-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q8D5IyjkF/w4Pv2nPzmAQ6sxz3Qhhgv9fY5LmdG2yJJeDk0hgZP2e0p6J+SwlnQx Plw/LT0/l1khykYERrwwFQ== 0000080255-99-000495.txt : 19990428 0000080255-99-000495.hdr.sgml : 19990428 ACCESSION NUMBER: 0000080255-99-000495 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE ASSOCIATES INC /MD/ CENTRAL INDEX KEY: 0000080255 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200] IRS NUMBER: 520556948 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14282 FILM NUMBER: 99601492 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: (410) 345- MAIL ADDRESS: STREET 1: P.O. BOX 89000 CITY: BALTIMORE STATE: MD ZIP: 21289 10-Q 1 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: MARCH 31, 1999. 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. 121,031,014 SHARES AT APRIL 23, 1999. Exhibit index is at Item 6(a) on page 14. 2 PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. T. ROWE PRICE ASSOCIATES, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) 12/31/98 03/31/99 ________ ________ ASSETS Cash and cash equivalents $283,838 $346,830 Accounts receivable 100,702 105,515 Investments in sponsored mutual funds 192,914 194,664 Partnership and other investments 26,597 22,130 Property and equipment 166,612 174,089 Other assets 26,121 18,668 ________ ________ $796,784 $861,896 ________ ________ ________ ________ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable and accrued expenses $ 45,737 $ 35,374 Accrued compensation and retirement costs 56,757 53,302 Income taxes payable 15,308 40,781 Dividends payable 12,012 12,088 Minority interests in consolidated subsidiaries 52,666 58,269 ________ ________ Total liabilities 182,480 199,814 ________ ________ 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 120,183,266 shares in 1998 and 120,893,546 shares in 1999 24,037 24,179 Capital in excess of par value 41,073 46,727 Retained earnings 517,631 558,955 Accumulated other comprehensive income 31,563 32,221 ________ ________ Total stockholders' equity 614,304 662,082 ________ ________ $796,784 $861,896 ________ ________ ________ ________ 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 ended ___________________ 03/31/98 03/31/99 ________ ________ Revenues Investment advisory fees $163,717 $190,877 Administrative fees 42,164 49,217 Investment and other income 4,553 5,731 ________ ________ 210,434 245,825 ________ ________ Expenses Compensation and related costs 70,400 81,463 Advertising and promotion 20,072 20,225 Occupancy and equipment 18,885 20,947 International investment research fees 12,560 12,144 Other operating expenses 12,921 15,810 ________ ________ 134,838 150,589 ________ ________ Income before income taxes and minority interests 75,596 95,236 Provision for income taxes 28,927 36,288 ________ ________ Income from consolidated companies 46,669 58,948 Minority interests in consolidated subsidiaries 5,379 5,536 ________ ________ Net income $ 41,290 $ 53,412 ________ ________ ________ ________ Basic earnings per share $ .35 $ .44 ________ ________ ________ ________ Diluted earnings per share $ .32 $ .41 ________ ________ ________ ________ Dividends declared per share $ .085 $ .10 ________ ________ ________ ________ Weighted average shares outstanding 118,495 120,512 ________ ________ ________ ________ Weighted average shares outstanding assuming dilution 129,933 129,589 ________ ________ ________ ________ 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) Three months ended __________________ 03/31/98 03/31/99 ________ ________ Cash flows from operating activities Net income $ 41,290 $ 53,412 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization of property and equipment 7,928 7,600 Minority interests in consolidated subsidiaries 5,379 5,536 Income taxes accrued but not paid 19,632 36,073 Other changes in assets and liabilities (13,251) (10,934) ________ ________ Net cash provided by operating activities 60,978 91,687 ________ ________ Cash flows from investing activities Investments in sponsored mutual funds (9,813) (664) Partnership and other investments (566) (7,541) Distributions from partnership investments 497 4,368 Additions to property and equipment (11,130) (15,209) ________ ________ Net cash used in investing activities (21,012) (19,046) ________ ________ Cash flows from financing activities Purchases of stock -- (1,007) Receipts relating to stock issuances 2,471 3,393 Dividends paid to stockholders (10,039) (12,012) Distributions to minority interests (17,014) (23) ________ ________ Net cash used in financing activities (24,582) (9,649) ________ ________ Cash and cash equivalents Net increase during period 15,384 62,992 At beginning of year 200,409 283,838 ________ ________ At end of period $215,793 $346,830 ________ ________ ________ ________ 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, 1998, 120,183,266 common shares $24,037 $41,073 $517,631 $ 31,563 $614,304 Comprehensive income Net income 53,412 Change in unrealized security holding gains 658 Total comprehensive income 54,070 743,780 common shares issued under stock-based compensation plans 149 6,654 6,803 33,500 common shares repurchased (7) (1,000) (1,007) Dividends declared (12,088) (12,088) _______ _______ ________ _______ ________ Balance at March 31, 1999, 120,893,546 common shares $24,179 $46,727 $558,955 $32,221 $662,082 _______ _______ ________ _______ ________ _______ _______ ________ _______ ________ 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, Inc. and its consolidated subsidiaries (the Company) derives its revenue and net income primarily from investment advisory services provided to individual and institutional investors in the Company's sponsored mutual funds and private account investment portfolios. The Company also provides investment advisory clients with related administrative services, including mutual fund transfer agent, defined contribution retirement plan recordkeeping, discount brokerage, and trust services. The Company's clients are primarily domiciled in the United States of America. Investment advisory revenues are largely dependent on the total value and composition of assets under management; accordingly, fluctuations in financial markets and in the composition of assets under management impact revenues and results of operations. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The unaudited interim financial information contained in the condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the 1998 Annual Report. NOTE 2 - INFORMATION ABOUT REVENUES AND SERVICES. The Company's revenues (in thousands) from advisory services provided under agreements with its sponsored mutual funds and other investment clients during the first quarter include: 1998 1999 _________ _________ Sponsored mutual funds Stock and balanced Domestic $ 70,879 $ 80,681 International 28,780 27,940 Bond and money market 21,831 24,322 ________ ________ 121,490 132,943 Other portfolios 42,227 57,934 ________ ________ Total investment advisory fees $163,717 $190,877 ________ ________ ________ ________ The following table summarizes the various investment portfolios and assets under management (in billions) on which the Company earns its advisory fees. 7 Average during first quarter _______________ 1998 1999 12/31/98 03/31/99 ______ ______ ________ ________ Sponsored mutual funds Stock and balanced Domestic $ 48.9 $ 56.2 $ 55.9 $ 56.8 International 16.3 16.0 16.4 16.2 Bond and money market 19.8 22.2 22.1 22.5 ______ ______ ______ ______ 85.0 94.4 94.4 95.5 Other portfolios 45.9 53.4 53.4 53.7 ______ ______ ______ ______ $130.9 $147.8 $147.8 $149.2 ______ ______ ______ ______ ______ ______ ______ ______ Fees for advisory-related administrative services provided to the funds were $31,021,000 and $36,222,000 in the first quarter of 1998 and 1999, respectively. Accounts receivable from the funds aggregate $59,052,000 at March 31, 1999. NOTE 3 - CHANGE IN ACCOUNTING PRINCIPLE. On January 1, 1999, the Company prospectively adopted a new accounting principle requiring the capitalization and subsequent amortization of certain costs of computer software developed or obtained for internal use. This change is not material to results of operations for the first quarter of 1999. NOTE 4 - SUBSEQUENT EVENT. On April 2, 1999, the Company borrowed 1,809,500,000 yen from a bank under a five-year promissory note due in installments of 180,950,000 yen in each of 2002 and 2003 and the balance of 1,447,600,000 yen in 2004. Interest is due quarterly at LIBOR for yen-denominated transactions plus .95% and is fixed for the first two years of the borrowing at 1.42%. On April 5, 1999, the Company used the proceeds of the borrowing to acquire a 10% interest in Daiwa SB Investments Ltd., a Japan-based investment management venture with The Sumitomo Bank and Daiwa Securities Co. The Company will account for its investment using the cost method. The Company has recorded both its yen borrowing and investment at $15,019,000. 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 March 31, 1999 and for the three-month periods ended March 31, 1998 and 1999, 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 generally accepted auditing standards, 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 generally accepted accounting principles. We previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1998, and the related consolidated statements of income, of cash flows, and of stock- holders' equity for the year then ended (not presented herein), and in our report dated January 26, 1999 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, 1998, 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 April 19, 1999 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. The Company derives its revenue and net income primarily from investment advisory services provided to individual and institutional investors in the Company's sponsored mutual funds and private account investment portfolios. The Company also provides investment advisory clients with related administrative services, including mutual fund transfer agent, defined contribution retirement plan recordkeeping, discount brokerage, and trust services. The Company's clients are primarily domiciled in the United States. The Company's base of assets under management consists of 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 its individual and institutional investment advisory clients. Investment advisory revenues are largely dependent on the total value and composition of assets under management; accordingly, fluctuations in financial markets and in the composition of assets under management impact revenues and results of operations. At March 31, 1999, assets under management totaled $149.2 billion, including $95.5 billion in the mutual funds. Equity investments comprise 73% of all assets under management at the end of March 1999. This management's discussion and analysis should be read in conjunction with that contained in the 1998 Annual Report. RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1999 VERSUS 1998. Net income increased $12.1 million or 29% to $53.4 million, or diluted earnings per share of $0.41, from $41.3 million or diluted earnings per share of $0.32. Total revenues increased about 17% from $210 million to nearly $246 million, led by an increase of $27 million in investment advisory fees. Investment advisory revenues earned from the mutual fund investment portfolios increased $11.5 million as average mutual fund assets under management were $94.4 billion, almost $9.4 billion more than during the 1998 period. First quarter average fund assets reflect the full lagged effect of asset growth in late 1998. Fund assets were up $1.1 billion during the first quarter and totaled $95.5 billion at March 31, 1999, including nearly $73 billion in stock and balanced funds. Net cash inflows to the funds during the quarter totaled $250 million, including inflows of $400 million into domestic stock funds and $350 million into the bond and money market funds, offset in part by outflows of $500 million from international stock funds. The balance of the increase in mutual fund assets was due to appreciation and reinvested income. Fees earned from other investment portfolios contributed the balance of the advisory revenue gains, including $7.1 million of increased performance-based advisory fees earned primarily on assets managed in sponsored partnerships. Assets under management in other investment portfolios rose to $53.7 billion at March 31, 1999, up $300 million since 10 year-end 1998. Total assets under management closed the quarter at $149.2 billion, up from $147.8 billion at the end of 1998. International assets under management by the Company's 50% owned consolidated subsidiary, Rowe Price-Fleming International, ended the 1999 quarter at $32.4 billion, including $17.3 billion in the mutual funds. Administrative fees from advisory-related services to the funds and their shareholders rose $7 million to $49.2 million. These increases were primarily attributable to defined contribution retirement plan recordkeeping and mutual fund transfer agent services; however, increased operating expenses, including preparations for Year 2000 processing, offset these gains. Commissions earned on greater trading volume in discount brokerage contributed $2.1 million of the revenue increase. Investment and other income rose $1.2 million, including $0.9 million of income from greater money market and other mutual fund investments. Operating expenses increased 12% to $150.6 million. Greater compensation and related costs, which were up $11.1 million, were attributable to increases in rates of compensation, including performance-related bonuses, and an 11% increase in staff size primarily to support the Company's growing investment- related administrative services and technology support operations. At March 31, 1999, the Company employed nearly 3,600 associates. Advertising and promotion expenditures increased less than 1% as compared with the 1998 period. These expenditures will vary over time as market conditions and cash flows to the funds warrant. Occupancy and equipment expense was up due to the expansion of operating facilities and equipment acquisitions, primarily investments in technology. Other expenses increased $2.9 million in support of the Company's growing operations. CAPITAL RESOURCES AND LIQUIDITY. See Note 4 on page 7 of this Form 10-Q Quarterly Report for a discussion concerning borrowings and investments. YEAR 2000 PROCESSING ISSUE UPDATE. In April 1999, the Company completed its participation in the street-wide testing conducted by the Securities Industry Association (SIA) and securities industry firms. Results of the testing are pending SIA publication. The following chart summarizes the Company's estimated timetable and current state of completion for its mission critical systems efforts including those related to the mutual fund transfer agency system, which is maintained by a third-party service provider. 11 Stages Target date Current state of completion _____________________________ ___________ ___________________________ Identification and assessment Complete Complete Remediation Complete Complete Internal testing Complete Complete Point-to-point testing 06/30/99 More than 75% Implementation 06/30/99 More than 75% The Company is developing a contingency plan for its mission critical systems and external dependencies. However, in an operation as complex as providing global investment advisory services, there are limited alternatives to certain mission critical systems and third-party providers, including electrical power and communications services. If these services or mission critical systems such as the mutual fund transfer agent system fail for an extended period of time, there would likely be a material adverse effect on the Company's business, results of operations and financial condition. Although the Company is investigating alternative solutions, it is unlikely that any adequate contingency plan can be developed for any prolonged failure of these mission critical services and systems. Additionally, the investment portfolios from which the Company derives the majority of its revenues could be subject to increased credit, market and liquidity risk arising from the impact of Year 2000 issues on the issuers of individual securities. The Company's investment staff are assessing the Year 2000 risks in the investment portfolios with particular attention to the more significant holdings. Their findings are included in the information used in making investment decisions. This process applies to actively managed portfolios, but not to the index-based investment portfolios where investments are generally determined by the composition of a third-party index. Additionally, governments and financial markets around the world could be affected by Year 2000 issues. To the extent that the market prices of securities are negatively impacted by these or other Year 2000 issues, the Company's investment advisory revenues, results of operations and financial condition could be materially adversely affected. FORWARD-LOOKING INFORMATION. Information or statements provided by or on behalf of the Company from time to time, including those within this Form 10-Q Quarterly Report, may contain certain "forward-looking information," including information relating to anticipated growth in revenues or earnings per share, anticipated changes in the amount and composition of assets under management, anticipated expense levels, and expectations regarding financial market conditions. The Company cautions readers that any forward-looking information provided by or on behalf of the Company 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 the Company undertakes 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. 12 In addition to those factors discussed above with respect to the Year 2000 processing issue, the Company's future revenues may fluctuate due to other factors such as: the total value and composition of assets under management and related cash inflows or outflows in mutual funds and private account investment portfolios; fluctuations in the worldwide financial markets, including those in emerging countries, resulting in appreciation or depreciation of assets under management; the relative investment performance of the Company's sponsored mutual funds and other investment portfolios as compared to competing offerings and market indices; the extent to which performance-based investment advisory fees are earned from private account investment portfolios; the expense ratios of the Company's sponsored mutual funds; investor sentiment and investor confidence; the ability of the Company to maintain investment management and administrative fees at appropriate levels; competitive conditions in the mutual funds industry; the introduction of new mutual funds and investment portfolios; the ability of the Company to contract with the 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 the Company's investment portfolio. The Company's revenues are substantially dependent on fees earned under contracts with the funds and could be adversely affected if the independent directors of one or more of the funds determined to terminate or significantly alter the terms of one or more investment management and/or related administrative services agreements. The Company's future operating results are also dependent upon the level of 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 incurred by the Company, including performance-based compensation based on the Company's financial results, as well as changes in response to the size of the total employee population, competitive factors, or other reasons; changes in the manner in which the Company provides international investment services; expenses and capital costs, including depreciation, amortization and other non-cash charges, incurred by the Company to maintain its administrative and services infrastructure, including costs incurred with respect to readiness for Year 2000 processing; unanticipated costs that may be incurred by the Company from time to time to protect investor accounts and client goodwill; and third-party noncompliance in Year 2000 processing. The Company's business is also subject to substantial governmental regulation, and changes in legal, regulatory, accounting, tax, and compliance requirements may have a substantial effect on the Company's business and results of operations, including but not limited to effects on the level of costs incurred by the Company and effects on investor interest in mutual funds and investing in general or in particular classes of mutual funds or other investments. 13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Since December 31, 1998, there has been no material change in the information provided in Item 7A of the 1998 Form 10-K Annual Report. PART II. OTHER INFORMATION. ITEM 1. LEGAL PROCEEDINGS. On July 6, 1998, RPFI, the T. Rowe Price International Stock Fund (the International Stock Fund) and its five directors were named as defendants in an action, 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 RPFI and the International Stock Fund, and sought recovery of an unspecified amount of advisory fees paid by the International Stock Fund to RPFI. This action was based on an allegation 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 T. Rowe Price Growth Stock Fund, T. Rowe Price Associates, and three of the Company's wholly-owned subsidiaries (T. Rowe Price Investment Services, T. Rowe Price Services and T. Rowe Price Retirement Plan Services) 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, though the fund directors were excluded as defendants. The Second Amended Complaint alleges a claim under Section 36(b) of the Investment Company Act of 1940. The Complaint seeks 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 arms length because each of the board of directors of the Price funds are not independent as required under the Investment Company Act of 1940. On March 19, 1999, T. Rowe Price and the other defendants filed a Motion to Dismiss Second Amended Complaint. On April 19, 1999, the plaintiffs filed a Memorandum in Opposition to Defendants' Motion to Dismiss the Second Amended Complaint. The Company continues to believe that the factual and legal basis on which the complaint is based is wholly unfounded, and the Company and the other defendants intend to defend the case vigorously. Accordingly, the Company does not believe that the ultimate resolution of this matter will have a 14 material adverse effect on the financial condition or results of operations of the Company. From time to time, the Company is a party to various claims arising in the ordinary course of business, including employment-related claims. In the opinion of management, after consultation with counsel, it is unlikely that any adverse determination in one or more pending claims would have a material adverse effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The 1999 annual meeting of the Company's stockholders was held on April 15, 1999. The Company's proxy statement and solicitation pertaining to this meeting were previously filed with the Commission. Shares eligible to vote were 120,538,067 as of the record date of February 16, 1999. Management's 13 nominees for the Board of Directors were elected to hold office until the next annual meeting of stockholders and until their respective successors are elected and qualify. The tabulation of votes was: Nominee For Withheld ________________ ___________ _________ J.E. Halbkat, Jr. 104,846,889 4,238,658 H.H. Hopkins 107,388,177 1,697,370 J.A.C. Kennedy 107,017,660 2,067,887 J.H. Laporte 107,398,738 1,686,809 R.L. Menschel 107,372,988 1,712,559 W.T. Reynolds 107,394,357 1,691,190 J.S. Riepe 107,394,578 1,690,969 G.A. Roche 107,275,052 1,810,495 B.C. Rogers 107,394,848 1,690,699 R.L. Strickland 107,383,239 1,702,308 M.D. Testa 107,348,830 1,736,717 P.C. Walsh 107,365,855 1,719,692 A.M. Whittemore 107,392,557 1,692,990 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 10.07 through 10.13 are compensatory plan arrangements. 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.) 15 10.01 Form of Investment Management Agreement with each of the T. Rowe Price Funds. (Incorporated by reference from Form N-1A; Accession No. 0000775688-99-000003.) 10.02 Transfer Agency and Service Agreement dated as of January 1, 1999 between each of the T. Rowe Price Funds and T. Rowe Price Services, Inc. (Incorporated by reference from Form N- 1A; Accession No. 0000775688-99-000003.) 10.03 Agreement dated January 1, 1999 between T. Rowe Price Retirement Plan Services, Inc. and each of the T. Rowe Price Taxable Funds. (Incorporated by reference from Form N-1A; Accession No. 0000775688-99-000003.) 10.04 Form of Underwriting Agreement between each of the T. Rowe Price Funds and T. Rowe Price Investment Services, Inc. (Incorporated by reference from Form N-1A; Accession No. 0000775688-99-000003.) 10.05 Agreement dated February 11, 1998 between TRP Suburban Second, Inc. and Riparius Construction, Inc. as Construction Manager and Constructor (Incorporated by reference from the paper filing of March 26, 1998, pursuant to a continuing hardship exemption, on Form SE to the 1997 Form 10-K [Accession No. 0000080255-98-00358].) 10.06 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.) 10.07 1986 Employee Stock Purchase Plan of T. Rowe Price Associates, Inc. as Amended to April 5, 1990. (Incorporated by reference from Exhibit A to the Definitive Proxy Statement for the 1990 Annual Meeting of Stockholders which is included in the 1989 Annual Report on Form 10-K [File No. 0-14282].) 10.08 T. Rowe Price Associates, Inc. 1986 Stock Incentive Plan. (Incorporated by reference from Form S-1 Registration Statement [File No. 33-3398].) 10.09 T. Rowe Price Associates, Inc. 1990 Stock Incentive Plan. (Incorporated by reference from Form S-8 Registration Statement [File No. 33-37573].) 10.10 T. Rowe Price Associates, Inc. 1993 Stock Incentive Plan. (Incorporated by reference from Form S-8 Registration Statement [File No. 33-72568].) 16 10.11 T. Rowe Price Associates, Inc. 1995 Director Stock Option Plan. (Incorporated by reference from Form DEF 14A; Accession No. 000933259-95-000009; CIK 0000080255.) 10.12 T. Rowe Price Associates, Inc. 1996 Stock Incentive Plan (Incorporated by reference from Form DEF 14A; Accession No. 0001006199-96-000031; CIK 0000080255.) 10.13 T. Rowe Price Associates, Inc. 1998 Director Stock Option Plan. (Incorporated by reference from Form DEF 14A; Accession No. 00080255-98-000355.) 15 Letter from PricewaterhouseCoopers LLP, independent accountants, re unaudited interim financial information. 27 Financial Data Schedule. (b) Reports on Form 8-K: None were filed during the first quarter of 1999. 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 April 26, 1999. T. Rowe Price Associates, Inc. /s/ Alvin M. Younger, Jr., Managing Director, Chief Financial & Accounting Officer, Treasurer and Secretary EX-15 2 EXHIBIT 15 April 19, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that our report dated April 19, 1999 (issued pursuant to the provisions of Statement on Auditing Standards No. 71) is incorporated by reference in the Prospectuses constituting parts of T. Rowe Price Associates, Inc.'s Registration Statements on Form S-8 (No. 033-07012, No. 033-08672, No. 033-37573, No. 033-72568, No. 033-58749 and No. 333-20333). We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, /s/ PricewaterhouseCoopers LLP EX-27 3
5 This schedule contains summary financial information extracted from the unaudited condensed consolidated financial statements of T. Rowe Price Associates, Inc. included in Part I, Item 1 of the accompanying Form 10-Q Quarterly Report for the period ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0000080255 T. ROWE PRICE ASSOCIATES, INC. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 346,830,000 194,664,000 105,515,000 0 0 0 174,089,000 0 861,896,000 0 0 0 0 24,179,000 637,903,000 861,896,000 0 245,825,000 0 150,589,000 0 0 0 95,236,000 36,288,000 53,412,000 0 0 0 53,412,000 .44 .41 Item is not contained in registrant's unclassified balance sheet. Item is reported net of accumulated depreciation at interim. Not reported at interim. Basic earnings per share.
-----END PRIVACY-ENHANCED MESSAGE-----