Item 1. Financial Statements.

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Item 1. Financial Statements.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	3/31/2022		12/31/2021
ASSETS
Cash and cash equivalents	$	1,997.5	$	1,523.1
Accounts receivable and accrued revenue	919.5		1,058.3
Investments	2,879.3		2,975.5
Assets of consolidated T. Rowe Price investment products ($1,501.0 million at March 31, 2022 and $1,761.5 million at December 31, 2021, related to variable interest entities)	1,658.2		1,962.8
Operating lease assets	164.5		201.2
Property, equipment and software, net	736.3		736.2
Intangible assets, net	886.3		913.4
Goodwill	2,643.9		2,693.2
Other assets	462.5		445.3
Total assets	$	12,348.0	$	12,509.0

LIABILITIES
Accounts payable and accrued expenses	$	417.3	$	431.0
Liabilities of consolidated T. Rowe Price investment products ($44.2 million at March 31, 2022 and $36.2 million at December 31, 2021, related to variable interest entities)	55.9		51.5
Operating lease liabilities	211.8		249.2
Accrued compensation and related costs	293.6		256.8

Supplemental savings plan liability	826.3		882.6
Contingent consideration liability	211.5		306.3
Income taxes payable	214.6		77.9
Total liabilities	2,231.0		2,255.3

Commitments and contingent liabilities

Redeemable non-controlling interests	790.4		982.3

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 227,283,000 shares at March 31, 2022 and 229,175,000 at December 31, 2021	45.5		45.8
Additional capital in excess of par value	668.2		919.8
Retained earnings	8,372.2		8,083.6
Accumulated other comprehensive loss	(31.5)		(26.5)
Total stockholders’ equity attributable to T. Rowe Price Group, Inc.	9,054.4		9,022.7
Non-controlling interests in consolidated entities	272.2		248.7
Total permanent stockholders’ equity	9,326.6		9,271.4
Total liabilities, redeemable non-controlling interests, and permanent stockholders’ equity	$	12,348.0	$	12,509.0

The accompanying notes are an integral part of these statements.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per-share amounts)


	Three months ended
	3/31/2022		3/31/2021
Revenues
Investment advisory fees	$	1,662.1	$	1,687.8
Capital allocation-based income	44.4		—
Administrative, distribution, and servicing fees	156.5		139.0
Net revenues	1,863.0		1,826.8

Operating expenses
Compensation and related costs	581.6		583.5
Distribution and servicing	85.9		85.6
Advertising and promotion	23.4		18.9
Product and recordkeeping related costs	80.4		41.0
Technology, occupancy, and facility costs	133.9		117.3
General, administrative, and other	80.4		87.3

Total operating expenses	985.6		933.6

Net operating income	877.4		893.2

Non-operating income (loss)
Net gains (losses) on investments	(89.9)		68.6
Net gains (losses) on consolidated investment products	(101.4)		37.2
Other income (loss)	(7.2)		(3.7)
Total non-operating income (loss)	(198.5)		102.1

Income before income taxes	678.9		995.3
Provision for income taxes	164.5		230.5
Net income	514.4		764.8
Less: net income (loss) attributable to redeemable non-controlling interests	(53.5)		15.4
Net income attributable to T. Rowe Price Group	$	567.9	$	749.4

Earnings per share on common stock of T. Rowe Price Group
Basic	$	2.43	$	3.20
Diluted	$	2.41	$	3.17

The accompanying notes are an integral part of these statements.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	Three months ended
	3/31/2022		3/31/2021
Net income	$	514.4	$	764.8
Other comprehensive income (loss)
Currency translation adjustments
Consolidated T. Rowe Price investment products - variable interest entities	(15.5)		(18.9)
Reclassification gains recognized in non-operating income upon deconsolidation of certain T. Rowe Price investment products	(1.6)		(2.6)
Total currency translation adjustments of consolidated T. Rowe Price investment products - variable interest entities	(17.1)		(21.5)
Equity method investments	.5		(.8)


Other comprehensive income (loss) before income taxes	(16.6)		(22.3)
Net deferred tax (expense) benefits	1.8		3.0
Total other comprehensive income (loss)	(14.8)		(19.3)

Total comprehensive income	499.6		745.5
Less: comprehensive income (loss) attributable to redeemable non-controlling interests	(63.3)		3.6
Total comprehensive income attributable to T. Rowe Price Group	$	562.9	$	741.9

The accompanying notes are an integral part of these statements.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Three months ended
	3/31/2022		3/31/2021
Cash flows from operating activities
Net income	$	514.4	$	764.8
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property, equipment and software	54.5		49.0
Amortization of acquisition-related assets and retention arrangements	53.9		—
Fair value remeasurement of contingent consideration liability	(45.5)		—

Stock-based compensation expense	63.6		57.5
Net (gains) losses recognized on investments	38.3		(59.5)
Net redemptions in T. Rowe Price investment products used to economically hedge supplemental savings plan liability	6.1		22.0
Net change in securities held by consolidated T. Rowe Price investment products	180.1		(120.9)
Other changes	238.0		281.8
Net cash provided by operating activities	1,103.4		994.7

Cash flows from investing activities
Purchases of investment products	(6.0)		(12.5)
Dispositions of investment products	64.9		60.3
Net cash of T. Rowe Price investment products on deconsolidation	(5.9)		(27.3)
Additions to property, equipment and software	(54.9)		(58.8)
Other investing activity	5.7		7.5
Net cash provided by (used in) investing activities	3.8		(30.8)

Cash flows from financing activities
Repurchases of common stock	(320.1)		(259.2)
Common share issuances under stock-based compensation plans	5.1		20.9
Dividends paid to common stockholders of T. Rowe Price	(279.2)		(252.3)
Net contributions from non-controlling interests in consolidated entities	6.0		—
Net subscriptions (redemptions) received from redeemable non-controlling interest holders	(55.9)		183.1
Net cash used in financing activities	(644.1)		(307.5)

Effect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment products	(2.7)		.9

Net change in cash and cash equivalents during period	460.4		657.3
Cash and cash equivalents at beginning of period, including $101.1 million at December 31, 2021, and $104.8 million at December 31, 2020, held by consolidated T. Rowe Price investment products	1,624.2		2,256.5
Cash and cash equivalents at end of period, including $87.1 million at March 31, 2022, and $83.7 million at March 31, 2021, held by consolidated T. Rowe Price investment products	$	2,084.6	$	2,913.8

The accompanying notes are an integral part of these statements.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(shares in thousands; dollars in millions)


	Three months ended 3/31/2022
	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, 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)	—	—		—		567.9		—		567.9		17.5		585.4		(53.5)
Other comprehensive income (loss), net of tax	—	—		—		—		(5.0)		(5.0)		—		(5.0)		(9.9)
Dividends declared ($1.20 per share)	—	—		—		(279.2)		—		(279.2)		—		(279.2)		—


Shares issued upon option exercises	174	—		7.8		—		—		7.8		—		7.8		—

Net shares issued upon vesting of restricted stock units	41			(3.2)		—		—		(3.2)		—		(3.2)		—

Stock-based compensation expense	—	—		63.5		—		—		63.5		—		63.5		—
Restricted stock units issued as dividend equivalents	—	—		.1		(.1)		—		—		—		—		—
Common shares repurchased	(2,107)	(.3)		(319.8)		—		—		(320.1)		—		(320.1)		—
Net contributions from non-controlling interests in consolidated entities	—	—		—		—		—		—		6.0		6.0		—
Net redemptions from T. Rowe Price investment products	—	—		—		—		—		—		—		—		(65.6)
Net deconsolidations of T. Rowe Price investment products	—	—		—		—		—		—		—		—		(62.9)
Balances at March 31, 2022	227,283	$	45.5	$	668.2	$	8,372.2	$	(31.5)	$	9,054.4	$	272.2	$	9,326.6	$	790.4


	Three months ended 3/31/2021
	Common shares outstanding	Common stock		Additional capital in excess of par value		Retained earnings		AOCI(1)		Total permanent stockholders’ equity		Redeemable non-controlling interests
Balances at December 31, 2020	227,965	$	45.6	$	654.6	$	7,029.8	$	(23.0)	$	7,707.0	$	1,561.7



Net income	—	—		—		749.4		—		749.4		15.4
Other comprehensive income (loss), net of tax	—	—		—		—		(7.5)		(7.5)		(11.8)
Dividends declared ($1.08 per share)	—	—		—		(252.3)		—		(252.3)		—

Shares issued upon option exercises	572	.1		25.3		—		—		25.4		—

Net shares issued upon vesting of restricted stock units	41	—		(3.7)		—		—		(3.7)		—

Stock-based compensation expense	—	—		57.5		—		—		57.5		—
Restricted stock units issued as dividend equivalents	—	—		.1		(.1)		—		—		—
Common shares repurchased	(1,630)	(.3)		(79.2)		(188.1)		—		(267.6)		—
Net subscriptions into T. Rowe Price investment products	—	—		—		—		—		—		187.5
Net deconsolidations of T. Rowe Price investment products	—	—		—		—		—		—		(739.9)
Balances at March 31, 2021	226,948	$	45.4	$	654.6	$	7,338.7	$	(30.5)	$	8,008.2	$	1,012.9

(1) Accumulated other comprehensive income

The accompanying notes are an integral part of these statements.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – THE COMPANY AND BASIS OF PREPARATION.

T. Rowe Price Group Inc. derives its consolidated revenues and net income primarily from investment advisory services that its subsidiaries provide to individual and institutional investors in the T. Rowe Price U.S. mutual funds (“U.S. mutual funds”), subadvised funds, separately managed accounts, collective investment trusts, and other

affiliated products. The other affiliated 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 or private accounts, and collateralized loan obligations. We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services through model delivery. Additionally, we also derive revenue from our interests in general partners of certain affiliated private investment funds that are entitled to a disproportionate allocation of income through capital allocation-based arrangements.

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

On December 29, 2021, we completed our acquisition of Oak Hill Advisors, L.P., a leading alternative credit manager, and other entities that had common ownership (collectively, OHA). We acquired 100% of the equity interests of Oak Hill Advisors, L.P., 100% of the equity interests in entities that make co-investments in certain affiliated private investment funds (the "co-investment entities") and a majority of the equity interests in entities that have interests in general partners of affiliated private investment funds and are entitled to a disproportionate allocation of income (the "carried interest entities"). As of March 31, 2022, OHA had $57 billion of capital under management (which includes net assets value, portfolio value and/or unfunded capital). We have reflected the financial position, operating results and cash flows of OHA in these financial statements.

BASIS OF PRESENTATION.

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

The unaudited interim financial information contained in these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our 2021 Annual Report.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

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

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

Revenues earned under agreements with clients include:


	Three months ended 3/31/2022										Three months ended 3/31/2021
			Administrative, distribution, and servicing fees										Administrative, distribution, and servicing fees
(in millions)	Investment advisory fees		Administrative fees		Distribution and servicing fees		Capital allocation-based income		Net revenues		Investment advisory fees		Administrative fees		Distribution and servicing fees		Net revenues
U.S. mutual funds	$	976.5	$	93.1	$	26.3	$	—	$	1,095.9	$	1,050.2	$	78.7	$	29.1	$	1,158.0
Subadvised funds, separate accounts, collective investment trusts, and other investment products	685.6		—		—		44.4		730.0		637.6		—		—		637.6
Other clients(1)	—		37.1		—		—		37.1		—		31.2		—		31.2
	$	1,662.1	$	130.2	$	26.3	$	44.4	$	1,863.0	$	1,687.8	$	109.9	$	29.1	$	1,826.8

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

Total net revenues earned from our related parties aggregate $1,536.4 million and $1,482.3 million for the three months ended March 31, 2022 and 2021, respectively. Accounts receivable from these products aggregate to $584.5 million at March 31, 2022 and $577.9 million at December 31, 2021.

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


	Three months ended
(in millions)	3/31/2022		3/31/2021
U.S. mutual funds
Equity	$	691.9	$	729.8
Fixed income, including money market	64.0		59.0
Multi-asset	220.6		261.4
	976.5		1,050.2
Subadvised funds, separate accounts, collective investment trusts, and other investment products
Equity	394.1		424.2
Fixed income, including money market	42.6		37.5
Multi-asset	184.0		175.9
Alternatives	64.9		—
	685.6		637.6
Total	$	1,662.1	$	1,687.8

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


	Average during
	Three months ended				As of
(in billions)	3/31/2022		3/31/2021			3/31/2022		12/31/2021
U.S. mutual funds
Equity	$	491.3	$	509.6		$	489.0	$	553.9
Fixed income, including money market	86.4		82.3			83.9		85.3
Multi-asset	220.3		222.6			216.5		232.2
	798.0		814.5			789.4		871.4
Subadvised funds, separate accounts, collective investment trusts, and other investment products
Equity	395.2		408.4			389.0		438.8
Fixed income, including money market	91.4		90.7			91.3		90.4
Multi-asset	233.4		195.2			239.9		245.5
Alternatives	41.9		—			42.2		41.7
	761.9		694.3			762.4		816.4
Total	$	1,559.9	$	1,508.8		$	1,551.8	$	1,687.8

Investors that we serve are primarily domiciled in the U.S.; investment advisory clients outside the U.S. account for 9.7% and 9.9% of our assets under management at March 31, 2022 and December 31, 2021, respectively.

NOTE 3 – INVESTMENTS.

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


(in millions)	3/31/2022		12/31/2021

Investments held at fair value
T. Rowe Price investment products
Discretionary investments	$	502.2	$	518.7
Seed capital	224.6		264.8
Supplemental savings plan liability economic hedges	820.0		881.5
Investment partnerships and other investments	105.0		108.9
Investments in affiliated collateralized loan obligations	9.3		10.8
Equity method investments


T. Rowe Price investment products - seed capital	134.0		141.7

Investments in affiliated private investment funds - carried interest	642.1		609.8
Investments in affiliated private investment funds - seed/co-investment	153.1		151.3
23% Investment in UTI Asset Management Company Limited (India)	170.3		165.4
Other investment partnerships and investments	2.5		2.5
Held to maturity
Investments in affiliated collateralized loan obligations	115.2		119.1
U.S. Treasury note	1.0		1.0
Total	$	2,879.3	$	2,975.5

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

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

During the three months ended March 31, 2022 and 2021, certain T. Rowe Price investment products in which we provided initial seed capital at the time of formation were deconsolidated, as we no longer had a controlling interest. Depending on our ownership interest, we are now reporting our residual interests in these T. Rowe Price investment products as either an equity method investment or an investment held at fair value. Additionally, during the three months ended March 31, 2022 and March 31, 2021, certain T. Rowe Price investment products were consolidated, as we regained a controlling interest. The net impact of these changes on our unaudited condensed consolidated balance sheets and statements of income as of the dates the portfolios were deconsolidated or reconsolidated is detailed below.


	Three months ended
(in millions)	3/31/2022		3/31/2021
Net increase (decrease) in assets of consolidated T. Rowe Price investment products	$	(97.5)	$	(928.1)
Net increase (decrease) in liabilities of consolidated T. Rowe Price investment products	$	(8.6)	$	(15.3)
Net increase (decrease) in redeemable non-controlling interests	$	(63.0)	$	(739.9)

Gains recognized upon deconsolidation	$	1.6	$	2.6

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

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

There is debt associated with our long-term investments in affiliated collateralized loan obligations (“CLOs”). As of March 31, 2022 and December 31, 2021, the debt is valued at $108.7 million and $113.5 million, and is reported in accounts payable and accrued expenses in our unaudited condensed consolidated balance sheets. The debt includes outstanding repurchase agreements of €66.7 million (equivalent to $73.8 million at March 31, 2022 and $75.9 million at December 31, 2021 at the respective EUR spot rates) and collateralized by the CLO investments. The debt also includes outstanding note facilities of €32.4 million (equivalent to $34.9 million at March 31, 2022 and $36.9 million at December 31, 2021 at the respective EUR spot rates) and are collateralized by first priority security interests in the assets of the consolidated OHA entity that is party to the notes. The debt bears interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.70% to 1.95% as of March 31, 2022. The debt matures on various dates through 2032 or if the investments are paid back in full or cancelled.

VARIABLE INTEREST ENTITIES.

Our investments at March 31, 2022 and December 31, 2021 include interests in variable interest entities that we do not consolidate as we are not deemed the primary beneficiary. Our maximum risk of loss related to our involvement with these entities is as follows:


(in millions)	3/31/2022		12/31/2021
Investment carrying values	$	951.9	$	943.3
Unfunded capital commitments	110.4		94.2
Accounts receivable	94.2		145.1
	$	1,156.5	$	1,182.6

The unfunded capital commitments totaling $110.4 million at March 31, 2022 and $94.2 million at December 31, 2021 relate primarily to the affiliated private investment funds and the investment partnerships in which we have an existing investment. In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

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INVESTMENTS IN AFFILIATED PARTNERS.

During 2021, as part of the OHA acquisition, we acquired a majority of the equity interests in entities that have interests in general partners of affiliated private investment funds and are entitled to a disproportionate allocation of income. These entities are considered variable interest entities and are consolidated as T. Rowe Price was determined to be the primary beneficiary.

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


(in millions)	3/31/2022		12/31/2021
Assets	$	695.4	$	692.7
Liabilities	$	1.1	$	56.4
Non-controlling interest	$	272.2	$	248.7

NOTE 4 – FAIR VALUE MEASUREMENTS.

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

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

Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar

securities, interest rates, prepayment speeds, and credit risk. These inputs are based on market data

obtained from independent sources.

Level 3 – unobservable inputs reflecting our own assumptions based on the best information available. 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 and liability that are recognized in our unaudited condensed consolidated balance sheets using fair value measurements determined based on the differing levels of inputs. This table excludes investments held by the consolidated T. Rowe Price investment products which are presented separately on our unaudited condensed consolidated balance sheets and are detailed in Note 5.


	3/31/2022						12/31/2021
(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	1,551.1		$	—	$	—	$	1,183.9	$	—	$	—
Discretionary investments	502.2		—		—		518.7		—		—
Seed capital	202.9		21.7		—		241.4		23.4		—
Supplemental savings plan liability economic hedges	820.0		—		—		881.5		—		—
Other investments	1.3		.1		—		.7		.1		—
Investments in affiliated collateralized loan obligations	—		9.3		—		—		10.8		—
Total	$	3,077.5	$	31.1	$	—	$	2,826.2	$	34.3	$	—

Contingent consideration liability	$	—	$	—	$	211.5	$	—	$	—	$	306.3

The fair value hierarchy level table above does not include the investment partnerships and other investments for which fair value is estimated using their NAV per share as a practical expedient. The carrying value of these investments as disclosed in Note 3 were $103.6 million at March 31, 2022, and $108.1 million at December 31, 2021.

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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, payable in cash, that may be due as part of an earnout payment starting in 2025 and ending in 2027 upon satisfying or exceeding certain defined revenue targets. These defined revenue targets will be evaluated on a cumulative basis beginning at the end of 2024, with the ability to extend two additional years if the defined revenue targets are not achieved. About 22% of the earnout is conditioned upon continued service with T. Rowe Price and was excluded from the purchase consideration and deemed compensatory. The fair value of the earnout is remeasured each reporting period and recognized over the related service period. For the three months ended March 31, 2022, $5.1 million was recorded as part of compensation expense in our unaudited condensed consolidated statements of income for the portion of the earnout deemed compensatory.

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


	Contingent Consideration Liability
(in millions)	Three Months Ended 3/31/2022
Balance, 12/31/2021	$	306.3
Measurement period adjustment	(49.3)
Unrealized (gains) losses, included in earnings	(45.5)
Balance, 3/31/2022	$	211.5

The fair value of the contingent consideration is measured using the Monte Carlo simulation methodology of valuation. The most significant assumptions used relate to the discount periods and rates and from changes pertaining to the achievement of the defined financial targets. The unrealized (gains) losses during the quarter are reflected in general, administrative and other expenses in our unaudited condensed consolidated statements of income.

In addition, simultaneously with the OHA acquisition, a Value Creation Agreement was entered into whereby certain employees of OHA will receive incentive payments in the aggregate equal to 10% of the appreciated value of the OHA business, subject to an annualized preferred return to T. Rowe Price, on the fifth anniversary of the acquisition date. This arrangement is treated as a post-combination compensation expense. This arrangement will be remeasured at fair value at each reporting date and recognized over the related service period. As of March 31, 2022, $2.0 million was recognized as part of compensation expense in our unaudited condensed consolidated statements of income.

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

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

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


	3/31/2022						12/31/2021
(in millions)	Voting interest entities		Variable interest entities		Total		Voting interest entities		Variable interest entities		Total
Cash and cash equivalents(1)	$	9.5	$	77.5	$	87.0	$	7.3	$	93.8	$	101.1
Investments(2)	144.4		1,391.5		1,535.9		188.9		1,645.0		1,833.9
Other assets	3.3		32.0		35.3		5.1		22.7		27.8
Total assets	157.2		1,501.0		1,658.2		201.3		1,761.5		1,962.8
Liabilities	11.7		44.2		55.9		15.3		36.2		51.5
Net assets	$	145.5	$	1,456.8	$	1,602.3	$	186.0	$	1,725.3	$	1,911.3

Attributable to T. Rowe Price	$	99.6	$	712.3	$	811.9	$	125.3	$	803.7	$	929.0
Attributable to redeemable non-controlling interests	45.9		744.5		790.4		60.7		921.6		982.3
	$	145.5	$	1,456.8	$	1,602.3	$	186.0	$	1,725.3	$	1,911.3

(1) Cash and cash equivalents includes $6.6 million at March 31, 2022, and $6.5 million at December 31, 2021, of T. Rowe Price money market mutual funds.

(2) Investments include $39.3 million at March 31, 2022, and $42.5 million at December 31, 2021 of other T. Rowe Price investment products.

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

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

The operating results of the consolidated T. Rowe Price investment products for the three months ended March 31, 2022 and 2021, are reflected in our unaudited condensed consolidated statements of income as follows:


	Three months ended
	3/31/2022						3/31/2021
(in millions)	Voting interest entities		Variable interest entities		Total		Voting interest entities		Variable interest entities		Total
Operating expenses reflected in net operating income	$	(.2)	$	(2.3)	$	(2.5)	$	(.2)	$	(3.3)	$	(3.5)
Net investment income (loss) reflected in non-operating income (loss)	(6.6)		(94.8)		(101.4)		6.1		31.1		37.2
Impact on income before taxes	$	(6.8)	$	(97.1)	$	(103.9)	$	5.9	$	27.8	$	33.7

Net income (loss) attributable to T. Rowe Price	$	(4.7)	$	(45.7)	$	(50.4)	$	4.0	$	14.3	$	18.3
Net income (loss) attributable to redeemable non-controlling interests	(2.1)		(51.4)		(53.5)		1.9		13.5		15.4
	$	(6.8)	$	(97.1)	$	(103.9)	$	5.9	$	27.8	$	33.7

The operating expenses of the consolidated investment products are reflected in general, administrative and other expenses. In preparing our unaudited condensed consolidated financial statements, we eliminated operating expenses of $0.9 million and $1.3 million for the three months ended March 31, 2022 and 2021, respectively, against the investment advisory and administrative fees earned from these products. The net investment income (loss) reflected in non-operating income (loss) includes dividend and interest income as well as realized and

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

The table below details the impact of these consolidated investment products on the individual lines of our unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021.


	Three months ended
	3/31/2022						3/31/2021
(in millions)	Voting interest entities		Variable interest entities		Total		Voting interest entities		Variable interest entities		Total
Net cash provided by (used in) operating activities	$	(2.6)	$	88.2	$	85.6	$	(31.7)	$	(112.0)	$	(143.7)
Net cash used in investing activities	—		(5.9)		(5.9)		(9.1)		(18.2)		(27.3)
Net cash provided by (used in) financing activities	4.9		(95.9)		(91.0)		36.7		112.3		149.0
Effect of exchange rate changes on cash and cash equivalents of consolidated T. Rowe Price investment products	—		(2.7)		(2.7)		—		.9		.9
Net change in cash and cash equivalents during period	2.3		(16.3)		(14.0)		(4.1)		(17.0)		(21.1)
Cash and cash equivalents at beginning of year	7.3		93.8		101.1		7.1		97.7		104.8
Cash and cash equivalents at end of period	$	9.6	$	77.5	$	87.1	$	3.0	$	80.7	$	83.7

The net cash provided by financing activities during the three months ended March 31, 2022 and 2021 includes $35.1 million and $34.1 million, respectively, of net subscriptions we made into the consolidated T. Rowe Price investment products, net of dividends received. These cash flows were eliminated in consolidation.

FAIR VALUE MEASUREMENTS.

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

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

Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, and credit risk. These inputs are based on market data obtained from independent sources.

Level 3 – unobservable inputs reflecting our own assumptions based on the best information available. The value of investments using Level 3 inputs is insignificant.

These levels are not necessarily an indication of the risk or liquidity associated with these investment holdings. The following table summarizes the investment holdings held by our consolidated T. Rowe Price investment products using fair value measurements determined based on the differing levels of inputs.


	3/31/2022				12/31/2021
(in millions)	Level 1		Level 2		Level 1		Level 2
Assets
Cash equivalents	$	6.6	$	2.1	$	6.5	$	.7
Equity securities	212.4		239.0		247.8		340.3
Fixed income securities	—		1,024.6		—		1,187.4
Other investments	8.6		51.3		5.7		52.7
	$	227.6	$	1,317.0	$	260.0	$	1,581.1

Liabilities	$	(1.9)	$	(13.1)	$	(.7)	$	(9.7)

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NOTE 6 - GOODWILL AND INTANGIBLE ASSETS.

Goodwill and intangible assets consist of the following:


(in millions)	3/31/2022		12/31/2021
Goodwill	$	2,643.9	$	2,693.2
Indefinite-lived intangible assets - trade name	134.7		134.7
Indefinite-lived intangible assets - investment advisory agreements	164.8		164.8
Definite-lived intangible assets - investment advisory agreements	586.8		613.9
Total	$	3,530.2	$	3,606.6

Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for the remainder of 2022 is $81.4 million, $108.1 million for 2023, $105.7 million for 2024, $105.0 million for 2025, and $87.7 million for 2026. Amortization expense for the definite-lived investment advisory agreements intangible assets was $27.1 million for the three months ended March 31, 2022.

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


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

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

NOTE 7 – STOCK-BASED COMPENSATION.

STOCK OPTIONS.

The following table summarizes the status of, and changes in, our stock options during the three months ended March 31, 2022.


	Options	Weighted- average exercise price
Outstanding at December 31, 2021	2,846,579	$	72.87



Exercised	(214,772)	$	64.58


Outstanding at March 31, 2022	2,631,807	$	73.55
Exercisable at March 31, 2022	2,631,807	$	73.55

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RESTRICTED SHARES AND STOCK UNITS.

The following table summarizes the status of, and changes in, our nonvested restricted shares and restricted stock units during the three months ended March 31, 2022.


	Restricted shares	Restricted stock units	Weighted-average fair value
Nonvested at December 31, 2021	5,720	5,701,865	$	146.87
Time-based grants	—	8,078	$	173.08

Dividend equivalents granted to non-employee directors	—	786	$	153.10
Vested	—	(62,378)	$	98.23
Forfeited	—	(61,216)	$	141.91
Nonvested at March 31, 2022	5,720	5,587,135	$	147.50

Nonvested at March 31, 2022, includes performance-based restricted stock units of 294,518. These nonvested performance-based restricted stock units include 81,123 units for which the performance period has lapsed, and the performance threshold has been met.

FUTURE STOCK-BASED COMPENSATION EXPENSE.

The following table presents the compensation expense to be recognized over the remaining vesting periods of the stock-based awards outstanding at March 31, 2022. Estimated future compensation expense will change to reflect future grants of restricted stock awards and units, future option grants, changes in the probability of performance thresholds being met, and adjustments for actual forfeitures.


(in millions)

Second quarter 2022	$	64.0
Third quarter 2022	63.1
Fourth quarter 2022	54.3
2023	125.5
2024 through 2026	105.4
Total	$	412.3

NOTE 8 – EARNINGS PER SHARE CALCULATIONS.

The following table presents the reconciliation of net income attributable to T. Rowe Price to net income allocated to our common stockholders and the weighted-average shares that are used in calculating the basic and diluted earnings per share on our common stock. Weighted-average common shares outstanding assuming dilution reflects the potential dilution, determined using the treasury stock method, that could occur if outstanding stock options were exercised and non-participating stock awards vested. No outstanding stock options had an anti-dilutive impact on the diluted earnings per common share calculation in the periods presented.


	Three months ended
(in millions)	3/31/2022		3/31/2021
Net income attributable to T. Rowe Price	$	567.9	$	749.4
Less: net income allocated to outstanding restricted stock and stock unit holders	13.0		19.9
Net income allocated to common stockholders	$	554.9	$	729.5

Weighted-average common shares
Outstanding	228.2		227.7
Outstanding assuming dilution	229.8		230.0

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NOTE 9 – OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS.

The changes in each component of accumulated other comprehensive loss, including reclassification adjustments for the three months ended March 31, 2022 and 2021 are presented in the table below.


	Three months ended 3/31/2022						Three months ended 3/31/2021

(in millions)	Equity method investments		Consolidated T. Rowe Price investment products - variable interest entities		Total currency translation adjustments		Equity method investments		Consolidated T. Rowe Price investment products - variable interest entities		Total currency translation adjustments
Balances at beginning of period	$	(36.7)	$	10.2	$	(26.5)	$	(43.6)	$	20.6	$	(23.0)



Other comprehensive income (loss) before reclassifications and income taxes	.5		(5.6)		(5.1)		(.8)		(7.1)		(7.9)
Reclassification adjustments recognized in non-operating income	—		(1.6)		(1.6)		—		(2.6)		(2.6)
	.5		(7.2)		(6.7)		(.8)		(9.7)		(10.5)
Net deferred tax benefits (income taxes)	(.1)		1.9		1.8		.5		2.5		3.0
Other comprehensive income (loss)	.4		(5.3)		(4.9)		(.3)		(7.2)		(7.5)
Balances at end of period	$	(36.3)	$	4.9	$	(31.4)	$	(43.9)	$	13.4	$	(30.5)

The other comprehensive income (loss) in the table above excludes losses of $9.9 million and income of $11.8 million of other comprehensive income related to redeemable non-controlling interests held in our consolidated products for the three months ended March 31, 2022 and 2021, respectively.

NOTE 10 – COMMITMENTS AND CONTINGENCIES.

COMMITMENTS.

T. Rowe Price has committed $499.1 million to fund OHA products over the next five years.

CONTINGENCIES.

On February 14, 2017, T. Rowe Price Group, Inc., T. Rowe Price Associates, Inc., T. Rowe Price Trust Company, current and former members of the management committee, and trustees of the T. Rowe Price U.S. Retirement Program were named as defendants in a lawsuit filed in the United States District Court for the District of Maryland. The lawsuit alleges breaches of ERISA’s fiduciary duty and prohibited transaction provisions on behalf of a class of all participants and beneficiaries of the T. Rowe Price 401(k) Plan from February 14, 2011, to the time of judgment. The matter has been certified as a class action. The parties reached a settlement agreement, and, on January 18, 2022, the Court provided preliminary approval of the proposed settlement and set a fairness hearing for May 24, 2022. The proposed settlement would not be material to T. Rowe Price Group, Inc.

In addition to the matter discussed above, various claims against us arise in the ordinary course of business, including employment-related claims. In the opinion of management, after consultation with counsel, the likelihood of an adverse determination in one or more of these pending ordinary course of business claims that would have a material adverse effect on our financial position or results of operations is remote.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

T. Rowe Price Group, Inc.:

Results of Review of Interim Financial Information

We have reviewed the condensed consolidated balance sheet of T. Rowe Price Group, Inc. and subsidiaries (the “Company") as of March 31, 2022, the related condensed consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 24, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

Baltimore, Maryland

April 28, 2022

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