<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1999.
Commission file number: 000-14282.
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. [ ]
State the aggregate market value of the common stock (based on the last
reported price from The Nasdaq Stock Market) held by non-affiliates
(excludes executive officers and directors) of the registrant. $3.6 BILLION
AT FEBRUARY 14, 2000.
Indicate the number of shares outstanding of the registrant's common stock,
as of the latest practicable date. 120,677,784 SHARES AT MARCH 27, 2000.
Documents incorporated by reference: IN PART III OF THIS FORM 10-K, THE
DEFINITIVE PROXY STATEMENT FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS (FORM
DEF 14A; ACCESSION NO. 0000080255-00-000375).
Exhibit index is at Item 14(a)3 on pages 37 - 39.
<PAGE> 2
PART I.
ITEM 1. BUSINESS.
OVERVIEW. T. Rowe Price Associates, Inc. is an investment adviser to
individual and institutional investors in the sponsored T. Rowe Price Mutual
Funds and other investment portfolios, including those of defined benefit
and defined contribution retirement plans, trusts, and other mutual funds,
some of which hold the assets of variable annuity insurance contracts. The
investors that we serve are primarily domiciled in the United States. Total
assets under our management increased $32.1 billion during 1999 to $179.9
billion at year-end, including $104.4 billion that is designated by
investors for retirement. Investments in equity securities were $139.1
billion at the end of 1999. The three largest Price funds - International
Stock, Equity Income, and Science & Technology - account for 20% of assets
under management at the end of 1999 and 24% of investment advisory revenues
for the year.
We also provide our investment advisory clients with related administrative
services, 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. Our
business is the successor to the investment counseling business begun by the
late Thomas Rowe Price in 1937. We operate primarily through T. Rowe Price
Associates and its consolidated subsidiaries, including Rowe Price-Fleming
International, Inc., a 50%-owned company. We manage $42.7 billion of
international assets through Rowe Price-Fleming, including $22.4 billion in
the Price funds.
We offer a broad range of investment portfolios designed to attract and
retain investors with varying investment objectives. Price fund
shareholders can exchange balances among mutual funds as economic and market
conditions and their investment needs change. From time-to-time, we
introduce new mutual funds and other investment portfolios to complement and
expand our investment offerings, respond to competitive developments in the
financial marketplace, and meet the changing needs of our investment
advisory clients. We will open a new Price fund only if we believe that it
can play a useful role for investors over a long period of time.
We manage a broad range of domestic and international stock, bond, and money
market mutual funds and other investment portfolios which meet the varied
needs and objectives of individual and institutional investors. Investment
advisory revenues depend largely on the total value and composition of
assets under management. Accordingly, fluctuations in financial markets and
in the composition of assets under management impact our revenues and
results of operations. We provide administrative services as an ancillary
service to investment advisory clients. About 75% of our administrative
revenues in 1999 were from services to the Price funds. Fees earned for
administrative services to the funds are generally based on the recovery of
expenditures incurred and they, therefore, do not significantly affect our
net income.
We employ fundamental, technical and cyclical security analyses in the
<PAGE> 3
performance of the investment advisory function. We maintain substantial
internal equity and fixed income investment research capabilities, including
original industry and company research using such sources as inspection of
corporate activities, management interviews, company-published financial and
other information, financial newspapers and magazines, corporate rating
services, and field checks with suppliers and competitors in the same
industry and particular business sector. We also use research provided by
brokerage firms in a supportive capacity and information received from
private economists, political observers, foreign commentators, government
experts, and market and security analysts. Our stock selection process for
some investment portfolios is based on quantitative analyses using
computerized data modeling.
Investment objectives for our managed investment portfolios, including the
Price funds, accommodate a variety of strategies. Investors select funds
for investment based on the unique objectives that are detailed in each
fund's prospectus. Management of other stock portfolios for non-mutual fund
clients includes active approaches similar to those employed in several of
the Price funds. Investment strategies for these clients may emphasize
large-cap, mid-cap or small-cap investing; growth or value investing; and
international or U.S. investing. We also offer systematic, tax-efficient,
and blended equity investment strategies as well as several active and
systematic management strategies for fixed income investments. Our
specialized advisory services include investing in emerging companies with
prospects of going public, creditor claims and securities of
financially-troubled companies, and stable value contracts. We also provide
an advisory service for the efficient disposition of equity distributions
from venture capital investments.
Information concerning our revenues, results of operations and assets under
management during the past three years is contained in our consolidated
statements of income and in note 6 to our consolidated financial statements
included in Item 8 of this Form 10-K.
RECENT DEVELOPMENTS. During 1999, we achieved several significant
milestones: revenues surpassed $1 billion for the first time; stockholders'
equity crossed $750 million; assets under management reached nearly $180
billion; and Standard & Poor's added our common shares to its benchmark S&P
500 Index of leading large-cap U.S. companies in leading industries.
Two new mutual funds were offered to the public in 1999: International
Growth & Income at the beginning of the year and Tax-Efficient Growth in the
third quarter. More significantly, the Science & Technology Fund combined
large net cash inflows and outstanding performance to increase from $4.7
billion at the end of 1998 to $12.3 billion at December 31, 1999. The
largest fund entering 1999, Equity Income, operated in the out-of-favor
large-cap value market and was down about $1.2 billion during the year,
closing 1999 at $12.3 billion in net assets. The International Stock Fund
achieved better results, though cash flows were negative much of the year.
Market performance late in the year pushed this fund to about $12.7 billion
at year end, up from $10.1 billion at the end of 1998.
<PAGE> 4
Other investment portfolios also contributed to our growth in 1999. The
sponsored Threshold III partnership entered its disposition stage and
contributed substantial performance-related advisory fees. The same
favorable markets for IPOs and technology stocks which drove Threshold's
investment results and produced these fees also provided more assets to our
specialized service for the disposition of venture capital distributions.
Combined, these services contributed approximately $9 million of additional
revenues in 1999. While revenues from these sources are of a recurring
nature, their significance will vary as market conditions change and the
Threshold partnership completes it liquidation.
The composition of the other portfolios and advisory revenues earned thereon
continue to evolve. Assets subadvised for third parties such as variable
annuity funds offered by insurers grew in importance again this past year.
At year-end, the subadvised portfolios accounted for almost $19 billion of
assets managed and contributed nearly a third of our advisory revenues from
managing other investment portfolios.
In late December, we completed our first offering of collateralized bond
obligations which added about $300 million to bond assets under management.
Performance-related fees that we can earn for managing the CBO will likely
vary over time.
We continue our tradition of focusing on meeting the needs of our investors.
During the fourth quarter, we launched the T. Rowe Price Retirement Income
Manager advisory service. This service offers retirees a plan for
withdrawing income from their investment accounts, as well as a range of
investment portfolios that are appropriate to that plan. Whereas most tools
for this purpose use simplistic estimates, our service uses a detailed
analytical process, including Monte Carlo-style market simulations. Our
service also incorporates an expert computational system that selects
best-fit solutions for each individual, based on personal requirements and
potential market activity. Personal consultation in developing and
implementing the plan is an important aspect of our service. A patent is
pending for the analytical method that we use.
We also enhanced the services provided through our investor web site
(www.troweprice.com) and added more features in 1999 - from information
dissemination and decision-making tools to transaction processing services.
In the second quarter, we acquired a 10% interest in Daiwa SB Investments,
an asset management venture with Daiwa Securities and Sumitomo Bank for
Japanese investors. We subadvise assets for this venture totaling almost
$300 million at the end of 1999.
In the third quarter, we received regulatory approval to organize a savings
bank and plan to commence operations in mid-2000. Through the savings bank,
we will issue federally insured certificates of deposit. The assets of
the savings bank will consist primarily of investments in mortgage-backed
securities.
<PAGE> 5
We made the crossover of operations into 2000 successfully as our
comprehensive Y2K program of remediation, testing, and monitoring was
completed timely and within planned budget.
In February 2000, we began the process of registering a new class of shares
with a 12b-1 fee for ten of the Price funds. We expect that these shares
will be available through full-service financial intermediaries beginning in
the second quarter, subject to approval by the SEC and each fund's directors.
PRICE FUNDS. We provide investment advisory, distribution and other
administrative services to the Price funds under various agreements.
Investment advisory services are provided to each fund under individual
investment management agreements which specify fundamental investment
objectives and grant the fund the right to use the T. Rowe Price name. The
boards of the respective funds, including a majority of directors who are
not "interested persons" (as defined in the Investment Company Act of 1940,
as amended) of the funds or of us, must approve the investment management
agreements annually. Amendments to management agreements must be approved
by fund shareholders. Each agreement automatically terminates in the event
of its assignment (as defined in the Investment Company Act) and generally
either party may terminate the agreement without penalty after a 60-day
notice. The termination of one or more of these agreements could have a
material adverse effect on our results of operations.
Advisory Services. Investment advisory fees are based upon the average
daily net assets managed in each fund. Additionally, other fees are earned
for advisory-related administrative services. Independent directors and
trustees of the Price funds regularly review fee structures.
The advisory fee paid by each of the Price funds generally is computed by
multiplying the individual fund's average daily net assets by a fee. The
applicable fee is equal to the sum of a group charge that is set based on
the combined net assets of the Price funds and an individual fund charge
that is set based on each fund's unique investment objective. As the
combined net assets of the funds increase, the group charge component of the
fee decreases. Details of each fund's fee arrangement are available in its
offering prospectus.
Each of the Price funds has a distinct investment objective that has been
developed as part of our strategy to provide a broad, comprehensive
selection of investment portfolios. All Price funds are sold exclusively 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 portfolios. We believe that our historical distribution
methods and fund shareholder and administrative services have promoted
stability of assets in the Price funds through market cycles in addition to
reducing costs to fund shareholders. The new class of shares to be offered
later in 2000 will expand our distribution of the Price funds.
Each fund typically bears all expenses associated with its operation and the
issuance and redemption of its securities. In particular, each fund pays
<PAGE> 6
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 trustees' or directors' fees and expenses. The new class of
fund shares to be offered in 2000 will also incur a 12b-1 fee for
distribution and recordkeeping.
Several of the Price funds have different fee arrangements. The Equity
Market Index and Summit funds have single, all-inclusive fees covering all
investment management and operating expenses. The Spectrum Growth, Income
and International Funds invest in a broadly diversified portfolio of other
Price funds and have no fees or direct expenses. However, they indirectly
bear the expenses of the funds in which they invest. The Foreign Equity and
Mid-Cap Equity Growth Funds for institutional investors each have distinct
advisory fee arrangements.
We usually guarantee that a newly-organized fund's expenses will not exceed
a specified percentage of its net assets during an initial operating period.
We absorb all advisory fees and other mutual fund expenses in excess of
these self-imposed limits.
We bear all advertising and promotion expenses for the Price funds. Our
costs include advertising and direct mail communications to existing and
potential fund shareholders as well as a substantial staff and
communications capability to respond to investor inquiries. Marketing
efforts have traditionally been focused in the print media, but in recent
years, promotional activities have expanded into television and the
Internet. In addition, we target considerable marketing efforts at
participant-directed defined contribution plans that invest in mutual funds.
Advertising and promotion expenditures vary over time based on investor
interest, market conditions, new investment offerings, and enhancements of
our Internet site.
Administrative Services. Our service company subsidiaries also provide
advisory-related administrative services to the Price funds. Through them,
we provide mutual fund transfer agency and shareholder services, including
maintenance of staff and technology and other equipment to respond to
inquiries from shareholders. In addition, we provide 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. We also provide
participant accounting, plan administration and transfer agent services for
defined contribution retirement plans that invest in the Price funds. Plan
sponsors compensate us for some services while the Price funds compensate us
for maintaining and administering the individual participant accounts for
those plans that invest in the funds.
We provide trust services through our Maryland-chartered limited-service
trust company. Through the trust company, we offer common trust funds for
investment by qualified retirement plans and serve as custodian or trustee
<PAGE> 7
for retirement plans and IRAs. The trust company may not accept deposits
and cannot make personal or commercial loans.
Fund Assets. At December 31, 1999, assets under our management in the Price
funds aggregated $114.5 billion, an increase of $20.1 billion during 1999.
The following table presents the year each Price fund was started as well as
the net assets (in millions) of each fund at December 31, 1998 and 1999.
The Spectrum funds are not listed in the table because their assets are
included in the amounts shown for their underlying fund investments.
1998 1999
________ _________
Domestic stock and blended funds:
Growth Stock (1950) $ 5,041 $ 5,672
New Horizons (1960) 5,229 6,022
New Era (1969) 999 1,082
Growth & Income (1982) 3,563 3,440
Equity Income (1985) 13,494 12,321
New America Growth (1985) 2,064 2,064
Capital Appreciation (1986) 1,004 856
Science & Technology (1987) 4,696 12,271
Small-Cap Value (1988) 1,632 1,262
Equity Index 500 (1990) 3,348 5,049
Balanced (1991) 1,650 2,091
Dividend Growth (1992) 1,338 1,028
Mid-Cap Growth (1992) 3,310 5,243
Small-Cap Stock (1992) 1,153 1,740
Blue Chip Growth (1993) 4,330 6,709
Media & Telecommunications (1993) 246 930
Capital Opportunity (1994) 125 109
Personal Strategy - Balanced (1994) 421 619
Personal Strategy - Growth (1994) 194 262
Personal Strategy - Income (1994) 213 206
Value (1994) 775 851
Health Sciences (1995) 317 303
Financial Services (1996) 224 159
Mid-Cap Equity Growth (1996) 132 266
Mid-Cap Value (1996) 221 212
Diversified Small-Cap Growth (1997) 70 75
Real Estate (1997) 28 25
Tax-Efficient Balanced (1997) 32 43
Extended Equity Market Index (1998) 21 54
Total Equity Market Index (1998) 61 199
Tax-Efficient Growth (1999) -- 70
________ ________
55,931 71,233
________ ________
International stock funds:
International Stock (1980) 10,142 12,674
International Discovery (1988) 193 687
Foreign Equity (1989) 3,415 3,923
European Stock (1990) 1,549 1,588
New Asia (1990) 622 1,375
Japan (1991) 181 596
<PAGE> 8
Latin America (1993) 182 268
Emerging Markets Stock (1995) 72 162
Global Stock (1995) 49 90
International Growth & Income (1998) 2 11
________ ________
16,407 21,374
________ ________
Bond and money market funds:
New Income (1973) 2,103 1,795
Prime Reserve (1976) 5,100 5,431
Tax-Free Income (1976) 1,481 1,328
Tax-Exempt Money (1981) 764 684
U.S. Treasury Money (1982) 927 966
Tax-Free Short-Intermediate (1983) 458 417
High Yield (1984) 1,704 1,682
Short-Term Bond (1984) 347 305
GNMA (1985) 1,146 1,089
Tax-Free High Yield (1985) 1,344 1,132
California Tax-Free Bond (1986) 220 214
California Tax-Free Money (1986) 102 102
International Bond (1986) 926 779
New York Tax-Free Bond (1986) 210 188
New York Tax-Free Money (1986) 104 112
Maryland Tax-Free Bond (1987) 1,039 990
U.S. Treasury Intermediate (1989) 263 244
U.S. Treasury Long-Term (1989) 310 324
Global Government Bond (1990) 42 32
New Jersey Tax-Free Bond (1991) 118 108
Short-Term U.S. Government (1991) 136 132
Virginia Tax-Free Bond (1991) 270 265
Tax-Free Intermediate Bond (1992) 119 116
Florida Intermediate Tax-Free Bond (1993) 116 99
Georgia Tax-Free Bond (1993) 59 58
Maryland Short-Term Tax-Free Bond (1993) 119 129
Summit Cash Reserves (1993) 1,867 2,430
Summit GNMA (1993) 50 62
Summit Limited-Term Bond (1993) 50 49
Summit Municipal Income (1993) 72 70
Summit Municipal Intermediate (1993) 81 79
Summit Municipal Money Market (1993) 173 191
Emerging Markets Bond (1994) 148 173
Virginia Short-Term Tax-Free Bond (1994) 27 28
Corporate Income (1995) 55 51
________ _________
22,050 21,854
________ _________
$ 94,388 $114,461
________ _________
________ _________
OTHER INVESTMENT PORTFOLIOS. We managed an aggregate of $65.4 billion at
December 31, 1999 in portfolios other than the Price funds. None of these
advisory services clients accounted for more than 1% of our investment
advisory revenues in 1999. We provide investment management services to
client accounts on an individual, separately-managed, or subadvised basis
and through sponsored investment portfolios generally organized as
partnerships
<PAGE> 9
and common trust funds. Several of our special-purpose subsidiaries serve
as the general partners of our sponsored investment partnerships which we
have formed through private placements.
We usually compute fees for separately-managed private accounts based upon
the value of assets under our management and we bill them in advance. Our
standard form of investment advisory agreement for private accounts provides
that the agreement may be terminated at any time and that any unearned fees
paid in advance will be refunded. We charge fees for investment management
based on, among other things, the unique services to be provided. A few of
our advisory relationships include fees that are determined based on the
investment performance of the portfolios that we manage.
Our investment adviser subsidiaries also provide private accounts with
specialized advisory services. Stable value investment contracts, totaling
$8 billion at December 31, 1999, are managed by T. Rowe Price Stable Asset
Management, Inc. International equity and fixed income securities are
managed by Rowe Price-Fleming. We consolidate Rowe Price-Fleming into our
financial statements and disclosures because of our 50% controlling
interest. The remaining 50% interest is owned by the London-based asset
management and investment banking group Robert Fleming Holdings Limited.
During 1999, international assets under management increased $9.8 billion to
$42.7 billion. International investment research is provided to Rowe
Price-Fleming by affiliates of Robert Fleming Holdings. Fees paid for these
services are based on assets under Rowe Price-Fleming's management.
REGULATION. Price Associates, Rowe Price-Fleming and Stable Asset
Management are registered with the SEC under the Investment Advisers Act of
1940 and all applicable state securities agencies. Our transfer agent
services subsidiary is registered under the Securities Exchange Act of 1934,
and our trust company is regulated by the State of Maryland Commissioner of
Financial Regulation.
The Price funds are distributed by our subsidiary, T. Rowe Price Investment
Services, Inc., which is a registered broker-dealer and member of the
National Association of Securities Dealers and the Securities Investor
Protection Corporation. We provide discount brokerage services through this
subsidiary primarily to complement the other services provided to
shareholders of the Price funds. All discount brokerage transactions are
cleared through and accounts maintained by Fiserv Securities, an independent
clearing broker.
All aspects of our business are subject to extensive federal and state laws
and regulations. These laws and regulations are primarily intended to
benefit or protect our clients and the Price funds' shareholders. They
generally grant supervisory agencies and bodies broad administrative powers,
including the power to limit or restrict the conduct of business in the event
that we fail to comply with these laws and regulations. Possible sanctions
that may be imposed on us in the event we fail to comply include the
suspension of individual employees, limitations on engaging in certain lines
of business for specified periods of time, revocation of our investment
<PAGE> 10
adviser and other registrations, censures, and fines.
We are subject to net capital requirements including those of various
federal and state regulatory agencies. Our net capital, as defined, has
consistently met or exceeded all minimum requirements.
COMPETITION. As a member of the financial services industry, we are subject
to substantial competition in all aspects of our business. A significant
number of mutual funds are sold to the public by investment management
firms, broker-dealers, other mutual fund companies, banks and insurance
companies and include the distribution of both proprietary and other
sponsors' mutual funds. We compete with brokerage and investment banking
firms, insurance companies, banks, and other financial institutions in all
aspects of our business. Many of these financial institutions have
substantially greater resources than we do. We compete with other providers
of investment management services primarily on the basis of the availability
and objectives of investment portfolios offered, investment performance, and
the scope and quality of our services.
We believe that competition within the investment management industry will
increase as a result of consolidation and acquisition activity. In order to
maintain and enhance our competitive position, we may review acquisition
prospects and, if appropriate opportunities arise, engage in discussions or
negotiations that could lead to acquisitions. Additionally, we continue to
review our distribution strategies and have expanded our business to include
being both a leading, low cost, direct marketer of mutual funds and a
subadviser to other sponsors' mutual funds. Distribution of the new class
of shares in the Price funds through financial intermediaries is expected to
begin later in 2000.
EMPLOYEES. At December 31, 1999, we employed more than 3,700 active,
full-time employees. We add additional temporary and part-time personnel to
our staff to meet periodic and special project demands for technology
functions and mutual fund administrative services.
ITEM 2. PROPERTIES.
We continued to expand our operating facilities in 1999. During the fourth
quarter, we completed the third and fourth buildings at our Owings Mills,
Maryland campus and began moving in. The buildings are on 70 acres of land
that we own and they total about 567,000 square feet of space. This acreage
also accommodates additional future development. We will continue the
realignment of our operations in the Baltimore area through the first half
of 2000.
We opened investor centers for walk-in traffic and investor meetings in the
Boston, Colorado Springs, and Los Angeles areas in 1999. Other investor
centers are located in the Washington, Baltimore, and Tampa areas.
We closed a small telephone servicing facility in downtown Los Angeles in the
second quarter and transferred its operations to a new temporary facility in
<PAGE> 11
Colorado Springs. We acquired land there for the development of a regional
campus and construction is underway on the first building.
Our primary corporate offices consist of approximately 270,000 square feet
of space leased through late 2006 at 100 East Pratt Street in Baltimore. We
lease other significant servicing facilities in the Tampa and Richmond areas.
We own an expandable 46,000 square foot technology center on a separate
parcel of land in Owings Mills. This facility is in close proximity to a
110,000 square foot facility that is presently being renovated to
accommodate the majority of our technology support staff. The land under
the larger facility is leased until 2089.
Information concerning our anticipated capital expenditures in 2000 is set
forth in the capital resources and liquidity discussion in Item 7 of this
Form 10-K. Our future minimum rental payments under noncancelable operating
leases at December 31, 1999 are set forth in note 8 to our consolidated
financial statements included in Item 8 of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS.
On July 6, 1998, Rowe Price-Fleming, the T. Rowe Price International Stock
Fund and the fund's five directors were named as defendants in Migdal v. Rowe
Price-Fleming International, Inc., et al., filed in the United States
District Court for the District of Maryland. The Complaint sought to
invalidate the advisory agreement between Rowe Price-Fleming and the
International Stock Fund, and sought recovery of an unspecified amount of
advisory fees paid by the International Stock Fund to Rowe Price-Fleming.
Plaintiffs alleged that the International Stock Fund does not have a
sufficient number of independent directors, as required by the Investment
Company Act of 1940, as amended, because its independent directors serve on
multiple boards of directors within the T. Rowe Price mutual fund complex and
receive substantial compensation in the form of director fees. On October
12, 1998, the plaintiffs filed an Amended Complaint adding as a plaintiff
Linda B. Rohrbaugh, a shareholder in the T. Rowe Price Growth Stock Fund.
The Amended Complaint also added as defendants the T. Rowe Price Growth Stock
Fund, T. Rowe Price Associates and certain of its subsidiaries which provide
services to the funds, as well as five directors of the T. Rowe Price Growth
Stock Fund. On January 21, 1999, the Amended Complaint was dismissed with
leave for plaintiffs to re-file. On February 16, 1999, the plaintiffs filed
a Second Amended Complaint, but the fund directors were excluded as
defendants. The Second Amended Complaint alleged a claim under Section 36(b)
of the Investment Company Act of 1940. The Complaint sought to invalidate
the advisory and service agreements negotiated between the corporate
defendants and certain T. Rowe Price funds based on a claim that (i) the fees
paid to the corporate defendants were excessive and (ii) the advisory
agreements were not negotiated at arm's length because each of the boards of
directors of the Price funds is not independent as required under the
Investment Company Act of 1940. On March 19, 1999, we and the other
defendants filed a Motion to Dismiss the Second Amended Complaint. In an
order dated March 20, 2000, our motion was granted and the case dismissed
<PAGE> 12
with prejudice. The plaintiffs have 30 days from the date of the order to
file an appeal.
From time to time, claims arise in the ordinary course of our business,
including employment-related claims. After consulting with counsel, we
believe it unlikely that any adverse determination in one or more pending
claims would have a material adverse effect on our financial condition or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of our stockholders during the fourth
quarter of 1999.
ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following information includes the names, ages, and positions of our
executive officers. There are no arrangements or understandings pursuant to
which any person serves as an officer.
George A. Roche (58), Chairman (1997), President (1997), Managing Director
(1989), and Chief Financial Officer (1984-1997)
James S. Riepe (56), Vice Chairman (1997) and Managing Director (1989)
M. David Testa (55), Vice Chairman (1997) and Managing Director (1989)
Edward C. Bernard (44), Managing Director (1995)
Michael A. Goff (40), Managing Director (1997) and Vice President (1994-1997)
Henry H. Hopkins (57), Managing Director (1989)
James A.C. Kennedy (46), Managing Director (1990)
Wayne D. O'Melia (47), Managing Director (1998) and Vice President
(1991-1998)
William T. Reynolds (51), Managing Director (1990)
Charles E. Vieth (43), Managing Director (1993)
Joseph P. Croteau (45), Vice President (1987), Controller (1994), and
Treasurer (2000)
Similar information for other significant employees who are managing
directors follows.
John H. Laporte (54), Managing Director (1989)
Brian C. Rogers (44), Managing Director (1991)
Preston G. Athey (50), Managing Director (1997) and Vice President
(1991-1997)
Brian W.H. Berghuis (41), Managing Director (1997) and Vice President
(1991-1997)
Stephen W. Boesel (55), Managing Director (1993)
Gregory A. McCrickard (41), Managing Director (1998) and Vice President
(1991-1998)
Mary J. Miller (44), Managing Director (1993)
Charles A. Morris (37), Managing Director (1995)
George A. Murnaghan (43), Managing Director (1997) and Vice President
(1986-1997)
<PAGE> 13
Edmund M. Notzon (54), Managing Director (1997) and Vice President
(1991-1997)
Larry J. Puglia (39), Managing Director (1998) and Vice President (1993-1998)
John R. Rockwell (57), Managing Director (1998) and Vice President
(1991-1998)
R. Todd Ruppert (43), Managing Director (1997) and Vice President (1988-1997)
Robert W. Smith (38), Managing Director (1998) and Vice President (1993-1998)
William J. Stromberg (39), Managing Director (1998) and Vice President
(1990-1998)
Richard T. Whitney (41), Managing Director (1995)
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Our 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, adjusted to give effect to the 2-for-1
stock split in April 1998, were:
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
________ ________ ________ ________
1998 - High price $ 37.438 $ 39.625 $ 42.875 $ 39.625
Low price 25.125 32.500 25.875 20.875
Cash dividends declared .085 .085 .085 .10
1999 - High price 39.875 43.250 40.000 40.250
Low price 29.250 30.625 27.438 25.875
Cash dividends declared .10 .10 .10 .13
On February 14, 2000, there were approximately 3,600 holders of record of
our outstanding common stock.
We expect to pay cash dividends at the $.13 per-share quarterly rate for the
first three quarters of 2000. The increase made to our quarterly dividend
rate in December 1999 was the fourteenth consecutive annual increase since
we became a public company in April 1986.
<PAGE> 14
ITEM 6. SELECTED FINANCIAL DATA.
Year ended December 31,
____________________________________________________
1995 1996 1997 1998 1999
________ ________ ________ ________ ________
(in millions, except per-share data)
Revenues $ 439.3 $ 586.1 $ 755.0 $ 886.1 $1,036.4
Net income $ 75.4 $ 98.5 $ 144.4 $ 174.1 $ 239.4
Basic earnings
per share $ .66 $ .86 $ 1.24 $ 1.46 $ 1.99
Diluted earnings
per share $ .62 $ .79 $ 1.13 $ 1.34 $ 1.85
Cash dividends
declared per share $ .1725 $ .2225 $ .28 $ .355 $ .43
Weighted average
shares outstanding 114.2 114.5 116.3 119.1 120.6
Weighted average
shares outstanding -
assuming dilution 122.1 123.9 128.1 130.0 129.2
December 31,
________________________________________________
1995 1996 1997 1998 1999
________ ________ ________ ________ ________
(in millions, except as noted)
Balance sheet data
Total assets $ 365.3 $ 478.8 $ 646.1 $ 796.8 $ 998.0
Debt $ -- $ -- $ -- -- $ 17.7
Stockholders'
equity $ 274.2 $ 345.7 $ 486.7 $ 614.3 $ 770.2
Common shares
outstanding 114.7 115.1 118.2 120.2 120.1
Assets under manage-
ment (in billions) $ 75.4 $ 99.4 $ 124.3 $ 147.8 $ 179.9
All share and per-share data has been retroactively adjusted to give effect
to the 2-for-1 stock splits in April 1996 and 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL.
Revenues and net income are derived primarily from investment advisory
services provided to U.S. individual and institutional investors in
sponsored mutual funds and other investment portfolios. Related
administrative services provided to investment advisory clients include
mutual fund transfer agent, defined contribution retirement plan
recordkeeping, discount brokerage, and trust services.
Assets under management consist of a broad range of domestic and
international stock, bond, and money market mutual funds and other investment
<PAGE> 15
portfolios which meet the varied needs and objectives of individual and
institutional investment advisory clients. Investment advisory 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. At December 31, 1999, assets under management totaled $179.9
billion, including $114.5 billion in sponsored mutual funds. Equity
investments comprise more than 75% of assets under management at the end of
1999.
RESULTS OF OPERATIONS.
1999 versus 1998. Net income increased $65 million or 37% to $239 million,
or diluted earnings per share of $1.85, from $174 million or diluted
earnings per share of $1.34. Total revenues increased 17% from $886 million
to a record $1.04 billion, led by an increase of $117 million in investment
advisory fees.
Investment advisory revenues earned from sponsored mutual fund investment
portfolios increased $73 million as average fund assets under management
were $100.8 billion, $12.9 billion more than in 1998. Fund assets increased
$20.1 billion during the year and totaled $114.5 billion at December 31,
1999, including $92.6 billion in stock and blended assets funds. The most
significant increase in fund assets during 1999 was attributable to market
appreciation of and income reinvested in the stock and blended funds totaling
$19 billion. Net cash inflows to the funds during the year totaled $1.1
billion, including inflows of more than $2.3 billion into domestic stock and
blended funds, offset in part by $1.0 billion of outflows from international
stock funds and $.2 billion from bond and money market funds. Domestic
growth stock funds accounted for the largest net inflows with the Science &
Technology and Blue Chip Growth funds each drawing more than $1 billion.
Greater assets in other investment portfolios, including variable annuity
and other subadvised funds, and an increase of $9 million in
performance-based fees contributed the balance of advisory revenue gains
totaling $44 million. Assets under management in other investment
portfolios were $65.4 billion at December 31, 1999, up $12 billion during 1999.
Administrative fees from advisory-related services to the funds and their
shareholders rose $24 million from 1998 to $197 million. This increase was
primarily attributable to defined contribution retirement plan recordkeeping
services; however, increased operating expenses offset these gains.
Commissions earned on greater discount brokerage trading volume contributed
nearly $5 million of the revenue increase.
Investment and other income rose $9 million from 1998, including $6 million
from larger money market fund balances and nearly $6 million from venture
capital investments offset by almost $3 million of foreign currency exchange
rate loss on the yen-denominated debt.
Operating expenses increased 8% to nearly $622 million. Greater compensation
<PAGE> 16
and related costs, which were up $25 million or 8%, were attributable to
increases in rates of compensation, including performance-related bonuses,
and an increase in staff size of 6% primarily to support the growing
investment-related administrative services and technology-based operations.
These increases in compensation costs were partially offset by reduced use
of temporary staff and the capitalization of almost $5 million for the
development of internal-use software. At year-end 1999, more than 3,700
associates were employed. Advertising and promotion expenditures increased
2% to $74 million in 1999. The increase in 2000 is anticipated to be
greater as new investment offerings, further enhancement of the Internet
site, and investor interest will drive promotional spending up as long as
market conditions warrant. Occupancy and equipment expense was nearly $11
million higher in 1999 due to the expansion of operating facilities and
related equipment acquisitions, primarily leases of technology assets.
International investment research fees were up nearly $6 million as
international assets under management increased during 1999 from $32.9
billion to $42.7 billion, including $22.4 billion in the mutual funds.
International assets are managed by a 50% owned consolidated subsidiary,
Rowe Price-Fleming International, and are included in the consolidated
assets under management. Other operating expenses increased $6 million to
support growing operations.
The crossover of operations into 2000 was made successfully. Expenditures
for the comprehensive efforts involved totaled $37 million through year-end,
including more than $18 million in 1999, an increase of about $1 million
from 1998. Comparable resources in 2000 will be used to fund other
technology projects.
The 1999 provision for income taxes as a percentage of pretax income is
lower than that of 1998 due to changes in income apportionment for purposes
of state taxation.
1998 versus 1997. Net income increased $29.7 million or 21% to $174.1
million, or diluted earnings per share of $1.34, from $144.4 million or
diluted earnings per share of $1.13. Total revenues increased 17% from $755
million to a record $886 million, led by an increase of $96 million in
investment advisory fees.
Investment advisory revenues earned from the mutual fund investment
portfolios increased $68.7 million as average mutual fund assets under
management rose $13.7 billion during 1998 to $88.0 billion. Fund assets
totaled $94.4 billion at December 31, 1998, up $13.3 billion during the
year, including more than $72.3 billion in stock funds. Net cash inflows to
the funds during 1998 totaled $3.7 billion, including inflows of $3.0
billion into domestic stock funds and $1.9 billion into the bond and money
market funds, offset in part by $1.2 billion of outflows from international
stock funds. The balance of the increase in mutual fund assets was due to
appreciation and income during the year. Fees earned from other investment
portfolios contributed the balance of the advisory revenue gains. These
assets under management rose to $53.4 billion at December 31, 1998, up $10.3
billion during 1998. Total assets under management closed 1998 at $147.8
billion, up from $124.3 billion at the end of 1997.
<PAGE> 17
Administrative fees from advisory-related services to the funds and their
shareholders grew $28.4 million during 1998 to $173.3 million. These
increases were primarily attributable to defined contribution retirement
plan recordkeeping and mutual fund transfer agent services; however,
increased operating expenses offset these gains. Commissions earned on
greater trading volume in discount brokerage contributed $2.1 million of the
revenue increase.
Investment and other income rose $6.5 million from 1997, including $4.8
million of income from the higher money market and other mutual fund
investments. The balance of the increase was attributable to gains
recognized on the investment portfolios.
Operating expenses increased 17% to $573.3 million. Greater compensation
and related costs, which were up $50.7 million, were attributable to
increases in rates of compensation, including performance-related bonuses,
and a nearly 12% increase in staff size in addition to greater use of
temporary employees primarily to support growing investment-related
administrative services and technology support operations. At year-end
1998, almost 3,500 associates were employed. Advertising and promotion
expenditures increased 9% to $73.0 million. Occupancy and equipment expense
was up due to the expansion of operating facilities and equipment
acquisitions, primarily investments in technology. Other operating expenses
increased $10.0 million primarily as a result of increased technology
spending including preparations for Year 2000 processing and the growth of
operations.
The provision for income taxes as a percentage of pretax income is lower in
1998 due to changes in state income taxation apportionment rules.
International assets under management ended 1998 at $32.9 billion, up $2.9
billion over the year. Average international assets managed were $31.9
billion during 1998, up less than 2% from 1997. International investment
research fees expense and minority interests in Rowe Price-Fleming's net
income were up only modestly, in line with average assets under management.
CAPITAL RESOURCES AND LIQUIDITY.
During the three years ended December 31, 1999, stockholders' equity
increased 123% from $346 million to $770 million. Stockholders' equity at
December 31, 1999 includes $49 million of unrealized security holding gains
(after provision for income taxes) on investments in sponsored mutual funds
and $42 million which is restricted as to use under various regulations and
agreements arising in the ordinary course of business. Net liquid assets of
about $450 million were available at the beginning of 2000 to meet business
demands and opportunities.
Operating activities provided net cash inflows of $297 million in 1999 as net
income increased $65 million from the prior year. Comparatively, 1998
provided net operating cash inflows of $232 million. Net cash expended in
investing activities during 1999 totaled $118 million, a $51 million increase
from 1998. Property and equipment expenditures increased $21 million to more
<PAGE> 18
than $77 million in 1999, relating primarily to the completion and
outfitting of two new buildings at the Owings Mills Campus. Net investments
of nearly $41 million were made in 1999 including $15 million for a 10%
interest in Daiwa SB Investments, an asset management company in Japan, $12
million in the income notes of a sponsored collateralized bond obligations
portfolio, and about $15 million in sponsored mutual funds. Cash used in
financing activities increased $23 million in 1999 to $104 million.
Repurchases of common stock increased $31 million to $67 million in 1999 and
dividends paid to common stockholders were $48 million, $8 million higher
than 1998 as the per-share dividend was again increased. Borrowings
provided cash of $15 million in 1999.
Anticipated property and equipment acquisitions in 2000 are more than $72
million, including the costs of constructing the initial phase of the new
Colorado Springs regional campus. These capital expenditures are expected
to be funded from liquid assets currently available and from operating cash
inflows.
FORWARD-LOOKING INFORMATION.
From time-to-time, information or statements provided by or on behalf of T.
Rowe Price, 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, anticipated changes in the
amount and composition of assets under management, anticipated expense
levels, and expectations regarding financial market conditions. Readers are
cautioned that any forward-looking information provided by or on behalf of
T. Rowe Price is not a guarantee of future performance. 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 T. Rowe Price 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.
Future revenues will fluctuate due to many factors, such as the total value
and composition of assets under management and related cash inflows or
outflows in mutual funds and other investment portfolios; fluctuations in
worldwide financial markets, including those in emerging countries, resulting
in appreciation or depreciation of assets under management; the relative
investment performance of sponsored mutual funds and other investment
portfolios as compared to competing offerings and market indices; the extent
to which performance-based investment advisory fees are earned; the expense
ratios of the sponsored mutual funds; investor sentiment and investor
confidence; the ability to maintain investment management and administrative
fees at appropriate levels; competitive conditions in the mutual funds and
broader financial services sectors; the introduction of new mutual funds and
investment portfolios; the ability to contract with the mutual funds for
payment for investment advisory-related administrative services provided to
the funds and their shareholders; the continuation of trends in the
retirement plan marketplace favoring defined contribution plans and
<PAGE> 19
participant-directed investments; and the amount and timing of income
recognized on investments. Revenues are substantially dependent on fees
earned under contracts with the funds and could be adversely affected if the
independent directors of one or more of the funds determined to terminate or
significantly alter the terms of the investment management or related
administrative services agreements.
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
due to, among other things, performance-based bonuses, changes in the
employee count and mix, and competitive factors; changes in the manner in
which international investment advisory services are provided; expenses and
capital costs, such as technology assets, depreciation, amortization,
research and development, and interest, incurred to maintain and enhance the
administrative and operating services infrastructure including Internet
capabilities; unanticipated costs that may be incurred to protect investor
accounts and client goodwill; and disruptions of services, including those
provided by third parties such as communications, power, and the mutual fund
transfer agent system.
T. Rowe Price'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 operations and
results, including but not limited to effects on costs incurred and effects
on investor interest in mutual funds and investing in general or in
particular classes of mutual funds or other investments.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
T. Rowe Price invests in its sponsored mutual funds, which are market risk
sensitive financial instruments held for purposes other than trading; it
does not invest in derivative financial or commodity instruments. Mutual
fund investments have inherent market risk in the form of equity price risk;
that is, the potential future loss of value that would result from a decline
in the fair values of the mutual fund shares. Each fund and its underlying
net assets are also subject to market risk which may arise from changes in
equity prices, credit ratings, foreign currency exchange rates, and interest
rates.
The following table (in thousands of dollars) presents the equity price risk
from investments in sponsored mutual funds by assuming a hypothetical
decline in the fair values of mutual fund shares. This potential future
loss of value reflects the valuation of mutual fund investments at year end
using each fund's lowest fair value per share during the prior twelve
months. With respect to this presentation, it is important to note that:
all funds did not experience their lowest fair value per share on the same
day; it is likely that the composition of the mutual fund investment
portfolio would be changed if adverse market conditions persisted; and T.
Rowe Price could experience future losses in excess of those presented below.
<PAGE> 20
Fair value at Potential
December 31, % of lower % of Potential loss
1999 Portfolio value Portfolio of value
_____________ _________ _________ _________ _______________
Stock funds
Domestic $133,941 57 $111,463 58 $22,478 17%
International 41,036 18 24,515 12 16,521 40
________ ___ ________ ___ _______
Total 174,977 75 135,978 70 38,999 22
Blended funds 20,388 9 19,217 10 1,171 6
Bond funds 38,559 16 37,989 20 570 1
________ ___ ________ ___ _______
$233,924 100 $193,183 100 40,740 17
________ ___ ________ ___
________ ___ ________ ___
Less potential loss attributable to minority interests 1,488
_______
Potential loss before income taxes attributable to
accumulated comprehensive income $39,252
_______
_______
The comparable potential loss shown in last year's annual report was $31
million on sponsored mutual fund investments of $193 million.
Investments in mutual funds generally moderate market risk because funds, by
their nature, invest in a number of different financial instruments. T.
Rowe Price further manages its exposure to market risk by diversifying its
investments into numerous stock and bond as well as blended funds, and among
domestic and international funds. In addition, investment holdings may be
altered from time-to-time, in response to changes in market risks and other
factors, as deemed appropriate by management.
In evaluating market risk, it is also important to consider the risk that
the value of managed investment portfolios will decline. Because revenues
and net income are based primarily on the value of assets under management,
declines of financial market values will negatively impact revenues and net
income.
The Japanese yen strengthened against the U.S. dollar in 1999, reaching
levels not experienced since 1995, and an exchange rate loss was recognized
on the yen borrowing made in April. In evaluating exchange rate
sensitivity, a loss of nearly $2 million would be recognized if the yen
further strengthened 10% from December 31, 1999. Other foreign currency
denominated assets and liabilities are not material.
<PAGE> 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Page
Index to Financial Statements:
Report of Independent Accountants 22
Consolidated Balance Sheets at December 31, 1998 and 1999 23
Consolidated Statements of Income for each of the
three years in the period ended December 31, 1999 24
Consolidated Statements of Cash Flows for each of the
three years in the period ended December 31, 1999 25
Consolidated Statements of Stockholders' Equity for
each of the three years in the period ended December 31, 1999 26
Summary of Significant Accounting Policies 28
Notes to Consolidated Financial Statements
including Supplementary Quarterly Financial Data 30
<PAGE> 22
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of T. Rowe Price Associates, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of T. Rowe Price Associates, Inc. and its subsidiaries at December
31, 1998 and 1999, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United
States. 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 auditing standards generally accepted in the United
States 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/ PricewaterhouseCoopers LLP
Baltimore, Maryland
January 25, 2000
<PAGE> 23
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
__________________
1998 1999
________ ________
(in thousands)
ASSETS
Cash and cash equivalents (Note 1) $283,838 $358,472
Accounts receivable (Note 6) 100,702 121,637
Investments in sponsored mutual funds (Note 1) 192,914 233,924
Other investments (Notes 2 and 8) 26,597 44,986
Property and equipment (Note 3) 166,612 210,302
Other assets (Note 7) 26,121 28,718
________ ________
$796,784 $998,039
________ ________
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 45,737 $ 37,712
Accrued compensation and related costs 56,757 64,774
Income taxes payable (Note 4) 15,308 31,819
Dividends payable 12,012 15,614
Debt (Note 7) -- 17,716
Minority interests in consolidated subsidiaries 52,666 60,220
________ ________
Total liabilities 182,480 227,855
________ ________
Commitments and contingent liabilities (Note 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
500,000,000 shares; issued 120,183,266 shares
in 1998 and 120,107,818 shares in 1999 24,037 24,022
Capital in excess of par value 41,073 48,057
Retained earnings 517,631 649,378
Accumulated other comprehensive income 31,563 48,727
________ ________
Total stockholders' equity 614,304 770,184
________ ________
$796,784 $998,039
________ ________
________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 24
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31,
____________________________
1997 1998 1999
________ ________ __________
(in thousands, except
per-share amounts)
Revenues (Notes 1, 6 and 7)
Investment advisory fees $588,014 $684,296 $ 801,579
Administrative fees 144,906 173,321 197,297
Investment and other income 22,037 28,525 37,503
________ ________ __________
754,957 886,142 1,036,379
________ ________ __________
Expenses
Compensation and related
costs (Notes 3, 5 and 7) 253,676 304,376 329,385
Advertising and promotion 66,954 73,044 74,140
Occupancy and equipment (Note 8) 68,018 83,374 94,008
International investment research fees 47,105 48,066 53,734
Other operating expenses (Note 8) 54,445 64,468 70,342
________ ________ __________
490,198 573,328 621,609
________ ________ __________
Income before income taxes and
minority interests 264,759 312,814 414,770
Provision for income taxes (Note 4) 101,208 118,676 155,166
________ ________ __________
Income from consolidated companies 163,551 194,138 259,604
Minority interests in consolidated subsidiaries 19,154 19,998 20,200
________ ________ __________
Net income $144,397 $174,140 $ 239,404
________ ________ __________
________ ________ __________
Earnings per share
Basic $ 1.24 $ 1.46 $ 1.99
________ ________ __________
________ ________ __________
Diluted $ 1.13 $ 1.34 $ 1.85
________ ________ __________
________ ________ __________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 25
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
______________________________
1997 1998 1999
________ ________ ________
(in thousands)
Cash flows from operating activities
Net income $144,397 $174,140 $239,404
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization of
property and equipment 29,034 32,615 32,628
Minority interests in consolidated
subsidiaries 19,154 19,998 20,200
Increase in accounts receivable (13,556) (13,865) (20,860)
Increase in accounts payable and accrued
liabilities 19,016 26,236 26,701
Other changes in assets and liabilities (237) (7,149) (1,136)
________ ________ ________
Net cash provided by operating activities 197,808 231,975 296,937
________ ________ ________
Cash flows from investing activities
Investments in sponsored mutual funds (28,675) (32,538) (16,059)
Dispositions of sponsored mutual funds 14,172 21,708 1,287
Other investments (2,146) (3,119) (35,888)
Distributions from other investments 7,062 2,934 9,926
Additions to property and equipment (70,081) (56,558) (77,417)
________ ________ ________
Net cash used in investing activities (79,668) (67,573) (118,151)
________ ________ ________
Cash flows from financing activities
Purchases of stock (9,655) (36,424) (67,418)
Receipts relating to stock issuances 15,066 12,901 9,967
Proceeds of bank borrowing -- -- 15,019
Dividends paid to stockholders (30,132) (40,406) (48,241)
Distributions to minority interests (7,561) (17,044) (13,479)
________ ________ ________
Net cash used in financing activities (32,282) (80,973) (104,152)
________ ________ ________
Cash and cash equivalents
Net increase during year 85,858 83,429 74,634
At beginning of year 114,551 200,409 283,838
________ ________ ________
At end of year $200,409 $283,838 $358,472
________ ________ ________
________ ________ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 26
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Accumu-
Capital lated
Common in other Total
stock excess compre- stock-
- par of par Retained hensive holders'
value value earnings income equity
_______ _______ ________ ________ ________
(in thousands)
Balance at December 31, 1996,
57,572,791 common shares $11,514 $ 7,823 $306,566 $19,763 $345,666
Comprehensive income
Net income 144,397
Unrealized security
holding gains (Note 1) 9,105
Total comprehensive income 153,502
1,754,914 common shares
issued under stock-based
compensation plans 351 29,496 29,847
230,000 common shares
purchased (46) (6,612) (2,997) (9,655)
Dividends declared (32,687) (32,687)
_______ _______ ________ _______ ________
Balance at December 31, 1997,
59,097,705 common shares 11,819 30,707 415,279 28,868 486,673
Comprehensive income
Net income 174,140
Unrealized security
holding gains (Note 1) 2,695
Total comprehensive income 176,835
2,711,273 common shares
issued under stock-based
compensation plans 543 29,056 29,599
59,594,288 common shares
issued in 2-for-1 split 11,919 (11,919) --
1,220,000 common shares
purchased (244) (6,771) (29,409) (36,424)
Dividends declared (42,379) (42,379)
_______ _______ ________ _______ ________
Balance at December 31, 1998,
120,183,266 common shares $24,037 $41,073 $517,631 $31,563 $614,304
_______ _______ ________ _______ ________
_______ _______ ________ _______ ________
Continued on next page.
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 27
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Accumu-
Capital lated
Common in other Total
stock excess compre- stock-
- par of par Retained hensive holders'
value value earnings income equity
_______ _______ ________ ________ ________
(in thousands)
Continued from prior page.
Balance at December 31, 1998,
120,183,266 common shares $24,037 $41,073 $517,631 $31,563 $614,304
Comprehensive income
Net income 239,404
Unrealized security
holding gains (Note 1) 17,164
Total comprehensive income 256,568
2,141,042 common shares
issued under stock-based
compensation plans 428 18,145 18,573
2,216,490 common shares
purchased (443) (11,161) (55,814) (67,418)
Dividends declared (51,843) (51,843)
_______ _______ ________ _______ ________
Balance at December 31, 1999,
120,107,818 common shares $24,022 $48,057 $649,378 $48,727 $770,184
_______ _______ ________ _______ ________
_______ _______ ________ _______ ________
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 28
T. ROWE PRICE ASSOCIATES, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Associates, Inc. and its consolidated subsidiaries derive
their revenue and net income primarily from investment advisory services
provided to individual and institutional investors in sponsored mutual funds
and other investment portfolios. T. Rowe Price also provides investment
advisory clients with related administrative services, including mutual fund
transfer agent, defined contribution retirement plan recordkeeping, discount
brokerage, and trust services.
Investment advisory 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.
BASIS OF PREPARATION.
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States which require
the use of estimates made by management.
PRINCIPLES OF CONSOLIDATION.
The consolidated financial statements include the accounts of all majority
owned subsidiaries and, by virtue of a controlling interest, Rowe
Price-Fleming International, a 50%-owned subsidiary. All material
intercompany accounts and transactions are eliminated in consolidation.
CASH EQUIVALENTS.
Cash equivalents consist of short-term, highly liquid investments in
sponsored money market mutual funds and overnight commercial paper. The
cost of these investments is equivalent to fair value.
INVESTMENTS IN SPONSORED MUTUAL FUNDS.
Investments in sponsored mutual funds are classified as available-for-sale
and are reported at fair value. Unrealized security holding gains are
recognized in comprehensive income.
CONCENTRATIONS OF RISK.
Concentration of credit risk in accounts receivable is believed to be
minimal in that clients have substantial assets including those in the
managed investment portfolios.
Mutual fund investments expose T. Rowe Price to market risk in the form of
equity price risk; that is, the potential future loss of value that would
result from a decline in the fair values of the mutual funds. Each fund and
its underlying net assets are also subject to market risk which may arise
from changes in equity prices, credit ratings, foreign currency exchange
rates, and interest rates.
<PAGE> 29
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 weighted average
estimated useful lives: computer and communications software and equipment,
3 to 4 years; furniture and other equipment, 5 years; buildings, 33 years;
leasehold improvements, 9 years; and leased land, 99 years.
REVENUE RECOGNITION.
Fees for investment advisory services and related administrative services
provided to investment advisory clients are recognized when earned.
ADVERTISING.
Costs of advertising are expensed the first time that the advertising takes
place.
INTERNATIONAL INVESTMENT RESEARCH FEES.
International investment research is provided by affiliates of the minority
stockholders of Rowe Price-Fleming International. Fees for these services
are based on international assets under management.
EARNINGS PER SHARE.
Basic earnings per share excludes the dilutive effect of outstanding stock
options and is computed by dividing net income by the weighted average
common shares outstanding of 116,258,000 in 1997, 119,134,000 in 1998, and
120,599,000 in 1999. Diluted earnings per share reflects the potential
dilution that could occur if outstanding stock options were exercised. It
is computed by increasing the denominator of the basic calculation by
potential dilutive common shares, determined using the treasury stock
method, of 11,815,000 shares in 1997, 10,818,000 shares in 1998, and
8,564,000 shares in 1999.
COMPREHENSIVE INCOME.
Total comprehensive income is reported in the consolidated statements of
stockholders' equity and includes net income and unrealized security holding
gains, net of income taxes and minority interests.
<PAGE> 30
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INVESTMENTS IN SPONSORED MUTUAL FUNDS.
Cash equivalents comprising investments in sponsored money market mutual
funds aggregate $280,679,000 at December 31, 1998 and $354,418,000 at
December 31, 1999. Investments in other sponsored mutual funds (in
thousands) at December 31 include:
Aggregate
Aggregate Unrealized fair
cost holding gains value
_________ ______________ _________
1998
___________
Stock funds
Domestic $ 69,031 $38,333 $107,364
International 21,191 4,785 25,976
________ _______ ________
Total 90,222 43,118 133,340
Blended funds 14,082 4,756 18,838
Bond funds 39,548 1,188 40,736
________ _______ ________
$143,852 $49,062 $192,914
________ _______ ________
________ _______ ________
1999
___________
Stock funds
Domestic $ 82,214 $51,727 $133,941
International 21,685 19,351 41,036
________ _______ ________
Total 103,899 71,078 174,977
Blended funds 14,994 5,394 20,388
Bond funds 38,165 394 38,559
________ _______ ________
$157,058 $76,866 $233,924
________ _______ ________
________ _______ ________
The following table reconciles unrealized holding gains on investments in
sponsored mutual funds (in thousands) to that recognized in comprehensive
income.
1997 1998 1999
_______ _______ _______
Unrealized holding gains
during the year $15,817 $ 8,355 $26,237
Less gains (losses)
realized in net income 1,527 4,840 (1,567)
_______ _______ _______
14,290 3,515 27,804
Deferred taxes (5,108) (946) (9,808)
_______ _______ _______
9,182 2,569 17,996
Minority interests (77) 126 (832)
_______ _______ _______
Unrealized holding gains
recognized in compre-
hensive income $ 9,105 $ 2,695 $17,164
_______ _______ _______
_______ _______ _______
<PAGE> 31
Dividends earned on investments in sponsored mutual funds, including money
market mutual funds, aggregate $16,372,000 in 1997, $20,878,000 in 1998, and
$32,941,000 in 1999.
NOTE 2 - OTHER INVESTMENTS.
Other investments (in thousands) at December 31 consists of:
1998 1999
________ ________
Cost method investments, including 10% interest
in Daiwa SB Investments (Japan) in 1999 $ 3,488 $ 18,153
Equity method investments, primarily sponsored
partnerships 23,109 14,554
Fair value investments
$12,221,000 income notes and accrued interest
of sponsored collateralized bond obligation,
due 2012, held as available for sale -- 12,248
Common stocks held for trading -- 31
________ ________
$ 26,597 $ 44,986
________ ________
________ ________
NOTE 3 - PROPERTY AND EQUIPMENT.
Property and equipment (in thousands) at December 31 consists of:
1998 1999
________ ________
Computer and communications software and equipment $ 92,138 $107,442
Buildings and leasehold improvements 112,997 133,842
Furniture and other equipment 28,943 44,189
Land owned and leased 16,553 21,503
________ ________
250,631 306,976
Accumulated depreciation and amortization (84,019) (96,674)
________ ________
$166,612 $210,302
________ ________
________ ________
On January 1, 1999, T. Rowe Price prospectively adopted a new accounting
principle requiring the capitalization and subsequent amortization of
certain costs of computer software developed for internal use. Accordingly,
compensation and related costs totaling $4,555,000 were capitalized during
1999.
NOTE 4 - INCOME TAXES.
The provision for income taxes (in thousands) consists of:
<PAGE> 32
1997 1998 1999
________ ________ ________
Current income taxes
Federal and foreign $ 88,061 $104,376 $144,754
State and local 15,624 13,562 16,046
Deferred income taxes (tax benefits) (2,477) 738 (5,634)
________ ________ ________
$101,208 $118,676 $155,166
________ ________ ________
________ ________ ________
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 $1,728,000 in
1998 related to investment income. Deferred tax benefits arising from
significant temporary differences include $1,161,000 in 1997, $1,417,000 in
1998, and $1,953,000 in 1999 related to accrued compensation, $3,122,000 in
1999 related to investment income and $1,619,000 in 1997 related to
depreciation expense.
The net deferred tax liability of $13,256,000 included in income taxes
payable at December 31, 1998 consists of total deferred tax liabilities of
$21,920,000 and total deferred tax assets of $8,664,000. Deferred tax
liabilities include $3,649,000 arising from Rowe Price-Fleming's
undistributed earnings and $17,206,000 arising from unrealized holding gains
on available-for-sale securities. Deferred tax assets include $6,894,000
arising from accrued compensation.
The net deferred tax liability of $17,430,000 included in income taxes
payable at December 31, 1999 consists of total deferred tax liabilities of
$31,271,000 and total deferred tax assets of $13,841,000. Deferred tax
liabilities include $4,079,000 arising from Rowe Price Fleming's
undistributed earnings and $27,013,000 arising from unrealized holding gains
on available-for-sale securities. Deferred tax assets include $8,848,000
arising from accrued compensation.
Cash outflows from operating activities include income taxes paid of
$86,897,000 in 1997, $114,322,000 in 1998, and $132,253,000 in 1999.
The following table reconciles the statutory federal income tax rate to the
effective income tax rate.
1997 1998 1999
______ ______ ______
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefits 3.7 2.9 2.6
Other items (.5) - (.2)
______ ______ ______
Effective income tax rate 38.2% 37.9% 37.4%
______ ______ ______
______ ______ ______
NOTE 5 - COMMON STOCK AND STOCK-BASED COMPENSATION PLANS.
SHARES AUTHORIZED AND ISSUED.
A two-for-one split of common stock was effected at the close of business on
<PAGE> 33
April 30, 1998. 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, 1999, 34,217,868 shares of unissued common stock were
reserved for the exercise of stock options. Additionally, 1,680,000 shares
are reserved for issuance under a plan whereby substantially all employees
may acquire common stock through payroll deductions at prevailing market
prices.
The board of directors has authorized the future repurchase of up to
5,503,510 common shares at December 31, 1999.
DIVIDENDS.
Cash dividends declared per share were $.28 in 1997, $.355 in 1998, and $.43
in 1999.
FIXED STOCK OPTION PLANS.
There are six stock-based compensation plans (the 1986, 1990, 1993 and 1996
Stock Incentive Plans and the 1995 and 1998 Director Stock Option Plans)
under which fixed stock options with a maximum term of ten years have been
granted to employees and directors. Vesting of employee options is based
solely on the individual continuing to render service and generally occurs
over a 5-year graded schedule. The exercise price of each option granted is
equivalent to the market price of the common stock at the date of grant.
Because the intrinsic value based method of accounting is applied to stock
option awards, no related compensation expense has been recognized in the
consolidated statements of income.
The following table summarizes the status of and changes in stock option
plans during the past three years.
Weighted- Weighted-
average average
exercise Options exercise
Options price exercisable price
__________ __________ ___________ _________
Outstanding at
beginning of 1997 24,722,118 $ 9.02 11,497,718 $5.46
Granted 2,600,796 31.16
Exercised (3,653,090) 5.23
Forfeited (551,400) 12.78
__________
Outstanding at
end of 1997 23,118,424 12.02 11,808,624 7.18
Granted 3,528,883 35.68
Exercised (3,491,738) 6.51
Forfeited (515,000) 18.30
__________
<PAGE> 34
Outstanding at
end of 1998 22,640,569 16.41 12,479,069 9.91
Granted 3,470,325 31.02
Exercised (2,294,013) 6.73
Forfeited (159,400) 23.80
__________
Outstanding at
end of 1999 23,657,481 19.45 14,014,481 13.04
__________
__________
Additional information regarding stock options outstanding at December 31,
1999 follows.
Weighted-
average
Weighted- remaining Weighted-
average contractual average
Range of exercise life (in exercise
exercise prices Outstanding price years) Exercisable price
___________________ ___________ __________ ___________ ___________ _________
$ 1.80 to 19.88 14,368,782 $ 10.77 5.0 12,101,982 $ 9.80
$26.44 to 40.25 9,288,699 32.86 8.8 1,912,499 33.55
__________ __________
23,657,481 19.45 6.5 14,014,481 13.04
__________ __________
__________ __________
Accounting principles require the following disclosures as if the fair value
based method of accounting had been applied to all stock option grants made
after 1994. The weighted-average grant-date fair value of each option
awarded is estimated to be $9.40 in 1997, $9.88 in 1998, and $9.86 in 1999
using the Black-Scholes option-pricing model and the following assumptions:
dividend yields of 1.5% in 1997, 1.4% in 1998, and 1.3% in 1999; expected
volatility of 29% in 1997, 30% in 1998, and 31% in 1999; risk-free interest
rates of 5.9% in 1997, 4.5% in 1998, and 5.9% in 1999; and expected lives of
4.7 years in 1997 and 1999, and 4.4 years in 1998. Had compensation costs
been determined including these estimates of the fair value of each option
granted, pro forma net income would be $134,871,000 in 1997, $161,723,000 in
1998, and $219,185,000 in 1999. Pro forma basic earnings per share would be
$1.16 in 1997, $1.36 in 1998, and $1.82 in 1999. Pro forma diluted earnings
per share would be $1.06 in 1997, $1.25 in 1998, and $1.70 in 1999. These
pro forma disclosures are not representative of the effects on reported net
income and earnings per share for future years because option grants were
primarily made in the fourth quarter of each year, most options vest over
several years, and additional awards are generally made each year.
NOTE 6 - INFORMATION ABOUT REVENUES AND SERVICES.
Revenues (in thousands) from advisory services provided under agreements
with sponsored mutual funds and other investment clients, which are
primarily domiciled in the United States, include:
<PAGE> 35
1997 1998 1999
_________ _________ _________
Sponsored mutual funds
Stock and blended
Domestic $232,928 $296,389 $358,226
International 121,266 115,914 121,294
Bond and money market 81,771 92,360 97,931
________ ________ ________
435,965 504,663 577,451
Other portfolios 152,049 179,633 224,128
________ ________ ________
Total investment advisory fees $588,014 $684,296 $801,579
________ ________ ________
________ ________ ________
The following table summarizes the various investment portfolios and assets
under management (in billions) on which advisory fees are earned.
Average during December 31,
________________________ _______________
1997 1998 1999 1998 1999
______ ______ ______ ______ ______
Sponsored mutual funds
Stock and blended
Domestic $ 39.3 $ 50.9 $ 61.6 $ 55.9 $ 71.2
International 16.7 16.3 17.0 16.4 21.4
Bond and money market 18.3 20.8 22.2 22.1 21.9
______ ______ ______ ______ ______
74.3 88.0 100.8 94.4 114.5
Other portfolios 40.0 48.6 56.7 53.4 65.4
______ ______ _____ ______ ______
$114.3 $136.6 $157.5 $147.8 $179.9
______ ______ ______ ______ ______
______ ______ ______ ______ ______
Fees for advisory-related administrative services provided to the funds were
$105,042,000 in 1997, $127,243,000 in 1998, and $147,224,000 in 1999.
Accounts receivable from the funds aggregate $56,345,000 and $68,390,000 at
December 31, 1998 and 1999, respectively. All services to the sponsored
mutual funds are provided under contracts which are subject to periodic
review and approval by each of the funds' boards and, with respect to
investment advisory contracts, also by the funds' shareholders.
NOTE 7 - OTHER DISCLOSURES.
Goodwill of $7,937,000 arising from a 1992 acquisition is included in other
assets and is being amortized over eleven years using the straight-line
method. Accumulated amortization aggregates $4,718,000 at December 31, 1998
and $5,463,000 at December 31, 1999.
In April 1999, T. Rowe Price borrowed 1,809,500,000 yen ($15,019,000) from a
bank under a promissory note due in installments of 180,950,000 yen in 2002
and 2003 and 1,447,600,000 yen in 2004. Interest is due quarterly at LIBOR
for yen borrowings plus .95% and is fixed for the first two years at 1.42%.
Foreign currency transaction losses arising from this borrowing are included
in investment and other income and totaled $2,706,000 in 1999.
Expense for two defined contribution retirement plans was $13,912,000 in
1997, $17,852,000 in 1998, and $20,835,000 in 1999.
<PAGE> 36
NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES.
T. Rowe Price occupies certain office facilities and rents computer and
other equipment under noncancelable operating leases. Related rental
expense was $21,319,000 in 1997, $25,953,000 in 1998, and $31,888,000 in
1999. Future minimum rental payments under these leases aggregate
$21,609,000 in 2000, $11,145,000 in 2001, $9,397,000 in 2002, $7,706,000 in
2003, $7,530,000 in 2004, and $17,260,000 in later years.
At December 31, 1999, there were outstanding commitments to fund additional
investments totaling $2,409,000.
Consolidated stockholders' equity at December 31, 1999 includes $41,522,000
which is restricted as to use by various regulations and agreements arising
in the ordinary course of business.
From time to time, various claims arise in the ordinary course of business,
including employment-related claims. 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 financial
position or results of operations.
NOTE 9 - SUPPLEMENTARY QUARTERLY FINANCIAL DATA (Unaudited).
Basic Diluted
earnings earnings
Net per per
Revenues income share share
_________ _______ _________ _________
(in thousands)
1998
___________
1st quarter $210,434 $41,290 $.35 $.32
2nd quarter 222,309 44,869 .38 .34
3rd quarter 218,559 42,974 .36 .33
4th quarter 234,840 45,007 .38 .35
1999
___________
1st quarter 245,826 53,413 .44 .41
2nd quarter 245,771 53,690 .44 .41
3rd quarter 259,929 62,221 .51 .48
4th quarter 284,853 70,080 .59 .55
<PAGE> 37
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 regarding the identification of executive
officers and certain significant employees is contained as a separate item
at the end of Part I of this Form 10-K. The balance of the information
required by this item regarding our directors and executive officers appears
in the definitive proxy statement filed pursuant to Regulation 14A for the
2000 Annual Meeting of our stockholders and is incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by these items appears in the definitive proxy
statement filed pursuant to Regulation 14A for the 2000 Annual Meeting of
our stockholders and is incorporated by reference.
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: None applicable.
3. The following exhibits required by Item 601 of Regulation S-K are
filed as part of this Form 10-K. Exhibits 10.07 through 10.13 are
compensatory plans and arrangements.
3.(i) Composite Restated Charter of T. Rowe Price Associates, Inc.
as of April 16, 1998. (Incorporated by reference from Form
10-Q Report for the quarterly period ended March 31, 1998;
Accession No. 0000080255-98-000361.)
3.(ii) Amended and Restated By-Laws of T. Rowe Price Associates,
Inc. as of April 17, 1997. (Incorporated by reference from
Form 10-Q Report for the quarterly period ended June 30,
1997; Accession No. 0000080255-97-000369.)
10.01 Representative Investment Management Agreement with each of
the T. Rowe Price mutual funds. (Incorporated by reference
from Form N-1A/A; Accession No. 0001046404-97-000008.)
<PAGE> 38
10.02 Transfer Agency and Service Agreement dated as of January
1,1999 between each of the T. Rowe Price mutual funds T. Rowe
Price Services, Inc. (Incorporated by reference from Form
485APOS; Accession No. 0001038490-99-000010.)
10.03 Agreement dated January 1, 1999 between T. Rowe Price
Retirement Plan Services, Inc. and each of the T. Rowe Price
taxable mutual funds. (Incorporated by reference from Form
485APOS; Accession No. 0001038490-99-000010.)
10.04 Representative Underwriting Agreement between each of the T.
Rowe Price mutual funds and T. Rowe Price Investment
Services, Inc. (Incorporated by reference from Form N-1A/A;
Accession No. 0001046404-97-000008.)
10.05 Agreement dated February 11, 1998 between TRP Suburban
Second, Inc. and Riparius Construction, Inc. as Construction
Manager and Constructor. (Incorporated by reference from the
paper filing of March 26, 1998, pursuant to a continuing
hardship exemption, on Form SE to the 1997 Form 10-K
[Accession No. 0000080255-98-00358].)
10.06 Amended, Restated, and Consolidated Office Lease dated as of
May 22, 1997 between 100 East Pratt Street Limited
Partnership and T. Rowe Price Associates, Inc. (Incorporated
by reference from Form 10-K for 1997; Accession No.
0000080255-98-000358.)
10.07 T. Rowe Price Associates, Inc. 1986 Stock Incentive Plan.
(Incorporated by reference from Form S-1 Registration
Statement [File No. 33-3398].)
10.08 T. Rowe Price Associates, Inc. 1990 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-37573].)
10.09 T. Rowe Price Associates, Inc. 1993 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-72568].)
10.10 T. Rowe Price Associates, Inc. 1995 Director Stock Option
Plan. (Incorporated by reference from Form DEF 14A;
Accession No. 000933259-95-000009; CIK 0000080255.)
10.11 T. Rowe Price Associates, Inc. 1996 Stock Incentive Plan.
(Incorporated by reference from Form DEF 14A; Accession No.
0001006199-96-000031; CIK 0000080255.)
10.12 T. Rowe Price Associates, Inc. 1998 Director Stock Option
Plan. (Incorporated by reference from Form DEF 14A;
Accession No. 00080255-98-000355.)
<PAGE> 39
10.13 Executive Incentive Compensation Plan. (Incorporated by
reference from Form DEF 14A; Accession No. 933259-95-000009;
CIK 0000080255.)
21 Subsidiaries of T. Rowe Price Associates, Inc.
23 Consent of Independent Accountants,
PricewaterhouseCoopers LLP.
27 Financial Data Schedule.
(b) Reports on Form 8-K: None during the last quarter of 1999.
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
24, 2000.
T. Rowe Price Associates, Inc.
By: /s/ George A. Roche, Chairman and President
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 24, 2000.
/s/ George A. Roche, Chairman and Director, President, and
Principal Financial Officer
/s/ James S. Riepe, Vice Chairman and Director
/s/ M. David Testa, Vice Chairman and Director
/s/ Edward C. Bernard, Director
/s/ James E. Halbkat, Jr., Director
/s/ Donald B. Hebb, 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/ Brian C. Rogers, Director
/s/ Robert L. Strickland, Director
/s/ Philip C. Walsh, Director
/s/ Anne Marie Whittemore, Director
/s/ Joseph P. Croteau, Treasurer and Principal Accounting Officer
EXHIBIT 21
SUBSIDIARIES OF T. ROWE PRICE ASSOCIATES, INC.
DECEMBER 31, 1999
Subsidiary companies and state of incorporation Ownership
_____________________________________________________________________________
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%
Other subsidiaries have been omitted because, when considered in the
aggregate, they 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. 033-37573, No. 033-72568, No.
033-58749, No. 333-20333 and No. 333-90967) of T. Rowe Price Associates,
Inc. of our report dated January 25, 2000 appearing on page 22 of this Form
10-K.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
March 23, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of T. Rowe Price Associates, Inc. listed in
the Index at Item 8 of the accompanying Form 10-K Annual Report for the year
ended December 31, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 358,472,000
<SECURITIES> 246,203,000
<RECEIVABLES> 121,637,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 306,976,000
<DEPRECIATION> 96,674,000
<TOTAL-ASSETS> 998,039,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 17,716,000
0
0
<COMMON> 24,022,000
<OTHER-SE> 746,162,000
<TOTAL-LIABILITY-AND-EQUITY> 998,039,000
<SALES> 0
<TOTAL-REVENUES> 1,036,379,000
<CGS> 0
<TOTAL-COSTS> 621,609,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 414,770,000
<INCOME-TAX> 155,166,000
<INCOME-CONTINUING> 239,404,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 239,404,000
<EPS-BASIC> 1.99
<EPS-DILUTED> 1.85
<FN>
<F1>Item is not contained in registrant's unclassified balance sheet.
</FN>
</TABLE>
