<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended: JUNE 30, 1997.
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) 345-2000.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]. No [ ].
Indicate the number of shares outstanding of the issuer's common stock ($.20
par value), as of the latest practicable date. 58,059,369 SHARES AT JULY 23,
1997.
Exhibit index is at Item 6(a) on page 11.
<PAGE> 2
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
12/31/96 06/30/97
________ ________
ASSETS
Cash and cash equivalents $114,551 $134,286
Accounts receivable 73,239 83,421
Investments in sponsored mutual funds held as
available-for-sale securities 143,410 166,634
Partnership and other investments 25,161 23,573
Property and equipment 101,207 122,495
Goodwill and other assets 21,266 15,260
________ ________
$478,834 $545,669
________ ________
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 31,529 $ 36,376
Accrued compensation and retirement costs 41,523 46,324
Income taxes payable 14,464 14,212
Dividends payable 7,484 7,537
Minority interests in consolidated subsidiaries 38,168 40,870
________ ________
Total liabilities 133,168 145,319
________ ________
Commitments and contingent liabilities
Stockholders' equity
Preferred stock, undesignated, $.20 par value -
authorized and unissued 20,000,000 shares -- --
Common stock, $.20 par value - authorized
200,000,000 shares; issued 57,572,791 shares
in 1996 and 57,978,854 shares in 1997 11,514 11,596
Capital in excess of par value 7,823 9,922
Retained earnings 306,566 350,837
Unrealized security holding gains 19,763 27,995
________ ________
Total stockholders' equity 345,666 400,350
________ ________
$478,834 $545,669
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
<PAGE> 3
T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
Three months Six months
ended ended
June 30, June 30,
__________________________________
1996 1997 1996 1997
________ ________________ ________
Revenues
Investment advisory fees $109,702 $141,549 $209,708 $270,846
Administrative fees 29,968 34,694 58,094 69,829
Investment and other income 4,018 3,845 8,298 7,372
________ ________ ________ ________
143,688 180,088 276,100 348,047
________ ________ ________ ________
Expenses
Compensation and related costs 43,165 55,788 85,151 109,866
Advertising and promotion 14,353 13,742 30,423 31,199
Depreciation, amortization and
operating rentals of property
and equipment 9,036 11,149 17,128 21,248
International investment
research fees 9,680 11,782 18,714 22,739
Administrative and general 20,222 24,545 38,514 45,572
________ ________ ________ ________
96,456 117,006 189,930 230,624
________ ________ ________ ________
Income before income taxes and
minority interests 47,232 63,082 86,170 117,423
Provision for income taxes 18,416 24,162 33,573 45,286
________ ________ ________ ________
Income from consolidated companies 28,816 38,920 52,597 72,137
Minority interests in consolidated
subsidiaries 4,366 5,138 7,728 9,808
________ ________ ________ ________
Net income $ 24,450 $ 33,782 $ 44,869 $ 62,329
________ ________ ________ ________
________ ________ ________ ________
Earnings per share $ .40 $ .53 $ .73 $ .98
________ ________ ________ ________
________ ________ ________ ________
Dividends declared per share $ .105 $ .13 $ .21 $ .26
________ ________ ________ ________
________ ________ ________ ________
Weighted average shares outstanding,
including share equivalents arising
from unexercised stock options 61,774 63,514 61,633 63,527
________ ________ ________ ________
________ ________ ________ ________
See the accompanying notes to the condensed consolidated financial
statements.
<PAGE> 4
T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six months ended
__________________
06/30/96 06/30/97
________ ________
Cash flows from operating activities
Net income $ 44,869 $ 62,329
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization of property
and equipment 7,575 11,102
Minority interests in consolidated subsidiaries 7,728 9,808
Increase in accounts receivable (9,424) (10,182)
Increase in accounts payable and accrued liabilities 19,396 10,514
Other changes in assets and liabilities (1,526) 669
_________ ________
Net cash provided by operating activities 68,618 84,240
________ ________
Cash flows from investing activities
Investments in sponsored mutual funds (4,520) (10,026)
Partnership and other investments (2,808) (3,432)
Distributions from partnership investments 1,141 5,696
Additions to property and equipment (20,770) (29,827)
________ ________
Net cash used in investing activities (26,957) (37,589)
________ ________
Cash flows from financing activities
Purchases of stock (17,774) (9,655)
Receipts relating to stock issuances 1,703 5,117
Dividends paid to stockholders (12,031) (15,008)
Distributions to minority interests (45) (7,370)
________ ________
Net cash used in financing activities (28,147) (26,916)
________ ________
Cash and cash equivalents
Net increase during period 13,514 19,735
At beginning of year 81,431 114,551
________ ________
At end of period $ 94,945 $134,286
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
<PAGE> 5
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY AND BASIS OF PREPARATION.
T. Rowe Price Associates, Inc. and its consolidated subsidiaries (the
Company) 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 June 30, 1997, the Company's assets
under management totaled $116.9 billion, including $75.3 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 1996 Annual Report to
Stockholders.
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NOTE 2 - STOCKHOLDERS' EQUITY.
The following table details the changes in stockholders' equity (dollars in
thousands) during the first six months of 1997.
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,
1996 57,572,791 $11,514 $ 7,823 $306,566 $19,763 $345,666
Common stock
issued under
stock-based
compensation
plans 636,063 128 8,711 8,839
Purchases of
common stock (230,000) (46) (6,612) (2,997) (9,655)
Net income 62,329 62,329
Dividends
declared (15,061) (15,061)
Increase in
unrealized
security
holding gains 8,232 8,232
__________ _______ _______ ________ _______ ________
Balance at
June 30,
1997 57,978,854 $11,596 $ 9,922 $350,837 $27,995 $400,350
__________ _______ _______ ________ _______ ________
__________ _______ _______ ________ _______ ________
<PAGE> 7
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
T. Rowe Price Associates, Inc.
We have reviewed the condensed consolidated balance sheet of T. Rowe Price
Associates, Inc. and its subsidiaries as of June 30, 1997, and the related
condensed consolidated statements of income and of cash flows for the three-
and six-month periods ended June 30, 1996 and 1997. 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, 1996, and the
related consolidated statements of income, of cash flows, and of
stockholders' equity for the year then ended (not presented herein), and in
our report dated January 24, 1997 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, 1996, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ PRICE WATERHOUSE LLP
Baltimore, Maryland
July 23, 1997
THE ABOVE REPORT IS NOT A "REPORT" WITHIN THE MEANING OF SECTIONS 7 AND 11 OF
THE SECURITIES ACT OF 1933 AND THE INDEPENDENT ACCOUNTANTS' LIABILITY
PROVISIONS OF SECTION 11 OF THE ACT DO NOT APPLY.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL.
T. Rowe Price Associates, Inc. (the Company) derives its revenue primarily
from investment advisory and administrative services provided to the Price
Mutual Funds (the Funds), 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. During 1996 and 1997, there have
been significant net cash inflows to the stock mutual funds, particularly the
domestic funds. At June 30, 1997, total assets under management were $116.9
billion, including $75.3 billion in the Funds. Equity investments comprise
approximately 70% of total assets under management.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1997 VERSUS 1996.
Net income increased $9.3 million or 38% to $33.8 million or $.53 per share
from $24.5 million or $.40 per share. Total revenues increased 25% from
$143.7 million to a record quarterly total of $180.1 million, led by an
increase of more than $31.8 million in investment advisory fees.
Investment advisory revenues from the Funds increased $20.8 million as
average fund assets under management were up $14.1 billion to $70.1 billion.
Fund assets totaled $75.3 billion at June 30, 1997, up $5.2 billion over the
quarterly average and up almost $8.7 billion from March 31, 1997, with stock
funds accounting for most of the increase. Net cash inflows to the Funds
during the second quarter totaled $1.9 billion. Advisory fees from private
accounts and other sponsored products contributed the balance of the
investment advisory revenue gains. These assets under management rose to
$41.6 billion at June 30, 1997, up $5.3 billion from March 31, 1997 and
almost $6.6 billion from December 31, 1996. Total assets under management
closed the quarter at $116.9 billion, up from $102.9 billion at March 31,
1997 and $99.4 billion at December 31, 1996.
Administrative fees, primarily from services to the Funds and their
shareholders, grew $4.7 million to $34.7 million; however, increases in
related operating expenses more than offset these revenue gains. Investment
income declined nearly $.2 million due to lower earnings recognized from
partnership investments.
Operating expenses increased 21% or almost $20.6 million to $117.0 million.
Greater compensation and related costs of $12.6 million were attributable to
a 22% increase in the number of employees during the past twelve months,
<PAGE> 9
primarily to support the Company's growing administrative services and data
processing operations, and to higher rates of pay including performance-
related compensation accruals. Advertising and promotion expenditures were
slightly lower than the prior year's quarter. Depreciation, amortization and
operating rentals of property and equipment was up 23% or $2.1 million due to
expansion of facilities and recent equipment acquisitions, primarily
investments in technology assets. International investment research fees
increased $2.1 million as international assets under management by Rowe
Price-Fleming International (RPFI) rose to $33.8 billion at June 30, 1997.
Administrative and general expenses increased $4.3 million due mainly to
greater costs associated with the Company's growing administrative operations
including data processing and communications capabilities.
Increased earnings by RPFI on greater assets under management was responsible
for the increase in minority interests in consolidated subsidiaries.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997 VERSUS 1996.
Net income increased $17.5 million or 39% to $62.3 million or $.98 per share
from $44.9 million or $.73 per share. Total revenues increased 26% from
$276.1 million to a record quarterly total of more than $348 million, led by
an increase of more than $61.1 million in investment advisory fees.
Investment advisory revenues from the Funds increased more than $42.8 million
as average fund assets under management rose $14.9 billion to $68.6 billion.
Net cash inflows to the Funds during the first six months of 1997 totaled
$5.3 billion. Advisory fees from private accounts and other sponsored
products contributed the balance of the investment advisory revenue gains.
Administrative fees, primarily from services to the Funds and their
shareholders, grew $11.7 million to $69.8 million; however, increases in
related operating expenses more than offset these revenue gains. Investment
income declined $.9 million due to lower earnings recognized from partnership
investments.
Operating expenses increased 21% or $40.7 million to $230.6 million. Greater
compensation and related costs were attributable to increases in the number
of employees and to higher rates of pay including performance-related
compensation accruals. Advertising and promotion expenditures were up 3% or
nearly $.8 million versus the first six months of 1996. Depreciation,
amortization and operating rentals of property and equipment was up $4.1
million due to expansion of facilities and recent equipment acquisitions,
primarily investments in technology assets. International investment
research fees increased $4.0 million based on the higher international assets
under management by RPFI. Administrative and general expenses increased
almost $7.1 million due mainly to greater costs of the Company's growing
administrative operations including data processing and communications
capabilities.
Increased earnings by RPFI on greater assets under management was responsible
for the increase in minority interests in consolidated subsidiaries.
<PAGE> 10
FORWARD-LOOKING INFORMATION.
Information or statements provided by or on behalf of the Company from time
to time, including those within this Form 10-Q Quarterly Report, may contain
certain "forward-looking information", including information relating to
anticipated growth in revenues or earnings per share, anticipated changes in
the amount and composition of assets under management, anticipated expense
levels, and expectations regarding financial market conditions. The Company
cautions readers that any forward-looking information provided by or on
behalf of the Company is not a guarantee of future performance and that
actual results may differ materially from those in forward-looking
information as a result of various factors, including but not limited to
those discussed below. Further, such forward-looking statements speak only
as of the date on which such statements are made, and the Company undertakes
no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect
the occurrence of unanticipated events.
The Company's future revenues may fluctuate due to factors such as: the
total value and composition of assets under management and related cash
inflows or outflows in mutual funds and private accounts; fluctuations in the
financial markets resulting in appreciation or depreciation of assets under
management; the relative investment performance of the Company's sponsored
investment products and private accounts as compared to competing products
and market indices; the extent to which performance-based investment advisory
fees are earned from private accounts; the expense ratios of the Company's
sponsored investment products; investor sentiment and investor confidence in
mutual funds; the ability of the Company to maintain investment management
fees at current levels; competitive conditions in the mutual funds industry;
the introduction of new mutual funds and investment products; the ability of
the Company to contract with the Price Funds for payment for administrative
services offered to the Price Funds and Price Fund shareholders; the
continuation of trends in the retirement plan marketplace favoring defined
contribution plans and participant-directed investments; and the amount and
timing of income from the Company's investment portfolio.
The Company's future operating results are also dependent upon the level of
operating expenses, which are subject to fluctuation for the following or
other reasons: changes in the level of advertising expenses in response to
market conditions or other factors; variations in the level of compensation
expense incurred by the Company, including performance-based compensation
based on the Company's financial results, as well as changes in response to
the size of the total employee population, competitive factors, or other
reasons; changes in the manner in which the Company provides international
investment services; expenses and capital costs, including depreciation,
amortization and other non-cash charges, incurred by the Company to maintain
its administrative and service infrastructure; and unanticipated costs that
may be incurred by the Company from time to time to protect investor accounts
and client goodwill.
The Company's revenues are substantially dependent on revenues from the Price
<PAGE> 11
Funds, which could be adversely affected if the independent directors of one
or more of the Price Funds determined to terminate or renegotiate the terms
of one or more investment management agreements.
The Company's business is also subject to substantial governmental
regulation, and changes in legal, regulatory, accounting, tax, and compliance
requirements may have a substantial effect on the Company's business and
results of operations, including but not limited to effects on the level of
costs incurred by the Company and effects on investor interest in mutual
funds in general or in particular classes of mutual funds.
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits required to be filed by Item 601 of Regulation S-K
are filed herewith and incorporated by reference herein:
3 (ii) - Amended and Restated By-Laws of T. Rowe Price Associates, Inc.
as of April 17, 1997.
15 - Letter from Price Waterhouse LLP, independent accountants, re
unaudited interim financial information.
27 - Financial Data Schedule.
All other items are omitted because they are not applicable or the answers
are none.
SIGNATURES.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on July 24, 1997.
T. Rowe Price Associates, Inc.
/s/ Alvin M. Younger, Jr., Chief Financial & Accounting Officer
<PAGE> 1 EXHIBIT 3 (ii)
T. ROWE PRICE ASSOCIATES, INC.
RESTATED BY-LAWS
(including all amendments through April 17, 1997)
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. Annual Meeting. The Corporation shall hold an annual
meeting of its stockholders to elect directors and transact any other
business within its powers, either at 2:00 p.m. on the last Thursday of March
in each year if not a legal holiday, or at such other time on such other day
falling on or before the 30th day thereafter as shall be set by the Board of
Directors. Except as the Charter or statute provides otherwise, any business
may be considered at an annual meeting without the purpose of the meeting
having been specified in the notice. Failure to hold an annual meeting does
not invalidate the Corporation's existence or affect any otherwise valid
corporate acts.
SECTION 1.02. Special Meeting. At any time in the interval between
annual meetings, a special meeting of the stockholders may be called by the
Chairman of the Board or the President or by a majority of the Board of
Directors by vote at a meeting or in writing (addressed to the Secretary of
the Corporation) with or without a meeting.
SECTION 1.03. Place of Meetings. Meetings of stockholders shall be
held at such place in the United States as is set from time to time by the
Board of Directors.
SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than ten
nor more than 90 days before each stockholders' meeting, the Secretary shall
give written notice of the meeting to each stockholder entitled to vote at
the meeting and each other stockholder entitled to notice of the meeting.
The notice shall state the time and place of the meeting and, if the meeting
is a special meeting or notice of the purpose is required by statute, the
purpose of the meeting. Notice is given to a stockholder when it is
personally delivered to him, left at his residence or usual place of
business, or mailed to him at his address as it appears on the records of the
Corporation. Notwithstanding the foregoing provisions, each person who is
entitled to notice waives notice if he before or after the meeting signs a
waiver of the notice which is filed with the records of stockholders'
meetings, or is present at the meeting in person or by proxy.
SECTION 1.05. Quorum; Voting. Unless statute or the Charter provides
otherwise, at a meeting of stockholders the presence in person or by proxy
of stockholders entitled to cast a majority of all the votes entitled to be
cast at the meeting constitutes a quorum, and a majority of all the votes
cast at a meeting at which a quorum is present is sufficient to approve any
matter which properly comes before the meeting, except that a plurality of
all the votes cast at a meeting at which a quorum is present is sufficient to
<PAGE> 2
elect a director.
SECTION 1.06. Adjournments. Whether or not a quorum is present, a
meeting of stockholders convened on the date for which it was called may be
adjourned from time to time by the stockholders present in person or by proxy
by a majority vote. Any business which might have been transacted at the
meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present. No further notice of
an adjourned meeting other than by announcement shall be necessary if held on
a date not more than 120 days after the original record date.
SECTION 1.07. General Right to Vote; Proxies. Unless the Charter
provides for a greater or lesser number of votes per share or limits or
denies voting rights, each outstanding share of stock, regardless of class,
is entitled to one vote on each matter submitted to a vote at a meeting of
stockholders. In all elections for directors, each share of stock may be
voted for as many individuals as there are directors to be elected and for
whose election the share is entitled to be voted. A stockholder may vote the
stock he owns of record either in person or by written proxy signed by the
stockholder or by his duly authorized attorney in fact. Unless a proxy
provides otherwise, it is not valid more than 11 months after its date.
SECTION 1.08. List of Stockholders. At each meeting of stockholders, a
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number and class of shares held by each and certified by
the transfer agent for such class or by the Secretary, shall be furnished by
the Secretary.
SECTION 1.09. Conduct of Voting. At all meetings of stockholders,
unless the voting is conducted by inspectors, the proxies and ballots shall
be received, and all questions touching the qualification of voters and the
validity of proxies and the acceptance or rejection of votes shall be
decided, by the chairman of the meeting. If demanded by stockholders,
present in person or by proxy, entitled to cast 10% in number of votes
entitled to be cast, or if ordered by the chairman, the vote upon any
election or question shall be taken by ballot and, upon like demand or order,
the voting shall be conducted by two inspectors, in which event the proxies
and ballots shall be received, and all questions touching the qualification
of voters and the validity of proxies and the acceptance or rejection of
votes shall be decided, by such inspectors. Unless so demanded or ordered,
no vote need be by ballot and voting need not be conducted by inspectors.
The stockholders at any meeting may choose an inspector or inspectors to act
at such meeting, and in default of such election the chairman of the meeting
may appoint an inspector or inspectors. No candidate for election as a
director at a meeting shall serve as an inspector thereat.
SECTION 1.10. Informal Action by Stockholders. Any action required or
permitted to be taken at a meeting of stockholders may be taken without a
meeting if there is filed with the records of stockholders meetings an
unanimous written consent which sets forth the action and is signed by each
stockholder entitled to vote on the matter and a written waiver of any right
<PAGE> 3
to dissent signed by each stockholder entitled to notice of the meeting but
not entitled to vote at it.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. Function of Directors. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors.
All powers of the Corporation may be exercised by or under authority of the
Board of Directors, except as conferred on or reserved to the stockholders
by statute or by the Charter or By-Laws.
SECTION 2.02. Number of Directors. The Corporation shall have at least
three directors; provided that, if there is no stock outstanding, the number
of Directors may be less than three but not less than one, and, if there is
stock outstanding and so long as there are less than three stockholders, the
number of Directors may be less than three but not less than the number of
stockholders. The Corporation shall have the number of directors provided in
the Charter until changed as herein provided. A majority of the entire Board
of Directors may alter the number of directors set by the Charter to not
exceeding 25 nor less than the minimum number then permitted herein, but the
action may not affect the tenure of office of any director.
SECTION 2.03. Election and Tenure of Directors. At each annual
meeting, the stockholders shall elect directors to hold office until the next
annual meeting and until their successors are elected and qualify.
SECTION 2.04. Removal of Director. Unless statute or the Charter
provides otherwise, the stockholders may remove any director, with or without
cause, by the affirmative vote of a majority of all the votes entitled to be
cast for the election of directors.
SECTION 2.05. Vacancy on Board. The stockholders may elect a successor
to fill a vacancy on the Board of Directors which results from the removal of
a director. A director elected by the stockholders to fill a vacancy which
results from the removal of a director serves for the balance of the term of
the removed director. A majority of the remaining directors, whether or not
sufficient to constitute a quorum, may fill a vacancy on the Board of
Directors which results from any cause except an increase in the number of
directors and a majority of the entire Board of Directors may fill a vacancy
which results from an increase in the number of directors. A director
elected by the Board of Directors to fill a vacancy serves until the next
annual meeting of stockholders and until his successor is elected and
qualifies.
SECTION 2.06. Regular Meetings. After each meeting of stockholders at
which a Board of Directors shall have been elected, the Board of Directors so
elected shall meet as soon as practicable for the purpose of organization and
the transaction of other business; and in the event that no other time is
designated by the stockholders, the Board of Directors shall meet one hour
<PAGE> 4
after the time for such stockholders' meeting or immediately following the
close of such meeting, whichever is later, on the day of such meeting. Such
first regular meeting shall be held at any place as may be designated by the
stockholders, or in default of such designation at the place designated by
the Board of Directors for such first regular meeting, or in default of such
designation at the place of the holding of the immediately preceding meeting
of stockholders. No notice of such first meeting shall be necessary if held
as hereinabove provided. Any other regular meeting of the Board of Directors
shall be held on such date and at any place as may be designated from time to
time by the Board of Directors.
SECTION 2.07. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board or the
President or by a majority of the Board of Directors by vote at a meeting, or
in writing with or without a meeting. A special meeting of the Board of
Directors shall be held on such date and at any place as may be designated
from time to time by the Board of Directors. In the absence of designation
such meeting shall be held at such place as may be designated in the call.
SECTION 2.08. Notice of Meeting. Except as provided in Section 2.06,
the Secretary shall give notice to each director of each regular and special
meeting of the Board of Directors. The notice shall state the time and place
of the meeting. Notice is given to a director when it is delivered
personally to him, left at his residence or usual place of business, or sent
by telegraph or telephone, at least 24 hours before the time of the meeting
or, in the alternative by mail to his address as it shall appear on the
records of the Corporation, at least 72 hours before the time of the meeting.
Unless the By-Laws or a resolution of the Board of Directors provides
otherwise, the notice need not state the business to be transacted at or the
purposes of any regular or special meeting of the Board of Directors. No
notice of any meeting of the Board of Directors need be given to any director
who attends, or to any director who, in writing executed and filed with the
records of the meeting either before or after the holding thereof, waives
such notice. Any meeting of the Board of Directors, regular or special, may
adjourn from time to time to reconvene at the same or some other place,
and no notice need be given of any such adjourned meeting other than by
announcement.
SECTION 2.09. Action by Directors. Unless statute or the Charter or
By-Laws requires a greater proportion, the action of a majority of the
directors present at a meeting at which a quorum is present is action of the
Board of Directors. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. In the absence of a
quorum, the directors present by majority vote and without notice other than
by announcement may adjourn the meeting from time to time until a quorum
shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at
the meeting as originally notified. Any action required or permitted to be
taken at a meeting of the Board of Directors may be taken without a meeting,
if an unanimous written consent which sets forth the action is signed by each
member of the Board and filed with the minutes of proceedings of the Board.
<PAGE> 5
SECTION 2.10. Meeting by Conference Telephone. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation in a meeting by these
means constitutes presence in person at a meeting.
SECTION 2.11. Compensation. By resolution of the Board of Directors a
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Directors or of committees thereof, and other
compensation for their services as such or on committees of the Board of
Directors, may be paid to directors. A director who serves the Corporation
in any other capacity also may receive compensation for such other services,
pursuant to a resolution of the directors.
ARTICLE III.
COMMITTEES
SECTION 3.01. Committees. The Board of Directors may appoint from
among its members an Executive Committee and other committees composed of two
or more directors and delegate to these committees any of the powers of the
Board of Directors, except the power to declare dividends or other
distributions on stock, elect directors, issue stock other than as provided
in the next sentence, recommend to the stockholders any action which requires
stockholder approval, amend the By-Laws, or approve any merger or share
exchange which does not require stockholder approval. If the Board of
Directors has given general authorization for the issuance of stock, a
committee of the Board, in accordance with a general formula or method
specified by the Board by resolution or by adoption of a stock option or
other plan, may fix the terms of stock subject to classification or
reclassification and the terms on which any stock may be issued, including
all terms and conditions required or permitted to be established or
authorized by the Board of Directors.
SECTION 3.02. Committee Procedure. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority
of those present at a meeting at which a quorum is present shall be the act
of the committee. The members of a committee present at any meeting, whether
or not they constitute a quorum, may appoint a director to act in the place
of an absent member. Any action required or permitted to be taken at a
meeting of a committee may be taken without a meeting, if an unanimous
written consent which sets forth the action is signed by each member of the
committee and filed with the minutes of the committee. The members of a
committee may conduct any meeting thereof by conference telephone in
accordance with the provisions of Section 2.10.
SECTION 3.03. Emergency. In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Corporation by its directors and officers as contemplated by
<PAGE> 6
the Charter and the By-Laws, any two or more available members of the then
incumbent Executive Committee shall constitute a quorum of that Committee for
the full conduct and management of the affairs and business of the
Corporation in accordance with the provisions of Section 3.01. In the event
of the unavailability, at such time, of a minimum of two members of the then
incumbent Executive Committee, the available directors shall elect an
Executive Committee consisting of any two members of the Board of Directors,
whether or not they be officers of the Corporation, which two members shall
constitute the Executive Committee for the full conduct and management of the
affairs of the Corporation in accordance with the aforegoing provisions of
this Section. This Section shall be subject to implementation by resolution
of the Board of Directors passed from time to time for that purpose, and any
provisions of the By-Laws (other than this Section) and any resolutions which
are contrary to the provisions of this Section or to the provisions of any
such implementary resolutions shall be suspended until it shall be determined
by any interim Executive Committee acting under this Section that it shall be
to the advantage of the Corporation to resume the conduct and management of
its affairs and business under all the other provisions of the By-Laws.
ARTICLE IV.
OFFICERS
SECTION 4.01. Executive and Other Officers; Operating Committees. The
Corporation shall have a President, a Secretary, and a Treasurer who shall be
executive officers of the Corporation. It may also have a Chairman of the
Board, who shall be an executive officer of the Corporation if designated as
an officer by the Board of Directors. The other officers shall be executive
officers to the extent designated by the Board of Directors. The Board of
Directors may designate who shall serve as chief executive officer, having
general supervision of the business and affairs of the Corporation, or as
chief operating officer, having supervision of the operations of the
Corporation; in the absence of designation the President shall serve as chief
executive officer and chief operating officer. It may also have one or more
Vice Chairmen of the Board, Managing Directors, Vice-Presidents, assistant
officers, and subordinate officers as may be established by the Board of
Directors and may provide additional descriptive titles, such as chief
financial officer or chief investment officer, as the Board shall deem
appropriate. A person may hold more than one office in the Corporation. The
Chairman of the Board, the President, and any Vice Chairmen of the Board
shall be directors; the other officers may be directors. The officers of the
Corporation may also act through one or more committees appointed by the
Board of Directors or appointed by a committee appointed by the Board of
Directors. [Amended September 7, 1989; April 7, 1993; April 17, 1997.]
SECTION 4.02. Chairman of the Board. The Chairman of the Board, if one
be elected, shall preside at all meetings of the Board of Directors and of
the stockholders at which he shall be present; and, in general, he shall
perform all such duties as are from time to time assigned to him by the Board
of Directors.
<PAGE> 7
SECTION 4.03. President. The President, in the absence of the Chairman
of the Board, shall preside at all meetings of the Board of Directors and of
the stockholders at which he shall be present; he may sign and execute, in
the name of the Corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer
or agent of the Corporation; and, in general, he shall perform all duties
usually performed by a president of a corporation and such other duties as
are from time to time assigned to him by the Board of Directors or the chief
executive officer of the Corporation.
SECTION 4.04. Vice Chairmen of the Board. The Board of Directors may
elect one or more Vice Chairmen of the Board, who shall have the powers and
perform the duties of Managing Directors of the Corporation and shall have
such additional powers and perform such additional duties as are from time to
time assigned to them by the Board of Directors, the Chairman of the Board,
the President, or any committee appointed by the Board of Directors. [Added
April 17, 1997]
SECTION 4.05. Managing Directors. The Managing Directors shall be
elected by the Board of Directors and shall have the powers and perform the
duties of Vice-Presidents of the Corporation and shall have such additional
powers and perform such additional duties as are from time to time assigned
to them by the Board of Directors, the chief executive officer, the
President, or any committee appointed by the Board of Directors. In addition,
the President, the Chairman of the Board (if an executive officer), and the
Vice Chairmen of the Board and the chief executive officer (if any are
elected), shall have the additional title of Managing Director. [Added
September 7, 1989; renumbered April 7, 1993; revised and renumbered April 17,
1997]
SECTION 4.06. Vice-Presidents. The Vice-President or Vice-Presidents,
at the request of the chief executive officer or the President, or in the
President's absence or during his inability to act, shall perform the duties
and exercise the functions of the President, and when so acting shall have
the powers of the President. If there be more than one Vice-President, the
Board of Directors, or any committee appointed by the Board of Directors may
determine which one or more of the Vice-Presidents shall perform any of such
duties or exercise any of such functions, or if such determination is not
made by the Board of Directors or such committee, the chief executive
officer, or the President may make such determination; otherwise any of the
Vice-Presidents may perform any of such duties or exercise any of such
functions. The Vice-President or Vice-Presidents shall have such other
powers and perform such other duties, and have such additional descriptive
designations in their titles (if any), as are from time to time assigned to
them by the Board of Directors, the chief executive officer, or the
President. [Renumbered and amended April 7, 1993; renumbered April 17,
1997.]
SECTION 4.07. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors and of any committees
<PAGE> 8
of the Board of Directors, in books provided for the purpose; he shall see
that all notices are duly given in accordance with the provisions of the
By-Laws or as required by law; he shall be custodian of the records of the
Corporation; he may witness any document on behalf of the Corporation, the
execution of which is duly authorized, see that the corporate seal is affixed
where such document is required or desired to be under its seal, and, when so
affixed, may attest the same; and, in general, he shall perform all duties
incident to the office of a secretary of a corporation, and such other
duties as are from time to time assigned to him by the Board of Directors,
the chief executive officer, the President, or any committee appointed by the
Board of Directors. [Renumbered September 7, 1989; amended April 7, 1993;
renumbered April 17, 1997.]
SECTION 4.08. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by
the Board of Directors; he shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation; and, in general, he shall perform all the duties incident to the
office of a treasurer of a corporation, and such other duties as are from
time to time assigned to him by the Board of Directors, the chief executive
officer, the President, or any committee appointed by the Board of Directors.
[Renumbered September 7, 1989; amended April 7, 1993; renumbered April 17,
1997.]
SECTION 4.09. Assistant and Subordinate Officers. The assistant and
subordinate officers of the Corporation are all officers below the office of
Managing Director, Vice-President, Secretary, or Treasurer. The assistant or
subordinate officers shall have such duties as are from time to time assigned
to them by the Board of Directors, the chief executive officer, the
President, any committee appointed by the Board of Directors, or any
committee appointed by a committee appointed by the Board of Directors.
[Renumbered September 7, 1989; amended effective April 7, 1993; renumbered
April 17, 1997.]
SECTION 4.10. Election, Tenure and Removal of Officers. The Board of
Directors shall elect the officers. The Board of Directors may from time to
time authorize any committee appointed by the Board, the president, or the
chief executive officer, to appoint vice presidents and assistant and
subordinate officers. Any committee appointed by the Board of Directors may
delegate its power to appoint assistant and subordinate officers to one or
more other committees of officers. The President serves for one year. All
other officers shall be appointed to hold their offices, respectively, during
the pleasure of the Board. The Board of Directors (or, as to any vice
president or assistant or subordinate officer, any committee appointed by the
Board of Directors, or any officer authorized by the Board) may remove an
officer at any time. The removal of an officer does not prejudice any of his
contract rights. The Board of Directors (or, as to any assistant or
subordinate officer, any committee appointed by the Board of Directors or any
<PAGE> 9
committee appointed by a committee appointed by the Board of Directors or
officer authorized by the Board) may fill a vacancy which occurs in any
office for the unexpired portion of the term. [Renumbered September 7,
1989; amended, effective April 7, 1993; renumbered April 17, 1997.]
SECTION 4.11. Compensation. The Board of Directors shall have power to
fix the salaries and other compensation and remuneration, of whatever kind,
of all officers of the Corporation. It may authorize one or more committees
comprised of directors or officers to fix the salaries, compensation, and
remuneration of managing directors and the other officers of the Corporation.
Any committee appointed by the Board of Directors may fix, or authorize one
or more other committees to fix, the salaries, compensation, and remuneration
of the vice presidents and assistant and subordinate officers. [Renumbered
September 7, 1989; amended, effective April 7, 1993; renumbered April 17,
1997.]
ARTICLE V.
STOCK
SECTION 5.01. Certificates for Stock. Each stockholder is entitled to
certificates which represent and certify the shares of stock he holds in the
Corporation. Each stock certificate shall include on its face the name of
the corporation that issues it, the name of the stockholder or other person
to whom it is issued, and the class of stock and number of shares it
represents. It shall be in such form, not inconsistent with law or with the
Charter, as shall be approved by the Board of Directors or any officer or
officers designated for such purpose by resolution of the Board of Directors.
Each stock certificate shall be signed by the Chairman of the Board, the
President, or a Vice-President, and countersigned by the Secretary, an
Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each
certificate may be sealed with the actual corporate seal or a facsimile of it
or in any other form and the signatures may be either manual or facsimile
signatures. A certificate is valid and may be issued whether or not an
officer who signed it is still an officer when it is issued.
SECTION 5.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates of stock; and
may appoint transfer agents and registrars thereof. The duties of transfer
agent and registrar may be combined.
SECTION 5.03. Record Date and Closing of Transfer Books. The Board of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
notice of a meeting, vote at a meeting, receive a dividend, or be allotted
other rights. The record date may not be more than 90 days before the date
on which the action requiring the determination will be taken; the transfer
books may not be closed for a period longer than 20 days; and, in the case of
a meeting of stockholders, the record date or the closing of the transfer
<PAGE> 10
books shall be at least ten days before the date of the meeting.
SECTION 5.04. Stock Ledger. The Corporation shall maintain a stock
ledger which contains the name and address of each stockholder and the number
of shares of stock of each class which the stockholder holds. The stock
ledger may be in written form or in any other form which can be converted
within a reasonable time into written form for visual inspection. The
original or a duplicate of the stock ledger shall be kept at the offices of a
transfer agent for the particular class of stock, or, if none, at the
principal office in the State of Maryland or the principal executive offices
of the Corporation.
SECTION 5.05. Certification of Beneficial Owners. The Board of
Directors may adopt by resolution a procedure by which a stockholder of the
Corporation may certify in writing to the Corporation that any shares of
stock registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth
the class of stockholders who may certify; the purpose for which the
certification may be made; the form of certification and the information to
be contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or
closing of the stock transfer books within which the certification must be
received by the Corporation; and any other provisions with respect to the
procedure which the Board considers necessary or desirable. On receipt of a
certification which complies with the procedure adopted by the Board in
accordance with this Section, the person specified in the certification is,
for the purpose set forth in the certification, the holder of record of the
specified stock in place of the stockholder who makes the certification.
SECTION 5.06. Lost Stock Certificates. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate
in place of one which is alleged to have been lost, stolen, or destroyed, or
the Board of Directors may delegate such power to any officer or officers of
the Corporation. In their discretion, the Board of Directors or such officer
or officers may refuse to issue such new certificate save upon the order of
some court having jurisdiction in the premises.
ARTICLE VI.
FINANCE
SECTION 6.01. Checks, Drafts, Etc. All checks, drafts and orders for
the payment of money, notes and other evidences of indebtedness, issued in
the name of the Corporation, shall, unless otherwise provided by resolution
of the Board of Directors, be signed by the President, a Vice-President or an
Assistant Vice-President and countersigned by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary.
SECTION 6.02. Annual Statement of Affairs. The President shall prepare
annually a full and correct statement of the affairs of the Corporation, to
include a balance sheet and a financial statement of operations for the
<PAGE> 11
preceding fiscal year. The statement of affairs shall be submitted at the
annual meeting of the stockholders and, within 20 days after the meeting,
placed on file at the Corporation's principal office.
SECTION 6.03. Fiscal Year. The fiscal year of the Corporation shall be
the twelve calendar months period ending December 31 in each year, unless
otherwise provided by the Board of Directors.
SECTION 6.04. Dividends. If declared by the Board of Directors at any
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the capital stock of the Corporation, unless such
dividend is contrary to law or to a restriction contained in the Charter.
ARTICLE VII.
SUNDRY PROVISIONS
SECTION 7.01. Books and Records. The Corporation shall keep correct
and complete books and records of its accounts and transactions and minutes
of the proceedings of its stockholders and Board of Directors and of any
executive or other committee when exercising any of the powers of the Board
of Directors. The books and records of a Corporation may be in written form
or in any other form which can be converted within a reasonable time into
written form for visual inspection. Minutes shall be recorded in written
form but may be maintained in the form of a reproduction. The original or a
certified copy of the By-Laws shall be kept at the principal office of the
Corporation.
SECTION 7.02. Corporate Seal. The Board of Directors shall provide a
suitable seal, bearing the name of the Corporation, which shall be in the
charge of the Secretary. The Board of Directors may authorize one or more
duplicate seals and provide for the custody thereof. If the Corporation is
required to place its corporate seal to a document, it is sufficient to meet
the requirement of any law, rule, or regulation relating to a corporate seal
to place the word "Seal" adjacent to the signature of the person authorized
to sign the document on behalf of the Corporation.
SECTION 7.03. Bonds. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his duties, with one or more
sureties and in such amount as may be satisfactory to the Board of Directors.
SECTION 7.04. Voting Upon Shares in Other Corporations. Stock of other
corporations or associations, registered in the name of the Corporation, may
be voted by the President, a Vice-President, or a proxy appointed by either
of them. The Board of Directors, however, may by resolution appoint some
other person to vote such shares, in which case such person shall be entitled
to vote such shares upon the production of a certified copy of such
resolution.
SECTION 7.05. Mail. Any notice or other document which is required by
<PAGE> 12
these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
SECTION 7.06. Execution of Documents. A person who holds more than one
office in the Corporation may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer.
SECTION 7.07. Amendments. Subject to the special provisions of Section
2.02, (a) any and all provisions of these By-Laws may be altered or repealed
and new by-laws may be adopted at any annual meeting of the stockholders, or
at any special meeting called for that purpose, and (b) the Board of
Directors shall have the power, at any regular or special meeting thereof, to
make and adopt new by-laws, or to amend, alter or repeal any of the By-Laws
of the Corporation.
EXHIBIT 15
July 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that our report dated July 23, 1997 (issued pursuant to the
provisions of Statement on Auditing Standards No. 71) is incorporated by
reference in the Prospectuses constituting parts of T. Rowe Price Associates,
Inc.'s Registration Statements on Form S-8 (No. 033-07012, No. 033-08672, No.
033-37573, No. 033-72568, No. 033-58749 and No. 333-20333). We are also
aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited condensed consolidated financial statements of T. Rowe Price
Associates, Inc. included in Part I., Item 1. of the accompanying Form 10-Q
Quarterly Report for the period ended June 30, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000080255
<NAME> T. ROWE PRICE ASSOCIATES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 134,286,000
<SECURITIES> 166,634,000
<RECEIVABLES> 83,421,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 122,495,000<F2>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 545,669,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 11,596,000
<OTHER-SE> 388,754,000
<TOTAL-LIABILITY-AND-EQUITY> 545,669,000
<SALES> 0
<TOTAL-REVENUES> 348,047,000
<CGS> 0
<TOTAL-COSTS> 230,624,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 117,423,000
<INCOME-TAX> 45,286,000
<INCOME-CONTINUING> 62,329,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,329,000
<EPS-PRIMARY> .98
<EPS-DILUTED> 0
<FN>
<F1>Item is not contained in registrant's unclassified balance sheet.
<F2>Item is reported net of depreciation at interim.
<F3>Not reported at interim.
</FN>
</TABLE>
