<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
__________ ______ _______ ______ ________ ________
__________ ______ _______ ______ ________ ________
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
<PAGE> 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
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<CIK> 0000080255
<NAME> T. ROWE PRICE ASSOCIATES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 76,740,000
<SECURITIES> 101,561,000
<RECEIVABLES> 50,900,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 48,556,000<F2>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 323,248,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 13,254,000
<COMMON> 5,705,000
0
0
<OTHER-SE> 235,331,000
<TOTAL-LIABILITY-AND-EQUITY> 323,248,000
<SALES> 0
<TOTAL-REVENUES> 202,635,000
<CGS> 0
<TOTAL-COSTS> 138,064,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0<F3>
<INCOME-PRETAX> 64,571,000
<INCOME-TAX> 25,088,000
<INCOME-CONTINUING> 33,213,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,213,000
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 0
<FN>
<F1>Not contained in registrant's unclassified balance sheet.
<F2>Represents net amount reported at interim.
<F3>Not reported at interim.
</FN>
</TABLE>
