UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________ 
FORM 10-Q
______________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 000-32191
______________________________________ 
T. ROWE PRICE GROUP, INC.
(Exact name of registrant as specified in its charter)
Maryland 52-2264646
(State of incorporation) (I.R.S. Employer Identification No.)
100 East Pratt Street, Baltimore, Maryland 21202
(Address, including Zip Code, of principal executive offices)
(410) 345-2000
(Registrant’s telephone number, including area code)
________________
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock,Stock, $.20 par value per shareTROWThe NASDAQ Stock Market LLC
(title of security)(ticker symbol)(Name of exchange on which registered)
______________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months.months (or for such shorter period that the registrant was required to submit such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer 
Non-accelerated filer (do not check if smaller reporting company)Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No
The number of shares outstanding of the issuer’s common stock ($.20 par value), as of the latest practicable date,
October 25, 2021,April 26, 2022, is 224,751,344.227,296,619.
The exhibit index is at Item 6 on page 40.38.



PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
 
9/30/202112/31/20203/31/202212/31/2021
ASSETSASSETSASSETS
Cash and cash equivalentsCash and cash equivalents$3,418.5 $2,151.7 Cash and cash equivalents$1,997.5 $1,523.1 
Accounts receivable and accrued revenueAccounts receivable and accrued revenue941.6 863.1 Accounts receivable and accrued revenue919.5 1,058.3 
InvestmentsInvestments3,330.3 3,250.8 Investments2,879.3 2,975.5 
Assets of consolidated T. Rowe Price investment products ($1,837.1 million at September 30, 2021 and $2,497.4 million at December 31, 2020, related to variable interest entities)2,026.7 2,695.5 
Assets of consolidated T. Rowe Price investment products ($1,501.0 million at March 31, 2022 and $1,761.5 million at December 31, 2021, related to variable interest entities)Assets of consolidated T. Rowe Price investment products ($1,501.0 million at March 31, 2022 and $1,761.5 million at December 31, 2021, related to variable interest entities)1,658.2 1,962.8 
Operating lease assetsOperating lease assets106.2 117.6 Operating lease assets164.5 201.2 
Property and equipment, net719.1 695.4 
Property, equipment and software, netProperty, equipment and software, net736.3 736.2 
Intangible assets, netIntangible assets, net886.3 913.4 
GoodwillGoodwill665.7 665.7 Goodwill2,643.9 2,693.2 
Other assetsOther assets242.6 219.2 Other assets462.5 445.3 
Total assetsTotal assets$11,450.7 $10,659.0 Total assets$12,348.0 $12,509.0 
LIABILITIESLIABILITIESLIABILITIES
Accounts payable and accrued expensesAccounts payable and accrued expenses$309.8 $187.7 Accounts payable and accrued expenses$417.3 $431.0 
Liabilities of consolidated T. Rowe Price investment products ($62.3 million at September 30, 2021 and $47.7 million at December 31, 2020, related to variable interest entities)92.1 57.7 
Liabilities of consolidated T. Rowe Price investment products ($44.2 million at March 31, 2022 and $36.2 million at December 31, 2021, related to variable interest entities)Liabilities of consolidated T. Rowe Price investment products ($44.2 million at March 31, 2022 and $36.2 million at December 31, 2021, related to variable interest entities)55.9 51.5 
Operating lease liabilitiesOperating lease liabilities142.1 154.1 Operating lease liabilities211.8 249.2 
Accrued compensation and related costsAccrued compensation and related costs697.5 133.6 Accrued compensation and related costs293.6 256.8 
Supplemental savings plan liabilitySupplemental savings plan liability826.3 882.6 
Contingent consideration liabilityContingent consideration liability211.5 306.3 
Income taxes payableIncome taxes payable60.7 85.0 Income taxes payable214.6 77.9 
Supplemental savings plan liability799.8 772.2 
Total liabilitiesTotal liabilities2,102.0 1,390.3 Total liabilities2,231.0 2,255.3 
Commitments and contingent liabilitiesCommitments and contingent liabilities00Commitments and contingent liabilities00
Redeemable non-controlling interestsRedeemable non-controlling interests1,086.6 1,561.7 Redeemable non-controlling interests790.4 982.3 
STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY
Preferred stock, undesignated, $.20 par value – authorized and unissued 20,000,000 sharesPreferred 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; issued 226,217,000 shares at September 30, 2021 and 227,965,000 at December 31, 202045.2 45.6 
Common stock, $.20 par value—authorized 750,000,000; issued 227,283,000 shares at March 31, 2022 and 229,175,000 at December 31, 2021Common stock, $.20 par value—authorized 750,000,000; issued 227,283,000 shares at March 31, 2022 and 229,175,000 at December 31, 202145.5 45.8 
Additional capital in excess of par valueAdditional capital in excess of par value654.6 654.6 Additional capital in excess of par value668.2 919.8 
Retained earningsRetained earnings7,591.7 7,029.8 Retained earnings8,372.2 8,083.6 
Accumulated other comprehensive lossAccumulated other comprehensive loss(29.4)(23.0)Accumulated other comprehensive loss(31.5)(26.5)
Total stockholders’ equity attributable to T. Rowe Price Group, Inc.Total stockholders’ equity attributable to T. Rowe Price Group, Inc.9,054.4 9,022.7 
Non-controlling interests in consolidated entitiesNon-controlling interests in consolidated entities272.2 248.7 
Total permanent stockholders’ equityTotal permanent stockholders’ equity8,262.1 7,707.0 Total permanent stockholders’ equity9,326.6 9,271.4 
Total liabilities, redeemable non-controlling interests, and permanent stockholders’ equityTotal liabilities, redeemable non-controlling interests, and permanent stockholders’ equity$11,450.7 $10,659.0 Total liabilities, redeemable non-controlling interests, and permanent stockholders’ equity$12,348.0 $12,509.0 
The accompanying notes are an integral part of these statements.
Page 2


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per-share amounts)
 
Three months endedNine months ended Three months ended
9/30/20219/30/20209/30/20219/30/2020 3/31/20223/31/2021
RevenuesRevenuesRevenues
Investment advisory feesInvestment advisory fees$1,813.4 $1,469.3 $5,288.4 $4,090.9 Investment advisory fees$1,662.1 $1,687.8 
Capital allocation-based incomeCapital allocation-based income44.4 — 
Administrative, distribution, and servicing feesAdministrative, distribution, and servicing fees140.7 126.5 421.8 382.9 Administrative, distribution, and servicing fees156.5 139.0 
Net revenuesNet revenues1,954.1 1,595.8 5,710.2 4,473.8 Net revenues1,863.0 1,826.8 
Operating expensesOperating expensesOperating expenses
Compensation and related costsCompensation and related costs564.6 552.3 1,751.9 1,542.0 Compensation and related costs581.6 583.5 
Distribution and servicingDistribution and servicing96.0 73.5 274.3 201.2 Distribution and servicing85.9 85.6 
Advertising and promotionAdvertising and promotion22.1 14.2 61.4 52.5 Advertising and promotion23.4 18.9 
Product and recordkeeping related costsProduct and recordkeeping related costs70.3 36.8 154.6 118.0 Product and recordkeeping related costs80.4 41.0 
Technology, occupancy, and facility costsTechnology, occupancy, and facility costs123.1 115.6 359.7 332.3 Technology, occupancy, and facility costs133.9 117.3 
General, administrative, and otherGeneral, administrative, and other81.8 74.5 260.8 238.0 General, administrative, and other80.4 87.3 
Total operating expensesTotal operating expenses957.9 866.9 2,862.7 2,484.0 Total operating expenses985.6 933.6 
Net operating incomeNet operating income996.2 728.9 2,847.5 1,989.8 Net operating income877.4 893.2 
Non-operating income (loss)Non-operating income (loss)Non-operating income (loss)
Net gains on investments8.7 84.6 165.0 100.6 
Net gains (losses) on investmentsNet gains (losses) on investments(89.9)68.6 
Net gains (losses) on consolidated investment productsNet gains (losses) on consolidated investment products(17.1)101.2 75.7 13.3 Net gains (losses) on consolidated investment products(101.4)37.2 
Other income (loss)Other income (loss)(3.1)5.8 (6.2)(7.5)Other income (loss)(7.2)(3.7)
Total non-operating income(11.5)191.6 234.5 106.4 
Total non-operating income (loss)Total non-operating income (loss)(198.5)102.1 
Income before income taxesIncome before income taxes984.7 920.5 3,082.0 2,096.2 Income before income taxes678.9 995.3 
Provision for income taxesProvision for income taxes227.3 221.9 717.1 502.5 Provision for income taxes164.5 230.5 
Net incomeNet income757.4 698.6 2,364.9 1,593.7 Net income514.4 764.8 
Less: net income (loss) attributable to redeemable
non-controlling interests
Less: net income (loss) attributable to redeemable
non-controlling interests
(19.8)55.4 22.6 4.4 Less: net income (loss) attributable to redeemable
non-controlling interests
(53.5)15.4 
Net income attributable to T. Rowe Price$777.2 $643.2 $2,342.3 $1,589.3 
Net income attributable to T. Rowe Price GroupNet income attributable to T. Rowe Price Group$567.9 $749.4 
Earnings per share on common stock of T. Rowe Price
Earnings per share on common stock of T. Rowe Price GroupEarnings per share on common stock of T. Rowe Price Group
BasicBasic$3.34 $2.75 $10.04 $6.73 Basic$2.43 $3.20 
DilutedDiluted$3.31 $2.73 $9.94 $6.66 Diluted$2.41 $3.17 

The accompanying notes are an integral part of these statements.
Page 3


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
 
Three months endedNine months ended Three months ended
9/30/20219/30/20209/30/20219/30/2020 3/31/20223/31/2021
Net incomeNet income$757.4 $698.6 $2,364.9 $1,593.7 Net income$514.4 $764.8 
Other comprehensive income (loss)Other comprehensive income (loss)Other comprehensive income (loss)
Currency translation adjustmentsCurrency translation adjustmentsCurrency translation adjustments
Consolidated T. Rowe Price investment products - variable interest entitiesConsolidated T. Rowe Price investment products - variable interest entities(17.2)33.4 (30.0)24.2 Consolidated T. Rowe Price investment products - variable interest entities(15.5)(18.9)
Reclassification gains recognized in non-operating income upon deconsolidation of certain T. Rowe Price investment productsReclassification gains recognized in non-operating income upon deconsolidation of certain T. Rowe Price investment products— — (2.6)(.1)Reclassification gains recognized in non-operating income upon deconsolidation of certain T. Rowe Price investment products(1.6)(2.6)
Total currency translation adjustments of consolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustments of consolidated T. Rowe Price investment products - variable interest entities(17.2)33.4 (32.6)24.1 Total currency translation adjustments of consolidated T. Rowe Price investment products - variable interest entities(17.1)(21.5)
Equity method investmentsEquity method investments3.5 .1 2.4 (9.4)Equity method investments.5 (.8)
Other comprehensive income (loss) before income taxesOther comprehensive income (loss) before income taxes(13.7)33.5 (30.2)14.7 Other comprehensive income (loss) before income taxes(16.6)(22.3)
Net deferred tax (expense) benefitsNet deferred tax (expense) benefits.8 (3.2)3.6 (.5)Net deferred tax (expense) benefits1.8 3.0 
Total other comprehensive income (loss)Total other comprehensive income (loss)(12.9)30.3 (26.6)14.2 Total other comprehensive income (loss)(14.8)(19.3)
Total comprehensive incomeTotal comprehensive income744.5 728.9 2,338.3 1,607.9 Total comprehensive income499.6 745.5 
Less: comprehensive income (loss) attributable to redeemable non-controlling interestsLess: comprehensive income (loss) attributable to redeemable non-controlling interests(32.0)76.2 2.4 18.3 Less: comprehensive income (loss) attributable to redeemable non-controlling interests(63.3)3.6 
Total comprehensive income attributable to T. Rowe Price$776.5 $652.7 $2,335.9 $1,589.6 
Total comprehensive income attributable to T. Rowe Price GroupTotal comprehensive income attributable to T. Rowe Price Group$562.9 $741.9 

The accompanying notes are an integral part of these statements.
Page 4


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 
Nine months ended Three months ended
9/30/20219/30/2020 3/31/20223/31/2021
Cash flows from operating activitiesCash flows from operating activitiesCash flows from operating activities
Net incomeNet income$2,364.9 $1,593.7 Net income$514.4 $764.8 
Adjustments to reconcile net income to net cash provided by operating activitiesAdjustments to reconcile net income to net cash provided by operating activitiesAdjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment151.1 144.0 
Depreciation and amortization of property, equipment and softwareDepreciation and amortization of property, equipment and software54.5 49.0 
Amortization of acquisition-related assets and retention arrangementsAmortization of acquisition-related assets and retention arrangements53.9 — 
Fair value remeasurement of contingent consideration liabilityFair value remeasurement of contingent consideration liability(45.5)— 
Stock-based compensation expenseStock-based compensation expense166.3 164.5 Stock-based compensation expense63.6 57.5 
Net gains recognized on investments(144.4)(75.3)
Net (investments) redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liability28.1 (19.1)
Net (gains) losses recognized on investmentsNet (gains) losses recognized on investments38.3 (59.5)
Net redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liabilityNet redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liability6.1 22.0 
Net change in securities held by consolidated T. Rowe Price investment productsNet change in securities held by consolidated T. Rowe Price investment products(5.3)(350.8)Net change in securities held by consolidated T. Rowe Price investment products180.1 (120.9)
Other changes in assets and liabilities530.0 459.9 
Other changesOther changes238.0 281.8 
Net cash provided by operating activitiesNet cash provided by operating activities3,090.7 1,916.9 Net cash provided by operating activities1,103.4 994.7 
Cash flows from investing activitiesCash flows from investing activitiesCash flows from investing activities
Purchases of T. Rowe Price investment products(47.3)(240.3)
Dispositions of T. Rowe Price investment products285.4 381.9 
Purchases of investment productsPurchases of investment products(6.0)(12.5)
Dispositions of investment productsDispositions of investment products64.9 60.3 
Net cash of T. Rowe Price investment products on deconsolidationNet cash of T. Rowe Price investment products on deconsolidation(15.6)(49.1)Net cash of T. Rowe Price investment products on deconsolidation(5.9)(27.3)
Additions to property and equipment(178.7)(155.4)
Additions to property, equipment and softwareAdditions to property, equipment and software(54.9)(58.8)
Other investing activityOther investing activity13.8 9.8 Other investing activity5.7 7.5 
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities57.6 (53.1)Net cash provided by (used in) investing activities3.8 (30.8)
Cash flows from financing activitiesCash flows from financing activitiesCash flows from financing activities
Repurchases of common stockRepurchases of common stock(493.1)(1,158.5)Repurchases of common stock(320.1)(259.2)
Common share issuances under stock-based compensation plansCommon share issuances under stock-based compensation plans33.3 76.2 Common share issuances under stock-based compensation plans5.1 20.9 
Dividends paid to common stockholders of T. Rowe PriceDividends paid to common stockholders of T. Rowe Price(1,454.0)(635.7)Dividends paid to common stockholders of T. Rowe Price(279.2)(252.3)
Net subscriptions received from redeemable non-controlling interest holders22.7 298.7 
Net contributions from non-controlling interests in consolidated entitiesNet contributions from non-controlling interests in consolidated entities6.0 — 
Net subscriptions (redemptions) received from redeemable non-controlling interest holdersNet subscriptions (redemptions) received from redeemable non-controlling interest holders(55.9)183.1 
Net cash used in financing activitiesNet cash used in financing activities(1,891.1)(1,419.3)Net cash used in financing activities(644.1)(307.5)
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
(3.6)3.4 
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
(2.7).9 
Net change in cash and cash equivalents during periodNet change in cash and cash equivalents during period1,253.6 447.9 Net change in cash and cash equivalents during period460.4 657.3 
Cash and cash equivalents at beginning of period, including $104.8 million at December 31, 2020, and $76.5 million at December 31, 2019, held by consolidated T. Rowe Price investment products2,256.5 1,858.3 
Cash and cash equivalents at end of period, including $91.6 million at September 30, 2021, and $78.0 million at September 30, 2020, held by consolidated T. Rowe Price investment products$3,510.1 $2,306.2 
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 productsCash 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 products1,624.2 2,256.5 
Cash and cash equivalents at end of period, including $87.1 million at March 31, 2022, and $83.7 million at March 31, 2021, held by consolidated T. Rowe Price investment productsCash and cash equivalents at end of period, including $87.1 million at March 31, 2022, and $83.7 million at March 31, 2021, held by consolidated T. Rowe Price investment products$2,084.6 $2,913.8 

The accompanying notes are an integral part of these statements.
Page 5


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(shares in thousands; dollars in millions)
Three months ended 9/30/2021Three months ended 3/31/2022
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interestsCommon
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity attributable to T. Rowe Price Group, Inc.
Non-controlling interests in consolidated entitiesTotal permanent stockholders’ equityRedeemable non-controlling interests
Balances at June 30, 2021226,925 $45.4 $673.7 $7,202.6 $(28.7)$7,893.0 $880.4 
Net income— — — 777.2 — 777.2 (19.8)
Balances at December 31, 2021Balances at December 31, 2021229,175 $45.8 $919.8 $8,083.6 $(26.5)$9,022.7 $248.7 $9,271.4 $982.3 
Net income (loss)Net income (loss)— — — 567.9 — 567.9 17.5 585.4 (53.5)
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax— — — — (.7)(.7)(12.2)Other comprehensive income (loss), net of tax— — — — (5.0)(5.0)— (5.0)(9.9)
Dividends declared ($1.08 per share)— — — (250.7)— (250.7)— 
Dividends declared ($1.20 per share)Dividends declared ($1.20 per share)— — — (279.2)— (279.2)— (279.2)— 
Shares issued upon option exercisesShares issued upon option exercises321 — 9.0 — — 9.0 — Shares issued upon option exercises174 — 7.8 — — 7.8 — 7.8 — 
Net shares issued upon vesting of restricted stock unitsNet shares issued upon vesting of restricted stock units— (.5)— — (.5)— Net shares issued upon vesting of restricted stock units41 (3.2)— — (3.2)— (3.2)— 
Stock-based compensation expenseStock-based compensation expense— — 52.3 — — 52.3 — Stock-based compensation expense— — 63.5 — — 63.5 — 63.5 — 
Restricted stock units issued as dividend equivalentsRestricted stock units issued as dividend equivalents— — .4 (.2)— .2 — Restricted stock units issued as dividend equivalents— — .1 (.1)— — — — — 
Common shares repurchasedCommon shares repurchased(1,034)(.2)(80.3)(137.2)— (217.7)— Common shares repurchased(2,107)(.3)(319.8)— — (320.1)— (320.1)— 
Net contributions from non-controlling interests in consolidated entitiesNet contributions from non-controlling interests in consolidated entities— — — — — — 6.0 6.0 — 
Net redemptions from T. Rowe Price investment productsNet redemptions from T. Rowe Price investment products— — — — — — (292.8)Net redemptions from T. Rowe Price investment products— — — — — — — — (65.6)
Net consolidations of T. Rowe Price investment products— — — — — — 531.0 
Balances at September 30, 2021226,217 $45.2 $654.6 $7,591.7 $(29.4)$8,262.1 $1,086.6 
Net deconsolidations of T. Rowe Price investment productsNet deconsolidations of T. Rowe Price investment products— — — — — — — — (62.9)
Balances at March 31, 2022Balances at March 31, 2022227,283 $45.5 $668.2 $8,372.2 $(31.5)$9,054.4 $272.2 $9,326.6 $790.4 
Three months ended 9/30/2020
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interests
Balances at June 30, 2020226,990 $45.4 $654.6 $6,102.9 $(52.2)$6,750.7 $1,090.1 
Net income— — — 643.2 — 643.2 55.4 
Other comprehensive income (loss), net of tax— — — — 9.5 9.5 20.8 
Dividends declared ($0.90 per share)— — — (210.2)— (210.2)— 
Shares issued upon option exercises492 .1 25.9 — — 26.0 — 
Net shares issued upon vesting of restricted stock units17 — (1.6)— — (1.6)— 
Stock-based compensation expense— — 52.8 — — 52.8 — 
Restricted stock units issued as dividend equivalents— —��.1 (.1)— — — 
Common shares repurchased(1,124)(.2)(77.2)(64.5)— (141.9)— 
Net subscriptions into T. Rowe Price investment products— — — — — — 217.9 
Net deconsolidations of T. Rowe Price investment products— — — — — — (44.0)
Balances at September 30, 2020226,375 $45.3 $654.6 $6,471.3 $(42.7)$7,128.5 $1,340.2 

Three months ended 3/31/2021
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total permanent
stockholders’
equity
Redeemable non-controlling interests
Balances at December 31, 2020227,965 $45.6 $654.6 $7,029.8 $(23.0)$7,707.0 $1,561.7 
Net income— — — 749.4 — 749.4 15.4 
Other comprehensive income (loss), net of tax— — — — (7.5)(7.5)(11.8)
Dividends declared ($1.08 per share)— — — (252.3)— (252.3)— 
Shares issued upon option exercises572 .1 25.3 — — 25.4 — 
Net shares issued upon vesting of restricted stock units41 — (3.7)— — (3.7)— 
Stock-based compensation expense— — 57.5 — — 57.5 — 
Restricted stock units issued as dividend equivalents— — .1 (.1)— — — 
Common shares repurchased(1,630)(.3)(79.2)(188.1)— (267.6)— 
Net subscriptions into T. Rowe Price investment products— — — — — — 187.5 
Net deconsolidations of T. Rowe Price investment products— — — — — — (739.9)
Balances at March 31, 2021226,948 $45.4 $654.6 $7,338.7 $(30.5)$8,008.2 $1,012.9 
(1) Accumulated other comprehensive income.

income
The accompanying notes are an integral part of these statements.
Page 6


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(shares in thousands; dollars in millions)
Nine months ended 9/30/2021
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interests
Balances at December 31, 2020227,965 $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 income (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 exercises1,083 .2 38.6 — — 38.8 — 
Restricted shares issued, net of shares withheld for taxes— — — — — — 
Net shares issued upon vesting of restricted stock units54 — (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, 2021226,217 $45.2 $654.6 $7,591.7 $(29.4)$8,262.1 $1,086.6 
Nine months ended 9/30/2020
Common
shares
outstanding
Common
stock
Additional
capital in
excess of
par value
Retained
earnings
AOCI(1)
Total
stockholders’
equity
Redeemable non-controlling interests
Balances at December 31, 2019235,214 $47.0 $654.6 $6,443.5 $(43.0)$7,102.1 $1,121.0 
Net income— — — 1,589.3 — 1,589.3 4.4 
Other comprehensive income (loss), net of tax— — — — .3 .3 13.9 
Dividends declared ($2.70 per share)— — — (635.3)— (635.3)— 
Shares issued upon option exercises1,856 .4 82.8 — — 83.2 — 
Restricted shares issued, net of shares withheld for taxes— — — — — — 
Net shares issued upon vesting of restricted stock units60 — (4.8)— — (4.8)— 
Forfeiture of restricted awards— — — — — — — 
Stock-based compensation expense— — 164.3 — — 164.3 — 
Restricted stock units issued as dividend equivalents— — .2 (.2)— — — 
Common shares repurchased(10,763)(2.1)(242.5)(926.0)— (1,170.6)— 
Net subscriptions into T. Rowe Price investment products— — — — — — 307.8 
Net deconsolidations of T. Rowe Price investment products— — — — — — (106.9)
Balances at September 30, 2020226,375 $45.3 $654.6 $6,471.3 $(42.7)$7,128.5 $1,340.2 
(1)Accumulated other comprehensive income.

The accompanying notes are an integral part of these statements.
Page 7


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – THE COMPANY AND BASIS OF PREPARATION.

T. Rowe Price Group Inc. derives its consolidated revenues and net income primarily from investment advisory services that its subsidiaries provide to individual and institutional investors in the T. Rowe Price U.S. mutual funds (“U.S. mutual funds”), subadvised funds, separately managed accounts, collective investment trusts, and other
T. Rowe Priceaffiliated products. The other T. Rowe Priceaffiliated products includeinclude: open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S., affiliated private investment funds or private accounts, 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; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services through model delivery and other multi-asset solutions for providersdelivery. Additionally, we also derive revenue from our interests in general partners of certain affiliated private investment funds that are entitled to implement.a disproportionate allocation of income through capital allocation-based arrangements.

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 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 March 31, 2022, OHA had $57 billion of capital under management (which includes net assets value, portfolio value and/or unfunded capital). We have reflected the financial position, operating results and cash flows of OHA in these financial statements.

BASIS OF PRESENTATION.

These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. These principles require the use of estimates and reflect all adjustments that are, in the opinion of management, necessary for a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature. Actual results may vary from our estimates.

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 20202021 Annual Report.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

We have considered all newly issued accounting guidance that is applicable to our operations and the preparation of our unaudited condensed consolidated statements, including those we have not yet adopted. We do not believe that any such guidance has or will have a material effect on our financial position or results of operations.



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

Revenues earned under agreements with clients include: 
Three months ended 9/30/2021Three months ended 9/30/2020Three months ended 3/31/2022Three months ended 3/31/2021
Administrative, distribution, and servicing feesAdministrative, distribution, and servicing feesAdministrative, distribution, and servicing feesAdministrative, distribution, and servicing fees
(in millions)(in millions)Investment advisory feesAdministrative feesDistribution and servicing feesNet revenuesInvestment advisory feesAdministrative feesDistribution and servicing feesNet revenues(in millions)Investment advisory feesAdministrative feesDistribution and servicing feesCapital allocation-based incomeNet revenuesInvestment advisory feesAdministrative feesDistribution and servicing feesNet revenues
U.S. mutual fundsU.S. mutual funds$1,125.5 $82.6 $30.9 $1,239.0 $939.5 $72.4 $28.5 $1,040.4 U.S. mutual funds$976.5 $93.1 $26.3 $— $1,095.9 $1,050.2 $78.7 $29.1 $1,158.0 
Subadvised funds, separate accounts, collective investment trusts, and other investment productsSubadvised funds, separate accounts, collective investment trusts, and other investment products687.9 — — 687.9 529.8 — — 529.8 Subadvised funds, separate accounts, collective investment trusts, and other investment products685.6 — — 44.4 730.0 637.6 — — 637.6 
Other clients(1)
Other clients(1)
— 27.2 — 27.2 — 25.6 — 25.6 
Other clients(1)
— 37.1 — — 37.1 — 31.2 — 31.2 
$1,813.4 $109.8 $30.9 $1,954.1 $1,469.3 $98.0 $28.5 $1,595.8 $1,662.1 $130.2 $26.3 $44.4 $1,863.0 $1,687.8 $109.9 $29.1 $1,826.8 
Nine months ended 9/30/2021Nine months ended 9/30/2020
Administrative, distribution, and servicing feesAdministrative, distribution, and servicing fees
(in millions)Investment advisory feesAdministrative feesDistribution and servicing feesNet revenuesInvestment advisory feesAdministrative feesDistribution and servicing feesNet revenues
U.S. mutual funds$3,273.2 $243.1 $90.0 $3,606.3 $2,638.8 $219.0 $82.1 $2,939.9 
Subadvised funds, separate accounts, collective investment trusts, and other investment products2,015.2 — — 2,015.2 1,452.1 — — 1,452.1 
Other clients(1)
— 88.7 — 88.7 — 81.8 — 81.8 
$5,288.4 $331.8 $90.0 $5,710.2 $4,090.9 $300.8 $82.1 $4,473.8 
(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 specifically T. Rowe Price investment products, aggregate $1,599.5$1,536.4 million and $1,302.3$1,482.3 million for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively. Total net revenues earned from these products during the nine months ended September 30, 2021 and 2020 aggregate $4,653.7 million and $3,652.8 million, respectively. Accounts receivable from these products aggregate to $581.6$584.5 million at September 30, 2021March 31, 2022 and $523.4$577.9 million at December 31, 2020.2021.

The following table details the investment advisory revenues earned from clients by their underlying asset class.
Three months endedNine months ended Three months ended
(in millions)(in millions)9/30/20219/30/20209/30/20219/30/2020(in millions)3/31/20223/31/2021
U.S. mutual fundsU.S. mutual fundsU.S. mutual funds
EquityEquity$813.0 $636.3 $2,310.8 $1,750.6 Equity$691.9 $729.8 
Fixed income, including money marketFixed income, including money market64.8 66.6 183.7 205.1 Fixed income, including money market64.0 59.0 
Multi-assetMulti-asset247.7 236.6 778.7 683.1 Multi-asset220.6 261.4 
1,125.5 939.5 3,273.2 2,638.8 976.5 1,050.2 
Subadvised funds, separate accounts, collective investment trusts, and other investment productsSubadvised funds, separate accounts, collective investment trusts, and other investment productsSubadvised funds, separate accounts, collective investment trusts, and other investment products
EquityEquity458.8 339.6 1,329.0 924.7 Equity394.1 424.2 
Fixed income, including money marketFixed income, including money market41.3 38.4 119.6 110.3 Fixed income, including money market42.6 37.5 
Multi-assetMulti-asset187.8 151.8 566.6 417.1 Multi-asset184.0 175.9 
AlternativesAlternatives64.9 — 
687.9 529.8 2,015.2 1,452.1 685.6 637.6 
TotalTotal$1,813.4 $1,469.3 $5,288.4 $4,090.9 Total$1,662.1 $1,687.8 



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The following table summarizes the assets under management on which we earn investment advisory revenues.
Average duringAverage during
Three months endedNine months endedAs ofThree months endedAs of
(in billions)(in billions)9/30/20219/30/20209/30/20219/30/20209/30/202112/31/2020(in billions)3/31/20223/31/20213/31/202212/31/2021
U.S. mutual fundsU.S. mutual fundsU.S. mutual funds
EquityEquity$559.8 $433.4 $534.0 $398.9 $546.1 $498.6 Equity$491.3 $509.6 $489.0 $553.9 
Fixed income, including money marketFixed income, including money market88.4 78.1 85.6 76.0 87.7 79.4 Fixed income, including money market86.4 82.3 83.9 85.3 
Multi-assetMulti-asset232.8 197.3 228.5 189.1 227.2 216.6 Multi-asset220.3 222.6 216.5 232.2 
881.0 708.8 848.1 664.0 861.0 794.6 798.0 814.5 789.4 871.4 
Subadvised funds, separate accounts, collective investment trusts, and other investment productsSubadvised funds, separate accounts, collective investment trusts, and other investment productsSubadvised funds, separate accounts, collective investment trusts, and other investment products
EquityEquity445.7 338.8 427.3 303.3 428.6 397.2 Equity395.2 408.4 389.0 438.8 
Fixed income, including money marketFixed income, including money market94.3 82.4 92.1 80.3 93.0 89.3 Fixed income, including money market91.4 90.7 91.3 90.4 
Multi-assetMulti-asset227.7 162.9 213.8 151.3 229.7 189.4 Multi-asset233.4 195.2 239.9 245.5 
AlternativesAlternatives41.9 — 42.2 41.7 
767.7 584.1 733.2 534.9 751.3 675.9 761.9 694.3 762.4 816.4 
TotalTotal$1,648.7 $1,292.9 $1,581.3 $1,198.9 $1,612.3 $1,470.5 Total$1,559.9 $1,508.8 $1,551.8 $1,687.8 

Investors that we serve are primarily domiciled in the U.S.; investment advisory clients outside the U.S. account for 8.8%, 9.0%9.7% and 9.3%9.9% of our assets under management at September 30, 2021, June 30, 2021March 31, 2022 and December 31, 2020,2021, 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:
(in millions)(in millions)9/30/202112/31/2020(in millions)3/31/202212/31/2021
Investments held at fair valueInvestments held at fair valueInvestments held at fair value
T. Rowe Price investment productsT. Rowe Price investment productsT. Rowe Price investment products
Discretionary investmentsDiscretionary investments$1,610.2 $1,647.7 Discretionary investments$502.2 $518.7 
Seed capitalSeed capital236.6 169.5 Seed capital224.6 264.8 
Supplemental savings plan liability economic hedgesSupplemental savings plan liability economic hedges795.5 768.1 Supplemental savings plan liability economic hedges820.0 881.5 
Investment partnerships and other investmentsInvestment partnerships and other investments108.6 95.1 Investment partnerships and other investments105.0 108.9 
Investments in affiliated collateralized loan obligationsInvestments in affiliated collateralized loan obligations9.310.8
Equity method investmentsEquity method investmentsEquity method investments
T. Rowe Price investment products
Discretionary investments254.1 242.9 
Seed capital164.9 178.6 
23% investment in UTI Asset Management Company Limited (India)156.6 145.5 
Investment partnerships and other investments2.8 2.4 
T. Rowe Price investment products - seed capitalT. Rowe Price investment products - seed capital134.0 141.7 
Investments in affiliated private investment funds - carried interestInvestments in affiliated private investment funds - carried interest642.1609.8
Investments in affiliated private investment funds - seed/co-investmentInvestments in affiliated private investment funds - seed/co-investment153.1151.3
23% Investment in UTI Asset Management Company Limited (India)23% Investment in UTI Asset Management Company Limited (India)170.3 165.4 
Other investment partnerships and investmentsOther investment partnerships and investments2.5 2.5 
Held to maturityHeld to maturity
Investments in affiliated collateralized loan obligationsInvestments in affiliated collateralized loan obligations115.2119.1
U.S. Treasury noteU.S. Treasury note1.0 1.0  U.S. Treasury note1.0 1.0 
TotalTotal$3,330.3 $3,250.8 Total$2,879.3 $2,975.5 

The investment partnerships are carried at fair value using net asset value (“NAV”) per share as a practical expedient. Our interests in these partnerships are generally not redeemable and are subject to significant transferability restrictions. The underlying investments of these partnerships have contractual terms through 2029, though we may receive distributions of liquidating assets over a longer term. The investment strategies of these partnerships include growth equity, buyout, venture capital, and real estate.


Page 9


During the three months ended September 30, 2021,March 31, 2022, net losses on investments included $4.6$99.9 million of net unrealized losses related to investments held at fair value that were still held at September 30, 2021. DuringMarch 31, 2022. For the nine months ended September 30,same period of 2021, net gains on investments included $83.7$38.8 million of net unrealized gains

Page 10


related to investments held at fair value that were still held at September 30, 2021. For the three and nine months ended September 30, 2020, net gains on investments included $75.5 million and $53.6 million, respectively, of net unrealized gains related to investments held at fair value that were still held at September 30, 2020.March 31, 2021.

During the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, 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 ninethree months ended September 30,March 31, 2022 and March 31, 2021, and September 30, 2020, certain T. Rowe Price 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 endedNine months endedThree months ended
(in millions)(in millions)9/30/20219/30/20209/30/20219/30/2020(in millions)3/31/20223/31/2021
Net increase (decrease) in assets of consolidated T. Rowe Price investment productsNet increase (decrease) in assets of consolidated T. Rowe Price investment products$589.7 $(132.2)$(727.6)$(278.4)Net increase (decrease) in assets of consolidated T. Rowe Price investment products$(97.5)$(928.1)
Net increase (decrease) in liabilities of consolidated T. Rowe Price investment productsNet increase (decrease) in liabilities of consolidated T. Rowe Price investment products$7.1 $(4.0)$(17.1)$(7.6)Net increase (decrease) in liabilities of consolidated T. Rowe Price investment products$(8.6)$(15.3)
Net increase (decrease) in redeemable non-controlling interestsNet increase (decrease) in redeemable non-controlling interests$531.0 $(44.0)$(483.6)$(106.9)Net increase (decrease) in redeemable non-controlling interests$(63.0)$(739.9)
Gains recognized upon deconsolidationGains recognized upon deconsolidation$— $— $2.6 $.1 Gains recognized upon deconsolidation$1.6 $2.6 

The gains or losses recognized upon deconsolidation were the result of reclassifying currency translation adjustments accumulated on certain T. Rowe Price investment products with non-USD functional currencies from accumulated other comprehensive income to non-operating income.

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

There is debt associated with our long-term investments in affiliated collateralized loan obligations (“CLOs”). As of March 31, 2022 and December 31, 2021, the debt is valued at $108.7 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 €66.7 million (equivalent to $73.8 million at March 31, 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 €32.4 million (equivalent to $34.9 million at March 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. The debt bears interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.70% to 1.95% as of March 31, 2022. The debt matures on various dates through 2032 or if the investments are paid back in full or cancelled.

VARIABLE INTEREST ENTITIES.

Our investments at September 30, 2021March 31, 2022 and December 31, 2020,2021 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:
(in millions)(in millions)9/30/202112/31/2020(in millions)3/31/202212/31/2021
Investment carrying valuesInvestment carrying values$193.4 $144.7 Investment carrying values$951.9 $943.3 
Unfunded capital commitmentsUnfunded capital commitments9.2 12.3 Unfunded capital commitments110.4 94.2 
Accounts receivableAccounts receivable21.7 13.8 Accounts receivable94.2 145.1 
$224.3 $170.8 $1,156.5 $1,182.6 

The unfunded capital commitments totaling $9.2$110.4 million at September 30, 2021March 31, 2022 and $12.3$94.2 million at December 31, 20202021 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.

Page 10



INVESTMENTS IN AFFILIATED PARTNERS.

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. These entities are considered variable interest entities and are consolidated as T. Rowe Price was determined to be the primary beneficiary.

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

(in millions)3/31/202212/31/2021
Assets$695.4 $692.7 
Liabilities$1.1 $56.4 
Non-controlling interest$272.2 $248.7 

NOTE 4 – FAIR VALUE MEASUREMENTS.

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

Level 1 – quoted prices in active markets for identical securities.
Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar
     securities, interest rates, prepayment speeds, and credit risk. These inputs are based on market data
     obtained from independent sources.
Level 3 – unobservable inputs reflecting our own assumptions based on the best information available. We doThe inputs into the determination of fair value require significant management judgment or estimation. Investments in this category generally include investments for which there is not
        value any investments using Level 3 inputs. an actively-traded market.

These levels are not necessarily an indication of the risk or liquidity associated with our investments. The following table summarizes our investments and liability that are recognized in our unaudited condensed consolidated balance sheets

Page 11


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.

9/30/202112/31/20203/31/202212/31/2021
(in millions)(in millions)Level 1Level 2Level 1Level 2(in millions)Level 1Level 2Level 3Level 1Level 2Level 3
T. Rowe Price investment productsT. Rowe Price investment productsT. Rowe Price investment products
Cash equivalents held in money market fundsCash equivalents held in money market funds2,966.7 $— $1,931.1 $— Cash equivalents held in money market funds1,551.1 $— $— $1,183.9 $— $— 
Discretionary investmentsDiscretionary investments1,610.2 — 1,647.7 — Discretionary investments502.2 — — 518.7 — — 
Seed capitalSeed capital216.2 20.4 156.6 12.9 Seed capital202.9 21.7 — 241.4 23.4 — 
Supplemental savings plan liability economic hedgesSupplemental savings plan liability economic hedges795.5 — 768.1 — Supplemental savings plan liability economic hedges820.0 — — 881.5 — — 
Other investmentsOther investments.7 .1 .5 .6 Other investments1.3 .1 — .7 .1 — 
Investments in affiliated collateralized loan obligationsInvestments in affiliated collateralized loan obligations— 9.3 — — 10.8 — 
TotalTotal$5,589.3 $20.5 $4,504.0 $13.5 Total$3,077.5 $31.1 $— $2,826.2 $34.3 $— 
Contingent consideration liabilityContingent consideration liability$— $— $211.5 $— $— $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 3 were $107.8$103.6 million at September 30, 2021,March 31, 2022, and $94.0$108.1 million at December 31, 2020.2021.


Page 11


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, 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. These defined revenue targets will be 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. 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 is remeasured each reporting period and recognized over the related service period. 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 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 3/31/2022
Balance, 12/31/2021$306.3 
  Measurement period adjustment(49.3)
  Unrealized (gains) losses, included in earnings(45.5)
Balance, 3/31/2022$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 periods and 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. Rowe Price, on the fifth anniversary of the acquisition date. 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. As of March 31, 2022, $2.0 million was recognized as part of compensation expense in our unaudited condensed consolidated statements of income.

NOTE 5 – CONSOLIDATED T. ROWE PRICE INVESTMENT PRODUCTS.PRODUCTS AND OTHER ENTITIES.

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



Page 12


The following table details the net assets of the consolidated T. Rowe Price investment products:
9/30/202112/31/20203/31/202212/31/2021
(in millions)(in millions)Voting
interest entities
Variable interest entitiesTotalVoting
interest entities
Variable interest entitiesTotal(in millions)Voting
interest entities
Variable interest entitiesTotalVoting
interest entities
Variable interest entitiesTotal
Cash and cash equivalents(1)
Cash and cash equivalents(1)
$6.2 $85.4 $91.6 $7.1 $97.7 $104.8 
Cash and cash equivalents(1)
$9.5 $77.5 $87.0 $7.3 $93.8 $101.1 
Investments(2)
Investments(2)
178.5 1,634.7 1,813.2 188.2 2,372.7 2,560.9 
Investments(2)
144.4 1,391.5 1,535.9 188.9 1,645.0 1,833.9 
Other assetsOther assets4.9 117.0 121.9 2.8 27.0 29.8 Other assets3.3 32.0 35.3 5.1 22.7 27.8 
Total assetsTotal assets189.6 1,837.1 2,026.7 198.1 2,497.4 2,695.5 Total assets157.2 1,501.0 1,658.2 201.3 1,761.5 1,962.8 
LiabilitiesLiabilities29.8 62.3 92.1 10.0 47.7 57.7 Liabilities11.7 44.2 55.9 15.3 36.2 51.5 
Net assetsNet assets$159.8 $1,774.8 $1,934.6 $188.1 $2,449.7 $2,637.8 Net assets$145.5 $1,456.8 $1,602.3 $186.0 $1,725.3 $1,911.3 
Attributable to T. Rowe PriceAttributable to T. Rowe Price$126.4 $721.6 $848.0 $130.7 $945.4 $1,076.1 Attributable to T. Rowe Price$99.6 $712.3 $811.9 $125.3 $803.7 $929.0 
Attributable to redeemable non-controlling interestsAttributable to redeemable non-controlling interests33.4 1,053.2 1,086.6 57.4 1,504.3 1,561.7 Attributable to redeemable non-controlling interests45.9 744.5 790.4 60.7 921.6 982.3 
$159.8 $1,774.8 $1,934.6 $188.1 $2,449.7 $2,637.8 $145.5 $1,456.8 $1,602.3 $186.0 $1,725.3 $1,911.3 
(1) Cash and cash equivalents includes $6.0$6.6 million at September 30, 2021,March 31, 2022, and $7.0$6.5 million at December 31, 2020,2021, of T. Rowe Price money market mutual funds.
(2) Investments include $44.5$39.3 million at September 30, 2021,March 31, 2022, and $26.9$42.5 million at December 31, 20202021 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. 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. We, however, are required to recognize the valuation changes associated with all underlying

Page 12


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-three months ended March 31, 2022 and nine-months ended September 30, 2021, and 2020, are reflected in our unaudited condensed consolidated statements of income as follows:
Three months ended
9/30/20219/30/2020
(in millions)Voting interest entitiesVariable interest entitiesTotalVoting interest entitiesVariable interest entitiesTotal
Operating expenses reflected in net operating income$(.1)$(2.7)$(2.8)$(.7)$(3.7)$(4.4)
Net investment income (loss) reflected in non-operating income (loss).7 (17.8)(17.1)13.1 88.1 101.2 
Impact on income before taxes$.6 $(20.5)$(19.9)$12.4 $84.4 $96.8 
Net income (loss) attributable to T. Rowe Price$.5 $(.6)$(.1)$7.0 $34.4 $41.4 
Net income (loss) attributable to redeemable non-controlling interests.1 (19.9)(19.8)5.4 50.0 55.4 
$.6 $(20.5)$(19.9)$12.4 $84.4 $96.8 

Nine months endedThree months ended
9/30/20219/30/20203/31/20223/31/2021
(in millions)(in millions)Voting
interest entities
Variable interest entitiesTotalVoting
interest entities
Variable interest entitiesTotal(in millions)Voting interest entitiesVariable interest entitiesTotalVoting interest entitiesVariable interest entitiesTotal
Operating expenses reflected in net operating incomeOperating expenses reflected in net operating income$(.4)$(8.7)$(9.1)$(1.2)$(10.5)$(11.7)Operating expenses reflected in net operating income$(.2)$(2.3)$(2.5)$(.2)$(3.3)$(3.5)
Net investment income (loss) reflected in non-operating income14.1 61.5 75.6 (5.7)19.0 13.3 
Net investment income (loss) reflected in non-operating income (loss)Net investment income (loss) reflected in non-operating income (loss)(6.6)(94.8)(101.4)6.1 31.1 37.2 
Impact on income before taxesImpact on income before taxes$13.7 $52.8 $66.5 $(6.9)$8.5 $1.6 Impact on income before taxes$(6.8)$(97.1)$(103.9)$5.9 $27.8 $33.7 
Net income (loss) attributable to T. Rowe PriceNet income (loss) attributable to T. Rowe Price$8.8 $35.1 $43.9 $(2.7)$(.1)$(2.8)Net income (loss) attributable to T. Rowe Price$(4.7)$(45.7)$(50.4)$4.0 $14.3 $18.3 
Net income (loss) attributable to redeemable non-controlling interestsNet income (loss) attributable to redeemable non-controlling interests4.9 17.7 22.6 (4.2)8.6 4.4 Net income (loss) attributable to redeemable non-controlling interests(2.1)(51.4)(53.5)1.9 13.5 15.4 
$13.7 $52.8 $66.5 $(6.9)$8.5 $1.6 $(6.8)$(97.1)$(103.9)$5.9 $27.8 $33.7 

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 $1.6$0.9 million and $2.7$1.3 million for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, against the investment advisory and administrative fees earned from these products. Operating expenses eliminated for the nine months ended September 30, 2021 and 2020, were $4.0 million and $7.3 million, respectively. The net investment income (loss) reflected in non-operating income (loss) includes dividend and interest income as well as realized and

Page 13


unrealized gains and losses on the underlying securities held by the consolidated T. Rowe Price investment products.



Page 13


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 ninethree months ended September 30, 2021March 31, 2022 and 2020.2021.
Nine months endedThree months ended
9/30/20219/30/20203/31/20223/31/2021
(in millions)(in millions)Voting
interest entities
Variable interest entitiesTotalVoting
interest entities
Variable interest entitiesTotal(in millions)Voting
interest entities
Variable interest entitiesTotalVoting
interest entities
Variable interest entitiesTotal
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$(109.1)$127.7 $18.6 $(105.7)$(241.0)$(346.7)Net cash provided by (used in) operating activities$(2.6)$88.2 $85.6 $(31.7)$(112.0)$(143.7)
Net cash used in investing activitiesNet cash used in investing activities(11.9)(3.7)(15.6)(23.4)(25.7)(49.1)Net cash used in investing activities— (5.9)(5.9)(9.1)(18.2)(27.3)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities120.1 (132.7)(12.6)124.4 269.5 393.9 Net cash provided by (used in) financing activities4.9 (95.9)(91.0)36.7 112.3 149.0 
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
— (3.6)(3.6)— 3.4 3.4 
Effect of exchange rate changes on cash and cash equivalents of consolidated
T. Rowe Price investment products
— (2.7)(2.7)— .9 .9 
Net change in cash and cash equivalents during periodNet change in cash and cash equivalents during period(.9)(12.3)(13.2)(4.7)6.2 1.5 Net change in cash and cash equivalents during period2.3 (16.3)(14.0)(4.1)(17.0)(21.1)
Cash and cash equivalents at beginning of yearCash and cash equivalents at beginning of year7.1 97.7 104.8 9.9 66.6 76.5 Cash and cash equivalents at beginning of year7.3 93.8 101.1 7.1 97.7 104.8 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$6.2 $85.4 $91.6 $5.2 $72.8 $78.0 Cash and cash equivalents at end of period$9.6 $77.5 $87.1 $3.0 $80.7 $83.7 

The net cash provided by financing activities during the ninethree months ended September 30,March 31, 2022 and 2021 and 2020 includes $35.3$35.1 million and $95.2$34.1 million, respectively, of net subscriptions we made into the consolidated T. Rowe Price 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:

Level 1 – quoted prices in active markets for identical securities.
Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, and credit risk. These inputs are based on market data obtained from independent sources.
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.
9/30/202112/31/20203/31/202212/31/2021
(in millions)(in millions)Level 1Level 2Level 1Level 2(in millions)Level 1Level 2Level 1Level 2
AssetsAssetsAssets
Cash equivalents Cash equivalents$6.0 $— $7.0 $—  Cash equivalents$6.6 $2.1 $6.5 $.7 
Equity securitiesEquity securities278.9 239.7 308.0 708.0 Equity securities212.4 239.0 247.8 340.3 
Fixed income securitiesFixed income securities— 1,231.1 — 1,411.3 Fixed income securities— 1,024.6 — 1,187.4 
Other investmentsOther investments8.8 54.7 2.6 131.0 Other investments8.6 51.3 5.7 52.7 
$293.7 $1,525.5 $317.6 $2,250.3 $227.6 $1,317.0 $260.0 $1,581.1 
LiabilitiesLiabilities$(.3)$(10.8)$(.4)$(18.8)Liabilities$(1.9)$(13.1)$(.7)$(9.7)




Page 14


NOTE 6 – STOCKHOLDERS’ EQUITY.- GOODWILL AND INTANGIBLE ASSETS.

Accounts payableGoodwill and accrued expenses includes liabilitiesintangible assets consist of $36.0 million at September 30, 2021, and $2.5 million at December 31, 2020 for common stock repurchases that settled during the first week of October 2021 and January 2021, respectively.following:

On June 14, 2021,
(in millions)3/31/202212/31/2021
Goodwill$2,643.9 $2,693.2 
Indefinite-lived intangible assets - trade name134.7 134.7 
Indefinite-lived intangible assets - investment advisory agreements164.8 164.8 
Definite-lived intangible assets - investment advisory agreements586.8 613.9 
Total$3,530.2 $3,606.6 
Estimated amortization expense for the Boarddefinite-lived investment advisory agreements intangible assets for the remainder of Directors declared2022 is $81.4 million, $108.1 million for 2023, $105.7 million for 2024, $105.0 million for 2025, and $87.7 million for 2026. Amortization expense for the definite-lived investment advisory agreements intangible assets was $27.1 million for the three months ended March 31, 2022.

Goodwill activity during the three months ended March 31, 2022 was as follows:

(in millions)2022
Balance, 12/31/2021$2,693.2 
Measurement period adjustment(49.3)
Balance, 3/31/2022$2,643.9 

We evaluate the carrying amount of goodwill for possible impairment on an annual basis in the third quarter using a special cash dividend of $3.00 per common share,fair value approach or $699.8 million,if triggering events occur that was paid on July 7, 2021require us to stockholders of record as of the close of business on June 25, 2021.evaluate for impairment earlier.


NOTE 7 – STOCK-BASED COMPENSATION.

STOCK OPTIONS.

The following table summarizes the status of, and changes in, our stock options during the ninethree months ended September 30, 2021.March 31, 2022.
Options
Weighted-
average
exercise
price
Outstanding at December 31, 20204,379,663 $71.67 
Exercised(1,403,996)$69.20 
Outstanding at September 30, 20212,975,667 $72.83 
Exercisable at September 30, 20212,975,667 $72.83 
Options
Weighted-
average
exercise
price
Outstanding at December 31, 20212,846,579 $72.87 
Exercised(214,772)$64.58 
Outstanding at March 31, 20222,631,807 $73.55 
Exercisable at March 31, 20222,631,807 $73.55 

EFFECT OF SPECIAL CASH DIVIDEND.Page 15


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.

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 ninethree months ended September 30, 2021.March 31, 2022.
Restricted
shares
Restricted
stock
units
Weighted-average
fair value
Restricted
shares
Restricted
stock
units
Weighted-average
fair value
Nonvested at December 31, 20207,412 6,367,059 $116.51 
Nonvested at December 31, 2021Nonvested at December 31, 20215,720 5,701,865 $146.87 
Time-based grantsTime-based grants4,336 29,314 $188.58 Time-based grants— 8,078 $173.08 
Dividend equivalents granted to non-employee directorsDividend equivalents granted to non-employee directors— 2,978 $192.66 Dividend equivalents granted to non-employee directors— 786 $153.10 
VestedVested(7,412)(99,091)$103.07 Vested— (62,378)$98.23 
ForfeitedForfeited— (137,390)$118.39 Forfeited— (61,216)$141.91 
Nonvested at September 30, 20214,336 6,162,870 $117.21 
Nonvested at March 31, 2022Nonvested at March 31, 20225,720 5,587,135 $147.50 

Nonvested at September 30, 2021,March 31, 2022, includes performance-based restricted stock units of 335,162.294,518. These nonvested performance-based restricted stock units include 188,61281,123 units for which the performance period has lapsed, and the performance threshold has been met.


Page 15


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, 2021.March 31, 2022. 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)
Fourth quarter 202149.9 
2022116.4 
2023 through 202695.8 
Total$262.1 
(in millions)
Second quarter 2022$64.0 
Third quarter 202263.1 
Fourth quarter 202254.3 
2023125.5 
2024 through 2026105.4 
Total$412.3 

NOTE 8 – EARNINGS PER SHARE CALCULATIONS.

The following table presents the reconciliation of net income attributable to T. Rowe Price to net income allocated to our common stockholders and the weighted-average shares that are used in calculating the basic and diluted earnings per share on our common stock. Weighted-average common shares outstanding assuming dilution reflects the potential dilution, determined using the treasury stock method, that could occur if outstanding stock options were exercised and non-participating stock awards vested. No outstanding stock options had an anti-dilutive impact on the diluted earnings per common share calculation in the periods presented.
Three months endedNine months ended Three months ended
(in millions)(in millions)9/30/20219/30/20209/30/20219/30/2020(in millions)3/31/20223/31/2021
Net income attributable to T. Rowe PriceNet income attributable to T. Rowe Price$777.2 $643.2 $2,342.3 $1,589.3 Net income attributable to T. Rowe Price$567.9 $749.4 
Less: net income allocated to outstanding restricted stock and stock unit holdersLess: net income allocated to outstanding restricted stock and stock unit holders19.5 17.9 61.6 44.1 Less: net income allocated to outstanding restricted stock and stock unit holders13.0 19.9 
Net income allocated to common stockholdersNet income allocated to common stockholders$757.7 $625.3 $2,280.7 $1,545.2 Net income allocated to common stockholders$554.9 $729.5 
Weighted-average common sharesWeighted-average common sharesWeighted-average common shares
OutstandingOutstanding226.9 227.0 227.2 229.5 Outstanding228.2 227.7 
Outstanding assuming dilutionOutstanding assuming dilution229.1 229.4 229.4 231.9 Outstanding assuming dilution229.8 230.0 


Page 16


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,March 31, 2022 and 2021 and 2020 are presented in the table below.
Three months ended 9/30/2021Three months ended 9/30/2020Three months ended 3/31/2022Three months ended 3/31/2021
(in millions)(in millions)Equity method investmentsConsolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustmentsEquity method investmentsConsolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustments(in millions)Equity method investmentsConsolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustmentsEquity method investmentsConsolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustments
Balances at beginning of periodBalances at beginning of period$(43.8)$15.1 $(28.7)$(54.4)$2.2 $(52.2)Balances at beginning of period$(36.7)$10.2 $(26.5)$(43.6)$20.6 $(23.0)
Other comprehensive income (loss) before reclassifications and income taxesOther comprehensive income (loss) before reclassifications and income taxes3.5 (5.0)(1.5)(2.0)12.5 10.5 Other comprehensive income (loss) before reclassifications and income taxes.5 (5.6)(5.1)(.8)(7.1)(7.9)
Reclassification adjustments recognized in non-operating incomeReclassification adjustments recognized in non-operating income— (1.6)(1.6)— (2.6)(2.6)
.5 (7.2)(6.7)(.8)(9.7)(10.5)
Net deferred tax benefits (income taxes)Net deferred tax benefits (income taxes)(.4)1.2 .8 2.1 (3.1)(1.0)Net deferred tax benefits (income taxes)(.1)1.9 1.8 .5 2.5 3.0 
Other comprehensive income (loss)Other comprehensive income (loss)3.1 (3.8)(.7).1 9.4 9.5 Other comprehensive income (loss).4 (5.3)(4.9)(.3)(7.2)(7.5)
Balances at end of periodBalances at end of period$(40.7)$11.3 $(29.4)$(54.3)$11.6 $(42.7)Balances at end of period$(36.3)$4.9 $(31.4)$(43.9)$13.4 $(30.5)

Page 16


The other comprehensive income (loss) in the table above excludes $(12.2)losses of $9.9 million and $20.8income of $11.8 million of other comprehensive income related to redeemable non-controlling interests held in our consolidated products for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively.
The changes in each component of accumulated other comprehensive loss, including reclassification adjustments for the nine months ended September 30, 2021 and 2020, are presented in the table below.
Nine months ended 9/30/2021Nine months ended 9/30/2020
(in millions)Equity method investmentsConsolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustmentsEquity method investmentsConsolidated T. Rowe Price investment products - variable interest entitiesTotal currency translation adjustments
Balances at beginning of period$(43.6)$20.6 $(23.0)$(46.9)$3.9 $(43.0)
Other comprehensive income (loss) before reclassifications and income taxes2.4 (9.8)(7.4)(9.4)10.3 .9 
Reclassification adjustments recognized in non-operating income— (2.6)(2.6)— (.1)(.1)
2.4 (12.4)(10.0)(9.4)10.2 .8 
Net deferred tax benefits (income taxes).5 3.1 3.6 2.0 (2.5)(.5)
Other comprehensive income (loss)2.9 (9.3)(6.4)(7.4)7.7 .3 
Balances at end of period$(40.7)$11.3 $(29.4)$(54.3)$11.6 $(42.7)
The other comprehensive income (loss) in the table above excludes $20.2 million for the 2021 period and $13.9 million for the 2020 period of other comprehensive income (loss) related to redeemable non-controlling interests held in our consolidated products.

NOTE 10 – COMMITMENTS AND CONTINGENCIES.

COMMITMENTS.

T. Rowe Price has committed $499.1 million to fund OHA products over the next five 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 have reached an agreement in principle for a settlement which will be presented toagreement, and, on January 18, 2022, the courtCourt provided preliminary approval of the proposed settlement and set a fairness hearing for approval.May 24, 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. 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.

NOTE 11 - SUBSEQUENT EVENTS.

PENDING ACQUISITION OF OAK HILL ADVISORS, L.P.

On October 28, 2021, we entered into a definitive purchase agreement to acquire 100% of the equity of Oak Hill Advisors, L.P. (OHA), and certain other entities that have common ownership. OHA is an alternative investment management firm with a focus on performing and distressed credit investments in North America, Europe and other geographies. Under the purchase agreement, we will acquire OHA for a purchase price of up to $4.2 billion, with $3.3 billion payable at closing, approximately 74% in cash and 26% in T. Rowe Price Group, Inc. common stock, and up to an additional $900 million in cash upon the achievement of certain business milestones beginning in 2025. The purchase price includes the retirement of OHA debt outstanding at closing. The completion of the acquisition is subject to various approvals and other customary closing conditions and is expected to close in the fourth quarter of 2021.


Page 17




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
T. Rowe Price Group, Inc.:

Results of Review of Interim Financial Information
We have reviewed the condensed consolidated balance sheet of T. Rowe Price Group, Inc. and subsidiaries (the “Company") as of September 30, 2021,March 31, 2022, the related condensed consolidated statements of income, comprehensive income, and stockholders’ equity, for the three-month and nine-month periods ended September 30, 2021 and 2020, the related condensed consolidated statements of cash flows for the nine-monththree-month periods ended September 30,March 31, 2022 and 2021, and 2020, 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. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020,2021, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 11, 2021,24, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2020,2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP
Baltimore, Maryland
OctoberApril 28, 20212022
 



Page 18


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW.

Our revenues and net income are derived primarily from investment advisory services provided to individual and institutional investors in U.S. mutual funds, subadvised funds, separately managed accounts, collective investment trusts, and other T. Rowe Priceaffiliated products. The other T. Rowe Priceaffiliated products includeinclude: open-ended investment products offered to investors outside the U.S., and products offered through variable annuity life insurance plans in the U.S., affiliated private investment funds or private accounts, 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; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services through model delivery. Additionally, we also 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.

We manage a broad range of U.S., international and global stock, bond, and money market mutual funds and collective investment trusts and other investment products, which meet the varied needs and objectives of individual and institutional investors. Investment advisory revenues depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management affect our revenues and results of operations. Additionally, approximately 30% of our operating expenses are impacted by fluctuations in our assets under management.

We incur significant expenditures to develop new products and services and improve and expand our capabilities and distribution channels in order to attract new investment advisory clients and additional investments from our existing clients. These efforts often involve costs that precede any future revenues that we may recognize from an increase to our assets under management.

The general trend to passive investing has been persistent and accelerated in recent years, which has negatively impacted our new client inflows. However, over the long term we expect well-executed active management to play an important role for investors. In this regard, we remain debt-free withhave ample liquidity and resources that allow us to take advantage of attractive growth opportunities. We are investing in key capabilities, including investment professionals, distribution professionals, technologies, and new product offerings in order to provide our clients with strong investment management expertise and service.

MARKET TRENDS.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 March 31, 2022, OHA had $57 billion of capital under management (which includes net assets value, portfolio value and/or unfunded capital).

Major
MARKET TRENDS.

Many global equity markets declined in the first quarter of 2022. In fact, the U.S. stock market indexesexperienced its worst quarter since the pandemic began about two years ago. Stocks fell as Russia invaded Ukraine in late February, prompting the U.S. and many other nations, especially in Europe, to respond with broad and damaging economic sanctions targeting a number of key Russian individuals and institutions. Equities were mixedalso hurt by elevated inflation—exacerbated by a sharp increase in commodity prices—as well as the third quarter. Large-cap shares outperformed. Stocks generally rose through early September, supported by favorable second-quarter corporate earnings reports. However, the spreadonset of the delta variant of the coronavirus weighed on the economic recovery. Toward the end of the quarter, investors turned cautious as longer-term U.S. Treasury yields climbed amid growingFederal Reserve interest rate increases and expectations thatfor the Federal Reserve could soon begin to taper its monthly asset purchases. Investors were also concerned that Congress had not yet passed legislation that raises or eliminates the debt ceiling, which is the statutory limit on the federal government’s borrowing ability.pursue an aggressive pace of monetary tightening.

European stock markets were widely mixed in U.S. dollar terms; UK shares fell marginally. Developed Asian and Far East markets were also mixed. Japanese sharesmostly lower in U.S. dollar terms, but Australian stocks bucked the negative trend with a 7% gain, helped by local currency strength versus the U.S. dollar. In Europe, most markets declined in dollar terms, as local losses were exacerbated by a weak euro and British pound. Equities in energy producer Norway, however, rose close to 5%, whereas Hong Kong stocks slumped more than 9% due10%. Stocks in part to Chinese regulatory developments.Portugal and the UK rose about 2%.

EmergingIn emerging Asia, markets equities generally declined. In Latin America, Brazilian shares tumbled more than 20%were mixed in U.S. dollar terms; in Asia, South Koreanterms, but Chinese shares slumped 13%skidded 14%. Emerging European markets rose broadly, though Turkish stocks trailedwere widely mixed, but Latin American markets produced excellent returns in dollar terms, as the resource-rich region with a 2% gain.


benefited from higher commodity prices. Gulf Cooperation Council markets in the Middle East were buoyed by higher global oil prices.

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Returns of several major equity market indexes were as follows:
Three months endedNine months ended
Index9/30/20219/30/2021
S&P 500 Index.6%15.9%
NASDAQ Composite Index(1)
(.4)%12.1%
Russell 2000 Index(4.4)%12.4%
MSCI EAFE (Europe, Australasia, and Far East) Index(.4)%8.8%
MSCI Emerging Markets Index(8.0)%(1.0)%
Three months ended
Index3/31/2022
S&P 500 Index(4.6)%
NASDAQ Composite Index(1)
(9.1)%
Russell 2000 Index(7.5)%
MSCI EAFE (Europe, Australasia, and Far East) Index(5.8)%
MSCI Emerging Markets Index(6.9)%
 (1) Returns exclude dividends

Global bond returnsbonds produced mostly flat or negative returns in U.S. dollar terms. Interms, as the U.S., long-term Federal Reserve began to raise short-term interest rates and Treasury yields initially declined, but they yields—especially short- and intermediate-term yields—rose in late September after the Federal Reserve signaled that it could soon moderate the paceanticipation of its monthly asset purchases.tighter monetary policy in response to elevated inflation. The 10-year U.S. Treasury note yield increasedrose from 1.45%1.52% to 1.52% during the quarter.2.32%.

In the taxable investment-grade bond universe, all major segments—including Treasuries,long-term Treasury and corporate bonds fared worst. Mortgage-backed and mortgage- and asset-backed securities—were essentially flat.commercial mortgage-backed securities also declined materially. Asset-backed securities held up best. Tax-free municipal securities fellbonds fared slightly and trailedworse than the taxable investment-grade bond market. High yield corporate bonds produced slight positive returns and outperformed high-quality issues.declined due to risk aversion.

Bonds in developed non-U.S. markets declinedproduced negative returns in U.S. dollar terms, as longer-term interest ratesgovernment bond yields in various countriesmarkets rose amid concerns about inflation and athe potential for tighter central bank monetary policies this year. A stronger U.S. dollar reduced localoverseas bond returns to U.S investors. The Japanese yen fell about .5% versus the greenback, while the euro and British pound dropped more than 2%.in dollar terms.

Emerging markets bonds also declined. Localslumped as investors shunned riskier investments, but local currency issues fared worseheld up better than dollar-denominated debt, as the South African rand, the South Korean won, andemerging markets debt. Currencies in several Latin American currencies fell materially againstcountries appreciated strongly versus the U.S. dollar.dollar, but many other currencies depreciated.

Returns for several major bond market indexes were as follows:
Three months endedNine months ended
Index9/30/20219/30/2021
Bloomberg Barclays U.S. Aggregate Bond Index.1%(1.6)%
JPMorgan Global High Yield Index    .6%4.6%
Bloomberg Barclays Municipal Bond Index(.3)%.8%
Bloomberg Barclays Global Aggregate Ex-U.S. Dollar Bond Index(1.6)%(5.9)%
JPMorgan Emerging Markets Bond Index Plus(1.1)%(4.2)%
Three months ended
Index3/31/2022
Bloomberg U.S. Aggregate Bond Index(5.9)%
JPMorgan Global High Yield Index    (4.5)%
Bloomberg Municipal Bond Index(6.2)%
Bloomberg Global Aggregate Ex-U.S. Dollar Bond Index(6.2)%
JPMorgan Emerging Markets Bond Index Plus(16.2)%


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ASSETS UNDER MANAGEMENT.MANAGEMENT(1).

Assets under management ended the thirdfirst quarter of 20212022 at $1,612.3$1,551.8 billion, a decrease of $10.8$136.0 billion from June 30, 2021, and an increase of $141.8 billion from the end of 2020. For the three months ended September 30, 2021, theDecember 31, 2021. The decrease in assets under management was driven by net cash outflows of $6.4$5.3 billion and market depreciation, including distributions not reinvested, of $4.4$130.7 billion. Clients transferred $3.6$4.1 billion in net assets from the U.S. mutual funds primarily to collective investment trusts and other investment products, of which $1.9$3.3 billion transferred into the retirement date trusts.

For the nine months ended September 30, 2021, the increase in assets under management was driven by market appreciation, net of distributions not reinvested, of $147.6 billion, partially offset by net cash outflows of $5.8 billion. Clients transferred $18.4 billion in net assets from the U.S. mutual funds primarily to collective investment trusts and other investment products, of which $12.7 billion transferred into the retirement date trusts.

The following tables detail changes in our assets under management, by vehicle and asset class, during the three- and nine-month periods ended September 30, 2021:first quarter of 2022:
Three months ended 9/30/2021Nine months ended 9/30/2021Three months ended 3/31/2022
(in billions)(in billions)U.S. mutual fundsSubadvised funds and separate accountsCollective investment trusts and other investment productsTotalU.S. mutual fundsSubadvised funds and separate accountsCollective investment trusts and other investment productsTotal(in billions)U.S. mutual fundsSubadvised funds and separate accountsCollective investment trusts and other investment productsTotal
Assets under management at beginning of periodAssets under management at beginning of period$865.8 $426.9 $330.4 $1,623.1 $794.6 $400.1 $275.8 $1,470.5 Assets under management at beginning of period$871.4 $437.1 $379.3 $1,687.8 
Net cash flows before client transfersNet cash flows before client transfers.1 (5.8)(.7)(6.4)3.2 (21.9)12.9 (5.8)Net cash flows before client transfers(5.7)(4.5)4.9 (5.3)
Client transfersClient transfers(3.6).5 3.1 — (18.4)2.0 16.4 — Client transfers(4.1)— 4.1 — 
Net cash flows after client transfersNet cash flows after client transfers(3.5)(5.3)2.4 (6.4)(15.2)(19.9)29.3 (5.8)Net cash flows after client transfers(9.8)(4.5)9.0 (5.3)
Net market (depreciation)/appreciation and (losses)/gains(1.1)(.8)(2.3)(4.2)82.1 40.6 25.4 148.1 
Net market depreciation and lossesNet market depreciation and losses(71.8)(34.6)(23.9)(130.3)
Net distributions not reinvestedNet distributions not reinvested(.2)— — (.2)(.5)— — (.5)Net distributions not reinvested(.4)— — (.4)
Change during the periodChange during the period(4.8)(6.1).1 (10.8)66.4 20.7 54.7 141.8 Change during the period(82.0)(39.1)(14.9)(136.0)
Assets under management at September 30, 2021$861.0 $420.8 $330.5 $1,612.3 $861.0 $420.8 $330.5 $1,612.3 
Assets under management at March 31, 2022Assets under management at March 31, 2022$789.4 $398.0 $364.4 $1,551.8 
Three months ended 9/30/2021Nine months ended 9/30/2021
(in billions)EquityFixed income, including money market
Multi-asset(1)
TotalEquityFixed income, including money market
Multi-asset(2)
Total
Assets under management at beginning of period$985.1 $178.7 $459.3 $1,623.1 $895.8 $168.7 $406.0 $1,470.5 
Net cash flows(8.4)2.1 (.1)(6.4)(28.8)11.2 11.8 (5.8)
Net market (depreciation)/appreciation and (losses)/gains(2)
(2.0)(.1)(2.3)(4.4)107.7 .8 39.1 147.6 
Change during the period(10.4)2.0 (2.4)(10.8)78.9 12.0 50.9 141.8 
Assets under management at September 30, 2021$974.7 $180.7 $456.9 $1,612.3 $974.7 $180.7 $456.9 $1,612.3 

Three months ended 3/31/2022
(in billions)EquityFixed income, including money market
Multi-asset(2)
Alternatives(3)
Total
Assets under management at beginning of period$992.7 $175.7 $477.7 $41.7 $1,687.8 
Net cash flows(18.1)5.3 6.7 .8 (5.3)
Net market depreciation and losses(4)
(96.6)(5.8)(28.0)(.3)(130.7)
Change during the period(114.7)(.5)(21.3).5 (136.0)
Assets under management at March 31, 2022$878.0 $175.2 $456.4 $42.2 $1,551.8 
(1)     Includes fee basis assets under management.
(2)The underlying assets under management of the multi-asset portfolios have been aggregated and presented in this category and not reported in the equity and fixed income columns.
(2)(3) The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed / distressed, non-investment grade CLOs, special situations, or have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included.
(4)Includes distributions reinvested and not reinvested.

Investment advisory clients outside the United States account for 8.8%9.7% of our assets under management at September 30, 2021, 9.0% at June 30, 2021,March 31, 2022 and 9.3%9.9% at December 31, 2020.2021.



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Our target date retirement products, which are included in the multi-asset totals shown above, continue to be a significant part of our assets under management. Assets under management in these portfolios, as well as net cash inflows (outflows), by vehicle, were as follows:
Net cash inflows (outflows)Net cash inflows (outflows)
Assets under managementThree months endedNine months endedAssets under managementThree months ended
(in billions)(in billions)9/30/20216/30/202112/31/20209/30/20219/30/20209/30/20219/30/2020(in billions)3/31/202212/31/20213/31/20223/31/2021
U.S. mutual fundsU.S. mutual funds$183.4 $185.0 $176.1 $(.7)$(2.9)$(9.4)$(9.6)U.S. mutual funds$174.4 $187.1 $(1.6)$(3.8)
Collective investment trustsCollective investment trusts182.2 182.0 145.4 1.4 (2.8)21.7 4.1 Collective investment trusts188.6 191.1 8.8 8.1 
Subadvised and separately managed accountsSubadvised and separately managed accounts12.1 12.2 10.7 — .2 .4 .5 Subadvised and separately managed accounts12.2 12.9 .1 .2 
$377.7 $379.2 $332.2 $.7 $(5.5)$12.7 $(5.0)$375.2 $391.1 $7.3 $4.5 

We also provide strategic investment advice solutions for certain portfolios. These advice solutions, which the vast majority is overseen by our multi-asset division, may include strategic asset allocation, and in certain portfolios, asset selection and/or tactical asset allocation overlays. We also offer advice solutions through retail separately managed accounts and separately managed accounts model delivery. As of March 31, 2022, total assets in these solutions were $466 billion, of which $459 billion are included in our reported assets under management in the tables above.

We provide participant accounting and plan administration for defined contribution retirement plans that invest in the firm's U.S. mutual funds, collective investment trusts and funds outside of the firm's complex. As of September 30, 2021,March 31, 2022, our assets under administration were $260$256 billion, of which nearly $173$153 billion are assets we manage.

In recent years, the firm began offering non-discretionary advisory services through model delivery and multi-asset solutions for providers to implement. We record the revenue earned on these services in administrative fees. The assets under advisement in these portfolios, predominantly in the United States, were $8 billion at September 30, 2021.

INVESTMENT PERFORMANCE.PERFORMANCE(1).

Strong investment performance and brand awareness is a key driver to attracting and retaining assets—and to our long-term success. Our performance disclosures include specific asset classes, assets under management weighted performance, mutual fund performance against passive peers and composite performance against benchmarks. The following tables present investment performance for the one-, three-, five-, and 10-years ended September 30, 2021.March 31, 2022. Past performance is no guarantee of future results.

% of U.S. mutual funds that outperformed Morningstar median(1),(2)
% of U.S. mutual funds that outperformed Morningstar median(2),(3)
% of U.S. mutual funds that outperformed Morningstar median(2),(3)
1 year3 years5 years10 years1 year3 years5 years10 years
EquityEquity56%74%68%85%Equity41%60%64%85%
Fixed IncomeFixed Income71%58%53%60%Fixed Income63%71%62%63%
Multi-AssetMulti-Asset89%94%85%90%Multi-Asset37%81%79%90%
All FundsAll Funds70%75%68%78%All Funds47%69%68%79%
% of U.S. mutual funds that outperformed passive peer median(1),(3)
% of U.S. mutual funds that outperformed passive peer median(2),(4)
% of U.S. mutual funds that outperformed passive peer median(2),(4)
1 year3 years5 years10 years1 year3 years5 years10 years
EquityEquity53%68%68%71%Equity38%52%55%67%
Fixed IncomeFixed Income88%68%57%47%Fixed Income53%69%55%50%
Multi-AssetMulti-Asset89%92%81%86%Multi-Asset31%76%68%69%
All FundsAll Funds74%76%69%68%All Funds40%64%59%63%
% of composites that outperformed benchmarks(4)(5)
1 year3 years5 years10 years1 year3 years5 years10 years
EquityEquity48%63%72%73%Equity34%49%59%72%
Fixed IncomeFixed Income85%79%81%85%Fixed Income58%73%77%79%
All CompositesAll Composites63%69%76%78%All Composites44%59%66%74%


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AUM Weighted PerformanceAUM Weighted PerformanceAUM Weighted Performance
% of U.S. mutual funds AUM that outperformed Morningstar median(1),(2)
% of U.S. mutual funds AUM that outperformed Morningstar median(2),(3)
% of U.S. mutual funds AUM that outperformed Morningstar median(2),(3)
1 year3 years5 years10 years1 year3 years5 years10 years
EquityEquity58%68%80%92%Equity46%47%76%92%
Fixed IncomeFixed Income77%52%55%69%Fixed Income75%81%68%80%
Multi-AssetMulti-Asset98%96%96%96%Multi-Asset37%95%96%97%
All FundsAll Funds69%73%81%91%All Funds46%63%81%92%
% of U.S. mutual funds AUM that outperformed passive peer median(1),(3)
% of U.S. mutual funds AUM that outperformed passive peer median(2),(4)
% of U.S. mutual funds AUM that outperformed passive peer median(2),(4)
1 year3 years5 years10 years1 year3 years5 years10 years
EquityEquity39%62%84%81%Equity43%46%57%59%
Fixed IncomeFixed Income96%61%58%43%Fixed Income69%71%63%48%
Multi-AssetMulti-Asset94%92%95%96%Multi-Asset27%96%95%92%
All FundsAll Funds56%70%85%82%All Funds40%61%67%67%
% of composites AUM that outperformed benchmarks(4)(5)
1 year3 years5 years10 years1 year3 years5 years10 years
EquityEquity35%65%71%71%Equity38%38%61%76%
Fixed IncomeFixed Income86%85%77%80%Fixed Income63%80%75%74%
All CompositesAll Composites44%68%72%72%All Composites42%45%63%76%
As of September 30, 2021, 73March 31, 2022, 69 of 123 (59.3%124 (55.6%) of the firm's rated U.S. mutual funds (across primary share classes) received an overall rating of 4 or 5 stars. By comparison, 32.5% of Morningstar's fund population is given a rating of 4 or 5 stars(5). In addition, 86%67%(5) of AUM in the firm's rated U.S. mutual funds (across primary share classes) ended September 30, 2021March 31, 2022 with an overall rating of 4 or 5 stars.

(1) The investment performance reflects that of T. Rowe Price sponsored mutual funds and composites AUM and not of OHA’s products.
(2) Source: © 20212022 Morningstar, Inc. All rights reserved. The information contained herein: 1) is proprietary to Morningstar and/or its content providers; 2) may not be copied or distributed; and 3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
(2)(3) Source: Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. The top chart reflects the percentage of T. Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the Morningstar category median. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $518B$394B for 1 year, $518B$393B for 3 years, $518B$393B for 5 years, and $508B$386B for 10 years.
(3)(4) Passive Peer Median was created by T. Rowe Price using data from Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, funds with fewer than three peers, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. This analysis compares T. Rowe Price active funds to the applicable universe of passive/index open-end funds and ETFs of peer firms. The top chart reflects the percentage of T. Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that are outperforming the passive peer universe. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $504B$372B for 1 year, $498B$370B for 3 years, $490B$368B for 5 years, and $422B$353B for 10 years.
(4)(5)Composite net returns are calculated using the highest applicable separate account fee schedule. Excludes money market composites. All composites compared to official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1 year, 3 year, 5 year, and 10 year track record that are outperforming their benchmarks. The bottom chart reflects the percentage of T. Rowe Price composite AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $1,501B$1,392B for 1 year, $1,498B$1,390B for 3 years, $1,482B$1,376B for 5 years, and $1,446B$1,337B for 10 years.
(5)(6) The Morningstar Rating™ for funds is calculated for funds with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. Morningstar gives its best ratings of 5 or 4 stars to the top 32.5% of all funds (of the 32.5%,10% get 5 stars and 22.5% get 4 stars). The Overall Morningstar Rating™ is derived from a weighted average of the performance figures associated with a fund’s 3, 5, and 10 year (if applicable) Morningstar Rating™ metrics.


RESULTS OF OPERATIONS.

The following table and discussion sets forth information regarding our consolidated financial results for the three and nine months ended September 30,March 31, 2022 and 2021 and 2020 on a U.S. GAAP basis as well as a non-GAAP basis. The first quarter of 2022 reflects the operating results of OHA which was acquired at the end of 2021. The non-GAAP basis adjusts for the impact of our consolidated T. Rowe Price investment products, the impact of market movements on the supplemental savings plan liability and related economic hedges, investment income related to certain other investments, and certain nonrecurring charges and gains, if any.including acquisition-related amortization and costs.

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Three months endedQ3 2021 vs. Q3 2020Nine months endedYTD 2021 vs. YTD 2020Three months endedQ1 2022 vs. Q1 2021
(in millions, except per-share data)(in millions, except per-share data)9/30/20219/30/2020$ change% change9/30/20219/30/2020$ change% change(in millions, except per-share data)3/31/20223/31/2021$ change% change
U.S. GAAP basisU.S. GAAP basisU.S. GAAP basis
Investment advisory feesInvestment advisory fees$1,813.4 $1,469.3 $344.1 23.4 %$5,288.4 $4,090.9 $1,197.5 29.3 %Investment advisory fees$1,662.1 $1,687.8 $(25.7)(1.5)%
Net revenuesNet revenues$1,954.1 $1,595.8 $358.3 22.5 %$5,710.2 $4,473.8 $1,236.4 27.6 %Net revenues$1,863.0 $1,826.8 $36.2 2.0 %
Operating expensesOperating expenses$957.9 $866.9 $91.0 10.5 %$2,862.7 $2,484.0 $378.7 15.2 %Operating expenses$985.6 $933.6 $52.0 5.6 %
Net operating incomeNet operating income$996.2 $728.9 $267.3 36.7 %$2,847.5 $1,989.8 $857.7 43.1 %Net operating income$877.4 $893.2 $(15.8)(1.8)%
Non-operating income (loss)(1)
Non-operating income (loss)(1)
$(11.5)$191.6 $(203.1)n/m$234.5 $106.4 $128.1 n/m
Non-operating income (loss)(1)
$(198.5)$102.1 $(300.6)n/m
Net income attributable to
T. Rowe Price
Net income attributable to
T. Rowe Price
$777.2 $643.2 $134.0 20.8 %$2,342.3 $1,589.3 $753.0 47.4 %Net income attributable to
T. Rowe Price
$567.9 $749.4 $(181.5)(24.2)%
Diluted earnings per common shareDiluted earnings per common share$3.31 $2.73 $.58 21.2 %$9.94 $6.66 $3.3 49.2 %Diluted earnings per common share$2.41 $3.17 $(.76)(24.0)%
Weighted average common shares outstanding assuming dilutionWeighted average common shares outstanding assuming dilution229.1 229.4 $(.3)(.1)%229.4 231.9 $(2.5)(1.1)%Weighted average common shares outstanding assuming dilution229.8 230.0 $(.2)(.1)%
Adjusted non-GAAP basis(2)
Adjusted non-GAAP basis(2)
Adjusted non-GAAP basis(2)
Operating expensesOperating expenses$957.2 $830.5 $126.7 15.3 %$2,798.2 $2,434.2 $364.0 15.0 %Operating expenses$1,039.1 $909.2 $129.9 14.3 %
Net operating incomeNet operating income$998.7 $768.0 $230.7 30.0 %$2,916.2 $2,046.9 $869.3 42.5 %Net operating income$838.0 $918.9 $(80.9)(8.8)%
Non-operating income (loss)(1)
Non-operating income (loss)(1)
$(3.0)$25.6 $(28.6)n/m$28.5 $50.2 $(21.7)n/m
Non-operating income (loss)(1)
$(23.8)$13.7 $(37.5)n/m
Net income attributable to T. Rowe PriceNet income attributable to T. Rowe Price$767.6 $602.7 $164.9 27.4 %$2,258.6 $1,596.6 $662.0 41.5 %Net income attributable to T. Rowe Price$616.9 $712.0 $(95.1)(13.4)%
Diluted earnings per common shareDiluted earnings per common share$3.27 $2.55 $.72 28.2 %$9.59 $6.69 $2.90 43.3 %Diluted earnings per common share$2.62 $3.01 $(.39)(13.0)%
Assets under management (in billions)
Assets under management (in billions)
Assets under management (in billions)
Average assets under managementAverage assets under management$1,648.7 $1,292.9 $355.8 27.5 %$1,581.3 $1,198.9 $382.4 31.9 %Average assets under management$1,559.9 $1,508.8 $51.1 3.4 %
Ending assets under managementEnding assets under management$1,612.3 $1,310.4 $301.9 23.0 %$1,612.3 $1,310.4 $301.9 23.0 %Ending assets under management$1,551.8 $1,518.0 $33.8 2.2 %
(1) The percentage change in non-operating income (loss) is not meaningful (n/m).
(2) See the reconciliation to the comparable U.S. GAAP measures at the end of the Results of Operations section of this Management’s Discussion and Analysis.

Results Overview - Quarter ended September 30, 2021March 31, 2022

InvestmentNet revenues.Total net revenues consist of investment advisory revenues; administrative, distribution, and servicing fees, and capital allocation-based income. Total net revenues were $1,863.0 million in the first quarter of 2022 compared with $1,826.8 million in the first quarter of 2021. Approximately 90% of our total net revenues are earned from investment advisory revenues.

Investment advisory fees are generally earned based on the value and composition of our assets under management, which change based on fluctuations in financial markets and net cash flows. As our average assets under management increase or decrease in a given period, the level of our investment advisory fee revenue for that same period generally fluctuates in a similar manner. Our annualized effective fee rates can be impacted by market or cash flow related shifts among asset and share classes, price changes in existing products, and asset level changes in products with tiered-fee structures.

Operating expenses. Operating expenses on a GAAP basis were $985.6 million in the first quarter of 2022 compared with $933.6 million in the first quarter of 2021. On a non-GAAP basis, operating expenses were $1,039.1 million, a 14.3% increase over the comparable 2021 period.

About half of the increase in our non-GAAP operating expenses from the first quarter of 2021 is due to the inclusion of OHA’s operating expenses in the first quarter of 2022 following the acquisition at the end of 2021. OHA's operating expenses primarily impact compensation expense; technology, occupancy, and facility costs; and general, administrative and other costs. The remaining increase is primarily attributable to higher costs for technology development and core operations provided by FIS since August 2021 for the firm's full-service recordkeeping offering and higher costs related to the ongoing investment in the firm's technology capabilities. The costs incurred from the FIS arrangement were partially offset by a reduction in compensation expenses as a result of the approximately 800 associates who transitioned to FIS in August 2021.

Our non-GAAP operating expenses exclude the impact of the supplemental savings plan, consolidated sponsored products, the remeasurement of the contingent consideration liability, amortization of certain acquisition-related assets, and other acquisition-related costs. See our non-GAAP reconciliations later in this Management’s Discussion and Analysis section.

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We updated our forecasted 2022 non-GAAP operating expenses, including a full-year of OHA’s operating expenses, from a range of 12% to 16% to a range of 10% to 14% to reflect lower market-related expenses and a slower pace of net hiring experienced in the quarter. We could elect to further adjust our expense growth should unforeseen circumstances arise, including significant market movements.

Operating margin. Our operating margin in the first quarter of 2022 was 47.1%, compared to 48.9% earned in the 2021 quarter. The decrease in our operating margin for the first quarter of 2022 compared to the 2021 period was primarily driven by expense growth outpacing the increase in net revenues in the first quarter of 2022.

Diluted earnings per share. Our 2022 diluted earnings per share reflects the net income of OHA that was acquired at the end of 2021.

Diluted earnings per share was $2.41 for the first quarter of 2022 as compared to $3.17 for the first quarter of 2021. The 24.0% decrease was primarily driven by lower operating income and net investment losses recognized in the first quarter of 2022 as compared to net investment gains in the first quarter of 2021, as the strong market returns in 2021 outpaced the market performance in the first quarter of 2022.

On a non-GAAP basis, diluted earnings per share was $2.62 for the first quarter of 2022 as compared to $3.01 for the first quarter of 2021. Similar to our GAAP diluted earnings, the decrease is largely attributable to lower operating income compared to 2021 period and net investment losses on our seed and discretionary portfolio recognized in the first quarter of 2022 as compared to net investment gains in the first quarter of 2021.

Net revenues
Three months endedQ1 2022 vs. Q1 2021
(in millions)3/31/20223/31/2021$ change% change
Investment advisory fees
U.S. mutual funds$976.5 $1,050.2 $(73.7)(7.0)%
Subadvised funds, separate accounts, collective investment trusts, and other investment products685.6 637.6 48.0 7.5 %
1,662.1 1,687.8 (25.7)(1.5)%
Administrative, distribution, and servicing fees
Administrative fees130.2 109.9 20.3 18.5 %
Distribution and servicing fees26.3 29.1 (2.8)(9.6)%
156.5 139.0 17.5 12.6 %
Capital allocation-based income(1)
44.4 — 44.4 n/m
Net revenues$1,863.0 $1,826.8 $36.2 2.0 %
(1) The percentage change for capital allocation-based income is not meaningful (n/m).

Investment advisory fees.
Investment advisory revenues earned in the thirdfirst quarter of 2021 increased2022 decreased over the comparable 20202021 quarter asdespite an increase in average assets under our management increased $355.8of $51.1 billion, or 27.5%3.4%, to $1,648.7$1,559.9 billion. In the thirdfirst quarter of 2021,2022, we voluntarily waived $13.7$9.2 million, or less than 1%, of our investment advisory fees in order to continue to maintain a positive yield for investors. At September 30, 2021,March 31, 2022, combined net assets of the investment portfolios in which we waived fees in the thirdfirst quarter of 20212022 were $23.7$22.8 billion. We anticipate that the waivers will decline in the fourthsecond quarter of 2021 will be at a similar level2022 and are expected to cease by the thirdend of the second quarter of 2021 and expect to continue to waive fees into 2022.

The total average annualized effective fee rate earned during the thirdfirst quarter of 20212022 was 43.643.2 basis points, compared with 45.245.4 basis points earned during both the thirdfirst quarter of 20202021 and 43.4 basis points earned during the secondfourth quarter of 2021. In comparison to the thirdfirst quarter of 2020,2021, our annualized effective fee rate declined primarily due to the July 2021 fee reductions in our target-date products client transfers within the complexand an asset mix shift to lower fee vehicles or shareand asset classes within the complex over the last twelve months and the money market fee waivers.months. These fee pressures were partially offset asby the higher market valuations led to an asset class shift towards equity strategies.

Operating expenses. Operating expenses were $957.9 million in the third quarter of 2021 compared with $866.9 million in the third quarter of 2020. The increase in our operating expenses was primarily due to higher compensation costs and higher distribution and servicing costs asthan average assets under management increased over prior year. Also contributing to the increase in operating expenses during the quarter were costs incurred as a

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result of our previously announced expanded relationship with FIS, a global technology leader, in which FIS assumed responsibility for managing retirement technology development and core operations for our full-service recordkeeping offering on August 1, 2021. During the quarter, the firm incurred recordkeeping costs, which were partially offset by a reduction in the compensation expenses related to the approximately 800 associates who transitioned to FIS, as well as transition costs associated with the expanded relationship.

These increases were partially offset by lower compensation expenses related to the supplemental savings plan. For the third quarter of 2021, the decrease in the supplemental savings plan expense was entirely offset by a corresponding decrease in the non-operating gains earned on the investments used to economically hedge the related liability.

The firm employed 7,124 associates at September 30, 2021, a decrease of 7.2% from the end of 2020 and 6.7% from September 30, 2020. Excluding the approximate 800 associates that became employees of FIS on August 1, 2021, headcount would have increased approximately 3% from both the end of 2020 and from September 30, 2020.

On a non-GAAP basis, our operating expenses in the third quarter of 2021 increased 15.3% to $957.2 million compared to the third quarter of 2020. Our non-GAAP operating expenses exclude the impact of our supplemental savings plan and consolidated sponsored investment products. See our non-GAAP reconciliations later in this Management’s Discussion and Analysis section.

Operating margin. Our operating margin in the third quarter of 2021 was 51.0%, compared to 45.7% earned in the 2020 quarter. The increase in our operating margin for the third quarter of 2021 compared to the 2020 period was primarily driven by higher investment advisory fee revenue and lower expense related to our supplemental savings plan, partially offset by higher product and recordkeeping expenses as well as distribution and servicing costs.

Diluted earnings per share. Diluted earnings per share was $3.31 for the third quarter of 2021 as compared to $2.73 for the third quarter of 2020. The 21.2% increase was primarily driven by higher operating income, as strong markets since the end of the third quarter of 2020 have increased average assets under management resulting in higher investment advisory fee revenue, and a lower effective tax rate. This increase was partially offset by net investment losses recognized in the third quarter of 2021 as compared to significant net investment gains in the third quarter of 2020, as the sharp market returns in 2020 quarterly outpaced the market performance in the third quarter of 2021.

On a non-GAAP basis, diluted earnings per share was $3.27 for the third quarter of 2021 as compared to $2.55 for the third quarter of 2020. Similar to our GAAP diluted earnings, the increase is largely attributable to higher operating income compared to 2021 period.

Results Overview - Year-to-Date ended September 30, 2021
Investment advisory revenues.Investment advisory revenues earned in the nine months ended September 30, 2021 increased over the comparable 2020 period as average assets under our management increased $382.4 billion, or 31.9%, to $1,581.3 billion. We waived $43.0 million, or less than 1%, of total investment advisory fees from certain of our money market mutual funds, trusts and other investment portfolios during the nine months ended September 30, 2021.

The average annualized effective fee rate earned on our assets under management during the nine months ended September 30, 2021 was 44.7 basis points compared with 45.6 basis points earned during the same period of 2020. Our annualized effective fee rate declined primarily due to the July 2021 fee reductions in our target-date products, client transfers within the complex to lower fee vehicles or share classes over the last twelve months and the money market fee waivers. These fee pressures were partially offset as higher market valuations led to analternative asset class shift towards equity strategies.

Operating expenses.Operating expenses were $2,862.7 million in the nine months ended September 30, 2021 compared with $2,484.0 million in the 2020 period. More than half of the increase in operating expenses was due to higher compensation expenses, including higher interim bonus accrual, increased salaries and benefits, and a $14.2 million increase in operating expenses related to the supplemental savings plan due to higher market returns in the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. For the nine months ended September 30, 2021, the increase in the supplemental savings plan expense was entirely offset by a corresponding increase in the non-operating gains earned on the investments used to economically hedge the

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related liability. Also contributing to the increase in operating expenses were higher distribution and servicing costs due to higher average assets under management and higher product and recordkeeping costs due to the expanded FIS arrangement.

On a non-GAAP basis, our operating expenses for the nine months ended September 30, 2021 increased 15.0% to $2,798.2 million compared to the 2020 period. Our non-GAAP operating expenses exclude the impact of our supplemental savings plan and consolidated sponsored investment products. See our non-GAAP reconciliations later in this Management’s Discussion and Analysis section.

In 2021 and beyond, we expect to advance our strategic priorities to maintain our position as a global and diversified asset manager, a global partner for retirement investors and a provider of integrated investment solutions; to embed environmental, social and governance and sustainability principles across the firm; to maintain effective processes and controls while becoming a more adaptive and agile firm; and to become a destination of choice for top talent with a diverse workforce and inclusive culture. We narrowed our 2021 non-GAAP operating expense growth guidance from a range of 12% - 15% to a range of 13% - 15% to reflect results year-to-date and expectations for the fourth quarter of 2021. This expense excludes any acquisition costs expected to be incurred in relation to the announced agreement to acquire OHA. We can elect to adjust our expense growth in the future should unforeseen circumstances arise, including significant market movements. As discussed in July 2021, the impact of our expanded partnership with FIS is reflected in the expense growth guidance above.

Operating margin. Our operating margin in the nine months ended September 30, 2021 was 49.9%, compared to 44.5% earned in the 2020 period. The increase in our operating margin for the nine months ended September 30, 2021 compared to the 2020 period was primarily driven by higher net revenues, partially offset by higher compensation costs and product and recordkeeping costs as well as distribution and servicing costs.

Diluted earnings per share. Diluted earnings per share was $9.94 for the nine months ended September 30, 2021 as compared to $6.66 for the nine months ended September 30, 2020. The 49.2% increase was primarily driven by higher net income, lower weighted average outstanding shares, and a lower effective tax rate.

On a non-GAAP basis, diluted earnings per share was $9.59 for the nine months ended September 30, 2021 as compared to $6.69 for the 2020 period. The increase in adjusted diluted earnings per share was primarily due to higher operating income and lower weighted average outstanding shares. See our non-GAAP reconciliations later in this Management’s Discussion and Analysis section.



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Net revenues
Three months endedQ3 2021 vs. Q3 2020Nine months endedYTD 2021 vs. YTD 2020
(in millions)9/30/20219/30/2020$ change% change9/30/20219/30/2020$ change% change
Investment advisory fees
U.S. mutual funds$1,125.5 $939.5 $186.0 19.8 %$3,273.2 $2,638.8 $634.4 24.0 %
Subadvised funds, separate accounts, collective investment trusts, and other investment products687.9 529.8 158.1 29.8 %2,015.2 1,452.1 563.1 38.8 %
1,813.4 1,469.3 344.1 23.4 %5,288.4 4,090.9 1,197.5 29.3 %
Administrative, distribution, and servicing fees
Administrative fees109.8 98.0 11.8 12.0 %331.8 300.8 31.0 10.3 %
Distribution and servicing fees30.9 28.5 2.4 8.4 %90.0 82.1 7.9 9.6 %
140.7 126.5 14.2 11.2 %421.8 382.9 38.9 10.2 %
Net revenues$1,954.1 $1,595.8 $358.3 22.5 %$5,710.2 $4,473.8 $1,236.4 27.6 %
Average assets under management (in billions)
U.S. mutual funds$881.0 $708.8 $172.2 24.3 %$848.1 $664.0 $184.1 27.7 %
Subadvised funds, separate accounts, collective investment trusts, and other investment products767.7 584.1 183.6 31.4 %733.2 534.9 198.3 37.1 %
$1,648.7 $1,292.9 355.8 27.5 %$1,581.3 $1,198.9 382.4 31.9 %

Investment advisory fees.class.

U.S. mutual funds
Investment advisory revenues earned in the thirdfirst quarter of 20212022 from our U.S. mutual funds were $1,125.5$976.5 million, an increasea decrease of 19.8%7.0% from the comparable 20202021 quarter. Average assets under management in these funds for the third first

Page 25


quarter of 2021 increased 24.3%2022 decreased 2.0% from the 20202021 quarter to $881$798.0 billion. The annualized effective fee rate of 50.749.6 basis points for the thirdfirst quarter of 20212022 decreased from 52.752.3 basis points in the thirdfirst quarter of 2020. In comparison to the third quarter of 2020, our annualized effective fee rate for U.S. mutual funds decreased2021 primarily due to the July 2021 fee reductions in our target datetarget-date products and increased money marketan asset mix shift to lower fee waivers.

Forvehicles and asset classes within the nine months ended September 30, 2021, investment advisory revenues earned fromcomplex over the firm's U.S. mutual funds were $3,273.2 million, an increase of 24.0% from the comparable 2020 period. Average assets under management in these funds for the nine months ended September 30, 2021 increased 27.7% from the 2020 period to $848.0 billion. The annualized effective fee rate of 51.6 basis points for the nine months ended September 30, 2021 decreased from 53.1 basis points for the nine months ended September 30, 2020. Our annualized effective fee rate for our U.S. mutual funds decreased primarily due to the July 2021 fee reductions in our target date products and increased money market fee waivers. In addition, strong market returns contributed to a relative decrease in the percentage fee earned as the asset levels of certain tiered-fee funds crossed a new tier.last twelve months.

Subadvised funds, separate accounts, collective investment trusts and other investment products (other portfolios)
Investment advisory revenues earned in the thirdfirst quarter of 20212022 from these other portfolios were $687.9$685.6 million, an increase of 29.8%7.5% from the comparable 20202021 quarter. Average assets under management for these products increased 31.4%9.7% from the 20202021 quarter to $767.7$761.9 billion. A portion of the increase in these advisory revenues and related average assets under management is due to the acquisition of OHA at the end of 2021. The annualized effective fee rate of 35.536.5 basis points for the thirdfirst quarter of 20212022 decreased from 36.137.2 basis points in the thirdfirst quarter of 2020. In comparison to the third quarter of 2020, our annualized effective fee rate for our other portfolios was2021. The decrease is primarily due to the July 2021 fee reductions in our target date products.

Fortarget-date products and an asset mix shift to lower fee vehicles and asset classes within the nine months ended September 30, 2021, investment advisory revenues earned from subadvised and separate accounts as well as collective investment trusts and other investment productscomplex over the last twelve months. These fee pressures were $2,015.2 million, an increase of 38.8% frompartially offset by the 2020 period. Average assets under management for these products increased 37.1% from the 2020 period to $733.3 billion. The annualized effectivehigher than average fee rate of 36.7 basis points for the nine months ended September 30, 2021 increased from 36.3 basis points for the nine months ended September 30, 2020. Our

Page 27


annualized effective fee rate forearned on our other portfolios increased primarily due to the mix shift towards equities and flows into our international products offset slightly by the July 2021 fee reductions in our target date products.alternative asset class.

Administrative, distribution, and servicing fees. Administrative, distribution, and servicing fees in the thirdfirst quarter of 20212022 were $140.7$156.5 million, an increase of $14.2$17.5 million, or 11.2%12.6%, from the comparable 20202021 quarter. For the nine months ended September 30, 2021, these fees were $421.8 million, an increase of $38.9 million, or 10.2%, from the 2020 period. The increase was primarily due to higher transfer agent servicing activities provided to the U.S.T. Rowe Price mutual funds, higher model delivery revenue, as well asand higher trustee services revenue. These increases were partially offset by lower 12b-1 revenue earned on the Advisor and R share classes of the U.S. mutual funds as a result of increasedlower assets under management in these share classes. The increasedecrease in 12b-1 revenue is offset entirely by an increasea decrease in the costs paid to third-party intermediaries that source these assets and are reported in distribution and servicing expense.

Capital allocation-based income. Capital allocation-based income in the first quarter of 2022 was $44.4 million. This represents $57.6 million of the carried interest we earn from investments in affiliated private investment funds, partially offset by $13.2 million in non-cash amortization associated with the difference in the closing date fair value and carrying value of investments acquired as part of the OHA acquisition.

Our net revenues reflect the elimination of advisory and administrative fee revenue earned from our consolidated
T. Rowe Price investment products. The corresponding expenses recognized by these products, and consolidated in our financial statements, were also eliminated from operating expenses. For the thirdfirst quarter, we eliminated net revenue of $1.6$.9 million in 20212022 and $2.7$1.3 million in 2020. For the nine months ended September 30, we eliminated net revenue of $4.0 million in 2021 and $7.3 million in 20202021.

Operating expenses

Three months endedQ3 2021 vs. Q3 2020Nine months endedYTD 2021 vs. YTD 2020Three months endedQ1 2022 vs. Q1 2021
(in millions)(in millions)9/30/20219/30/2020$ change% change9/30/20219/30/2020$ change% change(in millions)3/31/20223/31/2021$ change% change
Compensation and related costs, excluding supplemental savings planCompensation and related costs, excluding supplemental savings plan$564.9 $517.6 $47.3 9.1 %$1,692.3 $1,496.6 $195.7 13.1 %Compensation and related costs, excluding supplemental savings plan$632.6 $561.3 $71.3 12.7 %
Supplemental savings plan(1)
Supplemental savings plan(1)
(.3)34.7 (35.0)n/m59.6 45.4 $14.2 31.3 %
Supplemental savings plan(1)
(51.0)22.2 (73.2)n/m
Total compensation and related costs Total compensation and related costs564.6 552.3 12.3 2.2 %1,751.9 1,542.0 209.9 13.6 % Total compensation and related costs581.6 583.5 (1.9)(.3)%
Distribution and servicingDistribution and servicing96.0 73.5 22.5 30.6 %274.3 201.2 73.1 36.3 %Distribution and servicing85.9 85.6 .3 .4 %
Advertising and promotionAdvertising and promotion22.1 14.2 7.9 55.6 %61.4 52.5 8.9 17.0 %Advertising and promotion23.4 18.9 4.5 23.8 %
Product and recordkeeping related costsProduct and recordkeeping related costs70.3 36.8 33.5 91.0 %154.6 118.0 36.6 31.0 %Product and recordkeeping related costs80.4 41.0 39.4 96.1 %
Technology, occupancy, and facility costsTechnology, occupancy, and facility costs123.1 115.6 7.5 6.5 %359.7 332.3 27.4 8.2 %Technology, occupancy, and facility costs133.9 117.3 16.6 14.2 %
General, administrative, and otherGeneral, administrative, and other81.8 74.5 7.3 9.8 %260.8 238.0 22.8 9.6 %General, administrative, and other80.4 87.3 (6.9)(7.9)%
Total operating expensesTotal operating expenses$957.9 $866.9 $91.0 10.5 %$2,862.7 $2,484.0 $378.7 15.2 %Total operating expenses$985.6 $933.6 $52.0 5.6 %
(1) The impact of the market on the supplemental savings plan liability drives the expense recognized each period.

Compensation and related costs, excluding supplemental savings plan. Compensation and related costs, excluding supplemental savings plan, were $564.9$632.6 million in the thirdfirst quarter of 2021,2022, an increase of $47.3$71.3 million, or 9.1%12.7%, compared to the 20202021 quarter. The increase from the 2020 quarter was primarily due to a $32.5 million increase in our interim bonus accrual. We recognize the interim bonus accrual ratably over the year using the ratio of recognized quarterly net revenues to currently forecasted annual net revenues. Also contributing to the increase in 2021 costs compared to the thirdfirst quarter of 2020 was a $16.1 million increase in salaries and benefits due to modest increases in base salaries at the beginning of the year and an increase in our average staff size before the transition of approximately 800 T. Rowe Price operations and technology associates to FIS on August 1, 2021.

For the nine months ended September 30, 2021,2022 includes OHA’s compensation and related costs, excluding supplemental savings plan, were $1,692.3carried interest-related compensation, and $13.7 million in non-cash amortization of certain acquisition-related retention arrangements. The firm employed 7,573 associates at March 31, 2022, an increase of $195.7 million, or 13.1%, compared to the 2020 period. The increase in compensation and related costs.6% from the 2020 period was primarily due to a $121.7 million increase in our interim bonus accrual. Also contributing to the increase in costs compared to 2020 was a $78.1 million increase in salaries and benefits due to modest increases in base salaries at the beginningend of the year and an increase in our average staff size before the transition of approximately 800 operations and technology associates to FIS on August 1, 2021. These increases in compensation and related costs were offset in part by $11.7 million in higher labor capitalization related to internally developed software in 2021 period.

Distribution and servicing. Distribution and servicing costs were $96.0$85.9 million for the thirdfirst quarter of 2021,2022, an increase of 30.6%.4% from the $73.5$85.6 million recognized in the 20202021 quarter. For the nine months ended September 30, 2021, these costs were $274.3 million, anThe slight increase of 36.3% over the $201.2 million recognized in the comparable 2020 period. The increase iswas primarily driven by higher AUM-based distribution costs as a result of continued market

Page 2826


appreciation and inflows in our international products, including our Japanese Investment Trusts (ITMs), and SICAVs. Also contributing to the increase are higher costs incurred to distribute certain other products through U.S. financial intermediaries, as assets under management in these products have increased from prior year.year, and by higher AUM-based distribution costs in our international products, including our Japanese Investment Trusts (ITMs), and certain SICAV share classes. These increases were partially offset by lower 12b-1 fees due to lower average assets under management in the U.S. mutual funds.

The amounts paid to third-party intermediaries that source the assets of the Advisor and R share classes of our U.S. mutual funds and our international products, such as our Japanese ITMs and SICAVs, are recognized in the distribution and servicing expense category. Both of these costs are offset entirely by the revenue we earn and report in net revenues: 12b-1 revenue recognized in administrative, distribution, and servicing fees for the U.S. mutual funds and investment advisory fee revenue for our international products.

Advertising and promotion. Advertising and promotion costs were $22.1$23.4 million in the thirdfirst quarter of 2021,2022, an increase of $7.9$4.5 million, or 55.6%23.8%, compared to the $14.2$18.9 million recognized in the 20202021 quarter. For the nine months ended September 30, 2021, these costs were $61.4 million, an increase of $8.9 million, or 17.0%, compared to the 2020 period. The increase in both the third quarter and nine months ended September 30, 2021 was driven primarily by theincreased media spend related toas well as advertising development costs during the launch of a new brand marketing campaign and the promotion of the firm's target date solutions,quarter, along with lower spending in 20202021 due to the impact of the coronavirus pandemic.

Product and recordkeeping related costs. Product and recordkeeping costs were $70.3$80.4 million in the thirdfirst quarter of 2021,2022, an increase of $33.5$39.4 million, or 91%96%, compared to the $36.8$41.0 million in the 20202021 quarter. For the nine months ended September 30, 2021, these costs were $154.6 million, an increase of $36.6 million, or 31%, compared to the 2020 period. More than 85% of the increase in the third quarter and more thanApproximately 80% of the increase in the nine months ended September 30, 2021first quarter of 2022 was driven primarily by the recordkeeping costs incurred as part of our expanded FIS relationship including certain transition expenses that will extend into the fourth quarter of 2021 but not recurbegan in 2022. While these transition expenses will not recur, we do expect to incur certain technology-related costs as part of this expanded relationship with FIS over the next few years. These will be reported as technology, occupancy, and facility costs.August 2021.
Technology, occupancy, and facility costs. Technology, occupancy, and facility costs were $123.1$133.9 million in the thirdfirst quarter of 2021,2022, an increase of $7.5$16.6 million, or 6.5%14.2%, compared to the $115.6$117.3 million recognized in the 20202021 quarter. For the nine months ended September 30, 2021, these costs were $359.7 million, an increase of $27.4 million, or 8.2%, compared to the 2020 period. The increase is due primarily to the ongoing investment in our technology capabilities, including hosted solution licenses, depreciation and depreciation. Increased facility-related costs also contributed to the increase for the nine months ended September 30, 2021.office facility costs.

General, administrative, and other. General, administrative, and other expenses were $81.8$80.4 million in the thirdfirst quarter of 2021, an increase2022, a decrease of $7.3$6.9 million, or 6.1%7.9%, compared to the $74.5$87.3 million recognized in the 20202021 quarter. Higher research costsThe decrease was primarily duerelated to additional investment professional headcount, higherthe favorable impact of the change in fair value of the contingent consideration liability of $45.5 million, partially offset by $27.1 million in acquisition-related amortization and other acquisition-related costs. Higher information services, external research, travel and travel-relatedother nonrecurring administrative costs werefurther offset the primary contributors to the higher costsdecrease in the third quarter of 2021 compared to 2020.

For the nine months ended September 30, 2021, general, administrative and other expenses were $260.8 million, an increasein the first quarter of $22.8 million, or 9.6%,2022 compared to the 2020 period. Higher information services and research costs were primary contributors to the higher costs in 2021 as compared to 2020. Travel-related expenses were lower compared to the nine months ended September 30, 2020, due to the impact of the coronavirus pandemic.2021.



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Non-operating income (loss)

Non-operating loss for the thirdfirst quarter of 20212022 was $11.5$198.5 million a decrease of $203.1 million fromas compared to non-operating income of $191.6$102.1 million in the 20202021 quarter. For the nine months ended September 30, 2021, non-operating income was $234.5 million, an increase of $128.1 million from non-operating income of $106.4 million in the comparable 2020 period. The following table details the components of non-operating income (loss) for both the thirdfirst quarter ended March 31, 2022 and nine months ended September 30, 2021 and 2020.2021.


Page 29


Three months endedNine months endedThree months ended
(in millions)(in millions)9/30/20219/30/20209/30/20219/30/2020(in millions)3/31/20223/31/2021
Net gains (losses) from non-consolidated T. Rowe Price investment productsNet gains (losses) from non-consolidated T. Rowe Price investment productsNet gains (losses) from non-consolidated T. Rowe Price investment products
Cash and discretionary investmentsCash and discretionary investmentsCash and discretionary investments
Dividend incomeDividend income$4.0 $4.3 $14.0 $19.7 Dividend income$.8 $5.1 
Market related gains (losses) and equity in earnings (losses)Market related gains (losses) and equity in earnings (losses)(7.0)21.3 14.5 30.5 Market related gains (losses) and equity in earnings (losses)(24.6)8.6 
Total cash and discretionary investmentsTotal cash and discretionary investments(3.0)25.6 28.5 50.2 Total cash and discretionary investments(23.8)13.7 
Seed capital investmentsSeed capital investmentsSeed capital investments
Dividend incomeDividend income— .2 .1 1.4 Dividend income.2 .1 
Market related gains (losses) and equity in earnings (losses)Market related gains (losses) and equity in earnings (losses)(2.4)14.3 27.0 8.3 Market related gains (losses) and equity in earnings (losses)(22.8)11.9 
Net gains recognized upon deconsolidationNet gains recognized upon deconsolidation— — 2.6 .1 Net gains recognized upon deconsolidation1.6 2.6 
Investments used to hedge the supplemental savings plan liabilityInvestments used to hedge the supplemental savings plan liability.1 33.3 59.3 29.2 Investments used to hedge the supplemental savings plan liability(55.3)22.1 
Total net gains (losses) from non-consolidated T. Rowe Price investment productsTotal net gains (losses) from non-consolidated T. Rowe Price investment products(5.3)73.4 117.5 89.2 Total net gains (losses) from non-consolidated T. Rowe Price investment products(100.1)50.4 
Other investment incomeOther investment income14.0 11.2 47.5 11.4 Other investment income10.2 18.2 
Net gains on investments8.7 84.6 165.0 100.6 
Net gains (losses) on investmentsNet gains (losses) on investments(89.9)68.6 
Net gains (losses) on consolidated sponsored investment portfoliosNet gains (losses) on consolidated sponsored investment portfolios(17.1)101.2 75.7 13.3 Net gains (losses) on consolidated sponsored investment portfolios(101.4)37.2 
Other income (loss), including foreign currency gains and lossesOther income (loss), including foreign currency gains and losses(3.1)5.8 (6.2)(7.5)Other income (loss), including foreign currency gains and losses(7.2)(3.7)
Non-operating income (loss)Non-operating income (loss)$(11.5)$191.6 $234.5 $106.4 Non-operating income (loss)$(198.5)$102.1 

The significant investment portfolio gains in the thirdfirst quarter of 20202021 outperformed the slight investment portfolio losses in the thirdfirst quarter of 20212022 as the spreadRussian invasion of Ukraine, inflation fears and the delta variant of the coronavirusFederal Reserve interest rate increases weighed on the global economy and markets resulting in lower valuations at the end of the third quarter.first quarter 2022. The cash and discretionary investment portfolio also experienced net investment losses of $3.0$23.8 million during the third quarter of 2021.

Our investment portfolio for the nine months ended September 30, 2021, outperformed the same period in 2020 as a result of the significant market losses experienced in the first quarter of 2020. Our consolidated investment products and supplemental savings plan hedge portfolio comprised approximately 60% of the net gains recognized during the nine months ended September 30, 2021.2022.

The table above includes the net investment income of the underlying portfolios included in the consolidated
T. Rowe Price investment products and not just the net investment income related to our interest. The table below shows the impact that the consolidated T. Rowe Price investment products had on the individual lines of our unaudited condensed consolidated statements of income and the portion attributable to our interest:
Three months endedNine months endedThree months ended
(in millions)(in millions)9/30/20219/30/20209/30/20219/30/2020(in millions)3/31/20223/31/2021
Operating expenses reflected in net operating incomeOperating expenses reflected in net operating income$(2.8)$(4.4)$(9.1)$(11.7)Operating expenses reflected in net operating income$(2.5)$(3.5)
Net investment income (loss) reflected in non-operating incomeNet investment income (loss) reflected in non-operating income(17.1)101.2 75.6 13.3 Net investment income (loss) reflected in non-operating income(101.4)37.2 
Impact on income before taxesImpact on income before taxes$(19.9)$96.8 $66.5 $1.6 Impact on income before taxes$(103.9)$33.7 
Net income (loss) attributable to our interest in the consolidated T. Rowe Price investment productsNet income (loss) attributable to our interest in the consolidated T. Rowe Price investment products$(.1)$41.4 $43.9 $4.4 Net income (loss) attributable to our interest in the consolidated T. Rowe Price investment products$(50.4)$18.3 
Net income (loss) attributable to redeemable non-controlling interests (unrelated third-party investors)Net income (loss) attributable to redeemable non-controlling interests (unrelated third-party investors)(19.8)55.4 22.6 (2.8)Net income (loss) attributable to redeemable non-controlling interests (unrelated third-party investors)(53.5)15.4 
$(19.9)$96.8 $66.5 $1.6 $(103.9)$33.7 



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Provision for income taxes

Our GAAP effective tax rate for the third quarter of 2021 was 23.1%, compared with 24.1% in the 2020 quarter. For the nine months ended September 30, 2021, our GAAP effective tax rate was 23.3%, compared with 24.0% in the 2020 period.

The following table reconciles the statutory federal income tax rate to our effective tax rate on a GAAP basis for both the three-three months ended March 31, 2022 and nine-months ended September 30, 2021 and 2020:2021:

Three months endedNine months endedThree months ended
9/30/20219/30/20209/30/20219/30/20203/31/20223/31/2021
Statutory U.S. federal income tax rateStatutory U.S. federal income tax rate21.0 %21.0 %21.0 %21.0 %Statutory U.S. federal income tax rate21.0 %21.0 %
State income taxes for current year, net of federal income tax benefits(1)
State income taxes for current year, net of federal income tax benefits(1)
3.8 3.9 3.8 4.1 
State income taxes for current year, net of federal income tax benefits(1)
3.3 3.8 
Net (income) losses attributable to redeemable non-controlling interestsNet (income) losses attributable to redeemable non-controlling interests.1 (.3)(.2)— Net (income) losses attributable to redeemable non-controlling interests.3 (.6)
Net excess tax benefits from stock-based compensation plans activityNet excess tax benefits from stock-based compensation plans activity(1.6)(.8)(1.1)(1.3)Net excess tax benefits from stock-based compensation plans activity(.6)(1.2)
Other itemsOther items(.2).3 (.2).2 Other items.2 .2 
Effective income tax rateEffective income tax rate23.1 %24.1 %23.3 %24.0 %Effective income tax rate24.2 %23.2 %
(1) State income tax benefits are reflected in the total benefits for net income attributable to redeemable non-controlling interests and stock-based compensation plans activity.

Our GAAP effective tax rate for the first quarter of 2022 was 24.2%, compared with 23.2% in the 2021 quarter. The increase in the GAAP effective tax rate in 2022 from 2021 was primarily due to net losses attributable to redeemable non-controlling interests held in our consolidated investment products and lower discrete tax benefits associated with the settlement of stock-based awards. These increases were partially offset by the favorable impacts of the reduction in the effective state tax rate due to the full phase-in of the 2018 Maryland state tax legislation and the remeasurement of the contingent consideration liability with respect to the earnout arrangement with OHA.

The non-GAAP tax rate primarily adjusts for the impact of the consolidated investment products, including the net income attributable to the redeemable non-controlling interests. Our non-GAAP effective tax rate was 23.1%24.2% in the thirdfirst quarter of 20212022 compared with 24.1%23.7% in thirdfirst quarter of 2020, and was 23.4% for2021. The increase in the nine months ended September 30, 2021 compared with 23.9% for the nine months ended September 30, 2020. The non-GAAP effective tax rate for the third quarter of 2021 was favorably impacted by higher discreteprimarily attributable to lower discrete tax benefits associated with the settlement of stock-based awards.awards compared to the first quarter of 2021. The non-GAAP effective tax rate for the ninethree months ended September 30, 2021 wasMarch 31, 2022 continues to be favorably impacted by a lower state effective tax rate.

The firm continues to see the phased-incomplete phase-in benefit of the 2018 Maryland state tax legislation in which we expect to reduce our effective state rate over the five-year phase-in period to less than 3% by the end of 2022.legislation.

Our effective tax rate will continue to experience volatility in future periods as the discrete tax benefits recognized from option exercisesstock-based compensation are impacted by market fluctuations in our stock price and timing of option exercises.exercises as well as the remeasurement of the contingent consideration liability. Our GAAP rate will also be impacted by net investment income recognized on our consolidated investment products that are driven by market fluctuations and changes in the proportion of their net income that is attributable to our redeemable non-controlling interests.interests and non-controlling interests reflected in permanent equity.

We currently estimate that our effective tax rate for the full year 2021,2022, on a GAAP and non-GAAP basis, will be in the range of 22.0% to 24.0%25.0%. On a non-GAAP basis, the range is 23.0% to 25.0%.

NON-GAAP INFORMATION AND RECONCILIATION.

We believe the non-GAAP financial measures below provide relevant and meaningful information to investors about our core operating results. These measures have been established in order to increase transparency for the purpose of evaluating our core business, for comparing current results with prior period results, and to enable more appropriate comparison with industry peers. However, non-GAAP financial measures should not be considered a substitute for financial measures calculated in accordance with U.S. GAAP and may be calculated differently by other companies.



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The following schedules reconcile certain U.S. GAAP financial measures for the three months ended
September 30, 2021March 31, 2022 and 2020.2021.

Three months ended 9/30/2021Three months ended 3/31/2022
Operating expensesNet operating incomeNon-operating income (loss)
Provision (benefit) for income taxes(4)
Net income attributable to T. Rowe Price
Diluted earnings per share(5)
Operating expensesNet operating incomeNon-operating income (loss)
Provision (benefit) for income taxes(6)
Net income attributable to T. Rowe Price
Diluted earnings per share(7)
U.S. GAAP BasisU.S. GAAP Basis$957.9 $996.2 $(11.5)$227.3 $777.2 $3.31 U.S. GAAP Basis$985.6 $877.4 $(198.5)$164.5 $567.9 $2.41 
Non-GAAP adjustments:Non-GAAP adjustments:Non-GAAP adjustments:
Consolidated T. Rowe Price
investment products
(1)
Consolidated T. Rowe Price
investment products
(1)
(1.0)2.8 17.1 — .1 — 
Consolidated T. Rowe Price
investment products
(1)
(1.6)2.5 101.4 20.3 30.0 .13 
Supplemental savings plan liability(2)
Supplemental savings plan liability(2)
.3 (.3)(.1)— (.5)— 
Supplemental savings plan liability(2)
51.0 (51.0)55.3 1.7 2.7 .01 
Other non-operating income(3)
— — (8.5).8 (9.2)(.04)
Acquisition-related transaction costs(3)
Acquisition-related transaction costs(3)
(.7).7 — .3 .4 — 
Acquisition-related contingent consideration(4)
Acquisition-related contingent consideration(4)
45.5 (45.5)— (18.2)(27.3)(.12)
Acquisition-related compensation arrangements(4)
Acquisition-related compensation arrangements(4)
(13.6)13.6 — 5.4 8.2 .04 
Acquisition-related amortization - investments and intangible assets(4)
Acquisition-related amortization - investments and intangible assets(4)
(27.1)40.3 — 16.1 24.2 .10 
Other non-operating income(5)
Other non-operating income(5)
— — 18.0 7.2 10.8 .05 
Adjusted Non-GAAP BasisAdjusted Non-GAAP Basis$957.2 $998.7 $(3.0)$228.1 $767.6 $3.27 Adjusted Non-GAAP Basis$1,039.1 $838.0 $(23.8)$197.3 $616.9 $2.62 

Three months ended 9/30/2020
Operating expensesNet operating incomeNon-operating income (loss)
Provision (benefit) for income taxes(4)
Net income attributable to T. Rowe Price
Diluted earnings per share(5)
U.S. GAAP Basis$866.9 $728.9 $191.6 $221.9 $643.2 $2.73 
Non-GAAP adjustments:
   Consolidated T. Rowe Price
investment products
(1)
(1.7)4.4 (101.2)(18.1)(23.3)(.10)
   Supplemental savings plan liability(2)
(34.7)34.7 (33.3).6 .8 — 
   Other non-operating income(3)
— — (31.5)(13.5)(18.0)(.08)
Adjusted Non-GAAP Basis$830.5 $768.0 $25.6 $190.9 $602.7 $2.55 

The following schedules reconcile certain U.S. GAAP financial measures for the nine months ended September 30, 2021 and 2020.

Nine months ended 9/30/2021
Operating expensesNet operating incomeNon-operating income (loss)
Provision (benefit) for income taxes(4)
Net income attributable to T. Rowe Price
Diluted earnings per share(5)
U.S. GAAP Basis$2,862.7 $2,847.5 $234.5 $717.1 $2,342.3 $9.94 
Non-GAAP adjustments:
   Consolidated T. Rowe Price
investment products
(1)
(4.9)9.1 (75.7)(13.5)(30.5)(.13)
   Supplemental savings plan liability(2)
(59.6)59.6 (59.3).3 — — 
   Other non-operating income(3)
— — (71.0)(17.8)(53.2)(.22)
Adjusted Non-GAAP Basis$2,798.2 $2,916.2 $28.5 $686.1 $2,258.6 $9.59 


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Nine months ended 9/30/2020Three months ended 3/31/2021
Operating expensesNet operating incomeNon-operating income (loss)
Provision (benefit) for income taxes(4)
Net income attributable to T. Rowe Price
Diluted earnings per share(5)
Operating expensesNet operating incomeNon-operating income (loss)
Provision (benefit) for income taxes(6)
Net income attributable to T. Rowe Price
Diluted earnings per share(7)
U.S. GAAP BasisU.S. GAAP Basis$2,484.0 $1,989.8 $106.4 $502.5 $1,589.3 $6.66 U.S. GAAP Basis$933.6 $893.2 $102.1 $230.5 $749.4 $3.17 
Non-GAAP adjustments:Non-GAAP adjustments:Non-GAAP adjustments:
Consolidated T. Rowe Price
investment products
(1)
Consolidated T. Rowe Price
investment products
(1)
(4.4)11.7 (13.3)(1.3)4.1 .02 
Consolidated T. Rowe Price
investment products
(1)
(2.2)3.5 (37.2)(3.8)(14.5)(.06)
Supplemental savings plan liability(2)
Supplemental savings plan liability(2)
(45.4)45.4 (29.2)6.2 10.0 .04 
Supplemental savings plan liability(2)
(22.2)22.2 (22.1)— .1 — 
Other non-operating income(3)(5)
Other non-operating income(3)(5)
— — (13.7)(6.9)(6.8)(.03)
Other non-operating income(3)(5)
— — (29.1)(6.1)(23.0)(.10)
Adjusted Non-GAAP BasisAdjusted Non-GAAP Basis$2,434.2 $2,046.9 $50.2 $500.5 $1,596.6 $6.69 Adjusted Non-GAAP Basis$909.2 $918.9 $13.7 $220.6 $712.0 $3.01 

(1)    These non-GAAP adjustments remove the impact that the consolidated T. Rowe Price investment products have on our U.S. GAAP consolidated statements of income. Specifically, we add back the operating expenses and subtract the investment income of the consolidated T. Rowe Price investment products. The adjustment to our operating expenses represents the operating expenses of the consolidated products, net of the elimination of related management and administrative fees. The adjustment to net income attributable to T. Rowe Price represents the net income of the consolidated products, net of redeemable non-controlling interest.interests. We remove the impact of the consolidated T. Rowe Price investment products as we believe they impact the reader’s ability to understand our core operating results.

(2)    These non-GAAP adjustments remove the compensation expense impact from market valuation changes in the supplemental savings plan liability and the related net gains (losses) on investments designated as an economic hedge against the related liability. Amounts deferred under the supplemental savings plan are adjusted for appreciation (depreciation) of hypothetical investments chosen by participants. We use T. Rowe Price investment products to economically hedge the exposure to these market movements. We believe it is useful to offset the non-operating investment income (loss) realized on the economic hedges against the related compensation expense and remove the net impact to help the reader's ability to understand our core operating results and to increase comparability period to period.

(3)This non-GAAP adjustment removes the transactions costs incurred related to the acquisition of OHA. Management believes adjusting for these charges help the reader's ability to understand the firm's core operating results and to increase comparability period to period.


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(4)These non-GAAP adjustments remove the impact of acquisition-related amortization and costs including amortization of intangible assets, the recurring fair value remeasurements of the contingent consideration liability, amortization of acquired investment and non-controlling interest basis differences and amortization of compensation-related arrangements. Management believes adjusting for these charges helps the reader's ability to understand the firm's core operating results and to increase comparability period to period.

(5)    This non-GAAP adjustment represents the other non-operating income (loss) and the net gains (losses) earned on our non-consolidated investment portfolio that are not designated as economic hedges of the supplemental savings plan liability, and non-consolidated seed investments and other investments that are not part of the cash and discretionary investment portfolio. We retain the investment gains recognized on our non-consolidated cash and discretionary investments as these assets and related income (loss) are considered part of our core operations. We believe adjusting for these non-operating income (loss) items helps the reader’s ability to understand our core operating results and increases comparability to prior years. Additionally, we do not emphasize the impact of the portion of non-operating income (loss) removed when managing and evaluating our core performance.

(4)(6)    The income tax impacts were calculated in order to achieve an overall year-to-date non-GAAP effective tax rate of 23.4% for the first nine months of 2021 and 23.9% for the first nine months of 2020. As such, the non-GAAP effective tax rate for the three months ended September 30,March 31, 2022 and 2021 of 24.2% and 2020 was 23.1% and 24.1%23.7%, respectively. The firm estimates that its effective tax rate for the full-year 20212022 on a non-GAAP basis will be in the range of 22.0%23.0% to 24.0%25.0%.

(5)(7)    This non-GAAP measure was calculated by applying the two-class method to adjusted net income attributable to T. Rowe Price divided by the weighted-average common shares outstanding assuming dilution. The calculation of adjusted net income allocated to common stockholders is as follows:

Three months endedNine months endedThree months ended
9/30/20219/30/20209/30/20219/30/20203/31/20223/31/2021
Adjusted net income attributable to T. Rowe PriceAdjusted net income attributable to T. Rowe Price$767.6 $602.7 $2,258.6 $1,596.6 Adjusted net income attributable to T. Rowe Price$616.9 $712.0 
Less: adjusted net income allocated to outstanding restricted stock and stock unit holdersLess: adjusted net income allocated to outstanding restricted stock and stock unit holders19.4 16.8 59.5 44.1 Less: adjusted net income allocated to outstanding restricted stock and stock unit holders14.1 18.9 
Adjusted net income allocated to common stockholdersAdjusted net income allocated to common stockholders$748.2 $585.9 $2,199.1 $1,552.5 Adjusted net income allocated to common stockholders$602.8 $693.1 

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CAPITAL RESOURCES AND LIQUIDITY.

Sources of Liquidity

We remain debt-free withhave ample liquidity, including cash and investments in T. Rowe Price products, as follows:
(in millions)(in millions)9/30/202112/31/2020(in millions)3/31/202212/31/2021
Cash and cash equivalentsCash and cash equivalents$3,418.5 $2,151.7 Cash and cash equivalents$1,997.5 $1,523.1 
Discretionary investmentsDiscretionary investments1,925.1 2,095.7 Discretionary investments576.1 554.1 
Total cash and discretionary investmentsTotal cash and discretionary investments5,343.6 4,247.4 Total cash and discretionary investments2,573.6 2,077.2 
Redeemable seed capital investmentsRedeemable seed capital investments1,188.7 1,219.1 Redeemable seed capital investments1,096.6 1,300.1 
Investments used to hedge the supplemental savings plan liabilityInvestments used to hedge the supplemental savings plan liability795.5 768.1 Investments used to hedge the supplemental savings plan liability820.0 881.5 
Total cash and investments in T. Rowe Price productsTotal cash and investments in T. Rowe Price products$7,327.8 $6,234.6 Total cash and investments in T. Rowe Price products$4,490.2 $4,258.8 

Our discretionary investment portfolio is comprised primarily of short duration bond funds, which typically yield higher than money market rates, and asset allocation products. Cash and discretionary investments experienced $3.0market losses of $23.8 million in market losses and $28.5 million in market gains in the three- and nine-monthsthree months ended September 30, 2021, respectively, asMarch 31, 2022 compared to investment gains of $25.6 million and $50.2$13.7 million in the three- and nine-months ended September 30, 2020. Cash and discretionary investments in T. Rowe Price products held by our2021 quarter. Our subsidiaries outside the United States were $927.1hold cash and discretionary investments of $869.1 million at September 30, 2021March 31, 2022 and $675.8$764.2 million at December 31, 2020.2021. Given the availability of our financial resources and cash expected to be generated through future operations, we do not maintain an available external source of additional liquidity.

Our seed capital investments are redeemable, although we generally expect to be invested for several years for the products to build an investment performance history and until unrelated third-party investors substantially reduce our relative ownership percentage.

The cash and investment presentation on the unaudited condensed consolidated balance sheet is based on the accounting treatment for the cash equivalent or investment item. The following table details how T. Rowe Price’s

Page 31


interests in cash and investments relate to where they are presented on the unaudited condensed consolidated balance sheet as of September 30, 2021.March 31, 2022.

(in millions)(in millions)Cash and cash equivalentsInvestments
Net assets of consolidated T. Rowe Price investment products(1)
9/30/2021(in millions)Cash and cash equivalentsInvestments
Net assets of consolidated T. Rowe Price investment products(1)
3/31/2022
Cash and discretionary investmentsCash and discretionary investments$3,418.5 $1,864.3 $60.8 $5,343.6 Cash and discretionary investments$1,997.5 $502.2 $73.9 $2,573.6 
Seed capital investmentsSeed capital investments— 401.5 787.2 1,188.7 Seed capital investments— 358.6 738.0 1,096.6 
Investments used to hedge the supplemental savings plan liabilityInvestments used to hedge the supplemental savings plan liability— 795.5 — 795.5 Investments used to hedge the supplemental savings plan liability— 820.0 — 820.0 
Total cash and investments in T. Rowe Price products attributable to T. Rowe PriceTotal cash and investments in T. Rowe Price products attributable to T. Rowe Price3,418.5 3,061.3 848.0 7,327.8 Total cash and investments in T. Rowe Price products attributable to T. Rowe Price1,997.5 1,680.8 811.9 4,490.2 
Investments in affiliated private investment funds(2)
Investments in affiliated private investment funds(2)
— 795.2 — 795.2 
Investments in CLOsInvestments in CLOs— 124.5 — 124.5 
Investment in UTI and other investmentsInvestment in UTI and other investments— 269.0 — 269.0 Investment in UTI and other investments— 278.8 — 278.8 
Total cash and investments attributable to T. Rowe PriceTotal cash and investments attributable to T. Rowe Price3,418.5 3,330.3 848.0 7,596.8 Total cash and investments attributable to T. Rowe Price1,997.5 2,879.3 811.9 5,688.7 
Redeemable non-controlling interestsRedeemable non-controlling interests— — 1,086.6 1,086.6 Redeemable non-controlling interests— — 790.4 790.4 
As reported on unaudited condensed consolidated balance sheet at September 30, 2021$3,418.5 $3,330.3 $1,934.6 $8,683.4 
As reported on unaudited condensed consolidated balance sheet at March 31, 2022As reported on unaudited condensed consolidated balance sheet at March 31, 2022$1,997.5 $2,879.3 $1,602.3 $6,479.1 
(1) The consolidated T. Rowe Price investment products are generally those products we provided seed capital at the time of their formation and we have a controlling interest. These products generally represent U.S. mutual funds as well as those funds regulated outside the U.S.     The $60.8$73.9 million and the $787.2$738.0 million represent the total value at September 30, 2021March 31, 2022 of our interest in the consolidated T. Rowe Price investment products. The total net assets of the T. Rowe Price investment products at September 30, 2021March 31, 2022 of $1,934.6$1,602.3 million includes assets of $2,026.7$1,658.2 million, less liabilities of $92.1$55.9 million as reflected in our unaudited condensed consolidated balance sheets.
(2)Includes $272.2 million of non-controlling interests in consolidated entities and represents the portion of these investments, held by third parties, that we cannot sell in order to obtain cash for general operations.

Our unaudited condensed consolidated balance sheet reflects the cash and cash equivalents, investments, other assets and liabilities of those T. Rowe Price investment products we consolidate, as well as redeemable non-

Page 34


controllingnon-controlling interests for the portion of these T. Rowe Price investment products that are held by unrelated third-party investors. Although we can redeem our net interest in these T. Rowe Price investment products at any time, we cannot directly access or sell the assets held by the products to obtain cash for general operations. Additionally, the assets of these T. Rowe Price investment products are not available to our general creditors. Our interest in these
T. Rowe Price investment products was used as initial seed capital and is recategorized as discretionary when it is determined by management that the seed capital is no longer needed. We assess the discretionary investment products and, when we decide to liquidate our interest, we seek to do so in a way as to not impact the product and, ultimately, the unrelated third-party investors.

Uses of Liquidity

We increased our quarterly recurring dividend per common share in February 20212022 by 20.0%11.1% to $1.08$1.20 per common share from $.90$1.08 per common share. Additionally, our Board of Directors declared a special cash dividend of $3.00 per common share, or $699.8 million, on June 14, 2021, that was paid on July 7, 2021. Further, we expended $526.6$320.1 million in the first nine monthsquarter of 20212022 to repurchase 2.92.1 million shares, or 1.3%.9% of our outstanding common stock, at an average price of $182.27$151.97 per share. These dividends and repurchases were expended using existing cash balances and cash generated from operations. While opportunistic in our approach to stock buybacks, we will generally repurchase our common stock over time to offset the dilution created by our equity-based compensation plans.



Page 32


Since the end of 2018,2019, we have returned $5.5 billion to stockholders through stock repurchases, regular quarterly dividends, and a special dividends,dividend, as follows:

(in millions)(in millions)Recurring dividend
Special dividend(1)
Stock repurchasesTotal cash returned to stockholders(in millions)Recurring dividendSpecial dividendStock repurchasesTotal cash returned to stockholders
2019$733.6 $— $708.8 $1,442.4 
20202020846.0 — 1,192.2 2,038.2 2020$846.0 $— $1,192.2 $2,038.2 
Nine months ended 9/30/2021755.0 699.8 526.6 1,981.4 
202120211,003.7 699.8 1,136.0 2,839.5 
Three months ended 3/31/2022Three months ended 3/31/2022279.2 — 320.1 599.3 
TotalTotal$2,334.6 $699.8 $2,427.6 $5,462.0 Total$2,128.9 $699.8 $2,648.3 $5,477.0 
(1) Special cash dividend declared in June 2021 was paid in July 2021.

We anticipate property, equipment, software and other capital expenditures, including internal labor capitalization, for the full-year 20212022 to be about $250$290 million, of which more than three-quarters is planned for technology initiatives. We expect to fund our anticipated capital expenditures with operating cash flows and other available resources.

On October 28, 2021, we entered into an agreement to acquire 100% of the equity of OHA, and certain other entities that have common ownership. We will acquire OHA for a purchase price of up to $4.2 billion, with $3.3 billion payable at closing, approximately 74% in cash and 26% in T. Rowe Price Group, Inc. common stock, and up to an additional $900 million in cash upon the achievement of defined business milestones starting in 2025. We expect that the acquisition will close in the fourth quarter of 2021.

Page 3533


Cash Flows

The following table summarizes the cash flows for the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, that are attributable to T. Rowe Price, our consolidated T. Rowe Price investment products, and the related eliminations required in preparing the statement.
Nine months endedThree months ended
9/30/20219/30/20203/31/20223/31/2021
(in millions)(in millions)Cash flow attributable to T. Rowe PriceCash flow attributable to consolidated T. Rowe Price investment productsElimsAs reportedCash flow attributable to T. Rowe PriceCash flow attributable to consolidated T. Rowe Price investment productsElimsAs reported(in millions)Cash flow attributable to T. Rowe PriceCash flow attributable to consolidated T. Rowe Price investment productsElimsAs reportedCash flow attributable to T. Rowe PriceCash flow attributable to consolidated T. Rowe Price investment productsElimsAs reported
Cash flows from operating activitiesCash flows from operating activitiesCash flows from operating activities
Net income$2,342.3 $66.5 $(43.9)$2,364.9 $1,589.3 $1.6 $2.8 $1,593.7 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment151.1 — — 151.1 144.0 — — 144.0 
Net income (loss)Net income (loss)$567.9 $(103.9)$50.4 $514.4 $749.4 $33.7 $(18.3)$764.8 
Adjustments to reconcile net income (loss) to net cash provided by operating activitiesAdjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization of property, equipment and softwareDepreciation and amortization of property, equipment and software54.5 — — 54.5 49.0 — 49.0 
Amortization of acquired assets and liabilitiesAmortization of acquired assets and liabilities53.9 — — 53.9 — — — 
Fair value remeasurement of contingent liabilityFair value remeasurement of contingent liability(45.5)— — (45.5)— — — — 
Stock-based compensation expenseStock-based compensation expense166.3 — — 166.3 164.5 — — 164.5 Stock-based compensation expense63.6 — — 63.6 57.5 — 57.5 
Net (gains) losses recognized on investmentsNet (gains) losses recognized on investments(188.3)— 43.9 (144.4)(72.5)— (2.8)(75.3)Net (gains) losses recognized on investments88.7 — (50.4)38.3 (77.8)— 18.3 (59.5)
Net (investments) redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liability28.1 — — 28.1 (19.1)— — (19.1)
Net redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liabilityNet redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liability6.1 — — 6.1 22.0 — 22.0 
Net change in trading securities held by consolidated T. Rowe Price investment productsNet change in trading securities held by consolidated T. Rowe Price investment products(5.3)— (5.3)— (350.8)— (350.8)Net change in trading securities held by consolidated T. Rowe Price investment products— 180.1 — 180.1 — (120.9)(120.9)
Other changes in assets and liabilities573.1 (42.6)(.5)530.0 458.8 2.5 (1.4)459.9 
Other changesOther changes229.0 9.4 (.4)238.0 338.5 (56.5)(.2)281.8 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities3,072.6 18.6 (.5)3,090.7 2,265.0 (346.7)(1.4)1,916.9 Net cash provided by (used in) operating activities1,018.2 85.6 (.4)1,103.4 1,138.6 (143.7)(.2)994.7 
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities108.0 (15.6)(34.8)57.6 (100.6)(49.1)96.6 (53.1)Net cash provided by (used in) investing activities44.4 (5.9)(34.7)3.8 30.4 (27.3)(33.9)(30.8)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(1,913.8)(12.6)35.3 (1,891.1)(1,718.0)393.9 (95.2)(1,419.3)Net cash provided by (used in) financing activities(588.2)(91.0)35.1 (644.1)(490.6)149.0 34.1 (307.5)
Effect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment productsEffect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment products— (3.6)— (3.6)— 3.4 — 3.4 Effect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment products— (2.7)— (2.7)— .9 — .9 
Net change in cash and cash equivalents during periodNet change in cash and cash equivalents during period1,266.8 (13.2)— 1,253.6 446.4 1.5 — 447.9 Net change in cash and cash equivalents during period474.4 (14.0)— 460.4 678.4 (21.1)— 657.3 
Cash and cash equivalents at beginning of yearCash and cash equivalents at beginning of year2,151.7 104.8 — 2,256.5 1,781.8 76.5 — 1,858.3 Cash and cash equivalents at beginning of year1,523.1 101.1 — 1,624.2 2,151.7 104.8 — 2,256.5 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$3,418.5 $91.6 $— $3,510.1 $2,228.2 $78.0 $— $2,306.2 Cash and cash equivalents at end of period$1,997.5 $87.1 $— $2,084.6 $2,830.1 $83.7 $— $2,913.8 

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Operating Activities
Operating activities attributable to T. Rowe Price during the first nine monthsquarter of 20212022 provided cash flows of $3,072.6$1,018.2 million as compared to $2,265.0$1,138.6 million during the first nine monthsquarter of 2020.2021. Operating cash flows attributable to T. Rowe Price increased $807.6decreased $120.4 million, including a $753.0$181.5 million increasedecrease in net income from the first nine monthsquarter of 20202021 and timing differences primarily on the cash settlement of our assets and liabilities of $114.3$109.5 million. This increase wasThese decreases were partially offset by $106.9$186.5 million in lower non-cash adjustments, including unrealized investment gains/losses, depreciation, amortization of acquisition-related assets and retention arrangements, the fair value remeasurement of the contingent consideration liability, stock-based compensation expense.expense, and other noncash items. The non-cash adjustments were primarily driven by a $115.8$88.7 million increasein net investment losses in the first quarter of 2022 compared with $77.8 million in net investment gains in the first nine monthsquarter of 2021 compared with the first nine months of 2020.2021. Additionally, in 2021,2022, we had net proceeds of $28.1$6.1 million from certain investment products that economically hedge our supplemental savings plan liability while we hadcompared to net investmentsproceeds of $19.1$22.0 million in the same period of 2020.2021. Our interim operating cash flows do not include the cash impact of variable compensation that is accrued throughout the year before being substantially paid out in December. The remaining change in reported cash flows from operating activities was attributable to the net change in trading securities held in our consolidated investment products’ underlying portfolios.

Investing Activities
Net cash provided by investing activities that are attributable to T. Rowe Price totaled $108.0$44.4 million in the first nine monthsquarter of 20212022 compared with $100.6$30.4 million of cash usedprovided by investing activities in the 20202021 period. During 2021, 2022,
we increased the cash provided by investing activities with higher net proceeds from the sale of certain of our discretionary investments of $58.9 million compared to net proceeds of $47.8 million during 2021. Partially offsetting these increases were decreased property, equipment and software expenditures of $3.9 million. We also decreased the level of seed capital provided by $131.4$.8 million. We eliminate our seed capital in those T. Rowe Price investment products we consolidate in preparing our unaudited condensed consolidated statement of cash flows. Further increasing the cash provided by investing activities were higher net proceeds from the sale of certain of our discretionary investments of $238.1 million compared to net proceeds of $141.6 million during 2020. Partially offsetting these increases were increased property and equipment expenditures of $23.3 million. The remaining $33.5$21.4 million change in reported cash flows from investing activities is related to the net cash removed from our balance sheet from consolidating and deconsolidating investment products.

Financing Activities
Net cash used in financing activities attributable to T. Rowe Price were $1,913.8$588.2 million in the first nine monthsquarter of 20212022 compared with $1,718.0$490.6 million in the 20202021 period. During the first nine monthsquarter of 2021,2022, we used $526.6$320.1 million to repurchase 2.92.1 million shares compared to $1.2 billion$259.2 million to repurchase 10.81.6 million shares in the first nine monthsquarter of 2020. Partially offsetting this decrease in cash used for stock repurchases2021. During the first quarter of 2022, there was a $818.3$26.9 million increase in dividends paid in 20212022 as a result of the special cash dividend paid in July 2021 and the 20.0%11.1% increase in our quarterly dividend per share. Partially offsetting these increases in net cash used in financing activities were $6.0 million in net contributions from non-controlling interests in consolidated entities. The remaining change in reported cash flows from financing activities is primarily attributable to a $276.0$55.9 million decreasein net redemptions from redeemable non-controlling interest holders of our consolidated investment products during the first quarter of 2022 as compared to $183.1 million in net subscriptions received from redeemable non-controlling interest holders of our consolidated investment products during the first nine monthsquarter of 2021 compared to the 2020 period.2021.

CRITICAL ACCOUNTING POLICIES.

The preparation of financial statements often requires the selection of specific accounting methods and policies from among several acceptable alternatives. Further, significant estimates and judgments may be required in selecting and applying those methods and policies in the recognition of the assets and liabilities in our unaudited condensed consolidated balance sheets, the revenues and expenses in our unaudited condensed consolidated statements of income, and the information that is contained in our significant accounting policies and notes to unaudited condensed consolidated financial statements. Making these estimates and judgments requires the analysis of information concerning events that may not yet be complete and of facts and circumstances that may change over time. Accordingly, actual amounts or future results can differ materially from those estimates that we include currently in our unaudited condensed consolidated financial statements, significant accounting policies, and notes.

There have been no material changes in the critical accounting policies previously identified in our 20202021 Annual Report on Form 10-K.

NEWLY-ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

See Note 1 - The Company and Basis of Preparation note within Item 1. Financial Statements for a discussion of newly issued but not yet adopted accounting guidance.


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FORWARD-LOOKING INFORMATION.

From time to time, information or statements provided by or on behalf of T. Rowe Price, including those within this report, may contain certain forward-looking information, including information or anticipated information relating to: our revenues, net income, and earnings per share onof common stock; changes in the amount and composition of our assets under management; our expense levels; our tax rate; the timing and expense related to the integration of OHA with and into our business; and our expectations regarding financial markets, strategicfuture transactions, dividends, stock repurchases, investments, new products and services, capital expenditures, changes in our effective fee rate, the impact of the coronavirus pandemic, and other market conditions and the acquisition of OHA.conditions. Readers are cautioned that any forward-looking information provided by or on behalf of T. Rowe Price is not a guarantee of future performance. Actual results may differ materially from those in forward-looking information because of various factors including, but not limited to, those discussed below and in Item 1A, Risk Factors, included in our Form 10-K Annual Report for 2020.2021. Further, forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events.

Our future revenues and results of operations will fluctuate primarily due to changes in the total value and composition of assets under our management. Such changes result from many factors, including, among other things: cash inflows and outflows in the U.S. mutual funds, subadvised funds, separately managed accounts, collective investment trusts, and other investment products, performance fees, capital allocation-based income, fluctuations in global financial markets that result in appreciation or depreciation of the assets under our management, our introduction of new mutual funds and investment products, changes in retirement savings trends relative to participant-directed investments and defined contribution plans, and the impact of the coronavirus outbreak. The ability to attract and retain investors’ assets under our management is dependent on investor sentiment and confidence; the relative investment performance of the U.S.T. Rowe Price mutual funds and other managed investment products as compared with competing offerings and market indexes; the ability to maintain our investment management and administrative fees at appropriate levels; competitive conditions in the mutual fund, asset management, and broader financial services sectors; and our level of success in implementing our strategy to expand our business, including our announced plan to establishestablishment of T. Rowe Price Investment Management as a separate registered investment adviser.adviser; and our ability to attract and retain key personnel. Our revenues are substantially dependent on fees earned under contracts with the T. Rowe Price funds and could be adversely affected if the independent directors of one or more of the T. Rowe Price funds terminated or significantly altered the terms of the investment management or related administrative services agreements. Non-operating investment income will also fluctuate primarily due to the size of our investments, changes in their market valuations, and any other-than-temporary impairments that may arise or, in the case of our equity method investments, our proportionate share of the investees' net income.

Our future results are also dependent upon the level of our expenses, which are subject to fluctuation for the following or other reasons: changes in the level of our advertising and promotion expenses in response to market conditions, including our efforts to expand our investment advisory business to investors outside the U.S. and to further penetrate our distribution channels within the U.S.; the pace and level of spending to support key strategic priorities;priorities, including the integration of OHA with and into our business; variations in the level of total compensation expense due to, among other things, bonuses, restricted stock units and other equity grants, other incentive awards, our supplemental savings plan, changes in our employee count and mix, and competitive factors; any goodwill or other asset impairment that may arise; fluctuation in foreign currency exchange rates applicable to the costs of our international operations; expenses and capital costs, such as technology assets, depreciation, amortization, and research and development, incurred to maintain and enhance our administrative and operating services infrastructure; the leveltiming of the assumption of all third party research costs,payments, unanticipated costs that may be incurred to protect investor accounts and the goodwill of our clients; and disruptions of services, including those provided by third parties, such as fund and product recordkeeping, facilities, communications, power, and the mutual fund transfer agent and accounting systems.

Our business is also subject to substantial governmental regulation, and changes in legal, regulatory, accounting, tax, and compliance requirements may have a substantial effect on our operations and results, including, but not limited to, effects on costs that we incur and effects on investor interest in T. Rowe Price investment products and investing in general or in particular classes of mutual funds or other investments.

Our acquisition of OHA is subject to various risks and uncertainties, which could impact the completion of the transaction and effect our results of operations, including: (i) the occurrence of any event, change, or other circumstances that could give rise to the termination of the purchase agreement; (ii) closing conditions may not be satisfied in a timely manner or at all, including due to the failure to obtain regulatory and client approvals; (iii) the announcement and pendency of the acquisition may disrupt our business operations (including the threatened or

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actual loss of employees, clients, or suppliers); (iv) we could experience financial or other setbacks if the transaction encounters unanticipated problems; (v) anticipated benefits of the transaction, including the realization of revenue, accretion, financial benefits or returns, and expense and other synergies, may not be fully realized or may take longer to realize than expected; (vi) client and investor interest in T. Rowe Price or the combined business’s products may be less than anticipated; and (vii) we may be unable to successfully integrate OHA’s businesses or to integrate the businesses within the anticipated time frame.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

There has been no material change in the total potential loss information provided in Item 7A of the Form 10-K Annual Report for 2020.2021.

Item 4.Controls and Procedures.

Our management, including our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021.March 31, 2022. Based on that evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures as of September 30, 2021,March 31, 2022, are effective at the reasonable assurance level to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, including this Form 10-Q quarterly report, is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive and principal financial officers, has evaluated any change in our internal control over financial reporting that occurred during the thirdfirst quarter of 2021,2022, and has concluded that there was no change during the thirdfirst quarter of 20212022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION
 
Item 1. Legal Proceedings.

For information about our legal proceedings, please see our Commitments and Contingencies footnote to our unaudited condensed consolidated financial statements in Part 1. of this Form 10-Q.

Item 1A. Risk Factors.

There have been no material changes in the information provided in Item 1A of our Form 10-K Annual Report for 2020.2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) Repurchase activity during the thirdfirst quarter of 20212022 is as follows:
 
Month
Total Number of
Shares Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
Maximum Number of Shares that May Yet Be Purchased Under the Program
July5,056 $204.35 — 19,612,790 
August141,603 $215.77 112,246 19,500,544 
September935,928 $209.89 922,335 18,578,209 
Total1,082,587 $210.63 1,034,581 
Month
Total Number of
Shares Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
Maximum Number of Shares that May Yet Be Purchased Under the Program
January603,619 $173.23 600,000 14,925,910 
February912,273 $145.01 889,270 14,036,640 
March619,593 $141.46 618,000 13,418,640 
Total2,135,485 $151.96 2,107,270 

Shares repurchased by us in a quarter may include repurchases conducted pursuant to publicly announced board authorization, outstanding shares surrendered to the company to pay the exercise price in connection with swap exercises of employee stock options, and shares withheld to cover the minimum tax withholding obligation associated with the vesting of restricted stock awards. Of the total number of shares purchased during the third

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first quarter of 2021, 48,0062022, 28,215 were related to shares surrendered in connection with employee stock option exercises and no shares were withheld to cover tax withholdings associated with the vesting of restricted stock awards.


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The following table details the changes in and status of the Board of Directors’ outstanding publicly announced board authorizations.
Authorization DatesAuthorization Dates7/1/2021Total Number of
Shares Purchased
Maximum Number of Shares that May Yet Be Purchased at 9/30/2021Authorization Dates1/1/2022Total Number of
Shares Purchased
Maximum Number of Shares that May Yet Be Purchased at 3/31/2022
February 2019February 20194,612,790 (1,034,581)3,578,209 February 2019525,910 (525,910)— 
March 2020March 202015,000,000 — 15,000,000 March 202015,000,000 (1,581,360)13,418,640 
19,612,790 (1,034,581)18,578,209 15,525,910 (2,107,270)13,418,640 

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5.Other Information.

On OctoberApril 28, 2021,2022, we issued an earnings release reporting our results of operations for the thirdfirst quarter of 2021.2022. A copy of that earnings release is furnished herewith as Exhibit 99.1. This information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 6. Exhibits.

The following exhibits required by Item 601 of Regulation S-K are furnished herewith.
3(i) 
3(ii) 
15 
31(i).1 
31(i).2 
32 
99.1 
101 The following series of unaudited XBRL-formatted documents are collectively included herewith as Exhibit 101. The financial information is extracted from T. Rowe Price Group’s unaudited condensed consolidated interim financial statements and notes that are included in this Form 10-Q Report.
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Calculation Linkbase Document
101.LABXBRL Taxonomy Label Linkbase Document
101.PREXBRL Taxonomy Presentation Linkbase Document
101.DEFXBRL Taxonomy Definition Linkbase Document
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on OctoberApril 28, 2021.2022.
T. Rowe Price Group, Inc.

By:    /s/ Jennifer B. Dardis
Vice President, Chief Financial Officer and Treasurer

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