What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-02 compared with 2022-10-27 · 143 added, 274 removed, 420 unchanged (50% of the section changed)

6 unchanged sentences

Investments 2,606.2 2,539.2

Assets of consolidated T.

Rowe Price investment products ($ 1,234.8 million at September 30, 2022 and $ 1,761.5 million at December 31, 2021, related to variable interest entities)

Assets of consolidated sponsored investment products ($ 1,588.8 million at March 31, 2023 and $ 1,375.6 million at December 31, 2022, related to variable interest entities)

1,820.9 1,603.4

6 unchanged sentences

Accounts payable and accrued expenses $ 359.9 $ 406.7

Liabilities of consolidated T.

Rowe Price investment products ($ 41.6 million at September 30, 2022 and $ 36.2 million at December 31, 2021, related to variable interest entities)

Liabilities of consolidated sponsored investment products ($ 66.0 million at March 31, 2023 and $ 39.1 million at December 31, 2022, related to variable interest entities)

Operating lease liabilities 323.9 329.6

9 unchanged sentences

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

issued 223,920,000 shares at September 30, 2022 and 229,175,000 at December 31, 2021

issued 224,527,000 shares at March 31, 2023 and 224,310,000 at December 31, 2022

Additional capital in excess of par value 501.8 437.9

10 unchanged sentences

(in millions, except per-share amounts)

Three months ended Nine months ended

Three months ended

3/31/2023 3/31/2022

10 unchanged sentences

General, administrative, and other 107.5 98.8

Change in fair value of contingent consideration ( 49.6 ) ( 45.5 )

Acquisition-related amortization 26.0 27.1

Total operating expenses 1,053.4 985.6

3 unchanged sentences

Net gains (losses) on consolidated investment products 45.4 ( 101.4 )

Other income (loss) .4 ( 3.1 ) ( 12.2 ) ( 6.2 )

Other losses ( 3.9 ) ( 7.2 )

Total non-operating income (loss) 135.4 ( 198.5 )

13 unchanged sentences

(in millions)

Three months ended Nine months ended

Three months ended

3/31/2023 3/31/2022

4 unchanged sentences

Rowe Price investment products - variable interest entities 9.1 ( 15.5 )

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 — ( 1.6 )

1 unchanged sentence

Rowe Price investment products - variable interest entities

( 31.8 ) ( 17.2 ) ( 80.8 ) ( 32.6 )

Equity method investments

.7 3.5 ( 1.9 ) 2.4

Other comprehensive loss before income taxes ( 31.1 ) ( 13.7 ) ( 82.7 ) ( 30.2 )

Net deferred tax benefits 2.9 .8 8.1 3.6

Total other comprehensive loss ( 28.2 ) ( 12.9 ) ( 74.6 ) ( 26.6 )

Other comprehensive income (loss) before income taxes 8.0 ( 16.6 )

Net deferred tax (expense) benefits ( .6 ) 1.8

Total other comprehensive income (loss) 7.4 ( 14.8 )

Total comprehensive income 449.1 499.6

5 unchanged sentences

(in millions)

Nine months ended

Three months ended

3/31/2023 3/31/2022

2 unchanged sentences

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

Depreciation and amortization of property, equipment and software 166.0 151.1

Amortization of acquisition-related assets and retention arrangements 158.4 —

Depreciation, amortization and impairment of property, equipment and software 58.8 54.5

Amortization and impairment of acquisition-related assets and retention arrangements 48.2 53.9

Fair value remeasurement of contingent consideration liability ( 49.6 ) ( 45.5 )

1 unchanged sentence

Net (gains) losses recognized on investments ( 102.3 ) 38.3

Net redemptions in T.

Rowe Price investment products used to economically hedge supplemental savings plan liability 33.8 28.1

Net change in securities held by consolidated T.

Rowe Price investment products

291.0 ( 5.3 )

Other changes 240.9 530.0

Net redemptions in sponsored investment products used to economically hedge supplemental savings plan liability 18.4 6.1

Net change in securities held by consolidated sponsored investment products ( 200.7 ) 180.1

Other changes in assets and liabilities 238.4 238.0

Net cash provided by operating activities 511.7 1,103.4

Cash flows from investing activities

Purchases of investment products ( 47.7 ) ( 47.3 )

Dispositions of investment products 160.8 285.4

Net cash of T.

Rowe Price investment products on deconsolidation ( 8.7 ) ( 15.6 )

Purchases of sponsored investment products ( 8.4 ) ( 6.0 )

Dispositions of sponsored investment products 14.7 64.9

Net cash of sponsored investment products on deconsolidation ( 2.5 ) ( 5.9 )

Additions to property, equipment and software ( 60.7 ) ( 54.9 )

6 unchanged sentences

Rowe Price ( 282.2 ) ( 279.2 )

Net distributions to non-controlling interests in consolidated entities ( 8.4 ) —

Net subscriptions (redemptions) received from redeemable non-controlling interest holders ( 61.8 ) 22.7

Net contributions to non-controlling interests in consolidated entities .2 6.0

Net subscriptions (redemptions) from redeemable non-controlling interest holders 138.0 ( 55.9 )

Net cash used in financing activities ( 144.2 ) ( 644.1 )

2 unchanged sentences

Net change in cash and cash equivalents during period 311.5 460.4

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

Rowe Price investment products

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

1,874.7 1,624.2

Cash and cash equivalents at end of period, including $ 78.1 million at September 30, 2022, and $ 91.6 million at September 30, 2021, held by consolidated T.

Rowe Price investment products

Cash and cash equivalents at end of period, including $ 92.1 million at March 31, 2023, and $ 87.1 million at March 31, 2022, held by consolidated sponsored investment products

$ 2,186.2 $ 2,084.6

8 unchanged sentences

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

Balances at June 30, 2022 225,715 $ 45.1 $ 654.6 $ 8,311.9 $ ( 47.4 ) $ 8,964.2 $ 208.8 $ 9,173.0 $ 564.6

Net income (loss) — — — 384.4 — 384.4 .1 384.5 ( 26.6 )

Other comprehensive loss, net of tax — — — — ( 9.1 ) ( 9.1 ) — ( 9.1 ) ( 19.1 )

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

Net income — — — 421.5 — 421.5 3.5 425.0 20.2

Other comprehensive income, net of tax — — — — 1.3 1.3 — 1.3 6.1

Dividends declared ($ 1.22 per share)

3 unchanged sentences

Stock-based compensation expense — — 58.8 — — 58.8 — 58.8 —

Restricted stock units issued as dividend equivalents — — .1 ( .1 ) — — — — —

Common shares repurchased ( 25 ) — ( 2.7 ) — — ( 2.7 ) — ( 2.7 ) —

Net distributions to non-controlling interests in consolidated entities — — — — — — ( 1.9 ) ( 1.9 ) —

Net contributions to non-controlling interests in consolidated entities — — — — — — .2 .2 —

Net subscriptions from T.

Rowe Price investment products — — — — — — — — 151.1

Net consolidations of T.

Rowe Price investment products — — — — — — — — 42.7

Balances at September 30, 2022 223,920 $ 44.8 $ 499.3 $ 8,419.9 $ ( 56.5 ) $ 8,907.5 $ 207.0 $ 9,114.5 $ 580.8

Balances at March 31, 2023 224,527 $ 44.9 $ 501.8 $ 8,550.4 $ ( 51.7 ) $ 9,045.4 $ 194.4 $ 9,239.8 $ 834.1

Three months ended 3/31/2022

4 unchanged sentences

stockholders’

equity Redeemable non-controlling interests

Balances at June 30, 2021 226,925 $ 45.4 $ 673.7 $ 7,202.6 $ ( 28.7 ) $ 7,893.0 $ 880.4

Net income (loss) — — — 777.2 — 777.2 ( 19.8 )

Other comprehensive loss, net of tax — — — — ( .7 ) ( .7 ) ( 12.2 )

Dividends declared ($ 1.08 per share)

— — — ( 250.7 ) — ( 250.7 ) —

Shares issued upon option exercises 321 — 9.0 — — 9.0 —

Net shares issued upon vesting of restricted stock units 5 — ( .5 ) — — ( .5 ) —

Stock-based compensation expense — — 52.3 — — 52.3 —

Restricted stock units issued as dividend equivalents — — .4 ( .2 ) — .2 —

Common shares repurchased ( 1,034 ) ( .2 ) ( 80.3 ) ( 137.2 ) — ( 217.7 ) —

Net redemptions from T.

Rowe Price investment products — — — — — — ( 292.8 )

Net consolidations of T.

Rowe Price investment products — — — — — — 531.0

Balances at September 30, 2021 226,217 $ 45.2 $ 654.6 $ 7,591.7 $ ( 29.4 ) $ 8,262.1 $ 1,086.6

(1) Accumulated other comprehensive income

The accompanying notes are an integral part of these statements.

Nine months ended 9/30/2022

outstanding Common

stock Additional

par value Retained

earnings AOCI (1)

stockholders’

equity attributable to T.

11 unchanged sentences

Common shares repurchased ( 2,107 ) ( .3 ) ( 319.8 ) — — ( 320.1 ) — ( 320.1 ) —

Net distributions to non-controlling interests in consolidated entities — — — — — — ( 8.4 ) ( 8.4 ) —

Net contributions from non-controlling interests in consolidated entities — — — — — — 6.0 6.0 —

Net redemptions from T.

2 unchanged sentences

Rowe Price investment products — — — — — — — — ( 62.9 )

Balances at September 30, 2022 223,920 $ 44.8 $ 499.3 $ 8,419.9 $ ( 56.5 ) $ 8,907.5 $ 207.0 $ 9,114.5 $ — $ 580.8

Nine months ended 9/30/2021

outstanding Common

stock Additional

par value Retained

earnings AOCI (1)

Total stockholders’ equity Redeemable non-controlling interests

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

Net income — — — 2,342.3 — 2,342.3 22.6

Other comprehensive loss, net of tax — — — — ( 6.4 ) ( 6.4 ) ( 20.2 )

Dividends declared ($ 3.24 per share)

— — — ( 754.8 ) — ( 754.8 ) —

Special cash dividend declared ($ 3.00 per share)

— — — ( 699.5 ) — ( 699.5 ) —

Shares issued upon option exercises 1,083 .2 38.6 — — 38.8 —

Restricted shares issued, net of shares withheld for taxes 4 — — — — — —

Net shares issued upon vesting of restricted stock units 54 — ( 4.8 ) — — ( 4.8 ) —

Stock-based compensation expense — — 166.2 — — 166.2 —

Restricted stock units issued as dividend equivalents — — .6 ( .7 ) — ( .1 ) —

Common shares repurchased ( 2,889 ) ( .6 ) ( 200.6 ) ( 325.4 ) — ( 526.6 ) —

Net subscriptions into T.

Rowe Price investment products — — — — — — 6.1

Net deconsolidations of T.

Rowe Price investment products — — — — — — ( 483.6 )

Balances at September 30, 2021 226,217 $ 45.2 $ 654.6 $ 7,591.7 $ ( 29.4 ) $ 8,262.1 $ 1,086.6

Balances at March 31, 2022 227,283 $ 45.5 $ 668.2 $ 8,372.2 $ ( 31.5 ) $ 9,054.4 $ 272.2 $ 9,326.6 $ 790.4

(1) Accumulated other comprehensive income

6 unchanged sentences

mutual funds (“U.S.

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

affiliated products.

The other affiliated products include:

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

The other sponsored products include:

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.

6 unchanged sentences

Accordingly, fluctuations in financial markets and in the composition of assets under management impact our revenues and results of operations.

On December 29, 2021, we completed our acquisition of Oak Hill Advisors, L.P., a leading alternative credit manager, and other entities that had common ownership (collectively, OHA).

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").

As of September 30, 2022, OHA had $ 56 billion of capital under management (which includes net asset value, portfolio value and/or unfunded capital).

BASIS OF PRESENTATION.

4 unchanged sentences

The unaudited interim financial information contained in these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our 2022 Annual Report.

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

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

2 unchanged sentences

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

Revenues earned under agreements with clients include:

Three months ended 9/30/2022 Three months ended 9/30/2021

Administrative, distribution, and servicing fees

Our revenues are derived primarily from investment advisory services provided to individual and institutional investors through the use of U.S.

mutual funds, subadvised funds, separately managed accounts, collective investment trusts, and other sponsored products.

The other sponsored products include:

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

participant recordkeeping and transfer agent services for defined contribution retirement plans;

trust services;

and non-discretionary advisory services through model delivery.

Additionally, we derive revenue from our interests in general partners of certain affiliated private investment funds that are entitled to a disproportionate allocation of income through capital allocation-based arrangements also known as carried interest.

We manage a broad mix of equity, fixed income, multi-asset, and alternative classes and solutions that meet the varied needs and objectives of individual and institutional investors.

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

Accordingly, fluctuations in financial markets and in the composition of assets under management affect our revenues.

Net revenues earned for the three months ended March 31, 2023 and 2022, are included in the table below along with details of investment advisory revenues earned from clients by their underlying asset class.

We have also included average assets under management by asset class, on which we earn the investment advisory revenues.

Three months ended

(in millions) 3/31/2023 3/31/2022

Investment advisory fees

Administrative fees

Distribution and servicing fees

Capital allocation-based income Net revenues

Investment advisory fees

Administrative fees

Distribution and servicing fees

mutual funds $ 841.7 $ 86.5 $ 22.0 $ — $ 950.2 $ 1,125.5 $ 82.6 $ 30.9 $ 1,239.0

Subadvised funds, separate accounts, collective investment trusts, and other investment products 600.3 5.0 — 1.1 606.4 687.9 — — 687.9

Other clients (1)

— 31.6 — — 31.6 — 27.2 — 27.2

$ 1,442.0 $ 123.1 $ 22.0 $ 1.1 $ 1,588.2 $ 1,813.4 $ 109.8 $ 30.9 $ 1,954.1

Nine months ended 9/30/2022 Nine months ended 9/30/2021

Administrative, distribution, and servicing fees

(in millions) Investment advisory fees

Administrative fees

Distribution and servicing fees

Capital allocation-based income Net revenues

Investment advisory fees

Administrative fees

Distribution and servicing fees

mutual funds $ 2,694.4 $ 265.1 $ 71.5 $ — $ 3,031.0 $ 3,273.2 $ 243.1 $ 90.0 $ 3,606.3

Subadvised funds, separate accounts, collective investment trusts, and other investment products 1,906.4 12.5 — ( 80.8 ) 1,838.1 2,015.2 — — 2,015.2

Other clients (1)

— 95.1 — — 95.1 — 88.7 — 88.7

$ 4,600.8 $ 372.7 $ 71.5 $ ( 80.8 ) $ 4,964.2 $ 5,288.4 $ 331.8 $ 90.0 $ 5,710.2

(1) Other clients primarily include individuals, defined contribution plans, college savings plans, and institutions related to our non-discretionary advisory services.

Total net revenues earned from our related parties aggregate $ 1,311.2 million and $ 1,599.5 million for the three months ended September 30, 2022 and 2021, respectively.

For the nine months ended September 30, 2022 and 2021, net revenues from related parties aggregate $ 4,069.7 million and $ 4,653.7 million, respectively.

Accounts receivable from these products aggregate to $ 490.2 million at September 30, 2022 and $ 577.9 million at December 31, 2021.

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

Three months ended Nine months ended

(in millions) 9/30/2022 9/30/2021 9/30/2022 9/30/2021

Equity $ 833.9 $ 1,086.0

1 unchanged sentence

Multi-asset 386.0 404.6

841.7 1,125.5 2,694.4 3,273.2

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

Equity 316.9 458.8 1,047.5 1,329.0

Fixed income, including money market 41.4 41.3 125.2 119.6

Multi-asset 171.8 187.8 530.3 566.6

Alternatives 69.5 64.9

600.3 687.9 1,906.4 2,015.2

Total $ 1,442.0 $ 1,813.4 $ 4,600.8 $ 5,288.4

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

Average during

Three months ended Nine months ended As of

(in billions) 9/30/2022 9/30/2021 9/30/2022 9/30/2021 9/30/2022 12/31/2021

Equity $ 405.8 $ 559.8 $ 441.0 $ 534.0 $ 365.2 $ 553.9

Fixed income, including money market 79.4 88.4 82.7 85.6 74.5 85.3

Multi-asset 192.4 232.8 204.8 228.5 174.8 232.2

677.6 881.0 728.5 848.1 614.5 871.4

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

Total investment advisory fees $ 1,391.8 $ 1,662.1

Total administrative, distribution, and servicing fees 128.9 156.5

Capital allocation-based income 16.9 44.4

Net revenues $ 1,537.6 $ 1,863.0

Average AUM (in billions) :

Equity $ 687.0 $ 886.5

2 unchanged sentences

Alternatives 44.1 41.9

669.9 767.7 708.6 733.2 615.5 816.4

Total $ 1,347.5 $ 1,648.7 $ 1,437.1 $ 1,581.3 $ 1,230.0 $ 1,687.8

Average AUM $ 1,322.9 $ 1,559.9

Total net revenues earned from our sponsored products, primarily our sponsored U.S.

mutual funds and collective investment trusts, aggregate $ 1,268.0 million and $ 1,536.4 million for the three months ended March 31, 2023 and 2022, respectively.

Accounts receivable from our sponsored products aggregate to $ 498.5 million at March 31, 2023 and $ 492.4 million at December 31, 2022.

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

investment advisory clients outside the U.S.

account for 9.0 %, 9.4 %, and 9.9 % of our assets under management at September 30, 2022, June 30, 2022, and December 31, 2021, respectively.

account for 8.9 % and 9.1 % of our assets under management at March 31, 2023 and December 31, 2022, respectively.

NOTE 3 – INVESTMENTS.

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

Rowe Price investment products are as follows:

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

(in millions) 3/31/2023 12/31/2022

10 unchanged sentences

Seed capital 85.1 125.7

23 % Investment in UTI Asset Management Company Limited (India)

Investments in affiliated private investment funds - carried interest 483.8 467.8

Investments in affiliated private investment funds - seed/co-investment 179.4 173.8

23 % Investment in UTI Asset Management Company Limited (India)

Other investment partnerships and investments 2.1 2.4

8 unchanged sentences

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

During the three- and nine- months ended September 30, 2022, net losses on investments included $ 35.3 million and $ 258.7 million, respectively, of net unrealized losses related to investments held at fair value that were still held at September 30, 2022.

During the three months ended September 30, 2021, net losses on investments included $ 4.6 million of net unrealized losses related to investments held at fair value that were still held at September 30, 2021.

During the nine months ended September 30, 2021, net gains on investments included $ 83.7 million of net unrealized gains related to investments held at fair value that were still held at September 30, 2021.

During the nine months ended September 30, 2022 and 2021, 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 the nine months ended September 30, 2022 and September 30, 2021, certain T.

Rowe Price investment products were consolidated, as we regained a controlling interest.

During the three months ended March 31, 2023, net gains on investments included $ 46.7 million of net unrealized gains related to investments held at fair value that were still held at March 31, 2023.

During the three months ended March 31, 2022, net losses on investments included $ 99.9 million of net unrealized losses related to investments held at fair value that were still held at March 31, 2022.

During the three months ended March 31, 2023 and 2022, 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 the three months ended March 31, 2022, certain sponsored investment products 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 Nine months ended

Three months ended

(in millions) 3/31/2023 3/31/2022

Net increase (decrease) in assets of consolidated T.

Rowe Price investment products $ 24.2 $ 589.7 $ ( 289.6 ) $ ( 727.6 )

Net increase (decrease) in liabilities of consolidated T.

Rowe Price investment products $ — $ 7.1 $ ( 15.0 ) $ ( 17.1 )

Net increase (decrease) in redeemable non-controlling interests $ 42.9 $ 531.0 $ ( 175.2 ) $ ( 483.6 )

Net decrease in assets of consolidated sponsored investment products $ ( 2.4 ) $ ( 97.5 )

Net decrease in liabilities of consolidated sponsored investment products $ ( .1 ) $ ( 8.6 )

Net decrease in redeemable non-controlling interests $ — $ ( 63.0 )

Gains recognized upon deconsolidation $ — $ 1.6

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.

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

There is debt associated with our long-term investments in affiliated collateralized loan obligations (“CLOs”).

As of September 30, 2022 and December 31, 2021, the debt is carried at $ 94.6 million and $ 113.5 million, and is reported in accounts payable and accrued expenses in our unaudited condensed consolidated balance sheets.

The debt includes outstanding repurchase agreements of € 66.8 million (equivalent to $ 65.4 million at September 30, 2022 and $ 75.9 million at December 31, 2021 at the respective EUR spot rates) and collateralized by the CLO investments.

The debt also includes outstanding note facilities of € 35.6 million (equivalent to $ 29.2 million at September 30, 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.

The debt bears interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.75 % to 2.00 % as of September 30, 2022.

The debt matures on various dates through 2032 or if the investments are paid back in full or cancelled.

As of March 31, 2023 and December 31, 2022, the debt is carried at $ 101.7 million and $ 103.0 million, and is reported in accounts payable and accrued expenses in our unaudited condensed consolidated balance sheets.

The debt includes outstanding repurchase agreements of € 65.8 million (equivalent to $ 71.3 million at March 31, 2023 and $ 71.3 million at December 31, 2022 at the respective EUR spot rates) and collateralized by the CLO investments.

The debt also includes outstanding note facilities of € 35.6 million (equivalent to $ 30.4 million at March 31, 2023 and $ 31.7 million at December 31, 2022 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 note facilities bear interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.15 % to 11.26 % as of March 31, 2023.

The debt matures on various dates through 2035 or if the investments are paid back in full or cancelled, whichever is sooner.

VARIABLE INTEREST ENTITIES.

Our investments at September 30, 2022 and December 31, 2021 include interests in variable interest entities that we do not consolidate as we are not deemed the primary beneficiary.

Our investments at March 31, 2023 and December 31, 2022 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:

4 unchanged sentences

$ 953.4 $ 938.4

The unfunded capital commitments totaling $ 87.9 million at September 30, 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.

The unfunded capital commitments, totaling $ 86.5 million at March 31, 2023 and $ 84.7 million at December 31, 2022, 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.

INVESTMENTS IN AFFILIATED PARTNERS.

INVESTMENTS IN AFFILIATED FUNDS.

During 2021, as part of the OHA acquisition, 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.

18 unchanged sentences

The following table summarizes our investments and liabilities that are recognized in our unaudited condensed consolidated balance sheets using fair value measurements determined based on the differing levels of inputs.

This table excludes investments held by the consolidated T.

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

This table excludes investments held by the consolidated sponsored investment products which are presented separately on our unaudited condensed consolidated balance sheets and are detailed in Note 5.

3/31/2023 12/31/2022

11 unchanged sentences

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 $ 91.0 million at September 30, 2022, and $ 108.1 million at December 31, 2021.

The carrying value of these investments as disclosed in Note 3 were $ 80.1 million at March 31, 2023, and $ 86.4 million at December 31, 2022.

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 million, payable in cash, that may be due as part of an earnout payment starting in 2025 and ending in 2027 upon satisfying or exceeding certain defined revenue targets.

3 unchanged sentences

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

For the three- and nine- months ended September 30, 2022, $ 2.9 million

and $ 11.7 million, respectively, was recorded as part of compensation expense in our unaudited condensed consolidated statements of income for the portion of the earnout deemed compensatory.

For the three months ended March 31, 2022, $ 5.1 million was recorded as part of compensation expense in our unaudited condensed consolidated statements of income for the portion of the earnout deemed compensatory.

The amount recorded as compensation expense for the three months ended March 31, 2023 was immaterial.

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) Three months ended 9/30/2022 Nine months ended 9/30/2022

Three months ended

(in millions) 3/31/2023 3/31/2022

Balance at beginning of period $ 95.8 $ 306.3

Measurement period adjustment — ( 49.3 )

Unrealized (gains) losses, included in earnings ( 29.9 ) ( 125.7 )

Balance, September 30, 2022

$ 131.3 $ 131.3

Unrealized gains, included in earnings ( 49.6 ) ( 45.5 )

Balance at end of period $ 46.2 $ 211.5

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.

The unrealized (gains) losses during the quarter are reflected in general, administrative and other expenses in our unaudited condensed consolidated statements of income.

In addition, simultaneously with the OHA acquisition, a Value Creation Agreement was entered into whereby certain employees of OHA will receive incentive payments in the aggregate equal to 10 % of the appreciated value of the OHA business, subject to an annualized preferred return to T.

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

For the three- and nine- months ended September 30, 2022, $ 2.4 million and $ 7.1 million was recognized as part of compensation expense in our unaudited condensed consolidated statements of income.

NOTE 5 – CONSOLIDATED T.

ROWE PRICE INVESTMENT PRODUCTS AND OTHER ENTITIES.

Rowe Price investment products that we consolidate in our unaudited condensed 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.

For the three months ended March 31, 2023 and 2022, the amounts recognized as part of compensation expense in our unaudited condensed consolidated statements of income were immaterial.

NOTE 5 – CONSOLIDATED SPONSORED INVESTMENT PRODUCTS.

The sponsored investment products that we consolidate in our unaudited condensed 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:

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

3/31/2023 12/31/2022

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Attributable to T.

Rowe Price $ 29.3 $ 626.7 $ 656.0 $ 125.3 $ 803.7 $ 929.0

Rowe Price Group $ 145.1 $ 730.3 $ 875.4 $ 142.4 $ 715.2 $ 857.6

Attributable to redeemable non-controlling interests 41.6 792.5 834.1 35.4 621.3 656.7

$ 186.7 $ 1,522.8 $ 1,709.5 $ 177.8 $ 1,336.5 $ 1,514.3

(1) Cash and cash equivalents includes $ .1 million at September 30, 2022, and $ 6.5 million at December 31, 2021, of T.

(1) Cash and cash equivalents includes $ .9 million at March 31, 2023, and $ 2.6 million at December 31, 2022, of investments in T.

Rowe Price money market mutual funds.

(2) Investments include $ 8.6 million at September 30, 2022, and $ 42.5 million at December 31, 2021 of other T.

Rowe Price investment products.

Although we can redeem our net interest in these consolidated 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 $ 7.1 million at March 31, 2023, and $ 7.6 million at December 31, 2022 of sponsored investment products.

Although we can redeem our interest in these consolidated 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 interest.

We, however, are required to recognize the valuation changes associated with all underlying investments held by these products in our unaudited condensed 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 for the three- and nine-months ended September 30, 2022 and 2021, are reflected in our unaudited condensed consolidated statements of income as follows:

The operating results of the consolidated sponsored investment products for the three months ended March 31, 2023 and 2022, are reflected in our unaudited condensed consolidated statements of income as follows:

Three months ended

3/31/2023 3/31/2022

(in millions)

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

Operating expenses reflected in net operating income $ — $ ( 1.8 ) $ ( 1.8 ) $ ( .1 ) $ ( 2.7 ) $ ( 2.8 )

Net investment income (loss) reflected in non-operating income (loss) ( 1.8 ) ( 40.0 ) ( 41.8 ) .7 ( 17.8 ) ( 17.1 )

Impact on income before taxes $ ( 1.8 ) $ ( 41.8 ) $ ( 43.6 ) $ .6 $ ( 20.5 ) $ ( 19.9 )

Net income (loss) attributable to T.

Rowe Price $ ( 1.1 ) $ ( 15.9 ) $ ( 17.0 ) $ .5 $ ( .6 ) $ ( .1 )

Net income (loss) attributable to redeemable non-controlling interests ( .7 ) ( 25.9 ) ( 26.6 ) .1 ( 19.9 ) ( 19.8 )

$ ( 1.8 ) $ ( 41.8 ) $ ( 43.6 ) $ .6 $ ( 20.5 ) $ ( 19.9 )

Nine months ended

9/30/2022 9/30/2021

(in millions) Voting

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The operating expenses of the consolidated investment products are reflected in general, administrative and other expenses.

In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $ .5 million and $ 1.6 million for the three months ended September 30, 2022 and 2021, respectively, against the investment advisory and administrative fees earned from these products.

Operating expenses eliminated for the nine months ended September 30, 2022 and 2021, were $ 2.0 million and $ 4.0 million, respectively.

The net investment income (loss) reflected in non-operating income (loss) includes dividend and interest income as well as 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 nine months ended September 30, 2022 and 2021.

Nine months ended

In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $ 0.6 million and $ 0.9 million for the three months ended March 31, 2023 and 2022, respectively, against the investment advisory and administrative fees earned from these products.

The table below details the impact of these consolidated investment products on the individual lines of our unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022.

Three months ended

3/31/2023 3/31/2022

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$ 8.2 $ 83.9 $ 92.1 $ 9.6 $ 77.5 $ 87.1

The net cash provided by financing activities during the nine months ended September 30, 2022 and 2021 includes $ 22.3 million and $ 35.3 million, respectively, of net subscriptions we made into the consolidated T.

Rowe Price investment products, net of dividends received.

The net cash provided by financing activities during the three months ended March 31, 2023 and 2022 includes $ 4.4 million and $ 35.1 million, respectively, of net redemptions we received from the consolidated sponsored investment products, including dividends.

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.

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

The value of 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.

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.

3/31/2023 12/31/2022

(in millions)

Level 3 Level 1

Cash equivalents $ .9 $ — $ — $ 4.4 $ 20.6 $ —

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Liabilities $ ( 3.5 ) $ ( 17.0 ) $ — $ ( .9 ) $ ( 19.1 ) $ —

The fair value of Level 3 investments held by consolidated sponsored investment products is 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.

There were no transfers into or out of Level 3 of the fair value hierarchy for the three months ended March 31, 2023.

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

Fair value measurements as of March 31, 2023

(in millions) Fair value Valuation techniques Unobservable inputs Ranges

Other investments $ 75.8 Market Yield (Comparables) Yield 9.5 % - 12.2 %

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 6 - GOODWILL AND INTANGIBLE ASSETS.

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Total $ 3,246.6 $ 3,272.6

Amortization expense for the definite-lived investment advisory agreements intangible assets was $ 27.1 million and $ 81.4 million for the three- and nine- months ended September 30, 2022, respectively.

Amortization expense for the definite-lived investment advisory agreements intangible assets was $ 26.0 million and $ 27.1 million for the three months ended March 31, 2023 and 2022, respectively.

Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for the remainder of 2023 is $ 78.1 million, $ 91.5 million for 2024, $ 91.2 million for 2025, $ 74.2 million for 2026, and $ 50.0 million for 2027.

Goodwill activity during the three- and nine- months ended September 30, 2022 was as follows:

(in millions) Three months ended 9/30/2022 Nine months ended 9/30/2022

Balance at beginning of period $ 2,652.4 $ 2,693.2

Measurement period adjustment — ( 40.8 )

Balance, September 30, 2022

$ 2,652.4 $ 2,652.4

We evaluate the carrying amount of goodwill for possible impairment on an annual basis in the fourth quarter using a fair value approach or if triggering events occur that require us to evaluate for impairment earlier.

NOTE 7 – STOCKHOLDERS’ EQUITY.

Accounts payable and accrued expenses includes liabilities of $ 16.1 million at September 30, 2022 for common stock repurchases that settled during the first week of October 2022.

We evaluate the carrying amount of goodwill in our unaudited condensed consolidated balance sheets for possible impairment on an annual basis in the fourth quarter of each year or if triggering events occur that require us to evaluate for impairment earlier.

We did no t record any impairment charges for goodwill for the three months ended March 31, 2023.

NOTE 7 – STOCK-BASED COMPENSATION.

STOCK OPTIONS.

The following table summarizes the status of, and changes in, our stock options during the nine months ended September 30, 2022.

The following table summarizes the status of, and changes in, our stock options during the three months ended March 31, 2023.

Options Weighted-

Outstanding at December 31, 2022

2,218,506 $ 74.31

Exercised ( 252,013 ) $ 70.28

Outstanding at September 30, 2022 2,383,347 $ 74.37

Exercisable at September 30, 2022 2,383,347 $ 74.37

Outstanding at March 31, 2023 1,966,493 $ 74.83

Exercisable at March 31, 2023 1,966,493 $ 74.83

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 nine months ended September 30, 2022.

The following table summarizes the status of, and changes in, our nonvested restricted shares and restricted stock units during the three months ended March 31, 2023.

Weighted-average

Nonvested at December 31, 2022

8,715 5,901,600 $ 142.37

Time-based grants — 16,664 $ 114.04

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Forfeited — ( 33,039 ) $ 141.24

Nonvested at September 30, 2022 10,099 5,521,916 $ 147.33

Nonvested at September 30, 2022, includes performance-based restricted stock units of 294,518 .

Nonvested at March 31, 2023 8,715 5,820,434 $ 142.75

Nonvested at March 31, 2023, includes performance-based restricted stock units of 320,326 .

These nonvested performance-based restricted stock units include 105,106 units for which the performance period has lapsed, 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 September 30, 2022.

The following table presents the compensation expense to be recognized over the remaining vesting periods of the stock-based awards outstanding at March 31, 2023.

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

(in millions)

Second quarter 2023 $ 59.0

Third quarter 2023 57.8

Fourth quarter 2023 50.6

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

Three months ended Nine months ended

Three months ended

(in millions) 3/31/2023 3/31/2022

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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 September 30, 2022 and 2021 are presented in the table below.

The changes in currency translation adjustments included in accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022 are presented in the table below.

Three months ended 3/31/2023 Three months ended 3/31/2022

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( 1.1 ) 3.0 1.9 .5 ( 5.6 ) ( 5.1 )

Net deferred tax benefits (income taxes)

( .1 ) 3.0 2.9 ( .4 ) 1.2 .8

Other comprehensive income (loss)

.6 ( 9.7 ) ( 9.1 ) 3.1 ( 3.8 ) ( .7 )

Balances at end of period $ ( 39.3 ) $ ( 17.2 ) $ ( 56.5 ) $ ( 40.7 ) $ 11.3 $ ( 29.4 )

The other comprehensive income (loss) in the table above excludes losses of $ 19.1 million and $ 12.2 million of other comprehensive income related to redeemable non-controlling interests held in our consolidated products for the three months ended September 30, 2022 and 2021, respectively.

The changes in each component of accumulated other comprehensive loss, including reclassification adjustments for the nine months ended September 30, 2022 and 2021, are presented in the table below.

Nine months ended 9/30/2022 Nine months ended 9/30/2021

(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 $ ( 36.7 ) $ 10.2 $ ( 26.5 ) $ ( 43.6 ) $ 20.6 $ ( 23.0 )

Other comprehensive income (loss) before reclassifications and income taxes ( 1.9 ) ( 29.3 ) ( 31.2 ) 2.4 ( 9.8 ) ( 7.4 )

Reclassification adjustments recognized in non-operating income

— — — — ( 1.6 ) ( 1.6 )

( 1.1 ) 3.0 1.9 .5 ( 7.2 ) ( 6.7 )

Net deferred tax benefits (income taxes)

.2 ( .8 ) ( .6 ) ( .1 ) 1.9 1.8

Other comprehensive income (loss)

( .9 ) 2.2 1.3 .4 ( 5.3 ) ( 4.9 )

Balances at end of period $ ( 51.4 ) $ ( .3 ) $ ( 51.7 ) $ ( 36.3 ) $ 4.9 $ ( 31.4 )

The other comprehensive income (loss) in the table above excludes losses of $ 44.6 million for the 2022 period and income of $ 20.2 million for the 2021 period of other comprehensive income (loss) related to redeemable non-controlling interests held in our consolidated products.

The other comprehensive income (loss) in the table above excludes gains (losses) of $ 6.1 million and $( 9.9 ) million of other comprehensive income related to redeemable non-controlling interests held in our consolidated products for the three months ended March 31, 2023 and 2022, respectively.

NOTE 10 – COMMITMENTS AND CONTINGENCIES.

Rowe Price has committed $ 482.3 million to fund OHA products over the next five years .

Rowe Price has committed $ 472.4 million to fund OHA products over the next four years .

CONTINGENCIES.

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 alleged 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.

On February 27, 2023, the plaintiffs moved to dismiss their complaint without prejudice and the court granted the motion.

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

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Rowe Price Group, Inc.

and subsidiaries (the “Company") as of September 30, 2022, the related condensed consolidated statements of income, comprehensive income, stockholders’ equity for the three-month and nine-month periods ended September 30, 2022 and 2021, the related condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2022 and 2021, and the related notes (collectively, the consolidated interim financial information).

and subsidiaries (the “Company") as of March 31, 2023, the related condensed consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2023 and 2022, 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.

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Baltimore, Maryland

October 27, 2022

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