What changed in this filing

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Item 1. Financial Statements

2020-07-29 compared with 2020-04-28 · 163 added, 66 removed, 422 unchanged (35% of the section changed)

5 unchanged sentences

Assets of consolidated T.

Rowe Price investment products ($1,795.8 million at March 31, 2020 and $1,975.3 million at December 31, 2019, related to variable interest entities)

Rowe Price investment products ($2,005.4 million at June 30, 2020 and $1,975.3 million at December 31, 2019, related to variable interest entities)

Operating lease assets

2 unchanged sentences

Liabilities of consolidated T.

Rowe Price investment products ($72.0 million at March 31, 2020 and $27.0 million at December 31, 2019, related to variable interest entities)

Rowe Price investment products ($41.6 million at June 30, 2020 and $27.0 million at December 31, 2019, related to variable interest entities)

Operating lease liabilities

8 unchanged sentences

Common stock, $.20 par value—authorized 750,000,000;

issued 227,985,000 shares at March 31, 2020 and 235,214,000 at December 31, 2019

issued 226,990,000 shares at June 30, 2020 and 235,214,000 at December 31, 2019

Additional capital in excess of par value

7 unchanged sentences

Three months ended

Six months ended

Investment advisory fees

10 unchanged sentences

Non-operating income (loss)

Net gains (losses) on investments

Net gains on investments

Net gains (losses) on consolidated investment products

12 unchanged sentences

Three months ended

Six months ended

Other comprehensive income (loss)

7 unchanged sentences

Equity method investments

Other comprehensive loss before income taxes

Other comprehensive income (loss) before income taxes

Net deferred tax benefits

Total other comprehensive loss

Total other comprehensive income (loss)

Total comprehensive income

5 unchanged sentences

(in millions)

Three months ended

Six months ended

Cash flows from operating activities

31 unchanged sentences

Rowe Price investment products

Cash and cash equivalents at end of period, including $117.7 million at March 31, 2020, and $76.1 million at March 31, 2019, held by consolidated T.

Cash and cash equivalents at end of period, including $124.8 million at June 30, 2020, and $110.7 million at June 30, 2019, held by consolidated T.

Rowe Price investment products

6 unchanged sentences

Redeemable non-controlling interests

Balances at December 31, 2019

Balances at March 31, 2020

Other comprehensive loss, net of tax

1 unchanged sentence

Shares issued upon option exercises

Restricted shares issued, net of shares withheld for taxes

Net shares issued upon vesting of restricted stock units

6 unchanged sentences

Rowe Price investment products

Balances at March 31, 2020

Balances at June 30, 2020

Three months ended 6/30/2019

1 unchanged sentence

Redeemable non-controlling interests

Balances at December 31, 2018

Balances at March 31, 2019

Other comprehensive income (loss), net of tax

1 unchanged sentence

Shares issued upon option exercises

Restricted shares issued, net of shares withheld for taxes

Net shares issued upon vesting of restricted stock units

1 unchanged sentence

Stock-based compensation expense

Restricted stock units issued as dividend equivalents

Common shares repurchased

1 unchanged sentence

Rowe Price investment products

Net reconsolidations of T.

Net deconsolidations of T.

Rowe Price investment products

Balances at March 31, 2019

Balances at June 30, 2019

(1) Accumulated other comprehensive income.

The accompanying notes are an integral part of these statements.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(shares in thousands;

dollars in millions)

Six months ended 6/30/2020

stockholders’

Redeemable non-controlling interests

Balances at December 31, 2019

Other comprehensive income (loss), net of tax

Dividends declared ($1.80 per share)

Shares issued upon option exercises

Restricted shares issued, net of shares withheld for taxes

Shares issued upon vesting of restricted stock units, net of shares withheld for taxes

Stock-based compensation expense

Restricted stock units issued as dividend equivalents

Common shares repurchased

Net subscriptions into T.

Rowe Price investment products

Net deconsolidations of T.

Rowe Price investment products

Balances at June 30, 2020

Six months ended 6/30/2019

stockholders’

Redeemable non-controlling interests

Balances at December 31, 2018

Other comprehensive income (loss), net of tax

Dividends declared ($1.52 per share)

Shares issued upon option exercises

Restricted shares issued, net of shares withheld for taxes

Shares issued upon vesting of restricted stock units, net of shares withheld for taxes

Forfeiture of restricted awards

Stock-based compensation expense

Restricted stock units issued as dividend equivalents

Common shares repurchased

Net subscriptions into T.

Rowe Price investment products

Net deconsolidations of T.

Rowe Price investment products

Balances at June 30, 2019

(1) Accumulated other comprehensive income.

The accompanying notes are an integral part of these statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

18 unchanged sentences

Actual results may vary from our estimates.

Certain prior year amounts have been reclassified to conform to the 2020 presentation.

The unaudited interim financial information contained in these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our 2019 Annual Report.

6 unchanged sentences

Beginning on January 1, 2020, we are required to defer such qualifying implementation costs.

As of March 31, 2020, we capitalized an immaterial amount of implementation costs incurred in a cloud computing arrangement.

As of June 30, 2020, we capitalized an immaterial amount of implementation costs incurred in a cloud computing arrangement.

Accordingly, the adoption of this guidance did not have a material impact on our consolidated balance sheets or our consolidated statements of income.

6 unchanged sentences

The CARES Act provides economic relief to eligible businesses and individuals impacted by the novel coronavirus pandemic.

We are currently assessing what impact, if any, the CARES Act’s provisions will have on our financial position and results of operations, but we do not believe the impact will be material.

The CARES Act’s provisions will not have a material impact on our financial position and results of operations.

NOTE 2 – INFORMATION ABOUT RECEIVABLES, REVENUES, AND SERVICES.

Revenues earned during the first quarter of 2020 and 2019 under agreements with clients include:

Revenues earned during the three- and six-month periods ended June 30, 2020 and 2019 under agreements with clients include:

Three months ended 6/30/2020

11 unchanged sentences

Other clients

Six months ended 6/30/2020

Six months ended 6/30/2019

Administrative, distribution, and servicing fees

(in millions)

Investment advisory fees

Administrative fees

Distribution and servicing fees

Investment advisory fees

Administrative fees

Distribution and servicing fees

Subadvised and separate accounts and other investment products

Other clients

Total net revenues earned from our related parties, specifically T.

Rowe Price investment products , aggregate $ 1,207.7 million and $ 1,093.4 million for the three months ended March 31, 2020 and 2019 , respectively.

Accounts receivable from these products aggregate to $ 374.3 million at March 31, 2020 , and $ 424.8 million at December 31, 2019 .

Rowe Price investment products , aggregate $ 1,142.8 million and $ 1,147.6 million for the three months ended June 30, 2020 and 2019 , respectively.

Total net revenues earned during the six months ended June 30, 2020 and 2019 aggregate $ 2,350.5 million and $ 2,241.0 million , respectively.

Accounts receivable from these products aggregate to $ 410.6 million at June 30, 2020 , and $ 424.8 million at December 31, 2019 .

Following a change to the fee structure of the target date retirement funds in the second quarter of 2020, we have modified our investment advisory fee and assets under management presentation below to separately breakout the fees earned from clients and related assets under management of our multi-asset portfolios.

All prior periods have been recast to conform to this new presentation and to provide comparability.

The following table details the investment advisory fees earned from clients by their underlying asset class.

Three months ended

Six months ended

(in millions)

Equity and blended assets

Fixed income, including money market

Subadvised and separate accounts and other investment products

Equity and blended assets

Fixed income, including money market

1 unchanged sentence

Average during

Three months ended

Six months ended

(in billions)

Equity and blended assets

Fixed income, including money market

Subadvised and separate accounts and other investment products

Equity and blended assets

Fixed income, including money market

1 unchanged sentence

investment advisory clients outside the U.S.

account for 7.4 % and 6.9 % of our assets under management at March 31, 2020 , and December 31, 2019 , respectively.

account for 8.2 % and 6.9 % of our assets under management at June 30, 2020 , and December 31, 2019 , respectively.

NOTE 3 – INVESTMENTS.

3 unchanged sentences

Investments held at fair value

Rowe Price investment products

Rowe Price investment products designated as an economic hedge of supplemental savings plan liability

Rowe Price investment products - discretionary investments

Rowe Price investment products - seed capital

Rowe Price investment products - supplemental savings plan liability economic hedges

Investment partnerships and other investments

Equity method investments

Rowe Price investment products

Rowe Price investment products - discretionary investments

Rowe Price investment products - seed capital

Rowe Price investment products - supplemental savings plan liability economic hedges

26% interest in UTI Asset Management Company Limited (India)

5 unchanged sentences

The investment strategies of these partnerships include growth equity, buyout, venture capital, and real estate.

During the three months ended March 31, 2020 , net losses on investments included $ 103.6 million of net unrealized losses related to investments held at fair value that were still held at March 31, 2020 .

For the same period of 2019, the net gains on investments included $ 50.6 million of net unrealized gains on investments held at fair value that were still held at March 31, 2019 .

During the three months ended March 31, 2020 and 2019, certain T.

During the three- and six- months ended June 30, 2020 , net gains on investments included $ 125.5 million and $ 21.9 million , respectively, of net unrealized gains related to investments held at fair value that were still held at June 30, 2020 .

For the same period of 2019, the net gains on investments included $ 28.7 million and $ 79.3 million , respectively, of net unrealized gains on investments held at fair value that were still held at June 30, 2019 .

During the six months ended June 30, 2020 and 2019, certain T.

Rowe Price investment products in which we provided initial seed capital at the time of formation were deconsolidated, as we no longer had a controlling interest.

1 unchanged sentence

Rowe Price investment products as either an equity method investment or an investment held at fair value.

Additionally, during the three months ended March 31, 2019 , certain T.

Additionally, during the six months ended 2019 , certain T.

Rowe Price investment products that were being accounted for as equity method investments were consolidated, as we regained a controlling interest.

1 unchanged sentence

Three months ended

Six months ended

(in millions)

8 unchanged sentences

VARIABLE INTEREST ENTITIES.

Our investments at March 31, 2020 and December 31, 2019 , include interests in variable interest entities that we do not consolidate as we are not deemed the primary beneficiary.

Our investments at June 30, 2020 and December 31, 2019 , include interests in variable interest entities that we do not consolidate as we are not deemed the primary beneficiary.

Our maximum risk of loss related to our involvement with these entities is as follows:

3 unchanged sentences

Uncollected investment advisory and administrative fees

The unfunded capital commitments totaling $ 15.6 million and $ 18.1 million at March 31, 2020 and December 31, 2019 , respectively, relate primarily to the investment partnerships in which we have an existing investment.

The unfunded capital commitments totaling $ 14.4 million at June 30, 2020 , and $ 18.1 million at December 31, 2019 , relate primarily to the investment partnerships in which we have an existing investment.

In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

NOTE 4 – FAIR VALUE MEASUREMENTS.

We determine the fair value of our cash equivalents and certain investments using the following broad levels of inputs as defined by related accounting standards:

We determine the fair value of our cash equivalents and investments held at fair value using the following broad levels of inputs as defined by related accounting standards:

Level 1 – quoted prices in active markets for identical securities.

12 unchanged sentences

Rowe Price money market funds

Rowe Price investment products

Rowe Price investment products designated as an economic hedge of supplemental savings plan liability

As required by the accounting guidance, the fair value hierarchy levels table above does not include the investment partnerships and other investments for which fair value is estimated using their NAV per share as a practical expedient.

The carrying value of these investments as disclosed in Note 3 were $ 105.5 million at March 31, 2020 and $ 99.7 million at December 31, 2019 .

Rowe Price investment products - discretionary investments

Rowe Price investment products - seed capital

Rowe Price investment products - supplemental savings plan liability economic hedges

Other investments

As required by the accounting guidance, the fair value hierarchy level table above does not include the investment partnerships and other investments for which fair value is estimated using their NAV per share as a practical expedient.

The carrying value of these investments as disclosed in Note 3 were $ 90.5 million at June 30, 2020 , and $ 99.7 million at December 31, 2019 .

NOTE 5 – CONSOLIDATED T.

15 unchanged sentences

Attributable to redeemable non-controlling interests

(1) Cash and cash equivalents includes $ 22.5 million and $ 9.1 million at March 31, 2020 , and December 31, 2019 , respectively, of T.

(1) Cash and cash equivalents includes $ 10.5 million at June 30, 2020 , and $ 9.1 million at December 31, 2019 , of T.

Rowe Price money market mutual funds.

(2) Investments includes $ 35.3 million and $ 40.2 million at March 31, 2020 , and December 31, 2019 , respectively, of T.

(2) Investments includes $ 45.9 million at June 30, 2020 , and $ 40.2 million at December 31, 2019 of T.

Rowe Price investment products.

6 unchanged sentences

The operating results of the consolidated T.

Rowe Price investment products for the three months ended March 31, 2020 and 2019 , are reflected in our unaudited condensed consolidated statements of income as follows:

Rowe Price investment products for the three- and six- months ended June 30, 2020 and 2019 , are reflected in our unaudited condensed consolidated statements of income as follows:

Three months ended

10 unchanged sentences

Net income (loss) attributable to redeemable non-controlling interests

Six months ended

(in millions)

interest entities

Variable interest entities

interest entities

Variable interest entities

Operating expenses reflected in net operating income

Net investment income (loss) reflected in non-operating income

Impact on income before taxes

Net income (loss) attributable to T.

Rowe Price Group

Net income (loss) attributable to redeemable non-controlling interests

The operating expenses of the consolidated investment products are reflected in other operating expenses.

In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $ 2.5 million and $ 1.5 million for the three months ended March 31, 2020 and 2019 , respectively, against the investment advisory and administrative fees earned from these products.

The net investment income (loss) reflected in non-

operating income (loss) includes dividend and interest income and realized and unrealized gains and losses on the underlying securities held by the consolidated T.

In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $ 2.1 million and $ 2.2 million for the three months ended June 30, 2020 and 2019 , respectively, against the investment advisory and administrative fees earned from these products.

Operating expenses eliminated for the six months ended June 30, 2020 and 2019 , were $ 4.6 million and $ 3.7 million , respectively.

The net investment income (loss) reflected in non-operating income (loss) includes dividend and interest income and realized and unrealized gains and losses on the underlying securities held by the consolidated T.

Rowe Price investment products .

The table below details the impact of these consolidated investment products on the individual lines of our unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 .

Three months ended

The table below details the impact of these consolidated investment products on the individual lines of our unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2020 and 2019 .

Six months ended

(in millions)

3 unchanged sentences

Variable interest entities

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by in financing activities

Effect of exchange rate changes on cash and cash equivalents of consolidated

3 unchanged sentences

Cash and cash equivalents at end of period

The net cash provided by financing activities during the three months ended March 31, 2020 and 2019 includes $ 42.8 million and $ 37.8 million , respectively, of net subscriptions we made into the consolidated T.

The net cash provided by financing activities during the six months ended June 30, 2020 and 2019 includes $ 26.2 million and $ 146.9 million , respectively, of net subscriptions we made into the consolidated T.

Rowe Price investment products , net of dividends received.

17 unchanged sentences

NOTE 6 – STOCKHOLDERS’ EQUITY.

Accounts payable and accrued expenses includes liabilities of $ 7.9 million at March 31, 2020 , and $ 12.2 million at December 31, 2019 , for common stock repurchases that settled during the first week of April 2020 and January 2020, respectively.

Accounts payable and accrued expenses includes liabilities of $ 10.6 million at June 30, 2020 , and $ 12.2 million at December 31, 2019 , for common stock repurchases that settled during the first week of July 2020 and January 2020, respectively.

NOTE 7 – STOCK-BASED COMPENSATION.

STOCK OPTIONS.

The following table summarizes the status of, and changes in, our stock options during the three months ended March 31, 2020 .

The following table summarizes the status of, and changes in, our stock options during the six months ended June 30, 2020 .

Outstanding at December 31, 2019

Outstanding at March 31, 2020

Exercisable at March 31, 2020

Outstanding at June 30, 2020

Exercisable at June 30, 2020

RESTRICTED SHARES AND STOCK UNITS.

The following table summarizes the status of, and changes in, our nonvested restricted shares and restricted stock units during the three months ended March 31, 2020 .

The following table summarizes the status of, and changes in, our nonvested restricted shares and restricted stock units during the six months ended June 30, 2020 .

Weighted-average

2 unchanged sentences

Dividend equivalents granted to non-employee directors

Nonvested at March 31, 2020

Nonvested at March 31, 2020 , includes 403,008 performance-based restricted stock units, including 318,768 restricted stock units for which the performance period has expired, and the performance threshold has been met.

Nonvested at June 30, 2020

Nonvested at June 30, 2020 , includes 403,008 performance-based restricted stock units, including 318,768 restricted stock units for which the performance period has expired and the performance threshold has been met.

FUTURE STOCK-BASED COMPENSATION EXPENSE.

The following table presents the compensation expense to be recognized over the remaining vesting periods of the stock-based awards outstanding at March 31, 2020 .

The following table presents the compensation expense to be recognized over the remaining vesting periods of the stock-based awards outstanding at June 30, 2020 .

Estimated future compensation expense will change to reflect future grants of restricted stock awards and units, future option grants, changes in the probability of performance thresholds being met, and adjustments for actual forfeitures.

(in millions)

Second quarter 2020

Third quarter 2020

4 unchanged sentences

Rowe Price Group to net income allocated to our common stockholders and the weighted-average shares that are used in calculating the basic and diluted earnings per share on our common stock.

Weighted-average common shares outstanding assuming dilution reflects the potential dilution, determined using the treasury stock method, that could occur if outstanding stock options were exercised and non-participating stock awards vested.

No stock options had an anti-dilutive impact on the diluted earnings per common share calculation in the periods presented.

Weighted-average common shares outstanding assuming dilution reflects the potential dilution, determined using the treasury stock method, that could occur if outstanding stock

options were exercised and non-participating stock awards vested.

No outstanding stock options had an anti-dilutive impact on the diluted earnings per common share calculation in the periods presented.

Three months ended

Six months ended

(in millions)

6 unchanged sentences

NOTE 9 – OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS.

T he changes in each component of accumulated other comprehensive loss, including reclassification adjustments for the three months ended March 31, 2020 and 2019 are presented in the table below.

The changes in each component of accumulated other comprehensive loss, including reclassification adjustments for the three months ended June 30, 2020 and 2019 are presented in the table below.

Three months ended 6/30/2020

Three months ended 6/30/2019

Currency translation adjustments

(in millions)

13 unchanged sentences

Balances at end of period

The other comprehensive income (loss) in the table above excludes $ 17.2 million and $ 1.3 million of other comprehensive loss related to redeemable non-controlling interests held in our consolidated products for the three months ended March 31, 2020 and 2019 , respectively.

The other comprehensive income (loss) in the table above excludes $ 10.3 million in the 2020 quarter and $ 1.0 million in the 2019 quarter of other comprehensive income related to redeemable non-controlling interests held in our consolidated products.

The changes in each component of accumulated other comprehensive loss, including reclassification adjustments for six months ended June 30, 2020 and 2019 , are presented in the table below.

Six months ended 6/30/2020

Six months ended 6/30/2019

(in millions)

Equity method investments

Consolidated T.

Rowe Price investment products - variable interest entities

Total currency translation adjustments

Equity method investments

Consolidated T.

Rowe Price investment products - variable interest entities

Total currency translation adjustments

Balances at beginning of period

Other comprehensive income (loss) before reclassifications and income taxes

Reclassification adjustments recognized in non-operating income

Net deferred tax income taxes

Other comprehensive income (loss)

Balances at end of period

The other comprehensive income (loss) in the table above excludes $ 6.9 million for the 2020 period and $ .3 million for the 2019 period of other comprehensive losses.

NOTE 10 – COMMITMENTS AND CONTINGENCIES.

37 unchanged sentences

Rowe Price Group, Inc.

and subsidiaries (the Company) as of March 31, 2020 , the related condensed consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2020 and 2019 , and the related notes (collectively, the consolidated interim financial information).

and subsidiaries ("the Company") as of June 30, 2020 , the related condensed consolidated statements of income and comprehensive income, and stockholders’ equity for the three-month and six-month periods ended June 30, 2020 and 2019 , the related condensed consolidated statements of cash flows for the six -month periods ended June 30, 2020 and 2019 , and the related notes (collectively, the consolidated interim financial information).

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S.

13 unchanged sentences

Baltimore, Maryland

April 28, 2020

July 29, 2020

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements