<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended: MARCH 31, 1996.
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.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]. No [ ].
Indicate the number of shares outstanding of the issuer's common stock ($.20
par value), as of the latest practicable date. 57,155,624 SHARES AT MAY 3,
1996.
Exhibit index is at Item 6(a) on page 10.
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
T. ROWE PRICE ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
03/31/96
12/31/95 Unaudited
________ _________
ASSETS
Cash and cash equivalents $ 81,431 $ 88,233
Accounts receivable 55,841 63,607
Investments in sponsored mutual funds held as
available-for-sale securities 121,606 126,510
Partnership and other investments 28,049 30,722
Property and equipment 60,222 63,035
Goodwill and other assets 18,194 15,686
________ ________
$365,343 $387,793
________ ________
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 27,287 $ 29,501
Accrued compensation and retirement costs 28,803 25,435
Income taxes payable 7,376 19,208
Dividends payable 6,036 5,995
Minority interests in consolidated subsidiaries 21,609 24,999
________ ________
Total liabilities 91,111 105,138
________ ________
Commitments and contingent liabilities (Note 2)
Stockholders' equity
Preferred stock, undesignated, $.20 par value -
authorized and unissued 20,000,000 shares -- --
Common stock, $.20 par value - authorized
100,000,000 shares in 1995 and 200,000,000 shares
in 1996, including 100,000,000 shares authorized
on April 12, 1996; issued 28,665,472 shares
in 1995 and 57,105,176 shares in 1996, including
28,552,588 shares issued as part of a stock split
on April 30, 1996 (Note 3) 5,733 11,421
Capital in excess of par value 2,912 2,899
Retained earnings 252,934 253,477
Unrealized security holding gains 12,653 14,858
________ ________
Total stockholders' equity 274,232 282,655
________ ________
$365,343 $387,793
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
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T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
Three months ended
___________________
03/31/95 03/31/96
________ ________
Revenues
Investment advisory fees $ 73,133 $100,006
Administrative fees 22,613 28,126
Investment and other income 2,100 4,280
________ ________
97,846 132,412
________ ________
Expenses
Compensation and related costs 33,090 41,986
Advertising and promotion 7,901 16,070
Depreciation, amortization and operating
rentals of property and equipment 7,357 8,092
International investment research fees 6,782 9,034
Administrative and general 13,595 18,292
________ ________
68,725 93,474
________ ________
Income before income taxes and minority interests 29,121 38,938
Provision for income taxes 11,302 15,157
________ ________
Income from consolidated companies 17,819 23,781
Minority interests in consolidated subsidiaries 2,828 3,362
________ ________
Net income $ 14,991 $ 20,419
________ ________
________ ________
Earnings per share (Note 3) $ .25 $ .33
________ ________
________ ________
Dividends declared per share (Note 3) $ .08 $ .105
________ ________
________ ________
Weighted average shares outstanding, including
share equivalents arising from unexercised
stock options (Note 3) 60,026 61,493
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
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T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended
__________________
03/31/95 03/31/96
________ ________
Cash flows from operating activities
Net income $ 14,991 $ 20,419
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization of property
and equipment 3,090 3,513
Minority interests in consolidated subsidiaries 2,828 3,362
Increase in accounts receivable (316) (7,766)
Change in accounts payable and accrued liabilities (6,218) 3,884
Increase in accrued income taxes payable 8,936 13,386
Other changes in assets and liabilities 2,442 (1,620)
________ ________
Net cash provided by operating activities 25,753 35,178
________ ________
Cash flows from investing activities
Investments in sponsored mutual funds (2,474) (1,365)
Partnership and other investments (1,063) (1,200)
Return of partnership investments 1,010 151
Additions to property and equipment (3,456) (7,499)
________ ________
Net cash used in investing activities (5,983) (9,913)
________ ________
Cash flows from financing activities
Purchases of stock (7,637) (13,116)
Receipts relating to stock issuances 858 734
Dividends paid to stockholders (4,575) (6,036)
Distributions to minority interests (7,594) (45)
________ ________
Net cash used in financing activities (18,948) (18,463)
________ ________
Cash and cash equivalents
Net increase during period 822 6,802
At beginning of period 60,016 81,431
________ ________
At end of period $ 60,838 $ 88,233
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
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T. ROWE PRICE ASSOCIATES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY AND BASIS OF PREPARATION.
T. Rowe Price Associates, Inc. and its consolidated subsidiaries (the
Company) derives its revenue primarily from investment advisory and
administrative services provided to sponsored mutual funds and investment
products and to private accounts of other institutional and individual
investors. Company revenues are largely dependent on the total value and
composition of assets under management, which include domestic and
international equity and debt securities; accordingly, fluctuations in
financial markets and in the composition of assets under management impact
revenues and results of operations. At March 31, 1996, the Company's assets
under management totaled $82.0 billion, including $53.5 billion in the Price
funds.
The unaudited condensed consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All such
adjustments are of a normal recurring nature.
The unaudited interim financial information contained in the condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements contained in the 1995 Annual Report to
Stockholders.
NOTE 2 - COMMITMENTS AND CONTINGENT LIABILITIES.
On March 8, 1996, the Company entered into an agreement to construct two,
100,000 square foot, four-story office buildings and two, three-deck parking
garages for an aggregate price not to exceed $36 million. The facilities
will be erected on a portion of the 32.5 acres of land in suburban Owings
Mills, Maryland which were acquired in December 1995. Construction is
scheduled to be completed in September 1997.
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NOTE 3 - STOCKHOLDERS' EQUITY.
The following table details the changes in stockholders' equity (dollars in
thousands) during the first three months of 1996.
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,
1995 28,665,472 $ 5,733 $ 2,912 $252,934 $12,653 $274,232
Common stock
issued under
stock-based
compensation
plans 82,116 17 984 (1) 1,000
Purchases of
common stock (195,000) (39) (450) (8,717) (9,206)
Net income 20,419 20,419
Dividends
declared (5,995) (5,995)
Increase in
unrealized
security
holding gains 2,205 2,205
2-for-1 split
of common stock
issued at
March 31, 1996 28,552,588 5,710 (547) (5,163) --
__________ _______ _______ ________ _______ ________
Balance at
March 31,
1996 57,105,176 $11,421 $ 2,899 $253,477 $14,858 $282,655
__________ _______ _______ ________ _______ ________
__________ _______ _______ ________ _______ ________
On April 12, 1996, the Company's stockholders approved an amendment of the
Company's charter which increased the Company's authorized common shares from
100,000,000 to 200,000,000 and split the outstanding common shares two-for-
one. The stock split was effected at the close of business on April 30,
1996. Per-share and share data in the accompanying unaudited condensed
consolidated financial statements have been adjusted to give retroactive
effect to the stock split.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
T. Rowe Price Associates, Inc.
We have reviewed the condensed consolidated balance sheet of T. Rowe Price
Associates, Inc. and its subsidiaries as of March 31, 1996, and the related
condensed consolidated statements of income and cash flows for the three-
month periods ended March 31, 1995 and 1996. These financial statements are
the responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of income, cash flows, and stockholders'
equity for the year then ended (not presented herein), and in our report
dated January 25, 1996 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of December 31,
1995, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ PRICE WATERHOUSE LLP
Baltimore, Maryland
May 1, 1996
THE ABOVE REPORT IS NOT A "REPORT" WITHIN THE MEANING OF SECTIONS 7 AND 11 OF
THE SECURITIES ACT OF 1933 AND THE INDEPENDENT ACCOUNTANTS' LIABILITY
PROVISIONS OF SECTION 11 OF THE ACT DO NOT APPLY.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL.
T. Rowe Price Associates, Inc. (the Company) derives its revenue primarily
from investment advisory and administrative services provided to the Price
Mutual Funds (the Funds), other sponsored investment products, and private
accounts of other institutional and individual investors. Investment
advisory fees are generally based on the net assets of the portfolios
managed. The majority of administrative revenues are derived from services
provided to the Funds.
The Company's base of assets under management consists of a broad range of
domestic and international stock, bond and money market mutual funds and
other investment products which meet the varied needs and objectives of its
individual and institutional investors. In recent years, there have been
significant net cash inflows to the stock mutual funds. This trend continued
in the first quarter of 1996 as the stock funds had net inflows of $2.9
billion, including $2.0 billion into the domestic funds. Company revenues
are largely dependent on the total value and composition of assets under
management; accordingly, fluctuations in financial markets and in the
composition of assets under management impact revenues and results of
operations.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1996 VERSUS 1995.
Net income increased $5.4 million or 36% to $20.4 million or $.33 per share
from $15.0 million or $.25 per share. Earnings per share have been
retroactively adjusted for the two-for-one stock split effected on April 30,
1996. Total revenues increased 35% from $97.8 million to a record quarterly
total of $132.4 million, led by an increase of $26.9 million in investment
advisory fees.
Investment advisory revenues from the Funds increased $20.9 million as
average assets under management rose $13.5 billion to $51.4 billion. Fund
assets totaled $53.5 billion at March 31, 1996, up almost $5.0 billion from
December 31, 1995, with stock funds accounting for $4.8 billion of the
increase. Net cash inflows to the Funds during the first quarter totaled
nearly $3.2 billion, more than four times that of the comparable period last
year and 81% of the record net inflows of $3.9 billion achieved in the year
1993. Private accounts and other sponsored products contributed the balance
of the investment advisory revenue gains as these assets under management
rose to $28.5 billion at March 31, 1996, up $1.6 billion from December 31,
1995 and $6.3 billion from March 31, 1995. Total assets under management at
quarter end increased to $82.0 billion from $75.4 billion at December 31,
1995 and $61.6 billion at March 31, 1995.
Administrative fees from services to the Funds and their shareholders grew
$5.5 million to $28.1 million; however, increases in related operating
expenses more than offset these revenue gains.
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Investment and other income more than doubled from the 1995 quarter primarily
as a result of the positive performance of the partnerships in which the
Company has invested.
Operating expenses increased 36% or more than $24.7 million to almost $93.5
million from $68.7 million. Greater compensation and related costs, which
were up $8.9 million, were attributable to increases in overall compensation
rates, including higher bonuses, and an 8% increase in the average number of
employees primarily to support the Company's growing administrative
operations. Advertising and promotion expenditures more than doubled to
almost $16.1 million and were up 17% from the record fourth quarter 1995
level. Spending has been boosted significantly in response to investor
demand for stock mutual funds and in order to increase the national image and
investor awareness of T. Rowe Price. Advertising and promotion expenditures
in the next six months are expected to remain high relative to 1995
expenditures as long as market conditions and cash inflows warrant.
International investment research fees increased 33% or $2.3 million as
international assets under management rose to $24.7 billion at March 31,
1996, including $14.2 billion in the mutual funds. Administrative and
general expenses increased $4.7 million due to greater costs associated with
the Company's growing operations including its data processing and
communications capabilities.
PART II. OTHER INFORMATION.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The 1996 annual meeting of the Company's stockholders was held on April 12,
1996. The Company's proxy statement and solicitation pertaining to this
meeting were previously filed with the Commission. Shares eligible to vote
were 28,519,079 as of the record date of February 12, 1996.
Management's 14 nominees for the Board of Directors were elected to hold
office until the next annual meeting of stockholders and until their respec-
tive successors are elected and have qualified. The tabulation of votes was:
Nominee For Withheld
________________ __________ _________
G.J. Collins 24,635,458 599,033
J.E. Halbkat, Jr. 24,638,998 595,493
H.H. Hopkins 24,637,134 597,357
J.A.C. Kennedy 24,635,371 599,120
J.H. Laporte 24,639,175 595,316
R.L. Menschel 24,386,998 847,493
W.T. Reynolds 24,639,125 595,366
J.S. Riepe 24,638,574 595,917
G.A. Roche 24,638,975 595,516
J.W. Rosenblum 24,638,721 595,770
R.L. Strickland 24,636,881 597,610
M.D. Testa 24,053,658 1,180,833
P.C. Walsh 24,636,223 598,268
A.M. Whittemore 24,632,847 601,644
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The charter amendment to effect a two-for-one stock split and to increase the
authorized common stock of the Company from 100,000,000 to 200,000,000 shares
was approved by a vote of: 24,096,424 for; 740,923 against; and 300,104
abstentions. Broker non-votes were 97,040.
The 1996 Stock Incentive Plan was approved by a vote of: 16,334,881 for;
6,705,161 against; and 544,973 abstentions. Broker non-votes were 1,649,476.
ITEM 5. OTHER INFORMATION.
On April 12, 1996, George J. Collins, President and Chief Executive Officer
(CEO), announced his intention to step aside as the Company's CEO by April
1997. The Board of Directors has designated George A. Roche, currently the
Chief Financial Officer, to succeed Mr. Collins as CEO.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits required to be filed by Item 601 of Regulation S-K
are filed herewith and incorporated by reference herein:
3.(i) - Composite Restated Charter as of April 12, 1996.
10 P - Agreement between TRP Suburban Second, Inc. and Riparius
Construction, Inc. as Construction Manager and Constructor
(Incorporated by reference from Form SE which was filed in
paper pursuant to a continuing hardship exemption.)
15 - Letter from Price Waterhouse LLP, independent accountants, re
unaudited interim financial information.
27 - Financial Data Schedule.
All other items are omitted because they are not applicable or the answers
are none.
SIGNATURES.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on May 6, 1996.
T. Rowe Price Associates, Inc.
/s/ George A. Roche, Chief Financial Officer
/s/ Alvin M. Younger, Jr., Principal Accounting Officer
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EXHIBIT 3.(i)
T. ROWE PRICE ASSOCIATES, INC.
COMPOSITE RESTATED CHARTER
(restated as of April 12, 1996)
FIRST: That we, the subscribers, T. ROWE PRICE, WALTER H. KIDD and
CHARLES W. SHAEFFER, the post-office address of each of whom is 10
Light Street, Baltimore 2, Maryland, all being of full legal age,
do under and by virtue of the General Laws of the State of
Maryland, authorizing the formation of corporation, associate
ourselves with the intention of forming a corporation,
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
T. ROWE PRICE ASSOCIATES, INC.
THIRD: The purposes for which and any of which the Corporation is formed
and the business and objects to be carried on and promoted by it
are:
(1) To advise and confer with clients in respect of their
investments, changes in investments, and reinvestments and
anything relating thereto; to act as agent for clients in making
and implementing investment decisions and recommendations on a
discretionary basis; to conduct investigations and examinations of
businesses and enterprises of every kind and description with the
aim of securing information and particulars for the investment and
employment of capital; and to undertake and transact all kinds of
business relating to financial counseling and investments.
(2) To acquire by purchase, subscription, or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer,
mortgage, pledge, or otherwise dispose of or deal in and with any
and all securities, as such term is hereinafter defined, issued or
created by any corporation, firm, or other entity, public or
private, whether formed under the laws of the United States of
America or of any state, commonwealth, territory, dependency, or
possession thereof, or of any foreign country or of any state,
commonwealth, territory, dependency, possession, or other
political subdivision thereof, or issued or created by the United
States of America or any state or commonwealth thereof, or by any
foreign country, or by any agency, subdivision, territory,
dependency, possession, municipality, or other political
subdivision of any of the foregoing, and as owner thereof to
possess and exercise all the rights, powers, and privileges of
ownership including the right to exercise consents and vote
thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement, and
enhancement in value thereof.
<PAGE> 2
(3) To engage in any one or more businesses or transactions, or
to acquire all or any portion of any entity engaged in any one or
more businesses or transactions which the Board of Directors may
from time to time authorize or approve, whether or not related to
the business described elsewhere in this Article or to any other
business at the time or theretofore engaged in by the Corporation.
The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the
terms of any other clause of this or any other Article of the
charter of the Corporation, and each shall be regarded as
independent; and they are intended to be and shall be construed as
powers as well as purposes and objects of the Corporation and
shall be in addition to and not in limitation of the general
powers of corporations under the General Laws of the State of
Maryland.
FOURTH: The present address of the principal office of the Corporation in
this State is 100 East Pratt Street, Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation in
this State are Alvin M. Younger, Jr., 100 East Pratt Street,
Baltimore, Maryland 21202. Said resident agent is a citizen of the
State of Maryland who resides there.
SIXTH: (a) The total number of shares of stock of all classes of capital
stock (par value $.20 per share) which the Corporation has
authority to issue is 220,000,000 shares amounting in aggregate
par value to $44,000,000, of which 200,000,000 shares amounting in
aggregate par value to $40,000,000 are classified as "Common
Stock" and 20,000,000 shares amounting in aggregate par value to
$4,000,000 are classified as "Preferred Stock."
(b) The following is a description of the preferences, conversion
and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption
of the Common Stock and the Preferred Stock of the Corporation:
COMMON STOCK
(1) The Common Stock shall not be subject to classification or
reclassification by the Board of Directors, and shall have the
rights and terms hereinafter specified, subject to the terms of
any other stock provided in the charter pursuant to
classification or reclassification by the Board of Directors or
otherwise in accordance with law.
(2) Subject to the provisions of Article EIGHTH, Section (3)
of the charter of the Corporation, each share of Common Stock
shall have one vote, and, except as otherwise provided in
<PAGE> 3
respect of any Preferred Stock, the exclusive voting power for
all purposes shall be vested in the holders of the Common
Stock.
(3) Subject to the provisions of law and any preferences of
any Preferred Stock, dividends, including dividends payable in
shares of another class of the Corporation's stock, may be paid
on the Common Stock of the Corporation at such time and in such
amounts as the Board of Directors may deem advisable.
(4) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the
holders of the Common Stock shall be entitled, after payment or
provision for payment of the debts and other liabilities of the
Corporation and the amount to which the holders of any
Preferred Stock shall be entitled, to share ratably in the
remaining net assets of the Corporation.
PREFERRED STOCK
(5) The Board of Directors shall have authority to classify
and reclassify any unissued shares of Preferred Stock by fixing
or altering in any one or more respects from time to time
before issuance the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such
shares of stock; provided, that the Board of Directors shall
not classify or reclassify any of such shares into shares of
the Common Stock, or into any class or series of stock (i)
which is not prior to the Common Stock either as to dividends
or upon liquidation and (ii) which is not limited in some
respect either as to dividends or upon liquidation. Subject to
the foregoing, the power of the Board of Directors to classify
and reclassify any of the shares of Preferred Stock shall
include, without limitation, subject to the provisions of the
charter, authority to classify or reclassify any unissued
shares of such stock into a class or classes of preferred
stock, preference stock, special stock or other stock, and to
divide and classify shares of any class into one or more series
of such class, by determining, fixing, or altering one or more
of the following:
(a) The distinctive designation of such class or series and
the number of shares to constitute such class or series;
provided that, unless otherwise prohibited by the terms of
such or any other class or series, the number of shares of
any class or series may be decreased by the Board of
Directors in connection with any classification or
reclassification of unissued shares and the number of shares
of such class or series may be increased by the Board of
Directors in connection with any such classification or
<PAGE> 4
reclassification, and any shares of any class or series which
have been redeemed, purchased, otherwise acquired or
converted into shares of Common Stock or any other class or
series shall become part of the authorized capital stock and
be subject to classification and reclassification as provided
in this Section.
(b) Whether or not and, if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity with
the dividends payable on any other class or series of
Preferred Stock, and the status of any such dividends as
cumulative, cumulative to a limited extent or non-cumulative
and as participating or non-participating.
(c) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by
law and, if so, the terms of such voting rights.
(d) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and
conditions thereof, including provision for adjustment of the
conversion or exchange rate in such events or at such times
as the Board of Directors shall determine.
(e) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of
such redemption, including the date or dates upon or after
which they shall be redeemable and the amount per share
payable in case of redemption, which amount may vary under
different conditions and at different redemption dates; and
whether or not there shall be any sinking fund or purchase
account in respect thereof, and if so, the terms thereof.
(f) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the
Corporation, which rights may vary depending upon whether
such liquidation, dissolution or winding up is voluntary or
involuntary and, if voluntary, may vary at different dates,
and whether such rights shall rank senior or junior to or on
a parity with such rights of any other class or series of
stock.
(g) Whether or not there shall be any limitations
applicable, while shares of such class or series are
outstanding, upon the payment of dividends or making of
distributions on, or the acquisition of, or the use of moneys
for purchase or redemption of, any stock of the Corporation,
or upon any other action of the Corporation, including action
<PAGE> 5
under this Section, and, if so, the terms and conditions
thereof.
(h) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares
of such class or series, not inconsistent with law and the
charter of the Corporation.
(6) For the purposes hereof and of any articles supplementary
to the charter providing for the classification or
reclassification of any shares of Preferred Stock or of any
other charter document of the Corporation (unless otherwise
provided in any such articles or document), any class or series
of stock of the Corporation shall be deemed to rank:
(a) prior to another class or series either as to dividends
or upon liquidation, if the holders of such class or series
shall be entitled to the receipt of dividends or of amounts
distributable on liquidation, dissolution or winding up, as
the case may be, in preference or priority to holders of such
other class or series;
(b) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend
rates, dividend payment dates or redemption or liquidation
price per share thereof be different from those of such
others, if the holders of such class or series of stock shall
be entitled to receipt of dividends or amounts distributable
upon liquidation, dissolution or winding up, as the case may
be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or
priority over the holders of such other class or series; and
(c) junior to another class or series either as to dividends
or upon liquidation, if the rights of the holders of such
class or series shall be subject or subordinate to the rights
of the holders of such other class or series in respect of
the receipt of dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case may be.
SEVENTH: The number of directors of the Corporation shall be 14 , which
number may be increased or decreased pursuant to the By-Laws of
the Corporation, but shall never be less than the minimum number
permitted by the General Laws of the State of Maryland now or
hereafter in force. The names of the directors who will serve
until the next annual meeting and until their successors are
elected and qualify are as follows:
<PAGE> 6
George J. Collins
James E. Halbkat, Jr.
Henry H. Hopkins
James A.C. Kennedy
John H. Laporte
Richard L. Menschel
William T. Reynolds
James S. Riepe
George A. Roche
John W. Rosenblum
Robert L. Strickland
M. David Testa
Philip C. Walsh
Anne Marie Whittemore
EIGHTH: The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation
and of the directors and stockholders:
(1) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible
into shares of its stock of any class or classes, whether now or
hereafter authorized, for such consideration as may be deemed
advisable by the Board of Directors and without any action by the
stockholders.
(2) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any
other securities of the Corporation other than such, if any, as
the Board of Directors, in its sole discretion, may determine and
at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or other
securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion
shall determine, be offered to the holders of any class, series or
type of stock or other securities at the time outstanding to the
exclusion of the holders of any or all other classes, series, or
types of stock or other securities at the time outstanding.
(3)(a) For purposes of this Paragraph (3), the following words
have the meanings indicated:
(i) "Affiliate", including the term "affiliated person", means
a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, a specified person.
(ii) "Associate", when used to indicate a relationship with
any person, means:
<PAGE> 7
(A) Any corporation or organization, other than the
Corporation or a subsidiary of the Corporation, of which such
person is an officer, director, or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class
of equity securities;
(B) Any trust or other estate in which such person has a
substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity;
(C) Any relative or spouse of such person, or any relative
of such spouse, who has the same home as such person; and
(D) Any relative or spouse of such person, or any relative
of such spouse who is a director or officer of the
Corporation or any of its affiliates.
(iii) "Beneficial Owner", when used with respect to any Voting
Stock, means a person:
(A) That is the beneficial owner of Voting Stock, directly
or indirectly;
(B) The Affiliate or Associate of which is the beneficial
owner of Voting Stock, directly or indirectly;
(C) That has, or whose Affiliate or Associate has,
(I) The right to acquire Voting Stock (whether such right
is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement, or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; or
(II) The right to vote Voting Stock pursuant to any
agreement, arrangement, or understanding; or
(III) Any agreement, arrangement, or understanding for
the purpose of acquiring, holding, voting, or disposing of
Voting Stock with any other person that beneficially owns,
or whose Affiliates or Associates beneficially own,
directly or indirectly, such shares of Voting Stock;
provided, that directors, officers, and employees of the
Corporation shall not be deemed to have any such
agreement, arrangement, or understanding on the basis of
their status, or actions taken in their capacities, as
directors, officers, or employees of the Corporation or
any subsidiaries of the Corporation or as general or
limited partners of partnerships formed to make
investments or on the basis of their voting Voting Stock
with respect to management proposals.
<PAGE> 8
(D) For purposes of subparagraph (a) (iii) of this Paragraph
(3), (I) the solicitation of revocable proxies and the voting
thereof by proxy holders in connection with annual or special
meetings of stockholders prior to the time the Corporation is
subject to the proxy rules under the Securities Exchange Act
of 1934 or thereafter in accordance with such proxy rules,
and (II) statements of recommendations on matters to be
submitted for stockholder approval or intentions to vote
Voting Stock of which such persons are the Beneficial Owners
prior to the time the Corporation is subject to the proxy
rules under the Securities Exchange Act of 1934 or thereafter
in accordance with such proxy rules shall not constitute
agreements, arrangements, or understandings for the purpose
of acquiring, holding, voting, or disposing of Voting Stock.
(iv) "Control", including the terms "controlling", "controlled
by", and "under common control with", means the possession,
directly or indirectly, of the power to vote or cause the
direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or
otherwise, and the beneficial ownership of 10% or more of the
votes entitled to be cast by a corporation's voting stock
creates a presumption of control.
(v) "Group", when used to indicate those additional persons
whose Voting Stock is Beneficially Owned by a person, shall
include:
(A) the person,
(B) the Affiliates and Associates of the person; and
(C) any additional person whose stock is Beneficially Owned
by the person or an Affiliate or Associate of the person;
and shall include all persons that jointly file a statement of
beneficial ownership pursuant to Section 13(d) of the
Securities Exchange Act of 1934, irrespective of any
disclaimers of beneficial ownership.
(vi) "Voting Stock" means shares of capital stock of the
Corporation entitled to vote generally in the election of
directors.
(b) A person or Group that is the Beneficial Owner of more than
15% of any class of Voting Stock shall have the right to vote not
more than 15% of the shares of such class, and the remaining
shares Beneficially Owned by such person or Group shall be
deducted from the total number of shares of Voting Stock of such
class for purposes of determining the proportion of Voting Stock
required to approve a matter submitted for stockholder approval.
<PAGE> 9
In the case of a Group, the votes of individual members of a Group
shall be reduced on a pro rata basis for purposes of determining
which shares of such class of Voting Stock shall be voted so that
the Group shall have in the aggregate the right to vote not more
than 15% of the shares of such class of Voting Stock. A person
that is a member of more than one Group shall vote the least
number of shares of a class of voting stock that he may vote as a
member of any such Group.
(c) The operation of this Paragraph (3) shall not create any
presumptions of control for purposes of the Investment Company Act
of 1940.
(4) The Board of Directors shall have power from time to time and
in its sole discretion to determine in accordance with sound
accounting practice, what constitutes annual or other net profits,
earnings, surplus, or net assets in excess of capital; to fix and
vary from time to time the amount to be reserved as working
capital, or determine that retained earnings or surplus shall
remain in the hands of the Corporation; to set apart out of any
funds of the Corporation such reserve or reserves in such amount
or amounts and for such proper purpose or purposes as it shall
determine and to abolish any such reserve or any part thereof; to
distribute and pay distributions or dividends in stock, cash or
other securities or property, out of surplus or any other funds or
amounts legally available therefor, at such times and to the
stockholders of record on such dates as it may, from time to time,
determine; and to determine whether and to what extent and at what
times and places and under what conditions and regulations the
books, accounts and documents of the Corporation, or any of them,
shall be open to the inspection of stockholders, except as
otherwise provided by statute or by the By-Laws, and, except as so
provided, no stockholder shall have any right to inspect any book,
account, or document of the Corporation unless authorized so to do
by resolution of the Board of Directors.
(5) Notwithstanding any provision of law requiring the
authorization of any action by a greater proportion than a
majority of the total number of shares of all classes of capital
stock, such action shall be valid and effective if authorized by
the affirmative vote of the holders of a majority of the total
number of shares of all classes outstanding and entitled to vote
thereon, except that the affirmative vote of the holders of
two-thirds of the total number of shares of all classes
outstanding and entitled to vote thereon shall be required to
amend, repeal, or adopt any provision inconsistent with Article
EIGHTH, Section (3).
(6) A contract or other transaction between the Corporation and
any of its directors or between the Corporation and any other
Corporation, firm or other entity in which any of its directors is
<PAGE> 10
a director or has a material financial interest is not void or
voidable solely because of any one or more of the following: the
common directorship or interest; the presence of the director at
the meeting of the Board of Directors which authorizes, approves,
or ratifies the contract or transaction; or the counting of the
vote of the director for the authorization, approval, or
ratification of the contract or transaction. This Section applies
if:
(a) the fact of the common directorship or interest is
disclosed or known to: the Board of Directors and the Board
authorizes, approves, or ratifies the contract or transaction
by the affirmative vote of a majority of disinterested
directors, even if the disinterested directors constitute less
than a quorum; or the stockholders entitled to vote, and the
contract or transaction is authorized, approved, or ratified by
a majority of the votes cast by the stockholders entitled to
vote other than the votes of shares owned of record or
beneficially by the interested director or Corporation, firm,
or other entity; or
(b) the contract or transaction is fair and reasonable to the
Corporation.
Common or interested directors or the stock owned by them or by an
interested corporation, firm, or other entity may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or at a meeting of the stockholders, as the case may be,
at which the contract or transaction is authorized, approved, or
ratified. If a contract or transaction is not authorized,
approved, or ratified in one of the ways provided for in clause
(a) of the second sentence of this Section, the person asserting
the validity of the contract or transaction bears the burden of
proving that the contract or transaction was fair and reasonable
to the Corporation at the time it was authorized, approved, or
ratified. The procedures in this Section do not apply to the
fixing by the Board of Directors of reasonable compensation for a
director, whether as a director or in any other capacity.
(7) The Corporation shall indemnify (a) its directors to the full
extent provided by the general laws of the State of Maryland now
or hereafter in force, including the advance of expenses under the
procedures provided by such laws; (b) its officers to the same
extent it shall indemnify its directors; and (c) its officers who
are not directors to such further extent as shall be authorized by
the Board of Directors and be consistent with law. The foregoing
shall not limit the authority of the Corporation to indemnify
other employees and agents consistent with law.
(8) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer
<PAGE> 11
of this Corporation shall be personally liable to the Corporation
or its stockholders for money damages. No amendment or repeal of
any of its provisions shall limit or eliminate the benefits
provided to directors and officers under this provision with
respect to any act or omission which occurred prior to such
amendment or repeal.
(9) The Corporation reserves the right from time to time to make
any amendments of its charter which may now or hereafter be
authorized by law, including any amendments changing the terms or
contract rights, as expressly set forth in its charter, of any of
its outstanding stock by classification, reclassification, or
otherwise, but no such amendment which changes such terms or
contract rights of any of its outstanding stock shall be valid
unless such amendment shall have been authorized by not less than
a majority of the aggregate number of the votes entitled to be
cast thereon, by a vote at a meeting or in writing with or without
a meeting.
The enumeration and definition of particular powers of the Board
of Directors included in the foregoing shall in no way be limited
or restricted by reference to or inference from the terms of any
other clause of this or any other Article of the charter of the
Corporation, or construed as or deemed by inference or otherwise
in any manner to exclude or limit any powers conferred upon the
Board of Directors under the General Laws of the State of Maryland
now or hereafter in force.
NINTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, we have signed this certificate of incorporation on
December 31, 1946.
/s/ T. Rowe Price
/s/ Walter H. Kidd
/s/ Charles W. Shaeffer
EXHIBIT 15
May 1, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that our report dated May 1, 1996 (issued pursuant to the
provisions of Statement on Auditing Standards No. 71) is incorporated by
reference in the Prospectuses constituting parts of T. Rowe Price Associates,
Inc.'s Registration Statements on Form S-8 (No. 33-7012, No. 33-8672, No. 33-
37573, No. 33-72568 and No. 33-58749). We are also aware of our
responsibilities under the Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited condensed consolidated financial statements of T. Rowe Price
Associates, Inc. included in Part I., Item 1. of the accompanying Form 10-Q
Quarterly Report for the period ended March 31, 1996 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 88,233,000
<SECURITIES> 126,510,000
<RECEIVABLES> 63,607,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 63,035,000<F1>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 387,793,000
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 0
0
0
<COMMON> 11,421,000
<OTHER-SE> 271,234,000
<TOTAL-LIABILITY-AND-EQUITY> 387,793,000
<SALES> 0
<TOTAL-REVENUES> 132,412,000
<CGS> 0
<TOTAL-COSTS> 93,474,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38,938,000
<INCOME-TAX> 15,157,000
<INCOME-CONTINUING> 20,419,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,419,000
<EPS-PRIMARY> .33
<EPS-DILUTED> 0
<FN>
<F2>Not contained in registrant's unclassified balance sheet.
<F1>Represents net amount reported at interim.
<F3>Not reported at interim.
</FN>
</TABLE>
