment Management Agreement with each of the T. Rowe Price mutual funds. (Incorporated by reference from Form N-1A/A; Accession No. 0001046404-97-000008.) 10.02 Transfer Agency and Service Agreement dated as of January 1,2000 between each of the T. Rowe Price mutual funds and T. Rowe Price Services, Inc. (Incorporated by reference from Form 485BPOS; Accession No. 0001012968-00-000024.) 15 10.03 Agreement dated January 1, 2000, as amended February 9, 2000, between T. Rowe Price Retirement Plan Services, Inc. and each of the T. Rowe Price taxable mutual funds. (Incorporated by reference from Form 485BPOS; Accession No. 0001012968-00-000024.) 10.04 Representative Underwriting Agreement between each of the T. Rowe Price mutual funds and T. Rowe Price Investment Services, Inc. (Incorporated by reference from Form N-1A/A; Accession No. 0001046404-97-000008.) 10.05 Amended, Restated, and Consolidated Office Lease dated as of May 22, 1997 between 100 East Pratt Street Limited Partnership and T. Rowe Price Associates, Inc. (Incorporated by reference from Form 10-K for 1997; Accession No. 0000080255-98-000358.) 10.06 T. Rowe Price Associates, Inc. 1990 Stock Incentive Plan. (Incorporated by reference from Form S-8 Registration Statement [File No. 33-37573].) 10.07 T. Rowe Price Associates, Inc. 1993 Stock Incentive Plan. (Incorporated by reference from Form S-8 Registration Statement [File No. 33-72568].) 10.08 T. Rowe Price Associates, Inc. 1995 Director Stock Option Plan. (Incorporated by reference from Form DEF 14A; Accession No. 000933259-95-000009; CIK 0000080255.) 10.09 T. Rowe Price Associates, Inc. 1996 Stock Incentive Plan. (Incorporated by reference from Form DEF 14A; Accession No. 0001006199-96-000031; CIK 0000080255.) 10.10 T. Rowe Price Associates, Inc. 1998 Director Stock Option Plan. (Incorporated by reference from Form DEF 14A; Accession No. 00080255-98-000355.) 10.11 Executive Incentive Compensation Plan. (Incorporated by reference from Form DEF 14A; Accession No. 933259-95-000009; CIK 0000080255.) 15 Letter from PricewaterhouseCoopers LLP, independent accountants, re unaudited interim financial information. 27 Financial Data Schedule. (b) Reports on Form 8-K: None during the second quarter of 2000. 16 SIGNATURES. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on July 26, 2000. T. Rowe Price Associates, Inc. /s/ George A. Roche Chairman, President & Principal Financial Officer /s/ Joseph P. Croteau, CPA Vice President, Treasurer & Controller