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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K ANNUAL REPORT Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the fiscal year ended: DECEMBER 31, 1994.
Commission file number: 0-14282.
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.
Securities registered pursuant to Section 12(b) of the Act: NONE.
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.20 PAR VALUE.
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. [X] YES. [ ] No.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ].
State the aggregate market value of the voting stock (based on last reported
NNM price) held by non-affiliates of the registrant (excludes executive
officers and directors). $670,209,000 AT FEBRUARY 6, 1995.
Indicate the number of shares outstanding of the registrant's common stock,
as of the latest practicable date. 28,458,495 SHARES AT MARCH 16, 1995.
DOCUMENTS INCORPORATED BY REFERENCE: Information contained in the Proxy
Statement for the 1995 Annual Meeting of Stockholders is incorporated by
reference in Part III of this Form 10-K.
Exhibit index is at Item 14(a)3 on pages 40-42.
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PART I.
ITEM 1. BUSINESS.
T. Rowe Price Associates, Inc. and its 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. Total assets under management at December 31, 1994 were
approximately $57.8 billion, up $3.4 billion since December 31, 1993. 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. The
Company was incorporated in Maryland on January 2, 1947 as successor to the
investment counseling business formed by the late T. Rowe Price in 1937.
The Company offers its Price Funds' shareholders and private accounts a broad
range of investment products designed to attract and retain investors with
varying investment objectives. Shareholders are allowed to exchange funds
among mutual fund products as economic and market conditions and investor
needs change. Each year, the Company introduces several new mutual funds
designed to complement and expand its product offerings. New investment
products including mutual funds will be introduced if the Company believes
that it has personnel with sufficient investment expertise to manage the
product successfully and that the product will be attractive to a substantial
group of investors over a long period of time. In recent years, equity
investing and, more specifically, international equity investing have been
the most rapidly growing investment sectors. Investment advisory fees earned
on equity assets under management and related expenses incurred to generate
such fees are generally higher than those related to fixed income and money
market investment products. 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.
The investment strategies employed by the Company accommodate a variety of
client investment objectives encompassing both domestic and international
securities. Equity investment approaches include established growth,
emerging growth, equity income, basic value, capital appreciation, systematic
and balanced portfolio management. Fixed income approaches for taxable and
tax-exempt portfolios include active as well as passive (index) management
strategies and management of high yield securities and cash reserves. The
Company has also developed several specialized investment management services
including private company investing, investing in debt securities and
creditor claims of financially-troubled companies, and stable value
investment contract management.
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Average assets under management (in millions) during the past five years and
total assets under management at December 31, 1994 are:
1990 1991 1992 1993 1994 12/31/94
________ ________ ________ ________ ________ ________
Price Funds
Stock $ 6,268 $ 7,599 $ 10,280 $ 14,713 $ 21,495 $ 22,833
Taxable bond 2,629 3,304 5,150 6,025 5,412 4,844
Tax-free bond 2,144 2,530 3,187 4,169 4,225 3,867
Money market 6,372 6,177 5,428 4,903 5,333 5,765
________ ________ ________ ________ ________ ________
Total 17,413 19,610 24,045 29,810 36,465 37,309
Other sponsored in-
vestment products
and private
accounts 11,462 13,066 14,510 17,136 19,490 20,526
________ ________ ________ ________ ________ ________
Total assets under
management $ 28,875 $ 32,676 $ 38,555 $ 46,946 $ 55,955 $ 57,835
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
The Company's revenues (in thousands) from investment advisory and
administrative services provided under agreements with the Price Funds and
other clients during the past five years are:
1990 1991 1992 1993 1994
________ ________ ________ ________ ________
Investment advisory fees
Price Funds
Stock $ 36,120 $ 47,712 $ 65,202 $ 96,136 $145,020
Taxable bond 14,896 17,730 25,149 31,869 28,561
Tax-free bond 11,451 12,960 15,869 19,873 19,744
Money market 26,079 25,416 21,780 19,137 20,132
________ ________ ________ ________ ________
Total 88,546 103,818 128,000 167,015 213,457
Other sponsored investment
products and private
accounts 38,883 41,576 46,590 57,794 76,614
________ ________ ________ ________ ________
Total 127,429 145,394 174,590 224,809 290,071
________ ________ ________ ________ ________
Administrative fees
Price Funds 27,621 37,623 45,153 54,184 61,161
Price Funds' shareholders
and others 10,874 13,197 18,405 23,024 24,511
________ ________ ________ ________ ________
Total 38,495 50,820 63,558 77,208 85,672
________ ________ ________ ________ ________
Total investment advisory
and administrative fees $165,924 $196,214 $238,148 $302,017 $375,743
________ ________ ________ ________ ________
________ ________ ________ ________ ________
MUTUAL FUND MANAGEMENT.
OVERVIEW. Each of the Price Funds has a distinct investment objective that
has been developed as part of the Company's strategy to provide a broad and
balanced selection of investment products. All Funds are sold exclusively by
the Company on a no-load basis (without a sales commission). No-load mutual
funds offer investors a low-cost and relatively easy method of investing in a
variety of equity and fixed income products. The Company's marketing effort
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is focused on advertising in the print media and direct mail communications.
In addition, considerable direct marketing efforts are targeted at large
participant-directed defined contribution plans that invest, at least in
part, in mutual funds. The Company believes that its distribution methods
and fund shareholder and administrative services promote stability of assets
in the Price Funds through market cycles in addition to reducing costs to
fund shareholders.
At December 31, 1994, assets under management in the Price Funds aggregated
$37.3 billion. The following information includes the net assets (in
millions) at December 31, 1994 of each fund available to the investing
public, the year the fund was added to the Price family of funds, and the
fund's primary investment objective.
STOCK FUNDS:
$2,067.5 GROWTH STOCK (1950) - Long-term growth of capital and increasing
dividend income through investment primarily in common stocks of
well-established growth companies.
$1,648.4 NEW HORIZONS (1960) - Long-term growth of capital through
investment primarily in common stocks of small, rapidly growing
companies.
$ 979.5 NEW ERA (1969) - Long-term growth of capital through investment
primarily in common stocks of companies that own or develop
natural resources and other basic commodities, and other selected,
non-resource growth companies.
$5,786.9 INTERNATIONAL STOCK (1980) - Long-term growth of capital through
investment primarily in common stocks of established, non-U.S.
companies.
$1,228.9 GROWTH & INCOME (1982) - Long-term growth of capital, a reasonable
level of current income, and an increase in future income through
investment primarily in income-producing stocks with prospects for
appreciation and increasing dividends.
$ 646.1 NEW AMERICA GROWTH (1985) - Long-term growth of capital through
investment primarily in common stocks of U.S. growth companies
that operate in service industries.
$3,203.9 EQUITY INCOME (1985) - Substantial dividend income and capital
appreciation by investing primarily in dividend-paying common
stocks of established companies.
$ 655.0 CAPITAL APPRECIATION (1986) - Maximum capital appreciation through
investment primarily in common stocks that are considered to be
undervalued or out of favor with investors, or expected to
increase in price over the short-term.
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$ 915.1 SCIENCE & TECHNOLOGY (1987) - Long-term growth of capital through
investment primarily in common stocks of companies that are
expected to benefit from the development, advancement, and use of
science and technology.
$ 408.4 SMALL-CAP VALUE (1988) - Long-term capital growth through
investment primarily in common stocks of small companies that are
believed to be undervalued and have potential for capital
appreciation.
$ 437.4 INTERNATIONAL DISCOVERY (1988) - Long-term growth of capital
through investment primarily in common stocks of rapidly growing,
small- to medium-sized non-U.S. companies.
$ 366.5 EUROPEAN STOCK (1990) - Long-term growth of capital by investing
primarily in common stocks of both large and small European
companies.
$ 270.2 EQUITY INDEX (1990) - Replication of the total return performance
of the U.S. equity markets as represented by the Standard & Poor's
500 Composite Stock Index by investing substantially all of its
assets in stocks included in the Index.
$ 879.4 SPECTRUM GROWTH (1990) - Long-term growth of capital and growth of
income by investing primarily in a diversified group of seven T.
Rowe Price mutual funds that invest principally in equity
securities.
$1,987.6 NEW ASIA (1990) - Long-term growth of capital by investing in both
large and small companies domiciled or with primary operations in
Asia, excluding Japan, and in Pacific Rim countries, such as
Australia and New Zealand.
$ 392.0 BALANCED (1991) - Capital appreciation, current income, and
preservation of capital by investing in a diversified portfolio of
common stocks and bonds. Common stocks are generally expected to
represent approximately 60% of total assets.
$ 169.3 JAPAN (1991) - Long-term growth of capital by investing in common
stocks of large and small companies domiciled or with primary
operations in Japan.
$ 100.5 MID-CAP GROWTH (1992) - Long-term growth of capital by investing
primarily in common stocks of companies with medium-sized market
capitalizations and the potential for above-average growth.
$ 196.7 OTC (1992) - Long-term growth of capital through investment
primarily in common stocks of small- to medium-sized companies
that trade in the U.S. over-the-counter ("OTC") market.
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$ 53.6 DIVIDEND GROWTH (1992) - A growing level of dividend income, long-
term capital appreciation, and a reasonable level of current
income by investing primarily in dividend-paying stocks.
$ 39.0 BLUE CHIP GROWTH (1993) - Long-term growth of capital through
investments primarily in the common stocks of established, high
quality, growth companies.
$ 163.8 LATIN AMERICA (1993) - Long-term growth of capital by investing
primarily in common stocks of companies domiciled or with primary
operations in Latin America.
$ 8.3 PERSONAL STRATEGY - BALANCED (1994) - Highest total return over
time consistent with both capital appreciation and income by
investing in a diversified portfolio consisting of 50-70% stocks
and the balance in bonds and money market securities.
$ 6.5 PERSONAL STRATEGY - GROWTH (1994) - Highest total return over time
consistent primarily with capital appreciation by investing in a
diversified portfolio consisting of 70-90% stocks and the balance
in bonds and money market securities.
$ 6.0 PERSONAL STRATEGY - INCOME (1994) - Highest total return over time
consistent with a primary emphasis on income and secondary
emphasis on capital appreciation by investing in a diversified
portfolio consisting of 30-50% stocks and the balance in bonds and
money market securities.
$ 8.8 VALUE FUND (1994) - Long-term capital appreciation by investing
primarily in common stocks believed to be undervalued.
$ 2.4 CAPITAL OPPORTUNITY (1994) - Superior capital appreciation over
time by investing primarily in U.S. common stocks of small, medium
and large companies.
TAXABLE BOND FUNDS:
$1,367.8 NEW INCOME (1973) - Highest level of income over time consistent
with the preservation of capital through investment primarily in
marketable debt securities.
$1,040.4 HIGH YIELD (1984) - High current income through investment
primarily in a widely diversified portfolio of lower-quality,
long-term corporate bonds, often called high yield or junk bonds,
and income producing convertible securities and preferred stocks.
$ 474.9 SHORT-TERM BOND (1984) - High level of income consistent with
minimum fluctuation in principal value and liquidity through
investment primarily in short- and intermediate-term debt
securities. The Fund's dollar-weighted average effective maturity
will not exceed three years.
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$ 752.3 GNMA (1985) - High level of current income consistent with maximum
credit protection and moderate price fluctuation by investing
exclusively in securities backed by the full faith and credit of
the U.S. Government, primarily Government National Mortgage
Association (GNMA) mortgage-backed securities, and instruments
involving these securities.
$ 738.1 INTERNATIONAL BOND (1986) - High current income by investing in a
diversified portfolio of nondollar-denominated, high-quality
government and corporate bonds.
$ 163.2 U.S. TREASURY INTERMEDIATE (1989) - High level of income
consistent with maximum credit protection and moderate price
fluctuation in principal value by investing primarily in U.S.
Treasury securities and repurchase agreements with a remaining
effective maturity of no more than seven and one-half years.
$ 58.3 U.S. TREASURY LONG-TERM (1989) - Highest level of current income
consistent with maximum credit protection by investing primarily
in U.S. Treasury securities and repurchase agreements. The Fund's
dollar-weighted average maturity may range from ten to thirty
years.
$ 625.0 SPECTRUM INCOME (1990) - High level of current income consistent
with moderate price fluctuation by investing primarily in a
diversified group of seven T. Rowe Price Mutual Funds that invest
principally in fixed income securities.
$ 36.5 GLOBAL GOVERNMENT BOND (1990) - High current income by investing
primarily in high-quality U.S. and foreign government bonds.
$ 120.9 ADJUSTABLE RATE U.S. GOVERNMENT (1991) - Highest level of current
income consistent with minimal share price fluctuation. A change
in the Fund's name to Short-Term U.S. Government is pending.
$ 56.4 SHORT-TERM GLOBAL INCOME (1992) - High current income consistent
with modest price fluctuation by investing primarily in high-
quality, short-term U.S. and foreign fixed-income securities. The
Fund's dollar-weighted average effective maturity will not exceed
three years.
$ 16.3 SUMMIT GNMA (1993) - High level of income and maximum credit
protection by investing primarily in mortgage-backed certificates
issued by GNMA as well as in other U.S. government agency
securities.
$ 17.3 SUMMIT LIMITED-TERM BOND (1993) - High level of income consistent
with moderate fluctuation in principal value by investing
primarily in investment-grade corporate bonds. The Fund's dollar-
weighted average effective maturity will not exceed five years.
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$ 2.0 EMERGING MARKETS BOND (1994) - High income and capital
appreciation by investing in non-investment grade, short- and
intermediate-term, high yielding (high risk) debt securities
issued by governments and corporations in the emerging foreign
markets of less developed countries.
TAX-FREE BOND FUNDS:
$1,253.9 TAX-FREE INCOME (1976) - High level of income exempt from federal
income taxes by investing primarily in long-term, investment-grade
municipal securities.
$ 451.1 TAX-FREE SHORT-INTERMEDIATE (1983) - High level of income exempt
from federal income taxes consistent with modest price fluctuation
by investing primarily in investment grade short- and
intermediate-term municipal bonds.
$ 802.2 TAX-FREE HIGH YIELD (1985) - High level of income exempt from
federal income taxes by investing primarily in long-term, low- to
upper-medium quality municipal bonds.
$ 110.8 NEW YORK TAX-FREE BOND (1986) - Highest level of income exempt
from federal, New York state and New York city income taxes by
investing primarily in investment-grade New York municipal bonds.
$ 122.2 CALIFORNIA TAX-FREE BOND (1986) - Highest level of income exempt
from federal and California state income taxes by investing
primarily in investment-grade California municipal bonds.
$ 675.3 MARYLAND TAX-FREE BOND (1987) - Highest level of income exempt
from federal and Maryland state and local income taxes by
investing primarily in investment-grade Maryland municipal bonds.
$ 53.3 NEW JERSEY TAX-FREE BOND (1991) - Highest level of income exempt
from federal and New Jersey state income taxes by investing
primarily in investment-grade New Jersey municipal bonds.
$ 143.9 VIRGINIA TAX-FREE BOND (1991) - Highest level of income exempt
from federal and Virginia state income taxes by investing
primarily in investment-grade Virginia municipal bonds.
$ 79.8 TAX-FREE INSURED INTERMEDIATE BOND (1992) - High level of income
exempt from federal income taxes, maximum credit protection, and
moderate price protection by investing primarily in intermediate-
term municipal bonds whose interest and principal payments are
insured by private insurance companies.
$ 76.3 MARYLAND SHORT-TERM TAX-FREE BOND (1993) - Highest level of income
exempt from federal and Maryland state and local income taxes
consistent with modest fluctuation in principal value by investing
primarily in investment-grade Maryland municipal bonds.
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$ 51.7 FLORIDA INSURED INTERMEDIATE TAX-FREE BOND (1993) - High level of
income exempt from federal income taxes while minimizing credit
risk by investing primarily in high-quality Florida municipal
bonds whose interest and principal payments are insured by private
insurance companies.
$ 20.9 GEORGIA TAX-FREE BOND (1993) - Highest level of income exempt from
federal and Georgia state income taxes by investing primarily in
investment-grade Georgia municipal bonds.
$ 7.3 SUMMIT MUNICIPAL INCOME (1993) - High level of income exempt from
federal income taxes by investing primarily in long-term,
investment-grade municipal bonds.
$ 16.2 SUMMIT MUNICIPAL INTERMEDIATE (1993) - Highest possible income
exempt from federal income taxes consistent with moderate price
fluctuation by investing primarily in investment-grade municipal
bonds.
$ 2.0 VIRGINIA SHORT-TERM TAX-FREE BOND (1994) - Highest level of income
exempt from federal and Virginia state income taxes consistent
with modest fluctuation in principal value by investing primarily
in investment-grade Virginia municipal bonds.
MONEY MARKET FUNDS:
$3,891.0 PRIME RESERVE (1976) - Preservation of capital, liquidity, and,
consistent with these, the highest possible current income by
investing primarily in high-quality, U.S. dollar-denominated money
market securities.
$ 712.6 TAX-EXEMPT MONEY (1981) - Preservation of capital, liquidity, and,
consistent with these, the highest current income exempt from
federal income taxes by investing in high-quality, short-term
municipal securities.
$ 704.4 U.S. TREASURY MONEY (1982) - Maximum safety of capital, liquidity
and, consistent with these, the highest possible current income by
investing primarily in a portfolio of U.S. Treasury securities.
$ 68.8 NEW YORK TAX-FREE MONEY (1986) - Highest possible current income
exempt from federal, New York state and New York city income taxes
consistent with preservation of principal and liquidity by
investing in high-quality, short-term municipal securities.
$ 77.1 CALIFORNIA TAX-FREE MONEY (1986) - Highest possible current income
exempt from federal and California state income taxes consistent
with preservation of principal and liquidity by investing in high-
quality, short-term municipal securities.
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$ 249.8 SUMMIT CASH RESERVES (1993) - Preservation of capital, liquidity,
and, consistent with these, the highest possible current income by
investing principally in the highest-quality U.S. dollar-
denominated money market securities.
$ 61.0 SUMMIT MUNICIPAL MONEY MARKET (1993) - Preservation of capital,
liquidity, and, consistent with these, the highest possible
current income exempt from federal income taxes by investing
exclusively in high-quality municipal securities.
The Company also sponsors the Foreign Equity Fund, an international stock
fund founded in 1989 for institutional investors which seeks long-term growth
of capital through investments primarily in common stocks of established non-
U.S. companies. Assets under management in this fund were $1.1 billion at
December 31, 1994.
AGREEMENTS WITH PRICE FUNDS. The Company provides investment advisory,
distribution and administrative services to the Price Funds under investment
management, underwriting, transfer agency and service agreements. Pursuant
to investment management agreements with each of the Price Funds, the Company
provides investment advisory services to each fund, subject to the authority
of each fund's board of directors and to each fund's fundamental investment
objective. The investment management agreements with the Price Funds are
approved annually by the directors of the respective funds, including a
majority of the directors who are not "interested persons" of the funds or
the Company as defined under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). Amendments to such agreements must be
approved by the Price Funds' shareholders. Each agreement automatically
terminates in the event of its assignment (as defined in the Investment
Company Act) and either party may terminate the agreement without penalty
after notice (generally 60 days). Each fund has the right to use the "T.
Rowe Price" name for so long as its investment management agreement with the
Company remains in effect.
The Company is paid an investment advisory fee based upon the average daily
net assets of the funds and separate administrative fees for the support
services rendered by the Company. Management of the Company and the
independent directors of the Price Funds regularly review the fund fee
structures in light of fund performance, the level and range of services
provided, industry conditions, and other factors. The current advisory fee
structure for most of the Price Funds (excluding the Price Spectrum and
Summit Funds, the Price Equity Index Fund and the Foreign Equity Fund)
includes a group fee based on the combined net assets of the funds and an
individual fee based on the net assets of each fund.
Each fund (excluding the Price Summit Funds) bears all expenses associated
with the operation of the fund and the issuance and redemption of its
securities. In particular, each fund pays investment advisory fees;
shareholder servicing fees and expenses; fund accounting fees and expenses;
transfer agent fees; custodian fees and expenses; legal and auditing fees;
expenses of preparing, printing and mailing prospectuses and shareholder
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reports to existing shareholders; registration fees and expenses; proxy and
annual meeting expenses; and independent directors' fees and expenses. All
advertising, promotion and selling expenses are borne by the Company.
The Company does, however, absorb expenses of funds that are in excess of
limitations established under state securities laws. The Company does not
expect that state expense limits, at current fee and expense levels, will
have any significant effect on the results of its operations. The Company
generally guarantees that a newly-organized fund's expenses will not exceed a
specified ratio during its initial operations. Allowances made for reduced
advisory fees and other mutual fund expenses in excess of limitations may be
recovered in future periods if and when fund performance and related expense
limitation provisions permit.
Pursuant to underwriting agreements with each fund, T. Rowe Price Investment
Services, Inc. ("TRP Investment Services") is the exclusive distributor of
the Price Funds. The agreements provide that TRP Investment Services shall
always offer the funds' shares at a public offering price equal to the net
asset value per share and shall use its best efforts to obtain investors for
the funds. The underwriting agreements with the Price Funds are approved
annually by the directors of the respective funds, including a majority of
the directors who are not "interested persons" of the funds or the Company as
defined under the Investment Company Act. Each agreement automatically
terminates in the event of its assignment (as defined in the Investment
Company Act), and either party may terminate the agreement without penalty
after notice (generally 60 days). TRP Investment Services does not receive a
separate fee for its services to the Price Funds. The Company expends
substantial resources in advertising and direct mail communications to
existing and potential Price Funds' shareholders and in providing the staff
and communications equipment to respond to inquiries. The level of
advertising and promotion expenditures varies over time as market conditions
and cash inflows to the Price Funds warrant.
ADMINISTRATIVE SERVICES. T. Rowe Price Services, Inc. ("TRP Services")
provides transfer agent and shareholder services under contracts with the
Price Funds. Shareholder servicing activities include maintenance of staff
and equipment to respond to all telephone inquiries from existing Fund
shareholders and to provide the mutual fund transfer agent function. In
addition, the Company provides mutual fund accounting services including
maintenance of financial records, preparation of financial statements and
reports, daily valuation of portfolio securities and computation of daily net
asset values per share.
T. Rowe Price Retirement Plan Services, Inc. ("TRP Retirement Plan Services")
provides plan administrative and related transfer agent services for employee
defined contribution retirement plans that invest, at least in part, in the
Price Funds. Plan sponsors compensate TRP Retirement Plan Services for
certain administrative services while the Price Funds compensate it for
maintaining and administering the individual participant accounts for those
plans that invest in the Price Funds.
<PAGE> 12
The Company provides certain trust services through its Maryland-chartered
limited service trust company, T. Rowe Price Trust Company, Inc. ("TRP Trust
Company"). TRP Trust Company serves as custodian or trustee for the Price
Funds' prototype retirement plans, IRAs, and certain other retirement plans.
TRP Trust Company also sponsors common trust funds principally for investment
by qualified employee retirement plans. Under its charter, TRP Trust Company
may not be in the business of accepting deposits and cannot make personal or
commercial loans.
The Company also provides discount brokerage services through TRP Investment
Services. Such services are provided primarily to shareholders of the Price
Funds and are intended to complement the other investment services offered to
them. All discount brokerage transactions are cleared through and accounts
maintained by an independent clearing broker.
OTHER SPONSORED PRODUCTS AND PRIVATE ACCOUNT MANAGEMENT.
The Company serves as investment adviser to pension, profit sharing and other
employee benefit plans, endowments, foundations, trusts, individuals,
corporations, other mutual funds and other investors located throughout the
United States and certain foreign countries. No private account client
accounted for more than 2% of the Company's 1994 revenues. Investment
management services are provided to client accounts on an individual basis
and through sponsored investment partnerships and trusts. Sponsored
investment products have generally been issued through private placements.
Fees for separately managed private account clients are generally computed
based on the value of assets under management. The standard form of
investment advisory agreement with private account clients provides that the
agreement may be terminated at any time and that any unearned fees paid in
advance will be refunded. The minimum account size is generally $5 million
to $10 million for institutional private account services, although the
minimum account size for certain specialized investment services may be
higher. Fees for sponsored product management are based on individual
product advisory agreements, which result from consideration of, among other
things, the type of investments to be made and the unique investment
management services to be provided.
Many specialized investment advisory services are provided to private
accounts by subsidiaries of the Company. International equity and fixed
income securities management is provided by Rowe Price-Fleming International,
Inc. ("RPFI"). Management of stable value investment contracts is provided
by T. Rowe Price Stable Asset Management, Inc. ("TRP Stable Asset
Management").
INVESTMENT RESEARCH.
In the performance of its investment advisory functions, the Company conducts
fundamental investment research and valuation analyses. The equity research
department follows those companies approved for investment by the portfolios
of private account clients and the Price Funds and investigates candidates
<PAGE> 13
that may be approved for investment. Analysts are generally assigned on an
industry basis. The equity research department conducts original industry
and company research utilizing such sources as inspection of corporate
activities, management interviews, company-prepared information, publicly
available information, and field checks with participants in the industry
such as suppliers and competitors. In addition, a wide range of research
services and materials provided by brokerage firms and other third parties is
used to support the Company's original research. The Company allocates
brokerage business in recognition of value-added research services received.
Fixed income research has three basic components: economic analysis, credit
analysis and value analysis. The economic analysis function monitors and
evaluates numerous factors that influence the supply and demand for credit.
Credit analysts research the credit worthiness of debt issuers and their
individual short-term and long-term debt issues. Through yield-spread
differential analysis, the relative value of market sectors that represent
buying and selling opportunities are analyzed.
ROWE PRICE-FLEMING INTERNATIONAL, INC.
TRP Finance, Inc., an investment holding company subsidiary, owns 50% of the
common stock of RPFI which, by virtue of the Company's controlling interest,
is a consolidated subsidiary included in the Company's financial statements.
The balance of the common stock of RPFI is owned 25% by a subsidiary of
London-based Robert Fleming Holdings Limited and 25% by a subsidiary of Hong
Kong-based Jardine Fleming Holdings Limited. RPFI serves as investment
adviser to the Price International Funds and to other mutual funds, sponsored
investment products and private accounts of institutional investors. During
1994, international assets under management by RPFI increased to $18.3
billion at year end, including $10.8 billion in the T. Rowe Price
International Funds. At year-end 1993, assets under management by RPFI
totaled $15.4 billion, including $8.7 billion in the international funds.
RPFI's financial information and assets under management are included in the
Company's consolidated financial data and statistical information presented
elsewhere herein.
International investment research services are provided to RPFI by affiliates
of its minority stockholders. Fees are paid for these services based on
RPFI's assets under management.
REGULATION.
The Company and RPFI are registered with the Securities and Exchange
Commission under the Investment Advisers Act of 1940 and all applicable state
securities agencies. Each of the Price Funds is registered with the
Securities and Exchange Commission under the Investment Company Act and,
except for the specific state-tax free funds, is qualified for sale
throughout the United States and Puerto Rico. TRP Investment Services is
registered as a broker-dealer under the Securities Exchange Act of 1934 (the
"Exchange Act") and all applicable state securities laws and is a member of
the National Association of Securities Dealers, Inc. and the Securities
<PAGE> 14
Investor Protection Corporation. TRP Services is registered under the
Exchange Act as a transfer agent, and TRP Trust Company is regulated by the
State of Maryland Bank Commissioner. TRP Stable Asset Management is also a
registered investment adviser.
All aspects of the Company's business are subject to extensive federal and
state laws and regulations. These laws and regulations are primarily
intended to benefit or protect the Company's clients and the Price Funds'
shareholders and generally grant supervisory agencies and bodies broad
administrative powers, including the power to limit or restrict the Company
from carrying on its business in the event that it fails to comply with such
laws and regulations. In such event, the possible sanctions that may be
imposed include the suspension of individual employees, limitations on
engaging in certain lines of business for specified periods of time,
revocation of the investment adviser and other registrations, censures and
fines.
The Company and certain of its subsidiaries are subject to net capital
requirements including those of various federal and state regulatory
agencies. The Company's net capital, as defined, has consistently met or
exceeded all minimum requirements.
COMPETITION.
As a member of the financial services industry, the Company is subject to
substantial competition in all aspects of its business. A significant number
of mutual funds are sold to the public by investment management firms,
broker-dealers and insurance companies. In addition to other investment
advisory and mutual fund management companies, the Company competes with
brokerage and investment banking firms, insurance companies, banks, and other
financial institutions in all aspects of its business. Many of these
financial institutions have substantially greater resources than the Company.
The Company competes with other providers of investment products and services
primarily on the basis of the range of investment products offered, the
investment performance of such products, the manner in which such products
are distributed, and the scope and quality of the services provided to
investors.
The Company believes that competition among the mutual funds industry will
increase as a result of consolidation and acquisition activity within the
industry. In order to maintain and enhance its competitive position as an
independent, no-load, direct marketer of mutual funds, the Company regularly
reviews acquisition prospects and may, from time to time, engage in
discussions or negotiations that could lead to acquisitions by the Company.
Currently, the Company is not party to any agreements or understandings
regarding any material acquisitions; however, as a result of the Company's
process of reviewing possible acquisition prospects, negotiations may occur
from time to time if appropriate opportunities for material acquisitions
arise.
<PAGE> 15
EMPLOYEES.
At December 31, 1994, the Company and its subsidiaries had 1,788 active,
full-time employees. The Company employs additional temporary and part-time
personnel to meet seasonal and other periodic demands for shareholder and
investor services.
ITEM 2. PROPERTIES.
The Company's primary corporate offices consist of more than 215,000 square
feet of space located in Baltimore, Maryland which is leased from a joint
venture in which the Company is a minority partner. The Company also leases
office space in Los Angeles and San Francisco, California; Owings Mills,
Maryland; Glen Allen, Virginia; and Tampa, Florida. Future minimum rental
payments under noncancelable operating leases in effect at December 31, 1994
are set forth in Note 9 to the consolidated financial statements, which are
included in Item 8 of this Form 10-K Annual Report.
TRP Suburban, Inc. owns a $19.8 million financial operations center in Owings
Mills, Maryland consisting of approximately 110,000 square feet of operating
space. The facility houses much of the Company's administrative services
operations. The building is held subject to a $12.9 million note which is
due in 2001. The land has been leased until late 2040.
The Company anticipates that capital expenditures for the acquisition of data
processing and telecommunications equipment and other capital items for its
corporate and administrative services functions will total more than $24
million in 1995.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, the Company is subject to litigation and administrative
proceedings, including employment-related matters. The Company is not
currently party to any litigation or administrative proceeding that, if
adversely determined, is likely to 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.
No matters were submitted to a vote of the Company's stockholders during the
fourth quarter of 1994.
ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following information includes the names, ages, and positions of the
executive officers of the Company. Officers serve at the pleasure of the
Board of Directors, and there are no arrangements or understandings pursuant
to which any person was named an officer. The first seven named executive
officers are also members of the Board of Directors, which also includes four
independent directors.
<PAGE> 16
George J. Collins (54), President and Chief Executive Officer (1984) and
Managing Director (1989)
George A. Roche (53), Managing Director (1989) and Chief Financial
Officer (1984)
Thomas H. Broadus, Jr. (57), Managing Director (1989)
Carter O. Hoffman (67), Managing Director (1989)
Henry H. Hopkins (52), Managing Director (1989)
James S. Riepe (51), Managing Director (1989)
M. David Testa (50), Managing Director (1989)
Stephen W. Boesel (50), Managing Director (1993) and Vice President
(1977-1993)
James A.C. Kennedy (41), Managing Director (1990)
John H. LaPorte (50), Managing Director (1989)
Mary J. Miller (39), Managing Director (1993) and Vice President (1986-1993)
Mark E. Rayford (43), Managing Director (1993) and Vice President (1984-1993)
William T. Reynolds (46), Managing Director (1990)
Brian C. Rogers (39), Managing Director (1991) and Vice President (1985-1991)
Charles P. Smith (51), Managing Director (1990)
Peter Van Dyke (56), Managing Director (1990)
Charles E. Vieth (38), Managing Director (1993) and Vice President
(1985-1993)
Alvin M. Younger, Jr. (45), Managing Director (1990), Treasurer (1985) and
Secretary (1987)
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock ($.20 par value) trades on the Nasdaq National
Market under the symbol "TROW". The high and low prices and dividends per
share during the past two years, which have been retroactively adjusted to
give effect to the 2-for-1 stock split in November 1993, were:
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
________ ________ ________ ________
1993
____
High price $ 25.500 $ 24.125 $ 31.625 $ 32.875
Low price $ 21.250 $ 20.250 $ 22.625 $ 27.000
Cash dividends declared $ .105 $ .105 $ .105 $ .130
1994
____
High price $ 38.250 $ 31.750 $ 34.750 $ 34.500
Low price $ 26.250 $ 26.250 $ 24.625 $ 27.750
Cash dividends declared $ .130 $ .130 $ .130 $ .160
At February 6, 1995, there were approximately 2,309 holders of record of the
Company's outstanding common stock.
<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA.
Year ended December 31,
___________________________________________________
1990 1991 1992 1993 1994
________ ________ ________ ________ ________
(in thousands, except per-share amounts)
Revenues $170,031 $205,206 $245,112 $310,041 $382,378
Net income $ 20,921 $ 30,437 $ 35,784 $ 48,539 (1) $ 61,151
Earnings per
share (2) $ .71 $ 1.02 $ 1.19 $ 1.59 (1) $ 2.00
Cash dividends
declared per
share (2) $ .305 $ .33 $ .375 $ .445 $ .55
Weighted average
shares
outstanding (2) 29,497 29,823 30,158 30,615 30,571
(1) Net income and earnings per share before the cumulative effects of
changes in accounting principles were $48,869 and $1.60, respectively.
(2) Retroactively adjusted to give effect to the 2-for-1 stock split in
November 1993.
December 31,
________________________________________________
1990 1991 1992 1993 1994
________ ________ ________ ________ ________
(in thousands, except as noted)
Balance sheet data
Total assets $161,524 $179,571 $206,072 $263,400 $297,282
Debt $ 22,361 $ 15,969 $ 13,190 $ 12,915 $ 13,410
Stockholders'
equity $111,921 $132,525 $154,198 $195,953 $216,239
Assets under manage-
ment (in millions) $ 29,403 $ 35,623 $ 41,415 $ 54,396 $ 57,835
ITEM 7. 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
<PAGE> 18
financial markets and in the composition of assets under management impact
revenues and results of operations.
All per-share amounts have been retroactively adjusted for the 2-for-1 stock
split in November 1993.
RESULTS OF OPERATIONS.
1994 versus 1993. Net income increased $12.6 million or 26% from $48.5
million and $1.59 per share to $61.2 million and $2.00 per share. Revenues
increased 23% to $382.4 million from $310.0 million. Results for 1993
included a net charge of $.3 million or $.01 per share reflecting the
cumulative effects of changes in accounting principles.
Investment advisory revenues from the Funds increased $46.4 million as
average assets under management rose $6.7 billion to $36.5 billion. Assets
in the Funds closed 1994 at $37.3 billion, up $2.6 billion during the year,
with stock funds accounting for $22.8 billion of the year-end total. Net
cash inflows to the Funds during 1994 totaled nearly $3.4 billion as net
subscriptions of $4.1 billion into the stock funds and $.8 billion into the
money market funds were partially offset by net redemptions of $1.5 billion
from the bond funds. Private accounts and other sponsored products primarily
in the international asset area and performance management fees earned from
sponsored partnerships contributed $18.8 million of the revenue gains.
Private account assets under management rose to $20.5 billion at December 31,
1994, up $.8 billion during the year. Total assets under management at year
end increased to $57.8 billion from $54.4 billion.
Administrative fees from services to the Price Funds and their shareholders
rose 11% during 1994 to $85.7 million as a result of growth in the activities
of the Company's mutual fund transfer agent and defined contribution plan
recordkeeping services; however, increases in related operating expenses more
than offset these revenue gains. Investment and other income decreased $1.4
million from 1993 due to losses from dispositions and write-downs of the
Company's bond fund holdings in the higher interest rate environment that
existed throughout 1994.
Operating expenses increased 19% or $42.1 million to $261.2 million from
$219.1 million. Greater compensation and related costs, which were up $19.7
million, were attributable to increases in overall compensation rates,
including higher bonuses, and a 6% increase in the average number of
employees, primarily to support the growing administrative services
operations. The Company increased spending on advertising and promotion by
$1.8 million primarily to attract additional investments into the
international funds during early 1994. 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 $3.5
million as a result of the Company's recent investments in computer and
communications equipment, office facilities and furnishings. International
investment research fees, which are based on international assets under
management, increased $9.2 million. Administrative and general expenses
<PAGE> 19
increased $7.9 million as a result of greater operating costs associated with
the Company's growing operations, including those related to data processing
and communications.
Increased earnings by the Company's 50%-owned subsidiary, Rowe Price-Fleming
International, Inc. ("RPFI"), was the primary reason for the increase in
income attributable to the minority interests in consolidated subsidiaries.
The Company's international assets, which are managed by RPFI, increased $2.9
billion to $18.3 billion at December 31, 1994, including $10.8 billion in the
Price Funds.
1993 versus 1992. Net income increased almost $12.8 million or $.40 per
share (34%) from almost $35.8 million or $1.19 per share to $48.5 million or
$1.59 per share. Revenues increased 26% to a total of $310.0 million from
$245.1 million. As more fully discussed in the notes to the consolidated
financial statements, 1993 results include a charge of $.6 million or $.02
per share and a credit of $.3 million or $.01 per share reflecting the
cumulative effects of changes in accounting principles for postretirement
benefits other than pensions and for income taxes, respectively.
Investment advisory revenues from the Funds increased $39.0 million as
average assets under management rose $5.8 billion to $29.8 billion. Net cash
inflows to the Funds during 1993 totaled $3.9 billion, including $3.7 billion
into the stock funds. Other sponsored products and private accounts
primarily in the international asset area contributed the balance of the
revenue gains. Total assets under management increased $13.0 billion during
1993, to a record of almost $54.4 billion, including $34.7 billion in the
Funds. Administrative fees from services to the Funds and their shareholders
increased $13.6 million, primarily due to the increased volume of defined
contribution plan recordkeeping and mutual fund transfer agent services
provided. Returns on the Company's larger investment base accounted for the
increase in investment and other income.
Operating expenses increased almost $37.6 million to $219.1 million from
$181.5 million. Greater compensation and related costs, which were up $16.4
million, were primarily attributable to higher compensation rates including
bonuses and a 10% increase in the number of employees, primarily to staff the
growing administrative services operations. The Company increased spending
on advertising and promotion by $3.3 million to attract incremental cash
inflows to the Funds, given the strong investor demand for mutual fund
investment products. Depreciation, amortization, and operating rentals of
property and equipment increased $3.7 million as a result of the Company's
late 1992 acquisition of new computer equipment under operating leases and
the costs of expanded office facilities, including additional space and
equipment for its administrative services operations. International
investment research fees, which are based on the level of international
assets under management, increased $6.4 million. Administrative and general
expenses increased $4.4 million as a result of greater operating costs
associated with the Company's growing operations. The amortization of
goodwill and deferred expenses associated with the USF&G mutual funds
transaction in September 1992 and increased charitable contributions
<PAGE> 20
accounted for $2.5 million of the remaining increase.
The provision for income taxes increased to 38.8% from 37.3% of income before
income taxes and minority interests primarily as the result of the higher 35%
federal tax rate and increased state taxes in 1993.
Increased earnings by RPFI was the reason for the increase in minority
interests in consolidated subsidiaries. The Company's higher international
assets, which are managed by RPFI, more than doubled from $7.4 billion at
December 31, 1992, to $15.4 billion at December 31, 1993, including $8.7
billion in the Funds.
CAPITAL RESOURCES AND LIQUIDITY.
During the three years ended December 31, 1994, stockholders' equity
increased 63% or $83.7 million to $216.2 million. Stockholders' equity at
December 31, 1994 includes $43.9 million which is restricted as to use under
various regulations and agreements to which the Company and its subsidiaries
are subject in the ordinary course of business and $2.6 million of net
unrealized security holding gains on the Company's investments in sponsored
mutual funds.
Operating activities provided cash of $111.1 million in 1994, including $27.3
million from the liquidation of the Company's portfolio of sponsored mutual
funds which had been held as trading securities at December 31, 1993. Cash
provided by operating activities in 1993 was $38.3 million after inclusion of
outflows totaling $27.6 million to acquire the sponsored mutual funds which
were held as trading securities. After adjusting for the activity in trading
securities, net operating cash flows increased $17.8 million in 1994,
including $12.6 million from higher net income. Net cash expended in
investing activities in 1994 aggregated $53.5 million, including $36.1
million of net additions to the Company's longer-term investment portfolios
and $17.4 million of property and equipment acquisitions. The Company also
expended $43.8 million in 1994 for financing transactions, including $15.1
million for dividends to stockholders, $26.4 million to repurchase
approximately 3% of its outstanding common shares, and $6.3 million for
distributions to the minority interests in RPFI. At December 31, 1994, the
Company held liquid assets of $153.0 million, including $60.0 million of cash
and cash equivalents, to meet business demands and opportunities. In
addition, a maximum of $20 million is available to the Company under unused
bank lines of credit.
The Company anticipates that 1995 property and equipment acquisitions
initially budgeted at more than $24 million will be funded from liquid assets
currently available and from future operating cash inflows. Commitments for
additional investments in partnerships and other ventures aggregate $9.3
million at December 31, 1994.
<PAGE> 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to Financial Statements:
Report of Independent Accountants 22
Consolidated Balance Sheets at December 31, 1993 and 1994 23
Consolidated Statements of Income for each of the
three years in the period ended December 31, 1994 24
Consolidated Statements of Cash Flows for each of the
three years in the period ended December 31, 1994 25
Consolidated Statements of Stockholders' Equity for
each of the three years in the period ended December 31, 1994 26
Summary of Significant Accounting Policies 28
Notes to Consolidated Financial Statements 30
Financial Statement Schedule I - Marketable securities and
other investments at December 31, 1994 37
All other schedules are omitted because they are not
applicable or the required information is presented
in the consolidated financial statements and notes thereto.
Supplementary Data - Selected Quarterly Data. 39
<PAGE> 22
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of T. Rowe Price Associates, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of T. Rowe Price Associates, Inc. and its subsidiaries at December
31, 1993 and 1994, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
During 1993, the Company changed its methods of accounting for postretirement
benefits other than pensions, income taxes and investments in equity
securities by adopting new standards of the Financial Accounting Standards
Board. These changes are more fully described in Notes 8 and 4 and in the
Summary of Significant Accounting Policies accompanying the consolidated
financial statements.
/s/ PRICE WATERHOUSE LLP
Baltimore, Maryland
January 25, 1995
<PAGE> 23
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
__________________
1993 1994
________ ________
(in thousands)
ASSETS
Cash and cash equivalents (Note 1) $ 46,218 $ 60,016
Accounts receivable (Note 1) 43,102 46,722
Investments in sponsored mutual funds (Note 1)
Short-term bond and money market mutual funds
held as trading securities 27,647 --
Other funds held as available-for-sale securities 69,423 93,010
Partnership and other investments (Note 9) 19,606 28,657
Property and equipment (Notes 2 and 5) 39,828 49,341
Goodwill and deferred expenses (Notes 3 and 5) 9,773 7,811
Other assets (Note 4) 7,803 11,725
________ ________
$263,400 $297,282
________ ________
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 16,659 $ 17,741
Accrued compensation and retirement costs (Note 8) 19,844 27,413
Income taxes payable (Note 4) 5,097 1,573
Dividends payable (Note 6) 3,784 4,575
Debt (Note 5) 12,915 13,410
Minority interests in consolidated subsidiaries 9,148 16,331
________ ________
Total liabilities 67,447 81,043
________ ________
Commitments and contingent liabilities (Note 9)
Stockholders' equity (Notes 6 and 9)
Common stock, $.20 par value - authorized
48,000,000 shares; issued and outstanding
29,095,039 shares in 1993 and 28,569,419
shares in 1994 5,819 5,714
Capital in excess of par value 1,197 1,935
Unrealized security holding gains (Note 1) 5,345 2,554
Retained earnings 183,592 206,036
________ ________
Total stockholders' equity 195,953 216,239
________ ________
$263,400 $297,282
________ ________
________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 24
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31,
__________________________
1992 1993 1994
________ ________ ________
(in thousands, except
per-share amounts)
Revenues
Investment advisory fees (Note 1) $174,590 $224,809 $290,071
Administrative fees (Note 1) 63,558 77,208 85,672
Investment and other income (Notes 1 and 7) 6,964 8,024 6,635
________ ________ ________
245,112 310,041 382,378
________ ________ ________
Expenses
Compensation and related costs (Note 8) 93,275 109,637 129,373
Advertising and promotion 26,106 29,448 31,201
Depreciation, amortization and operating
rentals of property and equipment
(Notes 2 and 9) 17,851 21,528 24,993
International investment research fees 10,046 16,469 25,719
Administrative and general (Notes 2, 3 and 5) 34,207 41,975 49,899
________ ________ ________
181,485 219,057 261,185
________ ________ ________
Income before income taxes and minority
interests 63,627 90,984 121,193
Provision for income taxes (Note 4) 23,754 35,320 46,587
________ ________ ________
Income from consolidated companies 39,873 55,664 74,606
Minority interests in consolidated subsidiaries 4,089 6,795 13,455
________ ________ ________
Income before cumulative effects of changes
in accounting principles 35,784 48,869 61,151
Cumulative effects of changes in accounting
principles for
Postretirement benefits other than
pensions (Note 8) -- (621) --
Income taxes (Note 4) -- 291 --
________ ________ ________
Net income $ 35,784 $ 48,539 $ 61,151
________ ________ ________
________ ________ ________
Earnings per share, including a net charge of
$.01 per share in 1993 for the cumulative
effects of changes in accounting principles $ 1.19 $ 1.59 $ 2.00
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 25
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
____________________________
1992 1993 1994
________ ________ ________
(in thousands)
Cash flows from operating activities
Net income $ 35,784 $ 48,539 $ 61,151
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization of
property and equipment 7,350 7,974 10,134
Minority interests in consolidated
subsidiaries 4,089 6,795 13,455
Increase in accounts receivable (502) (13,036) (3,620)
Liquidations of (investments in) short-term
bond and money market mutual funds -- (27,657) 27,292
Non-compete and transition services agreements (2,374) 1,003 920
Leasehold improvements reimbursed by lessor (3,485) 3,485 --
Increase in accounts payable and accrued
liabilities 5,262 11,230 3,419
Other changes in assets and liabilities (1,015) (40) (1,697)
________ ________ ________
Net cash provided by operating activities 45,109 38,293 111,054
________ ________ ________
Cash flows from investing activities
Investments in sponsored mutual funds (9,794) (30,722) (33,962)
Proceeds from sales of mutual fund investments 2,224 1,034 5,143
Proceeds from sale of receivable from MRT -- 34,636 --
Principal receipts from MRT 9,619 -- --
Partnership and other investments (4,959) (3,214) (8,812)
Return of partnership investments 985 905 1,563
Additions to property and equipment (10,113) (12,240) (17,431)
Acquisition of subsidiary from
USF&G Corporation (8,519) -- --
________ ________ ________
Net cash used in investing activities (20,557) (9,601) (53,499)
________ ________ ________
Cash flows from financing activities
Purchases of stock (4,962) (2,251) (26,401)
Receipts relating to stock issuances 1,639 3,014 4,351
Dividends paid to stockholders (10,352) (12,138) (15,085)
Distributions to minority interests (2,129) (4,775) (6,320)
Debt payments (1,687) (275) (302)
________ ________ ________
Net cash used in financing activities (17,491) (16,425) (43,757)
________ ________ ________
Cash and cash equivalents
Net increase during year 7,061 12,267 13,798
At beginning of year 26,890 33,951 46,218
________ ________ ________
At end of year $ 33,951 $ 46,218 $ 60,016
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 26
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Capital Unreal-
Common in ized Total
Common stock excess security stock-
stock - par of par Retained holding holders'
- shares value value earnings gains equity
__________ ______ _______ ________ ________ ________
Balance at
December 31,
1991 14,413,586 $2,883 $ 635 $129,007 $132,525
Stock options
exercised 145,729 29 1,584 1,613
Purchases of
common stock (130,000) (26) (1,074) (3,862) (4,962)
Cash received
from holders of
Executive Stock 26 26
Net income 35,784 35,784
Dividends
declared (10,788) (10,788)
__________ ______ _______ ________ ________
Balance at
December 31,
1992 14,429,315 2,886 1,171 150,141 154,198
Stock options
exercised 254,629 51 2,896 2,947
2-for-1 stock
split 14,491,095 2,898 (1,997) (901) --
Purchases of
common stock (80,000) (16) (940) (1,295) (2,251)
Cash received
from holders of
Executive Stock 67 67
Net income 48,539 48,539
Dividends
declared (12,892) (12,892)
Unrealized hold-
ing gains on
available-for-
sale mutual fund
investments $5,345 5,345
__________ ______ _______ ________ ______ ________
Balance at
December 31,
1993 29,095,039 5,819 1,197 183,592 5,345 195,953
Continued on next page.
<PAGE> 27
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Capital Unreal-
Common in ized Total
Common stock excess security stock-
stock - par of par Retained holding holders'
- shares value value earnings gains equity
__________ ______ _______ ________ ________ ________
Continued from prior page.
Stock options
exercised 366,880 74 4,183 4,257
Purchases of
common stock (892,500) (179) (3,539) (22,831) (26,549)
Cash received
from holders of
Executive Stock 94 94
Net income 61,151 61,151
Dividends
declared (15,876) (15,876)
Decrease in
unrealized hold-
ing gains on
available-for-
sale mutual fund
investments (2,791) (2,791)
__________ ______ _______ ________ ______ ________
Balance at
December 31,
1994 28,569,419 $5,714 $ 1,935 $206,036 $2,554 $216,239
__________ ______ _______ ________ ______ ________
__________ ______ _______ ________ ______ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 28
T. ROWE PRICE ASSOCIATES, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Associates, Inc. and its consolidated subsidiaries (the
"Company") provide investment advisory and administrative services to
sponsored mutual funds and investment products, and to private accounts of
other institutional and individual investors.
BASIS OF PREPARATION.
The Company's financial statements are prepared in accordance with generally
accepted accounting principles. Certain 1992 and 1993 amounts have been
reclassified to conform to the 1994 presentation.
PRINCIPLES OF CONSOLIDATION.
The consolidated financial statements include the accounts of all majority
owned subsidiaries and, by virtue of the Company's controlling interest, its
50%-owned subsidiary, Rowe Price-Fleming International, Inc. ("RPFI"). All
material intercompany accounts and transactions are eliminated in
consolidation.
International investment research is provided by affiliates of the minority
stockholders of RPFI. Fees paid for these services are based on
international assets under management by RPFI.
CASH EQUIVALENTS.
For purposes of financial statement disclosure, cash equivalents consist of
all short-term, highly liquid investments including certain money market
mutual funds and all overnight commercial paper investments. The cost of
these investments is equivalent to fair value.
INVESTMENTS IN SPONSORED MUTUAL FUNDS.
The Company has historically accounted for its investments in sponsored stock
and bond mutual funds at the lower of aggregate cost or market. On December
31, 1993, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," which requires the Company to state its mutual fund investments
at fair value and to classify these holdings as either trading (held for only
a short period of time) or available-for-sale securities. The effect of
initially applying SFAS No. 115 was to charge investment income with an
unrealized holding loss of $10,000 on investments held as trading securities
at December 31, 1993. Unrealized holding gains on securities classified as
available-for-sale at December 31, 1993 and 1994 are reported net of income
tax effects as a separate component of stockholders' equity.
CONCENTRATION OF CREDIT RISK.
Financial instruments which potentially expose the Company to concentrations
of credit risk as defined by SFAS No. 105 consist primarily of investments in
sponsored money market and bond mutual funds and accounts receivable. Credit
risk is believed to be minimal in that counterparties to these financial
<PAGE> 29
instruments have substantial assets including the diversified investment
portfolios under management by the Company which aggregate $57.8 billion at
December 31, 1994.
PARTNERSHIP AND OTHER INVESTMENTS.
The Company invests in various partnerships and ventures including those
sponsored by the Company. These investees, which hold equity securities,
venture capital investments, debt securities and real estate, are carried at
cost adjusted for the Company's share of earnings or losses subsequent to
investment. Because the majority of the investees carry their investments at
fair value and include unrealized gains and losses in their reported
earnings, the carrying value of these investments approximates fair value.
PROPERTY AND EQUIPMENT.
Property and equipment is stated at cost net of accumulated depreciation and
amortization computed using the straight-line method. Provisions for
depreciation and amortization are based on the following estimated useful
lives: computer and communications equipment, furniture and other equipment,
2 to 7 years; building, 40 years; leased land, the 50-year lease term; and
leasehold improvements, the shorter of their estimated useful lives or the
remainder of the lease term.
REVENUE RECOGNITION.
Fees from investment advisory and administrative services are recognized
during the period in which such services are performed, except when advisory
fees from mutual funds are adjusted in accordance with the expense limitation
provisions of the investment advisory agreements between the Company and the
funds. Allowances made for reduced advisory fees and other mutual fund
expenses in excess of limitations may be recovered in future periods if and
when fund performance and related expense limitation provisions permit.
ADVERTISING.
Costs of advertising are expensed the first time that the advertising takes
place.
EARNINGS PER SHARE.
Earnings per share is computed based on the weighted average number of common
shares outstanding, including share equivalents arising from unexercised
stock options, retroactively adjusted to give effect to the 2-for-1 stock
split in November 1993. The aggregate weighted average shares outstanding
used in computing earnings per share were 30,157,564 in 1992, 30,615,114 in
1993, and 30,571,496 in 1994.
<PAGE> 30
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INVESTMENTS IN AND TRANSACTIONS WITH SPONSORED MUTUAL FUNDS.
Investments in sponsored money market mutual funds, which are classified as
cash equivalents in the accompanying consolidated financial statements,
aggregate $45,272,000 at December 31, 1993 and $59,355,000 at December 31,
1994.
The Company's investments in sponsored mutual funds held as available-for-
sale at December 31 include:
Gross
unrealized Aggregate
Aggregate holding gains fair
cost (losses) value
_________ ______________ _________
(in thousands)
1994
___________
Stock funds $ 58,540 $ 4,346 $ 62,886
Bond funds 30,460 (336) 30,124
________ _______ ________
Total $ 89,000 $ 4,010 $ 93,010
________ _______ ________
________ _______ ________
1993
___________
Stock funds $ 34,990 $ 7,025 $ 42,015
Bond funds 26,190 1,218 27,408
________ _______ ________
Total $ 61,180 $ 8,243 $ 69,423
________ _______ ________
________ _______ ________
Dividends earned on the Company's investments in sponsored mutual funds
aggregated $2,741,000 in 1992, $4,439,000 in 1993, and $5,644,000 in 1994.
The Company recognized net gains of $67,000 in 1992 and net losses of $34,000
and $1,306,000 in 1993 and 1994, respectively, from dispositions and write-
downs of fund investments.
The Company provides investment advisory and administrative services to the
T. Rowe Price family of mutual funds which had aggregate assets under
management at December 31, 1994 of $37.3 billion. All services rendered by
the Company are provided under contracts that set forth the services to be
provided and the fees to be charged. These contracts are subject to periodic
review and approval by each of the funds' boards of directors and, with
respect to investment advisory contracts, also by the funds' shareholders.
Revenues derived from services rendered to the sponsored mutual funds were
$173,153,000 in 1992, $221,199,000 in 1993, and $274,618,000 in 1994.
Accounts receivable from the sponsored mutual funds aggregate $21,741,000 and
$23,666,000 at December 31, 1993 and 1994, respectively.
<PAGE> 31
NOTE 2 - PROPERTY AND EQUIPMENT.
Property and equipment at December 31 consists of:
1993 1994
________ ________
(in thousands)
Computer and communications equipment $ 31,431 $ 42,316
Building and leased land 19,756 19,756
Furniture and other equipment 13,889 17,053
Leasehold improvements 4,691 6,971
________ ________
69,767 86,096
Accumulated depreciation and amortization (29,939) (36,755)
________ ________
$ 39,828 $ 49,341
________ ________
________ ________
Maintenance and repair expenses included in administrative and general
expenses were $2,368,000 in 1992, $2,458,000 in 1993, and $3,162,000 in 1994.
The Company terminated its capital lease arrangements for computer equipment
and recognized a loss of $578,000 in 1992.
NOTE 3 - GOODWILL AND DEFERRED EXPENSES.
The Company acquired an investment management subsidiary of USF&G Corporation
and combined six USF&G mutual funds with aggregate net assets of $.5 billion
into the T. Rowe Price family of funds in 1992. The total transaction cost
which has been recognized using the purchase method of accounting was
$11,024,000, including goodwill of $7,937,000 which is being amortized over
11 years using the straight-line method. Prepaid non-compete and transition
services agreements totaling $2,500,000 are being amortized over their three-
year life. Accumulated amortization at December 31, 1993 and 1994 aggregates
$2,216,000 and $3,794,000, respectively.
Goodwill of $1,980,000 from an earlier corporate acquisition is being
amortized over 40 years using the straight-line method. Accumulated
amortization was $1,039,000 at December 31, 1993 and $1,089,000 at December
31, 1994.
NOTE 4 - INCOME TAXES.
The provision for income taxes consists of:
1992 1993 1994
________ ________ ________
(in thousands)
Current income taxes
Federal and foreign $ 20,228 $ 27,254 $ 42,635
State and local 2,802 4,927 6,183
Deferred income taxes (tax benefits) 724 3,139 (2,231)
________ ________ ________
$ 23,754 $ 35,320 $ 46,587
________ ________ ________
________ ________ ________
<PAGE> 32
Deferred income taxes arise from temporary differences between taxable income
for financial statement and income tax return purposes. Significant
temporary differences resulted in deferred income taxes of $943,000 in 1992
related to depreciation expense and $2,713,000 in 1993 related to income on
the receivable from MRT. Deferred tax benefits arising from significant
temporary differences include $947,000 in 1992 related to income on the
receivable from MRT, $1,712,000 in 1994 related to accrued compensation and
retirement costs, and $704,000 in 1994 related to net unrealized investment
income.
On January 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income
Taxes," which requires the use of the liability method for computing deferred
income taxes instead of the deferred method previously used in the Company's
1992 financial statements. The cumulative effect of adopting the new
accounting principle was a credit to earnings of $291,000 or $.01 per share.
The net deferred tax liability of $2,596,000 included in income taxes payable
at December 31, 1993 consists of total deferred tax liabilities of $5,393,000
and total deferred tax assets of $2,797,000. Deferred tax liabilities
include $4,095,000 arising from net unrealized investment income and $681,000
from depreciation expense. Deferred tax assets include $1,934,000 arising
from accrued compensation and retirement costs.
The net deferred tax asset of $1,125,000 included in other assets at December
31, 1994 consists of total deferred tax liabilities of $3,656,000 and total
deferred tax assets of $4,781,000. Deferred tax liabilities include
$1,100,000 arising from RPFI's undistributed earnings, $1,901,000 arising
from net unrealized investment income, and $655,000 from depreciation
expense. Deferred tax assets include $3,646,000 arising from deferred
compensation and retirement costs and $662,000 from other accrued expenses.
Cash outflows from operating activities include income taxes paid of
$21,181,000 in 1992, $31,911,000 in 1993, and $50,539,000 in 1994.
The following table reconciles the statutory federal income tax rate to the
Company's effective income tax rate.
1992 1993 1994
______ ______ ______
Statutory federal income tax rate 34.0% 35.0% 35.0%
State income taxes, net of federal tax benefits 3.3 3.6 3.1
Other items .0 .2 .3
______ ______ ______
Effective income tax rate 37.3% 38.8% 38.4%
______ ______ ______
______ ______ ______
NOTE 5 - DEBT.
Long-term financing arrangements for the Company's administrative services
facility in Owings Mills, Maryland include a $13,500,000 secured promissory
note with Confederation Life Insurance Company. The terms of the note
include an interest rate of 9.77%, monthly principal and interest payments
totaling $128,000 for 10 years, and a final principal payment of $9,845,000
in July 2001. A prepayment option is available under the terms of the note;
<PAGE> 33
however, the payment of a substantial premium would be required to retire the
debt at December 31, 1994. Related debt issuance costs of $436,000 are
included in deferred expenses and are being amortized over the life of the
loan to produce an effective annual interest rate of 10.14%.
Outstanding principal balances for this note were $12,904,000 and $12,613,000
at December 31, 1993 and 1994, respectively. Fair values of $16,030,000 and
$14,005,000 have been estimated based on the cost of risk-free assets that
could be acquired to extinguish the obligation at December 31, 1993 and 1994,
respectively.
A maximum of $20,000,000 is available to the Company under unused bank lines
of credit at December 31, 1994.
Debt at December 31, 1994 also includes $797,000 relating to the acquisition
of computer software in 1994.
Cash outflows from operating activities include interest paid of $1,501,000
in 1992, $1,481,000 in 1993, and $1,643,000 in 1994. Interest expense was
$1,666,000 in 1992, $1,754,000 in 1993, and $1,330,000 in 1994.
NOTE 6 - COMMON STOCK AND EMPLOYEE STOCK INCENTIVE PLANS.
SHARES AUTHORIZED AND ISSUED.
On November 10, 1993, the Company's stockholders approved a 2-for-1 stock
split of the Company's common stock which was effected on November 30, 1993.
Earnings per-share data in the accompanying consolidated financial statements
and all per-share and share data in these notes have been adjusted to give
retroactive effect to the stock split.
At December 31, 1994, the Company had reserved 7,763,923 shares of its
unissued common stock for issuance upon the exercise of stock options and
420,000 shares for issuance under an employee stock purchase plan.
On December 16, 1994, the Company's board of directors adopted resolutions to
increase authorized common shares from 48,000,000 to 100,000,000 and create a
class of 20,000,000 authorized shares of undesignated preferred stock. These
changes require amendment of the Company's charter and have been recommended
by the board to the Company's stockholders for approval at their annual
meeting on April 6, 1995.
SHARE REPURCHASES.
The Company's board of directors has authorized the future repurchase of up
to 539,500 common shares at December 31, 1994. Subsequent to year end, the
board extended its repurchase authorization to include up to an additional
1,500,000 shares.
<PAGE> 34
DIVIDENDS.
The Company declared cash dividends per share of $.375 in 1992, $.445 in 1993
and $.55 in 1994.
EXECUTIVE STOCK.
At December 31, 1994, there were outstanding 929,040 shares of common stock
("Executive Stock") which were sold to certain officers of the Company in
1982 at a discount. These shares are subject to restrictions which require
payment of the discount of $.32 per share to the Company at the earlier of
the sale of such stock or termination of employment.
STOCK INCENTIVE PLANS.
The following table summarizes the status of noncompensatory stock options
granted at market value to certain officers and directors of the Company.
Options
Options Granted Options
Year Unexercised Exercised (Canceled) Unexercised Exercisable
of Options at During During Options at at Exercise
Grant 12/31/93 1994 1994 12/31/94 12/31/94 Price
_________________ _________ __________ ___________ ___________ _____________
1984 22,400 (22,400) -- -- -- $.75
1987 241,346 (53,515) -- 187,831 187,831 $5.38 & $9.38
1988 292,414 (89,844) -- 202,570 202,570 $7.94
1989 580,392 (85,350) -- 495,042 495,042 $11.38
1990 586,313 (58,183) (38,000) 490,130 193,130 $7.19 & $8.50
1991 760,450 (48,150) (42,800) 669,500 381,100 $17.00
1992 887,000 (27,150) (46,800) 813,050 310,050 $18.75
1993 1,154,000 (2,800) (45,400) 1,105,800 220,190 $28.13
1994 -- -- 1,231,500 1,231,500 -- $32.25
___________ ________ _________ __________ __________
4,524,315 (387,392) 1,058,500 5,195,423 1,989,913
___________ ________ _________ __________ __________
___________ ________ _________ __________ __________
The right to exercise stock options generally vests over the five-year period
following the grant. After the tenth year following the grant, the right to
exercise the related stock options lapses and the options are canceled.
NOTE 7 - OTHER INCOME.
In 1990, the Company acquired defaulted Mortgage and Realty Trust ("MRT")
commercial paper and medium-term notes from the portfolios of its investment
advisory clients, including sponsored mutual funds. Interest of $4,355,000
and $2,046,000 was received in 1992 and 1993, respectively, and a capital
loss of $112,000 was recognized in 1993 when the Company sold its remaining
claim against MRT.
NOTE 8 - EMPLOYEE RETIREMENT PLANS.
The Company sponsors two defined contribution retirement plans: a profit
sharing plan based on participant compensation and a 401(k) plan. Costs
<PAGE> 35
recognized for these plans were $6,739,000 in 1992, $7,601,000 in 1993, and
$7,881,000 in 1994.
The Company also has a defined benefit plan covering those employees whose
annual base salaries do not exceed a plan-specified salary limit.
Participant benefits are based on the final month's base pay and years of
service subsequent to January 1, 1987. The Company's funding policy is to
contribute annually the maximum amount that can be deducted for federal
income tax purposes. The following table sets forth the plan's funded status
and the amounts recognized in the Company's consolidated balance sheets.
1993 1994
________ ________
(in thousands)
Actuarial present value of
Accumulated benefit obligation for service rendered
Vested $ 1,671 $ 1,179
Non-vested 606 407
________ ________
Total 2,277 1,586
Obligation attributable to estimated future
compensation increases 1,329 971
________ ________
Projected benefit obligation 3,606 2,557
Plan assets held in sponsored mutual funds, at
fair value 2,593 2,749
________ ________
Projected benefit obligation in excess of (less than)
plan assets 1,013 (192)
Unrecognized net gain from changes in discount rate and
past participant experience different from that assumed 722 2,404
________ ________
Accrued retirement costs $ 1,735 $ 2,212
________ ________
________ ________
Discount rate used in determining actuarial
present values 6.40% 8.25%
________ ________
________ ________
Net periodic retirement plan expense includes:
1992 1993 1994
_____ ______ ______
(in thousands)
Service cost for benefits earned during
the year $698 $1,077 $867
Interest cost on projected benefit obligation 156 252 230
Actual return on plan assets (53) (94) (5)
Net amortization and deferral 102 489 (271)
_____ ______ _____
$903 $1,724 $821
_____ ______ _____
_____ ______ _____
On January 1, 1993, the Company adopted SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," which changed the Company's
practice of accounting for postretirement health and life insurance benefits
from the cash basis to the accrual basis. The adoption of the new accounting
principle resulted in the immediate recognition of the unfunded accumulated
postretirement benefits obligation of $1,011,000 for prior service cost.
<PAGE> 36
After recording the related deferred income tax benefit, the Company
recognized an aftertax charge to earnings of $621,000 or $.02 per share.
Eligible postretirement benefits plan participants include only those
retirees and their dependents who were receiving benefits on January 1, 1993.
NOTE 9 - COMMITMENTS AND CONTINGENT LIABILITIES.
The Company is a minority partner in the joint venture which owns the land
and building in which the Company leases its corporate offices. Future
minimum rental payments under the Company's lease agreement are $3,110,000 in
1995, $3,220,000 in 1996, $3,769,000 in each of 1997, 1998 and 1999, and
$29,986,000 in 2000 through 2006. Rent expense recognized under the lease
agreement with the venture was $5,296,000 in 1992, $6,348,000 in 1993, and
$6,138,000 in 1994.
The Company leases office facilities and equipment under other noncancelable
operating leases. Related rent expense was $5,205,000 in 1992, $7,206,000 in
1993, and $8,721,000 in 1994. Future minimum rental payments under these
leases aggregate $5,115,000 in 1995, $2,851,000 in 1996, $2,043,000 in 1997,
$1,480,000 in 1998, $1,434,000 in 1999, and $6,312,000 in later years.
At December 31, 1994, the Company had outstanding commitments to invest an
additional $9,260,000 in various investment partnerships and ventures.
The Company has contingent obligations at December 31, 1994 under a $500,000
direct pay letter of credit expiring not later than 1999 and a $780,000
standby letter of credit which is renewable annually.
Consolidated stockholders' equity at December 31, 1994 includes $43,890,000
which is restricted as to use under various regulations and agreements to
which the Company and its subsidiaries are subject in the ordinary course of
business.
From time to time, the Company is a party to various employment-related
claims before federal, state and local administrative agencies and courts.
The Company vigorously defends itself against these claims. In the opinion
of management, after consultation with counsel, it is unlikely that any
adverse determination in one or more pending employment-related claims would
have a material adverse effect on the Company's financial position or results
of operations.
<PAGE> 37
SCHEDULE I - MARKETABLE SECURITIES AND OTHER INVESTMENTS
Column A Column B Column C Column D Column E
_____________________________ __________ __________ __________ ___________
Amount at
which each
portfolio
of equity
security
issues and
each other
security
Market issue
Number of value of carried
shares or each in the
Name of issuer and title of ownership Cost of issue at balance
each issue percentage each issue 12/31/94 sheet
________________________________________ ___________ ___________ ___________
Marketable securities - Invest-
ments in sponsored mutual
funds - Other funds held as
available-for-sale securities
Stock Funds
Equity Income 213,493 $ 3,086,000 $ 3,412,000
Blue Chip Growth 299,494 3,119,000 3,327,000
Equity Index 251,456 2,832,000 3,292,000
International Discovery 207,798 3,137,000 3,146,000
International Stock 268,875 2,699,000 3,044,000
Personal Strategy Income 302,400 3,024,000 2,988,000
Latin America 349,551 3,500,000 2,954,000
Mid-Cap Growth 175,510 2,132,000 2,606,000
Dividend Growth 204,752 2,197,000 2,260,000
Equity Income Portfolio 205,653 2,059,000 2,143,000
Capital Opportunity 200,000 2,000,000 2,086,000
Value 201,374 2,014,000 2,062,000
International Stk. Portfolio 200,000 2,000,000 2,036,000
Personal Strategy Balanced 203,211 2,032,000 2,026,000
New America Growth Portfolio 200,000 2,000,000 2,020,000
Personal Strategy Balanced
Portfolio 200,000 2,000,000 2,000,000
Balanced 179,342 1,824,000 1,998,000
New Asia 222,014 1,341,000 1,778,000
OTC 122,847 1,869,000 1,695,000
New Horizons 107,934 1,294,000 1,593,000
Growth Stock 82,756 1,280,000 1,552,000
Personal Strategy Growth 151,635 1,516,000 1,530,000
Science & Technology 69,567 805,000 1,505,000
Small-Cap Value 105,065 1,394,000 1,408,000
Japan 117,399 1,087,000 1,202,000
European Stock 96,063 1,042,000 1,169,000
New Era 55,525 1,052,000 1,119,000
Other funds 4,205,000 4,935,000
___________ ___________ ___________
Total stock funds 58,540,000 62,886,000 $62,886,000
___________ ___________ ___________
<PAGE> 38
SCHEDULE I - MARKETABLE SECURITIES AND OTHER INVESTMENTS (Continued)
Column A Column B Column C Column D Column E
_____________________________ __________ __________ __________ ___________
Bond Funds - Taxable
Short-Term Global Income 475,286 2,082,000 2,082,000
Limited Term Bond Portfolio 417,151 2,085,000 2,052,000
Emerging Markets Bond 200,000 2,000,000 2,000,000
Other funds 5,003,000 4,893,000
Bond Funds - Tax-free
Florida Insured
Intermediate Tax-Free Bond 214,557 2,148,000 2,105,000
Georgia Tax-Free Bond 218,524 2,126,000 2,061,000
Summit Municipal
Money Market 2,052,345 2,052,000 2,052,000
Virginia Short-Term
Tax-Free Bond 401,431 2,007,000 2,007,000
Summit Municipal
Intermediate 209,804 2,043,000 1,991,000
Summit Municipal Income 211,618 1,976,000 1,917,000
Maryland Tax-Free Bond 134,897 1,303,000 1,290,000
Other funds 5,635,000 5,674,000
___________ ___________ ___________
30,460,000 30,124,000 30,124,000
___________ ___________ ___________
$89,000,000 $93,010,000 $93,010,000
___________ ___________ ___________
___________ ___________ ___________
Other investments - Partner-
ship and other investments
T. Rowe Price Recovery Fund, LP 21.0% $12,124,000 $12,124,000 $12,124,000
Jardine Fleming Taiwan In-
vestment Management Limited 24.0% 3,090,000 3,090,000 3,090,000
RPFI International Partners, LP 1.0% 2,209,000 2,209,000 2,209,000
T. Rowe Price Strategic
Partners Fund, LP 15.4% 1,943,000 1,943,000 1,943,000
New Enterprise Associates V,
Limited Partnership .8% 1,293,000 1,293,000 1,293,000
T. Rowe Price Strategic
Partners Fund II, LP 4.0% 1,802,000 1,802,000 1,802,000
Onset Enterprise Associates, LP 3.3% 1,107,000 1,107,000 1,107,000
Other investments 5,089,000 5,089,000 5,089,000
___________ ___________ ___________
$28,657,000 $28,657,000 $28,657,000
___________ ___________ ___________
___________ ___________ ___________
<PAGE> 39
Supplementary Data - Selected Quarterly Financial Data:
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
________ ________ ________ ________
(in thousands, except per-share amounts)
1993
Revenues $ 68,716 $ 72,679 $ 78,765 $ 89,881
Net income $ 10,221 (3) $ 11,536 $ 12,038 $ 14,744
Earnings per share (1) $ .34 (3) $ .38 $ .39 $ .48
1994
Revenues $ 91,927 $ 92,468 $ 96,943 $101,040
Net income $ 13,753 $ 15,049 $ 16,262 $ 16,087
Earnings per share (2) $ .44 $ .49 $ .53 $ .53
(1) Retroactively adjusted to give effect to the 2-for-1 stock split in
November 1993.
(2) The sum of the 1994 quarterly earnings per share does not equal the
full-year amount because the quarterly computations are done
independently.
(3) Net income and earnings per share before the cumulative effects of
changes in accounting principles were $10,551 and $.35, respectively.
<PAGE> 40
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item as to the identification of the Company's
executive officers and other significant employees is contained as a separate
item at the end of Part I of this Form 10-K Annual Report. The balance of
the information required by this item as to the Company's directors and
executive officers is incorporated in this Form 10-K Annual Report by
reference to the proxy statement pertaining to the Company's 1995 Annual
Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this item is incorporated in this Form 10-K Annual
Report by reference to the proxy statement pertaining to the Company's 1995
Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is incorporated in this Form 10-K Annual
Report by reference to the proxy statement pertaining to the Company's 1995
Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is incorporated in this Form 10-K Annual
Report by reference to the proxy statement pertaining to the Company's 1995
Annual Meeting of Stockholders.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report.
1. Financial Statements: See index at Item 8 of Part II.
2. Financial Statement Schedules: See index at Item 8 of Part II.
3. 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) Amended and Restated Charter of T. Rowe Price Associates,
Inc. (Incorporated by reference from the 1993 Annual Report
on Form 10-K; Accession No. 80255-94-33)
<PAGE> 41
3.(ii) Amended and Restated By-Laws of T. Rowe Price Associates,
Inc. (Incorporated by reference from the 1989 Annual Report
on Form 10-K [File No. 0-14282])
4 Pursuant to Item 601(b)(4)(iii)(A), agreements defining the
rights of the holder of $13,500,000 of a consolidated
subsidiary's long-term debt (not registered) will be
furnished to the Commission upon request.
10.01 Form of Investment Management Agreement with each of the T.
Rowe Price Funds. (Incorporated by reference from Form N-1A;
Accession No. 871839-95-12)
10.02 Transfer Agency and Service Agreement dated as of January 1,
1995 between each of the T. Rowe Price Funds and T. Rowe
Price Services, Inc. (Incorporated by reference from Form N-
1A; Accession No. 871839-95-12)
10.03 Agreement dated January 1, 1995 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. 871839-95-12)
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.
871839-95-12)
10.05 Office Lease dated as of July 27, 1989 between 100 East Pratt
Street Limited Partnership and T. Rowe Price Associates, Inc.
(Incorporated by reference from the 1989 Annual Report on
Form 10-K [File No. 0-14282])
10.06 Lease agreement dated April 17, 1990 between McDonogh School,
Incorporated and TRP Suburban, Inc. (Incorporated by
reference from the 1990 Annual Report on Form 10-K [File No.
0-14282])
10.07 Form of Executive Stock Agreement dated December 23, 1981.
(Incorporated by reference from Registration Statement on
Form S-1 [File No. 33-3398])
10.08 Form of Special Compensation Agreement dated April __, 1982.
(Incorporated by reference from Registration Statement on
Form S-1 [File No. 33-3398])
10.09 Form of Amendment to Executive Stock Agreement dated as of
________, 1986. (Incorporated by reference from Registration
Statement on Form S-1 [File No. 33-3398])
<PAGE> 42
10.10 1986 Employee Stock Purchase Plan of T. Rowe Price
Associates, Inc. (Incorporated by reference from Form S-8
Registration Statement [File No. 33-7012])
10.11 T. Rowe Price Associates, Inc. 1986 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-8672])
10.12 T. Rowe Price Associates, Inc. 1990 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-37573])
10.13 T. Rowe Price Associates, Inc. 1993 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-72568])
21 Subsidiaries of T. Rowe Price Associates, Inc.
23 Consent of Independent Accountants, Price Waterhouse.
27 Financial Data Schedule.
99 Proxy Statement pertaining to the 1995 Annual Meeting of
Stockholders. (Incorporated by reference from Form DEF 14A;
Accession No. 933259-95-9; CIK 80255)
(b) Reports on Form 8-K.
The Company was not required to and did not file any Reports on Form 8-K
during the three months ended December 31, 1994.
<PAGE> 43
SIGNATURES.
Pursuant to the requirements of Section 13 or 15(d) 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 March 27,
1995.
T. Rowe Price Associates, Inc.
By: /s/ George J. Collins, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 27, 1995.
/s/ George J. Collins, Chief Executive Officer and Director
/s/ George A. Roche, Chief Financial Officer and Director
/s/ Thomas H. Broadus, Jr., Director
/s/ James E. Halbkat, Jr., Director
/s/ Carter O. Hoffman, Director
/s/ Henry H. Hopkins, Director
/s/ James S. Riepe, Director
/s/ John W. Rosenblum, Director
/s/ Robert L. Strickland, Director
/s/ M. David Testa, Director
/s/ Philip C. Walsh, Director
/s/ Alvin M. Younger, Jr., Principal Accounting Officer
EXHIBIT 21
SUBSIDIARIES OF T. ROWE PRICE ASSOCIATES, INC. (1)
DECEMBER 31, 1994
Subsidiary companies and state of incorporation Ownership percentage
_____________________________________________________________________________
T. Rowe Price Investment Services, Inc. (Maryland) 100%
T. Rowe Price Retirement Plan Services, Inc. (Maryland) 100%
T. Rowe Price Services, Inc. (Maryland) 100%
T. Rowe Price Stable Asset Management, Inc. (Maryland) 100%
T. Rowe Price Trust Company, Inc. (Maryland) 100%
TRP Finance, Inc. (Delaware) 100%
Rowe Price-Fleming International, Inc. (Maryland) 50%
TRP Suburban, Inc. (Maryland) 100%
________________
(1) Omitted subsidiaries, when considered in the aggregate, do not
constitute a significant subsidiary.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-7012, No. 33-8672, No. 33-37573 and No. 33-
72568) of T. Rowe Price Associates, Inc. of our report dated January 25, 1995
appearing on page 22 of this Form 10-K.
/s/ PRICE WATERHOUSE LLP
Baltimore, Maryland
March 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF T. ROWE PRICE ASSOCIATES, INC. LISTED IN THE ITEM 8
INDEX ON PAGE 21 OF THE ACCOMPANYING FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED
DECEMBER 31, 1994 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> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 60,016,000
<SECURITIES> 93,010,000
<RECEIVABLES> 46,722,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 86,096,000
<DEPRECIATION> 36,755,000
<TOTAL-ASSETS> 297,282,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 13,410,000
<COMMON> 5,714,000
0
0
<OTHER-SE> 210,525,000
<TOTAL-LIABILITY-AND-EQUITY> 297,282,000
<SALES> 0
<TOTAL-REVENUES> 382,378,000
<CGS> 0
<TOTAL-COSTS> 259,855,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,330,000
<INCOME-PRETAX> 121,193,000
<INCOME-TAX> 46,587,000
<INCOME-CONTINUING> 61,151,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,151,000
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 0
<FN>
<F1>Item is not contained in registrant's unclassified balance sheet.
</FN>
</TABLE>
