What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-15 compared with 2022-02-24 · 253 added, 282 removed, 844 unchanged (39% of the section changed)

16 unchanged sentences

Investments 2,539.2 2,975.5

Assets of consolidated T.

Rowe Price investment products ($ 1,761.5 million at December 31, 2021 and $ 2,497.4 million at December 31, 2020, related to variable interest entities)

Assets of consolidated sponsored investment products ($ 1,375.6 million at December 31, 2022 and $ 1,761.5 million at December 31, 2021, related to variable interest entities)

1,603.4 1,962.8

6 unchanged sentences

Accounts payable and accrued expenses $ 406.7 $ 431.0

Liabilities of consolidated T.

Rowe Price investment products ($ 36.2 million at December 31, 2021 and $ 47.7 million at December 31, 2020, related to variable interest entities)

Liabilities of consolidated sponsored investment products ($ 39.1 million at December 31, 2022 and $ 36.2 million at December 31, 2021, related to variable interest entities)

Operating lease liabilities 329.6 249.2

7 unchanged sentences

STOCKHOLDERS’ EQUITY

Preferred stock, undesignated, $ .20 par value—authorized and unissued 20,000,000 shares

Preferred stock, undesignated, $ .20 par value—authorized and unissued

20,000,000 shares

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

14 unchanged sentences

Investment advisory fees $ 5,969.1 $ 7,098.1 $ 5,693.1

Capital allocation-based income ( 54.3 ) — —

Administrative, distribution, and servicing fees 573.6 573.8 513.6

7 unchanged sentences

General, administrative, and other 412.2 383.6 316.1

Change in fair value of contingent consideration ( 161.2 ) — —

Acquisition-related amortization and impairment costs 283.5 — —

Total operating expenses 4,114.7 3,961.9 3,461.0

Net operating income 2,373.7 3,710.0 2,745.7

Non-operating income

Net gains on investments 215.8 246.8 260.4

Non-operating income (loss)

Net gains (losses) on investments ( 204.7 ) 215.8 246.8

Net gains (losses) on consolidated investment products ( 203.5 ) 74.7 251.7

Other income (loss) ( 5.9 ) ( 2.0 ) 7.0

Total non-operating income 284.6 496.5 540.3

Other losses ( 17.3 ) ( 5.9 ) ( 2.0 )

Total non-operating income (loss) ( 425.5 ) 284.6 496.5

Income before income taxes 1,948.2 3,994.6 3,242.2

15 unchanged sentences

Currency translation adjustments:

Consolidated T.

Rowe Price investment products—variable interest entities ( 37.7 ) 57.8 ( 3.4 )

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

Rowe Price investment products ( 2.4 ) ( .7 ) ( .1 )

Total currency translation adjustments of consolidated T.

Rowe Price investment products—variable interest entities ( 40.1 ) 57.1 ( 3.5 )

Consolidated sponsored investment products—variable interest entities ( 34.9 ) ( 37.7 ) 57.8

Reclassification gains recognized in non-operating investment income upon deconsolidation of certain sponsored investment products ( 3.0 ) ( 2.4 ) ( .7 )

Total currency translation adjustments of consolidated sponsored investment products—variable interest entities ( 37.9 ) ( 40.1 ) 57.1

Equity method investments ( 14.6 ) 7.0 2.1

16 unchanged sentences

Depreciation, amortization and impairment of property, equipment and software 225.7 204.8 189.6

Amortization and impairment of acquisition-related assets and retention arrangements 420.1 — —

Fair value remeasurement of contingent consideration liability ( 161.2 ) — —

Stock-based compensation expense 285.4 274.6 246.2

1 unchanged sentence

210.6 ( 122.5 ) ( 189.6 )

Net investments in T.

Rowe Price investment products used to economically hedge supplemental savings plan liability ( 85.7 ) ( 142.9 ) ( 126.0 )

Net change in securities held by consolidated T.

Rowe Price investment products 14.9 ( 798.8 ) ( 930.9 )

Net investments in sponsored investment products used to economically hedge supplemental savings plan liability ( 18.8 ) ( 85.7 ) ( 142.9 )

Net change in securities held by consolidated sponsored investment products 87.9 14.9 ( 798.8 )

Other changes in assets and liabilities ( 139.9 ) 67.4 91.1

1 unchanged sentence

Cash flows from investing activities

Purchases of T.

Rowe Price investment products ( 48.0 ) ( 272.4 ) ( 239.7 )

Dispositions of T.

Rowe Price investment products 1,625.8 454.1 131.4

Net cash of T.

Rowe Price investment products on consolidation (deconsolidation) ( 16.9 ) ( 53.9 ) ( 18.4 )

Purchases of sponsored investment products ( 55.1 ) ( 48.0 ) ( 272.4 )

Dispositions of sponsored investment products 263.6 1,625.8 454.1

Net cash of sponsored investment products on consolidation (deconsolidation) ( 8.7 ) ( 16.9 ) ( 53.9 )

Additions to property and equipment ( 237.6 ) ( 239.1 ) ( 214.6 )

6 unchanged sentences

Dividends paid to common stock and equity-award holders ( 1,107.4 ) ( 1,701.9 ) ( 845.8 )

Net distributions to non-controlling interests in consolidated entities ( 35.1 ) — —

Net subscriptions (redemptions) from redeemable non-controlling interest holders ( 48.4 ) ( 66.8 ) 557.5

Net cash used in financing activities ( 2,076.9 ) ( 2,988.8 ) ( 1,486.3 )

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

Rowe Price investment products 2.6 1.9 ( 2.5 )

Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products 9.5 2.6 1.9

Net change in cash and cash equivalents during period 250.5 ( 632.3 ) 398.2

Cash and cash equivalents at beginning of period, including $ 104.8 million at December 31, 2020, $ 76.5 million at December 31, 2019 and $ 70.1 million at December 31, 2018 held by consolidated T.

Rowe Price investment products

Cash and cash equivalents at beginning of period, including $ 101.1 million at December 31, 2021, $ 104.8 million at December 31, 2020 and $ 76.5 million at December 31, 2019 held by consolidated sponsored investment products

1,624.2 2,256.5 1,858.3

Cash and cash equivalents at end of period, including $ 101.1 million at December 31, 2021, $ 104.8 million at December 31, 2020, and $ 76.5 million at December 31, 2019, held by consolidated T.

Rowe Price investment products

Cash and cash equivalents at end of period, including $ 119.1 million at December 31, 2022, $ 101.1 million at December 31, 2021, and $ 104.8 million at December 31, 2020, held by consolidated sponsored investment products

$ 1,874.7 $ 1,624.2 $ 2,256.5

9 unchanged sentences

Rowe Price Group, Inc.

Redeemable non-controlling interests

Non-controlling interests in consolidated entities Total permanent stockholders' equity Redeemable non-controlling interests

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

6 unchanged sentences

Restricted shares issued, net of shares withheld for taxes 8 — — — — — — — —

( 41 ) — ( 5.9 ) — — ( 5.9 ) —

Shares issued upon vesting of restricted stock units, net of shares withheld for taxes 1,457 .3 ( 92.0 ) — — ( 91.7 ) — ( 91.7 ) —

Forfeiture of restricted awards ( 10 ) — — — — — —

Stock-based compensation expense — — 246.2 — — 246.2 — 246.2 —

1 unchanged sentence

Common shares repurchased ( 10,908 ) ( 2.2 ) ( 250.0 ) ( 940.0 ) — ( 1,192.2 ) — ( 1,192.2 ) —

Net subscriptions into T.

Rowe Price investment products — — — — — — 530.3

Net deconsolidations of T.

Rowe Price investment products — — — — — — ( 267.6 )

Net subscriptions into sponsored investment products — — — — — — — — 563.3

Net deconsolidations of sponsored investment products — — — — — — — — ( 308.1 )

Balances at December 31, 2020 227,965 45.6 654.6 7,029.8 ( 23.0 ) 7,707.0 — 7,707.0 1,561.7

3 unchanged sentences

— — — ( 1,003.5 ) — ( 1,003.5 ) — ( 1,003.5 ) —

Special cash dividend declared ($ 3.00 per share)

— — — ( 699.5 ) — ( 699.5 ) — ( 699.5 ) —

Common stock-based compensation plans activity:

1 unchanged sentence

Restricted shares issued, net of shares withheld for taxes 6 — — — — — — — —

8 — — — — — —

Shares issued upon vesting of restricted stock units, net of shares withheld for taxes 1,492 .3 ( 128.0 ) — — ( 127.7 ) — ( 127.7 ) —

Forfeiture of restricted awards — — — — — — —

Stock-based compensation expense — — 274.6 — — 274.6 — 274.6 —

1 unchanged sentence

Common shares repurchased ( 5,941 ) ( 1.2 ) ( 809.4 ) ( 325.4 ) — ( 1,136.0 ) — ( 1,136.0 ) —

Net subscriptions into T.

Rowe Price investment products — — — — — — 563.3

Net deconsolidations of T.

Rowe Price investment products — — — — — — ( 308.1 )

Common shares issued for acquisition 4,447 .9 880.6 — — 881.5 — 881.5 —

Non-controlling interests — — — — — — 248.7 248.7

Net redemptions into sponsored investment products — — — — — — — — ( 67.7 )

Net deconsolidations of sponsored investment products — — — — — — — — ( 501.1 )

Balances at December 31, 2021 229,175 $ 45.8 $ 919.8 $ 8,083.6 $ ( 26.5 ) $ 9,022.7 $ 248.7 $ 9,271.4 $ 982.3

4 unchanged sentences

stock Additional

excess of par

value Retained

excess of par value Retained

earnings AOCI (1)

4 unchanged sentences

Balances at December 31, 2021 229,175 $ 45.8 $ 919.8 $ 8,083.6 $ ( 26.5 ) $ 9,022.7 $ 248.7 $ 9,271.4 $ 982.3

Net income — — — 3,082.9 — 3,082.9 — 3,082.9 15.6

Other comprehensive income (loss), net of tax — — — — ( 3.5 ) ( 3.5 ) — ( 3.5 ) ( 26.2 )

Net income (loss) — — — 1,557.9 — 1,557.9 ( 22.9 ) 1,535.0 ( 108.3 )

Other comprehensive loss, net of tax — — — — ( 26.5 ) ( 26.5 ) — ( 26.5 ) ( 21.0 )

Dividends declared ($ 4.80 per share)

— — — ( 1,108.7 ) — ( 1,108.7 ) — ( 1,108.7 ) —

Special cash dividend declared ($ 3.00 per share)

— — — ( 699.5 ) — ( 699.5 ) — ( 699.5 ) —

Common stock-based compensation plans activity:

2 unchanged sentences

Shares issued upon vesting of restricted stock units, net of shares withheld for taxes 1,355 .3 ( 64.6 ) — — ( 64.3 ) — ( 64.3 ) —

Forfeiture of restricted awards — — — — — — — — —

Stock-based compensation expense — — 285.4 — — 285.4 — 285.4 —

1 unchanged sentence

Common shares repurchased ( 6,751 ) ( 1.3 ) ( 731.4 ) ( 122.6 ) — ( 855.3 ) — ( 855.3 ) —

Common shares issued for acquisition 4,447 .9 880.6 — — 881.5 — 881.5 —

Non-controlling interests — — — — — — 248.7 248.7 —

Net redemptions from T.

Rowe Price investment products — — — — — — — — ( 67.7 )

Net deconsolidations of T.

Rowe Price investment products — — — — — — — — ( 501.1 )

Net distributions to non-controlling interests in consolidated entities — — — — — — ( 35.1 ) ( 35.1 ) —

Net redemptions from sponsored investment products — — — — — — — — ( 49.3 )

Net deconsolidations of sponsored investment products — — — — — — — — ( 147.0 )

Balances at December 31, 2022 224,310 $ 44.9 $ 437.9 $ 8,409.7 $ ( 53.0 ) $ 8,839.5 $ 190.7 $ 9,030.2 $ 656.7

10 unchanged sentences

Rowe Price products include:

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., products offered through variable annuity life insurance plans in the U.S., affiliated private investment funds and collateralized loan obligations.

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

4 unchanged sentences

We acquired 100 % of the equity interests of Oak Hill Advisors, L.P., 100 % of the equity interests in entities that make co-investments in certain affiliated private investment funds (the "co-investment entities") and a majority of the equity interests in entities that have interests in general partners of affiliated private investment funds and are entitled to a disproportionate allocation of income (the "carried interest entities").

The acquisition accelerates our expansion into alternatives investment markets and complements our existing global platform and ongoing strategic initiatives in our core investments and distribution capabilities.

The acquisition accelerated our expansion into alternatives investment markets and complemented our existing global platform and ongoing strategic initiatives in our core investments and distribution capabilities.

OHA and its advisory affiliates provide investment advisory, asset management and other advisory services primarily to affiliated private investment funds and private accounts investing in leveraged loans, high yield bonds, structured products, private lending, distressed securities and turnaround investments.

Rowe Price Group, Inc.

recorded the assets acquired and liabilities assumed at their acquisition date fair values on its consolidated balance sheets as of the close date.

Rowe Price Group, Inc.

did not record any 2021 OHA financial results in its consolidated statements of income or comprehensive income as the OHA activity between the closing date and December 31, 2021 was deemed immaterial.

Investment advisory revenues depend largely on the total value and composition of assets under our management.

4 unchanged sentences

Actual results may vary from our estimates.

INFLATION REDUCTION LEGISLATION.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022 ("IRA").

The IRA establishes new tax provisions and various incentives and tax credits.

Among other things, the IRA created a 15% minimum tax on adjusted book income effective for taxable years beginning after December 31, 2022 as well as an excise tax of 1% on stock repurchases, net of stock issuances, for publicly traded companies effective for net stock repurchases made after December 31, 2022.

We do not believe the impact of the IRA’s provisions will be material to our financial position and results of operations.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

8 unchanged sentences

Consolidation

Our consolidated financial statements include the accounts of all subsidiaries and T.

Rowe Price investment products in which we have a controlling interest.

Our consolidated financial statements include the accounts of all subsidiaries and sponsored investment products in which we have a controlling interest.

We are deemed to have a controlling interest when we own the majority of a voting interest entity ("VOE") or are deemed to be the primary beneficiary of a variable interest entity ("VIE").

7 unchanged sentences

We consolidate a VIE when we are the primary beneficiary, which is the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the VIE that could potentially be significant.

Our Luxembourg-based SICAV funds and other T.

Rowe Price investment products regulated outside the U.S.

were determined to be VIEs.

In addition, in connection with the OHA acquisition, we acquired a majority of the carried interest entities.

Our Luxembourg-based SICAV funds, and other sponsored investment products regulated outside the U.S., were determined to be VIEs.

In addition, as part of the OHA acquisition, we acquired a majority of the carried interest entities.

These carried interest entities are considered VIEs and T.

Rowe Price is determined to be the primary beneficiary.

The total assets, liabilities, and non-controlling interests of these consolidated VIEs as of December 31, 2021 were $ 692.7 million, $ 56.4 million, and $ 248.7 million, respectively.

Further, these carried interest entities hold general partner interests in affiliated private investment funds that are VIEs, though these carried interest entities were determined to not be the primary beneficiary, and therefore, these affiliated private investment funds are not consolidated.

Further, our carried interest entities hold general partner interests in affiliated private investment funds that are VIEs, though these carried interest entities were determined to not be the primary beneficiary.

Therefore, these affiliated private investment funds are not consolidated.

Redeemable non-controlling interests

We recognize redeemable non-controlling interests for the portion of the net assets of our consolidated T.

Rowe Price investment products held by unrelated third-party investors as their interests are convertible to cash and other assets at their option.

We recognize redeemable non-controlling interests for the portion of the net assets of our consolidated sponsored investment products held by unrelated third-party investors as their interests are convertible to cash and other assets at their option.

As such, we reflect redeemable non-controlling interests as temporary equity in our consolidated balance sheets.

Non-controlling interests in consolidated entities

As a result of the OHA acquisition, we recognized non-controlling interests in the consolidated carried interest entities and present it as a component of permanent equity in our consolidated balance sheets.

We recognize non-controlling interests in the consolidated carried interest entities and present it as a component of permanent equity in our consolidated balance sheets.

The non-controlling interests represent the minority interest held by limited partnerships controlled by employees, one of which is a member of our Board of Directors.

Beginning in 2022, income (loss) will be allocated to these non-controlling interests based on the carried interest entity contractual arrangements that govern the allocation of income (loss), such as net income allocable to T.

Income (loss) is allocated to these non-controlling interests based on the contractual arrangements that govern the allocation of income (loss).

Investments in T.

7 unchanged sentences

Investments held at fair value

Investments in T.

Rowe Price investment products have been made for both general corporate investment purposes and to provide seed capital for newly formed products.

Investments in sponsored investment products have been made for both general corporate investment purposes and to provide seed capital for newly formed products.

Those investments that we do not consolidate are carried at fair value using the quoted closing NAV per share of each fund as of the balance sheet date.

The underlying investments held by our consolidated T.

Rowe Price investment products retain investment company specialized accounting in consolidation, are considered securities held in a trading account for cash flow reporting purposes and are valued in accordance with the valuation and pricing policy used to value our assets under management which is further described in the Revenue Recognition policy below.

The underlying investments held by our consolidated sponsored investment products retain investment company specialized accounting in consolidation, are considered securities held in a trading account for cash flow reporting purposes, and are valued in accordance with the valuation and pricing policy used to value our assets under management which is further described in the Revenue Recognition policy below.

We elected to value our interest in investment partnerships, for which market prices or quotations are not readily available, at fair value using the NAV per share as a practical expedient.

1 unchanged sentence

Equity method investments

Equity method investments consist of investments in entities, including T.

Rowe Price investment products, for which we have the ability to exercise significant influence over the operating and financial policies of the investee.

Equity method investments consist of investments in entities, including sponsored investment products, for which we have the ability to exercise significant influence over the operating and financial policies of the investee.

The carrying values of these investments are adjusted to reflect our proportionate share of the investee's net income or loss, any unrealized gain or loss resulting from the translation of foreign-denominated financial statements into U.S.

4 unchanged sentences

Investments in affiliated private investment funds

The investments in affiliated private investment funds - carried interest represent interests in general partners of affiliated private investment funds with disproportionate allocation of income or capital allocation-based arrangements that are accounted for as financial instruments under ASC 323, Investments – Equity Method and Joint Ventures ("ASC 323") since the general partner has significant governance rights in the investment funds in which it invests, which demonstrate significant influence.

The investments in affiliated private investment funds - carried interest represent interests in general partners of affiliated private investment funds that have arrangements that entitle them to a disproportionate allocation of income, which is also referred to as carried interest.

We account for these investments as financial instruments under ASC 323, Investments – Equity Method and Joint Ventures ("ASC 323") since the general partner has significant governance rights in the investment funds in which it invests, which demonstrate significant influence.

The income earned is recognized as capital-allocation based income in our consolidated statements of income.

Held to Maturity

As part of the acquisition of OHA, we acquired investments in rated notes of certain European collateralized loan obligation funds.

We have designated these rated notes as held-to-maturity and will carry them on the balance sheet at amortized cost.

At December 31, 2021, these investments were recorded at their acquisition date fair value in accordance with ASC 805 - Business Combinations .

Investments in rated notes of certain European collateralized loan obligation funds are designated as held-to-maturity and carried on the balance sheet at amortized cost.

Concentration of risk

4 unchanged sentences

If we determine that an arrangement qualifies as a lease, we recognize a lease liability and a corresponding asset on the lease’s commencement date.

The lease liability is initially measured at the present value of the future minimum lease payments over the lease term using

the rate implicit in the arrangement or, if not available, our incremental borrowing rate.

The lease liability is initially measured at the present value of the future minimum lease payments over the lease term using the rate implicit in the arrangement or, if not available, our incremental borrowing rate.

An operating lease asset is measured initially at the value of the lease liability less any lease incentives received and initial direct costs incurred.

16 unchanged sentences

Intangible assets

Intangible assets acquired in the OHA acquisition consist primarily of investment advisory agreements and a trade name.

The fair values of the acquired investment advisory agreements are based on the net present value of estimated future cash flows attributable to the agreements, which include significant assumptions about revenue growth rate, discount rate and effective tax rate.

The investment advisory agreement intangible assets will be amortized using the straight-line method over their estimated useful lives unless the asset is determined to have an indefinite life as there is no foreseeable limit on the contract period.

The weighted average useful life of definite-lived intangibles assets is approximately 6.1 years.

Intangible assets consist primarily of acquired investment advisory agreements and the OHA trade name.

The fair values of the acquired investment advisory agreements are based on the net present value of estimated future cash flows attributable to the agreements, which include significant assumptions related to revenue, discount rate, and effective tax rate.

The investment advisory agreement intangible assets are amortized using the straight-line method over their estimated useful lives unless the asset is determined to have an indefinite life as there is no foreseeable limit on the contract period.

The weighted average remaining useful life of definite-lived intangibles assets is approximately 6.5 years.

The trade name fair value is determined using the relief from royalty method based on net present value of estimated cash flows, which include significant assumptions about royalty rate, revenue growth rate, discount rate and effective tax rate.

3 unchanged sentences

Impairment is indicated when the carrying value of the asset is not recoverable and exceeds its fair value.

If indicators are present, we perform a recoverability test by comparing the estimated undiscounted future cash flows attributable to the asset group in question to the asset group’s carrying amount.

If indicators are present, we perform a

recoverability test by comparing the estimated undiscounted future cash flows attributable to the asset group in question to the asset group’s carrying amount.

If the undiscounted estimated future cash flows are less than the carrying amount of the asset, the asset’s cost is adjusted to fair value and an impairment loss is recognized.

We evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the third quarter of each year using a fair value approach.

Our evaluations have indicated that no impairment exists.

We internally conduct, manage, and report our operations as one investment advisory business.

We do not have distinct operating segments or components that separately constitute a business.

Accordingly, we attribute goodwill to a single reportable segment and reporting unit - our investment advisory business.

With the completion of the acquisition of OHA in December 2021, we are currently evaluating the impact that OHA will have on our business reporting and goodwill impairment analysis.

This reflects how the chief operating decision maker allocates resources and assesses performance.

Accordingly, we have one reporting unit - investment advisory business, consistent with our single operating segment, to which all goodwill has been assigned.

We evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the fourth quarter of each year using a fair value approach.

Our evaluations have indicated that no impairment exists.

Revenue recognition

Our revenue is earned from investment advisory, administrative, and distribution services we provide to our clients.

Our revenue is earned from investment advisory, administrative, and distribution services we provide to our clients as well as capital allocation-based income.

Each distinct service we promise in our agreements is considered a performance obligation and is the basis for determining when we recognize revenue.

11 unchanged sentences

Substantially all performance obligations for providing advisory services are satisfied over time and revenue is recognized as time passes.

Investment advisory agreements with T.

Rowe Price investment products regulated outside the U.S.

Investment advisory agreements with sponsored investment products regulated outside the U.S.

generally have two performance obligations;

11 unchanged sentences

prices furnished by dealers who make markets in such securities;

or from data provided by an independent pricing service that considers yield or price of investments of comparable quality, coupon, maturity, and type.

or from data provided by an independent pricing

service that considers yield or price of investments of comparable quality, coupon, maturity, and type.

Investments for which market prices are not readily available are not a material portion of our total assets under management.

2 unchanged sentences

Regulations require that the funds’ shareholders also approve material changes to investment advisory contracts.

Investment advisory fees also include fees earned from affiliated private investment funds or private accounts that are determined either monthly or quarterly and are generally based on the fund’s or account's net asset value or invested capital.

Investment advisory fees earned from CLOs include senior collateral management fees and subordinated collateral management fees, which are generally determined quarterly based on the sum of collateral principal amounts and the aggregate principal amount of all defaulted obligations.

If amounts distributable on any payment date are insufficient to pay the collateral management fee according to the priority of payments, any shortfall is deferred and payable on subsequent payment dates.

We recognize performance-based incentive fees in connection with the investment advisory agreements from certain separately managed and subadvised accounts.

We are entitled to receive performance-based incentive fees when the return on investment assets exceeds a certain benchmark return.

In such arrangements, these incentive fees are recognized at the end of the measurement period when the performance benchmark or contractual

outperformance has been achieved.

In such arrangements, these incentive fees are recognized at the end of the measurement period when the performance benchmark or contractual outperformance has been achieved.

Performance-based incentive fees are considered a form of variable consideration, and as such these fees are subject to potential reversal up until the end of the measurement period (which is generally one year) when the performance-based incentive fees become fixed, determinable, and are not subject to significant reversal.

There are no significant judgments made when determining the performance-based incentive fees.

Beginning in 2022, investment advisory fees will also include fees earned from affiliated private investment funds or private accounts that are determined either monthly or quarterly and are generally based on the fund’s or account's net asset value or invested capital.

Administrative, distribution, and servicing fees

6 unchanged sentences

mutual funds for accounting oversight, transfer agency, and recordkeeping services generally have one performance obligation as the promised services in each agreement are not separately identifiable from other promises in the agreement and, therefore, are not distinct.

The fees for performing these services are generally equal to the costs incurred and represent variable consideration.

The fees for performing these services are earned based on basis points of the related assets under management and represent variable consideration.

The fees are generally constrained and are recognized as revenue when costs are incurred to perform the services.

14 unchanged sentences

Capital allocation-based income

Beginning in 2022, we will record income earned from investments in affiliated private investment funds with capital allocation-based arrangements that are accounted for under ASC 323 based on the proportionate share of the income or loss of the fund assuming the fund was liquidated as of each reporting date pursuant to each investment fund's governing agreements.

Accordingly, this income, also known as carried interest, is accounted for outside of the scope of ASC 606.

This represents the income earned from investments in affiliated private investment funds with arrangements that are entitled to a disproportionate allocation of income, which is also known as carried interest.

These investments are accounted for under ASC 323 and the income recognized represents the proportionate share of the income or loss of the fund assuming the fund was liquidated as of each reporting date pursuant to each investment fund's governing agreements.

Capital allocation-based income will fluctuate period-to-period to reflect the adjustment to accrued carried interest for the change in value of the affiliated funds' underlying investments assuming the value was realized as of the end of the period, regardless of whether the fund's underlying investments have been realized.

The realization of accrued carried interest occurs over a number of years.

Accordingly, this income is accounted for outside of the scope of ASC 606, Revenue Recognition , and recorded as part of capital allocation-based income in our consolidated statements of income.

A portion of this income is allocated to non-controlling interest holders and is reflected as compensation expense.

Costs of advertising are expensed the first time that the advertising takes place.

3 unchanged sentences

As of December 31, 2022, a total of 10,437,953 shares were available for future grant under the 2020 Long-Term Incentive Plan and the 2017 Non-Employee Director Equity Plan (2017 Plan).

Under our LTI Plans, we have issued restricted shares and restricted stock units to employees that settle in shares of our common stock after vesting.

Under our LTI Plans, we have issued restricted stock units to employees that settle in shares of our common stock after vesting.

Vesting of these awards is based on the individual continuing to render service over an average 5.0 year graded schedule.

All restricted stockholders and restricted stock unit holders receive non-forfeitable cash dividends and cash dividend equivalents, respectively, on our dividend payable date.

All restricted stock unit holders receive non-forfeitable cash dividends and cash dividend equivalents, respectively, on our dividend payable date.

We are also authorized to grant qualified incentive and nonqualified fixed stock options with a maximum term of 10 years.

16 unchanged sentences

The components of comprehensive income are presented in a separate statement following our consolidated statements of income and include net income and the change in our currency translation adjustments.

The currency translation adjustments result from translating our proportionate share of the financial statements of our equity method investment in UTI, and certain consolidated T.

Rowe Price investment products into U.S.

The currency translation adjustments result from translating our proportionate share of the financial statements of our equity method investment in UTI, and certain consolidated sponsored investment products into U.S.

Assets and liabilities are translated into U.S.

1 unchanged sentence

The changes in accumulated balances of each component of other comprehensive income, the deferred tax impacts of each component, and information about significant items reclassified out of accumulated other comprehensive income are presented in the notes to the financial statements.

The notes also indicate the line item

of our consolidated statements of income in which the significant reclassifications were recognized.

The notes also indicate the line item of our consolidated statements of income in which the significant reclassifications were recognized.

We reclassify income tax effects relating to currency translation adjustments to tax expense when there is a reduction in our ownership interest in the related investment.

6 unchanged sentences

The upfront purchase consideration included the retirement of $ 217.1 million of OHA debt.

The consideration transferred is subject to customary working capital and escrow settlements in the post-combination period.

The equity consideration transferred is restricted from sale for one year .

An additional $ 8.5 million of cash was paid to the sellers in June 2022 following the finalization of the purchase consideration.

The equity consideration transferred was restricted from sale for one year .

In addition, contingent consideration in the amount of up to $ 900.0 million in cash may be due as part of an earnout payment starting in 2025 and ending in 2027, upon satisfying or exceeding certain defined revenue targets.

These defined revenue targets are evaluated on a cumulative basis beginning at the end of 2024, with the ability to extend two additional years if the defined revenue targets are not achieved.

The earnout amount will be subject to a proportional reduction if OHA's actual revenue at the end of the earnout period does not meet the defined revenue targets and could result in no earnout payout if OHA's actual revenue falls below 75 % of the defined revenue target.

The earnout amount is subject to a proportional reduction if OHA's actual revenue at the end of the earnout period does not meet the defined revenue targets and could result in no earnout payout if OHA's actual revenue falls below 75 % of the defined revenue target.

About 22 % of the earnout is conditioned upon continued service with T.

Rowe Price and is excluded from the purchase consideration transferred as further discussed in Compensation Arrangements below.

A Monte Carlo simulation was used to determine the fair value of the earnout.

Rowe Price and was excluded from the purchase consideration transferred as further discussed in Compensation Arrangements below.

The portion of the earnout which is not conditioned upon continued service with T.

Rowe Price had a fair value of $ 306.3 million and is recorded as a contingent consideration liability in our 2021 consolidated balance sheet.

The acquisition met the requirements to be considered a business combination under ASC 805 - Business Combinations and was accounted for using the acquisition method of accounting.

Accordingly, the purchase price consideration was allocated to the assets acquired, including separately identified intangibles, and liabilities assumed based on their estimated fair values as of the acquisition date.

Any excess of the purchase price over the fair value of the identifiable assets and liabilities is recorded as goodwill.

Approximately $ 1.2 billion of the goodwill generated by the acquisition is deductible in future periods for U.S.

federal income tax purposes.

The remaining goodwill is not deductible for tax purposes.

The non-deductible goodwill is part of a tax basis difference associated with our investment in OHA, and, as permitted by accounting guidance, we have adopted an accounting policy to not record a related deferred tax liability.

In addition to the upfront and contingent consideration, we also assumed debt of $ 113.5 million and identified non-controlling interests in acquired consolidated entities of $ 248.7 million.

See below for a summary of the total purchase consideration transferred at closing and the total purchase consideration allocated.

(in millions)

Cash consideration $ 2,487.4

Contingent consideration 306.3

Equity consideration 881.5

Debt assumed 113.5

Non-controlling interests in consolidated entities 248.7

Total purchase consideration at closing 4,037.4

cash payment treated as future compensation expense (1)

Total purchase consideration transferred $ 3,754.2

(1) See discussion in Compensation Arrangement section below.

The amount is included within “Other Assets” on our consolidated balance sheet.

The purchase price allocation is preliminary and subject to change during the measurement period, which is not to exceed one year from the acquisition date.

The following table sets forth the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition:

(in millions) Acquisition date fair value

Rowe Price had a fair value of $ 95.8 million and $ 306.3 million at December 31, 2022 and 2021, respectively, and is recorded as a contingent consideration liability in our consolidated balance sheets.

The following table sets forth the preliminary and revised fair values of the assets acquired and liabilities assumed in connection with the acquisition:

(in millions) Acquisition date fair value Adjustments Revised fair value

Cash and cash equivalents $ 22.1 $ — $ 22.1

10 unchanged sentences

Deferred tax liabilities, included in other assets in the consolidated balance sheet 125.7 ( 9.6 ) 116.1

Total liabilities assumed 373.1

Total purchase consideration $ 3,754.2

The fair values of the acquired assets and liabilities assumed were determined using level 3 inputs.

The fair value of the intangible assets and certain investments in affiliated private investment funds where we earn a carried interest were determined using net present value of estimated future cash flows.

The acquired book values of the remaining assets and liabilities approximated their fair values.

Contingent consideration liability 306.3 ( 49.3 ) 257.0

Total liabilities 679.4 ( 58.9 ) 620.5

Total identifiable net assets $ 3,447.9 $ 8.5 $ 3,456.4

The adjustments to the acquisition date fair values are a result of new information obtained about facts that existed as of the acquisition date.

As part of the acquisition, T.

Rowe Price Group, Inc.

incurred approximately $ 31.9 million of acquisition-related costs that are included in general, administrative and other expenses in our 2021 consolidated statement of income.

incurred approximately $ 31.9 million of acquisition-related costs in 2021 that are included in general, administrative and other expenses in our 2021 consolidated statement of income.

We incurred additional $ .9 million of acquisition-related costs during 2022.

GOODWILL AND INTANGIBLE ASSETS

1 unchanged sentence

Rowe Price from the OHA acquisition, which do not qualify as separately recognized intangible assets.

With the completion of the acquisition of OHA in December 2021, we are currently evaluating the impact that OHA will have on our segment reporting and goodwill impairment analysis.

The intangible assets include an indefinite-lived trade name of $ 134.7 million and both indefinite- and definite-lived investment advisory agreements totaling $ 778.7 million.

Approximately $ 1.2 billion of the goodwill generated by the acquisition is deductible in future periods for U.S.

federal income tax purposes.

The remaining goodwill is not deductible for tax purposes.

The separately identified intangible assets at acquisition close included an indefinite-lived trade name of $ 134.7 million and both indefinite- and definite-lived investment advisory agreements totaling $ 778.7 million.

See Note 10 for more details on goodwill and the intangible assets.

As part of the OHA acquisition, investments in affiliated private investment funds have been recorded at fair value of $ 761.1 million as of the acquisition date.

The difference of $ 375.0 million between the carrying value of these investments on OHA’s books and their fair value represent the basis difference, of which $ 306.5 million will be amortized on a straight-line basis over the funds’ estimated weighted average remaining life of 5.9 years.

This amortization will be included in “Net revenues” in the consolidated statements of income in future periods.

Rowe Price acquired the majority, but not 100 % of the equity interest in these carried interest entities, non-controlling interests have been recorded in permanent stockholders' equity at a fair value of $ 248.7 million as of the acquisition date.

The fair value of these non-controlling interests include a basis difference of $ 154.3 million, of which $ 129.1 million is attributable to funds with a definite life and will be amortized on a straight-line basis over the funds’ estimated weighted average remaining life of 5.9 years.

The non-controlling interests are held by employees that participate in the management of the investments in affiliated private investment funds and therefore profit and

loss allocations will be reflected as compensation expense in the consolidated statements of income.

Accordingly, the future basis difference amortization will also be included in “Compensation and related costs” line in the consolidated statements of income.

As part of the OHA acquisition, investments in affiliated private investment funds were recorded at fair value of $ 761.1 million as of the acquisition date.

The difference of $ 375.0 million between the carrying value of these investments on OHA’s books and their fair value represented the basis difference, of which $ 306.5 million is being amortized on a straight-line basis over the funds’ estimated weighted average life of 5.9 years at acquisition.

Rowe Price acquired the majority, but not 100 % of the equity interest in these carried interest entities, non-controlling interests were recorded in permanent stockholders' equity at a fair value of $ 248.7 million as of the

acquisition date.

The fair value of these non-controlling interests included a basis difference of $ 154.3 million, of which $ 129.1 million is attributable to funds with a definite life and is being amortized on a straight-line basis over the funds’ estimated weighted average life of 5.9 years at acquisition.

The non-controlling interests are held by employees that participate in the management of the investments in affiliated private investment funds and therefore profit and loss allocations is reflected as compensation expense in the consolidated statements of income.

COMPENSATION ARRANGEMENTS

In connection with the OHA acquisition, a portion of the upfront purchase consideration and future payments to sellers or employees related to other compensation arrangements are conditioned upon continued service or a future performance period.

In connection with the OHA acquisition, a portion of the upfront purchase consideration and future payments to sellers or employees related to other compensation arrangements were conditioned upon continued service or a future performance period.

These arrangements are treated as post-combination compensation expense recognized over a period of three to five years , and had an aggregate fair value of $ 459.9 million as of the acquisition closing date.

5 unchanged sentences

The fair value of the earnout and Value Creation Agreement will be remeasured each reporting period and recognized over the related service periods.

Due to the timing of the OHA acquisition, no compensation expense related to these arrangements is included in our consolidated statements of income for the year ended December 31, 2021.

See Note 6 for more information on the Value Creation Agreement.

CASH FLOW INFORMATION

For cash flow reporting purposes, there were non-cash financing activities of $ 881.5 million for the issuance of T.

For the 2021 statement of cash flow, there were non-cash financing activities of $ 881.5 million for the issuance of T.

Rowe Price Group, Inc.

17 unchanged sentences

Administrative, distribution, and servicing fees

(in millions) Investment advisory fees Administrative fees Distribution and servicing fees Net revenues

(in millions) Investment advisory fees Administrative fees Distribution and servicing fees Capital allocation-based income Net revenues

mutual funds $ 3,486.2 $ 338.3 $ 92.2 $ — $ 3,916.7

24 unchanged sentences

Multi-asset 699.4 763.2 577.6

Alternatives 273.1 — —

2,482.9 2,709.2 2,053.2

1 unchanged sentence

The following table summarizes the investment portfolios and assets under management on which we earned investment advisory fees.

The assets under management as of December 31, 2021, in the table below, excludes fee-basis assets under management of $ 46.9 billion acquired as part of the OHA acquisition.

(in billions) Average during As of December 31,

8 unchanged sentences

Multi-Asset 218.9 219.8 156.8 215.9 245.5

Alternatives 42.7 — — 43.4 41.7

692.7 742.7 560.2 646.9 816.4

3 unchanged sentences

account for about 9.1 % and 9.9 % of our assets under management at December 31, 2022 and 2021, respectively.

The percentage at December 31, 2021 reflects the assets under management from OHA's clients outside the United States.

Total net revenues earned from T.

Rowe Price investment products totaled $ 6,259.3 million in 2021, $ 5,044.3 million in 2020, and $ 4,626.3 million in 2019.

Total net revenues earned from sponsored investment products totaled $ 5,326.3 million in 2022, $ 6,259.3 million in 2021, and $ 5,044.3 million in 2020.

Accounts receivable from these products aggregate to $ 492.4 million at December 31, 2022 and $ 577.9 million at December 31, 2021.

NOTE 5 – INVESTMENTS.

The carrying values of investments that are not part of the consolidated T.

Rowe Price investment products at December 31 are as follows:

The carrying values of investments that are not part of the consolidated sponsored investment products at December 31 are as follows:

(in millions) 2022 2021

16 unchanged sentences

Investments in affiliated collateralized loan obligations 109.6 119.1

Certificates of deposit 9.2 —

Treasury note 1.0 1.0

Total $ 2,539.2 $ 2,975.5

(1) These investments were acquired as part of the OHA acquisition.

As of December 31, 2021, these investments are recorded at their acquisition date fair value but will be accounted for as held-to-maturity going forward.

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 2021, we recognized $ 63.6 million of net unrealized gains on investments held at fair value that were still held at December 31, 2021.

During 2022, we recognized $ 240.5 million of net unrealized losses on investments held at fair value that were still held at December 31, 2022.

For 2021, we recognized $ 63.6 million of net unrealized gains on investments held at fair value that were still held at December 31, 2021.

For 2020, we recognized $ 142.7 million of net unrealized gains on investments held at fair value that were still held at December 31, 2020.

Dividends, including capital gain distributions, earned on the T.

Rowe Price investment products held at fair value, totaled $ 90.2 million in 2021, $ 50.8 million in 2020, and $ 50.6 million in 2019.

During each of the last three years, 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.

Depending on our ownership interest, we are now reporting our residual interests in these T.

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

Additionally, during 2020 and 2019, certain T.

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

Dividends, including capital gain distributions, earned on the sponsored investment products held at fair value, totaled $ 45.3 million in 2022, $ 90.2 million in 2021, and $ 50.8 million in 2020.

During each of the last three years, certain sponsored investment products in which we provided initial seed capital at the time of formation were deconsolidated, as we no longer had a controlling interest.

Depending on our ownership interest, we are now reporting our residual interests in these sponsored investment products as either an equity method investment or an investment held at fair value.

Additionally, during 2022 and 2021, certain sponsored investment products that were being accounted for as either equity method or fair value investments were consolidated, as we regained a controlling interest.

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

(in millions) 2022 2021 2020

Net decrease in assets of consolidated T.

Rowe Price investment products $ ( 753.0 ) $ ( 546.1 ) $ ( 380.5 )

Net decrease in liabilities of consolidated T.

Rowe Price investment products $ ( 17.6 ) $ ( 10.5 ) $ ( 15.0 )

Net decrease in assets of consolidated sponsored investment products $ ( 256.9 ) $ ( 753.0 ) $ ( 546.1 )

Net decrease in liabilities of consolidated sponsored investment products $ ( 12.8 ) $ ( 17.6 ) $ ( 10.5 )

Net decrease in redeemable non-controlling interests $ ( 147.2 ) $ ( 501.1 ) $ ( 308.1 )

Gains recognized upon deconsolidation $ 3.0 $ 2.4 $ .7

The gains 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.

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

1 unchanged sentence

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

INVESTMENTS IN AFFILIATED PRIVATE INVESTMENT FUNDS.

We acquired investments in certain OHA affiliated private investment funds that are recorded at their acquisition fair value of $ 761.1 million as of December 31, 2021 and reported in investments in our 2021 consolidated balance sheet.

For the carried interest investments, we will recognize an allocable share of net profits as determined by the underlying limited partnership agreements in net revenues in future consolidated statements of income.

For seed/ co-investments, we will recognize income from these investments in non-operating income in future consolidated statements of income.

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

As part of the OHA acquisition, we acquired long-term investments in collateralized loan obligations ("CLOs") and assumed debt associated with these investments.

We recorded these investments at their acquisition date fair values.

The European CLOs, which were valued at $ 116.0 million at December 31, 2022, invest in 5 % vertical strips in each class of rated notes and subordinated notes.

Certain investments in the debt tranches of the CLOs will be subsequently measured at amortized cost as investments held to maturity and included in investments in our consolidated balance sheets.

The subordinated note tranches of these investments are accounted for as equity method investments and our allocable share of income will be included in non-operating income (loss) in the consolidated statements of income beginning in 2022.

Certain investments in the debt tranches of the CLOs are measured at amortized cost as investments held to maturity and included in investments in our consolidated balance sheets.

The subordinated note tranches of these investments are accounted for as equity method investments and our allocable share of income is included in non-operating income (loss) in the consolidated statements of income.

Certain of the investments in the debt tranches of the CLOs have been pledged as collateral against the repurchase agreements.

The debt assumed was valued at $ 113.5 million at December 31, 2021, and is reported in accounts payable and accrued expenses of the consolidated balance sheet.

The debt assumed includes outstanding repurchase agreements of € 66.7 million (equivalent to $ 75.9 million at the December 31, 2021 EUR spot rate) that are collateralized by our CLO investment.

There is debt associated with our long-term investments in affiliated CLOs.

As of December 31, 2022 and 2021, the debt is carried at $ 103.0 million and $ 113.5 million, respectively, and is reported in accounts payable and accrued expenses in our consolidated balance sheets.

The debt includes outstanding repurchase agreements of € 66.7 million (equivalent to $ 71.3 million at December 31, 2022 and $ 75.9 million at December 31, 2021 at the respective EUR spot rates) and collateralized by our CLO investments.

Interest income on the underlying investments accrues quarterly and those amounts are retained by the counterparty.

1 unchanged sentence

We still hold the legal rights and obligations associated with the underlying assets and therefore continue to satisfy the United Kingdom risk retention requirements.

The debt we assumed also includes outstanding note facilities of € 32.4 million (equivalent to $ 36.9 million at the December 31, 2021 EUR spot rate) that were entered into in connection with the financing of certain CLO investments and are collateralized by first priority security interests in the assets of the consolidated OHA entity that is party to the notes.

The debt also includes outstanding note facilities of € 35.6 million (equivalent to $ 31.7 million at December 31, 2022 and $ 36.9 million at December 31, 2021 at the respective EUR spot rates) and are collateralized by first priority security interests in the assets of the consolidated OHA entity that is party to the notes.

These notes bear interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 3.16 % to 3.41 % as of December 31, 2022.

2 unchanged sentences

Each deed contains covenants which, if not met, may cause the termination of the note facility and declare principal and interest immediately due and payable.

The consolidated entity that is the party to the notes was in compliance with all such covenants at December 31, 2021.

The consolidated entity that is the party to the notes was in compliance with all such covenants at December 31, 2022 and 2021.

VARIABLE INTEREST ENTITIES.

4 unchanged sentences

Unfunded capital commitments 84.7 94.2

Receivable for investment advisory and administrative fees 22.9 13.8

Accounts receivable 91.5 145.1

$ 938.4 $ 1,182.6

The unfunded capital commitments, totaling $ 8.0 million at December 31, 2021, and $ 12.3 million at December 31, 2020, relate primarily to investment partnerships in which we have an existing investment.

The unfunded capital commitments, totaling $ 84.7 million at December 31, 2022, and $ 94.2 million at December 31, 2021, relate primarily to the affiliated private investment funds and 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.

In connection with the OHA acquisition, we acquired carried interest entities that hold general partner interests in affiliated private investment funds that are VIEs, though these carried interest entities were determined to not be the primary beneficiary.

Our maximum risk of loss related to these affiliated investment funds are the investment carrying value of $ 761.1 million, the unfunded capital commitments of $ 86.2 million, and their receivable for investment advisory and performance-based incentive fees of $ 122.2 million.

INVESTMENTS IN AFFILIATED FUNDS.

As part of the OHA acquisition in December 2021, we acquired a majority of the equity interests in entities that have interests in general partners of affiliated private investment funds and are entitled to a disproportionate allocation of income.

These entities are considered variable interest entities and are consolidated as T.

Rowe Price is determined to be the primary beneficiary.

The total assets, liabilities and non-controlling interests of these consolidated variable interest entities as of December 31, 2022 and 2021 are as follows:

(in millions) 2022 2021

Assets $ 526.2 $ 692.7

Liabilities $ 15.8 $ 56.4

Non-controlling interest $ 190.7 $ 248.7

NOTE 6 – FAIR VALUE MEASUREMENTS.

10 unchanged sentences

The following table summarizes our investments that are recognized in our consolidated balance sheets at December 31 using fair value measurements determined based on the differing levels of inputs.

This table excludes investments held by consolidated T.

Rowe Price investment products which are presented separately on our consolidated balance sheets and are detailed in Note 7.

(in millions) Level 1 Level 2 Level 1 Level 2

This table excludes investments held by consolidated sponsored investment products which are presented separately on our consolidated balance sheets and are detailed in Note 7.

(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Rowe Price investment products

4 unchanged sentences

Other investments .6 .1 — .7 .1 —

Investments in affiliated collateralized loan obligations — 6.4 — — 10.8 —

Total $ 2,576.3 $ 40.6 $ — $ 2,826.2 $ 34.3 $ —

At December 31, 2021, the reported investments held at fair value in Note 5 include $ 108.1 million of investments that are carried at fair value using the NAV per share as a practical expedient.

These investments are not required to be included in the fair value hierarchy levels above.

As part of the acquisition of OHA, we recorded the assets acquired and liabilities assumed at the acquisition date fair value.

See Note 2 for more information on the acquisition and the fair value of the assets acquired and liabilities assumed.

NOTE 7 – CONSOLIDATED T.

ROWE PRICE INVESTMENT PRODUCTS.

Rowe Price investment products that we consolidate in our consolidated financial statements are generally those products we provided initial seed capital at the time of their formation and have a controlling interest.

mutual funds are considered voting interest entities, while those regulated outside the U.S.

Contingent consideration liability $ — $ — $ 95.8 $ — $ — $ 306.3

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 5 were $ 86.4 million and $ 108.1 million at December 31, 2022 and 2021, respectively.

As part of the purchase consideration for our acquisition of OHA in December 2021, there was contingent consideration in the amount of up to $ 900.0 million as part of an earnout payment.

See Note 2 for more details on the earnout arrangement.

About 22 % of the earnout is conditioned upon continued service with T.

Rowe Price and was excluded from the purchase consideration and deemed compensatory.

The fair value of the earnout deemed compensatory is remeasured each reporting period and recognized over the related service period.

For the year ended December 31, 2022, $ 13.5 million was recorded as part of compensation expense in our consolidated statements of income for the portion of the earnout deemed compensatory.

The change in the contingent consideration liability measured at fair value for which we used Level 3 inputs to determine fair value is as follows:

Contingent Consideration Liability

(in millions) Year ended 12/31/2022

Balance at beginning of period $ 306.3

Measurement period adjustment ( 49.3 )

Unrealized gains, included in earnings ( 161.2 )

Balance, December 31, 2022

The fair value of the contingent consideration is measured using the Monte Carlo simulation methodology of valuation.

The most significant assumptions used relate to the discount rates and from changes pertaining to the achievement of the defined financial targets.

In addition, simultaneously with the OHA acquisition, a Value Creation Agreement was entered into whereby certain employees of OHA will receive incentive payments based on the appreciated value of the OHA business on the fifth anniversary of the acquisition date.

See Note 2 for more details on this arrangement.

This arrangement is treated as a post-combination compensation expense.

This arrangement will be remeasured at fair value at each reporting date and recognized over the related service period.

For the year ended December 31, 2022, $ 8.9 million was recognized as part of compensation expense in our consolidated statements of income.

During 2022, we recognized impairment charges on certain of our identified intangible assets related to the OHA acquisition.

As part of the impairment recognition, a fair value measurement was determined for these intangible assets.

See Note 10 for further discussion of the impairments.

NOTE 7 – CONSOLIDATED SPONSORED INVESTMENT PRODUCTS.

The sponsored investment products that we consolidate in our consolidated financial statements are generally those products we provided initial seed capital at the time of their formation and have a controlling interest.

mutual funds and certain other sponsored products are considered voting interest entities, while those regulated outside the U.S.

are considered variable interest entities.

The following table details the net assets of the consolidated T.

Rowe Price investment products at December 31:

The following table details the net assets of the consolidated sponsored investment products at December 31:

(in millions) VOE VIE Total VOE VIE Total

13 unchanged sentences

Rowe Price money market mutual funds.

(2) Investments include $ 42.5 million and $ 26.9 million at December 31, 2021 and 2020, respectively, of T.

Rowe Price investment products.

Although we can redeem our net interest in the T.

Rowe Price investment products at any time, we cannot directly access or sell the assets held by these products to obtain cash for general operations.

(2) Investments include $ 7.6 million and $ 42.5 million at December 31, 2022 and 2021, respectively, of sponsored investment products.

Although we can generally redeem our net interest in the sponsored investment products at any time, we cannot directly access or sell the assets held by these products to obtain cash for general operations.

Additionally, the assets of these investment products are not available to our general creditors.

Since third-party investors in these investment products have no recourse to our credit, our overall risk related to the net assets of consolidated T.

Rowe Price investment products is limited to valuation changes associated with our net interest.

Since third-party investors in these investment products have no recourse to our credit, our overall risk related to the net assets of consolidated sponsored investment products is limited to valuation changes associated with our net interest.

We, however, are required to recognize the valuation changes associated with all underlying investments held by these products in our consolidated statements of income and disclose the portion attributable to third-party investors as net income attributable to redeemable non-controlling interests.

The operating results of the consolidated T.

Rowe Price investment products, are reflected in our consolidated statements of income for the year ended December 31 as follows:

The operating results of the consolidated sponsored investment products, are reflected in our consolidated statements of income for the year ended December 31 as follows:

2022 2021 2020

9 unchanged sentences

In preparing our consolidated financial statements, we eliminated operating expenses of $ 2.0 million in 2022, $ 5.5 million in 2021, and $ 9.9 million in 2020, against the investment advisory and administrative fees earned from these products.

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

The following table details the impact of these consolidated investment products on the individual lines of our consolidated statements of cash flows.

8 unchanged sentences

Cash and cash equivalents at end of year $ 16.2 $ 102.9 $ 119.1 $ 7.3 $ 93.8 $ 101.1 $ 7.1 $ 97.7 $ 104.8

The net cash provided by financing activities includes $ 51.9 million in 2021, $ 79.5 million in 2020 and $ 174.4 million in 2019, of net subscriptions we made into the consolidated T.

Rowe Price investment products, net of dividends received.

The net cash provided by financing activities includes $ 142.8 million in 2022, $ 51.9 million in 2021 and $ 79.5 million in 2020, of net subscriptions we made into the consolidated sponsored investment products, net of dividends received.

These cash flows were eliminated in consolidation.

FAIR VALUE MEASUREMENTS.

We determine the fair value of investments held by consolidated T.

Rowe Price investment products using the following broad levels of inputs as defined by related accounting standards:

We determine the fair value of investments held by consolidated sponsored investment products using the following broad levels of inputs as defined by related accounting standards:

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

4 unchanged sentences

Level 3 – unobservable inputs reflecting our own assumptions based on the best information available.

investments using Level 3 inputs is insignificant.

These levels are not necessarily an indication of the risk or liquidity associated with these investment holdings.

The following table summarizes the investment holdings held by our consolidated T.

Rowe Price investment products using fair value measurements determined based on the differing levels of inputs as of December 31.

The following table summarizes the investment holdings held by our consolidated sponsored investment products using fair value measurements determined based on the differing levels of inputs as of December 31.

(in millions) Level 1

Level 3 Level 1

Cash equivalents $ 4.4 $ 20.6 $ — $ 6.5 $ .7 $ —

4 unchanged sentences

Liabilities $ ( .9 ) $ ( 19.1 ) $ — $ ( .7 ) $ ( 9.7 ) $ —

The fair value of Level 3 investments held by consolidated sponsored investment products are derived from inputs that are unobservable and which reflect the company's own determinations about the assumptions that market participants would use in pricing the investments, including assumptions about risk.

These inputs are developed based on the company's own data, which is adjusted if information indicates that market participants would use different assumptions.

Changes in fair value Level 3 are solely attributable to the purchases of investments during 2022.

There were no transfers into or out of Level 3 of the fair value hierarchy for the year ended December 31, 2022.

The following table provides information about the significant Level 3 inputs:

Fair value measurements as of December 31, 2022

(in millions) Fair value Valuation techniques Unobservable inputs Ranges

Other investments $ 71.8 Market Yield (Comparables) Yield 9.8 % - 12.4 %

NOTE 8 – LEASES.

6 unchanged sentences

We made lease payments of $ 44.8 million during 2022.

Due to the timing of the closing of the acquisition of OHA on December 29, 2021, we have excluded operating lease expense and payments for 2021 from the disclosures above.

Our future undiscounted cash flows related to our operating leases, including operating leases associated with OHA, and the reconciliation to the operating lease liability as of December 31, 2022, are as follows:

24 unchanged sentences

Total $ 3,272.6 $ 3,606.6

The estimated weighted average life for the definite-lived intangible assets is 6.1 years.

Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for 2022 through 2026 is $ 108.5 million for 2022, $ 108.1 million for 2023, $ 105.7 million for 2024, $ 105.0 million for 2025 and $ 87.7 million for 2026.

Due to the timing of the acquisition of OHA, there was no amortization expense for acquisition intangible assets included in the consolidated statements of income for the year ended December 31, 2021.

Goodwill activity during the years ended December 31, 2022 and 2021, was as follows:

2 unchanged sentences

Acquisition of OHA — 2,027.5

Measurement period adjustments ( 50.4 ) —

Balance, end of year $ 2,642.8 $ 2,693.2

For the goodwill held prior to the acquisition of OHA, we evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the third quarter of each year using a fair value approach.

We evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the fourth quarter of each year using a fair value approach.

We did no t record any impairment charges for goodwill for the years ended December 31, 2022, 2021, or 2020.

INTANGIBLE ASSETS .

Our indefinite-lived intangible assets are tested for impairment annually, in the fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the intangible asset is impaired.

Based on a review of qualitative factors, primarily, the current market environment and future outlook, we determined that it was necessary to perform a quantitative impairment test.

The impairment test consists of a comparison of the fair value of an intangible asset with its carrying amount.

During 2022, we determined that the carrying amount of our indefinite-lived intangible assets exceeded their fair value.

Accordingly, we recognized an impairment loss equal to that excess in the amount of $ 99.2 million for the investment advisory agreements and $ 17.6 million for the trade name.

Fair value for each asset was determined using a discounted cash flow analysis where estimated future cash flows were discounted to arrive at a single present value amount.

This approach included inputs that required significant management judgment, the most relevant of which included revenue growth, discount rates, and effective tax rates.

Definite-lived intangible assets are reviewed for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable (i.e., the carrying amount is less than the undiscounted estimated future cash flows).

Based on a review of factors significant to these assets, we determined that the carrying amount is not recoverable from certain of these intangible assets.

Accordingly, we then assessed whether the fair value was less than the asset's carrying amount.

During 2022, we determined that the carrying amount of certain intangible assets exceeded their fair value and recorded an impairment loss equal to that excess in the amount of $ 58.3 million.

Fair value was determined using a discounted cash flow analysis where estimated future cash flows were discounted to arrive at a single present value amount.

This approach included inputs that required significant management judgment, the most relevant of which included revenue growth, discount rates, and effective tax rates.

Should conditions that led us to recognize these impairment charges continue or deteriorate, additional impairments may be recognized in future periods.

As of December 31, 2022, the estimated weighted average remaining life for the definite-lived intangible assets is 6.5 years.

Amortization expense for the definite-lived investment advisory agreement intangible assets was $ 108.5 million for 2022.

Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for 2023 through 2027 is, $ 96.3 million for 2023, $ 93.9 million for 2024, $ 93.2 million for 2025, $ 75.9 million for 2026, and $ 51.6 million for 2027.

NOTE 11 – INCOME TAXES.

12 unchanged sentences

Asset impairments 4.6 2.0 2.9

Operating lease assets 24.7 ( 10.6 ) 1.0

Operating lease liabilities ( 24.2 ) 10.6 ( 1.0 )

Stock-based compensation ( 8.7 ) ( 8.1 ) 1.8

1 unchanged sentence

Supplemental savings plan liability 21.3 ( 29.3 ) ( 43.3 )

Acquisition-related retention liability ( 13.6 ) — —

Contingent consideration liability 32.4 — —

Acquired investments ( 73.0 ) — —

Unrealized holding gains recognized in non-operating income ( 114.6 ) ( 26.1 ) 46.8

20 unchanged sentences

Accrued compensation 9.6 9.1

Acquired investments 20.8 —

Supplemental savings plan 168.9 190.2

Net unrealized holding losses recognized in income 10.6 —

Currency translation adjustment 8.5 2.0

2 unchanged sentences

Acquisition-related retention liability ( 54.3 ) ( 68.4 )

Contingent consideration liability ( 32.4 ) —

Acquired Investments — ( 59.2 )

5 unchanged sentences

Net deferred tax (liability) asset $ 216.1 $ ( 7.0 )

We consider the need for valuation allowances against our deferred tax assets to the extent that we are not able to generate sufficient taxable income.

During 2022, we recognized an immaterial amount of valuation allowances against our deferred tax assets.

Unless we are able to generate sufficient taxable income in future periods, we may need to record additional valuation allowances to further reduce our deferred tax assets.

Any additional amount of valuation allowances could materially increase our income tax expenses in future periods.

We intend to repatriate earnings of T.

45 unchanged sentences

Exercisable at December 31, 2022 2,218,506 $ 74.31 1.7

Compensation and related costs includes a charge for stock option-based compensation expense of $ 2.0 million in 2020 and $ 5.1 million in 2019.

There was no stock option-based compensation expense in 2021.

Compensation and related costs includes a charge for stock option-based compensation expense.

There was no stock option-based compensation expense in 2022 and 2021, but, in 2020, we recorded $ 2.0 million of stock option-based compensation expense.

The total intrinsic value of options exercised was $ 40.3 million in 2022, $ 177.2 million in 2021, and $ 198.3 million in 2020.

At December 31, 2021, the aggregate intrinsic value of in-the-money options outstanding was $ 352.3 million, all outstanding options are exercisable.

EFFECT OF SPECIAL CASH DIVIDEND.

As a result of the special cash dividend declared by the Board of Directors in June 2021, the anti-dilution provisions of our employee long-term incentive plans and non-employee director plans (collectively, the LTI plans) require an automatic adjustment to neutralize the effect of the special cash dividend.

On the special cash dividend’s ex-dividend date (June 24, 2021), the number of shares authorized and the number of stock options outstanding and their exercise price were adjusted resulting in an increase of 50,607 stock options outstanding on the ex-dividend date, and no incremental compensation expense.

In the table above, the number of options outstanding at December 31, 2020 was updated to reflect this adjustment.

At December 31, 2022, the aggregate intrinsic value of in-the-money options outstanding was $ 77.1 million.

All outstanding options are exercisable.

RESTRICTED SHARES AND STOCK UNITS.

49 unchanged sentences

Currency translation adjustments

(in millions) Equity method investments Consolidated T.

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

(in millions) Equity method investments Consolidated sponsored investment products - variable interest entities Total currency translation adjustments Total

Balances at December 31, 2019 $ ( 46.9 ) $ 3.9 $ ( 43.0 ) $ ( 43.0 )

19 unchanged sentences

NOTE 16 – COMMITMENTS AND CONTINGENCIES.

Rowe Price has committed $ 500 million to fund OHA products over the next five years .

Rowe Price has committed $ 464.1 million to fund OHA products over the next four years .

CONTINGENCIES.

On February 14, 2017, T.

Rowe Price Group, Inc., T.

Rowe Price Associates, Inc., T.

Rowe Price Trust Company, current and former members of the management committee, and trustees of the T.

Rowe Price U.S.

Retirement Program were named as defendants in a lawsuit filed in the United States District Court for the District of Maryland.

The lawsuit alleges breaches of ERISA’s fiduciary duty and prohibited transaction provisions on behalf of a class of all participants and beneficiaries of the T.

Rowe Price 401(k) Plan from February 14, 2011, to the time of judgment.

The matter has been certified as a class action.

The parties reached a settlement agreement, which was presented to the court for preliminary approval on January 7, 2022.

The proposed settlement would not be material to T.

Rowe Price Group, Inc.

In addition to the matter discussed above, various claims against us arise in the ordinary course of business, including employment-related claims.

On October 27, 2022, two individuals filed a class action lawsuit in the United States District Court for the Southern District of California against T.

Rowe Price Retirement Plan Services, Inc.

The complaint alleges that use of certain biometric voiceprints to validate the identity of callers as participants in retirement plans serviced by RPS violated the California Invasion of Privacy Act (“CIPA”) because RPS did not obtain their express written consent.

While we believe the claims are without merit and will vigorously defend the case, we cannot predict at this time the outcome of the litigation or estimate the possible loss or range of loss that may arise from the proceeding.

Various claims against us arise in the ordinary course of business, including employment-related claims.

In the opinion of management, after consultation with counsel, the likelihood of an adverse determination in one or more of these pending ordinary course of business claims that would have a material adverse effect on our financial position or results of operations is remote.

5 unchanged sentences

The amounts deferred are adjusted in accordance with the hypothetical investments chosen by the officer from a list of mutual funds.

Beginning with the plan's 2021 year, the maximum that certain senior officers can defer will be the lesser of 50 % of their annual cash incentive earned or $ 2 million.

Additionally, the officers can now defer amounts for a minimum of five years rather than the two years prior to the plan's 2021 year.

Beginning with the plan's 2021 year, the maximum that certain senior officers can defer is the lesser of 50 % of their annual cash incentive earned or $ 2 million.

Previous to the 2021 plan year, the officer could initially defer these amounts for a period of two to 15 years.

This was updated to five to 15 years beginning with the plan's 2021 year.

Certain senior officers elected to defer $ 51.8 million in 2022, $ 62.4 million in 2021, and $ 105.8 million in 2020.

20 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the completeness and accuracy of assets under management data used in the calculation of investment advisory fees revenue

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the completeness and accuracy of assets under management data used in the calculation of investment advisory fee revenue

As discussed in Note 1 to the consolidated financial statements, the Company recognizes fees for its investment advisory agreements based on a percentage of its assets under management (AUM).

6 unchanged sentences

The following are the primary procedures we performed to address the critical audit matter.

We evaluated the design and tested the operational effectiveness of certain internal controls over the Company’s revenue processes, including manual controls over the completeness and accuracy of AUM data.

We evaluated the design and tested the operational effectiveness of certain controls over the Company’s revenue processes, including manual controls over the completeness and accuracy of AUM data.

We involved IT professionals with specialized skills and knowledge, who assisted in the testing of general IT controls and the interface of data between multiple IT systems used to maintain AUM data.

To assess the AUM data, we (1) compared AUM used in the calculation of a sample of investment advisory fees to the source IT systems, and (2) for a selection of Funds, compared AUM on select dates from the source IT system to the audited Fund financial statements.

Purchase price allocation for Oak Hill Advisors, L.P.

and certain related entities

As discussed in Note 2 to the consolidated financial statements, the Company completed its acquisition of Oak Hill Advisors, L.P.

on December 29, 2021.

The Company accounted for this transaction as a business combination.

The transaction resulted in management recording $778.7 million of investment advisory agreement intangibles and $609.8 million of equity method investments in affiliated private investment funds with capital allocation-based income arrangements (certain acquired assets).

Fair values of these certain acquired assets at the transaction date are based on the net present value of estimated future cash flows attributable to those assets, which include assumptions as of the acquisition date about the discount rates and assets under management (AUM) data.

We have identified the evaluation of the purchase price allocation to these certain acquired assets as a critical audit matter.

Subjective auditor judgement was required to determine the extent of audit evidence over the existence and valuation of AUM data.

Additionally, specialized skills and knowledge were required to evaluate management’s discount rates used to estimate the fair value of these certain acquired assets.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s accounting for the acquisition, including controls over the existence and valuation of AUM data and the determination of the discount rates.

We evaluated the existence and valuation of AUM data at the acquisition date by confirming certain underlying investment positions with third parties and independently pricing those securities.

We also involved valuation professionals with specialized skills and knowledge to assist in evaluating the appropriateness of management’s assumptions about the discount rates by testing the inputs used by management.

We have served as the Company’s auditor since 2001.

3 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data