<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended: DECEMBER 31, 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) 345-2000.
Securities registered pursuant to Section 12(b) of the Act: NONE.
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.20 PAR VALUE.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]. No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock (based on last reported
NNM price) held by non-affiliates of the registrant (excludes executive
officers and directors). $2.6 BILLION AT FEBRUARY 14, 1997.
Indicate the number of shares outstanding of the registrant's common stock,
as of the latest practicable date. 57,862,585 SHARES AT MARCH 14, 1997.
DOCUMENTS INCORPORATED BY REFERENCE: In Part III of this Form 10-K, the
Definitive Proxy Statement for the 1997 Annual Meeting of Stockholders (Form
DEF 14A; Accession No. 0001006199-97-000025; CIK 0000080255).
Exhibit index is at Item 14(a)3 on pages 33-35.
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PART I.
ITEM 1. BUSINESS.
T. Rowe Price Associates, Inc. and its subsidiaries (the Company) serve as
investment adviser to the T. Rowe Price Mutual Funds (the Price Funds), other
sponsored investment products, and private accounts of other institutional
and individual investors, including defined benefit and defined contribution
retirement plans, endowments, foundations, trusts, and other mutual funds
including those which hold the assets of variable annuity insurance
contracts. Total assets under management at December 31, 1996 were $99.4
billion, up $24 billion since December 31, 1995. The Company also provides
various administrative services to the Price Funds and other clients,
including mutual fund transfer agent, accounting and shareholder services;
participant recordkeeping and transfer agent services for defined
contribution retirement plans; discount brokerage; and trust services. The
Company was incorporated in Maryland in January 1947 as successor to the
investment counseling business formed by the late Mr. T. Rowe Price in 1937.
The Company offers its Price Funds' shareholders and private accounts a broad
range of investment products designed to attract and retain investors with
varying investment objectives. Shareholders are allowed to exchange funds
among mutual fund products as economic and market conditions and investor
needs change. The Company frequently introduces new mutual funds designed to
complement and expand its investment product offerings, respond to
competitive developments in the financial marketplace, and meet the changing
needs of its funds' shareholders. New mutual funds and other investment
products are introduced when the Company believes that it has personnel with
sufficient investment expertise to manage the product successfully for a
substantial group of investors over a long period of time. 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, particularly the international funds
in 1994 and the domestic funds in 1995 and 1996. 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. Investment advisory fees earned on assets under management and
related expenses incurred to generate such fees are generally higher for
stock and international investment products which have become a substantially
larger portion of the Company's assets under management than in the past.
The investment strategies employed by the Company accommodate a variety of
private account client investment objectives encompassing both domestic and
international securities. Management of investments in stocks include active
approaches emphasizing established growth, mid-cap growth, New America growth
(companies that participate in the growth of the service sector of the U.S.
economy), small cap, equity income, capital appreciation, and natural
resources as well as systematic and balanced portfolio strategies.
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Approaches for investing in fixed income securities portfolios include active
and systematic (index) management strategies and management of high yield
securities and cash reserves. The Company has also developed several
specialized investment management services including private company
investing, investing in debt securities and creditor claims of
financially-troubled companies, the efficient disposition of equity
distributions from venture capital investments, and stable value investment
contract management.
Average assets under management (in millions) during the past five years and
total assets under management at December 31, 1996 are:
1992 1993 1994 1995 1996 12/31/96
________ ________ ________ ________ ________ ________
Price Funds
Stock $ 10,280 $ 14,713 $ 21,495 $ 27,211 $ 40,287 $ 46,982
Taxable bond 5,150 6,025 5,412 5,392 5,767 5,883
Tax-free bond 3,187 4,169 4,225 4,211 4,450 4,573
Money market 5,428 4,903 5,333 5,865 6,473 6,928
________ ________ ________ ________ ________ ________
Total 24,045 29,810 36,465 42,679 56,977 64,366
Other sponsored in-
vestment products
and private
accounts 14,510 17,136 19,490 23,866 30,495 35,018
________ ________ ________ ________ ________ ________
Total assets under
management $ 38,555 $ 46,946 $ 55,955 $ 66,545 $ 87,472 $ 99,384
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
The Company's revenues (in thousands) from investment advisory and
administrative services provided under agreements with the Price Funds and
other clients during the past five years are:
1992 1993 1994 1995 1996
________ ________ ________ ________ ________
Investment advisory fees
Price Funds
Stock $ 65,202 $ 96,136 $145,020 $180,574 $260,807
Taxable bond 25,149 31,869 28,561 28,404 30,217
Tax-free bond 15,869 19,873 19,744 20,018 21,112
Money market 21,780 19,137 20,132 22,113 23,852
________ ________ ________ ________ ________
Total 128,000 167,015 213,457 251,109 335,988
Other sponsored investment
products and private
accounts 46,590 57,794 76,614 80,978 115,319
________ ________ ________ ________ ________
Total 174,590 224,809 290,071 332,087 451,307
________ ________ ________ ________ ________
Administrative fees
Price Funds 45,153 54,184 61,057 67,166 87,031
Price Funds' shareholders
and others 18,405 23,024 24,615 27,211 30,772
________ ________ ________ ________ ________
Total 63,558 77,208 85,672 94,377 117,803
________ ________ ________ ________ ________
Total investment advisory
and administrative fees $238,148 $302,017 $375,743 $426,464 $569,110
________ ________ ________ ________ ________
________ ________ ________ ________ ________
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MUTUAL FUND MANAGEMENT.
OVERVIEW. Each of the Price Funds has a distinct investment objective that
has been developed as part of the Company's strategy to provide a broad and
balanced selection of investment products. All Funds are sold exclusively by
the Company on a no-load basis (without a sales commission). No-load mutual
funds offer investors a low-cost and relatively easy method of investing in a
variety of stock and bond products. The Company's marketing effort is
focused on advertising in the print media and direct mail communications.
During 1996 and 1997, the Company has expanded its promotional activities to
the television market including cable channels. In addition, considerable
direct marketing efforts are targeted at large participant-directed defined
contribution plans that invest, in whole or in part, in mutual funds. The
Company believes that its distribution methods and fund shareholder and
administrative services promote stability of assets in the Price Funds
through market cycles in addition to reducing costs to fund shareholders.
At December 31, 1996, assets under management in the Price Funds aggregated
$64.4 billion, an increase of $15.8 billion during 1996. The following
information sets forth the net assets (in millions) at December 31, 1996 of
each fund available to the investing public and includes the year the fund
was added to the Price family of funds.
DOMESTIC STOCK FUNDS:
Growth Stock (1950) $3,431
New Horizons (1960) $4,363
New Era (1969) $1,468
Growth & Income (1982) $2,489
New America Growth (1985) $1,440
Equity Income (1985) $7,818
Capital Appreciation (1986) $ 960
Science & Technology (1987) $3,292
Small-Cap Value (1988) $1,410
Equity Index (1990) $ 808
Balanced (1991) $ 876
Mid-Cap Growth (1992) $1,021
OTC (1992) $ 416
Dividend Growth (1992) $ 209
Blue Chip Growth (1993) $ 540
Personal Strategy - Balanced (1994) $ 180
Personal Strategy - Growth (1994) $ 42
Personal Strategy - Income (1994) $ 33
Value (1994) $ 198
Capital Opportunity (1994) $ 125
Health Sciences (1995) $ 194
Mid-Cap Value (1996) $ 49
Financial Services (1996) $ 30
INTERNATIONAL STOCK FUNDS:
International Stock (1980) $9,341
International Discovery (1988) $ 322
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European Stock (1990) $ 765
New Asia (1990) $2,182
Japan (1991) $ 147
Latin America (1993) $ 211
Emerging Markets Stock (1995) $ 73
Global Stock (1995) $ 17
TAXABLE BOND FUNDS:
New Income (1973) $1,688
High Yield (1984) $1,325
Short-Term Bond (1984) $ 447
GNMA (1985) $ 928
International Bond (1986) $ 969
U.S. Treasury Intermediate (1989) $ 194
U.S. Treasury Long-Term (1989) $ 73
Global Government Bond (1990) $ 56
Short-Term U.S. Government (1991) $ 96
Summit GNMA (1993) $ 25
Summit Limited-Term Bond (1993) $ 27
Emerging Markets Bond (1994) $ 40
Corporate Income (1995) $ 16
TAX-FREE BOND FUNDS:
Tax-Free Income (1976) $1,345
Tax-Free Short- Intermediate (1983) $ 439
Tax-Free High Yield (1985) $1,033
New York Tax-Free Bond (1986) $ 142
California Tax-Free Bond (1986) $ 156
Maryland Tax-Free Bond (1987) $ 808
New Jersey Tax-Free Bond (1991) $ 79
Virginia Tax-Free Bond (1991) $ 190
Tax-Free Insured Intermediate Bond (1992) $ 97
Maryland Short-Term Tax-Free Bond (1993) $ 95
Florida Insured Intermediate Tax-Free Bond (1993) $ 90
Georgia Tax-Free Bond (1993) $ 37
Summit Municipal Income (1993) $ 16
Summit Municipal Intermediate (1993) $ 31
Virginia Short-Term Tax-Free Bond (1994) $ 15
MONEY MARKET FUNDS:
Prime Reserve (1976) $4,323
Tax-Exempt Money (1981) $ 664
U.S. Treasury Money (1982) $ 803
New York Tax-Free Money (1986) $ 81
California Tax-Free Money (1986) $ 78
Summit Cash Reserves (1993) $ 880
Summit Municipal Money Market (1993) $ 99
The Company also sponsors the Spectrum series of funds (Growth, Income and
International), three other mutual funds that invest in a broadly diversified
portfolio of other T. Rowe Price funds. Assets under management in these
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funds aggregated $3,460 million at December 31, 1996. In addition, the
Company also sponsors two other equity mutual funds: the Foreign Equity Fund,
an international stock fund begun in 1989 for institutional investors, and
the Mid-Cap Equity Growth Fund, a domestic stock fund begun in 1996. Assets
under management in these two funds were $2,532 million at December 31, 1996.
AGREEMENTS WITH PRICE FUNDS. The Company provides investment advisory,
distribution and administrative services to the Price Funds under investment
management, underwriting, transfer agency and service agreements. Pursuant
to investment management agreements with each of the Price Funds, the Company
provides investment advisory services to each fund, subject to the authority
of each fund's board of directors and to each fund's fundamental investment
objective. The investment management agreements with the Price Funds are
approved annually by the directors of the respective funds, including a
majority of the directors who are not "interested persons" of the funds or
the Company as defined under the Investment Company Act of 1940, as amended
(the Investment Company Act). Amendments to such agreements must be approved
by the Price Funds' shareholders. Each agreement automatically terminates in
the event of its assignment (as defined in the Investment Company Act) and
either party may terminate the agreement without penalty after notice
(generally 60 days). Each fund has the right to use the "T. Rowe Price" name
for so long as its investment management agreement with the Company remains
in effect.
The Company is paid an investment advisory fee based upon the average daily
net assets of the funds and separate administrative fees for the support
services rendered by the Company. Management of the Company and the
independent directors of the Price Funds regularly review the fund fee
structures in light of fund performance, the level and range of services
provided, industry conditions, and other factors. The current advisory fee
paid by each of the Price Funds (excluding the Price Spectrum and Summit
Funds, the Price Equity Index Fund, and the Foreign Equity and Mid-Cap Equity
Growth Funds) is computed by multiplying the individual fund's average daily
net assets by a composite fee determined by adding a group fee based on the
combined net assets of the Price Funds and an individual fund fee applicable
to each fund.
Except as noted in the following paragraph, each fund (excluding the Price
Spectrum and Summit Funds) bears all expenses associated with the operation
of the fund and the issuance and redemption of its securities. In
particular, each fund pays investment advisory fees; shareholder servicing
fees and expenses; fund accounting fees and expenses; transfer agent fees;
custodian fees and expenses; legal and auditing fees; expenses of preparing,
printing and mailing prospectuses and shareholder reports to existing
shareholders; registration fees and expenses; proxy and annual meeting
expenses; and independent directors' fees and expenses. All advertising,
promotion and selling expenses are borne by the Company.
The Company generally guarantees that a newly-organized fund's expenses will
not exceed a specified ratio during its initial operations. Advisory fees
and other mutual fund expenses in excess of these self-imposed limits are
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absorbed by the Company and have not been material.
Pursuant to underwriting agreements with each fund, T. Rowe Price Investment
Services, Inc. (TRP Investment Services) is the exclusive distributor of the
Price Funds. The agreements provide that TRP Investment Services shall
always offer the funds' shares at a public offering price equal to the net
asset value per share and shall use its best efforts to obtain investors for
the funds. The underwriting agreements with the Price Funds are approved
annually by the directors of the respective funds, including a majority of
the directors who are not "interested persons" of the funds or the Company as
defined under the Investment Company Act. Each agreement automatically
terminates in the event of its assignment (as defined in the Investment
Company Act), and either party may terminate the agreement without penalty
after notice (generally 60 days). TRP Investment Services does not receive a
separate fee for its services to the Price Funds. The Company expends
substantial resources in advertising and direct mail communications to
existing and potential Price Funds' shareholders and in providing the staff
and communications capabilities to respond to inquiries. The level of
advertising and promotion expenditures varies over time as market conditions
and cash inflows to the Price Funds warrant.
ADMINISTRATIVE SERVICES. T. Rowe Price Services, Inc. (TRP Services)
provides transfer agent and shareholder services under contracts with the
Price Funds. Shareholder servicing activities include maintenance of staff
and equipment to respond to all telephone inquiries from existing Fund
shareholders and to provide the mutual fund transfer agent function. In
addition, the Company provides mutual fund accounting services including
maintenance of financial records, preparation of financial statements and
reports, daily valuation of portfolio securities and computation of daily net
asset values per share.
T. Rowe Price Retirement Plan Services, Inc. (TRP Retirement Plan Services)
provides participant accounting, plan administration and transfer agent
services for defined contribution retirement plans that invest, at least in
part, in the Price Funds. Plan sponsors compensate TRP Retirement Plan
Services for certain administrative services while the Price Funds compensate
it for maintaining and administering the individual participant accounts for
those plans that invest in the Price Funds.
The Company provides certain trust services through its Maryland-chartered
limited service trust company, T. Rowe Price Trust Company, Inc. (TRP Trust
Company). TRP Trust Company serves as custodian or trustee for the Price
Funds' prototype retirement plans, IRAs, and certain other retirement plans.
TRP Trust Company also sponsors common trust funds principally for investment
by qualified employee retirement plans. Under its charter, TRP Trust Company
may not be in the business of accepting deposits and cannot make personal or
commercial loans.
The Company also provides discount brokerage services through TRP Investment
Services. Such services are provided primarily to shareholders of the Price
Funds and are intended to complement the other investment services offered to
<PAGE> 8
them. All discount brokerage transactions are cleared through and accounts
maintained by BHC Securities, Inc., an independent clearing broker.
OTHER SPONSORED PRODUCTS AND PRIVATE ACCOUNT MANAGEMENT.
The Company serves as investment adviser to pension, profit sharing and other
employee benefit plans, endowments, foundations, trusts, individuals,
corporations, other mutual funds (including those which hold the assets of
variable annuity insurance contracts) and other investors who are principally
domiciled in the United States. No private account client accounted for more
than 5% of the Company's 1996 private account investment advisory revenues.
Investment management services are provided to client accounts on an
individual basis and through sponsored investment partnerships and trusts.
Sponsored investment products have generally been issued through private
placements.
Fees for separately managed private account clients are generally computed
based on the value of assets under management. The standard form of
investment advisory agreement with private account clients provides that the
agreement may be terminated at any time and that any unearned fees paid in
advance will be refunded. The minimum account size is generally $20 million
for institutional private account services, although the minimum account size
for certain specialized investment services may be higher. Fees for
sponsored product management are based on individual product advisory
agreements, which result from consideration of, among other things, the type
of investments to be made and the unique investment management services to be
provided.
Many specialized investment advisory services are provided to private
accounts by subsidiaries of the Company. International equity and fixed
income securities management is provided by Rowe Price-Fleming International,
Inc. (RPFI). Management of stable value investment contracts, aggregating
almost $6.1 billion at December 31, 1996, is provided by T. Rowe Price Stable
Asset Management, Inc. (TRP Stable Asset Management).
INVESTMENT RESEARCH.
In the performance of its investment advisory functions, the Company uses
fundamental, technical and cyclical security analysis methods. The Company
maintains a substantial internal equity and fixed income investment research
effort, undertaken by analysts, economists, statisticians and support
personnel, which includes original industry and company research, utilizing
such sources as inspection of corporate activities, management interviews,
company-prepared information, financial information published by companies
and/or filed with the SEC, financial newspapers and magazines, corporate
rating services, and field checks with participants in the industry such as
suppliers or competitors. In addition, the Company utilizes research
provided by brokerage firms in a supportive capacity; information is received
from private economists, political observers, foreign commentators,
government experts, and market and security analysts. In certain instances,
computerized data is the basis of the stock selection process.
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ROWE PRICE-FLEMING INTERNATIONAL, INC.
TRP Finance, Inc., an investment holding company subsidiary, owns 50% of the
common stock of RPFI which, by virtue of the Company's controlling interest,
is consolidated into the Company's financial statements. The balance of the
common stock of RPFI is owned equally by Copthall Overseas Limited (United
Kingdom), a subsidiary of the London-based merchant banking group Robert
Fleming Holdings Limited, and Jardine Fleming International Holdings Limited
(Cayman Islands), a subsidiary of the Jardine Fleming Group Limited, an
investment bank in the Asia-Pacific Region. RPFI serves as investment
adviser to the Price International Funds and to other mutual funds, sponsored
investment products and private accounts of institutional investors. During
1996, international assets under management by RPFI increased $7.0 billion to
$29.2 billion at year end, including $16.6 billion in the T. Rowe Price
International Funds. RPFI's financial information and assets under
management are included in the Company's consolidated financial data and
statistical information presented elsewhere in this Form 10-K.
International investment research is provided to RPFI by affiliates of its
minority stockholders. Fees paid for these services are based on RPFI's
assets under management.
REGULATION.
The Company, RPFI, TRP Stable Asset Management, and T. Rowe Price (Canada),
Inc. (TRP Canada) are registered with the Securities and Exchange Commission
under the Investment Advisers Act of 1940 and all applicable state securities
agencies. Each of the Price Funds is registered with the Securities and
Exchange Commission under the Investment Company Act and, except for the
specific state tax-free funds, is qualified for sale throughout the United
States and Puerto Rico. TRP Investment Services is registered as a broker-
dealer under the Securities Exchange Act of 1934 (Exchange Act) and all
applicable state securities laws and is a member of the National Association
of Securities Dealers, Inc. and the Securities Investor Protection
Corporation. TRP Services is registered under the Exchange Act as a transfer
agent, and TRP Trust Company is regulated by the State of Maryland Bank
Commissioner. TRP Canada is also registered as an investment adviser with
the Ontario Securities Commission.
All aspects of the Company's business are subject to extensive federal and
state laws and regulations. These laws and regulations are primarily
intended to benefit or protect the Company's clients and the Price Funds'
shareholders and generally grant supervisory agencies and bodies broad
administrative powers, including the power to limit or restrict the Company
from carrying on its business in the event that it fails to comply with such
laws and regulations. In such event, the possible sanctions that may be
imposed include the suspension of individual employees, limitations on
engaging in certain lines of business for specified periods of time,
revocation of the investment adviser and other registrations, censures and
fines.
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The Company and certain of its subsidiaries are subject to net capital
requirements including those of various federal and state regulatory
agencies. The Company's net capital, as defined, has consistently met or
exceeded all minimum requirements.
COMPETITION.
As a member of the financial services industry, the Company is subject to
substantial competition in all aspects of its business. A significant number
of mutual funds are sold to the public by investment management firms,
broker-dealers, banks and insurance companies and, in recent years, brokerage
and other mutual fund companies have extended their product offerings to
include other sponsors' mutual funds. The Company competes with brokerage
and investment banking firms, insurance companies, banks, and other financial
institutions in all aspects of its business. Many of these financial
institutions have substantially greater resources than the Company. The
Company competes with other providers of investment products and services
primarily on the basis of the range of investment products offered, the
investment performance of such products, the manner in which such products
are distributed, and the scope and quality of the services provided.
The Company believes that competition within the investment management
industry will increase as a result of consolidation and acquisition activity.
In order to maintain and enhance its competitive position as an independent,
no-load, direct marketer of mutual funds, the Company may review acquisition
prospects and, if appropriate opportunities arise, engage in discussions or
negotiations that could lead to acquisitions by the Company. The Company is
not currently party to any agreements or understandings regarding any
material acquisitions.
EMPLOYEES.
At December 31, 1996, the Company and its subsidiaries had 2,587 active,
full-time employees. The Company employs additional temporary and part-time
personnel to meet seasonal and other periodic demands for its mutual fund
shareholder and investor services.
ITEM 2. PROPERTIES.
The Company's primary corporate offices consist of approximately 270,000
square feet of leased space located at 100 East Pratt Street in Baltimore,
Maryland.
TRP Suburban, Inc. owns a financial operations center in Owings Mills,
Maryland consisting of approximately 110,000 square feet of operating space.
The facility houses a portion of the Company's administrative services
operations. The underlying land has been leased until 2089.
TRP Suburban Second, Inc. acquired 32.5 acres of land in Owings Mills,
Maryland in December 1995 and is developing two buildings with a combined
207,000 square feet of space for additional operating facilities.
<PAGE> 11
Construction is expected to be completed in August 1997. The acreage will
accommodate additional development of approximately 300,000 square feet of
space. TRP Suburban Second also constructed a 46,000 square foot technology
center on a separate parcel of land in Owings Mills, Maryland in 1996.
Information concerning anticipated 1997 capital expenditures is set forth in
the last paragraph of the Capital Resources and Liquidity section of Item 7.
of this Form 10-K.
The Company also leases facilities in Los Angeles and San Francisco,
California; Owings Mills, Maryland; Glen Allen, Virginia; Washington, D.C.;
Chicago, Illinois; and Tampa, Florida. Future minimum rental payments under
noncancelable operating leases at December 31, 1996 are set forth in Note 8
to the consolidated financial statements included in Item 8. of this Form 10-
K.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, the Company is a party to various claims arising in the
ordinary course of business. The Company is not currently the subject of any
claim that, if adversely determined, is likely to have a material adverse
effect on the Company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's stockholders during the
fourth quarter of 1996.
ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following information includes the names, ages, and positions of the
executive officers of the Company. There are no arrangements or
understandings pursuant to which any person serves the Company.
George J. Collins (56), President and Chief Executive Officer (1984) and
Managing Director (1989)
George A. Roche (55), Managing Director (1989), Chief Financial
Officer (1984) and Chief Executive Officer - designate (1996)
Edward C. Bernard (41), Managing Director (1995) and Vice President
(1989-1995)
Henry H. Hopkins (54), Managing Director (1989)
James A.C. Kennedy (43), Managing Director (1990)
William T. Reynolds (48), Managing Director (1990)
James S. Riepe (53), Managing Director (1989)
M. David Testa (52), Managing Director (1989)
Charles E. Vieth (40), Managing Director (1993) and Vice President
(1985-1993)
Alvin M. Younger, Jr. (47), Managing Director (1990), Treasurer (1985) and
Secretary (1987)
<PAGE> 12
Similar information for the Company's other managing directors follows.
Stephen W. Boesel (52), Managing Director (1993) and Vice President
(1977-1993)
Thomas H. Broadus, Jr. (59), Managing Director (1989)
John H. Laporte (51), Managing Director (1989)
Mary J. Miller (41), Managing Director (1993) and Vice President (1986-1993)
Charles A. Morris (34), Managing Director (1995) and Vice President
(1990-1995)
Brian C. Rogers (41), Managing Director (1991)
Charles P. Smith (53), Managing Director (1990)
Peter Van Dyke (58), Managing Director (1990)
Richard T. Whitney, (38), Managing Director (1995) and Vice President
(1988-1995)
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock ($.20 par value) trades on The Nasdaq National
Market under the symbol "TROW". The high and low trade price information and
dividends per share during the past two years were:
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
________ ________ ________ ________
1995 - High price $ 18.625 $ 20.500 $ 25.875 $ 28.375
Low price $ 13.500 $ 17.625 $ 16.875 $ 22.500
Cash dividends declared $ .08 $ .08 $ .08 $ .105
1996 - High price $ 29.250 $ 31.250 $ 35.750 $ 45.625
Low price $ 21.313 $ 24.750 $ 22.750 $ 32.000
Cash dividends declared $ .105 $ .105 $ .105 $ .13
At February 14, 1997, there were approximately 2,600 holders of record of the
Company's outstanding common stock.
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA.
Year ended December 31,
____________________________________________________
1992 1993 1994 1995 1996
________ ________ ________ ________ ________
(in millions, except per-share amounts)
Revenues $ 245.1 $ 310.0 $ 382.4 $ 439.3 $ 586.1
Net income $ 35.8 $ 48.5 $ 61.2 $ 75.4 $ 98.5
Earnings per
share (1) $ .59 $ .79 $ 1.00 $ 1.24 $ 1.59
Cash dividends
declared per
share (1) $ .1875 $ .2225 $ .275 $ .345 $ .445
Weighted average
shares
outstanding (1) 60.3 61.2 61.1 61.1 61.9
(1) Retroactively adjusted to give effect to the 2-for-1 stock splits in
November 1993 and April 1996.
December 31,
________________________________________________
1992 1993 1994 1995 1996
________ ________ ________ ________ ________
(in millions, except as noted)
Balance sheet data
Total assets $ 206.1 $ 263.4 $ 297.3 $ 365.3 $ 478.8
Debt $ 13.2 $ 12.9 $ 12.6 $ -- $ --
Stockholders'
equity $ 154.2 $ 196.0 $ 216.2 $ 274.2 $ 345.7
Assets under manage-
ment (in billions) $ 41.4 $ 54.4 $ 57.8 $ 75.4 $ 99.4
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL.
T. Rowe Price Associates, Inc. (the Company) derives its revenue primarily
from investment advisory and administrative services provided to the Price
Mutual Funds (the Funds), 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, particularly the
international funds in 1994 and the domestic funds in 1995 and 1996. At
December 31, 1996, total assets under management were $99.4 billion,
<PAGE> 14
including $64.4 billion in the T. Rowe Price mutual funds. Equity
investments comprise approximately two-thirds of total assets under
management at the end of 1996.
All per-share amounts have been retroactively adjusted for the 2-for-1 stock
split in April 1996.
RESULTS OF OPERATIONS.
1996 versus 1995. Net income increased $23.0 million or 31% to $98.5 million
or $1.59 per share from $75.4 million or $1.24 per share. Results for 1995
include a $1.0 million extraordinary charge from the early extinguishment of
the Company's long-term debt which reduced earnings per share $.01. Total
revenues increased 33% from $439.3 million to a record of $586.1 million, led
by an increase of $119.2 million in investment advisory fees.
Investment advisory revenues from the Funds increased $84.9 million as
average fund assets under management rose $14.3 billion to $57.0 billion.
Fund assets totaled $64.4 billion at December 31, 1996, up $15.8 billion
during the year, with stock funds accounting for most of the increase. Net
cash inflows to the Funds during 1996 totaled $8.6 billion, more than double
that of the record annual net inflows of $3.9 billion achieved in 1993.
Private accounts and other sponsored products and performance management fees
earned from sponsored partnerships contributed the balance of the investment
advisory revenue gains as these assets under management rose $8.1 billion to
$35.0 billion at December 31, 1996. Total assets under management at year
end increased to nearly $99.4 billion from $75.4 billion.
Administrative fees from services to the Funds and their shareholders rose
25% during 1996 to $117.8 million, primarily as a result of growth in the
activities of the Company's mutual fund transfer agent and defined
contribution retirement plan recordkeeping services; however, increases in
related operating expenses more than offset these revenue gains.
Investment and other income rose $4.1 million primarily due to greater
capital gain dividends from the Company's holdings of stock mutual funds and
higher earnings recognized from partnership investments.
Operating expenses increased 35% to $398.6 million. Greater compensation and
related costs, which were up $36.0 million, were attributable to increases in
performance-related rates of compensation and a 35% increase in the number of
employees during the year primarily to support the Company's growing
administrative and technology support operations. Advertising and promotion
expenditures increased 67% to $58.3 million as the Company sought to
capitalize on the strong investor demand for stock mutual funds. Investor
interest in equity products remained strong in January 1997. As long as
market conditions warrant, advertising and promotion expenditures will
continue at high levels compared to 1996, though the percentage increase is
not expected to be as large. Depreciation, amortization and operating
rentals of property and equipment was up due to expansion of facilities and
equipment acquisitions, primarily investments in technology assets.
<PAGE> 15
International investment research fees increased 31% or $9.3 million as
international assets under management rose to $29.2 billion, including $16.6
billion in the mutual funds. Administrative and general expenses increased
$26.4 million due primarily to greater costs associated with the Company's
growing operations including its technology-related data processing and
communications capabilities. Charitable contributions, which increased $3.6
million from 1995, also contributed to the increase in general expenses.
The provision for income taxes increased as a percentage of income before
income taxes and minority interests primarily due to the recognition of
federal research expenditure credits in the prior year.
Higher net income reported on a separate company basis by the Company's 50%-
owned subsidiary, Rowe Price-Fleming International, Inc. (RPFI), resulted in
the increase in income attributable to the minority interests in the
Company's consolidated subsidiaries. RPFI manages the international assets
included in the Company's total assets under management.
1995 versus 1994. Net income increased almost $14.3 million or 23% to $75.4
million. Earnings per share grew $.24 per share to an annual record of
$1.24. The 1995 results include the extraordinary charge of $1.0 million
from the early extinguishment of the Company's 9.77% fixed rate, $12.4
million promissory note due in 2001. The Company's common stock repurchases
during 1994 and 1995 resulted in a decrease in weighted average shares
outstanding and account for $.02 of the increase in earnings per share.
Total revenues increased 15% from $382.4 million to an annual record of
$439.3 million, led by an increase of $42.0 million in investment advisory
revenues.
Investment advisory revenues from the Funds increased more than $37.6 million
as average assets under management rose $6.2 billion to $42.7 billion. Fund
assets totaled $48.6 billion at December 31, 1995, up $11.3 billion from
December 31, 1994, with stock funds accounting for $9.5 billion of the
increase. Net cash inflows to the Funds during 1995 of $3.8 billion,
including $3.6 billion to the stock funds, surpassed the 1994 total of $3.4
billion and nearly equaled the record of $3.9 billion in 1993. Private
accounts and other sponsored products contributed the balance of the
investment advisory revenue gains as these assets under management rose $6.3
billion to more than $26.8 billion at December 31, 1995. Total assets under
management at year end increased to $75.4 billion from $57.8 billion.
Administrative fees from services to the Funds and their shareholders rose
10% during 1995 to $94.4 million, primarily as a result of growth in the
activities of the Company's mutual fund transfer agent and defined
contribution retirement plan recordkeeping services; however, increases in
related operating expenses more than offset these revenue gains.
Investment and other income rose $6.2 million primarily due to greater
earnings on the Company's larger mutual fund holdings and capital gains
realized on stock mutual fund investments.
<PAGE> 16
Operating expenses increased 13% or $34.4 million to $295.6 million from
$261.2 million. Greater compensation and related costs, which were up $14.0
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 increased 12% to $34.8
million as fourth quarter 1995 spending was boosted significantly in response
to investor demand for stock mutual funds. Depreciation, amortization, and
operating rentals of property and equipment increased $5.2 million as a
result of the Company's recent investments in computer and communications
equipment and office facilities. International investment research fees
increased $4.3 million as international assets under management rose to $22.2
billion at December 31, 1995, including $12.6 billion in the mutual funds.
Administrative and general expenses increased $7.2 million due to greater
costs associated with the Company's growing operations and data processing
capabilities.
The provision for income taxes decreased as a percentage of income before
income taxes and minority interests primarily due to the recognition of
federal research expenditure credits. Tax laws allowing such credits expired
June 30, 1995.
Lower net income reported by RPFI on a separate company basis was the primary
reason for the decrease in income attributable to the minority interests in
the Company's consolidated subsidiaries.
CAPITAL RESOURCES AND LIQUIDITY.
During the three years ended December 31, 1996, stockholders' equity has
increased 76% or $149.7 million to $345.7 million. Stockholders' equity at
December 31, 1996 includes $19.8 million of net unrealized security holding
gains on the Company's investments in sponsored mutual funds and $54.4
million which is restricted as to use under various regulations and
agreements to which the Company and its subsidiaries are subject in the
ordinary course of business.
Operating activities provided net cash inflows of $141.2 million in 1996 as
net income increased $23.0 million from the prior year. Comparatively, 1995
provided net operating cash inflows of $101.8 million. Net cash expended in
investing activities during 1996 aggregated $69.3 million, almost double the
$35.5 million expended in 1995. Property and equipment expenditures reached
$58.8 million in 1996, including $25.7 million for the in-progress
construction of additional office facilities and a technology center in
Owings Mills, Maryland. Financing activities consumed $38.7 million in 1996,
down $6.2 million from 1995 when the Company had greater distributions to
minority interests as well as the early extinguishment of its long-term debt.
At December 31, 1996, the Company held net liquid assets of $198 million,
including $115 million of cash and cash equivalents, to meet business demands
and opportunities. In addition, $20 million is available to the Company
under unused bank lines of credit.
<PAGE> 17
The Company anticipates 1997 property and equipment acquisitions of
approximately $64 million, including $21 million for completion of two office
buildings in Owings Mills, Maryland. These capital expenditures are expected
to be funded from liquid assets currently available and from operating cash
inflows. Commitments for additional investments in partnerships and other
ventures aggregate $9.1 million at December 31, 1996.
FORWARD-LOOKING INFORMATION.
Information or statements provided by or on behalf of the Company from time
to time, including those within this Form 10-K Annual 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
<PAGE> 18
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
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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to Financial Statements:
Report of Independent Accountants 19
Consolidated Balance Sheets at December 31, 1995 and 1996 20
Consolidated Statements of Income for each of the
three years in the period ended December 31, 1996 21
Consolidated Statements of Cash Flows for each of the
three years in the period ended December 31, 1996 22
Consolidated Statements of Stockholders' Equity for
each of the three years in the period ended December 31, 1996 23
Summary of Significant Accounting Policies 25
Notes to Consolidated Financial Statements including
Supplementary Quarterly Financial Data 27
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of T. Rowe Price Associates, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of T. Rowe Price Associates, Inc. and its subsidiaries at
December 31, 1995 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1996,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
Baltimore, Maryland
January 24, 1997
<PAGE> 20
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
__________________
1995 1996
________ ________
(in thousands)
ASSETS
Cash and cash equivalents (Note 1) $ 81,431 $114,551
Accounts receivable (Note 1) 55,841 73,239
Investments in sponsored mutual funds held as
available-for-sale securities (Note 1) 121,606 143,410
Partnership and other investments (Note 8) 28,049 25,161
Property and equipment (Note 2) 60,222 101,207
Goodwill and other assets (Note 3) 18,194 21,266
________ ________
$365,343 $478,834
________ ________
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses (Note 5) $ 27,287 $ 31,529
Accrued compensation and retirement costs 28,803 41,523
Income taxes payable (Note 4) 7,376 14,464
Dividends payable 6,036 7,484
Minority interests in consolidated subsidiaries 21,609 38,168
________ ________
Total liabilities 91,111 133,168
________ ________
Commitments and contingent liabilities (Notes 2 and 8)
Stockholders' equity (Notes 5 and 8)
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; issued 28,665,472 shares in 1995
and 57,572,791 shares in 1996 5,733 11,514
Capital in excess of par value 2,912 7,823
Retained earnings 252,934 306,566
Unrealized security holding gains (Note 1) 12,653 19,763
________ ________
Total stockholders' equity 274,232 345,666
________ ________
$365,343 $478,834
________ ________
________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 21
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31,
__________________________
1994 1995 1996
________ ________ ________
(in thousands, except
per-share amounts)
Revenues (Note 1)
Investment advisory fees $290,071 $332,087 $451,307
Administrative fees 85,672 94,377 117,803
Investment and other income 6,635 12,835 16,960
________ ________ ________
382,378 439,299 586,070
________ ________ ________
Expenses
Compensation and related costs (Notes 5 and 6) 129,373 143,369 179,381
Advertising and promotion 31,201 34,843 58,291
Depreciation, amortization and operating
rentals of property and equipment (Note 8) 24,993 30,247 38,112
International investment research fees 25,719 30,023 39,328
Administrative and general (Note 7) 49,899 57,124 83,487
________ ________ ________
261,185 295,606 398,599
________ ________ ________
Income before income taxes and minority
interests 121,193 143,693 187,471
Provision for income taxes (Note 4) 46,587 54,335 72,608
________ ________ ________
Income from consolidated companies 74,606 89,358 114,863
Minority interests in consolidated subsidiaries 13,455 12,900 16,410
________ ________ ________
Income before extraordinary charge 61,151 76,458 98,453
Extraordinary charge from early extinguishment
of debt, net of income tax benefit (Note 7) -- (1,049) --
________ ________ ________
Net income $ 61,151 $ 75,409 $ 98,453
________ ________ ________
________ ________ ________
Earnings per share, which were reduced $.01
per share in 1995 because of the extraordinary
charge $ 1.00 $ 1.24 $ 1.59
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 22
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
______________________________
1994 1995 1996
________ ________ ________
(in thousands)
Cash flows from operating activities
Net income $ 61,151 $ 75,409 $ 98,453
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization of
property and equipment 10,134 13,278 18,062
Minority interests in consolidated
subsidiaries 13,455 12,900 16,410
Increase in accounts receivable (3,620) (9,119) (17,398)
Liquidation of sponsored mutual funds
held as trading securities 27,292 -- --
Increase in accounts payable and accrued
liabilities 6,505 6,055 27,421
Other changes in assets and liabilities (3,058) 3,229 (1,792)
________ ________ ________
Net cash provided by operating activities 111,859 101,752 141,156
________ ________ ________
Cash flows from investing activities
Investments in sponsored mutual funds (33,962) (19,101) (14,151)
Proceeds from dispositions of sponsored
mutual funds 5,192 6,846 3,580
Partnership and other investments (8,812) (1,387) (7,186)
Distributions from partnership investments 1,563 2,076 7,201
Additions to property and equipment (17,431) (23,906) (58,771)
________ ________ ________
Net cash used in investing activities (53,450) (35,472) (69,327)
________ ________ ________
Cash flows from financing activities
Purchases of stock (26,401) (9,679) (19,667)
Receipts relating to stock issuances 3,497 4,455 5,061
Dividends paid to stockholders (15,085) (18,259) (24,058)
Distributions to minority interests (6,320) (7,720) (45)
Debt payments (302) (12,613) --
Extraordinary charge from early
extinguishment of debt -- (1,049) --
________ ________ ________
Net cash used in financing activities (44,611) (44,865) (38,709)
________ ________ ________
Cash and cash equivalents
Net increase during year 13,798 21,415 33,120
At beginning of year 46,218 60,016 81,431
________ ________ ________
At end of year $ 60,016 $ 81,431 $114,551
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 23
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Capital Unreal-
Common in ized Total
Common stock excess security stock-
stock - par of par Retained holding holders'
- shares value value earnings gains equity
__________ _______ _______ ________ ________ ________
Balance at
December 31,
1993 29,095,039 $ 5,819 $ 1,197 $183,592 $ 5,345 $195,953
Common stock
issued under
stock-based
compensation
plans 366,880 74 4,277 4,351
Purchases of
common stock (892,500) (179) (3,539) (22,831) (26,549)
Net income 61,151 61,151
Dividends
declared (15,876) (15,876)
Decrease in
unrealized
security
holding gains (2,791) (2,791)
__________ _______ _______ ________ ______ ________
Balance at
December 31,
1994 28,569,419 5,714 1,935 206,036 2,554 216,239
Common stock
issued under
stock-based
compensation
plans 465,553 93 5,555 (2) 5,646
Purchases of
common stock (369,500) (74) (4,578) (8,789) (13,441)
Net income 75,409 75,409
Dividends
declared (19,720) (19,720)
Increase in
unrealized
security
holding gains 10,099 10,099
__________ _______ _______ ________ _______ ________
Balance at
December 31,
1995 28,665,472 5,733 2,912 252,934 12,653 274,232
Continued on next page.
<PAGE> 24
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Capital Unreal-
Common in ized Total
Common stock excess security stock-
stock - par of par Retained holding holders'
- shares value value earnings gains equity
__________ _______ _______ ________ ________ ________
Continued from prior page.
Common stock
issued under
stock-based
compensation
plans 782,307 156 6,979 (1) 7,134
2-for-1 stock
split 28,570,012 5,714 (547) (5,167) --
Purchases of
common stock (445,000) (89) (1,521) (14,147) (15,757)
Net income 98,453 98,453
Dividends
declared (25,506) (25,506)
Increase in
unrealized
security
holding gains 7,110 7,110
__________ _______ _______ ________ _______ ________
Balance at
December 31,
1996 57,572,791 $11,514 $ 7,823 $306,566 $19,763 $345,666
__________ _______ _______ ________ _______ ________
__________ _______ _______ ________ _______ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 25
T. ROWE PRICE ASSOCIATES, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, primarily domiciled in the United States of America. 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.
BASIS OF PREPARATION.
The consolidated financial statements are prepared in accordance with
generally accepted accounting principles which requires the use of estimates
made by the Company's management. Certain 1994 and 1995 amounts have been
reclassified to conform to the 1996 presentation.
PRINCIPLES OF CONSOLIDATION.
The consolidated financial statements include the accounts of all majority
owned subsidiaries and, by virtue of the Company's controlling interest, its
50%-owned subsidiary, Rowe Price-Fleming International, Inc. (RPFI). All
material intercompany accounts and transactions are eliminated in
consolidation.
International investment research is provided by affiliates of the minority
stockholders of RPFI. Fees paid for these services are based on
international assets under management by RPFI.
CASH EQUIVALENTS.
For purposes of financial statement disclosure, cash equivalents consist of
all short-term, highly liquid investments including certain money market
mutual funds and all overnight commercial paper investments. The cost of
these investments is equivalent to fair value.
INVESTMENTS IN SPONSORED MUTUAL FUNDS.
The Company accounts for its investments in sponsored stock and bond mutual
funds at fair value and, accordingly, classifies these holdings as either
trading securities (held for only a short period of time) or available-for-
sale securities. Unrealized holding gains on securities classified as
available-for-sale are reported, net of income taxes, as a separate component
of stockholders' equity.
CONCENTRATION OF CREDIT RISK.
Financial instruments which potentially expose the Company to concentrations
of credit risk as defined by Statement of Financial Accounting Standards
(SFAS) No. 105 consist primarily of investments in sponsored money market and
<PAGE>26
bond mutual funds and accounts receivable. Credit risk is believed to be
minimal in that counterparties to these financial instruments have
substantial assets, including the diversified investment portfolios under
management by the Company which aggregate $99.4 billion at December 31, 1996.
PARTNERSHIP AND OTHER INVESTMENTS.
The Company's investments in various partnerships and ventures, including
those sponsored by the Company, do not have a readily determinable fair
value. These entities, which hold equity securities, venture capital
investments and debt securities, are generally accounted for using the equity
method which adjusts the Company's cost for its share of subsequent earnings
or losses. Minor limited partnership investments are accounted for using the
cost method.
PROPERTY AND EQUIPMENT.
Property and equipment is stated at cost net of accumulated depreciation and
amortization computed using the straight-line method. Provisions for
depreciation and amortization are based on the following estimated useful
lives: computer and communications equipment, 2 to 5 years; furniture and
other equipment, 5 years; buildings, 30 to 40 years; leasehold improvements,
the shorter of their estimated useful lives or the remainder of the lease
term; and leased land, the 99-year term of the lease.
REVENUE RECOGNITION.
Investment advisory and administrative services fees are recognized when
earned.
ADVERTISING.
Costs of advertising are expensed the first time that the advertising takes
place.
EARNINGS PER SHARE.
Earnings per share is computed based on the weighted average number of common
shares outstanding, including share equivalents arising from unexercised
stock options. The aggregate weighted average shares outstanding used in
computing earnings per share were 61,142,992 in 1994, 61,049,706 in 1995, and
61,941,949 in 1996.
<PAGE> 27
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INVESTMENTS IN AND TRANSACTIONS WITH SPONSORED MUTUAL FUNDS.
Investments in sponsored money market mutual funds, which are classified as
cash equivalents in the accompanying consolidated financial statements,
aggregate $78,947,000 at December 31, 1995 and $112,251,000 at December 31,
1996.
The Company's investments in sponsored mutual funds held as available-for-
sale at December 31 include:
Aggregate
Aggregate Unrealized fair
cost holding gains value
_________ ______________ _________
(in thousands)
1995
___________
Stock funds $ 70,872 $17,345 $ 88,217
Bond funds 30,856 2,533 33,389
________ _______ ________
Total $101,728 $19,878 $121,606
________ _______ ________
________ _______ ________
1996
___________
Stock funds $ 84,282 $29,278 $113,560
Bond funds 27,871 1,979 29,850
________ _______ ________
Total $112,153 $31,257 $143,410
________ _______ ________
________ _______ ________
Dividends earned on the Company's investments in sponsored mutual funds
aggregated $5,644,000 in 1994, $9,845,000 in 1995, and $12,293,000 in 1996.
The Company recognized net losses of $1,306,000 in 1994 and $146,000 in 1996,
and a net gain of $473,000 in 1995 from dispositions and write-downs of fund
investments.
The Company provides investment advisory and administrative services to the
T. Rowe Price family of mutual funds which had aggregate net assets under
management at December 31, 1996 of $64.4 billion. All services rendered by
the Company are provided under contracts that set forth the services to be
provided and the fees to be charged. These contracts are subject to periodic
review and approval by each of the funds' boards of directors and, with
respect to investment advisory contracts, also by the funds' shareholders.
Revenues derived from services rendered to the sponsored mutual funds were
$274,618,000 in 1994, $318,276,000 in 1995, and $423,019,000 in 1996.
Accounts receivable from the sponsored mutual funds aggregate $30,029,000 and
$37,994,000 at December 31, 1995 and 1996, respectively.
<PAGE> 28
NOTE 2 - PROPERTY AND EQUIPMENT.
Property and equipment at December 31 consists of:
1995 1996
________ ________
(in thousands)
Computer and communications equipment $ 52,266 $ 77,442
Building and leasehold improvements 25,277 50,166
Furniture and other equipment 18,207 19,161
Land owned and leased 10,236 11,611
________ ________
105,986 158,380
Accumulated depreciation and amortization (45,764) (57,173)
________ ________
$ 60,222 $101,207
________ ________
________ ________
The Company has entered into an agreement for the construction of two,
105,000 square foot, four-story office buildings and two, three-deck parking
garages for an aggregate price not to exceed $38,065,000. Building and
leasehold improvements at December 31, 1996 include $17,142,000 for in-
progress construction of these facilities which are expected to be completed
in August 1997.
NOTE 3 - GOODWILL.
Goodwill of $7,937,000 arising from a 1992 acquisition is being amortized
over 11 years using the straight-line method. Accumulated amortization
aggregates $2,483,000 at December 31, 1995 and $3,228,000 at December 31,
1996.
NOTE 4 - INCOME TAXES.
The provision for income taxes consists of:
1994 1995 1996
________ ________ ________
(in thousands)
Current income taxes
Federal and foreign $ 42,635 $ 46,350 $ 63,399
State and local 6,184 7,274 9,531
Deferred income taxes (tax benefits) (2,232) 711 (322)
________ ________ ________
$ 46,587 $ 54,335 $ 72,608
________ ________ ________
________ ________ ________
Deferred income taxes arise from temporary differences between taxable income
for financial statement and income tax return purposes. Significant
temporary differences resulted in deferred income taxes of $944,000 in 1995
related to accrued compensation and retirement costs and $1,139,000 in 1996
related to RPFI's undistributed earnings. Deferred tax benefits arising from
significant temporary differences include $1,712,000 in 1994 and $1,614,000
in 1996 related to accrued compensation and retirement costs.
The net deferred tax liability of $5,189,000 included in income taxes payable
<PAGE> 29
at December 31, 1995 consists of total deferred tax liabilities of $8,991,000
and total deferred tax assets of $3,802,000. Deferred tax liabilities
include $1,475,000 arising from RPFI's undistributed earnings, $7,037,000
arising from net unrealized investment income, and $479,000 from depreciation
expense. Deferred tax assets include $2,702,000 arising from deferred
compensation and retirement costs and $1,100,000 from other accrued expenses.
The net deferred tax liability of $8,942,000 included in income taxes payable
at December 31, 1996 consists of total deferred tax liabilities of
$14,201,000 and total deferred tax assets of $5,259,000. Deferred tax
liabilities include $2,614,000 arising from RPFI's undistributed earnings and
$11,154,000 arising from unrealized holding gains on available-for-sale
securities. Deferred tax assets include $4,315,000 arising from deferred
compensation and retirement costs.
Cash outflows from operating activities include income taxes paid of
$49,686,000 in 1994, $52,956,000 in 1995, and $64,975,000 in 1996.
The following table reconciles the statutory federal income tax rate to the
Company's effective income tax rate.
1994 1995 1996
______ ______ ______
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefits 3.1 3.3 3.4
Other items .3 (.5) .3
______ ______ ______
Effective income tax rate 38.4% 37.8% 38.7%
______ ______ ______
______ ______ ______
NOTE 5 - COMMON STOCK AND STOCK-BASED COMPENSATION PLANS.
SHARES AUTHORIZED AND ISSUED.
A 2-for-1 split of the Company's common stock was effected at the close of
business on April 30, 1996. In conjunction with the stock split, the
Company's authorized common shares were increased proportionately from
100,000,000 to 200,000,000. Earnings per-share data in the accompanying
consolidated financial statements and all per-share and share data in these
notes have been adjusted to give retroactive effect to the stock split.
At December 31, 1996, the Company had reserved 21,548,859 shares of its
unissued common stock for issuance upon the exercise of stock options and
840,000 shares for issuance under a plan whereby substantially all employees
may acquire shares of Company stock through payroll deductions at prevailing
market prices.
The Company's board of directors has authorized the future repurchase of up
to 2,700,000 common shares at December 31, 1996. Accounts payable and
accrued expenses includes $3,910,000 at December 31, 1995 for pending
settlements of common stock repurchases.
DIVIDENDS.
<PAGE> 30
The Company declared cash dividends per share of $.275 in 1994, $.345 in 1995
and $.445 in 1996.
FIXED STOCK OPTION PLANS.
The Company has five stock-based compensation plans (the 1986, 1990, 1993 and
1996 Stock Incentive Plans and the 1995 Director Stock Option Plan) under
which it has granted fixed stock options with a maximum term of 10 years to
its employees and directors. Vesting of employee options is based solely on
the individual continuing to render service to the Company and generally
occurs over a 5-year graded schedule. The exercise price of each option
granted is equivalent to the market price of the Company's stock at the date
of grant. The Company applies the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," in accounting for its stock option awards.
Accordingly, the Company has not recognized any related compensation expense
in its consolidated statements of income.
The following table summarizes the status of and changes in the Company's
stock option plans during the past three years.
Weighted- Weighted-
average average
exercise Options exercise
Options price exercisable price
_________ __________ ___________ _________
Outstanding at
beginning of 1994 9,048,630 $ 8.55
Granted 2,463,000 16.13
Exercised (774,784) 5.08
Forfeited (346,000) 9.12
__________ ______
Outstanding at
end of 1994 10,390,846 10.58 3,979,826 $7.24
_________ ______
_________ ______
Granted 2,483,000 26.03
Exercised (1,031,042) 6.01
Forfeited (192,220) 12.76
__________ ______
Outstanding at
end of 1995 11,650,584 14.24 4,924,384 $8.53
_________ ______
_________ ______
Granted 1,913,000 35.88
Exercised (939,925) 7.28
Forfeited (262,600) 18.04
__________ ______
Outstanding at
end of 1996 12,361,059 $18.04 5,748,859 $10.92
__________ ______ _________ ______
__________ ______ _________ ______
Additional information regarding stock options outstanding at December 31,
1996 follows.
<PAGE> 31
Weighted-
average
Weighted- remaining Weighted-
average contractual average
Range of exercise life (in exercise
exercise prices Outstanding price years) Exercisable price
_____________________________ __________ ___________ ___________ _________
$2.6875 to 3.96875 635,045 $ 3.68 3.0 635,045 $ 3.68
4.25 to 5.6875 786,344 5.41 2.4 786,344 5.41
8.50 to 9.375 2,435,620 9.01 5.4 2,122,820 8.95
14.0625 to 19.1875 4,242,400 15.20 7.4 1,816,000 14.89
22.875 to 28.50 2,376,650 26.13 8.8 388,650 26.06
36.00 1,885,000 36.00 9.9 0 --
__________ ______ ____ _________ ______
$2.6875 to 36.00 12,361,059 $18.04 7.1 5,748,859 $10.92
__________ ______ ____ _________ ______
__________ ______ ____ _________ ______
SFAS No. 123, "Accounting for Stock-Based Compensation," requires the Company
to make certain disclosures as if the fair value based method of accounting
had been applied to the Company's stock option grants made subsequent to
1994. Accordingly, the Company estimated the grant-date fair value of each
option awarded in 1995 and 1996 using the Black-Scholes option-pricing model
with the following weighted-average assumptions: dividend yield of 1.6%,
expected volatility of 27%, risk-free interest rate of 5.8%, and expected
lives of 5.3 years in 1995 and 5.1 years in 1996. Had 1995 and 1996
compensation cost been determined including the weighted-average estimate of
the fair value of each option granted of $7.85 in 1995 and $10.65 in 1996,
the Company's net income would be reduced to pro forma amounts of $74,473,000
in 1995 and $92,825,000 in 1996. Pro forma earnings per share would be $1.22
in 1995 and $1.50 in 1996. These pro forma disclosures are not
representative of the effects on reported net income and earnings per share
for future years because the option grants were primarily made in the fourth
quarter of each year, options vest over several years, and additional awards
generally are made each year.
NOTE 6 - EMPLOYEE RETIREMENT PLANS.
The Company terminated its defined benefit pension plan on September 30, 1996
and expects to settle all accumulated benefit obligations with plan
participants in the first half of 1997. Net plan assets exceed accumulated
benefit obligations at December 31, 1996. Additionally, the Company sponsors
two defined contribution retirement plans. Net retirement plans expense was
$8,702,000 in 1994, $8,985,000 in 1995, and $10,048,000 in 1996.
NOTE 7 - BORROWING FACILITIES.
A maximum of $20,000,000 is available to the Company under unused bank lines
of credit at December 31, 1996.
In September 1995, the Company extinguished the $12,375,000 balance of its
9.77% promissory note due in 2001 and recognized an extraordinary charge of
$1,049,000. Interest expense on this debt was $1,246,000 in 1994 and
$908,000 in 1995.
<PAGE> 32
NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES.
The Company leases office facilities and equipment under noncancelable
operating leases. Related rent expense was $14,859,000 in 1994, $16,969,000
in 1995, and $20,050,000 in 1996. Future minimum rental payments under these
leases aggregate $11,142,000 in 1997, $9,251,000 in 1998, $6,108,000 in 1999,
$5,678,000 in 2000, $5,743,000 in 2001, and $26,073,000 in later years.
At December 31, 1996, the Company had outstanding commitments to invest an
additional $9,118,000 in various investment partnerships and ventures.
Consolidated stockholders' equity at December 31, 1996 includes $54,397,000
which is restricted as to use under various regulations and agreements to
which the Company and its subsidiaries are subject in the ordinary course of
business.
From time to time, the Company is a party to various claims arising in the
ordinary course of business. In the opinion of management, after
consultation with counsel, it is unlikely that any adverse determination in
one or more pending claims would have a material adverse effect on the
Company's financial position or results of operations.
NOTE 9 - SUPPLEMENTARY QUARTERLY FINANCIAL DATA (Unaudited).
Per-share
Income be- income be-
fore extra- fore extra-
ordinary ordinary
Revenues charge charge Net income
_________ ___________ __________ __________
(in thousands except per-share amounts)
1995
___________
1st quarter $ 97,846 $14,991 $.25 $14,991
2nd quarter $104,789 $18,222 $.30 $18,222
3rd quarter $113,226 $21,551 $.35 $20,502
4th quarter $123,438 $21,694 $.35 $21,694
1996
___________
1st quarter $132,412 $20,419 $.33 $20,419
2nd quarter $143,688 $24,450 $.40 $24,450
3rd quarter $150,150 $25,948 $.42 $25,948
4th quarter $159,820 $27,636 $.44 $27,636
<PAGE> 33
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item as to the identification of the Company's
executive officers and other significant employees is contained as a separate
item at the end of Part I of this Form 10-K Annual Report. The balance of
the information required by this item as to the Company's directors and
executive officers appears in the definitive proxy statement for the
Company's 1997 Annual Meeting of Stockholders and is incorporated by
reference in this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by Items 11. through 13. appears in the definitive proxy
statement for the Company's 1997 Annual Meeting of Stockholders and is
incorporated by reference in this Form 10-K.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report.
1. Financial Statements: See index at Item 8 of Part II.
2. Financial Statement Schedules: Not applicable.
3. The following exhibits required by Item 601 of Regulation S-K are
filed as part of this Form 10-K. Exhibits 10.08 through 10.13 are
compensatory plan arrangements.
3.(i) Composite Restated Charter of T. Rowe Price Associates, Inc.
as of April 12, 1996. (Incorporated by reference from Form
10-Q Report for the quarterly period ended March 31, 1996;
Accession No. 0000080255-96-000224)
3.(ii) Amended and Restated By-Laws of T. Rowe Price Associates,
Inc. as of April 7, 1993. (Incorporated by reference from
Form 10-Q Report for the quarterly period ended September 30,
1995; Accession No. 0000080255-95-000083)
10.01 Form of Investment Management Agreement with each of the T.
Rowe Price Funds. (Incorporated by reference from Form N-1A;
Accession No. 0000216907-97-000005)
<PAGE> 34
10.02 Transfer Agency and Service Agreement dated as of January 1,
1997 between each of the T. Rowe Price Funds and T. Rowe
Price Services, Inc. (Incorporated by reference from Form N-
1A; Accession No. 0000216907-97-000005)
10.03 Agreement dated January 1, 1997 between T. Rowe Price
Retirement Plan Services, Inc. and each of the T. Rowe Price
Taxable Funds. (Incorporated by reference from Form N-1A;
Accession No. 0000216907-97-000005)
10.04 Form of Underwriting Agreement between each of the T. Rowe
Price Funds and T. Rowe Price Investment Services, Inc.
(Incorporated by reference from Form N-1A; Accession No.
0000216907-97-000005)
10.05 Contract of Sale and Option dated September 29, 1995 between
McDonogh School, Incorporated and TRP Suburban Second, Inc.
(Incorporated by reference from the 1995 Annual Report on
Form 10-K; Accession No. 0000080255-96-000219)
10.06 Agreement between TRP Suburban Second, Inc. and Riparius
Construction, Inc. as Construction Manager and Constructor
(Incorporated by reference from Form SE to the Form 10-Q for
the quarterly period ended March 31, 1996; CIK 0000080255)
10.07 Office Lease dated as of July 27, 1989 between 100 East Pratt
Street Limited Partnership and T. Rowe Price Associates, Inc.
(Incorporated by reference from the 1989 Annual Report on
Form 10-K [File No. 0-14282])
10.08 1986 Employee Stock Purchase Plan of T. Rowe Price
Associates, Inc. as Amended to April 5, 1990. (Incorporated
by reference from Exhibit A to the Definitive Proxy Statement
for the 1990 Annual Meeting of Stockholders which is included
in the 1989 Annual Report on Form 10-K [File No. 0-14282])
10.09 T. Rowe Price Associates, Inc. 1986 Stock Incentive Plan.
(Incorporated by reference from Form S-1 Registration
Statement [File No. 33-3398])
10.10 T. Rowe Price Associates, Inc. 1990 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-37573])
10.11 T. Rowe Price Associates, Inc. 1993 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-72568])
10.12 T. Rowe Price Associates, Inc. 1995 Director Stock Option
Plan. (Incorporated by reference from Form DEF 14A;
Accession No. 000933259-95-000009; CIK 0000080255)
<PAGE> 35
10.13 T. Rowe Price Associates, Inc. 1996 Stock Incentive Plan
(Incorporated by reference from Form DEF 14A; Accession No.
0001006199-96-000031; CIK 0000080255)
21 Subsidiaries of T. Rowe Price Associates, Inc.
23 Consent of Independent Accountants, Price Waterhouse LLP.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None were filed during the three months ended December 31, 1996.
SIGNATURES.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 26,
1997.
T. Rowe Price Associates, Inc.
By: /s/ George J. Collins, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 26, 1997.
/s/ George J. Collins, Chief Executive Officer and Director
/s/ George A. Roche, Chief Financial Officer and Director
/s/ James E. Halbkat, Jr., Director
/s/ Henry H. Hopkins, Director
/s/ James A.C. Kennedy, Director
/s/ John H. Laporte, Director
/s/ Richard L. Menschel, Director
/s/ William T. Reynolds, Director
/s/ James S. Riepe, Director
/s/ John W. Rosenblum, Director
/s/ Robert L. Strickland, Director
/s/ M. David Testa, Director
/s/ Philip C. Walsh, Director
/s/ Anne Marie Whittemore, Director
/s/ Alvin M. Younger, Jr., Principal Accounting Officer
EXHIBIT 21
SUBSIDIARIES OF T. ROWE PRICE ASSOCIATES, INC. (1)
DECEMBER 31, 1996
Subsidiary companies and state of incorporation Ownership percentage
_____________________________________________________________________________
T. Rowe Price (Canada), Inc. (Maryland) 100%
T. Rowe Price Investment Services, Inc. (Maryland) 100%
T. Rowe Price Investment Technologies, Inc. (Maryland) 100%
T. Rowe Price Retirement Plan Services, Inc. (Maryland) 100%
T. Rowe Price Services, Inc. (Maryland) 100%
T. Rowe Price Stable Asset Management, Inc. (Maryland) 100%
TRP Finance, Inc. (Delaware) 100%
Rowe Price-Fleming International, Inc. (Maryland) 50%
TRP Suburban Second, Inc. (Maryland) 100%
________________
(1) Omitted subsidiaries, when considered in the aggregate, do not
constitute a significant subsidiary.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 033-07012, No. 033-08672, No. 033-37573, No. 033-
72568, No. 033-58749 and No. 333-20333) of T. Rowe Price Associates, Inc. of
our report dated January 24, 1997 appearing on page 19 of this Form 10-K.
/s/ PRICE WATERHOUSE LLP
Baltimore, Maryland
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of T. Rowe Price Associates, Inc. listed in the Item 8
Index on page 18 of the accompanying Form 10-K Annual Report for the year ended
December 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> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 114,551,000
<SECURITIES> 143,410,000
<RECEIVABLES> 73,239,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 158,380,000
<DEPRECIATION> 57,173,000
<TOTAL-ASSETS> 478,834,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 11,514,000
<OTHER-SE> 334,152,000
<TOTAL-LIABILITY-AND-EQUITY> 478,834,000
<SALES> 0
<TOTAL-REVENUES> 586,070,000
<CGS> 0
<TOTAL-COSTS> 398,599,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 187,471,000
<INCOME-TAX> 72,608,000
<INCOME-CONTINUING> 98,453,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,453,000
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 0
<FN>
<F1>Item is not contained in registrant's unclassified balance sheet.
</FN>
</TABLE>
