What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-10-29 compared with 2020-07-29 · 197 added, 123 removed, 462 unchanged (41% of the section changed)

2 unchanged sentences

(in millions, except share data)

9/30/2020 12/31/2019

Cash and cash equivalents $ 2,228.2 $ 1,781.8

Accounts receivable and accrued revenue 714.8 646.6

Investments 3,030.8 2,939.8

Assets of consolidated T.

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)

Rowe Price investment products ($ 2,255.3 million at September 30, 2020 and $ 1,975.3 million at December 31, 2019, related to variable interest entities)

2,442.3 2,276.9

Operating lease assets 139.2 110.8

Property and equipment, net 681.9 674.4

Goodwill 665.7 665.7

Other assets 231.7 234.4

Total assets $ 10,134.6 $ 9,330.4

Accounts payable and accrued expenses $ 186.9 $ 214.5

Liabilities of consolidated T.

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

Rowe Price investment products ($ 36.8 million at September 30, 2020 and $ 27.0 million at December 31, 2019, related to variable interest entities)

Operating lease liabilities 175.3 146.3

8 unchanged sentences

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

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

issued 226,375,000 shares at September 30, 2020 and 235,214,000 at December 31, 2019

Additional capital in excess of par value 654.6 654.6

6 unchanged sentences

(in millions, except per-share amounts)

Three months ended

Six months ended

Three months ended Nine months ended

9/30/2020 9/30/2019 9/30/2020 9/30/2019

Investment advisory fees $ 1,469.3 $ 1,303.4 $ 4,090.9 $ 3,767.8

Administrative, distribution, and servicing fees 126.5 123.3 382.9 381.4

Net revenues 1,595.8 1,426.7 4,473.8 4,149.2

Operating expenses

9 unchanged sentences

Net gains on investments 84.6 32.1 100.6 194.0

Net gains (losses) on consolidated investment products

Net gains on consolidated investment products 101.2 11.6 13.3 176.3

Other income (loss) 5.8 ( .7 ) ( 7.5 ) —

Total non-operating income (loss)

Total non-operating income 191.6 43.0 106.4 370.3

Income before income taxes 920.5 702.1 2,096.2 2,177.0

Provision for income taxes 221.9 157.0 502.5 522.0

Net income 698.6 545.1 1,593.7 1,655.0

net income (loss) attributable to redeemable non-controlling interests 55.4 ( .8 ) 4.4 69.0

3 unchanged sentences

Rowe Price Group

Basic $ 2.75 $ 2.26 $ 6.73 $ 6.55

Diluted $ 2.73 $ 2.23 $ 6.66 $ 6.47

The accompanying notes are an integral part of these statements.

1 unchanged sentence

(in millions)

Three months ended

Six months ended

Three months ended Nine months ended

9/30/2020 9/30/2019 9/30/2020 9/30/2019

Net income $ 698.6 $ 545.1 $ 1,593.7 $ 1,655.0

Other comprehensive income (loss)

2 unchanged sentences

Rowe Price investment products - variable interest entities 33.4 ( 30.1 ) 24.2 ( 32.2 )

Reclassification gains recognized in non-operating income upon deconsolidation of certain T.

Reclassification (gains) losses recognized in non-operating income upon deconsolidation of certain T.

Rowe Price investment products — .1 ( .1 ) ( .1 )

1 unchanged sentence

Rowe Price investment products - variable interest entities

33.4 ( 30.0 ) 24.1 ( 32.3 )

Equity method investments

.1 ( 1.0 ) ( 9.4 ) 5.4

Other comprehensive income (loss) before income taxes 33.5 ( 31.0 ) 14.7 ( 26.9 )

Net deferred tax benefits

Net deferred tax benefits (income taxes) ( 3.2 ) 3.4 ( .5 ) 2.5

Total other comprehensive income (loss) 30.3 ( 27.6 ) 14.2 ( 24.4 )

6 unchanged sentences

(in millions)

Six months ended

Nine months ended

9/30/2020 9/30/2019

Cash flows from operating activities

Net income $ 1,593.7 $ 1,655.0

Adjustments to reconcile net income to net cash provided by operating activities

1 unchanged sentence

Stock-based compensation expense

Net (gains) losses recognized on investments

Net gains recognized on investments ( 75.3 ) ( 137.3 )

Net investments in T.

Rowe Price investment products used to economically hedge supplemental savings plan liability

( 19.1 ) ( 20.5 )

Net change in securities held by consolidated T.

Rowe Price investment products

( 350.8 ) ( 688.1 )

Other changes in assets and liabilities

9 unchanged sentences

Other investing activity 9.8 3.5

Net cash provided by (used in) investing activities

Net cash used in investing activities ( 53.1 ) ( 76.7 )

Cash flows from financing activities

10 unchanged sentences

Rowe Price investment products

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.

1,858.3 1,495.3

Cash and cash equivalents at end of period, including $ 78.0 million at September 30, 2020, and $ 80.9 million at September 30, 2019, held by consolidated T.

Rowe Price investment products

$ 2,306.2 $ 2,294.1

The accompanying notes are an integral part of these statements.

5 unchanged sentences

Redeemable non-controlling interests

Balances at March 31, 2020

Other comprehensive loss, net of tax

Balances at June 30, 2020 226,990 $ 45.4 $ 654.6 $ 6,102.9 $ ( 52.2 ) $ 6,750.7 $ 1,090.1

Net income — — — 643.2 — 643.2 55.4

Other comprehensive income (loss), net of tax — — — — 9.5 9.5 20.8

Dividends declared ($ 0.90 per share)

— — — ( 210.2 ) — ( 210.2 ) —

Shares issued upon option exercises 492 .1 25.9 — — 26.0 —

8 unchanged sentences

Rowe Price investment products — — — — — — ( 44.0 )

Balances at June 30, 2020

Balances at September 30, 2020 226,375 $ 45.3 $ 654.6 $ 6,471.3 $ ( 42.7 ) $ 7,128.5 $ 1,340.2

Three months ended 9/30/2019

outstanding Common

stock Additional

par value Retained

earnings AOCI (1)

stockholders’

Redeemable non-controlling interests

Balances at March 31, 2019

equity Redeemable non-controlling interests

Balances at June 30, 2019 235,518 $ 47.1 $ 654.6 $ 5,915.9 $ ( 38.5 ) $ 6,579.1 $ 1,012.3

Net income — — — 545.9 — 545.9 ( .8 )

Other comprehensive income (loss), net of tax — — — — ( 10.2 ) ( 10.2 ) ( 17.4 )

Dividends declared ($ 0.76 per share)

— — — ( 182.7 ) — ( 182.7 ) —

Shares issued upon option exercises 782 .1 36.4 — — 36.5 —

9 unchanged sentences

Rowe Price investment products — — — — — — ( 72.3 )

Balances at June 30, 2019

Balances at September 30, 2019 234,702 $ 46.9 $ 654.6 $ 6,187.0 $ ( 48.7 ) $ 6,839.8 $ 1,102.9

(1) Accumulated other comprehensive income.

3 unchanged sentences

dollars in millions)

Six months ended 6/30/2020

Nine months ended 9/30/2020

outstanding Common

stock Additional

par value Retained

earnings AOCI (1)

stockholders’

Redeemable non-controlling interests

equity Redeemable non-controlling interests

Balances at December 31, 2019 235,214 $ 47.0 $ 654.6 $ 6,443.5 $ ( 43.0 ) $ 7,102.1 $ 1,121.0

Net income — — — 1,589.3 — 1,589.3 4.4

Other comprehensive income (loss), net of tax — — — — .3 .3 13.9

Dividends declared ($ 2.70 per share)

— — — ( 635.3 ) — ( 635.3 ) —

Shares issued upon option exercises 1,856 .4 82.8 — — 83.2 —

8 unchanged sentences

Rowe Price investment products — — — — — — ( 106.9 )

Balances at June 30, 2020

Six months ended 6/30/2019

Balances at September 30, 2020 226,375 $ 45.3 $ 654.6 $ 6,471.3 $ ( 42.7 ) $ 7,128.5 $ 1,340.2

Nine months ended 9/30/2019

outstanding Common

stock Additional

par value Retained

earnings AOCI (1)

stockholders’

Redeemable non-controlling interests

equity Redeemable non-controlling interests

Balances at December 31, 2018 238,069 $ 47.6 $ 654.6 $ 5,464.1 $ ( 42.0 ) $ 6,124.3 $ 740.3

Net income — — — 1,586.0 — 1,586.0 69.0

Other comprehensive income (loss), net of tax — — — — ( 6.7 ) ( 6.7 ) ( 17.7 )

Dividends declared ($ 2.28 per share)

— — — ( 549.9 ) — ( 549.9 ) —

Shares issued upon option exercises 2,277 .4 118.9 — — 119.3 —

9 unchanged sentences

Rowe Price investment products — — — — — — ( 81.4 )

Balances at June 30, 2019

Balances at September 30, 2019 234,702 $ 46.9 $ 654.6 $ 6,187.0 $ ( 48.7 ) $ 6,839.8 $ 1,102.9

(1) Accumulated other comprehensive income.

6 unchanged sentences

mutual funds (“U.S.

mutual funds ”), separately managed accounts, subadvised funds, and other T.

mutual funds”), subadvised funds, separately managed accounts, collective investment trusts, and other T.

Rowe Price products.

Rowe Price products include:

collective investment trusts, open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S.

open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S.

We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services;

17 unchanged sentences

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

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

As of September 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.

8 unchanged sentences

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

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

Three months ended 6/30/2019

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

Three months ended 9/30/2020 Three months ended 9/30/2019

Administrative, distribution, and servicing fees

7 unchanged sentences

Distribution and servicing fees

Subadvised and separate accounts and other investment products

mutual funds $ 939.5 $ 72.4 $ 28.5 $ 1,040.4 $ 881.0 $ 69.0 $ 30.1 $ 980.1

Subadvised funds, separate accounts, collective investment trusts, and other investment products 529.8 — — 529.8 422.4 — — 422.4

Other clients

Six months ended 6/30/2020

Six months ended 6/30/2019

— 25.6 — 25.6 — 24.2 — 24.2

$ 1,469.3 $ 98.0 $ 28.5 $ 1,595.8 $ 1,303.4 $ 93.2 $ 30.1 $ 1,426.7

Nine months ended 9/30/2020 Nine months ended 9/30/2019

Administrative, distribution, and servicing fees

7 unchanged sentences

Distribution and servicing fees

Subadvised and separate accounts and other investment products

mutual funds $ 2,638.8 $ 219.0 $ 82.1 $ 2,939.9 $ 2,557.6 $ 215.3 $ 90.4 $ 2,863.3

Subadvised funds, separate accounts, collective investment trusts, and other investment products 1,452.1 — — 1,452.1 1,210.2 — — 1,210.2

Other clients

— 81.8 — 81.8 — 75.7 — 75.7

$ 4,090.9 $ 300.8 $ 82.1 $ 4,473.8 $ 3,767.8 $ 291.0 $ 90.4 $ 4,149.2

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

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.

Rowe Price investment products, aggregate $ 1,302.3 million and $ 1,180.9 million for the three months ended September 30, 2020 and 2019, respectively.

Total net revenues earned during the nine months ended September 30, 2020 and 2019 aggregate $ 3,652.8 million and $ 3,421.9 million, respectively.

Accounts receivable from these products aggregate to $ 442.0 million at September 30, 2020, and $ 424.8 million at December 31, 2019.

In the second quarter of 2020, we changed our fee structure of the target date retirement funds such that our investment advisory fee revenue is now earned at the target date retirement fund level rather than at the underlying mutual fund level.

As a result, 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

Three months ended Nine months ended

(in millions) 9/30/2020 9/30/2019 9/30/2020 9/30/2019

Equity $ 636.3 $ 570.2 $ 1,750.6 $ 1,641.4

Fixed income, including money market 66.6 70.7 205.1 208.6

Subadvised and separate accounts and other investment products

Multi-asset 236.6 240.1 683.1 707.6

939.5 881.0 2,638.8 2,557.6

Subadvised funds, separate accounts, collective investment trusts, and other investment products

Equity 339.6 259.5 924.7 751.0

Fixed income, including money market 38.4 39.7 110.3 116.0

Multi-asset 151.8 123.2 417.1 343.2

529.8 422.4 1,452.1 1,210.2

Total $ 1,469.3 $ 1,303.4 $ 4,090.9 $ 3,767.8

The following table summarizes the assets under management on which we earn investment advisory fees.

Average during

Three months ended

Six months ended

Average during Average during

Three months ended Nine months ended As of

(in billions) 9/30/2020 9/30/2019 9/30/2020 9/30/2019 9/30/2020 12/31/2019

Equity $ 433.4 $ 384.4 $ 398.9 $ 371.5 $ 442.3 $ 407.1

Fixed income, including money market 78.1 73.3 76.0 71.3 77.6 73.7

Subadvised and separate accounts and other investment products

Multi-asset 197.3 192.8 189.1 190.4 196.3 201.9

708.8 650.5 664.0 633.2 716.2 682.7

Subadvised funds, separate accounts, collective investment trusts, and other investment products

Equity 338.8 262.4 303.3 251.1 343.5 291.7

Fixed income, including money market 82.4 80.9 80.3 78.9 83.5 74.2

Multi-asset 162.9 136.4 151.3 128.3 167.2 158.2

584.1 479.7 534.9 458.3 594.2 524.1

Total $ 1,292.9 $ 1,130.2 $ 1,198.9 $ 1,091.5 $ 1,310.4 $ 1,206.8

Investors that we serve are primarily domiciled in the U.S.;

investment advisory clients outside the U.S.

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

account for 8.7 % and 6.9 % of our assets under management at September 30, 2020, and December 31, 2019, respectively.

NOTE 3 – INVESTMENTS.

14 unchanged sentences

Treasury note 1.0 1.0

Total $ 3,030.8 $ 2,939.8

The investment partnerships are carried at fair value using net asset value (“NAV”) per share as a practical expedient.

2 unchanged sentences

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

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.

During the three- and nine-months ended September 30, 2020, net gains on investments included $ 75.5 million and $ 53.6 million, respectively, of net unrealized gains related to investments held at fair value that were still held at September 30, 2020.

For the same periods of 2019, the net gains on investments included $ 4.8 million and $ 84.2 million, respectively, of net unrealized gains on investments held at fair value that were still held at September 30, 2019.

During the nine months ended September 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 six months ended 2019 , certain T.

Additionally, during the nine months ended September 30, 2019, certain T.

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

The net impact of these changes on our unaudited condensed consolidated balance sheets and statements of income as of the dates the portfolios were deconsolidated or reconsolidated is detailed below.

Three months ended

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Three months ended Nine months ended

(in millions) 9/30/2020 9/30/2019 9/30/2020 9/30/2019

4 unchanged sentences

Net increase (decrease) in redeemable non-controlling interests $ ( 44.0 ) $ ( 72.3 ) $ ( 106.9 ) $ ( 81.4 )

Gains recognized upon deconsolidation

Gains (losses) recognized upon deconsolidation $ — $ ( .1 ) $ .1 $ .1

The gains or losses recognized upon deconsolidation were the result of reclassifying currency translation adjustments accumulated on certain T.

Rowe Price investment products with non-USD functional currencies from accumulated other comprehensive income to non-operating income (loss).

Rowe Price investment products with non-USD functional currencies from accumulated other comprehensive income to non-operating income.

In October 2020, UTI Asset Management Company Limited (India), one of our equity method investments, held an initial public offering in India.

As part of the offering, we sold a portion of our 26 % interest and recorded a net gain on the sale of approximately $ 3.5 million in the fourth quarter of 2020.

Subsequent to the sale, we have an ownership interest of 23 % in UTI Asset Management Company Limited (India).

VARIABLE INTEREST ENTITIES.

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 investments at September 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 14.0 10.5

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.

$ 146.1 $ 184.6

The unfunded capital commitments totaling $ 13.2 million at September 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.

12 unchanged sentences

Rowe Price investment products which are presented separately on our unaudited condensed consolidated balance sheets and are detailed in Note 5.

9/30/2020 12/31/2019

(in millions)

5 unchanged sentences

Other investments 2.0 .6 — —

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 .

Total $ 3,593.5 $ 10.9 $ 3,309.7 $ 9.9

The carrying value of these investments as disclosed in Note 3 were $ 96.8 million at September 30, 2020, and $ 99.7 million at December 31, 2019.

NOTE 5 – CONSOLIDATED T.

5 unchanged sentences

Rowe Price investment products:

9/30/2020 12/31/2019

(in millions)

4 unchanged sentences

Cash and cash equivalents (1)

$ 5.2 $ 72.8 $ 78.0 $ 9.9 $ 66.6 $ 76.5

Investments (2)

178.8 2,150.3 2,329.1 281.1 1,891.3 2,172.4

Other assets 3.0 32.2 35.2 10.6 17.4 28.0

Total assets 187.0 2,255.3 2,442.3 301.6 1,975.3 2,276.9

Liabilities 9.7 36.8 46.5 12.2 27.0 39.2

Net assets $ 177.3 $ 2,218.5 $ 2,395.8 $ 289.4 $ 1,948.3 $ 2,237.7

Attributable to T.

1 unchanged sentence

Attributable to redeemable non-controlling interests 51.1 1,289.1 1,340.2 89.8 1,031.2 1,121.0

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

$ 177.3 $ 2,218.5 $ 2,395.8 $ 289.4 $ 1,948.3 $ 2,237.7

(1) Cash and cash equivalents includes $ 5.1 million at September 30, 2020, and $ 9.1 million at December 31, 2019, of T.

Rowe Price money market mutual funds.

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

(2) Investments includes $ 18.9 million at September 30, 2020, and $ 40.2 million at December 31, 2019 of other T.

Rowe Price investment products.

6 unchanged sentences

The operating results of the consolidated T.

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:

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

Three months ended

9/30/2020 9/30/2019

(in millions)

Voting interest entities

Variable interest entities

Voting interest entities

Variable interest entities

Voting interest entities Variable interest entities Total Voting interest entities Variable interest entities Total

Operating expenses reflected in net operating income $ ( .7 ) $ ( 3.7 ) $ ( 4.4 ) $ ( .6 ) $ ( 3.1 ) $ ( 3.7 )

4 unchanged sentences

Net income (loss) attributable to redeemable non-controlling interests 5.4 50.0 55.4 .2 ( 1.0 ) ( .8 )

Six months ended

(in millions)

interest entities

Variable interest entities

interest entities

Variable interest entities

$ 12.4 $ 84.4 $ 96.8 $ .9 $ 7.0 $ 7.9

Nine months ended

9/30/2020 9/30/2019

(in millions) Voting

interest entities Variable interest entities Total Voting

interest entities Variable interest entities Total

Operating expenses reflected in net operating income $ ( 1.2 ) $ ( 10.5 ) $ ( 11.7 ) $ ( 1.6 ) $ ( 9.0 ) $ ( 10.6 )

4 unchanged sentences

Net income (loss) attributable to redeemable non-controlling interests ( 4.2 ) 8.6 4.4 4.7 64.3 69.0

$ ( 6.9 ) $ 8.5 $ 1.6 $ 19.3 $ 146.4 $ 165.7

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 $ 2.1 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.

In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $ 2.7 million and $ 2.6 million for the three months ended September 30, 2020 and 2019, respectively, against the investment advisory and administrative fees earned from these products.

Operating expenses eliminated for the nine months ended September 30, 2020 and 2019, were $ 7.3 million and $ 6.3 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 six months ended June 30, 2020 and 2019 .

Six 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 nine months ended September 30, 2020 and 2019.

Nine months ended

9/30/2020 9/30/2019

(in millions)

8 unchanged sentences

Rowe Price investment products

— 3.4 3.4 — ( 2.2 ) ( 2.2 )

Net change in cash and cash equivalents during period

( 4.7 ) 6.2 1.5 ( 7.0 ) 17.8 10.8

Cash and cash equivalents at beginning of year

9.9 66.6 76.5 18.5 51.6 70.1

Cash and cash equivalents at end of period

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.

$ 5.2 $ 72.8 $ 78.0 $ 11.5 $ 69.4 $ 80.9

The net cash provided by financing activities during the nine months ended September 30, 2020 and 2019 includes $ 95.2 million and $ 157.7 million, respectively, of net subscriptions we made into the consolidated T.

Rowe Price investment products, net of dividends received.

11 unchanged sentences

Rowe Price investment products using fair value measurements determined based on the differing levels of inputs.

9/30/2020 12/31/2019

(in millions)

3 unchanged sentences

Other investments 2.7 25.4 2.7 33.8

$ 284.8 $ 2,049.4 $ 174.6 $ 2,008.0

Liabilities $ ( .2 ) $ ( 12.8 ) $ ( .4 ) $ ( 11.2 )

NOTE 6 – STOCKHOLDERS’ EQUITY.

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.

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

NOTE 7 – STOCK-BASED COMPENSATION.

STOCK OPTIONS.

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

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

Options Weighted-

Outstanding at December 31, 2019 7,388,068 $ 71.06

Outstanding at June 30, 2020

Exercisable at June 30, 2020

Exercised ( 2,555,527 ) $ 68.53

Forfeited ( 6,874 ) $ 74.48

Outstanding at September 30, 2020 4,825,667 $ 72.39

Exercisable at September 30, 2020 4,165,306 $ 71.85

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 six months ended June 30, 2020 .

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

Weighted-average

2 unchanged sentences

Dividend equivalents granted to non-employee directors — 1,842 $ 116.19

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.

Vested ( 7,404 ) ( 116,121 ) $ 93.25

Forfeited — ( 82,764 ) $ 97.29

Nonvested at September 30, 2020 7,412 6,574,702 $ 99.07

Nonvested at September 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 June 30, 2020 .

The following table presents the compensation expense to be recognized over the remaining vesting periods of the stock-based awards outstanding at September 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)

Third quarter 2020

Fourth quarter 2020 $ 46.8

2022 through 2026 90.6

Total $ 246.5

NOTE 8 – EARNINGS PER SHARE CALCULATIONS.

1 unchanged sentence

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.

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

Three months ended Nine months ended

(in millions) 9/30/2020 9/30/2019 9/30/2020 9/30/2019

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Weighted-average common shares

Outstanding 227.0 234.9 229.5 235.8

Outstanding assuming dilution 229.4 238.2 231.9 239.0

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

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

(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

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

Three months ended 9/30/2020 Three months ended 9/30/2019

(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 $ ( 54.4 ) $ 2.2 $ ( 52.2 ) $ ( 43.8 ) $ 5.3 $ ( 38.5 )

Other comprehensive income (loss) before reclassifications and income taxes

( 2.0 ) 12.5 10.5 ( 1.0 ) ( 12.6 ) ( 13.6 )

Reclassification adjustments recognized in non-operating income

— — — — .1 .1

( 2.0 ) 12.5 10.5 ( 1.0 ) ( 12.5 ) ( 13.5 )

Net deferred tax benefits (income taxes)

2.1 ( 3.1 ) ( 1.0 ) .3 3.1 3.4

Other comprehensive income (loss)

.1 9.4 9.5 ( .7 ) ( 9.4 ) ( 10.1 )

Balances at end of period $ ( 54.3 ) $ 11.6 $ ( 42.7 ) $ ( 44.5 ) $ ( 4.1 ) $ ( 48.6 )

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

The other comprehensive income (loss) in the table above excludes $ 20.8 million in the 2020 quarter and $( 17.4 ) million in the 2019 quarter of other comprehensive income (loss) 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 the nine months ended September 30, 2020 and 2019, are presented in the table below.

Nine months ended 9/30/2020 Nine months ended 9/30/2019

(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

Rowe Price investment products - variable interest entities Total currency translation adjustments

Balances at beginning of period $ ( 46.9 ) $ 3.9 $ ( 43.0 ) $ ( 48.8 ) $ 6.8 $ ( 42.0 )

1 unchanged sentence

Reclassification adjustments recognized in non-operating income — ( .1 ) ( .1 ) — ( .1 ) ( .1 )

Net deferred tax income taxes

( 9.4 ) 10.2 .8 5.4 ( 14.5 ) ( 9.1 )

Net deferred tax benefits (income taxes) 2.0 ( 2.5 ) ( .5 ) ( 1.1 ) 3.6 2.5

Other comprehensive income (loss) ( 7.4 ) 7.7 .3 4.3 ( 10.9 ) ( 6.6 )

Balances at end of period $ ( 54.3 ) $ 11.6 $ ( 42.7 ) $ ( 44.5 ) $ ( 4.1 ) $ ( 48.6 )

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.

The other comprehensive income (loss) in the table above excludes $ 13.9 million for the 2020 period and $( 17.7 ) million for the 2019 period of other comprehensive income (loss) related to redeemable non-controlling interests held in our consolidated products.

NOTE 10 – COMMITMENTS AND CONTINGENCIES.

9 unchanged sentences

Rowe Price believes the claims are without merit and is vigorously defending the action.

This matter is in the expert discovery phase of litigation and we cannot predict the eventual outcome, or whether it will have a material negative impact on our financial results, or estimate the possible loss or range of loss that may arise from any negative outcome.

Plaintiffs have filed a motion for partial summary judgment and defendants have filed a cross-motion for summary judgment, and briefing is underway.

We cannot predict the eventual outcome, or whether it will have a material negative impact on our financial results, or estimate the possible loss or range of loss that may arise from any negative outcome.

On April 27, 2016, certain shareholders in the T.

25 unchanged sentences

Rowe Price Group, Inc.

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).

and subsidiaries ("the Company") as of September 30, 2020, the related condensed consolidated statements of income and comprehensive income, and stockholders’ equity for the three-month and nine-month periods ended September 30, 2020 and 2019, the related condensed consolidated statements of cash flows for the nine-month periods ended September 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.

11 unchanged sentences

Accordingly, we do not express such an opinion.

/ s / KPMG LLP

Baltimore, Maryland

July 29, 2020

October 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