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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended: MARCH 31, 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. 57,920,848 SHARES AT MAY 6,
1997.
Exhibit index is at Item 6(a) on page 11.
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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 03/31/97
________ ________
ASSETS
Cash and cash equivalents $114,551 $133,262
Accounts receivable 73,239 75,248
Investments in sponsored mutual funds held as
available-for-sale securities 143,410 144,171
Partnership and other investments 25,161 26,063
Property and equipment 101,207 108,674
Goodwill and other assets 21,266 16,684
________ ________
$478,834 $504,102
________ ________
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 31,529 $ 33,420
Accrued compensation and retirement costs 41,523 30,659
Income taxes payable 14,464 26,039
Dividends payable 7,484 7,524
Minority interests in consolidated subsidiaries 38,168 42,872
________ ________
Total liabilities 133,168 140,514
________ ________
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 57,827,919 shares in 1997 11,514 11,566
Capital in excess of par value 7,823 7,787
Retained earnings 306,566 325,494
Unrealized security holding gains 19,763 18,741
________ ________
Total stockholders' equity 345,666 363,588
________ ________
$478,834 $504,102
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
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T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
Three months ended
___________________
03/31/96 03/31/97
________ ________
Revenues
Investment advisory fees $100,006 $129,297
Administrative fees 28,126 35,135
Investment and other income 4,280 3,527
________ ________
132,412 167,959
________ ________
Expenses
Compensation and related costs 41,986 54,078
Advertising and promotion 16,070 17,457
Depreciation, amortization and operating
rentals of property and equipment 8,092 10,099
International investment research fees 9,034 10,957
Administrative and general 18,292 21,027
________ ________
93,474 113,618
________ ________
Income before income taxes and minority interests 38,938 54,341
Provision for income taxes 15,157 21,124
________ ________
Income from consolidated companies 23,781 33,217
Minority interests in consolidated subsidiaries 3,362 4,670
________ ________
Net income $ 20,419 $ 28,547
________ ________
________ ________
Earnings per share $ .33 $ .45
________ ________
________ ________
Dividends declared per share $ .105 $ .13
________ ________
________ ________
Weighted average shares outstanding, including
share equivalents arising from unexercised
stock options 61,493 63,541
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
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T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended
__________________
03/31/96 03/31/97
________ ________
Cash flows from operating activities
Net income $ 20,419 $ 28,547
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization of property
and equipment 3,513 5,071
Minority interests in consolidated subsidiaries 3,362 4,670
Increase in accounts receivable (7,766) (2,009)
Change in accounts payable and accrued liabilities 3,884 (4,858)
Increase in accrued income taxes payable 13,386 15,031
Other changes in assets and liabilities (1,620) (875)
_________ ________
Net cash provided by operating activities 35,178 45,577
________ ________
Cash flows from investing activities
Investments in sponsored mutual funds (1,365) (2,292)
Partnership and other investments (1,049) (79)
Additions to property and equipment (7,499) (14,247)
________ ________
Net cash used in investing activities (9,913) (16,618)
________ ________
Cash flows from financing activities
Purchases of stock (13,116) (6,465)
Receipts relating to stock issuances 734 3,701
Dividends paid to stockholders (6,036) (7,484)
Distributions to minority interests (45) --
________ ________
Net cash used in financing activities (18,463) (10,248)
________ ________
Cash and cash equivalents
Net increase during period 6,802 18,711
At beginning of period 81,431 114,551
________ ________
At end of period $ 88,233 $133,262
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial
statements.
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T. ROWE PRICE ASSOCIATES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY AND BASIS OF PREPARATION.
T. Rowe Price Associates, Inc. and its consolidated subsidiaries (the
Company) derives its revenue primarily from investment advisory and
administrative services provided to sponsored mutual funds and investment
products and to private accounts of other institutional and individual
investors. Company revenues are largely dependent on the total value and
composition of assets under management, which include domestic and
international equity and debt securities; accordingly, fluctuations in
financial markets and in the composition of assets under management impact
revenues and results of operations. At March 31, 1997, the Company's assets
under management totaled $102.9 billion, including $66.7 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 three 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 460,128 92 6,522 6,614
Purchases of
common stock (205,000) (40) (6,558) (2,095) (8,693)
Net income 28,547 28,547
Dividends
declared (7,524) (7,524)
Decrease in
unrealized
security
holding gains (1,022) (1,022)
__________ _______ _______ ________ _______ ________
Balance at
March 31,
1997 57,827,919 $11,566 $ 7,787 $325,494 $18,741 $363,588
__________ _______ _______ ________ _______ ________
__________ _______ _______ ________ _______ ________
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
T. Rowe Price Associates, Inc.
We have reviewed the condensed consolidated balance sheet of T. Rowe Price
Associates, Inc. and its subsidiaries as of March 31, 1997, and the related
condensed consolidated statements of income and of cash flows for the three-
month periods ended March 31, 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
May 9, 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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL.
T. Rowe Price Associates, Inc. (the Company) derives its revenue primarily
from investment advisory and administrative services provided to the Price
Mutual Funds (the Funds), other sponsored investment products, and private
accounts of other institutional and individual investors. Investment
advisory fees are generally based on the net assets of the portfolios
managed. The majority of administrative revenues are derived from services
provided to the Funds.
The Company's base of assets under management consists of a broad range of
domestic and international stock, bond and money market mutual funds and
other investment products which meet the varied needs and objectives of its
individual and institutional investors. During 1996 and 1997, there have
been significant net cash inflows to the stock mutual funds, particularly the
domestic funds. At March 31, 1997, total assets under management were $102.9
billion, including $66.7 billion in the Funds. Equity investments comprise
approximately two-thirds of total assets under management.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1997 VERSUS 1996.
Net income increased $8.1 million or 40% to $28.5 million or $.45 per share
from $20.4 million or $.33 per share. Total revenues increased 27% from
$132.4 million to a record quarterly total of nearly $168.0 million, led by
an increase of $29.3 million in investment advisory fees.
Investment advisory revenues from the Funds increased $22.0 million as
average fund assets under management rose $15.5 billion to $67.0 billion.
Fund assets totaled $66.7 billion at March 31, 1997, just under the quarterly
average, but up $2.3 billion from December 31, 1996, with stock funds
accounting for $2.0 billion of the increase. Net cash inflows to the Funds
during the first quarter totaled nearly $3.4 billion, more than $200 million
greater than the previous record set in the first quarter of 1996. Advisory
fees from private accounts and other sponsored products contributed the
balance of the investment advisory revenue gains which were split almost
equally between domestic and international products. These assets under
management rose to $36.2 billion at March 31, 1997, up $1.2 billion from
December 31, 1996 and more than $7.7 billion from March 31, 1996. Total
assets under management at quarter end crossed the $100 billion mark for the
first time closing the quarter at $102.9 billion, up from $99.4 billion at
December 31, 1996 and $82.0 billion at March 31, 1996.
Administrative fees, primarily from services to the Funds and their
shareholders, grew $7.0 million to $35.1 million; however, increases in
related operating expenses more than offset these revenue gains. Investment
income declined nearly $.8 million due to lower earnings recognized from
partnership investments.
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Operating expenses increased 22% or more than $20.1 million to $113.6
million. Greater compensation and related costs, which were up $12.1
million, were attributable to a 30% increase in the number of employees
during the past 12 months, 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 up modestly from both the first and fourth
quarters of 1996 due to strong investor interest in stock mutual funds.
Depreciation, amortization and operating rentals of property and equipment
was up 25% or $2.0 million due to expansion of facilities and recent
equipment acquisitions, primarily investments in technology assets.
International investment research fees increased 21% or $1.9 million as
international assets under management by Rowe Price - Fleming International
(RPFI) rose to $29.8 billion at March 31, 1997. Administrative and general
expenses increased $2.7 million due mainly to greater costs of the Company's
growing data processing and communications capabilities.
Increased earnings by RPFI on greater assets under management was the primary
reason for the increase in minority interests in consolidated subsidiaries.
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
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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
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The 1997 annual meeting of the Company's stockholders was held on April 17,
1997. The Company's proxy statement and solicitation pertaining to this
meeting were previously filed with the Commission. Shares eligible to vote
were 57,752,569 as of the record date of February 14, 1997.
Management's 15 nominees for the Board of Directors were elected to hold
office until the next annual meeting of stockholders and until their
respective successors are elected and have qualified. The tabulation of
votes was:
Nominee For Withheld
________________ __________ _________
G.J. Collins 51,664,386 724,927
J.E. Halbkat, Jr. 51,687,045 702,268
H.H. Hopkins 51,663,081 726,232
J.A.C. Kennedy 51,666,326 722,987
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Nominee For Withheld
________________ __________ _________
J.H. Laporte 51,672,072 717,241
R.L. Menschel 51,357,929 1,031,384
W.T. Reynolds 51,673,869 715,444
J.S. Riepe 51,670,570 718,743
G.A. Roche 51,666,390 722,923
B.C. Rogers 51,667,603 721,710
J.W. Rosenblum 51,685,001 704,312
R.L. Strickland 51,680,482 708,831
M.D. Testa 50,509,223 1,880,090
P.C. Walsh 51,634,384 754,929
A.M. Whittemore 51,689,092 700,221
ITEM 5. OTHER INFORMATION.
On April 17, 1997, the Company's board of directors elected George A. Roche
President and Chairman of the Board. James S. Riepe was elected Vice
Chairman and M. David Testa was elected Vice Chairman and Chief Investment
Officer. Alvin M. Younger, Jr. was appointed Chief Financial Officer.
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 May 12, 1997.
T. Rowe Price Associates, Inc.
/s/ Alvin M. Younger, Jr., Chief Financial & Accounting Officer
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 elect a director.
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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 to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at it.
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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
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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 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.
4
<PAGE>
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
5
<PAGE>
the Corporation by its directors and officers as contemplated by 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 but may not serve concurrently as both
President and Vice-President of 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
6
<PAGE>
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.
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 and 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.]
7
<PAGE>
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 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 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.]
8
<PAGE>
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 books shall be at
least ten days before the date of the meeting.
9
<PAGE>
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
10
<PAGE>
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
11
<PAGE>
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 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
May 12, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that our report dated May 9, 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 March 31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 133,262,000
<SECURITIES> 144,171,000
<RECEIVABLES> 75,248,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 108,674,000<F2>
<DEPRECIATION> 0<F3>
<TOTAL-ASSETS> 504,102,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 11,566,000
<OTHER-SE> 352,022,000
<TOTAL-LIABILITY-AND-EQUITY> 504,102,000
<SALES> 0
<TOTAL-REVENUES> 167,959,000
<CGS> 0
<TOTAL-COSTS> 113,618,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 54,341,000
<INCOME-TAX> 21,124,000
<INCOME-CONTINUING> 28,547,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,547,000
<EPS-PRIMARY> .45
<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>
