Item 8. Financial Statements.

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Item 8. Financial Statements.


			Page
Index to Financial Statements:
Consolidated Balance Sheets at December 31, 2023 and 2022			57
Consolidated Statements of Income for each of the years in the three-year period ended December 31, 2023			58
Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, 2023			59
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2023			60
Consolidated Statements of Stockholders' Equity for each of the years in the three-year period ended December 31, 2023			61
Notes to Consolidated Financial Statements			63
Report of Independent Registered Public Accounting Firm (KPMG LLP, Baltimore, MD, Auditor ID: 185)			88

Page 56

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	12/31/2023		12/31/2022
ASSETS
Cash and cash equivalents	$	2,066.6	$	1,755.6
Accounts receivable and accrued revenue	807.9		748.7
Investments	2,554.7		2,539.2
Assets of consolidated sponsored investment products ($1,204.4 million at December 31, 2023 and $1,375.6 million at December 31, 2022, related to variable interest entities)	1,959.3		1,603.4
Operating lease assets	241.1		279.4
Property, equipment and software, net	806.6		755.7
Intangible assets	507.3		629.8
Goodwill	2,642.8		2,642.8
Other assets	692.5		688.7
Total assets	$	12,278.8	$	11,643.3

LIABILITIES
Accounts payable and accrued expenses	$	409.5	$	406.7
Liabilities of consolidated sponsored investment products ($35.2 million at December 31, 2023 and $39.1 million at December 31, 2022, related to variable interest entities)	54.2		89.1
Operating lease liabilities	308.5		329.6
Accrued compensation and related costs	240.8		228.0
Supplemental savings plan liability	895.0		761.2
Contingent consideration liability	13.4		95.8

Income taxes payable	66.2		46.0

Total liabilities	1,987.6		1,956.4

Commitments and contingent liabilities

Redeemable non-controlling interests	594.1		656.7

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 223,938,000 shares at December 31, 2023 and 224,310,000 at December 31, 2022	44.8		44.9
Additional capital in excess of par value	431.7		437.9
Retained earnings	9,076.1		8,409.7
Accumulated other comprehensive loss	(47.5)		(53.0)
Total stockholders' equity attributable to T. Rowe Price Group, Inc.	9,505.1		8,839.5
Non-controlling interests in consolidated entities	192.0		190.7
Total permanent stockholders' equity	9,697.1		9,030.2
Total liabilities, redeemable non-controlling interests and permanent stockholders’ equity	$	12,278.8	$	11,643.3

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

Page 57

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per-share amounts)


	2023		2022		2021
Revenues
Investment advisory fees	$	5,747.7	$	5,969.1	$	7,098.1
Capital allocation-based income	161.9		(54.3)		—
Administrative, distribution, and servicing fees	550.9		573.6		573.8
Net revenues	6,460.5		6,488.4		7,671.9

Operating expenses
Compensation and related costs	2,673.5		2,320.8		2,383.0
Distribution and servicing costs	289.9		301.5		373.9
Advertising and promotion	114.2		97.3		100.2
Product and recordkeeping related costs	291.0		300.1		236.3
Technology, occupancy, and facility costs	632.6		560.5		484.9
General, administrative, and other	421.3		412.2		383.6
Change in fair value of contingent consideration	(82.4)		(161.2)		—
Acquisition-related amortization and impairment costs	134.2		283.5		—
Total operating expenses	4,474.3		4,114.7		3,961.9

Net operating income	1,986.2		2,373.7		3,710.0

Non-operating income (loss)
Net gains (losses) on investments	355.2		(204.7)		215.8
Net gains (losses) on consolidated investment products	164.6		(203.5)		74.7
Other losses	(15.7)		(17.3)		(5.9)
Total non-operating income (loss)	504.1		(425.5)		284.6

Income before income taxes	2,490.3		1,948.2		3,994.6
Provision for income taxes	654.6		498.6		896.1
Net income	1,835.7		1,449.6		3,098.5
Less: net income (loss) attributable to redeemable non-controlling interests	47.0		(108.3)		15.6
Net income attributable to T. Rowe Price Group	$	1,788.7	$	1,557.9	$	3,082.9

Earnings per share on common stock of T. Rowe Price Group
Basic	$	7.78	$	6.73	$	13.25
Diluted	$	7.76	$	6.70	$	13.12

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

Page 58

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	2023		2022		2021
Net income	$	1,835.7	$	1,449.6	$	3,098.5
Other comprehensive income (loss)
Currency translation adjustments:
Consolidated sponsored investment products—variable interest entities	21.7		(34.9)		(37.7)
Reclassification gains recognized in non-operating investment income upon deconsolidation of certain sponsored investment products	—		(3.0)		(2.4)
Total currency translation adjustments of consolidated sponsored investment products—variable interest entities	21.7		(37.9)		(40.1)
Equity method investments	(1.6)		(14.6)		7.0
Reclassification adjustment recognized upon partial disposition of equity method investment	—		—		—
Total equity method investments	(1.6)		(14.6)		7.0









Other comprehensive income (loss) before income taxes	20.1		(52.5)		(33.1)
Net deferred tax benefits (income taxes)	(1.9)		5.0		3.4
Total other comprehensive income (loss)	18.2		(47.5)		(29.7)
Total comprehensive income	1,853.9		1,402.1		3,068.8
Less: comprehensive income (loss) attributable to redeemable non-controlling interests	59.7		(129.1)		(10.6)
Comprehensive income attributable to T. Rowe Price Group	$	1,794.2	$	1,531.2	$	3,079.4

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

Page 59

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	2023		2022		2021
Cash flows from operating activities
Net income	$	1,835.7	$	1,449.6	$	3,098.5
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and impairment of property, equipment and software	254.8		225.7		204.8
Amortization and impairment of acquisition-related assets and retention arrangements	226.8		420.1		—
Fair value remeasurement of contingent consideration liability	(82.4)		(161.2)		—
Stock-based compensation expense	265.6		285.4		274.6


Net (gains) losses recognized on other investments	(460.8)		210.6		(122.5)
Net investments in sponsored investment products used to economically hedge supplemental savings plan liability	56.1		(18.8)		(85.7)
Net change in securities held by consolidated sponsored investment products	(1,070.3)		87.9		14.9


Other changes in assets and liabilities	193.6		(139.9)		67.4
Net cash provided by operating activities	1,219.1		2,359.4		3,452.0

Cash flows from investing activities
Purchases of sponsored investment products	(85.3)		(55.1)		(48.0)
Dispositions of sponsored investment products	616.6		263.6		1,625.8
Net cash of sponsored investment products on consolidation (deconsolidation)	(56.8)		(8.7)		(16.9)
Additions to property and equipment	(307.9)		(237.6)		(239.1)
Acquisition, net of cash acquired	—		—		(2,450.8)
Other investing activity	(38.4)		(3.7)		30.9
Net cash used in investing activities	128.2		(41.5)		(1,098.1)

Cash flows from financing activities
Repurchases of common stock	(254.4)		(849.8)		(1,138.5)
Common share issuances under stock-based compensation plans	(18.0)		(36.2)		(81.6)
Dividends paid to common stock and equity-award holders	(1,121.7)		(1,107.4)		(1,701.9)
Net distributions to non-controlling interests in consolidated entities	(43.3)		(35.1)		—
Net subscriptions (redemptions) from redeemable non-controlling interest holders	358.8		(48.4)		(66.8)
Net cash used in financing activities	(1,078.6)		(2,076.9)		(2,988.8)
Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products	0.4		9.5		2.6
Net change in cash and cash equivalents during period	269.1		250.5		(632.3)
Cash and cash equivalents at beginning of period, including $119.1 million at December 31, 2022, $101.1 million at December 31, 2021 and $104.8 million at December 31, 2020 held by consolidated sponsored investment products	1,874.7		1,624.2		2,256.5
Cash and cash equivalents at end of period, including $77.2 million at December 31, 2023, $119.1 million at December 31, 2022, and $101.1 million at December 31, 2021, held by consolidated sponsored investment products	$	2,143.8	$	1,874.7	$	1,624.2

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

Page 60

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 (loss)	—	—		—		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	0.2		46.8		—		—		47.0		—		47.0		—
Restricted shares issued, net of shares withheld for taxes	6	—		—		—		—		—		—		—		—
Shares issued upon vesting of restricted stock units, net of shares withheld for taxes	1,492	0.3		(128.0)		—		—		(127.7)		—		(127.7)		—

Stock-based compensation expense	—	—		274.6		—		—		274.6		—		274.6		—
Restricted stock units issued as dividend equivalents	—	—		0.6		(0.7)		—		(0.1)		—		(0.1)		—
Common shares repurchased	(5,941)	(1.2)		(809.4)		(325.4)		—		(1,136.0)		—		(1,136.0)		—
Common shares issued for acquisition	4,447	0.9		880.6						881.5		—		881.5		—
Non-controlling interests	—	—		—		—		—		—		248.7		248.7		—
Net redemptions from sponsored investment products	—	—		—		—		—		—		—		—		(67.7)
Net deconsolidations of sponsored investment products	—	—		—		—		—		—		—		—		(501.1)
Balances at December 31, 2021	229,175	45.8		919.8		8,083.6		(26.5)		9,022.7		248.7		9,271.4		982.3



Net income (loss)	—	—		—		1,557.9		—		1,557.9		(22.9)		1,535.0		(108.3)
Other comprehensive income (loss), net of tax	—	—		—		—		(26.5)		(26.5)		—		(26.5)		(21.0)
Dividends declared ($4.80 per share)	—	—		—		(1,108.7)		—		(1,108.7)		—		(1,108.7)		—

Common stock-based compensation plans activity:
Shares issued upon option exercises	522	0.1		28.2		—		—		28.3		—		28.3		—
Restricted shares issued, net of shares withheld for taxes	9	—		—		—		—		—		—		—		—
Shares issued upon vesting of restricted stock units, net of shares withheld for taxes	1,355	0.3		(64.6)		—		—		(64.3)		—		(64.3)		—

Stock-based compensation expense	—	—		285.4		—		—		285.4		—		285.4		—
Restricted stock units issued as dividend equivalents	—	—		0.5		(0.5)		—		—		—		—		—
Common shares repurchased	(6,751)	(1.3)		(731.4)		(122.6)		—		(855.3)		—		(855.3)		—

Net distributions to non-controlling interests in consolidated entities	—	—		—		—		—		—		(35.1)		(35.1)
Net redemptions from sponsored investment products	—	—		—		—		—		—		—		—		(49.3)
Net deconsolidations of sponsored investment products	—	—		—		—		—		—		—		—		(147.0)
Balances at December 31, 2022	224,310	$	44.9	$	437.9	$	8,409.7	$	(53.0)	$	8,839.5	$	190.7	$	9,030.2	$	656.7

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



Net income (loss)	—	—		—		1,788.7		—		1,788.7		44.6		1,833.3		47.0
Other comprehensive income (loss), net of tax	—	—		—		—		5.5		5.5		—		5.5		12.7
Dividends declared ($4.88 per share)	—	—		—		(1,121.9)		—		(1,121.9)		—		(1,121.9)		—

Common stock-based compensation plans activity:
Shares issued upon option exercises	585	0.1		35.6		—		—		35.7		—		35.7		—
Restricted shares withheld for taxes, net of shares issued	57	—		—		—		—		—		—		—		—
Shares issued upon vesting of restricted stock units, net of shares withheld for taxes	1,413	0.3		(54.0)		—		—		(53.7)		—		(53.7)		—

Stock-based compensation expense	—	—		265.6		—		—		265.6		—		265.6		—
Restricted stock units issued as dividend equivalents	—	—		0.4		(0.4)		—		—		—		—		—

Common shares repurchased	(2,427)	(0.5)		(253.8)				—		(254.3)		—		(254.3)		—

Net distributions to non-controlling interests in consolidated entities	—	—		—		—		—		—		(43.3)		(43.3)		—

Net subscriptions into sponsored investment products	—	—		—		—		—		—		—		—		356.9
Net deconsolidations of sponsored investment products	—	—		—		—		—		—		—		—		(479.2)
Balances at December 31, 2023	223,938	$	44.8	$	431.7	$	9,076.1	$	(47.5)	$	9,505.1	$	192.0	$	9,697.1	$	594.1

(1) Accumulated other comprehensive income

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

Page 62

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 that invest in a broad range of investment solutions across equity, fixed income, multi-asset, and alternative capabilities. 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.

The investment solutions are provided in a number of vehicles including 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., products offered through variable annuity life insurance plans in the U.S., affiliated private investment funds and collateralized loan obligations.

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. We completed our acquisition of Oak Hill Advisors, L.P. and other entities that have common ownership (collectively, "OHA") on December 29, 2021, therefore, our results of operations for 2021 does not include any financial results of OHA. Additionally, certain prior period tax-related amounts were recast to conform to current year presentation.

U.S. INFLATION REDUCTION LEGISLATION.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 ("IRA"). The IRA establishes new tax provisions and various incentives and tax credits. Among other things, the IRA created a 15% minimum tax on adjusted book income effective for taxable years beginning after December 31, 2022 as well as an excise tax of 1% on stock repurchases, net of stock issuances, for publicly traded companies effective for net stock repurchases made after December 31, 2022. The impact of the IRA’s provisions was not material to our financial position and results of operations.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07 - Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. The amendment requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker by reportable segment and clarifies that single reportable segment entities are required to apply all existing segment disclosures in the guidance. The amendment is effective for the firm on January 1, 2024 and is retrospectively applicable to all prior periods presented in its consolidated financial statements. We are currently evaluating the impact of adopting this standard, however, we expect the standard to result in additional segment footnote disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09 - Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. This amendment is effective for the firm on January 1, 2025. We are currently evaluating the impact of adopting this standard and have not yet determined our transition approach.

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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.

Consolidation

Our consolidated financial statements include the accounts of all wholly-owned subsidiaries, majority-owned entities that are entitled to a disproportionate allocation of income of affiliated private investment funds ("carried interest entities"), and sponsored investment products in which we have a controlling interest. We are deemed to have a controlling interest when we own the majority of a voting interest entity ("VOE") or are deemed to be the primary beneficiary of a variable interest entity ("VIE"). 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 sponsored investment products regulated outside the U.S., that we provide seed capital were determined to be VIEs and are consolidated when we are the primary beneficiary.

We have determined that our carried interest entities are considered VIEs and T. Rowe Price is determined to be the primary beneficiary of these entities. Further, our carried interest entities hold general partner interests in affiliated private investment funds that are VIEs, though these carried interest entities were determined to not be the primary beneficiary. Therefore, these affiliated private investment funds are not consolidated.

Redeemable non-controlling interests

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

Non-controlling interests in consolidated entities

We recognize non-controlling interests in the consolidated carried interest entities and present it as a component of permanent equity in our consolidated balance sheets. The non-controlling interests represent the minority interest held by limited partnerships controlled by employees, one of which is a member of our Board of Directors. Income (loss) is allocated to these non-controlling interests based on the contractual arrangements that govern the allocation of income (loss).

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.

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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.

Investments

Investments held at fair value

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

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

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 sponsored investment products and investments in affiliated private investments funds - seed/co-investment, 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 - carried interest

The investments in affiliated private investment funds - carried interest represent interests in general partners of affiliated private investment funds that have arrangements that entitle them to a disproportionate allocation of income, which is also referred to as carried interest. We account for these investments as financial instruments under ASC 323, Investments – Equity Method and Joint Ventures ("ASC 323") since the general partner has significant governance rights in the investment funds in which it invests, which demonstrate significant influence. The income earned is recognized as capital-allocation based income in our consolidated statements of income.

Held to Maturity

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

Concentration of risk

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.

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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 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, 9 years; and furniture and other equipment, 6 years.

Intangible assets

Intangible assets consist primarily of acquired investment advisory agreements and trade name. The fair values of the acquired investment advisory agreements were based on the net present value of estimated future cash flows attributable to the agreements, which included significant assumptions related to revenue, discount rate, and effective tax rate. The investment advisory agreement intangible assets are amortized using the straight-line method over their estimated useful lives unless the asset is determined to have an indefinite life as there is no foreseeable limit on the contract period. The weighted average remaining useful life of definite-lived intangibles assets is approximately 5.5 years.

The trade name fair value was 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 use of the acquired 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.The fair value for each asset is determined using a discounted cash flow analysis where estimated future cash flows were discounted to arrive at a single present value amount. This approach includes inputs that require significant management judgment, the most relevant of which include revenue growth, discount rates, and effective tax rates.

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. The fair

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value is determined using a discounted cash flow analysis where estimated future cash flows are discounted to arrive at a single present value amount. This approach includes inputs that require significant management judgment, the most relevant of which included revenue growth, discount rates, and effective tax rates.

Goodwill

We internally conduct, manage, and report our operations as one investment advisory business. This reflects how the chief operating decision maker allocates resources and assesses performance. Accordingly, we have one reporting unit - investment advisory business, consistent with our single operating segment, to which all goodwill has been assigned.

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

Revenue recognition

Our revenue is earned from investment advisory, administrative, and distribution services we provide to our clients as well as capital allocation-based income. Each distinct service we promise in our agreements is considered a performance obligation and is the basis for determining when we recognize revenue. 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 sponsored 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

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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.

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

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

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 earned based on basis points of the related assets under management and represent variable consideration. The fees are generally constrained and are recognized as revenue when costs are incurred to perform the services.

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 3 - Information about Receivables, Revenues and Services relates to distribution and servicing obligations that were satisfied during prior periods.

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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

This represents the income earned from investments in affiliated private investment funds with arrangements that are entitled to a disproportionate allocation of income, which is also known as carried interest. These investments are accounted for under ASC 323 and the income recognized represents the proportionate share of the income or loss of the fund assuming the fund was liquidated as of each reporting date pursuant to each investment fund's governing agreements. Capital allocation-based income will fluctuate period-to-period to reflect the adjustment to accrued carried interest for the change in value of the affiliated funds' underlying investments assuming the value was realized as of the end of the period, regardless of whether the fund's underlying investments have been realized. The realization of accrued carried interest occurs over a number of years. Accordingly, this income is accounted for outside of the scope of ASC 606, Revenue Recognition, and recorded as part of capital allocation-based income in our consolidated statements of income. A portion of this income is allocated to non-controlling interest holders and is reflected as compensation expense.

Advertising

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

Stock-based compensation

We maintain two stockholder-approved employee long-term incentive plans (2020 Long-Term Incentive Plan and 2012 Long-Term 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, 2023, a total of 9,004,208 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 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 stock unit holders receive non-forfeitable cash dividend equivalents 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.

Both time-based and performance-based restricted stock units are valued on the grant-date using the closing market price of our common stock. 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.

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

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

NOTE 2 – CASH EQUIVALENTS.

Cash equivalent investments in the T. Rowe Price money market mutual funds aggregate to $1,678.1 million at December 31, 2023, and $1,412.0 million at December 31, 2022. Dividends earned on these investments totaled $101.3 million in 2023, $30.0 million in 2022, and $0.3 million in 2021.

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NOTE 3 – INFORMATION ABOUT RECEIVABLES, REVENUES, AND SERVICES.

Revenues earned during the years ended December 31, 2023, 2022 and 2021, are included in the table below along with details of investment advisory revenues earned from clients by their underlying asset class. We have also included average assets under management by asset class, on which we earn the investment advisory revenues.


(in millions)	2023		2022		2021
Investment advisory fees
Equity	$	3,445.5	$	3,759.7	$	4,899.9
Fixed income, including money market	401.5		427.4		409.8
Multi-asset	1,583.4		1,508.9		1,788.4
Alternatives	317.3		273.1		—
Total investment advisory fees	$	5,747.7	$	5,969.1	$	7,098.1
Capital allocation-based income	161.9		(54.3)		—
Total administrative, distribution, and servicing fees	550.9		573.6		573.8
Net revenues	$	6,460.5	$	6,488.4	$	7,671.9

Average AUM (in billions):
Equity	$	705.2	$	763.6	$	972.0
Fixed income, including money market	169.3		173.4		177.7
Multi-asset	442.3		418.7		449.6
Alternatives	45.5		42.7		—
Average AUM	$	1,362.3	$	1,398.4	$	1,599.3

Total net revenues earned from sponsored investment products totaled $5,327.9 million in 2023, $5,326.3 million in 2022, and $6,259.3 million in 2021. Accounts receivable from these products aggregate to $533.9 million at December 31, 2023 and $492.4 million at December 31, 2022.

Investors that we serve are primarily domiciled in the U.S.; investment advisory clients outside the U.S. account for 8.6% and 9.1% of our assets under management at December 31, 2023 and 2022, respectively.

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NOTE 4 – INVESTMENTS.

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


(in millions)	2023		2022
Investments held at fair value
T. Rowe Price investment products
Discretionary investments	$	246.4	$	242.0
Seed capital	247.8		195.1
Supplemental savings plan liability economic hedges	806.6		760.7
Investment partnerships and other investments	69.7		87.1
Investments in affiliated collateralized loan obligations	8.4		6.4
Equity method investments
T. Rowe Price investment products
Discretionary investments	5.3		199.6
Seed capital	91.1		125.7
Supplemental savings plan liability economic hedges	21.0		—
Investment in UTI Asset Management Company Limited (India)	164.5		158.8
Investments in affiliated private investment funds - carried interest	519.9		467.8
Investments in affiliated private investment funds - seed/co-investment	253.4		173.8
Other investment partnerships and investments	2.2		2.4
Held to maturity
Investments in affiliated collateralized loan obligations	94.1		109.6
Certificates of deposit	23.3		9.2
U.S. Treasury note	1.0		1.0
Total	$	2,554.7	$	2,539.2

INVESTMENTS AT FAIR VALUE

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 2023, we recognized $86.7 million of net unrealized gains on investments held at fair value that were still held at December 31, 2023. For 2022, we recognized $240.5 million of net unrealized losses on investments held at fair value that were still held at December 31, 2022. For 2021, we recognized $63.6 million of net unrealized gains on investments held at fair value that were still held at December 31, 2021.

Dividends, including capital gain distributions, earned on the sponsored investment products held at fair value, totaled $38.2 million in 2023, $45.3 million in 2022, and $90.2 million in 2021.

During each of the last three years, certain sponsored investment products in which we provided initial seed capital at the time of formation were deconsolidated, as we no longer had a controlling interest. Depending on our ownership interest, we are now reporting our residual interests in these sponsored investment products as either an equity method investment or an investment held at fair value. Additionally, during 2023 and 2022, certain sponsored investment products that were being accounted for as either equity method or fair value investments were consolidated, as we regained a controlling interest. The net impact of these changes on our consolidated balance

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sheets and statements of income as of the dates the portfolios were deconsolidated or reconsolidated is detailed below.


(in millions)	2023		2022		2021
Net decrease in assets of consolidated sponsored investment products	$	(663.8)	$	(256.9)	$	(753.0)
Net decrease in liabilities of consolidated sponsored investment products	$	(29.7)	$	(12.8)	$	(17.6)
Net decrease in redeemable non-controlling interests	$	(479.2)	$	(147.2)	$	(501.1)

Gains recognized upon deconsolidation	$	—	$	3.0	$	2.4

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

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

These investments represent European CLOs that invest in 5% vertical strips in each class of rated notes and subordinated notes. Certain investments in the debt tranches of the CLOs are measured at amortized cost as investments held to maturity and included in investments in our consolidated balance sheets. The subordinated note tranches of these investments are accounted for as equity method investments and our allocable share of income is included in non-operating income (loss) in the consolidated statements of income. Certain of the investments in the debt tranches of the CLOs have been pledged as collateral against the repurchase agreements.

There is debt associated with our long-term investments in affiliated collateralized loan obligations (“CLOs”). This debt is carried at $89.4 million at December 31, 2023 and $103.0 million at December 31, 2022, and is reported in accounts payable and accrued expenses in our consolidated balance sheets. The debt includes outstanding repurchase agreements of €65.5 million (equivalent to $72.3 million at December 31, 2023 and $71.3 million at December 31, 2022 at the respective EUR spot rates) that are collateralized by the CLO investments. The debt also includes outstanding note facilities of €15.5 million (equivalent to $17.1 million at December 31, 2023 and $31.7 million at December 31, 2022 at the respective EUR spot rates) that are collateralized by first priority security interests in the assets of a consolidated subsidiary that is party to the notes. These note facilities bear interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.15% to 12.87% as of December 31, 2023. The debt matures on various dates through 2035 or if the investments are paid back in full or cancelled, whichever is sooner.

VARIABLE INTEREST ENTITIES.

Our investments at December 31, 2023 and 2022, include interests in variable interest entities that we do not consolidate as we are not deemed the primary beneficiary. Our maximum risk of loss related to our involvement with these entities is as follows:


(in millions)	2023		2022
Investment carrying values	$	919.3	$	762.2
Unfunded capital commitments	94.1		84.7
Accounts receivable	92.1		91.5
	$	1,105.5	$	938.4

The unfunded capital commitments, totaling $94.1 million at December 31, 2023, and $84.7 million at December 31, 2022, relate primarily to the affiliated private investment funds and the investment partnerships in which we have an existing investment. In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

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INVESTMENTS IN AFFILIATED FUNDS - CARRIED INTEREST.

Certain of the investments in affiliated funds represent the general partners interest in affiliated private investment funds and are entitled to a disproportionate allocation of income. These general partner entities are considered variable interest entities and are consolidated as T. Rowe Price is determined to be the primary beneficiary.

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


(in millions)	2023		2022
Assets	$	564.7	$	526.2
Liabilities	$	1.9	$	15.8
Non-controlling interest	$	192.0	$	190.7

NOTE 5 – 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 financial instruments accessible at the reporting date.

Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads. 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 sponsored investment products which are presented separately on our consolidated balance sheets and are detailed in Note 6.


	2023						2022
(in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
T. Rowe Price investment products
Cash equivalents held in money market funds	$	1,678.1	$	—	$	—	$	1,412.0	$	—	$	—
Discretionary investments	246.4		—		—		242.0		—		—
Seed capital	206.0		41.8		—		161.0		34.1		—
Supplemental savings plan liability economic hedges	806.6		—		—		760.7		—		—
Other investments	0.7		—		—		0.6		0.1		—
Investments in affiliated collateralized loan obligations	—		8.4		—		—		6.4		—
Total	$	2,937.8	$	50.2	$	—	$	2,576.3	$	40.6	$	—

Contingent consideration liability	$	—	$	—	$	13.4	$	—	$	—	$	95.8

The fair value hierarchy level table above does not include the investment partnerships and other investments for which fair value is estimated using their NAV per share as a practical expedient. The carrying value of these investments as disclosed in Note 4 were $69.0 million at December 31, 2023 and $86.4 million at December 31, 2022.

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As part of the purchase consideration for our acquisition of OHA in December 2021, there was contingent consideration in the amount of up to $900.0 million as part of an earnout cash payment that may be due 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 is subject to a proportional reduction if OHA's actual revenue at the end of the earnout period does not meet the defined revenue targets and could result in no earnout payout if OHA's actual revenue falls below 75% of the defined revenue target. About 22% of the earnout is conditioned upon continued service with T. Rowe Price and was excluded from the purchase consideration and deemed compensatory. The fair value of the earnout deemed compensatory is remeasured each reporting period and recognized over the related service period. For the year ended December 31, 2023 and 2022, the amounts recognized as part of compensation expense in our consolidated statements of income were immaterial.

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


	Year-ended
(in millions)	12/31/2023		12/31/2022
Balance at beginning of the year	$	95.8	$	306.3
Measurement period adjustment	—		(49.3)
Unrealized gains, included in earnings	(82.4)		(161.2)
Balance at end of the year	$	13.4	$	95.8

The fair value of the contingent consideration is measured using the Monte Carlo simulation methodology of valuation. The most significant assumptions used relate to the discount rates and from changes pertaining to the achievement of the defined financial targets.

In addition, simultaneously with the OHA acquisition, a Value Creation Agreement was entered into whereby certain employees of OHA will receive incentive payments equal to 10% of the appreciated value of the OHA business on the fifth anniversary of the acquisition date, subject to an annualized preferred return to T. Rowe Price. This arrangement is treated as a post-combination compensation expense. This arrangement will be remeasured at fair value at each reporting date and recognized over the related service period. For the year ended December 31, 2023 and 2022, the amounts recognized as part of compensation expense in our consolidated statements of income were immaterial.

During 2023 and 2022, we recognized impairment charges on certain of our identified intangible assets related to the OHA acquisition. As part of the impairment recognition, a fair value measurement was determined for these intangible assets. See Note 9 for further discussion of the impairments.

NOTE 6 – CONSOLIDATED SPONSORED INVESTMENT PRODUCTS.

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

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


	2023						2022
(in millions)	VOE		VIE		Total		VOE		VIE		Total
Cash and cash equivalents(1)	$	25.7	$	51.5	$	77.2	$	16.2	$	102.9	$	119.1
Investments(2)	718.0		1,129.0		1,847.0		205.3		1,255.5		1,460.8
Other assets	11.2		23.9		35.1		6.3		17.2		23.5
Total assets	754.9		1,204.4		1,959.3		227.8		1,375.6		1,603.4
Liabilities	19.0		35.2		54.2		50.0		39.1		89.1
Net assets	$	735.9	$	1,169.2	$	1,905.1	$	177.8	$	1,336.5	$	1,514.3

Attributable to T. Rowe Price Group	$	589.9	$	721.1	$	1,311.0	$	142.4	$	715.2	$	857.6
Attributable to redeemable non-controlling interests	146.0		448.1		594.1		35.4		621.3		656.7
	$	735.9	$	1,169.2	$	1,905.1	$	177.8	$	1,336.5	$	1,514.3

(1) Cash and cash equivalents includes $16.2 million and $2.6 million at December 31, 2023 and 2022, respectively, of investments in

T. Rowe Price money market mutual funds.

(2) Investments include $6.2 million and $7.6 million at December 31, 2023 and 2022, respectively, of sponsored investment products.

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

Since third-party investors in these investment products have no recourse to our credit, our overall risk related to the net assets of consolidated sponsored investment products is limited to valuation changes associated with our net interest. However, we are required to recognize the valuation changes associated with all underlying investments held by these products in our consolidated statements of income and disclose the portion attributable to third-party investors as net income attributable to redeemable non-controlling interests.

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


	2023						2022						2021
(in millions)	VOE		VIE		Total		VOE		VIE		Total		VOE		VIE		Total
Operating expenses reflected in net operating income	$	(3.7)	$	(7.4)	$	(11.1)	$	(.5)	$	(7.7)	$	(8.2)	$	(.6)	$	(11.6)	$	(12.2)
Net gains (losses) reflected in non-operating income	52.4		112.2		164.6		(13.4)		(190.1)		(203.5)		18.0		56.7		74.7
Impact on income before taxes	$	48.7	$	104.8	$	153.5	$	(13.9)	$	(197.8)	$	(211.7)	$	17.4	$	45.1	$	62.5

Net income (loss) attributable to T. Rowe Price Group	$	40.9	$	65.6	$	106.5	$	(9.5)	$	(93.9)	$	(103.4)	$	11.4	$	35.5	$	46.9
Net income (loss) attributable to redeemable non-controlling interests	7.8		39.2		47.0		(4.4)		(103.9)		(108.3)		6.0		9.6		15.6
	$	48.7	$	104.8	$	153.5	$	(13.9)	$	(197.8)	$	(211.7)	$	17.4	$	45.1	$	62.5

The operating expenses of these consolidated products are reflected in other operating expenses. In preparing our consolidated financial statements, we eliminated operating expenses of $2.1 million in 2023, $2.0 million in 2022, and $5.5 million in 2021, 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 sponsored investment products.

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


	2023						2022						2021
(in millions)	VOE		VIE		Total		VOE		VIE		Total		VOE		VIE		Total
Net cash provided by operating activities	$	(517.5)	$	(371.4)	$	(888.9)	$	(84.1)	$	6.9	$	(77.2)	$	(135.3)	$	160.8	$	25.5
Net cash provided by (used in) investing activities	(32.7)		(24.1)		(56.8)		.1		(8.8)		(8.7)		(11.9)		(5.0)		(16.9)
Net cash used in financing activities	559.7		343.7		903.4		92.9		1.5		94.4		147.4		(162.3)		(14.9)
FX impact on cash	—		0.4		0.4		—		9.5		9.5		—		2.6		2.6
Net change in cash and cash equivalents during period	9.5		(51.4)		(41.9)		8.9		9.1		18.0		0.2		(3.9)		(3.7)
Cash and cash equivalents at beginning of year	16.2		102.9		119.1		7.3		93.8		101.1		7.1		97.7		104.8
Cash and cash equivalents at end of year	$	25.7	$	51.5	$	77.2	$	16.2	$	102.9	$	119.1	$	7.3	$	93.8	$	101.1

The net cash provided by financing activities includes $544.6 million in 2023, $142.8 million in 2022 and $51.9 million in 2021, of net subscriptions we made into the consolidated sponsored investment products, net of dividends received. These cash flows were eliminated in consolidation.

FAIR VALUE MEASUREMENTS.

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

Level 1 – quoted prices in active markets for identical financial instruments accessible at the reporting date.

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

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


	2023						2022
(in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	17.2	$	8.0	$	—	$	4.4	$	20.6	$	—
Equity securities	365.1		213.6		—		136.7		167.8		—
Fixed income securities	—		1,241.9		—		—		1,051.1		—
Other investments	3.6		22.8		—		3.3		30.1		71.8
	$	385.9	$	1,486.3	$	—	$	144.4	$	1,269.6	$	71.8

Liabilities	$	(5.1)	$	(16.2)	$	—	$	(0.9)	$	(19.1)	$	—

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The fair value of Level 3 investments held by consolidated sponsored investment products are derived from inputs that are unobservable and which reflect the company's own determinations about the assumptions that market participants would use in pricing the investments, including assumptions about risk. These inputs are developed based on the company's own data, which is adjusted if information indicates that market participants would use different assumptions. Changes in fair value Level 3 are solely attributable to the deconsolidation of certain investments in 2023, and the purchase of investments in 2022.

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


	Fair value measurements as of December 31, 2022
(in millions)	Fair value		Valuation techniques	Unobservable inputs	Ranges
Other investments	$	71.8	Market Yield (Comparables)	Yield	9.8% - 12.4%

There were no transfers into or out of Level 3 of the fair value hierarchy for the year ended December 31, 2023 or 2022.

NOTE 7 – 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 and plan to relocate in late 2024.

At December 31, 2023, the weighted-average remaining lease term on our leases is approximately 10.3 years and the weighted-average discount rate used to measure the lease liabilities is 3.3%.

Operating lease expense was $52.4 million in 2023, $50.0 million in 2022, and $32.5 million in 2021. 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 $11.2 million in 2023. We made lease payments of $42.4 million during 2023.

Our future undiscounted cash flows related to our operating leases, and the reconciliation to the operating lease liability as of December 31, 2023, are as follows:


(in millions)	2023
2024	$	57.5
2025	26.4
2026	35.2
2027	35.3
2028	33.1
Thereafter	178.7
Total future undiscounted cash flows	366.2
Less: imputed interest to be recognized in lease expense	(57.7)
Operating lease liabilities, as reported	$	308.5

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NOTE 8 – PROPERTY, EQUIPMENT AND SOFTWARE.

Property, equipment and software at December 31 consists of:


(in millions)	2023		2022
Computer and communications software and equipment	$	1,497.3	$	1,364.6
Buildings and improvements	490.7		488.9
Leasehold improvements	260.9		236.3
Furniture and other equipment	207.8		209.7
Land	25.7		25.7

	2,482.4		2,325.2
Less accumulated depreciation and amortization	1,675.8		1,569.5
Total	$	806.6	$	755.7

Compensation and related costs attributable to the development of computer software for internal use, totaling $156.1 million in 2023, $134.6 million in 2022, and $137.6 million in 2021, have been capitalized.

NOTE 9 - GOODWILL AND INTANGIBLE ASSETS.

Goodwill and intangible assets consist of the following:


(in millions)	As of December 31,
	2023		2022
Goodwill	$	2,642.8	$	2,642.8
Indefinite-lived intangible assets - trade name	117.1		117.1
Indefinite-lived intangible assets - investment advisory agreements	65.6		65.6
Definite-lived intangible assets - investment advisory agreements	324.6		447.1
Total	$	3,150.1	$	3,272.6

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GOODWILL.

Goodwill activity during the years ended December 31, 2023 and 2022, was as follows:


(in millions)	2023		2022
Balance, beginning of the year	$	2,642.8	$	2,693.2
Measurement period adjustments	—		(50.4)
Balance, end of the year	$	2,642.8	$	2,642.8

We evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the fourth quarter of each year using a fair value approach. We did not record any impairment charges for goodwill for the years ended December 31, 2023, 2022, or 2021.

INTANGIBLE ASSETS**.**

Intangible assets consisted of the following:


(in millions)	Remaining weighted-average estimated useful life	Gross carrying amount	Accumulated amortization & impairments	Net carrying amount
December 31, 2023





Definite-lived intangible assets - Investment advisory agreements	5.5	613.9	(289.3)	324.6



December 31, 2022





Definite-lived intangible assets - Investment advisory agreements	6.5	613.9	(166.8)	447.1

Amortization and Impairments.

We recognized no impairments of indefinite-lived intangibles in 2023 compared with $116.8M in 2022. Of the $116.8M in impairments in 2022, $99.2M was attributable to investment advisory agreements and $17.6M for the trade name.The impairments in 2022 were the result of reduced growth expectations for both management and incentive fees and a higher discount rate.

We recognized insignificant impairments of definite-lived intangibles in 2023 compared with $58.3M in 2022. The impairments in 2022 were the result of reduced growth expectations for both management and incentive fees and a higher discount rate.

Amortization and impairment expense for the definite-lived investment advisory agreement intangible assets was $122.5 million for 2023. Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for the five succeeding years is a follows:


(in millions)	2023
2024	$	87.2
2025	85.8
2026	68.7
2027	46.7
2028	14.3

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NOTE 10 – INCOME TAXES.

INCOME TAX PROVISION.

The provision for income taxes consists of:


(in millions)	2023		2022		2021
Current income taxes
U.S. federal	$	554.0	$	574.7	$	745.0
State and local	68.1		115.4		179.3
Foreign	23.9		15.5		28.1
Deferred income taxes (benefits)	8.6		(207.0)		(56.3)
Total	$	654.6	$	498.6	$	896.1

Deferred income taxes (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)	2023		2022		2021
Property and equipment	$	(43.2)	$	(64.1)	$	11.8
Asset impairments	—		4.6		2.0
Operating lease assets	(6.3)		24.8		(10.6)
Operating lease liabilities	3.8		(24.3)		10.6
Stock-based compensation	1.9		(9.0)		(8.1)
Accrued compensation	(4.1)		(0.5)		(1.6)
Supplemental savings plan liability	(26.4)		21.3		(29.3)
Acquisition-related retention liability	(14.8)		(13.6)		—
Contingent consideration liability	15.4		32.4		—
Acquired investments	(19.5)		(73.0)		—
Unrealized holding gains recognized in non-operating income	43.8		(114.6)		(26.1)
Foreign net operating losses	(31.5)		(11.0)		—
Change in valuation allowance	86.4		16.4		—
Other	3.1		3.6		(5.0)
Total net deferred income taxes (benefits)	$	8.6	$	(207.0)	$	(56.3)

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


	2023		2022		2021
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)	2.3		3.4		3.7
Net income attributable to redeemable non-controlling interests(2)	(0.5)		1.3		(0.1)
Net excess tax benefits from stock-based compensation plans activity	0.1		(0.4)		(2.1)
Valuation allowance	3.4		—		—
Other items	—		0.3		(0.1)
Effective income tax rate	26.3	%	25.6	%	22.4	%

(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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DEFERRED TAX ASSETS (LIABILITIES).

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


(in millions)	2023		2022
Deferred tax assets
Stock-based compensation	$	94.5	$	96.4
Property and equipment	30.6		—

Operating lease liabilities	44.8		48.6
Accrued compensation	13.7		9.6
Acquired investments	40.3		20.8
Supplemental savings plan	195.3		168.9
Net operating loss carry-forwards	42.5		11.0
Net unrealized holding losses recognized in income	—		10.6
Currency translation adjustment	6.6		8.5
Other	9.4		17.3
Total deferred tax assets	477.7		391.7
Valuation allowance	(102.8)		(16.4)
Total deferred tax assets, net of valuation allowance	374.9		375.3

Deferred tax liabilities
Acquisition-related retention liability	(39.5)		(54.3)
Contingent consideration liability	(47.8)		(32.4)

Property and equipment	—		(12.6)
Operating lease assets	(42.8)		(49.1)

Net unrealized holding gains recognized in income	(33.2)		—

Other	(17.8)		(10.8)
Total deferred tax liabilities	(181.1)		(159.2)
Net deferred tax assets	$	193.8	$	216.1

We had operating loss carryforwards before tax of $173.4 million and $61.7 million at December 31, 2023 and 2022, respectively. Almost all of the operating loss carryforwards are attributable to the United Kingdom and do not expire. However, the amount of annual profits that can be relieved by losses carried forward is limited to 50%, subject to an annual allowance of GBP 5 million per group. The increase from 2022 is primarily related to operating losses generated by certain subsidiaries based outside the U.S.

We consider the need for valuation allowances against our deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. As of December 31, 2023 and 2022, the valuation allowances total $102.8 million and $16.4 million, respectively. The increase of $86.4 million in the valuation allowances was due to the uncertainty of generating sufficient taxable income in future periods in certain foreign jurisdictions. Any additional or reversal of valuation allowances in future periods will be dependent on the generation of sufficient taxable income. The future change in the valuation allowance could materially increase or decrease our income tax expenses in future periods.

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 $886 million at December 31, 2023. 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.

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OTHER DISCLOSURES.

Other assets include tax refund receivables of $81.0 million at December 31, 2023, and $71.2 million at December 31, 2022.

Cash outflows from operating activities include net income taxes paid of $632.0 million in 2023, $794.2 million in 2022, and $948.9 million in 2021.

In 2023, stock-based compensation plans activity increased income tax expense by $3.4 million. In 2022 and 2021, stock-based compensation plans activity decreased income tax expense by $7.1 million and $82.7 million, respectively. These income tax impacts were recognized in the income tax provision.

UNRECOGNIZED TAX BENEFITS.

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


(in millions)	2023		2022		2021
Balance at beginning of year	$	35.4	$	29.3	$	26.7
Changes in tax positions related to
Current year	7.8		5.5		8.9
Prior years	0.5		1.3		(1.0)
Expired statute of limitations	(1.0)		(0.7)		(5.3)
Balance at end of year	$	42.7	$	35.4	$	29.3

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 2023 and prior years will significantly change in 2024. The U.S. has concluded examinations related to federal tax obligations through the year 2021. A net interest payable related to our unrecognized tax benefits of $5.2 million at December 31, 2023, and $2.3 million at December 31, 2022, 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 11 – 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 6,348,517 common shares as of December 31, 2023.

Accounts payable and accrued expenses includes liabilities of $5.4 million at December 31, 2023 for common stock repurchases that settled during the first week of January 2024.

RESTRICTED CAPITAL.

Our consolidated stockholders' equity at December 31, 2023, includes about $413 million that is restricted as to use by various regulations and agreements arising in the ordinary course of our business.

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NOTE 12 – STOCK-BASED COMPENSATION.

SHARES AUTHORIZED FOR STOCK-BASED COMPENSATION PROGRAMS.

At December 31, 2023, a total of 17,052,156 shares of unissued common stock were authorized for issuance under our stock-based compensation plans. Additionally, a total of 3,467,496 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 2023.


	Options	Weighted- average exercise price		Weighted-average remaining contractual term in years
Outstanding at December 31, 2022	2,218,506	$	74.31

Exercised	(742,402)	$	72.16


Outstanding at December 31, 2023	1,476,104	$	75.39	1.1
Exercisable at December 31, 2023	1,476,104	$	75.39	1.1

There was no stock option-based compensation expense in 2023, 2022, or in 2021.

The total intrinsic value of options exercised was $30.6 million in 2023, $40.3 million in 2022, and $177.2 million in 2021. At December 31, 2023, the aggregate intrinsic value of in-the-money options outstanding was $47.7 million. All outstanding options are exercisable.

RESTRICTED SHARES AND STOCK UNITS.

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


	Restricted shares	Restricted stock units	Weighted- average fair value
Nonvested at December 31, 2022	8,715	5,901,600	$	142.37
Time-based grants	56,740	2,617,522	$	100.89
Performance-based grants	—	81,556	$	100.55
Vested (value at vest date was $195.5 million)	(8,715)	(1,939,021)	$	132.90
Nonvested dividend equivalents granted to non-employee directors	—	4,039	$	108.28
Forfeited	—	(180,443)	$	140.83
Nonvested at December 31, 2023	56,740	6,485,253	$	127.74

Nonvested at December 31, 2023 includes performance-based restricted stock units of 364,107. These nonvested performance-based restricted units include 67,331 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 $265.6 million in 2023, $285.4 million in 2022, and $274.6 million in 2021.

At December 31, 2023, non-employee directors held 86,591 vested stock units that will convert to common shares upon their separation from the Board.

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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, 2023. 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 2024	$	59.8
Second quarter 2024	58.4
Third quarter 2024	57.4
Fourth quarter 2024	50.3
2025	119.1
2026 through 2029	88.5
Total	$	433.5

NOTE 13 – 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)	2023		2022		2021
Net income attributable to T. Rowe Price Group	$	1,788.7	$	1,557.9	$	3,082.9
Less: net income allocated to outstanding restricted stock and stock unit holders	44.4		36.1		80.5
Net income allocated to common stockholders	$	1,744.3	$	1,521.8	$	3,002.4

Weighted-average common shares
Outstanding	224.1		226.0		226.6
Outstanding assuming dilution	224.8		227.1		228.8

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 14 – 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)	2023		2022		2021
Net deferred tax benefits (income taxes) on:
Currency translation adjustments	$	(2.0)	$	4.2	$	2.8

Reclassification adjustment recognized in the provision for income taxes upon deconsolidation of T. Rowe Price investment product	0.1		0.8		0.6







Total net deferred tax benefits	$	(1.9)	$	5.0	$	3.4

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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 sponsored investment products - variable interest entities		Total currency translation adjustments		Total
Balances at December 31, 2020	$	(43.6)	$	20.6	$	(23.0)	$	(23.0)



Other comprehensive income (loss) 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)	(0.1)		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)
Other comprehensive income (loss) before reclassifications and income taxes	(14.6)		(13.9)		(28.5)		(28.5)
Reclassification adjustments recognized in non-operating income	—		(3.0)		(3.0)		(3.0)
	(14.6)		(16.9)		(31.5)		(31.5)
Net deferred tax benefits (income taxes)	0.8		4.2		5.0		5.0
Other comprehensive income (loss)	(13.8)		(12.7)		(26.5)		(26.5)
Balances at December 31, 2022	(50.5)		(2.5)		(53.0)		(53.0)



Other comprehensive income before reclassifications and income taxes	(1.6)		9.0		7.4		7.4


Net deferred tax benefits (income taxes)	0.2		(2.1)		(1.9)		(1.9)
Other comprehensive income (loss)	(1.4)		6.9		5.5		5.5

Balances at December 31, 2023	$	(51.9)	$	4.4	$	(47.5)	$	(47.5)

The other comprehensive income (loss) in the table above excludes $12.7 million in 2023, $(21.0) million in 2022, and $(26.2) million in 2021 of other comprehensive income (loss) related to redeemable non-controlling interests held in our consolidated products.

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NOTE 15 – COMMITMENTS AND CONTINGENCIES.

COMMITMENTS.

T. Rowe Price has committed $404.0 million to fund OHA products over the next four years.

CONTINGENCIES.

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 16 – OTHER DISCLOSURES.

RETIREMENT PLANS.

Compensation and related costs includes expense recognized for our defined contribution retirement plans of $152.5 million in 2023, $130.2 million in 2022, and $124.2 million in 2021.

SUPPLEMENTAL SAVINGS PLAN.

The Supplemental Savings Plan provides certain senior officers the opportunity to defer the lesser of 50% of their annual cash incentive earned or $2 million. The amounts deferred are adjusted in accordance with the hypothetical investments chosen by the officer from a list of mutual funds. The officer can defer these amounts for a period of five to 15 years. Certain senior officers elected to defer $51.7 million in 2023, $51.8 million in 2022, and $62.4 million in 2021.

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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, 2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, 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, 2023, 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 16, 2024 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 Matter

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

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

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

As discussed in Note 1 to the consolidated financial statements, the Company recognizes fees for its investment advisory agreements based on a percentage of its assets under management (AUM). AUM data represents a significant input to the calculation of investment advisory fees. The Company recognized $3.3 billion in investment advisory fees related to T. Rowe Price U.S. mutual funds (Funds) during the year ended December 31, 2023.

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

/s/ KPMG LLP

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

Baltimore, Maryland

February 16, 2024

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