Item 8. Financial Statements.

			Page
Index to Financial Statements:
Consolidated Balance Sheets at December 31, 2021 and 2020			54
Consolidated Statements of Income for each of the years in the three-year period ended December 31, 2021			55
Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, 2021			56
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2021			57
Consolidated Statements of Stockholders' Equity for each of the years in the three-year period ended December 31, 2021			58
Notes to Consolidated Financial Statements			60
Report of Independent Registered Public Accounting Firm (KPMG LLP, Baltimore, MD, Auditor ID: 185)			86

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CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

			12/31/2021						12/31/2020
ASSETS
Cash and cash equivalents			$	1,523.1					$	2,151.7
Accounts receivable and accrued revenue			1,058.3						863.1
Investments			2,975.5						3,250.8
Assets of consolidated T. Rowe Price investment products ($1,761.5 million at December 31, 2021 and $2,497.4 million at December 31, 2020, related to variable interest entities)			1,962.8						2,695.5
Operating lease assets			201.2						117.6
Property, equipment and software, net			736.2						695.4
Intangible assets			913.4						—
Goodwill			2,693.2						665.7
Other assets			445.3						219.2
Total assets			$	12,509.0					$	10,659.0
LIABILITIES
Accounts payable and accrued expenses			$	431.0					$	187.7
Liabilities of consolidated T. Rowe Price investment products ($36.2 million at December 31, 2021 and $47.7 million at December 31, 2020, related to variable interest entities)			51.5						57.7
Operating lease liabilities			249.2						154.1
Accrued compensation and related costs			256.8						133.6
Supplemental savings plan liability			882.6						772.2
Contingent consideration liability			306.3						—
Income taxes payable			77.9						85.0
Total liabilities			2,255.3						1,390.3
Commitments and contingent liabilities
Redeemable non-controlling interests			982.3						1,561.7
STOCKHOLDERS’ EQUITY
Preferred stock, undesignated, $.20 par value—authorized and unissued 20,000,000 shares			—						—
Common stock, $.20 par value—authorized 750,000,000; issued 229,175,000 shares at December 31, 2021 and 227,965,000 at December 31, 2020			45.8						45.6
Additional capital in excess of par value			919.8						654.6
Retained earnings			8,083.6						7,029.8
Accumulated other comprehensive loss			(26.5)						(23.0)
Total stockholders' equity attributable to T. Rowe Price Group, Inc.			9,022.7						7,707.0
Non-controlling interests in consolidated entities			248.7						—
Total permanent stockholders' equity			9,271.4						7,707.0
Total liabilities, redeemable non-controlling interests and permanent stockholders’ equity			$	12,509.0					$	10,659.0

The accompanying notes to consolidated financial statements are an integral part of these statements.

Page 54

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per-share amounts)

			2021						2020						2019
Revenues
Investment advisory fees			$	7,098.1					$	5,693.1					$	5,112.5
Administrative, distribution, and servicing fees			573.8						513.6						505.4
Net revenues			7,671.9						6,206.7						5,617.9
Operating expenses
Compensation and related costs			2,383.0						2,182.4						1,969.2
Distribution and servicing costs			373.9						278.5						262.5
Advertising and promotion			100.2						83.7						96.8
Product and recordkeeping related costs			236.3						155.5						153.2
Technology, occupancy, and facility costs			484.9						444.8						427.3
General, administrative, and other			383.6						316.1						321.9
Total operating expenses			3,961.9						3,461.0						3,230.9
Net operating income			3,710.0						2,745.7						2,387.0
Non-operating income
Net gains on investments			215.8						246.8						260.4
Net gains (losses) on consolidated investment products			74.7						251.7						272.9
Other income (loss)			(5.9)						(2.0)						7.0
Total non-operating income			284.6						496.5						540.3
Income before income taxes			3,994.6						3,242.2						2,927.3
Provision for income taxes			896.1						718.9						678.4
Net income			3,098.5						2,523.3						2,248.9
Less: net income (loss) attributable to redeemable non-controlling interests			15.6						150.6						117.6
Net income attributable to T. Rowe Price Group			$	3,082.9					$	2,372.7					$	2,131.3
Earnings per share on common stock of T. Rowe Price Group
Basic			$	13.25					$	10.08					$	8.82
Diluted			$	13.12					$	9.98					$	8.70

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

			2021						2020						2019
Net income			$	3,098.5					$	2,523.3					$	2,248.9
Other comprehensive income (loss)
Currency translation adjustments:
Consolidated T. Rowe Price investment products—variable interest entities			(37.7)						57.8						(3.4)
Reclassification gains recognized in non-operating investment income upon deconsolidation of certain T. Rowe Price investment products			(2.4)						(.7)						(.1)
Total currency translation adjustments of consolidated T. Rowe Price investment products—variable interest entities			(40.1)						57.1						(3.5)
Equity method investments			7.0						2.1						2.4
Reclassification adjustment recognized upon partial disposition of equity method investment			—						7.5						—
Total equity method investments			7.0						9.6						2.4
Other comprehensive income (loss) before income taxes			(33.1)						66.7						(1.1)
Net deferred tax benefits			3.4						(11.8)						.5
Total other comprehensive income (loss)			(29.7)						54.9						(.6)
Total comprehensive income			3,068.8						2,578.2						2,248.3
Less: comprehensive income (loss) attributable to redeemable non-controlling interests			(10.6)						185.5						118.0
Comprehensive income attributable to T. Rowe Price Group			$	3,079.4					$	2,392.7					$	2,130.3

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

			2021						2020						2019
Cash flows from operating activities
Net income			$	3,098.5					$	2,523.3					$	2,248.9
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and impairment of property, equipment and software			204.8						189.6						190.8
Stock-based compensation expense			274.6						246.2						206.6
Net gains recognized on other investments			(122.5)						(189.6)						(176.3)
Net investments in T. Rowe Price investment products used to economically hedge supplemental savings plan liability			(85.7)						(142.9)						(126.0)
Net change in securities held by consolidated T. Rowe Price investment products			14.9						(798.8)						(930.9)
Other changes in assets and liabilities			67.4						91.1						109.6
Net cash provided by operating activities			3,452.0						1,918.9						1,522.7
Cash flows from investing activities
Purchases of T. Rowe Price investment products			(48.0)						(272.4)						(239.7)
Dispositions of T. Rowe Price investment products			1,625.8						454.1						131.4
Net cash of T. Rowe Price investment products on consolidation (deconsolidation)			(16.9)						(53.9)						(18.4)
Additions to property and equipment			(239.1)						(214.6)						(204.6)
Acquisition, net of cash acquired			(2,450.8)						—						—
Other investing activity			30.9						50.5						6.8
Net cash used in investing activities			(1,098.1)						(36.3)						(324.5)
Cash flows from financing activities
Repurchases of common stock			(1,138.5)						(1,201.9)						(705.8)
Common share issuances under stock-based compensation plans			(81.6)						3.9						83.3
Dividends paid to common stock and equity-award holders			(1,701.9)						(845.8)						(733.9)
Net subscriptions (redemptions) from redeemable non-controlling interest holders			(66.8)						557.5						523.7
Net cash used in financing activities			(2,988.8)						(1,486.3)						(832.7)
Effect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment products			2.6						1.9						(2.5)
Net change in cash and cash equivalents during period			(632.3)						398.2						363.0
Cash and cash equivalents at beginning of period, including $104.8 million at December 31, 2020, $76.5 million at December 31, 2019 and $70.1 million at December 31, 2018 held by consolidated T. Rowe Price investment products			2,256.5						1,858.3						1,495.3
Cash and cash equivalents at end of period, including $101.1 million at December 31, 2021, $104.8 million at December 31, 2020, and $76.5 million at December 31, 2019, held by consolidated T. Rowe Price investment products			$	1,624.2					$	2,256.5					$	1,858.3

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (shares in thousands; dollars in millions)

			Common 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.						Redeemable non-controlling interests
Balances at December 31, 2018			238,069						$	47.6					$	654.6					$	5,464.1					$	(42.0)					$	6,124.3					$	740.3
Net income			—						—						—						2,131.3						—						2,131.3						117.6
Other comprehensive income (loss), net of tax			—						—						—						—						(1.0)						(1.0)						.4
Dividends declared ($3.04 per share)			—						—						—						(733.6)						—						(733.6)						—
Common stock-based compensation plans activity:
Shares issued upon option exercises			2,924						.6						147.9						—						—						148.5						—
Restricted shares issued, net of shares withheld for taxes			(41)						—						(5.9)						—						—						(5.9)						—
Shares issued upon vesting of restricted stock units, net of shares withheld for taxes			1,245						.2						(59.5)						—						—						(59.3)						—
Forfeiture of restricted awards			(10)						—						—						—						—						—						—
Stock-based compensation expense			—						—						206.6						—						—						206.6						—
Restricted stock units issued as dividend equivalents			—						—						.2						(.2)						—						—						—
Common shares repurchased			(6,973)						(1.4)						(289.3)						(418.1)						—						(708.8)						—
Net subscriptions into T. Rowe Price investment products			—						—						—						—						—						—						530.3
Net deconsolidations of T. Rowe Price investment products			—						—						—						—						—						—						(267.6)
Balances at December 31, 2019			235,214						47.0						654.6						6,443.5						(43.0)						7,102.1						1,121.0
Net income			—						—						—						2,372.7						—						2,372.7						150.6
Other comprehensive income (loss), net of tax			—						—						—						—						20.0						20.0						34.9
Dividends declared ($3.60 per share)			—						—						—						(846.1)						—						(846.1)						—
Common stock-based compensation plans activity:
Shares issued upon option exercises			2,194						.5						95.5						—						—						96.0						—
Restricted shares issued, net of shares withheld for taxes			8						—						—						—						—						—						—
Shares issued upon vesting of restricted stock units, net of shares withheld for taxes			1,457						.3						(92.0)						—						—						(91.7)						—
Forfeiture of restricted awards			—						—						—						—						—						—						—
Stock-based compensation expense			—						—						246.2						—						—						246.2						—
Restricted stock units issued as dividend equivalents			—						—						.3						(.3)						—						—						—
Common shares repurchased			(10,908)						(2.2)						(250.0)						(940.0)						—						(1,192.2)						—
Net subscriptions into T. Rowe Price investment products			—						—						—						—						—						—						563.3
Net deconsolidations of T. Rowe Price investment products			—						—						—						—						—						—						(308.1)
Balances at December 31, 2020			227,965						$	45.6					$	654.6					$	7,029.8					$	(23.0)					$	7,707.0					$	1,561.7

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (shares in thousands; dollars in millions)

			Common 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 entities			Total permanent stockholders'equity						Redeemable non-controlling interests
Balances at December 31, 2020			227,965						$	45.6					$	654.6					$	7,029.8					$	(23.0)					$	7,707.0					$	—		$	7,707.0					$	1,561.7
Net income			—						—						—						3,082.9						—						3,082.9						—			3,082.9						15.6
Other comprehensive income (loss), net of tax			—						—						—						—						(3.5)						(3.5)						—			(3.5)						(26.2)
Dividends declared ($4.32 per share)			—						—						—						(1,003.5)						—						(1,003.5)						—			(1,003.5)						—
Special cash dividend declared ($3.00 per share)			—						—						—						(699.5)						—						(699.5)						—			(699.5)						—
Common stock-based compensation plans activity:
Shares issued upon option exercises			1,206						.2						46.8						—						—						47.0						—			47.0						—
Restricted shares withheld for taxes, net of shares issued			6						—						—						—						—						—						—			—						—
Shares issued upon vesting of restricted stock units, net of shares withheld for taxes			1,492						.3						(128.0)						—						—						(127.7)						—			(127.7)						—
Forfeiture of restricted awards			—						—						—						—						—						—						—			—						—
Stock-based compensation expense			—						—						274.6						—						—						274.6						—			274.6						—
Restricted stock units issued as dividend equivalents			—						—						.6						(.7)						—						(.1)						—			(.1)						—
Common shares repurchased			(5,941)						(1.2)						(809.4)						(325.4)						—						(1,136.0)						—			(1,136.0)						—
Common shares issued for acquisition			4,447						.9						880.6						—						—						881.5						—			881.5						—
Non-controlling interests			—						—						—						—						—						—						248.7			248.7						—
Net redemptions from T. Rowe Price investment products			—						—						—						—						—						—						—			—						(67.7)
Net deconsolidations of T. Rowe Price investment products			—						—						—						—						—						—						—			—						(501.1)
Balances at December 31, 2021			229,175						$	45.8					$	919.8					$	8,083.6					$	(26.5)					$	9,022.7					$	248.7		$	9,271.4					$	982.3

(1) Accumulated other comprehensive income

The accompanying notes to consolidated financial statements are an integral part of these statements.

Page 59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

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 Price products. The other T. Rowe Price products include: open-ended investment products offered to investors outside the U.S. and products offered through variable annuity life insurance plans in the U.S. 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.

On December 29, 2021, we completed our acquisition of Oak Hill Advisors, L.P., a leading alternative credit manager, and other entities that have 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"). The acquisition accelerates our expansion into alternatives investment markets and complements our existing global platform and ongoing strategic initiatives in our core investments and distribution capabilities. OHA and its advisory affiliates provide investment advisory, asset management and other advisory services primarily to affiliated private investment funds and private accounts investing in leveraged loans, high yield bonds, structured products, private lending, distressed securities and turnaround investments. T. Rowe Price Group, Inc. recorded the assets acquired and liabilities assumed at their acquisition date fair values on its consolidated balance sheets as of the close date. Further, T. Rowe Price Group, Inc. did not record any 2021 OHA financial results in its consolidated statements of income or comprehensive income as the OHA activity between the closing date and December 31, 2021 was deemed immaterial.

Investment advisory revenues depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management impact our revenues and results of operations.

BASIS OF PREPARATION.

These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States. These principles require that we make certain estimates and assumptions. Actual results may vary from our estimates.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

Business Combinations

We account for business combinations under the acquisition method of accounting, whereby we recognize assets acquired and liabilities assumed, including separately identified intangible assets, contingent liabilities, and non-controlling interests, based on the fair value estimates as of the date of the acquisition. Any excess purchase consideration over the fair value of the identified net assets acquired is recognized as goodwill. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in earnings.

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Consolidation

Our consolidated financial statements include the accounts of all subsidiaries and T. Rowe Price investment products in which we have a controlling interest. We are deemed to have a controlling interest when we own the majority of a voting interest entity ("VOE") or are deemed to be the primary beneficiary of a variable interest entity ("VIE"). We perform an analysis of our investments to determine if the investment entity is a VOE or a VIE. Our analysis involves judgment and considers several factors, including an entity’s legal organization, capital structure, the rights of the equity investment holders, our ownership interest in the entity, and our contractual involvement with the entity. We continually review and reconsider our VOE or VIE conclusions upon the occurrence of certain events, such as changes to our ownership interest, changes to an entity’s legal structure, or amendments to governing documents. All material accounts and transactions between consolidated entities are eliminated in consolidation.

Variable interest entities

VIEs are entities that, by design: (i) lack sufficient equity to permit the entity to finance its activities independently or (ii) have equity holders that do not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, the obligation to absorb the entity’s losses, or the rights to receive the entity’s residual returns. We consolidate a VIE when we are the primary beneficiary, which is the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the VIE that could potentially be significant.

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

In addition, in connection with the OHA acquisition, we acquired a majority of the carried interest entities. These carried interest entities are considered VIEs and T. Rowe Price is determined to be the primary beneficiary. The total assets, liabilities, and non-controlling interests of these consolidated VIEs as of December 31, 2021 were $692.7 million, $56.4 million, and $248.7 million, respectively.

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

Redeemable non-controlling interests

We recognize redeemable non-controlling interests for the portion of the net assets of our consolidated T. Rowe Price investment products held by unrelated third-party investors as their interests are convertible to cash and other assets at their option. As such, we reflect redeemable non-controlling interests as temporary equity in our consolidated balance sheets.

Non-controlling interests in consolidated entities

As a result of the OHA acquisition, we recognized non-controlling interests in the consolidated carried interest entities and present it as a component of permanent equity in our consolidated balance sheets. The non-controlling interests represent the minority interest held by limited partnerships controlled by employees, one of which is a member of our Board of Directors. Beginning in 2022, income (loss) will be allocated to these non-controlling interests based on the carried interest entity contractual arrangements that govern the allocation of income (loss), such as net income allocable to T. Rowe Price.

Investments in T. Rowe Price money market mutual funds

We do not consider our investments in T. Rowe Price money market mutual funds when performing our consolidation analysis as the guidance provides a scope exception for interests in entities that are required to comply with, or operate in accordance with, requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds.

Cash equivalents

Cash equivalents consist primarily of short-term, highly liquid investments in T. Rowe Price money market mutual funds. The cost of these funds is equivalent to fair value.

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Investments

Investments held at fair value

Investments in T. Rowe Price investment products have been made for both general corporate investment purposes and to provide seed capital for newly formed products. Those investments that we do not consolidate are carried at fair value using the quoted closing NAV per share of each fund as of the balance sheet date. The underlying investments held by our consolidated T. Rowe Price investment products retain investment company specialized accounting in consolidation, are considered securities held in a trading account for cash flow reporting purposes and are valued in accordance with the valuation and pricing policy used to value our assets under management which is further described in the Revenue Recognition policy below.

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

Changes in the fair values of all these investments are reflected in non-operating income in our consolidated statements of income.

Equity method investments

Equity method investments consist of investments in entities, including T. Rowe Price investment products, for which we have the ability to exercise significant influence over the operating and financial policies of the investee. The carrying values of these investments are adjusted to reflect our proportionate share of the investee's net income or loss, any unrealized gain or loss resulting from the translation of foreign-denominated financial statements into U.S. dollars, and dividends received. Our proportionate share of income or loss is included in non-operating income in our consolidated statements of income. As permitted under existing accounting guidance, we adopted a policy by which we recognize our share of UTI Asset Management Company Limited’s ("UTI") earnings on a quarter lag as current financial information is not available in a timely manner. The basis difference between our carrying value and our proportionate share of UTI’s book value is primarily related to consideration paid in excess of the stepped-up basis of assets and liabilities on the date of purchase.

Investments in affiliated private investment funds

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

Held to Maturity

As part of the acquisition of OHA, we acquired investments in rated notes of certain European collateralized loan obligation funds. We have designated these rated notes as held-to-maturity and will carry them on the balance sheet at amortized cost. At December 31, 2021, these investments were recorded at their acquisition date fair value in accordance with ASC 805 - Business Combinations.

Concentration of risk

Concentration of credit risk in accounts receivable is believed to be minimal in that our clients generally have substantial assets, including those in the investment portfolios we manage for them.

Our investments held at fair value expose us to market risk, that is, the potential future loss of value that would result from a decline in the fair value of each investment or its underlying net assets. The underlying holdings of our assets under management are also subject to market risk, which may arise from changes in equity prices, credit ratings, foreign currency exchange rates, and interest rates.

Leases

We review new arrangements at inception to evaluate whether we have the right to obtain substantially all the economic benefits of and have the right to control the use of an asset. If we determine that an arrangement qualifies as a lease, we recognize a lease liability and a corresponding asset on the lease’s commencement date. The lease liability is initially measured at the present value of the future minimum lease payments over the lease term using

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the rate implicit in the arrangement or, if not available, our incremental borrowing rate. An operating lease asset is measured initially at the value of the lease liability less any lease incentives received and initial direct costs incurred.

Our leases qualify as operating leases and consist primarily of real estate leases for corporate offices, data centers, and other facilities. We measure our operating lease liabilities using an estimated incremental borrowing rate as an implicit rate cannot be readily determinable from any of our operating lease arrangements. Since we do not have any outstanding borrowings, we estimate our incremental borrowing rate using an estimated credit rating and available market information. Additionally, certain of our leases contain options to extend or terminate the lease term that, if exercised, would result in the remeasurement of the operating lease liability.

Our operating leases contain both lease and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the lease assets, such as common area maintenance and other management costs. We elected to measure the lease liability of our real estate operating leases by combining the lease and non-lease components into one single lease component. As such, we included the fixed payments and any payments that depend on a rate or index related to our lease and non-lease components in measuring the operating lease liability.

We recognize operating lease expense on a straight-line basis over the lease term as part of technology, occupancy, and facility costs in our consolidated statements of income.

Property, equipment and software

Property, equipment and software is stated at cost net of accumulated depreciation and amortization computed using the straight-line method. Provisions for depreciation and amortization are based on the following weighted-average estimated useful lives: computer and communications software and equipment, 3 years; buildings and improvements, 33 years; leasehold improvements, 8 years; and furniture and other equipment, 6 years.

Intangible assets

Intangible assets acquired in the OHA acquisition consist primarily of investment advisory agreements and a trade name. The fair values of the acquired investment advisory agreements are based on the net present value of estimated future cash flows attributable to the agreements, which include significant assumptions about revenue growth rate, discount rate and effective tax rate. The investment advisory agreement intangible assets will be amortized using the straight-line method over their estimated useful lives unless the asset is determined to have an indefinite life as there is no foreseeable limit on the contract period. The weighted average useful life of definite-lived intangibles assets is approximately 6.1 years.

The trade name fair value is determined using the relief from royalty method based on net present value of estimated cash flows, which include significant assumptions about royalty rate, revenue growth rate, discount rate and effective tax rate. Additionally, we identified the trade name intangible asset as indefinite-lived as there is no foreseeable limit on the use of the OHA name.

Indefinite-lived intangible assets are tested for impairment annually or more frequently when an event occurs or circumstances change that more likely than not reduce the fair value of the indefinite-lived intangible asset below its carrying value.

Definite-lived intangible assets are tested when there is an indication of impairment. Impairment is indicated when the carrying value of the asset is not recoverable and exceeds its fair value. If indicators are present, we perform a recoverability test by comparing the estimated undiscounted future cash flows attributable to the asset group in question to the asset group’s carrying amount. If the undiscounted estimated future cash flows are less than the carrying amount of the asset, the asset’s cost is adjusted to fair value and an impairment loss is recognized.

Goodwill

We evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the third quarter of each year using a fair value approach. Our evaluations have indicated that no impairment exists.

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We internally conduct, manage, and report our operations as one investment advisory business. We do not have distinct operating segments or components that separately constitute a business. Accordingly, we attribute goodwill to a single reportable segment and reporting unit - our investment advisory business. With the completion of the acquisition of OHA in December 2021, we are currently evaluating the impact that OHA will have on our business reporting and goodwill impairment analysis.

Revenue recognition

Our revenue is earned from investment advisory, administrative, and distribution services we provide to our clients. Each distinct service we promise in our agreements is considered a performance obligation and is the basis for determining when we recognize revenue. The fees are allocated to each distinct performance obligation and we recognize revenue when, or as, we satisfy our promises. The consideration for our services is generally variable and included in net revenues, when it is improbable that a significant reversal could occur in the future. For certain client agreements, we have the discretion to hire a third party to provide services to our clients. In these circumstances, we are generally deemed to control the services before transferring them to our clients, and accordingly present the revenues gross of the related third-party costs. The timing of when we bill our clients and related payment terms vary in accordance with agreed-upon contractual terms. For the majority of our agreements, billing occurs after we have recognized revenue, which results in accounts receivable and accrued revenue. For an insignificant portion of our contracts, billing occurs in advance of providing services, which results in deferred revenue within the accounts payable and accrued expenses line of our consolidated balance sheets.

Taxes billed to our clients based on our fees for services rendered are not included in revenues.

Investment advisory fees

The majority of our investment advisory agreements, including those with the U.S. mutual funds, have a single performance obligation as the promised services are not separately identifiable from other promises in the agreements and, therefore, are not distinct. Substantially all performance obligations for providing advisory services are satisfied over time and revenue is recognized as time passes.

Investment advisory agreements with T. Rowe Price investment products regulated outside the U.S. generally have two performance obligations; one for investment management and one for distribution. For these agreements, we allocate the management fee to each performance obligation using our best estimate of the standalone fee of each of these services. The performance obligation for providing investment management services, like our other advisory contracts, is satisfied over time and revenue is recognized as time passes. The performance obligation for distribution is satisfied at the point in time when an investor makes an investment into the product. Accordingly, a portion of the investment advisory fees earned from these products relate to distribution performance obligations that were satisfied during prior periods. These distribution fees are reported within the investment advisory fees line of our consolidated statements of income.

The management fee for our investment advisory agreements are based on our assets under management, which change based on fluctuations in financial markets and net cash flows from investors, and represents variable consideration. Therefore, investment advisory fees are generally constrained, and excluded from revenue, until the asset values on which our client is billed are no longer subject to financial market volatility. Investment advisory fees for investment products are presented net of fees waived pursuant to the contractual expense limitations of the product. Our assets under management are valued in accordance with valuation and pricing processes for each major type of investment. Fair values used in our processes are primarily determined from quoted market prices; prices furnished by dealers who make markets in such securities; or from data provided by an independent pricing service that considers yield or price of investments of comparable quality, coupon, maturity, and type. Investments for which market prices are not readily available are not a material portion of our total assets under management.

We provide all services to the U.S. mutual funds under contracts that are subject to periodic review and approval by the funds’ Boards. Regulations require that the funds’ shareholders also approve material changes to investment advisory contracts.

We recognize performance-based incentive fees in connection with the investment advisory agreements from certain separately managed and subadvised accounts. We are entitled to receive performance-based incentive fees when the return on investment assets exceeds a certain benchmark return. In such arrangements, these incentive fees are recognized at the end of the measurement period when the performance benchmark or contractual

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outperformance has been achieved. Performance-based incentive fees are considered a form of variable consideration, and as such these fees are subject to potential reversal up until the end of the measurement period (which is generally one year) when the performance-based incentive fees become fixed, determinable, and are not subject to significant reversal. There are no significant judgments made when determining the performance-based incentive fees.

Beginning in 2022, investment advisory fees will also include fees earned from affiliated private investment funds or private accounts that are determined either monthly or quarterly and are generally based on the fund’s or account's net asset value or invested capital. Investment advisory fees earned from CLOs include senior collateral management fees and subordinated collateral management fees, which are generally determined quarterly based on the sum of collateral principal amounts and the aggregate principal amount of all defaulted obligations. If amounts distributable on any payment date are insufficient to pay the collateral management fee according to the priority of payments, any shortfall is deferred and payable on subsequent payment dates.

Administrative, distribution, and servicing fees

Administrative fees

The administrative services we provide include 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.

The administrative service agreements with the U.S. mutual funds for accounting oversight, transfer agency, and recordkeeping services generally have one performance obligation as the promised services in each agreement are not separately identifiable from other promises in the agreement and, therefore, are not distinct. The fees for performing these services are generally equal to the costs incurred and represent variable consideration. The fees are generally constrained and are recognized as revenue when costs are incurred to perform the services.

Other administrative service agreements for participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage services, and trust services generally have one performance obligation as the promised services in each agreement are not separately identifiable from other performance obligations in the contract and, therefore, are not distinct. Our performance obligation in each agreement is satisfied over time and revenue is recognized as time passes. The fees for these services vary by contract and are both fixed and variable.

Distribution and servicing fees

The agreements for distribution and servicing fees earned from 12b-1 plans of the Advisor Class, R Class, and Variable Annuity II Class shares of the U.S. mutual funds have one performance obligation, as distribution services are not separately identifiable from shareholder servicing promises in the agreements and, therefore, are not distinct. Our performance obligation is satisfied at the point in time when an investor makes an investment into these share classes of the U.S. mutual funds. The fees for these distribution and servicing agreements are based on the assets under management in these share classes, which change based on fluctuations in financial markets, and represent variable consideration. These fees are generally constrained, and excluded from revenue, until the asset values on which our client is billed are not subject to financial market volatility. Accordingly, the majority of the distribution and servicing revenue disclosed in Note 4 - Information about Receivables, Revenues and Services relates to distribution and servicing obligations that were satisfied during prior periods.

We also recognize the corresponding costs paid to the third-party financial intermediaries that distribute these funds' share classes within the distribution and servicing costs line of the consolidated statements of income. The fee revenue that we recognize from the funds and the expense that we recognize for the fees paid to third-party intermediaries are equal in amount and, therefore, do not impact our net operating income.

Capital allocation-based income

Beginning in 2022, we will record income earned from investments in affiliated private investment funds with capital allocation-based arrangements that are accounted for under ASC 323 based on the proportionate share of the income or loss of the fund assuming the fund was liquidated as of each reporting date pursuant to each investment fund's governing agreements. Accordingly, this income, also known as carried interest, is accounted for outside of the scope of ASC 606.

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Advertising

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

Stock-based compensation

We maintain three stockholder-approved employee long-term incentive plans (2020 Long-Term Incentive Plan, 2012 Long-Term Incentive Plan, and 2004 Stock Incentive Plan, collectively the LTI Plans) and two stockholder-approved non-employee director plans (2017 Non-Employee Director Equity Plan and 2007 Non-Employee Director Equity Plan, collectively the Director Plans). We believe that our stock-based compensation programs align the interests of our employees and directors with those of our common stockholders. As of December 31, 2021, a total of 11,584,645 shares were available for future grant under the 2020 Long-Term Incentive Plan and the 2017 Non-Employee Director Equity Plan (2017 Plan).

Under our LTI Plans, we have issued restricted shares and restricted stock units to employees that settle in shares of our common stock after vesting. Vesting of these awards is based on the individual continuing to render service over an average 5.0 year graded schedule. All restricted stockholders and restricted stock unit holders receive non-forfeitable cash dividends and cash dividend equivalents, respectively, on our dividend payable date. We are also authorized to grant qualified incentive and nonqualified fixed stock options with a maximum term of 10 years. We have not granted options to employees since 2015.

We grant performance-based restricted stock units to certain executive officers in which the number of restricted stock units ultimately retained is determined based on achievement of certain performance thresholds. The number of restricted stock units retained is also subject to similar time-based vesting requirements as the other restricted stock units described above. Cash dividend equivalents are accrued and paid to the holders of performance-based restricted stock units only after the performance period has lapsed and the performance thresholds have been met.

Under the Director Plans, we may grant options with a maximum term of 10 years, restricted shares, and restricted stock units to non-employee directors. Under the 2017 Plan, awards generally vest over one year and, in the case of restricted stock units, are settled upon the non-employee directors’ departure from the Board. For restricted shares, cash dividends are accrued and paid only after the award vests. Restricted stock unit holders receive dividend equivalents in the form of unvested stock units that vest over the same period as the underlying award. We have not granted options to non-employee directors since 2016.

We recognize the grant-date fair value of these awards as compensation expense ratably over the awards' requisite service period. Compensation expense recognized for performance-based restricted units includes an estimate regarding the probability of the performance thresholds being met. We account for forfeitures as they occur. Both time-based and performance-based restricted stock units are valued on the grant-date using the closing market price of our common stock.

Earnings per share

We compute our basic and diluted earnings per share under the two-class method, which considers our outstanding restricted shares and stock units, on which we pay non-forfeitable dividends as if they were a separate class of stock.

Comprehensive income

The components of comprehensive income are presented in a separate statement following our consolidated statements of income and include net income and the change in our currency translation adjustments. The currency translation adjustments result from translating our proportionate share of the financial statements of our equity method investment in UTI, and certain consolidated T. Rowe Price investment products into U.S. dollars. Assets and liabilities are translated into U.S. dollars using year-end exchange rates, and revenues and expenses are translated using weighted-average exchange rates for the period.

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

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

We reclassify income tax effects relating to currency translation adjustments to tax expense when there is a reduction in our ownership interest in the related investment. The amount of the reclassification depends on the investment’s accounting treatment before and after the change in ownership percentage.

NOTE 2 - ACQUISITION.

As discussed in Note 1, on December 29, 2021, T. Rowe Price Group, Inc. and certain wholly owned subsidiaries completed the acquisition of Oak Hill Advisors, L.P., a leading alternative credit manager, and other entities that have common ownership (collectively, "OHA").

The upfront purchase consideration transferred included cash consideration of $2,487.4 million, and 4.4 million shares of common stock valued at $881.5 million. The upfront purchase consideration included the retirement of $217.1 million of OHA debt. The consideration transferred is subject to customary working capital and escrow settlements in the post-combination period. The equity consideration transferred is restricted from sale for one year. In addition, contingent consideration in the amount of up to $900.0 million in cash may be due as part of an earnout payment starting in 2025 and ending in 2027, upon satisfying or exceeding certain defined revenue targets. These defined revenue targets are evaluated on a cumulative basis beginning at the end of 2024, with the ability to extend two additional years if the defined revenue targets are not achieved. The earnout amount will be subject to a proportional reduction if OHA's actual revenue at the end of the earnout period does not meet the defined revenue targets and could result in no earnout payout if OHA's actual revenue falls below 75% of the defined revenue target. About 22% of the earnout is conditioned upon continued service with T. Rowe Price and is excluded from the purchase consideration transferred as further discussed in Compensation Arrangements below. A Monte Carlo simulation was used to determine the fair value of the earnout. The portion of the earnout which is not conditioned upon continued service with T. Rowe Price had a fair value of $306.3 million and is recorded as a contingent consideration liability in our 2021 consolidated balance sheet.

The acquisition met the requirements to be considered a business combination under ASC 805 - Business Combinations and was accounted for using the acquisition method of accounting. Accordingly, the purchase price consideration was allocated to the assets acquired, including separately identified intangibles, and liabilities assumed based on their estimated fair values as of the acquisition date. Any excess of the purchase price over the fair value of the identifiable assets and liabilities is recorded as goodwill. Approximately $1.2 billion of the goodwill generated by the acquisition is deductible in future periods for U.S. federal income tax purposes. The remaining goodwill is not deductible for tax purposes. The non-deductible goodwill is part of a tax basis difference associated with our investment in OHA, and, as permitted by accounting guidance, we have adopted an accounting policy to not record a related deferred tax liability.

In addition to the upfront and contingent consideration, we also assumed debt of $113.5 million and identified non-controlling interests in acquired consolidated entities of $248.7 million. See below for a summary of the total purchase consideration transferred at closing and the total purchase consideration allocated.

(in millions)
Cash consideration						$	2,487.4
Contingent consideration						306.3
Equity consideration						881.5
Debt assumed						113.5
Non-controlling interests in consolidated entities						248.7
Total purchase consideration at closing						4,037.4
Less: cash payment treated as future compensation expense(1)						(283.2)
Total purchase consideration transferred						$	3,754.2

(1) See discussion in Compensation Arrangement section below. The amount is included within “Other Assets” on our consolidated balance sheet.

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The purchase price allocation is preliminary and subject to change during the measurement period, which is not to exceed one year from the acquisition date. The following table sets forth the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition:

(in millions)						Acquisition date fair value
Cash and cash equivalents						$	22.1
Accounts receivable and accrued revenue						122.2
Investments						891.0
Property, equipment and software, net						22.4
Operating lease asset						101.5
Intangible assets						913.4
Goodwill						2,027.5
Other assets						27.2
Total assets						4,127.3
Accounts payable and accrued expenses						$	133.3
Operating lease liability						114.1
Deferred tax liabilities, included in other assets in the consolidated balance sheet						125.7
Total liabilities assumed						373.1
Total purchase consideration						$	3,754.2

The fair values of the acquired assets and liabilities assumed were determined using level 3 inputs. The fair value of the intangible assets and certain investments in affiliated private investment funds where we earn a carried interest were determined using net present value of estimated future cash flows. The acquired book values of the remaining assets and liabilities approximated their fair values.

As part of the acquisition, T. Rowe Price Group, Inc. incurred approximately $31.9 million of acquisition-related costs that are included in general, administrative and other expenses in our 2021 consolidated statement of income.

GOODWILL AND INTANGIBLE ASSETS

Goodwill is comprised of future benefits for T. Rowe Price from the OHA acquisition, which do not qualify as separately recognized intangible assets. With the completion of the acquisition of OHA in December 2021, we are currently evaluating the impact that OHA will have on our segment reporting and goodwill impairment analysis.

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

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

INVESTMENTS

As part of the OHA acquisition, investments in affiliated private investment funds have been recorded at fair value of $761.1 million as of the acquisition date. The difference of $375.0 million between the carrying value of these investments on OHA’s books and their fair value represent the basis difference, of which $306.5 million will be amortized on a straight-line basis over the funds’ estimated weighted average remaining life of 5.9 years. This amortization will be included in “Net revenues” in the consolidated statements of income in future periods. Since T. Rowe Price acquired the majority, but not 100% of the equity interest in these carried interest entities, non-controlling interests have been recorded in permanent stockholders' equity at a fair value of $248.7 million as of the acquisition date. The fair value of these non-controlling interests include a basis difference of $154.3 million, of which $129.1 million is attributable to funds with a definite life and will be amortized on a straight-line basis over the funds’ estimated weighted average remaining life of 5.9 years. The non-controlling interests are held by employees that participate in the management of the investments in affiliated private investment funds and therefore profit and

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

COMPENSATION ARRANGEMENTS

In connection with the OHA acquisition, a portion of the upfront purchase consideration and future payments to sellers or employees related to other compensation arrangements are conditioned upon continued service or a future performance period. These arrangements are treated as post-combination compensation expense recognized over a period of three to five years, and had an aggregate fair value of $459.9 million as of the acquisition closing date. These arrangements include an agreement among certain sellers whereby $283.2 million of their upfront purchase consideration would be forfeited and redistributed among the other sellers who are party to the agreement if employment with T. Rowe Price or an affiliate was voluntarily terminated prior to the fifth anniversary of the acquisition date. Additionally, these arrangements include about 22% of the total earnout with a fair value of $88.2 million as of December 31, 2021, and $58.3 million in retention bonuses that will be paid to certain employees of OHA following the completion of a service period. The aggregate fair value of $459.9 million also includes an agreement, referred to as the Value Creation Agreement, 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. The fair value of the earnout and Value Creation Agreement will be remeasured each reporting period and recognized over the related service periods. Due to the timing of the OHA acquisition, no compensation expense related to these arrangements is included in our consolidated statements of income for the year ended December 31, 2021.

CASH FLOW INFORMATION

For cash flow reporting purposes, there were non-cash financing activities of $881.5 million for the issuance of T. Rowe Price Group, Inc. common stock as part of the purchase consideration and non-cash investing activities of $306.3 million related to the contingent consideration for the earnout.

PRO FORMA SUMMARY

The following unaudited pro forma summary presents combined results of operations of T. Rowe Price Group, Inc. as if the OHA acquisition had occurred on January 1, 2020. The pro forma adjustments include acquisition-related costs and adjustments to intangible amortization expense. These pro forma results are not indicative of results of operations that would have been achieved had the acquisition occurred on January 1, 2020, nor are they indicative of future results of operations of the combined entity.

			Pro forma years ended (unaudited)
(in millions)			12/31/2021			12/31/2020
Revenue			$	8,162		$	6,479
Net income			$	3,016		$	2,241

NOTE 3 – CASH EQUIVALENTS.

Cash equivalent investments in the T. Rowe Price money market mutual funds aggregate to $1,183.9 million at December 31, 2021, and $1,931.1 million at December 31, 2020. Dividends earned on these investments totaled $0.3 million in 2021, $4.2 million in 2020, and $33.3 million in 2019.

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NOTE 4 – INFORMATION ABOUT RECEIVABLES, REVENUES, AND SERVICES.

Revenues earned during the years ended December 31, 2021, 2020 and 2019, under agreements with clients include:

			2021
									Administrative, distribution, and servicing fees
(in millions)			Investment advisory fees						Administrative fees						Distribution and servicing fees						Net revenues
U.S. mutual funds			$	4,388.9					$	333.4					$	120.3					$	4,842.6
Subadvised funds, separate accounts, collective investment trusts, and other investment products			2,709.2						—						—						2,709.2
Other clients			—						120.1						—						120.1
			$	7,098.1					$	453.5					$	120.3					$	7,671.9
			2020
									Administrative, distribution, and servicing fees
(in millions)			Investment advisory fees						Administrative fees						Distribution and servicing fees						Net revenues
U.S. mutual funds			$	3,639.9					$	291.3					$	111.3					$	4,042.5
Subadvised funds, separate accounts, collective investment trusts, and other investment products			2,053.2						—						—						2,053.2
Other clients			—						111.0						—						111.0
			$	5,693.1					$	402.3					$	111.3					$	6,206.7
			2019
									Administrative, distribution, and servicing fees
(in millions)			Investment Advisory Fees						Administrative Fees						Distribution and servicing fees						Net Revenues
U.S. mutual funds			$	3,452.5					$	281.8					$	120.0					$	3,854.3
Subadvised funds, separate accounts, collective investment trusts, and other investment products			1,660.0						—						—						1,660.0
Other clients			—						103.6						—						103.6
			$	5,112.5					$	385.4					$	120.0					$	5,617.9

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

(in millions)			2021						2020						2019
U.S. mutual funds
Equity			$	3,118.5					$	2,440.4					$	2,219.1
Fixed income, including money market			245.2						266.5						280.1
Multi-asset			1,025.2						933.0						953.3
			4,388.9						3,639.9						3,452.5
Subadvised funds, separate accounts, collective investment trusts, and other investment products
Equity and blended assets			1,781.4						1,326.3						1,033.4
Fixed income, including money market			164.6						149.3						153.7
Multi-asset			763.2						577.6						472.9
			2,709.2						2,053.2						1,660.0
Total			$	7,098.1					$	5,693.1					$	5,112.5

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The following table summarizes the investment portfolios and assets under management on which we earned investment advisory fees. The assets under management as of December 31, 2021, in the table below, excludes fee-basis assets under management of $46.9 billion acquired as part of the OHA acquisition.

(in billions)			Average during																		As of December 31,
			2021						2020						2019						2021						2020
U.S. mutual funds
Equity			$	540.4					$	417.0					$	376.3					$	553.9					$	498.6
Fixed income, including money market			86.4						76.8						72.0						85.3						79.4
Multi-Asset			229.8						193.9						192.1						232.2						216.6
			856.6						687.7						640.4						871.4						794.6
Subadvised funds, separate accounts, collective investment trusts, and other investment products
Equity			431.6						321.3						257.3						438.8						397.2
Fixed income, including money market			91.3						82.1						79.5						85.2						89.3
Multi-Asset			219.8						156.8						132.1						245.5						189.4
			742.7						560.2						468.9						769.5						675.9
Total			$	1,599.3					$	1,247.9					$	1,109.3					$	1,640.9					$	1,470.5

Investors that we serve are primarily domiciled in the U.S.; investment advisory clients outside the U.S. account for about 9.9% and 9.3% of our assets under management at December 31, 2021 and 2020, respectively. The percentage at December 31, 2021 reflects the assets under management from OHA's clients outside the United States.

Total net revenues earned from T. Rowe Price investment products totaled $6,259.3 million in 2021, $5,044.3 million in 2020, and $4,626.3 million in 2019. Accounts receivable from these products aggregate to $577.9 million at December 31, 2021 and $523.4 million at December 31, 2020.

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NOTE 5 – INVESTMENTS.

The carrying values of investments that are not part of the consolidated T. Rowe Price investment products at December 31 are as follows:

(in millions)			2021						2020
Investments held at fair value
T. Rowe Price investment products
Discretionary investments			$	518.7					$	1,647.7
Seed capital			264.8						169.5
Supplemental savings plan liability economic hedges			881.5						768.1
Investment partnerships and other investments			108.9						95.1
Investments in affiliated collateralized loan obligations			10.8						—
Equity method investments
T. Rowe Price investment products
Discretionary investments			—						242.9
Seed capital			141.7						178.6
Investment in UTI Asset Management Company Limited (India)			165.4						145.5
Investments in affiliated private investment funds - carried interest			609.8						—
Investments in affiliated private investment funds - seed/co-investment			151.3						—
Other investment partnerships and investments			2.5						2.4
Held to maturity
Investments in affiliated collateralized loan obligations(1)			119.1						—
U.S. Treasury note			1.0						1.0
Total			$	2,975.5					$	3,250.8

(1) These investments were acquired as part of the OHA acquisition. As of December 31, 2021, these investments are recorded at their acquisition date fair value but will be accounted for as held-to-maturity going forward.

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

During 2021, we recognized $63.6 million of net unrealized gains on investments held at fair value that were still held at December 31, 2021. For 2020, we recognized $142.7 million of net unrealized gains on investments held at fair value that were still held at December 31, 2020. For 2019, we recognized $105.4 million of net unrealized gains on investments held at fair value that were still held at December 31, 2019.

Dividends, including capital gain distributions, earned on the T. Rowe Price investment products held at fair value, totaled $90.2 million in 2021, $50.8 million in 2020, and $50.6 million in 2019.

During each of the last three years, certain T. Rowe Price investment products in which we provided initial seed capital at the time of formation were deconsolidated, as we no longer had a controlling interest. Depending on our ownership interest, we are now reporting our residual interests in these T. Rowe Price investment products as either an equity method investment or an investment held at fair value. Additionally, during 2020 and 2019, certain T. Rowe Price investment products that were being accounted for as equity method investments were consolidated, as we regained a controlling interest. The net impact of these changes on our consolidated balance sheets and statements of income as of the dates the portfolios were deconsolidated or reconsolidated is detailed below.

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(in millions)			2021						2020						2019
Net decrease in assets of consolidated T. Rowe Price investment products			$	(753.0)					$	(546.1)					$	(380.5)
Net decrease in liabilities of consolidated T. Rowe Price investment products			$	(17.6)					$	(10.5)					$	(15.0)
Net decrease in redeemable non-controlling interests			$	(501.1)					$	(308.1)					$	(267.6)
Gains recognized upon deconsolidation			$	2.4					$	.7					$	.1

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

In October 2020, UTI Asset Management Company Limited (India), one of our equity method investments, held an initial public offering in India. As part of the offering, we sold a portion of our 26% interest and recorded a net gain on the sale of approximately $2.8 million in the fourth quarter of 2020. Subsequent to the sale, we have an ownership interest of 23% in UTI Asset Management Company Limited (India).

INVESTMENTS IN AFFILIATED PRIVATE INVESTMENT FUNDS.

We acquired investments in certain OHA affiliated private investment funds that are recorded at their acquisition fair value of $761.1 million as of December 31, 2021 and reported in investments in our 2021 consolidated balance sheet. For the carried interest investments, we will recognize an allocable share of net profits as determined by the underlying limited partnership agreements in net revenues in future consolidated statements of income. For seed/ co-investments, we will recognize income from these investments in non-operating income in future consolidated statements of income.

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

As part of the OHA acquisition, we acquired long-term investments in collateralized loan obligations ("CLOs") and assumed debt associated with these investments. We recorded these investments at their acquisition date fair values. The European CLOs, which were valued at $129.9 million at December 31, 2021, invest in 5% vertical strips in each class of rated notes and subordinated notes. Certain investments in the debt tranches of the CLOs will be subsequently measured at amortized cost as investments held to maturity and included in investments in our consolidated balance sheets. The subordinated note tranches of these investments are accounted for as equity method investments and our allocable share of income will be included in non-operating income (loss) in the consolidated statements of income beginning in 2022. Certain of the investments in the debt tranches of the CLOs have been pledged as collateral against the repurchase agreements.

The debt assumed was valued at $113.5 million at December 31, 2021, and is reported in accounts payable and accrued expenses of the consolidated balance sheet. The debt assumed includes outstanding repurchase agreements of €66.7 million (equivalent to $75.9 million at the December 31, 2021 EUR spot rate) that are collateralized by our CLO investment. Interest income on the underlying investments accrues quarterly and those amounts are retained by the counterparty. Interest expense accrues quarterly, which is equal to the interest income retained by the counterparty, plus 0.5% per annum on the notes of the underlying pledged investments. We still hold the legal rights and obligations associated with the underlying assets and therefore continue to satisfy the United Kingdom risk retention requirements.

The debt we assumed also includes outstanding note facilities of €32.4 million (equivalent to $36.9 million at the December 31, 2021 EUR spot rate) that were entered into in connection with the financing of certain CLO investments and are collateralized by first priority security interests in the assets of the consolidated OHA entity that is party to the notes. These notes bear interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.70% to 1.95% as of December 31, 2021. The notes mature on various dates through 2032 or if the investment is paid back in full or cancelled, whichever is sooner. Payments are required on the debt when payments are received on the investments. Each deed contains covenants which, if not met, may cause the termination of the note facility and declare principal and interest immediately due and payable. The consolidated entity that is the party to the notes was in compliance with all such covenants at December 31, 2021.

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VARIABLE INTEREST ENTITIES.

Our investments at December 31, 2021 and 2020, 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)			2021						2020
Investment carrying values			$	182.2					$	144.7
Unfunded capital commitments			8.0						12.3
Receivable for investment advisory and administrative fees			22.9						13.8
			$	213.1					$	170.8

The unfunded capital commitments, totaling $8.0 million at December 31, 2021, and $12.3 million at December 31, 2020, relate primarily to investment partnerships in which we have an existing investment. In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

In connection with the OHA acquisition, we acquired carried interest entities that hold general partner interests in affiliated private investment funds that are VIEs, though these carried interest entities were determined to not be the primary beneficiary. Our maximum risk of loss related to these affiliated investment funds are the investment carrying value of $761.1 million, the unfunded capital commitments of $86.2 million, and their receivable for investment advisory and performance-based incentive fees of $122.2 million.

NOTE 6 – FAIR VALUE MEASUREMENTS.

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

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 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 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 that are recognized in our consolidated balance sheets at December 31 using fair value measurements determined based on the differing levels of inputs. This table excludes investments held by consolidated T. Rowe Price investment products which are presented separately on our consolidated balance sheets and are detailed in Note 7.

			2021												2020
(in millions)			Level 1						Level 2						Level 1						Level 2
T. Rowe Price investment products
Cash equivalents held in money market funds			$	1,183.9					$	—					$	1,931.1					$	—
Discretionary investments			518.7												1,647.7						—
Seed capital			241.4						23.4						156.6						12.9
Supplemental savings plan liability economic hedges			881.5						—						768.1						—
Other investments			.7						.1						.5						.6
Total			$	2,826.2					$	23.5					$	4,504.0					$	13.5

At December 31, 2021, the reported investments held at fair value in Note 5 include $108.1 million of investments that are carried at fair value using the NAV per share as a practical expedient. These investments are not required to be included in the fair value hierarchy levels above.

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As part of the acquisition of OHA, we recorded the assets acquired and liabilities assumed at the acquisition date fair value. See Note 2 for more information on the acquisition and the fair value of the assets acquired and liabilities assumed.

NOTE 7 – CONSOLIDATED T. ROWE PRICE INVESTMENT PRODUCTS.

The T. Rowe Price investment products that we consolidate in our consolidated financial statements are generally those products we provided initial seed capital at the time of their formation and have a controlling interest. Our U.S. mutual funds are considered voting interest entities, while those regulated outside the U.S. are considered variable interest entities.

The following table details the net assets of the consolidated T. Rowe Price investment products at December 31:

			2021																		2020
(in millions)			VOE						VIE						Total						VOE						VIE						Total
Cash and cash equivalents(1)			$	7.3					$	93.8					$	101.1					$	7.1					$	97.7					$	104.8
Investments(2)			188.9						1,645.0						1,833.9						188.2						2,372.7						2,560.9
Other assets			5.1						22.7						27.8						2.8						27.0						29.8
Total assets			201.3						1,761.5						1,962.8						198.1						2,497.4						2,695.5
Liabilities			15.3						36.2						51.5						10.0						47.7						57.7
Net assets			$	186.0					$	1,725.3					$	1,911.3					$	188.1					$	2,449.7					$	2,637.8
Attributable to T. Rowe Price Group			$	125.3					$	803.7					$	929.0					$	130.7					$	945.4					$	1,076.1
Attributable to redeemable non-controlling interests			60.7						921.6						982.3						57.4						1,504.3						1,561.7
			$	186.0					$	1,725.3					$	1,911.3					$	188.1					$	2,449.7					$	2,637.8

(1) Cash and cash equivalents includes $6.5 million and $7.0 million at December 31, 2021 and 2020, respectively, of investments in

T. Rowe Price money market mutual funds.

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

Although we can redeem our net interest in the T. Rowe Price investment products at any time, we cannot directly access or sell the assets held by these products to obtain cash for general operations. 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 investments held by these products in our consolidated statements of income and disclose the portion attributable to third-party investors as net income attributable to redeemable non-controlling interests.

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

			2021																		2020																		2019
(in millions)			VOE						VIE						Total						VOE						VIE						Total						VOE						VIE						Total
Operating expenses reflected in net operating income			$	(.6)					$	(11.6)					$	(12.2)					$	(1.6)					$	(14.8)					$	(16.4)					$	(2.2)					$	(12.5)					$	(14.7)
Net gains (losses) reflected in non-operating income			18.0						56.7						74.7						13.2						238.5						251.7						31.0						241.9						272.9
Impact on income before taxes			$	17.4					$	45.1					$	62.5					$	11.6					$	223.7					$	235.3					$	28.8					$	229.4					$	258.2
Net income (loss) attributable to T. Rowe Price Group			$	11.4					$	35.5					$	46.9					$	11.6					$	73.1					$	84.7					$	21.3					$	119.3					$	140.6
Net income (loss) attributable to redeemable non-controlling interests			6.0						9.6						15.6						—						150.6						150.6						7.5						110.1						117.6
			$	17.4					$	45.1					$	62.5					$	11.6					$	223.7					$	235.3					$	28.8					$	229.4					$	258.2

The operating expenses of these consolidated products are reflected in other operating expenses. In preparing our consolidated financial statements, we eliminated operating expenses of $5.5 million in 2021, $9.9 million in 2020, and $6.8 million in 2019, against the investment advisory and administrative fees earned from these products. The net gains (losses) reflected in non-operating income includes dividend and interest income and realized and unrealized gains and losses on the underlying securities held by the consolidated T. Rowe Price investment products.

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

			2021																		2020																		2019
(in millions)			VOE						VIE						Total						VOE						VIE						Total						VOE						VIE						Total
Net cash provided by operating activities			$	(135.3)					$	160.8					$	25.5					$	(155.4)					$	(401.3)					$	(556.7)					$	(7.2)					$	(663.6)					$	(670.8)
Net cash provided by (used in) investing activities			(11.9)						(5.0)						(16.9)						(23.4)						(30.5)						(53.9)						(7.1)						(11.3)						(18.4)
Net cash used in financing activities			147.4						(162.3)						(14.9)						176.0						461.0						637.0						5.7						692.4						698.1
FX impact on cash			—						2.6						2.6						—						1.9						1.9						—						(2.5)						(2.5)
Net change in cash and cash equivalents during period			.2						(3.9)						(3.7)						(2.8)						31.1						28.3						(8.6)						15.0						6.4
Cash and cash equivalents at beginning of year			7.1						97.7						104.8						9.9						66.6						76.5						18.5						51.6						70.1
Cash and cash equivalents at end of year			$	7.3					$	93.8					$	101.1					$	7.1					$	97.7					$	104.8					$	9.9					$	66.6					$	76.5

The net cash provided by financing activities includes $51.9 million in 2021, $79.5 million in 2020 and $174.4 million in 2019, of net subscriptions we made into the consolidated T. Rowe Price investment products, net of dividends received. These cash flows were eliminated in consolidation.

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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 as of December 31.

			2021												2020
(in millions)			Level 1						Level 2						Level 1						Level 2
Assets
Cash equivalents			$	6.5					$	.7					$	7.0					$	—
Equity securities			247.8						340.3						308.0						708.0
Fixed income securities			—						1,187.4						—						1,411.3
Other investments			5.7						52.7						2.6						131.0
			$	260.0					$	1,581.1					$	317.6					$	2,250.3
Liabilities			$	(.7)					$	(9.7)					$	(.4)					$	(18.8)

NOTE 8 – LEASES.

All of our leases are operating leases and primarily consist of real estate leases for corporate offices, data centers, and other facilities. In December 2020, we announced that we signed a letter of intent for a long-term lease for our global headquarters in a different downtown location in Baltimore, Maryland. We plan to relocate our operations from our East Pratt Street offices in 2024.

As of December 31, 2021, the weighted-average remaining lease term on our leases is approximately 9.1 years and the weighted-average discount rate used to measure the lease liabilities is 2.4%.

Operating lease expense was $32.5 million in 2021, $32.1 million in 2020, and $29.0 million in 2019. Charges related to our operating leases that are variable, including variable common area maintenance charges and other management-related costs, and not included in the measurement of the lease liabilities, were $9.6 million in 2021. We made lease payments of $36.6 million during 2021. Due to the timing of the closing of the acquisition of OHA on December 29, 2021, we have excluded operating lease expense and payments for 2021 from the disclosures above.

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Our future undiscounted cash flows related to our operating leases, including operating leases associated with OHA, and the reconciliation to the operating lease liability as of December 31, 2021, are as follows:

(in millions)			2021
2021			$	41.7
2022			41.1
2023			50.6
2024			22.5
2025			11.7
Thereafter			106.5
Total future undiscounted cash flows			274.1
Less: imputed interest to be recognized in lease expense			(24.9)
Operating lease liabilities, as reported			$	249.2

NOTE 9 – PROPERTY, EQUIPMENT AND SOFTWARE.

Property, equipment and software at December 31 consists of:

(in millions)			2021						2020
Computer and communications software and equipment			$	1,293.5					$	1,113.1
Buildings and improvements			472.0						457.5
Leasehold improvements			196.4						169.2
Furniture and other equipment			205.6						193.3
Land			25.7						37.2
			2,193.2						1,970.3
Less accumulated depreciation and amortization			1,457.0						1,274.9
Total			$	736.2					$	695.4

Compensation and related costs attributable to the development of computer software for internal use, totaling $137.6 million in 2021, $125.9 million in 2020, and $95.5 million in 2019, have been capitalized.

NOTE 10 - GOODWILL AND INTANGIBLE ASSETS.

Goodwill and intangible assets consist of the following:

(in millions)			As of December 31,
			2021						2020
Goodwill			$	2,693.2					$	665.7
Indefinite-lived intangible assets - trade name			134.7						—
Indefinite-lived intangible assets - investment advisory agreements			164.8						—
Definite-lived intangible assets - investment advisory agreements			613.9						—
Total			$	3,606.6					$	665.7

The estimated weighted average life for the definite-lived intangible assets is 6.1 years. Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for 2022 through 2026 is $108.5 million for 2022, $108.1 million for 2023, $105.7 million for 2024, $105.0 million for 2025 and $87.7 million for 2026. Due to the timing of the acquisition of OHA, there was no amortization expense for acquisition intangible assets included in the consolidated statements of income for the year ended December 31, 2021.

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Goodwill activity during the years ended December 31, 2021 and 2020, was as follows:

(in millions)			2021						2020
Balance, beginning of the year			$	665.7					$	665.7
Acquisition of OHA			2,027.5						—
Balance, end of year			$	2,693.2					$	665.7

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

NOTE 11 – INCOME TAXES.

The provision for income taxes consists of:

(in millions)			2021						2020						2019
Current income taxes
U.S. federal			$	745.0					$	547.1					$	490.9
State and local			179.3						135.2						135.9
Foreign			28.1						22.9						18.3
Deferred income taxes (benefits)			(56.3)						13.7						33.3
Total			$	896.1					$	718.9					$	678.4

Deferred income taxes and benefits arise from temporary differences between taxable income for financial statement and income tax return purposes. The deferred income taxes (benefits) recognized as part of our provision for income taxes is related to:

(in millions)			2021						2020						2019
Property and equipment			$	11.8					$	15.6					$	3.0
Asset impairments			2.0						2.9						(2.4)
Stock-based compensation			(8.1)						1.8						4.5
Accrued compensation			(1.6)						(2.2)						1.3
Supplemental savings plan liability			(29.3)						(43.3)						(33.6)
Unrealized holding gains recognized in non-operating income			(26.1)						46.8						63.0
Other			(5.0)						(7.9)						(2.5)
Total deferred income taxes (benefits)			$	(56.3)					$	13.7					$	33.3

The following table reconciles the statutory federal income tax rate to our effective income tax rate.

			2021						2020						2019
Statutory U.S. federal income tax rate			21.0		%				21.0		%				21.0		%
State income taxes for current year, net of federal income tax benefits(1)			3.7						3.8						4.3
Net income attributable to redeemable non-controlling interests(2)			(.1)						(1.2)						(1.0)
Net excess tax benefits from stock-based compensation plans activity			(2.1)						(1.9)						(1.5)
Other items			(.1)						.5						.4
Effective income tax rate			22.4		%				22.2		%				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.

(2) Net income attributable to redeemable non-controlling interests represents the portion of earnings held in the firm's consolidated investment products, which are not taxable to the firm despite being included in pre-tax income.

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The net deferred tax assets recognized in our consolidated balance sheets in other assets as of December 31 relate to the following:

(in millions)			2021						2020
Deferred tax assets
Stock-based compensation			$	87.4					$	79.3
Asset impairments			5.4						7.4
Operating lease liabilities			24.3						34.9
Accrued compensation			9.1						7.5
Supplemental savings plan			190.2						160.9
Currency translation adjustment			2.0						.2
Other			24.6						13.5
			343.0						303.7
Deferred tax liabilities
Acquisition-related retention liability			(68.4)						—
Acquired Investments			(59.2)						—
Property and equipment			(76.7)						(64.9)
Operating lease assets			(24.3)						(34.9)
Net unrealized holding gains recognized in income			(104.8)						(130.9)
Other			(16.6)						(12.4)
			(350.0)						(243.1)
Net deferred tax (liability) asset			$	(7.0)					$	60.6

We intend to repatriate earnings of T. Rowe Price foreign subsidiaries to the U.S. in an amount not to exceed these subsidiaries' previously taxed earnings and profits ("PTEP"), which are estimated to be approximately $864 million at December 31, 2021. These earnings as well as our pro rata share of the earnings of foreign corporations in which T. Rowe Price owns 10% or more were subject to the repatriation tax enacted with the U.S. tax reform and are treated as PTEP. As such, we did not record a deferred tax liability with respect to the U.S. federal or foreign withholding taxes as the PTEP should not be taxed in these jurisdictions. We did recognize a state deferred tax liability of $0.8 million for the intended repatriation as states have varying rules on taxation of these amounts.

Other assets include tax refund receivables of $11.9 million at December 31, 2021, and $25.0 million at December 31, 2020.

Cash outflows from operating activities include net income taxes paid of $948.9 million in 2021, $643.0 million in 2020, and $677.3 million in 2019.

Additional income tax benefit arising from stock-based compensation plans activity totaling $82.7 million in 2021, $61.9 million in 2020, and $42.7 million in 2019 reduced the amount of income taxes that would have otherwise been payable. These income tax benefits were recognized in the income tax provision.

The following table summarizes the changes in our unrecognized tax benefits.

(in millions)			2021						2020						2019
Balance at beginning of year			$	26.7					$	23.9					$	16.1
Changes in tax positions related to
Current year			8.9						7.7						8.1
Prior years			(1.0)						(2.6)						.5
Expired statute of limitations			(5.3)						(2.3)						(.8)
Balance at end of year			$	29.3					$	26.7					$	23.9

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If recognized, these tax benefits would affect our effective tax rate; however, we do not expect that unrecognized tax benefits for tax positions taken with respect to 2021 and prior years will significantly change in 2022. The U.S. has concluded examinations related to federal tax obligations through the year 2019. A net interest payable related to our unrecognized tax benefits of $1.6 million at December 31, 2021, and $1.9 million at December 31, 2020, are recognized in our consolidated balance sheets. Our accounting policy with respect to interest and penalties arising from income tax settlements is to recognize them as part of our provision for income taxes. Interest recognized as part of our provision for income taxes was not material.

NOTE 12 – STOCKHOLDERS' EQUITY.

SPECIAL DIVIDEND.

On June 14, 2021, the Board of Directors declared a special cash dividend of $3.00 per common share, or $699.8 million, that was paid on July 7, 2021, to stockholders of record as of the close of business on June 25, 2021.

SHARE REPURCHASES.

The Board of Directors has authorized the future repurchase of up to 15,525,910 common shares as of December 31, 2021.

Accounts payable and accrued expenses includes liabilities of $2.5 million at December 31, 2020 for common stock repurchases that settled during the first week of January 2021.

RESTRICTED CAPITAL.

Our consolidated stockholders' equity at December 31, 2021, includes about $361 million that is restricted as to use by various regulations and agreements arising in the ordinary course of our business.

NOTE 13 – STOCK-BASED COMPENSATION.

SHARES AUTHORIZED FOR STOCK-BASED COMPENSATION PROGRAMS.

At December 31, 2021, a total of 20,226,619 shares of unissued common stock were authorized for issuance under our stock-based compensation plans. Additionally, a total of 1,320,803 shares are authorized for issuance under a plan whereby substantially all employees may acquire common stock through payroll deductions at prevailing market prices.

STOCK OPTIONS.

The following table summarizes the status of, and changes in, our stock options during 2021.

			Options						Weighted- average exercise price						Weighted-average remaining contractual term in years
Outstanding at December 31, 2020			4,379,663						$	71.67
Exercised			(1,533,084)						$	69.44
Outstanding at December 31, 2021			2,846,579						$	72.87					2.5
Exercisable at December 31, 2021			2,846,579						$	72.87					2.5

Compensation and related costs includes a charge for stock option-based compensation expense of $2.0 million in 2020 and $5.1 million in 2019. There was no stock option-based compensation expense in 2021.

The total intrinsic value of options exercised was $177.2 million in 2021, $198.3 million in 2020, and $170.9 million in 2019. At December 31, 2021, the aggregate intrinsic value of in-the-money options outstanding was $352.3 million, all outstanding options are exercisable.

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EFFECT OF SPECIAL CASH DIVIDEND.

As a result of the special cash dividend declared by the Board of Directors in June 2021, the anti-dilution provisions of our employee long-term incentive plans and non-employee director plans (collectively, the LTI plans) require an automatic adjustment to neutralize the effect of the special cash dividend. On the special cash dividend’s ex-dividend date (June 24, 2021), the number of shares authorized and the number of stock options outstanding and their exercise price were adjusted resulting in an increase of 50,607 stock options outstanding on the ex-dividend date, and no incremental compensation expense. In the table above, the number of options outstanding at December 31, 2020 was updated to reflect this adjustment.

RESTRICTED SHARES AND STOCK UNITS.

The following table summarizes the status of, and changes in, our nonvested restricted shares and restricted stock units during 2021.

			Restricted shares						Restricted stock units						Weighted- average fair value
Nonvested at December 31, 2020			7,412						6,367,059						$	116.51
Time-based grants			5,720						1,596,036						$	203.87
Performance-based grants			—						66,845						$	204.22
Vested (value at vest date was $426.6 million)			(7,412)						(2,154,853)						$	104.05
Nonvested dividend equivalents granted to non-employee directors			—						3,515						$	193.49
Forfeited			—						(176,737)						$	117.24
Nonvested at December 31, 2021			5,720						5,701,865						$	146.87

Nonvested at December 31, 2021 includes performance-based restricted stock units of 346,081. These nonvested performance-based restricted units include 132,686 units for which the performance period has lapsed, and the performance threshold has been met.

Compensation and related costs includes expenses for restricted shares and restricted stock units of $274.6 million in 2021, $244.1 million in 2020, and $201.5 million in 2019.

At December 31, 2021, non-employee directors held 93,530 vested stock units that will convert to common shares upon their separation from the Board.

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 December 31, 2021. Estimated future compensation expense will change to reflect future grants, changes in the probability of performance thresholds being met, and adjustments for actual forfeitures.

(in millions)
First quarter 2022			$	67.4
Second quarter 2022			64.6
Third quarter 2022			63.7
Fourth quarter 2022			54.9
Total 2022			250.6
2023 through 2027			232.6
Total			$	483.2

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NOTE 14 – EARNINGS PER SHARE CALCULATIONS.

The following table presents the reconciliation of net income attributable to T. Rowe Price Group to net income allocated to our common stockholders and the weighted-average shares that are used in calculating the basic and diluted earnings per share on our common stock. Weighted-average common shares outstanding assuming dilution reflect the potential dilution, determined using the treasury stock method, that could occur if outstanding stock options were exercised and non-participating stock awards vested.

(in millions)			2021						2020						2019
Net income attributable to T. Rowe Price Group			$	3,082.9					$	2,372.7					$	2,131.3
Less: net income allocated to outstanding restricted stock and stock unit holders			80.5						65.3						55.3
Net income allocated to common stockholders			$	3,002.4					$	2,307.4					$	2,076.0
Weighted-average common shares
Outstanding			226.6						228.8						235.4
Outstanding assuming dilution			228.8						231.2						238.6

For the past three years, no stock options have been excluded from the calculation of diluted earnings per common share as none of the options' inclusion would be anti-dilutive.

NOTE 15 – OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME.

The following table presents the impact of the components of other comprehensive income or loss on deferred tax benefits (income taxes).

(in millions)			2021						2020						2019
Net deferred tax benefits (income taxes) on:
Currency translation adjustments			$	2.8					$	(10.3)					$	.5
Reclassification adjustment recognized upon partial disposition of equity method investment			—						(1.7)						—
Reclassification adjustment recognized in the provision for income taxes upon deconsolidation of T. Rowe Price investment product			.6						.2						—
Total net deferred tax benefits			$	3.4					$	(11.8)					$	0.5

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The changes in each component of accumulated other comprehensive income (loss), including reclassification are presented below.

						Currency translation adjustments
(in millions)						Equity method investments						Consolidated T. Rowe Price investment products - variable interest entities						Total currency translation adjustments												Total
Balances at December 31, 2018						$	(48.8)					$	6.8					$	(42.0)											$	(42.0)
Other comprehensive income (loss) before reclassifications and income taxes						2.4						(3.8)						(1.4)												(1.4)
Reclassification adjustments recognized in non-operating income						—						(.1)						(.1)												(.1)
						2.4						(3.9)						(1.5)												(1.5)
Net deferred tax benefits (income taxes)						(.5)						1.0						.5												.5
Other comprehensive income (loss)						1.9						(2.9)						(1.0)												(1.0)
Balances at December 31, 2019						(46.9)						3.9						(43.0)												(43.0)
Other comprehensive income (loss) before reclassifications and income taxes						2.1						22.9						25.0												25.0
Reclassification adjustments recognized in non-operating income						7.5						(.7)						6.8												6.8
						9.6						22.2						31.8												31.8
Net deferred tax benefits (income taxes)						(6.3)						(5.5)						(11.8)												(11.8)
Other comprehensive income (loss)						3.3						16.7						20.0												20.0
Balances at December 31, 2020						(43.6)						20.6						(23.0)												(23.0)
Other comprehensive income before reclassifications and income taxes						7.0						(11.5)						(4.5)												(4.5)
Reclassification adjustments recognized in non-operating income						—						(2.4)						(2.4)												(2.4)
						7.0						(13.9)						(6.9)												(6.9)
Net deferred tax benefits (income taxes)						(.1)						3.5						3.4												3.4
Other comprehensive income (loss)						6.9						(10.4)						(3.5)												(3.5)
Balances at December 31, 2021						$	(36.7)					$	10.2					$	(26.5)											$	(26.5)

The other comprehensive income (loss) in the table above excludes $(26.2) million in 2021, $34.9 million in 2020, and $0.4 million in 2019 of other comprehensive income (loss) related to redeemable non-controlling interests held in our consolidated products.

NOTE 16 – COMMITMENTS AND CONTINGENCIES.

COMMITMENTS.

T. Rowe Price has committed $500 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 reached a settlement agreement, which was presented to the court for preliminary approval on January 7, 2022. The proposed settlement would not be material to T. Rowe Price Group, Inc.

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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 17 – OTHER DISCLOSURES.

RETIREMENT PLANS.

Compensation and related costs includes expense recognized for our defined contribution retirement plans of $124.2 million in 2021, $117.0 million in 2020, and $104.6 million in 2019.

SUPPLEMENTAL SAVINGS PLAN.

Through the 2020 plan year, the Supplemental Savings Plan provides certain senior officers the opportunity to defer receipt of up to 100% of their cash incentive compensation earned for a respective calendar year during which services are provided. The amounts deferred are adjusted in accordance with the hypothetical investments chosen by the officer from a list of mutual funds. Beginning with the plan's 2021 year, the maximum that certain senior officers can defer will be the lesser of 50% of their annual cash incentive earned or $2 million. Additionally, the officers can now defer amounts for a minimum of five years rather than the two years prior to the plan's 2021 year. Previous to the 2021 plan year, the officer could initially defer these amounts for a period of two to 15 years. Certain senior officers elected to defer $63.5 million in 2021, $105.8 million in 2020, and $107.5 million in 2019

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

T. Rowe Price Group, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of T. Rowe Price Group, Inc. and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2022, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

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

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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

As discussed in Note 1 to the consolidated financial statements, the Company recognizes fees for its investment advisory agreements based on a percentage of its assets under management (AUM). AUM data represents a significant input to the calculation of investment advisory fees. The Company recognized $4.4 billion in investment advisory fees related to T. Rowe Price U.S. mutual funds (Funds) during the year ended December 31, 2021.

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We identified the evaluation of the completeness and accuracy of AUM data for the Funds as a critical audit matter as AUM data is transmitted through multiple information technology (IT) systems used in the calculation of investment advisory fee revenue. Given the Company's use of multiple IT systems, the nature and extent of audit effort involved in performing procedures to evaluate the completeness and accuracy of AUM data required the use of IT professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and tested the operational effectiveness of certain internal controls over the Company’s revenue processes, including manual controls over the completeness and accuracy of AUM data. We involved IT professionals with specialized skills and knowledge, who assisted in the testing of general IT controls and the interface of data between multiple IT systems used to maintain AUM data. To assess the AUM data, we (1) compared AUM used in the calculation of a sample of investment advisory fees to the source IT systems, and (2) for a selection of Funds, compared AUM on select dates from the source IT system to the audited Fund financial statements.

Purchase price allocation for Oak Hill Advisors, L.P. and certain related entities

As discussed in Note 2 to the consolidated financial statements, the Company completed its acquisition of Oak Hill Advisors, L.P. on December 29, 2021. The Company accounted for this transaction as a business combination. The transaction resulted in management recording $778.7 million of investment advisory agreement intangibles and $609.8 million of equity method investments in affiliated private investment funds with capital allocation-based income arrangements (certain acquired assets). Fair values of these certain acquired assets at the transaction date are based on the net present value of estimated future cash flows attributable to those assets, which include assumptions as of the acquisition date about the discount rates and assets under management (AUM) data.

We have identified the evaluation of the purchase price allocation to these certain acquired assets as a critical audit matter. Subjective auditor judgement was required to determine the extent of audit evidence over the existence and valuation of AUM data. Additionally, specialized skills and knowledge were required to evaluate management’s discount rates used to estimate the fair value of these certain acquired assets.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s accounting for the acquisition, including controls over the existence and valuation of AUM data and the determination of the discount rates. We evaluated the existence and valuation of AUM data at the acquisition date by confirming certain underlying investment positions with third parties and independently pricing those securities. We also involved valuation professionals with specialized skills and knowledge to assist in evaluating the appropriateness of management’s assumptions about the discount rates by testing the inputs used by management.

/s/ KPMG LLP

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

Baltimore, Maryland

February 24, 2022

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