-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bqkG9nOr5Tg54VMxgsHQc4DK40M3yXyKDg9L9j3DjbeHPb5P/GF6TOVSkolrdzYK OJ0VSPbjANSFdKx3hVNTlQ== 0000080255-95-000071.txt : 19950801 0000080255-95-000071.hdr.sgml : 19950801 ACCESSION NUMBER: 0000080255-95-000071 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950731 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 000-14282 FILM NUMBER: 95557339 BUSINESS ADDRESS: STREET 1: 100 EAST PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21202 10-Q 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 1995. 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) 547-2000. 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: 28,542,346 SHARES AT JULY 27, 1995. Exhibit index is at Item 6(a) on page 10. 2 PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. T. ROWE PRICE ASSOCIATES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) 06/30/95 12/31/94 Unaudited ________ _________ ASSETS Cash and cash equivalents $ 60,016 $ 76,740 Accounts receivable 46,722 50,900 Investments in sponsored mutual funds held as available-for-sale securities 93,010 101,561 Partnership and other investments 28,657 29,697 Property and equipment 49,341 48,556 Goodwill and deferred expenses 7,811 7,050 Other assets 11,725 8,744 ________ ________ $297,282 $323,248 ________ ________ ________ ________ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable and accrued expenses $ 17,741 $ 16,686 Accrued compensation and retirement costs 27,413 29,420 Income taxes payable 1,573 3,252 Dividends payable 4,575 4,558 Debt 13,410 13,254 Minority interests in consolidated subsidiaries 16,331 15,042 ________ ________ Total liabilities 81,043 82,212 ________ ________ Commitments and contingent liabilities Stockholders' equity Common stock, $.20 par value - authorized 48,000,000 shares; issued and outstanding 28,569,419 shares in 1994 and 28,526,846 in 1995 5,714 5,705 Capital in excess of par value 1,935 2,937 Unrealized security holding gains 2,554 8,618 Retained earnings 206,036 223,776 ________ ________ Total stockholders' equity 216,239 241,036 ________ ________ $297,282 $323,248 ________ ________ ________ ________ 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 June 30, ended June 30, __________________________________ 1994 1995 1994 1995 ________ ________________ ________ Revenues Investment advisory fees $ 70,700 $ 80,467 $139,715 $153,600 Administrative fees 20,471 22,506 42,242 45,119 Investment and other income 1,297 1,816 2,438 3,916 ________ ________ ________ ________ 92,468 104,789 184,395 202,635 ________ ________ ________ ________ Expenses Compensation and related costs 32,547 35,697 63,942 68,787 Advertising and promotion 6,898 6,069 17,268 13,970 Depreciation, amortization and operating rentals of property and equipment 6,184 7,265 12,107 14,622 International investment research fees 6,242 7,332 12,151 14,114 Administrative and general 11,083 12,976 22,099 26,571 ________ ________ ________ ________ 62,954 69,339 127,567 138,064 ________ ________ ________ ________ Income before income taxes and minority interests 29,514 35,450 56,828 64,571 Provision for income taxes 11,507 13,786 22,183 25,088 ________ ________ ________ ________ Income from consolidated companies 18,007 21,664 34,645 39,483 Minority interests in consolidated subsidiaries 2,958 3,442 5,843 6,270 ________ ________ ________ ________ Net income $ 15,049 $ 18,222 $ 28,802 $ 33,213 ________ ________ ________ ________ ________ ________ ________ ________ Earnings per share $ .49 $ .60 $ .93 $ 1.10 ________ ________ ________ ________ ________ ________ ________ ________ Dividends declared per share $ .13 $ .16 $ .26 $ .32 ________ ________ ________ ________ ________ ________ ________ ________ Weighted average shares outstanding, including share equivalents arising from unexercised stock options 30,638 30,368 30,810 30,192 ________ ________ ________ ________ ________ ________ ________ ________ 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 __________________ 06/30/94 06/30/95 ________ ________ Cash flows from operating activities Net income $ 28,802 $ 33,213 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization of property and equipment 4,666 6,300 Minority interests in consolidated subsidiaries 5,843 6,270 Increase in accounts receivable (3,665) (4,178) Increase in accounts payable and accrued liabilities 3,997 1,129 Other changes in assets and liabilities 19 2,565 ________ ________ Net cash provided by operating activities 39,662 45,299 ________ ________ Cash flows from investing activities Investments in sponsored mutual funds (12,067) (2,804) Proceeds from liquidation of mutual fund investments -- 3,075 Partnership and other investments (4,693) (1,552) Return of partnership investments 529 1,173 Additions to property and equipment (8,551) (6,376) ________ ________ Net cash used in investing activities (24,782) (6,484) ________ ________ Cash flows from financing activities Purchases of stock (11,345) (7,489) Receipts relating to stock issuances 1,643 2,120 Dividends paid to stockholders (7,572) (9,128) Distributions to minority interests (6,320) (7,594) ________ ________ Net cash used in financing activities (23,594) (22,091) ________ ________ Cash and cash equivalents Net change during period (8,714) 16,724 At beginning of period 46,218 60,016 ________ ________ At end of period $ 37,504 $ 76,740 ________ ________ ________ ________ See the accompanying notes to the condensed consolidated financial statements. 5 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) serve as investment adviser to the T. Rowe Price Mutual Funds (the Price funds), other sponsored investment products, and private accounts of other institutional and individual investors, including defined benefit and defined contribution retirement plans, endowments, foundations, trusts, and other mutual funds. The Company also provides various administrative services to its clients, 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. At June 30, 1995, the Company's assets under management totaled $66.6 billion, including $42.5 billion in the Price 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 1994 Annual Report to Stockholders. NOTE 2 - STOCK OPTIONS. On April 6, 1995, the Company awarded options to purchase 16,000 shares of common stock to the four non-employee members of its board of directors. The options were granted at an exercise price of $38.375 per share and become exercisable in 1996. NOTE 3 - STOCKHOLDERS' EQUITY. The following table details the changes in stockholders' equity (dollars in thousands) during the first six months of 1995. 6 Capital Unreal- Common in ized Total Common stock excess security stock- stock - par of par holding Retained holders' - shares value value gains earnings equity __________ ______ _______ ________ ________ ________ Balance at December 31, 1994 28,569,419 $5,714 $ 1,935 $2,554 $206,036 $216,239 Stock options exercised 206,927 41 2,046 (2) 2,085 Purchases of common stock (249,500) (50) (1,079) (6,360) (7,489) Cash received from holders of Executive Stock 35 35 Net income 33,213 33,213 Dividends declared (9,111) (9,111) Unrealized hold- ing gain on available-for- sale mutual fund investments 6,064 6,064 __________ ______ _______ ______ ________ ________ Balance at June 30, 1995 28,526,846 $5,705 $ 2,937 $8,618 $223,776 $241,036 __________ ______ _______ ______ ________ ________ __________ ______ _______ ______ ________ ________ 7 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of T. Rowe Price Associates, Inc. We have reviewed the condensed consolidated balance sheet of T. Rowe Price Associates, Inc. and its subsidiaries as of June 30, 1995, and the related condensed consolidated statements of income and cash flows for the three- and six-month periods ended June 30, 1994 and 1995. 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 condensed consolidated financial statements referred to above 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, 1994, and the related consolidated statements of income, cash flows, and stockholders' equity for the year then ended (not presented herein), and in our report dated January 25, 1995 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, 1994, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ PRICE WATERHOUSE LLP Baltimore, Maryland July 26, 1995 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. (the Company) derives its revenue primarily from investment advisory and administrative services provided to the Price Mutual Funds (the Funds), private accounts, and other sponsored investment products. Investment advisory fees are generally based on the net assets of the portfolios managed. The majority of administrative revenues are earned from contracted services provided to the Funds. The Company believes its base of assets under management is well diversified and relatively stable and that its broad range of investment products meets the varied needs and objectives of most individual and institutional investors. Company 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. RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1995 VERSUS 1994. Net income increased $3.2 million or 21% to $18.2 million or $.60 per share from $15.0 million or $.49 per share. The Company's common stock repurchases during the twelve months ended March 31, 1995 resulted in a decrease in weighted average shares outstanding and account for $.01 of the increase in earnings per share. Total revenues for the second quarter increased 13% from $92.5 million in 1994 to a record quarterly total of $104.8 million, led by an increase of $9.8 million in investment advisory revenues. Investment advisory revenues from the Funds increased $9.3 million as average assets under management rose $5.7 billion to $41.2 billion. Fund assets totaled $42.5 billion at June 30, 1995, up $3.0 billion from March 31, 1995, with stock funds accounting for $2.5 billion of the increase. Net cash inflows to the Funds during the second quarter totaled nearly $.8 billion as net subscriptions to the stock funds were more than $.6 billion. Private accounts and other sponsored products contributed the balance of the investment advisory revenue gains. Private account assets under management rose to $24.1 billion at June 30, 1995, up $2.0 billion from March 31, 1995 and $5.1 billion from June 30, 1994. Total assets under management at quarter end increased to $66.6 billion from $61.6 billion at March 31, 1995 and from $54.5 billion at June 30, 1994. Administrative fees from services to the Price Funds and their shareholders grew 10% to $22.5 million; however, increases in related operating expenses largely offset these revenue gains. Investment and other income rose more than $.5 million due to greater dividends received on larger money market fund balances, which earned higher rates of interest in 1995, and greater mutual fund investments. 9 Operating expenses increased 10% or $6.4 million to $69.3 million from almost $63.0 million. Greater compensation and related costs, which were up $3.1 million, were attributable to increases in overall compensation rates and a 9% increase in the average number of employees, primarily to support the Company's growing operations. Advertising and promotion expenditures were reduced from the 1994 second quarter as well as the 1995 first quarter. Such expenditures vary over time as market conditions and cash inflows to the Funds warrant. Depreciation, amortization, and operating rentals of property and equipment increased $1.1 million as a result of the Company's recent investments in computer and communications equipment, office facilities and furnishings. International investment research fees increased $1.1 million as quarter-end international assets under management rose to nearly $20.2 billion, up from $17.0 billion at June 30, 1994. Administrative and general expenses increased $1.9 million due largely to greater operating costs associated with the Company's data processing operations. Increased earnings by RPFI was the reason for the increase in minority interests in consolidated subsidiaries. RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1995 VERSUS 1994. Net income increased $4.4 million or 15% to $33.2 million. Earnings per share grew more than 18% to a record $1.10 for the first six months. The Company's common stock repurchases during 1994 and 1995 account for $.02 of the increase in earnings per share. Total revenues increased 10% from $184.4 million in 1994 to a record first half total of $202.6 million, led by an increase of $13.9 million in investment advisory revenues. Investment advisory revenues from the Funds increased $12.7 million as average assets under management rose $4.0 billion to $39.6 billion. Fund assets closed the 1995 first half at $42.5 billion, up $5.2 billion from December 31, 1994, with stock funds accounting for $4.1 billion of the increase. Net cash inflows to the Funds during the first six months totaled nearly $1.6 billion as net subscriptions to the stock funds were more than $1.4 billion. Private accounts and other sponsored products contributed the balance of the investment advisory revenue gains. Administrative fees from services to the Price Funds and their shareholders grew 7% to $45.1 million; however, increases in related operating expenses offset these revenue gains. Investment and other income rose almost $1.5 million due to greater dividends received on larger money market fund balances and greater mutual fund investments. Operating expenses increased 8% or $10.5 million to $138.1 million from $127.6 million. Greater compensation and related costs, which were up $4.8 million, were attributable to increases in overall compensation rates and a 9% increase in the average number of employees, primarily to support the Company's growing operations. Advertising and promotion expenditures were reduced significantly from 1994 levels when net cash inflows to the Funds 10 were $1.7 billion in the first quarter alone. Such expenditures vary over time as market conditions and cash inflows to the Funds warrant. Depreciation, amortization, and operating rentals of property and equipment increased $2.5 million as a result of the Company's recent investments in computer and communications equipment, office facilities and furnishings. International investment research fees increased $2.0 million as international assets under management rose to nearly $20.2 billion at June 30, 1995. Administrative and general expenses increased $4.5 million due largely to greater operating costs associated with the Company's growing data processing and administrative services operations. PART II. OTHER INFORMATION. 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: 15 - Letter from Price Waterhouse LLP, independent accountants, re unaudited interim financial information. 27 - Financial Data Schedule. All other items are omitted because they are not applicable or the answers are none. 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 28, 1995. T. Rowe Price Associates, Inc. /s/ George A. Roche, Chief Financial Officer /s/ Alvin M. Younger, Jr., Principal Accounting Officer EX-15 2 EXHIBIT 15 July 28, 1995 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that our report dated July 26, 1995 (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. 33-7012, No. 33-8672, No. 33- 37573, No. 33-72568 and No. 33-58749). We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, /s/ Price Waterhouse 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 June 30, 1995 and is qualified in its entirety by reference to such financial statements. 0000080255 T. ROWE PRICE ASSOCIATES, INC. 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 76,740,000 101,561,000 50,900,000 0 0 0 48,556,000 0 323,248,000 0 13,254,000 5,705,000 0 0 235,331,000 323,248,000 0 202,635,000 0 138,064,000 0 0 0 64,571,000 25,088,000 33,213,000 0 0 0 33,213,000 1.10 0 Not contained in registrant's unclassified balance sheet. Represents net amount reported at interim. Not reported at interim.
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