-----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, L+Twb+S3ctrC9ckpS19XDSpL5bDHEasGfWUdPsCR30Iu+30flTY2/+3Jodl45GIu m1E6Av9RvQ6BpeR2yNLveA== 0000080255-98-000397.txt : 19981111 0000080255-98-000397.hdr.sgml : 19981111 ACCESSION NUMBER: 0000080255-98-000397 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE ASSOCIATES INC /MD/ CENTRAL INDEX KEY: 0000080255 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] 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: 98743352 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: (410) 345-2000 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: SEPTEMBER 30, 1998. 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. 119,281,143 SHARES AT NOVEMBER 9, 1998. Exhibit index is at Item 6(a) on page 13. 2 PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. T. ROWE PRICE ASSOCIATES, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) 12/31/97 09/30/98 ________ ________ ASSETS Cash and cash equivalents $200,409 $287,780 Accounts receivable 86,795 91,943 Investments in sponsored mutual funds 173,729 164,202 Partnership and other investments 19,030 16,100 Property and equipment (Note 2) 142,497 157,645 Other assets 23,607 14,215 ________ ________ $646,067 $731,885 ________ ________ ________ ________ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable and accrued expenses $ 30,722 $ 28,570 Accrued compensation and retirement costs 49,694 74,263 Income taxes payable 19,102 6,896 Dividends payable 10,039 10,121 Minority interests in consolidated subsidiaries 49,837 48,580 ________ ________ Total liabilities 159,394 168,430 ________ ________ Commitments and contingent liabilities (Note 2) Stockholders' equity Preferred stock, undesignated, $.20 par value - authorized and unissued 20,000,000 shares -- -- Common stock, $.20 par value - authorized 200,000,000 shares in 1997 and 500,000,000 shares in 1998; issued 59,097,705 shares in 1997 and 119,132,378 shares in 1998 (Note 3) 11,819 23,826 Capital in excess of par value 30,707 30,380 Retained earnings 415,279 487,173 Accumulated other comprehensive income 28,868 22,076 ________ ________ Total stockholders' equity 486,673 563,455 ________ ________ $646,067 $731,885 ________ ________ ________ ________ 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 Nine months ended ended September 30, September 30, ________________ _________________ 1997 1998 1997 1998 ________ _______ ________ ________ Revenues Investment advisory fees $158,233 $170,214 $429,079 $510,681 Administrative fees 37,533 42,919 107,362 128,444 Investment and other income 4,003 5,426 11,375 12,177 ________ ________ ________ ________ 199,769 218,559 547,816 651,302 ________ ________ ________ ________ Expenses Compensation and related costs 66,623 78,153 188,062 224,459 Advertising and promotion 13,419 13,764 44,618 50,819 Occupancy and equipment 18,934 22,293 47,679 61,249 International investment research fees 13,145 10,657 35,884 35,770 Other operating expenses 13,029 15,223 39,531 43,186 ________ ________ ________ ________ 125,150 140,090 355,774 415,483 ________ ________ ________ ________ Income before income taxes and minority interests 74,619 78,469 192,042 235,819 Provision for income taxes 27,968 30,094 73,254 90,623 ________ ________ ________ ________ Income from consolidated companies 46,651 48,375 118,788 145,196 Minority interests in consolidated subsidiaries 5,314 5,401 15,122 16,063 ________ ________ ________ ________ Net income $ 41,337 $ 42,974 $103,666 $129,133 ________ ________ ________ ________ ________ ________ ________ ________ Basic earnings per share $ .36 $ .36 $ .89 $ 1.08 ________ ________ ________ ________ ________ ________ ________ ________ Diluted earnings per share $ .32 $ .33 $ .81 $ .99 ________ ________ ________ ________ ________ ________ ________ ________ Dividends declared per share $ .065 $ .085 $ .195 .255 ________ ________ ________ ________ ________ ________ ________ ________ Weighted average shares outstanding 116,331 119,429 115,904 119,047 ________ ________ ________ ________ ________ ________ ________ ________ Weighted average shares outstanding- assuming dilution 128,508 130,096 127,545 130,209 ________ ________ ________ ________ ________ ________ ________ ________ 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) Nine months ended __________________ 09/30/97 09/30/98 ________ ________ Cash flows from operating activities Net income $103,666 $129,133 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization of property and equipment 19,371 24,286 Minority interests in consolidated subsidiaries 15,122 16,063 Increase in accounts receivable (14,649) (5,148) Change in accounts payable and accrued liabilities 34,888 31,804 Other changes in assets and liabilities (2,333) 3,687 _________ ________ Net cash provided by operating activities 156,065 199,825 ________ ________ Cash flows from investing activities Investments in sponsored mutual funds (10,453) (13,690) Proceeds from disposition of sponsored mutual funds -- 13,955 Partnership and other investments (1,789) (1,113) Liquidation of partnership and other investments 6,348 2,686 Additions to property and equipment (53,070) (41,247) ________ ________ Net cash used in investing activities (58,964) (39,409) ________ ________ Cash flows from financing activities Purchases of stock (9,655) (33,666) Receipts relating to stock issuances 8,645 7,951 Dividends paid to stockholders (22,545) (30,285) Distributions to minority interests (7,370) (17,045) ________ ________ Net cash used in financing activities (30,925) (73,045) ________ ________ Cash and cash equivalents Net increase during period 66,176 87,371 At beginning of year 114,551 200,409 ________ ________ At end of period $180,727 $287,780 ________ ________ ________ ________ 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, 1997, 59,097,705 common shares $11,819 $30,707 $415,279 $28,868 $486,673 Comprehensive income Net income 129,133 Change in unrealized security holding gains (6,792) Total comprehensive income 122,341 1,560,385 common shares issued under stock-based compensation plans 312 18,162 18,474 1,120,000 common shares repurchased (224) (6,570) (26,872) (33,666) Dividends declared (30,367) (30,367) 59,594,288 shares issued in 2-for-1 split of common stock at April 30, 1998 11,919 (11,919) -- _______ _______ ________ _______ ________ Balance at September 30, 1998, 119,132,378 common shares $23,826 $30,380 $487,173 $22,076 $563,455 _______ _______ ________ _______ ________ _______ _______ ________ _______ ________ 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 primarily from investment advisory and administrative services provided to sponsored mutual funds and investment portfolios and to private accounts of other institutional and individual investors, primarily domiciled in the United States of America. Company revenues are largely dependent on the total value and composition of assets under management, which include domestic and international equity and debt securities; accordingly, fluctuations in financial markets and in the composition of assets under management impact revenues and results of operations. Assets under management at September 30, 1998 total $129.5 billion, including more than $82.9 billion in the sponsored T. Rowe Price mutual funds. 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 1997 Annual Report to Stockholders. NOTE 2 - COMMITMENTS AND CONTINGENT LIABILITIES. On February 11, 1998, the Company entered into an agreement to construct two office buildings having a combined 360,000 square feet of floor space and two parking garages. On June 17, 1998, the agreement was amended to include an aggregate guaranteed maximum price of $70,840,000. The facilities will be erected on land owned in Owings Mills, Maryland. NOTE 3 - COMMON STOCK SPLIT. On April 30, 1998, the Company's outstanding common shares split two-for-one. All per share and share data in the accompanying unaudited condensed consolidated statements of income have been adjusted to give retroactive effect to the stock split. 7 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 September 30, 1998, and for the three- and nine-month periods ended September 30, 1997 and 1998, appearing on pages two through six 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 have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1997, 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, 1998 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, 1997, 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 October 19, 1998 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. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL. T. Rowe Price Associates, Inc. and its consolidated subsidiaries (the Company) derives its revenue primarily from investment advisory and administrative services provided to the sponsored Price Mutual Funds (the Funds), other sponsored investment portfolios, and private accounts of other institutional and individual investors. Investment advisory fees are generally based on the net assets of the portfolios managed. The majority of administrative revenues are derived from services provided to the Funds. 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. At September 30, 1998, total assets under management are $129.5 billion, including more than $82.9 billion in the Funds. Equity investments compose approximately 70% of total assets under management. RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS 1997. Net income increased $1.6 million or 4% to nearly $43 million or diluted earnings per share of $0.33 from $41.3 million or diluted earnings per share of $0.32. Earnings per share have been retroactively restated for the two- for-one stock split effected at April 30, 1998. Total revenues increased 9% from $199.8 million to $218.6 million, led by an increase of $12.0 million in investment advisory fees. Investment advisory fees from the Funds increased $8.8 million as the Funds' average assets under management during the third quarter rose $8.4 billion to $87.4 billion. Fund assets totaled more than $82.9 billion at September 30, 1998, up $1.8 billion from December 31, 1997. Net cash inflows to the Funds during the third quarter of 1998 were $400 million. Lower end of period Fund assets are the result of financial market declines during the 1998 quarter. Advisory fees from private accounts and other sponsored investment portfolios contributed the balance of the investment advisory revenue gains. These assets under management rose to $46.6 billion at September 30, 1998, up $3.4 billion from December 31, 1997 and $3.5 billion over the past twelve months. Total assets under management closed the third quarter at $129.5 billion, up from $124.3 billion at December 31, 1997 and $124.7 billion at September 30, 1997. Because assets under management are the primary source of the Company's revenues, future quarterly results could be adversely affected if the financial markets do not remain at levels experienced earlier this year. Administrative fees from services to the Funds and their shareholders grew $5.4 million to $42.9 million. Revenue gains were primarily attributable to the Company's defined contribution retirement plan recordkeeping services and mutual fund transfer agent; however, increases in related operating expenses offset these gains. 9 Investment and other income rose $1.4 million due primarily to greater income on larger money market fund holdings. Operating expenses increased 12% to $140.1 million. Compensation and related costs were up $11.5 million due to higher rates of compensation and a 16% increase in the number of associates, primarily in the Company's growing technology support and administrative services operations. At the end of the third quarter, the Company employed more than 3,380 associates. Advertising and promotion expenditures increased about 3% to $13.8 million. These expenditures will vary over time as market conditions and cash flows to the Funds warrant. The Company expects to increase advertising expenditures in the fourth quarter of 1998 to a level similar to that of the same period in 1997. Occupancy and equipment expense was up 18% due to the recent expansion of operating facilities and equipment acquisitions, primarily investments in technology. International investment research fees were down as international assets under management decreased to $28.5 billion at September 30, 1998 from $33.0 billion at September 30, 1997. International assets are managed by the Company's 50%-owned subsidiary, Rowe Price-Fleming International, Inc. (RPFI). RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS 1997. Net income increased $25.5 million or nearly 25% to $129.1 million or diluted earnings per share of $0.99 versus $0.81 in 1997. Total revenues increased 19% from almost $548 million to $651 million, led by an increase of $81.6 million in investment advisory fees. Investment advisory fees from the Funds increased $60.5 million as the Funds' average assets under management during the first nine months rose more than $15.4 billion to $87.9 billion. Net cash inflows to the Funds during the first nine months of 1998 were $3.6 billion. Almost 80% of the net inflows were to the domestic stock funds. Advisory fees from private accounts and other sponsored investment portfolios contributed the balance of the investment advisory revenue gains. Administrative fees from services to the Funds and their shareholders grew $21.1 million to $128.4 million. As with the three-month period, increases in related operating expenses offset these gains. Operating expenses increased 17% to $415.5 million. Compensation and related costs, including performance-based bonus accruals and greater use of temporary employees primarily in the technology support areas, were up $36.4 million. Occupancy and equipment costs rose $13.6 million or 29% due to operating growth in the technology support and administrative services areas. YEAR 2000 PROCESSING ISSUE. Many existing computer programs employed throughout the world use two digits 10 rather than four to identify the year. These programs, if not adapted, will not correctly handle the change from "99" to "00" on January 1, 2000, and will no longer be able to perform necessary functions. The Year 2000 issue affects all companies and organizations. The Company has implemented steps intended to assure that its major or mission critical computer systems and processes are capable of Year 2000 processing. Year 2000 readiness assessments have been made in the Company's major application areas. Detailed plans for remediation efforts have been developed and are underway. Because the Company's operations include daily exchanges of data electronically with customers and vendors, the Company is also working with these third parties to assess the adequacy of their compliance efforts, and is developing contingency plans, including alternative vendors, intended to assure that third-party noncompliance will not materially affect the Company's operations. Additionally, a third-party consultant is reviewing the Company's Year 2000 efforts at various intervals throughout 1998 and 1999. The following chart summarizes the Company's estimated timetable and current state of completion for its Year 2000 major system efforts. Stages Target Date Current state of Completion _____________________________ ___________ ___________________________ Identification and assessment Complete Complete Remediation 12/31/98 51 - 75% Testing 03/31/99 51 - 75% Implementation 06/30/99 Less than 25% For other systems, the target dates are somewhat later than those shown above for major systems, but in any event sufficiently in advance of December 31, 1999. The Company presently estimates that it will incur expenses of more than $44 million on Year 2000 software remediation, replacement of existing systems and development of contingency plans through the year 2000. Approximately $26 million of these expenditures are anticipated after 1998 when the bulk of testing and implementation is to be done. The Company cannot assure that the costs of its Year 2000 compliance efforts will not be significantly more in the event that presently unidentified complications arise; however, the Company believes that it will be able to fund any additional costs from available resources without materially affecting liquidity, financial condition, or future prospects. 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 11 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. The Company's future revenues may fluctuate due to factors such as: the total value and composition of assets under management and related cash inflows or outflows in mutual funds and private accounts; 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 investment portfolios and private accounts as compared to competing offerings and market indices; the extent to which performance-based investment advisory fees are earned from private accounts; the expense ratios of the Company's sponsored investment portfolios; investor sentiment and investor confidence in mutual funds; the ability of the Company to maintain investment management and administrative fees at current 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 administrative services offered 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 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. Additionally, governments and financial markets could be affected. The extent of such risk on the Company is, however, not determinable. It is equally difficult to assess the impact of any widespread business interruption. To the extent that the market prices of securities are negatively impacted by Year 2000 issues, the Company's investment advisory revenues could be materially adversely affected. 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 service 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. 12 The Company's revenues are substantially dependent on revenues from the Funds, which 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 agreements. 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 in general or in particular classes of mutual funds. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Because the Company's market capitalization on January 28, 1997 was less than $2.5 billion, this item is not applicable until the filing 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 seeks to invalidate the advisory agreement between RPFI and the International Stock Fund, and seeks recovery of an unspecified amount of advisory fees paid by the International Stock Fund to RPFI. This relief is sought 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 October 28, 1998, the Company and the other defendants filed a Motion to Dismiss 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. Among other things, the Company has been advised that the structure of the board of the Fund complies with all applicable federal and state legal and regulatory requirements and 13 practices, as well as with established industry norms. Accordingly, the Company does not believe that the ultimate resolution of this matter will have a 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. 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 5. OTHER INFORMATION. On October 15, 1998, John W. Rosenblum resigned from the Company's Board of Directors in order to become a board member of a private investment management firm. 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.) 10.01 Form of Investment Management Agreement with each of the T. Rowe Price Funds. (Incorporated by reference from Form N-1A; Accession No. 0000313212-98-000006.) 10.02 Transfer Agency and Service Agreement dated as of January 1, 1998 between each of the T. Rowe Price Funds and T. Rowe Price Services, Inc. (Incorporated by reference from Form N- 1A; Accession No. 0000313212-98-000006.) 10.03 Agreement dated January 1, 1998 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. 0000313212-98-000006.) 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. 0000313212-98-000006.) 14 10.05 Agreement dated February 11, 1998 between TRP Suburban Second, Inc. and Riparius Construction, Inc. as Construction Manager and Constructor (Filed in paper on March 26, 1998, pursuant to a continuing hardship exemption, on Form SE to the Form 10-K for 1997; 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; 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].) 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. All other items in Part II are omitted because they are not applicable or the answers are none. 15 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 November 10, 1998. T. Rowe Price Associates, Inc. /s/ Alvin M. Younger, Jr., Chief Financial & Accounting Officer EX-15 2 EXHIBIT 15 November 9, 1998 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that our report dated October 19, 1998 (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 September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000080255 T. ROWE PRICE ASSOCIATES, INC. 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 287,780,000 164,202,000 91,943,000 0 0 0 157,645,000 0 731,885,000 0 0 0 0 23,826,000 539,629,000 731,885,000 0 651,302,000 0 415,483,000 0 0 0 235,819,000 90,623,000 129,133,000 0 0 0 129,133,000 1.08 .99 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-----