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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended: JUNE 30, 2000.
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.
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. 121,308,413 SHARES AT
JULY 25, 2000.
Exhibit index is at Item 6(a) on pages 14 - 15.
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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)
12/31/99 06/30/00
________ __________
ASSETS
Cash and cash equivalents $358,472 $ 505,892
Accounts receivable 121,637 135,592
Investments in sponsored mutual funds 233,924 185,689
Other investments 44,986 63,934
Property and equipment 210,302 234,265
Other assets 28,718 18,934
________ __________
$998,039 $1,144,306
________ __________
________ __________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 37,712 $ 43,498
Accrued compensation and related costs 64,774 75,386
Income taxes payable 31,819 22,482
Dividends payable 15,614 15,764
Debt 17,716 17,127
Minority interests in consolidated subsidiaries 60,220 71,824
________ __________
Total liabilities 227,855 246,081
________ __________
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
500,000,000 shares; issued 120,107,818 shares in
1999 and 121,275,210 shares in 2000 24,022 24,255
Capital in excess of par value 48,057 63,217
Retained earnings 649,378 762,301
Accumulated other comprehensive income 48,727 48,452
________ __________
Total stockholders' equity 770,184 898,225
________ __________
$998,039 $1,144,306
________ __________
________ __________
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 Six months
ended ended
_________________ _________________
06/30/99 06/30/00 06/30/99 06/30/00
________ ________ ________ ________
Revenues
Investment advisory fees $191,545 $226,373 $382,423 $460,534
Administrative fees 48,379 57,178 97,596 118,025
Investment and other income 5,847 17,131 11,578 38,454
________ ________ ________ ________
245,771 300,682 491,597 617,013
________ ________ ________ ________
Expenses
Compensation and related costs 82,932 92,665 164,395 185,632
Advertising and promotion 16,268 21,071 36,493 46,181
Occupancy and equipment 21,402 27,440 42,349 53,346
International investment
research fees 12,581 14,690 24,725 30,704
Other operating expenses 17,115 24,318 32,925 49,861
________ ________ ________ ________
150,298 180,184 300,887 365,724
________ ________ ________ ________
Income before income taxes and
minority interests 95,473 120,498 190,710 251,289
Provision for income taxes 36,657 45,591 72,945 94,795
________ ________ ________ ________
Income from consolidated companies 58,816 74,907 117,765 156,494
Minority interests in consolidated
subsidiaries 5,126 5,568 10,662 12,121
________ ________ ________ ________
Net income $ 53,690 $ 69,339 $107,103 $144,373
________ ________ ________ ________
________ ________ ________ ________
Basic earnings per share $ .44 $ .57 $ .89 $ 1.20
________ ________ ________ ________
________ ________ ________ ________
Diluted earnings per share $ .41 $ .54 $ .82 $ 1.12
________ ________ ________ ________
________ ________ ________ ________
Dividends declared per share $ .10 $ .13 $ .20 $ .26
________ ________ ________ ________
________ ________ ________ ________
Weighted average shares outstanding 121,152 120,930 120,834 120,674
________ ________ ________ ________
________ ________ ________ ________
Weighted average shares outstanding-
assuming dilution 130,062 129,335 129,827 128,867
________ ________ ________ ________
________ ________ ________ ________
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)
Six months ended
__________________
06/30/99 06/30/00
________ ________
Cash flows from operating activities
Net income $107,103 $144,373
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization of property
and equipment 15,421 19,651
Minority interests in consolidated subsidiaries 10,662 12,121
Other changes in assets and liabilities (1,545) (9,501)
________ ________
Net cash provided by operating activities 131,641 166,644
________ ________
Cash flows from investing activities
Investments in sponsored mutual funds (1,018) (4,894)
Dispositions of sponsored mutual funds -- 56,750
Other investments (23,792) (6,053)
Distributions from other investments 10,002 227
Additions to property and equipment (31,500) (40,678)
________ ________
Net cash used in investing activities (46,308) 5,352
________ ________
Cash flows from financing activities
Purchases of stock (3,669) --
Receipts relating to stock issuances 5,186 8,796
Proceeds of bank borrowing 15,019 --
Dividends paid to stockholders (24,100) (31,300)
Cost of bank credit facility -- (1,576)
Distributions to minority interests (23) (496)
________ ________
Net cash used in financing activities (7,587) (24,576)
________ ________
Cash and cash equivalents
Net increase during period 77,746 147,420
At beginning of year 283,838 358,472
________ ________
At end of period $361,584 $505,892
________ ________
________ ________
See the accompanying notes to the condensed consolidated financial statements.
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T. ROWE PRICE ASSOCIATES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Accumu-
Capital lated
Common in other Total
stock excess compre- stock-
- par of par Retained hensive holders'
value value earnings income equity
_______ _______ ________ ________ ________
Balance at December 31, 1999,
120,107,818 common shares $24,022 $48,057 $649,378 $48,727 $770,184
Comprehensive income
Net income 144,373
Change in unrealized
security holding gains (275)
Total comprehensive income 144,098
1,167,392 common shares
issued under stock-based
compensation plans 233 15,160 15,393
Dividends declared (31,450) (31,450)
_______ _______ ________ _______ ________
Balance at June 30, 2000,
121,275,210 common shares $24,255 $63,217 $762,301 $48,452 $898,225
_______ _______ ________ _______ ________
_______ _______ ________ _______ ________
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 derives its consolidated revenues and net income
primarily from investment advisory services provided to individual and
institutional investors in the sponsored T. Rowe Price mutual funds and
other investment portfolios. 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. The investors that we serve are primarily
domiciled in the United States.
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.
These unaudited condensed consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of our results for the interim periods presented. All such
adjustments are of a normal recurring nature.
The unaudited interim financial information contained in these condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements contained in our 1999 Annual Report.
NOTE 2 - INFORMATION ABOUT REVENUES AND SERVICES.
Our revenues (in thousands) from advisory services provided under agreements
with our sponsored mutual funds and other investment clients for the six
months ended June 30 were:
1999 2000
________ ________
Sponsored mutual funds
Stock and blended
Domestic $167,659 $209,092
International 57,199 75,696
Bond and money market 48,855 46,390
________ ________
273,713 331,178
Other portfolios 108,710 129,356
________ ________
Total investment advisory fees $382,423 $460,534
________ ________
________ ________
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The following table summarizes the various investment portfolios and assets
under management (in billions) on which we earn advisory fees.
Average during
first 6 months
_______________
1999 2000 12/31/99 06/30/00
______ ______ ________ ________
Sponsored mutual funds
Stock and blended
Domestic $ 58.4 $ 71.7 $ 71.2 $ 73.2
International 16.3 21.0 21.4 20.4
Bond and money market 22.3 21.7 21.9 21.7
______ ______ ______ ______
97.0 114.4 114.5 115.3
Other portfolios 54.4 64.6 65.4 63.7
______ ______ ______ ______
$151.4 $179.0 $179.9 $179.0
______ ______ ______ ______
______ ______ ______ ______
Fees for advisory-related administrative services provided to the funds were
$72,137,000 and $87,530,000 for the first six months of 1999 and 2000,
respectively. Accounts receivable from the funds totaled $71,282,000 at
June 30, 2000.
NOTE 3 - PENDING TRANSACTIONS.
On April 11, 2000, we entered into an agreement with Robert Fleming Holdings
Limited to purchase its 50% interest in Rowe Price-Fleming International for
a fixed price of $780 million. Rowe Price-Fleming was formed in 1979 and is
a 50% owned consolidated subsidiary of T. Rowe Price Associates. It
primarily provides U.S. investors with international investment advisory
services and, at June 30, 2000, managed $39.2 billion. Our acquisition of
the remaining interest in Rowe Price-Fleming is expected to close in August
2000 after The Chase Manhattan Corporation completes its acquisition of
Robert Fleming Holdings. The acquisition will likely be modestly dilutive
to earnings per share near-term and somewhat accretive to income before
goodwill charges. We expect to finance this acquisition with available cash
resources including the borrowings of approximately $300 million from a
five-year, $500 million syndicated bank credit facility that we obtained in
June 2000.
On June 30, 2000, our stockholders approved the one-for-one exchange of
their shares of our outstanding common stock for that of our newly-organized
holding company, T. Rowe Price Group, Inc. The share exchange is subject to
receipt of regulatory approvals and is expected to occur before the end of
2000. The exchange will result in Price Group becoming the sole owner of
Price Associates and our stockholders becoming the stockholders of Price
Group. The exchange will be accounted for similar to a pooling-of-interests
transaction. Subsequent to the share exchange, Price Group will succeed to
Price Associates' obligation for periodic public reporting.
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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 financial statements of T. Rowe
Price Associates, Inc. and its subsidiaries as of June 30, 2000 and for the
three- and six-month periods ended June 30, 1999 and June 30, 2000,
appearing on pages two through seven of this Form 10-Q Quarterly Report.
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 auditing standards generally accepted in the
United States, 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 accompanying condensed consolidated financial
statements for them to be in conformity with accounting principles generally
accepted in the United States.
We previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet as of
December 31, 1999, 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 25, 2000, 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, 1999, is fairly stated in all
material respects in relation to the consolidated balance sheet from which
it has been derived.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
July 24, 2000
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.
Our revenues and net income are derived primarily from investment advisory
services provided to U.S. individual and institutional investors in our
sponsored mutual funds and other investment portfolios.
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. Total assets under our management were $179.0
billion at June 30, 2000, including $139.2 billion in equity securities.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2000 VERSUS 1999.
Net income increased $15.6 million or 29% to $69.3 million and diluted
earnings per share rose from $.41 to $.54. Total revenues increased 22%
from $246 million to $301 million, led by increases of $34.8 million in
investment advisory fees and $11.3 million in investment income.
Investment advisory revenues earned from the T. Rowe Price mutual funds
increased $23.6 million as average fund assets under management during the
quarter were $113.8 billion, $14.2 billion more than in the second quarter
of 1999. Fund assets fell $4.1 billion during the three months ended June
30, 2000 and totaled $115.3 billion at quarter end, including $93.6 billion
in stock and blended assets funds. The decrease in fund assets during the
quarter was primarily attributable to market depreciation. Further, net
cash inflows of $321 million into domestic stock funds were more than offset
by outflows during the quarter of $547 million from international stock
funds and $466 million from bond and money market funds. Growth stock funds
generally had net inflows while value funds had net outflows.
Greater assets in other managed investment portfolios, including variable
annuity and other subadvised funds, resulted in the balance of our advisory
revenue gains totaling $11.2 million. Performance-related advisory fees
were $2.4 million higher this quarter than the comparable quarter last year
but were down $3.2 million from the first quarter 2000. We earn these
performance-related fees primarily on venture capital investments that we
manage and, though recurring, these fees will vary significantly as market
conditions change. Assets under management in the other investment
portfolios that we manage were $63.7 billion at June 30, 2000, up $7.1
billion from June 30, 1999 but down $2.1 billion from March 31, 2000.
Administrative fees from advisory-related services that we provide to the
funds and their shareholders rose $8.8 million from the second quarter of
1999 to $57.2 million. This increase is primarily attributable to transfer
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agency and recordkeeping services that we provide to defined contribution
retirement plans and the T. Rowe Price mutual funds. These revenues are
largely offset by the costs that we incur in providing the services.
Investment and other income rose $11.3 million from the second quarter of
1999, including $3.0 million from our larger money market fund balances and
$3.2 million from venture capital investments. Additionally, we realized
gains of $4.1 million on sales of our mutual fund holdings totaling $56.8
million. These sales proceeds have been added to our cash holdings which
will be used to partially fund the Rowe Price-Fleming acquisition. We
expect that investment income will decrease from the second to the third
quarter this year and be significantly lower next year.
Operating expenses increased 20% to $180 million. Greater compensation and
related costs, which were up $9.7 million or 12%, were attributable to
increases in our rates of compensation, including performance-related
bonuses, and a 3% increase in our staff size primarily to support the
growing investment-related administrative services and technology-based
operations. As of June 30, 2000, we employed more than 3,700 associates.
Our advertising and promotion expenditures increased 30% to $21 million. We
expect that our promotional spending will continue to moderate in the third
quarter of 2000, though remain at a level higher than the comparable 1999
period. Occupancy and equipment expense was $6 million higher due primarily
to the expansion of our operating facilities in Owings Mills. International
investment research fees were up $2.1 million as international assets under
management increased $5.9 billion from June 30, 1999 to $39.2 billion this
period end. Other operating expenses increased $7.2 million due to the
expansion of our operations.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2000 VERSUS 1999.
Net income increased $37.3 million or 35% to $144.4 million and diluted
earnings per share rose from $.82 to $1.12. Total revenues increased 26%
from $492 million to $617 million, led by increases of $78.1 million in
investment advisory fees and $26.9 million in investment income.
Investment advisory revenues earned from the T. Rowe Price mutual funds
increased $57.5 million as average fund assets under management during the
first six months were $114.4 billion, $17.4 billion more than in the first
half of 1999. Fund assets increased $837 million during the first six
months of 2000 and totaled $115.3 billion at June 30, including $93.6
billion in stock and blended assets funds. Net cash outflows from the funds
during the first six months totaled $519 million. Outflows of $210 million
from international stock funds and $670 million from bond and money market
funds were partially offset by inflows of $361 million into domestic stock
funds.
Greater assets in other managed investment portfolios resulted in the
balance of our advisory revenue gains totaling $20.6 million.
Performance-related advisory fees were $9.7 million in the first half of
2000, up $.9 million from the first six months of 1999.
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Administrative fees from advisory-related services rose $20.4 million from
the first half of 1999 to $118.0 million. This increase is mostly
attributable to transfer agency and recordkeeping services that we provide
to defined contribution retirement plans and the T. Rowe Price mutual funds.
Discount brokerage commissions contributed $1.9 million of the revenue
increase.
Investment and other income rose $26.9 million from the first six months of
1999, including $5.6 million from our larger money market fund balances,
$4.1 million from mutual fund dispositions in the second quarter of 2000,
and $16.0 million from our venture capital investments. The strong IPO
markets of late 1999 and early 2000 produced significant market gains and
distributions from our venture investments this year.
Operating expenses increased 22% to about $366 million. International
investment research fees were up $6.0 million as international assets under
management increased $5.9 billion from June 30, 1999.
CAPITAL RESOURCES AND LIQUIDITY.
We expect to finance the Rowe Price-Fleming International acquisition
discussed in Note 3 on page 7 of this Form 10-Q from available cash
resources, including current cash holdings of more than $500 million and
borrowings of approximately $300 million from the five-year, $500 million
syndicated bank credit facility that we obtained in June 2000. We have also
obtained a complementary $100 million, 364-day syndicated bank credit facility.
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-Q Quarterly Report, may
contain certain "forward-looking information," including information
relating to anticipated growth in our revenues or earnings, anticipated
changes in the amount and composition of assets under management, our
anticipated expense levels, and our expectations regarding financial market
and other 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 we undertake 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.
Our future revenues will fluctuate due to many factors, such as the total
value and composition of assets under our management and related cash
inflows
<PAGE> 12
or outflows in the T. Rowe Price mutual funds and other investment
portfolios; fluctuations in worldwide financial markets, including those in
emerging countries, resulting in appreciation or depreciation of assets
under our management; the relative investment performance of the Pric mutual
funds and other investment portfolios as compared to competing offerings and
market indices; the extent to which we earn performance-based investment
advisory fees; the expense ratios of the Price mutual funds; investor sentiment
and investor confidence; the ability to maintain our investment management and
administrative fees at appropriate levels; competitive conditions in the
mutual fund, asset management, and broader financial services sectors; our
introduction of new mutual funds and investment portfolios; our ability to
contract with the Price 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 participant-directed investments;
and the amount and timing of income recognized on our venture capital and
other investments. Our revenues are substantially dependent on fees earned
under contracts with the Price funds and could be adversely affected if the
independent directors of one or more of the Price funds determined to
terminate or significantly alter the terms of the investment management or
related administrative services agreements.
Our future operating results are also dependent upon the level of our
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
our employee count and mix, and competitive factors; changes in expense
levels resulting from our pending acquisition of the minority interests in
Rowe Price-Fleming International, including goodwill charges and interest
expense, and from differences in the manner in which we provide support for
our international investment advisory services; expenses and capital costs,
such as technology assets, depreciation, amortization and research and
development, incurred to maintain and enhance our administrative and
operating services infrastructure including Internet capabilities;
unanticipated costs that may be incurred to protect investor accounts and
the goodwill of our clients; and disruptions of services, including those
provided by third parties such as communications, power, and the mutual fund
transfer agent system.
Our business is also subject to substantial governmental regulation, and
changes in legal, regulatory, accounting, tax, and compliance requirements
may have a substantial effect on our operations and results, including but
not limited to effects on costs we incur and effects on investor interest in
mutual funds and investing in general or in particular classes of mutual
funds or other investments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Since December 31, 1999, there has been no material change in the
information provided in Item 7A of the 1999 Form 10-K Annual Report.
<PAGE> 13
PART II. OTHER INFORMATION.
ITEM 1. 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 with prejudice. On April 6, 2000, the plaintiffs
filed a Notice of Appeal of the Dismissal of the case. On June 16, 2000, we
and the other defendants filed a Brief with the United States Court of
Appeals (Fourth Circuit) to affirm the District Court's judgment.
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.
A special meeting of our stockholders was held on June 30, 2000. The proxy
statement and solicitation pertaining to this meeting were previously filed
with the Commission. Shares eligible to vote were 120,748,550 as of the
record date of April 24, 2000.
<PAGE> 14
The Agreement and Plan of Share Exchange by and between T. Rowe Price
Associates and T. Rowe Price Group provides that Price Associates shall
become a wholly-owned subsidiary of Price Group, and each outstanding share
of Price Associates' common stock shall be exchanged for one share of Price
Group's common stock. The Agreement was approved by a vote of 85,475,059
for; 760,669 against; and 375,400 abstentions.
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. Exhibits
10.06 through 10.11 are compensatory plan arrangements.
2.01 Agreement and Plan of Exchange as of April 30, 2000 between
T. Rowe Price Associates, Inc. and T. Rowe Price Group, Inc.
(Incorporated by reference from Form 424B3; Accession No.
0001113169-00-000003.)
2.02 Form of Articles of Share Exchange between T. Rowe Price
Associates, Inc. and T. Rowe Price Group, Inc. (Incorporated
by reference from Form 424B3; Accession No.
0001113169-00-000003.)
2.03 Stock Purchase Agreement dated as of April 11, 2000 by and
between Robert Fleming Holdings Limited and its wholly owned
subsidiaries Jardine Fleming International Holdings Limited
and Copthall Overseas Limited, T. Rowe Price Associates,
Inc., and The Chase Manhattan Corporation.
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.)
4.01 $500,000,000 Five-Year Credit Agreement among T. Rowe Price
Associates, Inc., the several lenders, and The Chase
Manhattan Bank, as administrative agent.
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.)
10.02 Transfer Agency and Service Agreement dated as of January
1,2000 between each of the T. Rowe Price mutual funds and T.
Rowe Price Services, Inc. (Incorporated by reference from
Form 485BPOS; Accession No. 0001012968-00-000024.)
<PAGE> 15
10.03 Agreement dated January 1, 2000, as amended February 9, 2000,
between T. Rowe Price Retirement Plan Services, Inc. and each
of the T. Rowe Price taxable mutual funds. (Incorporated by
reference from Form 485BPOS; Accession No.
0001012968-00-000024.)
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 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.)
10.06 T. Rowe Price Associates, Inc. 1990 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-37573].)
10.07 T. Rowe Price Associates, Inc. 1993 Stock Incentive Plan.
(Incorporated by reference from Form S-8 Registration
Statement [File No. 33-72568].)
10.08 T. Rowe Price Associates, Inc. 1995 Director Stock Option
Plan. (Incorporated by reference from Form DEF 14A;
Accession No. 000933259-95-000009; CIK 0000080255.)
10.09 T. Rowe Price Associates, Inc. 1996 Stock Incentive Plan.
(Incorporated by reference from Form DEF 14A; Accession No.
0001006199-96-000031; CIK 0000080255.)
10.10 T. Rowe Price Associates, Inc. 1998 Director Stock Option
Plan. (Incorporated by reference from Form DEF 14A;
Accession No. 00080255-98-000355.)
10.11 Executive Incentive Compensation Plan. (Incorporated by
reference from Form DEF 14A; Accession No. 933259-95-000009;
CIK 0000080255.)
15 Letter from PricewaterhouseCoopers LLP, independent
accountants, re unaudited interim financial information.
27 Financial Data Schedule.
(b) Reports on Form 8-K: None during the second quarter of 2000.
<PAGE> 16
SIGNATURES.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on July 26, 2000.
T. Rowe Price Associates, Inc.
/s/ George A. Roche
Chairman, President & Principal Financial Officer
/s/ Joseph P. Croteau, CPA
Vice President, Treasurer & Controller
