BlackRock, Inc. (NYSE:BLK):
FINANCIAL RESULTS
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(in millions, except per share data)
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Q2
2014
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Q2
2013
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Change
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Q1
2014
|
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Change
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Six Months Ended June 30,
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Change
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2014
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2013
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AUM
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$
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4,593,612
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$
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3,857,007
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19
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%
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$
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4,400,925
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|
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4
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%
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$
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4,593,612
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$
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3,857,007
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19
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%
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GAAP basis:
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Revenue
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$
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2,778
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$
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2,482
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12
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%
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$
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2,670
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4
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%
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$
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5,448
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$
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4,931
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10
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%
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Operating income
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$
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1,122
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$
|
849
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32
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%
|
$
|
1,051
|
|
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7
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%
|
$
|
2,173
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$
|
1,758
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24
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%
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Operating margin
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40.4
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%
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34.2
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%
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620 bps
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39.4
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%
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|
100 bps
|
|
39.9
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%
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35.7
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%
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|
420 bps
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Net income(1)
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$
|
808
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$
|
729
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11
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%
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$
|
756
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|
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7
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%
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$
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1,564
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$
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1,361
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15
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%
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Diluted EPS
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$
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4.72
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$
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4.19
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13
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%
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$
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4.40
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7
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%
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$
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9.12
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$
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7.81
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17
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%
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Weighted average diluted shares
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171.2
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173.9
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(2
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%)
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171.9
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-
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%
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171.5
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174.3
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(2
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%)
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As Adjusted:
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Operating income(2)
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$
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1,133
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$
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982
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15
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%
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$
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1,062
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7
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%
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$
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2,195
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$
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1,903
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15
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%
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Operating margin(2)
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42.4
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%
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41.3
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%
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110 bps
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41.4
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%
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100 bps
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41.9
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%
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40.6
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%
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130 bps
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Net income(1) (2)
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$
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837
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$
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722
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16
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%
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$
|
762
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|
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10
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%
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$
|
1,599
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$
|
1,359
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|
18
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%
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Diluted EPS(2)
|
$
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4.89
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$
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4.15
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18
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%
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$
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4.43
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10
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%
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$
|
9.32
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$
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7.80
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19
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%
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(1) Net income represents net income attributable to
BlackRock, Inc.
(2) See notes (1) through (5) to the Condensed Consolidated
Statements of Income and Supplemental Information for more information
on as adjusted items and the reconciliation to GAAP.
BlackRock, Inc. (NYSE:BLK) today reported financial results for the
three and six months ended June 30, 2014.
“In the second quarter, we saw strong revenue growth driven by a
combination of robust organic revenue gains and market tailwinds. Our
results, with revenue up 12% and as adjusted EPS up 18% year-over-year,
once again demonstrate the benefits of our diverse platform,” commented
Laurence D. Fink, Chairman and CEO of BlackRock. “During the quarter we
generated 4% annualized organic growth or $38.0 billion in long-term net
new business. We continue to execute on long-term growth strategies by
focusing on key industry trends impacting our clients, including ETFs,
alternatives, retirement, outcomes and solutions.
“We saw $13.1 billion of long-term net inflows in Retail as we continued
to raise our brand profile, evolve our product set and deepen our
distribution relationships. Retail flows were driven by clients’
interest in efficient beta and our outcome-oriented strategies –
including multi-asset, alternatives and unconstrained fixed income
offerings. This included $3.0 billion in flows to our unconstrained
Strategic Income Opportunities fund and $1.1 billion to our Multi-Asset
Income fund.
“iShares flows of $30.4 billion led the industry in market share
for the quarter. Liquidity-oriented investors increased their
participation in rising developed and emerging markets, while
buy-and-hold investors continued to access our Core Series product
suite, which attracted $5.5 billion in the US alone this quarter.
“Among institutional clients, we continued to see strong interest in our
multi-asset class offerings, such as our LifePath target-date
suite and fiduciary mandates, as well as illiquid alternatives, where we
again raised more than $1 billion in commitments.
“BlackRock remains committed to top quartile performance across all of
our investment products. Our active fixed income product suite continues
to excel, with 90% of taxable assets above benchmark or peer median for
the three-year period. Similarly strong investment track records in our
scientific active equity, alternatives and index businesses are
delivering results for our clients and position us well for future
growth. While performance in fundamental equities remains challenged, we
continue to make substantial investments to restructure this business
and remain confident in our new teams, their processes and the future
outlook for growth over time.
“Looking ahead to the second half of 2014, our commitment to alpha
generation, product innovation and broad-based distribution positions us
well to drive results for our clients and shareholders. The depth of our
platform is built on the quality of our people and the strength of our
culture, and I want to once again thank BlackRock employees for their
commitment to helping our clients build better financial futures.”
RESULTS BY CLIENT TYPE
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(in millions), (unaudited)
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Q2 2014
Net flows
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June 30, 2014
AUM
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Q2 2014
Base Fees(1)
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June 30, 2014
AUM
% of Total
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Q2 2014
Base Fees(1)
% of Total
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Retail
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$
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13,128
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$
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534,502
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$
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823
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12
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%
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35
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%
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iShares
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30,445
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993,832
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817
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23
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%
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35
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%
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Institutional:
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Active
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1,013
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970,433
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470
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23
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%
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20
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%
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Index
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(6,562
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)
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1,795,938
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251
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42
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%
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10
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%
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Total institutional
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(5,549
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)
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2,766,371
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721
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65
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%
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30
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%
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Total long-term
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$
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38,024
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$
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4,294,705
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$
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2,361
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100
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%
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100
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%
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RESULTS BY PRODUCT
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(in millions), (unaudited)
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Q2 2014
Net flows
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June 30, 2014
AUM
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Q2 2014
Base Fees(1)
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June 30, 2014
AUM
% of Total
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Q2 2014
Base Fees(1)
% of Total
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Equity
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$
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9,707
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$
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2,462,585
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$
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1,338
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57
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%
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56
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%
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Fixed income
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21,255
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1,340,725
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539
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31
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%
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23
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%
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Multi-asset
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6,795
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374,473
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300
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9
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%
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13
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%
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Alternatives
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|
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267
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116,922
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184
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3
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%
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8
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%
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Total long-term
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$
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38,024
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$
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4,294,705
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$
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2,361
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100
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%
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100
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%
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(1) Base fees include investment advisory, administration
fees and securities lending revenue.
Long-Term Business Highlights
Long-term net inflows of $27.4 billion and $13.7 billion from clients in
the Americas and EMEA, respectively, were partially offset by net
outflows of $3.1 billion from Asia-Pacific clients. At June 30, 2014,
BlackRock managed 60% of long-term AUM for investors in the Americas and
40% for clients in EMEA and Asia-Pacific.
A discussion of the Company’s net flows by client type for the second
quarter of 2014 is presented below.
-
Retail long-term net inflows of $13.1 billion included
net inflows of $4.2 billion in the United States and $8.9 billion
internationally. Flows were led by fixed income net inflows of $10.1
billion, which reflected strong interest in unconstrained fixed income
offerings, including $3.0 billion of net inflows into our Strategic
Income Opportunities fund. Equity net inflows of $1.5 billion were
driven by strong flows into European index mutual funds. Multi-asset
class net inflows were led by our Multi-Asset Income fund which raised
over $1 billion of net new assets. Alternative U.S. mutual funds
generated $0.7 billion in net inflows.
-
iShares® long-term net inflows of
$30.4 billion included U.S. and European iShares net inflows of
$23.1 billion and $8.2 billion, respectively. Equity net inflows
totaled $20.6 billion, with strength in both developed and emerging
markets. Fixed income net inflows of $9.5 billion represented the
leading share of fixed income industry ETF flows for the quarter. The
U.S. Core Series generated $5.5 billion of net inflows.
-
Institutional active long-term net inflows of $1.0
billion were led by multi-asset class net inflows of $5.3 billion,
which reflected ongoing demand for our LifePath®
target-date suite and fiduciary mandate wins. Equity net outflows of
$4.5 billion included fundamental net outflows of $2.4 billion and
scientific net outflows of $2.1 billion. Alternatives net outflows of
$0.6 billion included $0.9 billion of capital successfully returned to
investors.
-
Institutional index long-term net outflows of $6.6
billion were driven by equity net outflows of $7.9 billion related to
client asset allocation decisions.
Cash management AUM increased 2% to $268.4 billion.
Advisory AUM decreased 4% to $30.5 billion due to disposition
portfolio liquidations. The execution of these liquidations contributed
to BlackRock Solutions® and advisory revenue in the
quarter.
INVESTMENT PERFORMANCE AT JUNE 30, 2014(1)
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One-year period
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|
Three-year period
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Five-year period
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Fixed Income:
|
|
|
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|
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Actively managed products above benchmark or peer median
|
|
|
|
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Taxable
|
|
83
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%
|
|
90
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%
|
|
91
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%
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Tax-exempt
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|
69
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%
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|
70
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%
|
|
72
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%
|
Index products within or above applicable tolerance
|
|
97
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%
|
|
98
|
%
|
|
98
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%
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Equity:
|
|
|
|
|
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Actively managed products above benchmark or peer median
|
|
|
|
|
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Fundamental
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|
35
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%
|
|
47
|
%
|
|
49
|
%
|
Scientific
|
|
81
|
%
|
|
93
|
%
|
|
93
|
%
|
Index products within or above applicable tolerance
|
|
95
|
%
|
|
97
|
%
|
|
97
|
%
|
(1) Past performance is not indicative of future results. The
performance information shown is based on preliminary available data.
Please refer to performance disclosure detail.
Teleconference, Webcast and Presentation Information
Chairman and Chief Executive Officer, Laurence D. Fink, and Chief
Financial Officer, Gary S. Shedlin, will host a teleconference call for
investors and analysts on Wednesday, July 16, 2014 at 8:30 a.m. (Eastern
Time). Members of the public who are interested in participating in the
teleconference should dial, from the United States, (800) 374-0176, or
from outside the United States, (706) 679-8281, shortly before 8:30 a.m.
and reference the BlackRock Conference Call (ID Number 68909181). A
live, listen-only webcast will also be available via the investor
relations section of www.blackrock.com.
Both the teleconference and webcast will be available for replay by
12:30 p.m. (Eastern Time) on Wednesday, July 16, 2014 and ending at
midnight on Wednesday, July 30, 2014. To access the replay of the
teleconference, callers from the United States should dial
(800) 585-8367 and callers from outside the United States should dial
(404) 537-3406 and enter the Conference ID Number 68909181. To access
the webcast, please visit the investor relations section of www.blackrock.com.
About BlackRock
BlackRock is a leader in investment management, risk management and
advisory services for institutional and retail clients worldwide. At
June 30, 2014, BlackRock’s AUM was $4.594 trillion. BlackRock helps
clients meet their goals and overcome challenges with a range of
products that include separate accounts, mutual funds, iShares®
(exchange-traded funds), and other pooled investment vehicles. BlackRock
also offers risk management, advisory and enterprise investment system
services to a broad base of institutional investors through BlackRock
Solutions®. Headquartered in New York City, as of June
30, 2014, the firm had approximately 11,600 employees in more than 30
countries and a major presence in key global markets, including North
and South America, Europe, Asia, Australia and the Middle East and
Africa.
For additional information, please visit the Company’s website at www.blackrock.com
| Twitter: @blackrock_news
| Blog: www.blackrockblog.com
| LinkedIn: www.linkedin.com/company/blackrock
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL
INFORMATION
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(in millions, except per share data), (unaudited)
|
|
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|
|
|
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Three Months
|
|
|
|
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Three Months Ended
|
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|
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Ended
|
|
|
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June 30,
|
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|
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March 31,
|
|
|
|
|
2014
|
|
2013
|
|
Change
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|
2014
|
|
Change
|
Revenue
|
|
|
|
|
|
|
|
|
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|
Investment advisory, administration fees and securities lending
revenue
|
|
$2,434
|
|
$2,177
|
|
$257
|
|
$2,291
|
|
$143
|
Investment advisory performance fees
|
|
115
|
|
89
|
|
26
|
|
158
|
|
(43)
|
BlackRock Solutions and advisory
|
|
146
|
|
138
|
|
8
|
|
154
|
|
(8)
|
Distribution fees
|
|
18
|
|
18
|
|
-
|
|
19
|
|
(1)
|
Other revenue
|
|
65
|
|
60
|
|
5
|
|
48
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
2,778
|
|
2,482
|
|
296
|
|
2,670
|
|
108
|
|
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
948
|
|
864
|
|
84
|
|
982
|
|
(34)
|
Distribution and servicing costs
|
|
89
|
|
90
|
|
(1)
|
|
89
|
|
-
|
Amortization of deferred sales commissions
|
|
14
|
|
12
|
|
2
|
|
15
|
|
(1)
|
Direct fund expense
|
|
187
|
|
162
|
|
25
|
|
179
|
|
8
|
General and administration
|
|
377
|
|
465
|
|
(88)
|
|
313
|
|
64
|
Amortization of intangible assets
|
|
41
|
|
40
|
|
1
|
|
41
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Total expense
|
|
1,656
|
|
1,633
|
|
23
|
|
1,619
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
1,122
|
|
849
|
|
273
|
|
1,051
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income (expense)
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on investments
|
|
45
|
|
141
|
|
(96)
|
|
76
|
|
(31)
|
Net gain (loss) on consolidated variable interest entities
|
|
28
|
|
(23)
|
|
51
|
|
(16)
|
|
44
|
Interest and dividend income
|
|
3
|
|
4
|
|
(1)
|
|
10
|
|
(7)
|
Interest expense
|
|
(60)
|
|
(53)
|
|
(7)
|
|
(53)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
Total nonoperating income (expense)
|
|
16
|
|
69
|
|
(53)
|
|
17
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
1,138
|
|
918
|
|
220
|
|
1,068
|
|
70
|
Income tax expense
|
|
297
|
|
212
|
|
85
|
|
324
|
|
(27)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
841
|
|
706
|
|
135
|
|
744
|
|
97
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to noncontrolling interests
|
|
33
|
|
(23)
|
|
56
|
|
(12)
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to BlackRock, Inc.
|
|
$808
|
|
$729
|
|
$79
|
|
$756
|
|
$52
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
168,712,221
|
|
170,648,731
|
|
(1,936,510)
|
|
169,081,421
|
|
(369,200)
|
Diluted
|
|
171,150,153
|
|
173,873,583
|
|
(2,723,430)
|
|
171,933,803
|
|
(783,650)
|
Earnings per share attributable to BlackRock, Inc. common
stockholders (5)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$4.79
|
|
$4.27
|
|
$0.52
|
|
$4.47
|
|
$0.32
|
Diluted
|
|
$4.72
|
|
$4.19
|
|
$0.53
|
|
$4.40
|
|
$0.32
|
Cash dividends declared and paid per share
|
|
$1.93
|
|
$1.68
|
|
$0.25
|
|
$1.93
|
|
$-
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM (end of period)
|
|
$4,593,612
|
|
$3,857,007
|
|
$736,605
|
|
$4,400,925
|
|
$192,687
|
Shares outstanding (end of period)
|
|
168,363,315
|
|
170,285,093
|
|
(1,921,778)
|
|
169,138,109
|
|
(774,794)
|
GAAP:
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
40.4%
|
|
34.2%
|
|
620 bps
|
|
39.4%
|
|
100 bps
|
Effective tax rate
|
|
26.8%
|
|
22.5%
|
|
430 bps
|
|
30.0%
|
|
(320) bps
|
As adjusted:
|
|
|
|
|
|
|
|
|
|
|
Operating income (1)
|
|
$1,133
|
|
$982
|
|
$151
|
|
$1,062
|
|
$71
|
Operating margin (1)
|
|
42.4%
|
|
41.3%
|
|
110 bps
|
|
41.4%
|
|
100 bps
|
Nonoperating income (expense), less net income (loss) attributable
to noncontrolling interests (2)
|
|
($20)
|
|
$12
|
|
($32)
|
|
$26
|
|
($46)
|
Net income attributable to BlackRock, Inc. (3) (4)
|
|
$837
|
|
$722
|
|
$115
|
|
$762
|
|
$75
|
Diluted earnings attributable to BlackRock, Inc. common stockholders
per share (3) (4) (5)
|
|
$4.89
|
|
$4.15
|
|
$0.74
|
|
$4.43
|
|
$0.46
|
Effective tax rate
|
|
24.8%
|
|
27.3%
|
|
(250) bps
|
|
30.0%
|
|
(520) bps
|
|
|
|
|
|
|
|
|
|
|
|
See the reconciliation to GAAP and notes (1) through (5) for more
information on as adjusted items.
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL
INFORMATION
|
(in millions, except per share data), (unaudited)
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
Revenue
|
|
|
|
|
|
|
Investment advisory, administration fees and securities lending
revenue
|
|
$4,725
|
|
$4,306
|
|
$419
|
Investment advisory performance fees
|
|
273
|
|
197
|
|
76
|
BlackRock Solutions and advisory
|
|
300
|
|
264
|
|
36
|
Distribution fees
|
|
37
|
|
35
|
|
2
|
Other revenue
|
|
113
|
|
129
|
|
(16)
|
|
|
|
|
|
|
|
Total revenue
|
|
5,448
|
|
4,931
|
|
517
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
1,930
|
|
1,769
|
|
161
|
Distribution and servicing costs
|
|
178
|
|
181
|
|
(3)
|
Amortization of deferred sales commissions
|
|
29
|
|
24
|
|
5
|
Direct fund expense
|
|
366
|
|
323
|
|
43
|
General and administration
|
|
690
|
|
796
|
|
(106)
|
Amortization of intangible assets
|
|
82
|
|
80
|
|
2
|
|
|
|
|
|
|
|
Total expense
|
|
3,275
|
|
3,173
|
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
2,173
|
|
1,758
|
|
415
|
|
|
|
|
|
|
|
Nonoperating income (expense)
|
|
|
|
|
|
|
Net gain (loss) on investments
|
|
121
|
|
203
|
|
(82)
|
Net gain (loss) on consolidated variable interest entities
|
|
12
|
|
4
|
|
8
|
Interest and dividend income
|
|
13
|
|
10
|
|
3
|
Interest expense
|
|
(113)
|
|
(107)
|
|
(6)
|
|
|
|
|
|
|
|
Total nonoperating income (expense)
|
|
33
|
|
110
|
|
(77)
|
|
|
|
|
|
|
|
Income before income taxes
|
|
2,206
|
|
1,868
|
|
338
|
Income tax expense
|
|
621
|
|
496
|
|
125
|
|
|
|
|
|
|
|
Net income
|
|
1,585
|
|
1,372
|
|
213
|
Less:
|
|
|
|
|
|
|
Net income (loss) attributable to noncontrolling interests
|
|
21
|
|
11
|
|
10
|
|
|
|
|
|
|
|
Net income attributable to BlackRock, Inc.
|
|
$1,564
|
|
$1,361
|
|
$203
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
|
|
|
|
Basic
|
|
168,895,801
|
|
170,973,462
|
|
(2,077,661)
|
Diluted
|
|
171,540,018
|
|
174,268,870
|
|
(2,728,852)
|
Earnings per share attributable to BlackRock, Inc. common
stockholders (5)
|
|
|
|
|
|
|
Basic
|
|
$9.26
|
|
$7.96
|
|
$1.30
|
Diluted
|
|
$9.12
|
|
$7.81
|
|
$1.31
|
Cash dividends declared and paid per share
|
|
$3.86
|
|
$3.36
|
|
$0.50
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM (end of period)
|
|
$4,593,612
|
|
$3,857,007
|
|
$736,605
|
Shares outstanding (end of period)
|
|
168,363,315
|
|
170,285,093
|
|
(1,921,778)
|
GAAP:
|
|
|
|
|
|
|
Operating margin
|
|
39.9%
|
|
35.7%
|
|
420 bps
|
Effective tax rate
|
|
28.4%
|
|
26.7%
|
|
170 bps
|
As adjusted:
|
|
|
|
|
|
|
Operating income (1)
|
|
$2,195
|
|
$1,903
|
|
$292
|
Operating margin (1)
|
|
41.9%
|
|
40.6 %
|
|
130 bps
|
Nonoperating income (expense), less net income (loss) attributable
to noncontrolling interests (2)
|
|
$6
|
|
$15
|
|
($9)
|
Net income attributable to BlackRock, Inc. (3) (4)
|
|
$1,599
|
|
$1,359
|
|
$240
|
Diluted earnings attributable to BlackRock, Inc. common stockholders
per share (3) (4) (5)
|
|
$9.32
|
|
$7.80
|
|
$1.52
|
Effective tax rate
|
|
27.4%
|
|
29.1%
|
|
(170) bps
|
|
|
|
|
|
|
|
See reconciliation to GAAP and notes (1) through (5) for more
information on as adjusted items.
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS UNDER MANAGEMENT
|
(in millions), (unaudited)
|
|
Current Quarter Component Changes by Client Type and Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
subscriptions
|
|
|
|
|
|
June 30,
|
|
|
|
|
2014
|
|
(redemptions)
|
|
Market change
|
|
FX impact (1)
|
|
2014
|
|
Average AUM (2)
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$ 208,238
|
|
$ 1,524
|
|
$ 6,006
|
|
$ 701
|
|
$ 216,469
|
|
$ 211,420
|
Fixed income
|
|
160,448
|
|
10,132
|
|
2,027
|
|
65
|
|
172,672
|
|
166,365
|
Multi-asset
|
|
121,548
|
|
1,031
|
|
3,703
|
|
110
|
|
126,392
|
|
123,650
|
Alternatives
|
|
18,483
|
|
441
|
|
59
|
|
(14)
|
|
18,969
|
|
18,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail subtotal
|
|
508,717
|
|
13,128
|
|
11,795
|
|
862
|
|
534,502
|
|
520,326
|
iShares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
723,973
|
|
20,636
|
|
28,447
|
|
997
|
|
774,053
|
|
746,481
|
Fixed income
|
|
188,022
|
|
9,474
|
|
2,678
|
|
345
|
|
200,519
|
|
195,811
|
Multi-asset
|
|
1,437
|
|
133
|
|
48
|
|
6
|
|
1,624
|
|
1,529
|
Alternatives
|
|
16,948
|
|
202
|
|
480
|
|
6
|
|
17,636
|
|
17,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
iShares subtotal
|
|
930,380
|
|
30,445
|
|
31,653
|
|
1,354
|
|
993,832
|
|
960,929
|
Institutional:
|
|
|
|
|
|
|
|
|
|
|
|
|
Active:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
132,374
|
|
(4,515)
|
|
4,746
|
|
1,175
|
|
133,780
|
|
132,447
|
Fixed income
|
|
509,692
|
|
852
|
|
10,814
|
|
2,307
|
|
523,665
|
|
516,970
|
Multi-asset
|
|
223,865
|
|
5,257
|
|
9,285
|
|
800
|
|
239,207
|
|
231,654
|
Alternatives
|
|
73,723
|
|
(581)
|
|
409
|
|
230
|
|
73,781
|
|
73,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active subtotal
|
|
939,654
|
|
1,013
|
|
25,254
|
|
4,512
|
|
970,433
|
|
954,733
|
Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
1,283,349
|
|
(7,938)
|
|
56,886
|
|
5,986
|
|
1,338,283
|
|
1,305,563
|
Fixed income
|
|
430,852
|
|
797
|
|
6,101
|
|
6,119
|
|
443,869
|
|
438,521
|
Multi-asset
|
|
6,381
|
|
374
|
|
432
|
|
63
|
|
7,250
|
|
6,721
|
Alternatives
|
|
6,273
|
|
205
|
|
(26)
|
|
84
|
|
6,536
|
|
6,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Index subtotal
|
|
1,726,855
|
|
(6,562)
|
|
63,393
|
|
12,252
|
|
1,795,938
|
|
1,757,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional subtotal
|
|
2,666,509
|
|
(5,549)
|
|
88,647
|
|
16,764
|
|
2,766,371
|
|
2,711,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
4,105,606
|
|
38,024
|
|
132,095
|
|
18,980
|
|
4,294,705
|
|
$ 4,193,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash management
|
|
263,533
|
|
3,512
|
|
380
|
|
963
|
|
268,388
|
|
|
Advisory (3)
|
|
31,786
|
|
(2,018)
|
|
171
|
|
580
|
|
30,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ 4,400,925
|
|
$ 39,518
|
|
$ 132,646
|
|
$ 20,523
|
|
$ 4,593,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Quarter Component Changes by Product
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
subscriptions
|
|
|
|
|
|
June 30,
|
|
|
|
|
2014
|
|
(redemptions)
|
|
Market change
|
|
FX impact (1)
|
|
2014
|
|
Average AUM (2)
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
$ 314,850
|
|
$ (5,342)
|
|
$ 9,835
|
|
$ 1,487
|
|
$ 320,830
|
|
$ 316,479
|
iShares
|
|
723,973
|
|
20,636
|
|
28,447
|
|
997
|
|
774,053
|
|
746,481
|
Fixed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
665,151
|
|
9,566
|
|
12,749
|
|
2,258
|
|
689,724
|
|
677,946
|
iShares
|
|
188,022
|
|
9,474
|
|
2,678
|
|
345
|
|
200,519
|
|
195,811
|
Multi-asset
|
|
353,231
|
|
6,795
|
|
13,468
|
|
979
|
|
374,473
|
|
363,554
|
Alternatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
|
|
87,865
|
|
274
|
|
464
|
|
155
|
|
88,758
|
|
88,449
|
Currency and commodities (4)
|
|
27,562
|
|
(7)
|
|
458
|
|
151
|
|
28,164
|
|
27,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
2,360,654
|
|
41,396
|
|
68,099
|
|
6,372
|
|
2,476,521
|
|
2,416,338
|
Non-ETF Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
1,309,111
|
|
(5,587)
|
|
57,803
|
|
6,375
|
|
1,367,702
|
|
1,332,951
|
Fixed income
|
|
435,841
|
|
2,215
|
|
6,193
|
|
6,233
|
|
450,482
|
|
443,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Non-ETF Index
|
|
1,744,952
|
|
(3,372)
|
|
63,996
|
|
12,608
|
|
1,818,184
|
|
1,776,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
$ 4,105,606
|
|
$ 38,024
|
|
$ 132,095
|
|
$ 18,980
|
|
$ 4,294,705
|
|
$ 4,193,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Foreign exchange reflects the impact of converting non-U.S. dollar
denominated AUM into U.S. dollars for reporting purposes.
|
(2)
|
|
Average AUM is calculated as the average of the month-end spot AUM
amounts for the trailing four months.
|
(3)
|
|
Advisory AUM represents long-term portfolio liquidation assignments.
|
(4)
|
|
Amounts include commodity iShares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS UNDER MANAGEMENT
|
(in millions), (unaudited)
|
|
Year-to-Date Component Changes by Client Type and Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
subscriptions
|
|
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
(redemptions)
|
|
Market change
|
|
FX impact (1)
|
|
2014
|
|
Average AUM (2)
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$ 203,035
|
|
$ 3,707
|
|
$ 8,721
|
|
$ 1,006
|
|
$ 216,469
|
|
$ 207,697
|
Fixed income
|
|
151,475
|
|
16,190
|
|
4,881
|
|
126
|
|
172,672
|
|
161,335
|
Multi-asset
|
|
117,054
|
|
4,668
|
|
4,467
|
|
203
|
|
126,392
|
|
121,232
|
Alternatives
|
|
16,213
|
|
2,566
|
|
190
|
|
-
|
|
18,969
|
|
18,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail subtotal
|
|
487,777
|
|
27,131
|
|
18,259
|
|
1,335
|
|
534,502
|
|
508,291
|
iShares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
718,135
|
|
21,569
|
|
34,222
|
|
127
|
|
774,053
|
|
729,635
|
Fixed income
|
|
178,835
|
|
16,098
|
|
5,539
|
|
47
|
|
200,519
|
|
190,868
|
Multi-asset
|
|
1,310
|
|
244
|
|
68
|
|
2
|
|
1,624
|
|
1,454
|
Alternatives
|
|
16,092
|
|
292
|
|
1,257
|
|
(5)
|
|
17,636
|
|
16,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
iShares subtotal
|
|
914,372
|
|
38,203
|
|
41,086
|
|
171
|
|
993,832
|
|
938,850
|
Institutional:
|
|
|
|
|
|
|
|
|
|
|
|
|
Active:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
138,726
|
|
(12,548)
|
|
6,255
|
|
1,347
|
|
133,780
|
|
134,127
|
Fixed income
|
|
505,109
|
|
(6,169)
|
|
21,580
|
|
3,145
|
|
523,665
|
|
512,957
|
Multi-asset
|
|
215,276
|
|
8,106
|
|
14,949
|
|
876
|
|
239,207
|
|
226,396
|
Alternatives
|
|
73,299
|
|
(987)
|
|
1,083
|
|
386
|
|
73,781
|
|
73,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active subtotal
|
|
932,410
|
|
(11,598)
|
|
43,867
|
|
5,754
|
|
970,433
|
|
947,070
|
Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
1,257,799
|
|
803
|
|
71,702
|
|
7,979
|
|
1,338,283
|
|
1,281,215
|
Fixed income
|
|
406,767
|
|
10,778
|
|
18,749
|
|
7,575
|
|
443,869
|
|
427,788
|
Multi-asset
|
|
7,574
|
|
(1,233)
|
|
776
|
|
133
|
|
7,250
|
|
6,736
|
Alternatives
|
|
5,510
|
|
667
|
|
253
|
|
106
|
|
6,536
|
|
6,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Index subtotal
|
|
1,677,650
|
|
11,015
|
|
91,480
|
|
15,793
|
|
1,795,938
|
|
1,721,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional subtotal
|
|
2,610,060
|
|
(583)
|
|
135,347
|
|
21,547
|
|
2,766,371
|
|
2,668,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
4,012,209
|
|
64,751
|
|
194,692
|
|
23,053
|
|
4,294,705
|
|
$ 4,116,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash management
|
|
275,554
|
|
(8,920)
|
|
505
|
|
1,249
|
|
268,388
|
|
|
Advisory (3)
|
|
36,325
|
|
(5,791)
|
|
407
|
|
(422)
|
|
30,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ 4,324,088
|
|
$ 50,040
|
|
$ 195,604
|
|
$ 23,880
|
|
$ 4,593,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date Component Changes by Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
subscriptions
|
|
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
(redemptions)
|
|
Market change
|
|
FX impact (1)
|
|
2014
|
|
Average AUM (2)
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
$ 317,262
|
|
$ (12,257)
|
|
$ 13,951
|
|
$ 1,874
|
|
$ 320,830
|
|
$ 315,594
|
iShares
|
|
718,135
|
|
21,569
|
|
34,222
|
|
127
|
|
774,053
|
|
729,635
|
Fixed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
652,209
|
|
8,108
|
|
26,279
|
|
3,128
|
|
689,724
|
|
669,229
|
iShares
|
|
178,835
|
|
16,098
|
|
5,539
|
|
47
|
|
200,519
|
|
190,868
|
Multi-asset
|
|
341,214
|
|
11,785
|
|
20,260
|
|
1,214
|
|
374,473
|
|
355,818
|
Alternatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
|
|
85,026
|
|
2,208
|
|
1,269
|
|
255
|
|
88,758
|
|
87,362
|
Currency and commodities (4)
|
|
26,088
|
|
330
|
|
1,514
|
|
232
|
|
28,164
|
|
27,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
2,318,769
|
|
47,841
|
|
103,034
|
|
6,877
|
|
2,476,521
|
|
2,375,831
|
Non-ETF Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
1,282,298
|
|
4,219
|
|
72,727
|
|
8,458
|
|
1,367,702
|
|
1,307,445
|
Fixed income
|
|
411,142
|
|
12,691
|
|
18,931
|
|
7,718
|
|
450,482
|
|
432,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Non-ETF Index
|
|
1,693,440
|
|
16,910
|
|
91,658
|
|
16,176
|
|
1,818,184
|
|
1,740,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
$ 4,012,209
|
|
$ 64,751
|
|
$ 194,692
|
|
$ 23,053
|
|
$ 4,294,705
|
|
$ 4,116,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Foreign exchange reflects the impact of converting non-U.S. dollar
denominated AUM into U.S. dollars for reporting purposes.
|
(2)
|
|
Average AUM is calculated as the average of the month-end spot AUM
amounts for the trailing seven months.
|
(3)
|
|
Advisory AUM represents long-term portfolio liquidation assignments.
|
(4)
|
|
Amounts include commodity iShares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS UNDER MANAGEMENT
|
(in millions), (unaudited)
|
|
Year-over-Year Component Changes by Client Type and Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
subscriptions
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
(redemptions)
|
|
Adjustments (1)
|
|
Acquisitions (2)
|
|
Market change
|
|
FX impact (3)
|
|
2014
|
|
Average AUM (4)
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$ 161,441
|
|
$ 9,710
|
|
$ 13,066
|
|
$ -
|
|
$ 28,505
|
|
$ 3,747
|
|
$ 216,469
|
|
$ 192,279
|
Fixed income
|
|
141,541
|
|
22,315
|
|
3,897
|
|
-
|
|
4,214
|
|
705
|
|
172,672
|
|
153,028
|
Multi-asset
|
|
99,105
|
|
14,111
|
|
2,663
|
|
-
|
|
9,994
|
|
519
|
|
126,392
|
|
114,171
|
Alternatives
|
|
12,292
|
|
5,927
|
|
-
|
|
136
|
|
342
|
|
272
|
|
18,969
|
|
16,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail subtotal
|
|
414,379
|
|
52,063
|
|
19,626
|
|
136
|
|
43,055
|
|
5,243
|
|
534,502
|
|
475,698
|
iShares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
577,268
|
|
66,754
|
|
-
|
|
13,021
|
|
112,605
|
|
4,405
|
|
774,053
|
|
689,973
|
Fixed income
|
|
180,943
|
|
11,112
|
|
-
|
|
1,294
|
|
4,945
|
|
2,225
|
|
200,519
|
|
186,723
|
Multi-asset
|
|
1,107
|
|
370
|
|
-
|
|
-
|
|
147
|
|
-
|
|
1,624
|
|
1,326
|
Alternatives
|
|
15,079
|
|
(694)
|
|
-
|
|
1,645
|
|
1,543
|
|
63
|
|
17,636
|
|
17,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
iShares subtotal
|
|
774,397
|
|
77,542
|
|
-
|
|
15,960
|
|
119,240
|
|
6,693
|
|
993,832
|
|
895,566
|
Institutional:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
126,425
|
|
(20,470)
|
|
-
|
|
-
|
|
23,515
|
|
4,310
|
|
133,780
|
|
132,440
|
Fixed income
|
|
490,490
|
|
(687)
|
|
-
|
|
-
|
|
25,642
|
|
8,220
|
|
523,665
|
|
506,559
|
Multi-asset
|
|
180,310
|
|
22,454
|
|
3,335
|
|
-
|
|
26,578
|
|
6,530
|
|
239,207
|
|
209,548
|
Alternatives
|
|
64,006
|
|
(4,841)
|
|
-
|
|
10,836
|
|
3,010
|
|
770
|
|
73,781
|
|
70,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active subtotal
|
|
861,231
|
|
(3,544)
|
|
3,335
|
|
10,836
|
|
78,745
|
|
19,830
|
|
970,433
|
|
919,376
|
Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
1,107,981
|
|
(6,530)
|
|
(18,238)
|
|
-
|
|
233,464
|
|
21,606
|
|
1,338,283
|
|
1,235,124
|
Fixed income
|
|
392,385
|
|
13,144
|
|
(4,723)
|
|
-
|
|
19,947
|
|
23,116
|
|
443,869
|
|
415,862
|
Multi-asset
|
|
8,783
|
|
(2,931)
|
|
-
|
|
-
|
|
1,145
|
|
253
|
|
7,250
|
|
7,547
|
Alternatives
|
|
5,299
|
|
769
|
|
-
|
|
-
|
|
122
|
|
346
|
|
6,536
|
|
5,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Index subtotal
|
|
1,514,448
|
|
4,452
|
|
(22,961)
|
|
-
|
|
254,678
|
|
45,321
|
|
1,795,938
|
|
1,664,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional subtotal
|
|
2,375,679
|
|
908
|
|
(19,626)
|
|
10,836
|
|
333,423
|
|
65,151
|
|
2,766,371
|
|
2,583,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
3,564,455
|
|
130,513
|
|
-
|
|
26,932
|
|
495,718
|
|
77,087
|
|
4,294,705
|
|
$ 3,955,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash management
|
|
252,562
|
|
9,799
|
|
-
|
|
-
|
|
768
|
|
5,259
|
|
268,388
|
|
|
Advisory (5)
|
|
39,990
|
|
(9,231)
|
|
-
|
|
-
|
|
44
|
|
(284)
|
|
30,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ 3,857,007
|
|
$ 131,081
|
|
$ -
|
|
$ 26,932
|
|
$ 496,530
|
|
$ 82,062
|
|
$ 4,593,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-over-Year Component Changes by Product
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
subscriptions
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
(redemptions)
|
|
Adjustments (1)
|
|
Acquisitions (2)
|
|
Market change
|
|
FX impact (3)
|
|
2014
|
|
Average AUM (4)
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
$ 280,332
|
|
$ (16,428)
|
|
$ -
|
|
$ -
|
|
$ 49,612
|
|
$ 7,314
|
|
$ 320,830
|
|
$ 306,534
|
iShares
|
|
577,268
|
|
66,754
|
|
-
|
|
13,021
|
|
112,605
|
|
4,405
|
|
774,053
|
|
689,973
|
Fixed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
631,808
|
|
19,563
|
|
-
|
|
-
|
|
29,667
|
|
8,686
|
|
689,724
|
|
656,746
|
iShares
|
|
180,943
|
|
11,112
|
|
-
|
|
1,294
|
|
4,945
|
|
2,225
|
|
200,519
|
|
186,723
|
Multi-asset
|
|
289,305
|
|
34,004
|
|
5,998
|
|
-
|
|
37,864
|
|
7,302
|
|
374,473
|
|
332,592
|
Alternatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
|
|
70,227
|
|
2,994
|
|
-
|
|
10,972
|
|
3,428
|
|
1,137
|
|
88,758
|
|
82,177
|
Currency and commodities (6)
|
|
26,449
|
|
(1,833)
|
|
-
|
|
1,645
|
|
1,589
|
|
314
|
|
28,164
|
|
28,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
2,056,332
|
|
116,166
|
|
5,998
|
|
26,932
|
|
239,710
|
|
31,383
|
|
2,476,521
|
|
2,283,016
|
Non-ETF Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
1,115,515
|
|
(862)
|
|
(5,172)
|
|
-
|
|
235,872
|
|
22,349
|
|
1,367,702
|
|
1,253,309
|
Fixed income
|
|
392,608
|
|
15,209
|
|
(826)
|
|
-
|
|
20,136
|
|
23,355
|
|
450,482
|
|
418,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Non-ETF Index
|
|
1,508,123
|
|
14,347
|
|
(5,998)
|
|
-
|
|
256,008
|
|
45,704
|
|
1,818,184
|
|
1,672,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
$ 3,564,455
|
|
$ 130,513
|
|
$ -
|
|
$ 26,932
|
|
$ 495,718
|
|
$ 77,087
|
|
$ 4,294,705
|
|
$ 3,955,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amounts include $19.6 billion of AUM related to fund ranges
reclassed from institutional to retail and $6.0 billion of AUM
reclassed from non-ETF index equity and fixed income to multi-asset.
|
(2)
|
|
Amounts represent $16.0 billion of AUM acquired in the Credit Suisse
ETF franchise acquisition in July 2013 and $11.0 billion of AUM
acquired in the MGPA acquisition in October 2013.
|
(3)
|
|
Foreign exchange reflects the impact of converting non-U.S. dollar
denominated AUM into U.S. dollars for reporting purposes.
|
(4)
|
|
Average AUM is calculated as the average of the month-end spot AUM
amounts for the trailing thirteen months.
|
(5)
|
|
Advisory AUM represents long-term portfolio liquidation assignments.
|
(6)
|
|
Amounts include commodity iShares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY OF REVENUE
|
(in millions), (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|
March 31, 2014
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory, administration fees and securities lending
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
$478
|
|
$432
|
|
$46
|
|
$463
|
|
$15
|
|
$941
|
|
$865
|
|
$76
|
iShares
|
|
677
|
|
584
|
|
93
|
|
634
|
|
43
|
|
1,311
|
|
1,155
|
|
156
|
Fixed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
346
|
|
322
|
|
24
|
|
324
|
|
22
|
|
670
|
|
634
|
|
36
|
iShares
|
|
122
|
|
120
|
|
2
|
|
113
|
|
9
|
|
235
|
|
236
|
|
(1)
|
Multi-asset
|
|
300
|
|
253
|
|
47
|
|
286
|
|
14
|
|
586
|
|
501
|
|
85
|
Alternatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
|
|
161
|
|
136
|
|
25
|
|
159
|
|
2
|
|
320
|
|
272
|
|
48
|
Currency and commodities
|
|
23
|
|
25
|
|
(2)
|
|
22
|
|
1
|
|
45
|
|
55
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
2,107
|
|
1,872
|
|
235
|
|
2,001
|
|
106
|
|
4,108
|
|
3,718
|
|
390
|
Non-ETF Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
183
|
|
161
|
|
22
|
|
158
|
|
25
|
|
341
|
|
301
|
|
40
|
Fixed income
|
|
71
|
|
61
|
|
10
|
|
58
|
|
13
|
|
129
|
|
118
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Non-ETF Index
|
|
254
|
|
222
|
|
32
|
|
216
|
|
38
|
|
470
|
|
419
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
2,361
|
|
2,094
|
|
267
|
|
2,217
|
|
144
|
|
4,578
|
|
4,137
|
|
441
|
Cash management
|
|
73
|
|
83
|
|
(10)
|
|
74
|
|
(1)
|
|
147
|
|
169
|
|
(22)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total base fees
|
|
2,434
|
|
2,177
|
|
257
|
|
2,291
|
|
143
|
|
4,725
|
|
4,306
|
|
419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory performance fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
31
|
|
17
|
|
14
|
|
22
|
|
9
|
|
53
|
|
34
|
|
19
|
Fixed income
|
|
5
|
|
9
|
|
(4)
|
|
8
|
|
(3)
|
|
13
|
|
10
|
|
3
|
Multi-asset
|
|
10
|
|
3
|
|
7
|
|
3
|
|
7
|
|
13
|
|
10
|
|
3
|
Alternatives
|
|
69
|
|
60
|
|
9
|
|
125
|
|
(56)
|
|
194
|
|
143
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
115
|
|
89
|
|
26
|
|
158
|
|
(43)
|
|
273
|
|
197
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock Solutions and advisory
|
|
146
|
|
138
|
|
8
|
|
154
|
|
(8)
|
|
300
|
|
264
|
|
36
|
Distribution fees
|
|
18
|
|
18
|
|
-
|
|
19
|
|
(1)
|
|
37
|
|
35
|
|
2
|
Other revenue
|
|
65
|
|
60
|
|
5
|
|
48
|
|
17
|
|
113
|
|
129
|
|
(16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$2,778
|
|
$2,482
|
|
$296
|
|
$ 2,670
|
|
$108
|
|
$5,448
|
|
$4,931
|
|
$517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlights
-
Investment advisory, administration fees and securities lending
revenue increased $257 million from the second quarter of 2013 due to
higher long-term average AUM. Securities lending fees of $140 million
in the current quarter increased $4 million from the second quarter of
2013.
Investment advisory, administration fees and
securities lending revenue increased $143 million from the first
quarter of 2014 due to higher long-term average AUM, the effect of one
additional revenue day in the current quarter and seasonally higher
securities lending fees. Securities lending fees increased $35 million
from the first quarter of 2014 driven by higher seasonal demand.
-
Performance fees increased $26 million from the second quarter of
2013, primarily reflecting higher fees from equity and alternative
products.
Performance fees declined $43 million from the
first quarter of 2014, primarily reflecting a large performance fee in
the first quarter of 2014 associated with the planned final
liquidation of a closed-end mortgage fund.
-
BlackRock Solutions and advisory revenue increased $8 million
from the second quarter of 2013 due to higher revenue from Aladdin®
mandates. BlackRock Solutions and advisory revenue included
$109 million in Aladdin business revenue in the current quarter
compared with $98 million in the second quarter of 2013.
-
Other revenue increased $17 million from the first quarter of 2014
primarily due to higher transition management service fees and higher
earnings from certain strategic investments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY OF EXPENSE
|
(in millions), (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
|
Three
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
|
Months
|
|
|
|
Six Months
|
|
|
|
|
June 30,
|
|
|
|
Ended
|
|
|
|
Ended June 30,
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
$948
|
|
$864
|
|
$84
|
|
$982
|
|
($34)
|
|
$1,930
|
|
$1,769
|
|
$161
|
Distribution and servicing costs
|
|
89
|
|
90
|
|
(1)
|
|
89
|
|
-
|
|
178
|
|
181
|
|
(3)
|
Amortization of deferred sales commissions
|
|
14
|
|
12
|
|
2
|
|
15
|
|
(1)
|
|
29
|
|
24
|
|
5
|
Direct fund expense
|
|
187
|
|
162
|
|
25
|
|
179
|
|
8
|
|
366
|
|
323
|
|
43
|
General and administration
|
|
377
|
|
465
|
|
(88)
|
|
313
|
|
64
|
|
690
|
|
796
|
|
(106)
|
Amortization of intangible assets
|
|
41
|
|
40
|
|
1
|
|
41
|
|
-
|
|
82
|
|
80
|
|
2
|
Total Operating Expense
|
|
$1,656
|
|
$1,633
|
|
$23
|
|
$1,619
|
|
$37
|
|
$3,275
|
|
$3,173
|
|
$102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlights
-
Employee compensation and benefits increased $84 million from the
second quarter of 2013, reflecting higher headcount and higher
incentive compensation driven by higher operating income.
Employee
compensation and benefits decreased $34 million from the first quarter
of 2014, primarily reflecting lower seasonal employer payroll taxes,
partially offset by higher incentive compensation.
-
General and administration expense decreased $88 million from the
second quarter of 2013, largely driven by the $124 million expense
related to the charitable contribution of approximately six million
units of the Company’s equity method investment in PennyMac in the
second quarter of 2013 (the “Charitable Contribution”), which has been
excluded from as adjusted results. The second quarter of 2014 included
higher other expense, including elevated legal and regulatory expense.
General
and administration expense increased $64 million from the first
quarter of 2014, primarily reflecting the timing of marketing and
promotional spend, increased occupancy expense, reflecting a one-time
benefit from the reversal of a real estate-related retirement
obligation in the first quarter of 2014, which is no longer required
to be funded and higher other expense, including elevated legal and
regulatory expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY OF NONOPERATING INCOME (EXPENSE)
|
(in millions), (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Three Months Ended March 31, 2014
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
Nonoperating income (expense), GAAP basis
|
|
|
|
$16
|
|
$69
|
|
($53)
|
|
$17
|
|
($1)
|
|
$33
|
|
$110
|
|
($77)
|
Less: Net income (loss) attributable to NCI
|
|
|
|
33
|
|
(23)
|
|
56
|
|
(12)
|
|
45
|
|
21
|
|
11
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income (expense)(1)
|
|
|
|
($17)
|
|
$92
|
|
($109)
|
|
$29
|
|
($46)
|
|
$12
|
|
$99
|
|
($87)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated economic investments at June
30, 2014(2)
|
|
Three Months Ended June 30,
|
|
|
|
Three Months Ended March 31, 2014
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
Net gain (loss) on investments(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity
|
|
20-25%
|
|
$12
|
|
$4
|
|
$8
|
|
$44
|
|
($32)
|
|
$56
|
|
$23
|
|
$33
|
Real estate
|
|
5-10%
|
|
8
|
|
7
|
|
1
|
|
2
|
|
6
|
|
10
|
|
10
|
|
-
|
Distressed credit/mortgage funds/opportunistic funds
|
|
5-10%
|
|
6
|
|
4
|
|
2
|
|
10
|
|
(4)
|
|
16
|
|
23
|
|
(7)
|
Hedge funds/funds of hedge funds
|
|
20-25%
|
|
8
|
|
5
|
|
3
|
|
11
|
|
(3)
|
|
19
|
|
8
|
|
11
|
Other investments(3)
|
|
35-40%
|
|
3
|
|
2
|
|
1
|
|
2
|
|
1
|
|
5
|
|
9
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
|
37
|
|
22
|
|
15
|
|
69
|
|
(32)
|
|
106
|
|
73
|
|
33
|
Gain related to the PennyMac IPO
|
|
|
|
-
|
|
39
|
|
(39)
|
|
-
|
|
-
|
|
-
|
|
39
|
|
(39)
|
Gain related to the Charitable Contribution
|
|
|
|
-
|
|
80
|
|
(80)
|
|
-
|
|
-
|
|
-
|
|
80
|
|
(80)
|
Investments related to deferred compensation plans
|
|
|
|
3
|
|
-
|
|
3
|
|
3
|
|
-
|
|
6
|
|
4
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net gain (loss) on investments(1)
|
|
|
|
40
|
|
141
|
|
(101)
|
|
72
|
|
(32)
|
|
112
|
|
196
|
|
(84)
|
Interest and dividend income
|
|
|
|
3
|
|
4
|
|
(1)
|
|
10
|
|
(7)
|
|
13
|
|
10
|
|
3
|
Interest expense
|
|
|
|
(60)
|
|
(53)
|
|
(7)
|
|
(53)
|
|
(7)
|
|
(113)
|
|
(107)
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
|
(57)
|
|
(49)
|
|
(8)
|
|
(43)
|
|
(14)
|
|
(100)
|
|
(97)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonoperating income (expense)(1)
|
|
|
|
(17)
|
|
92
|
|
(109)
|
|
29
|
|
(46)
|
|
12
|
|
99
|
|
(87)
|
Gain related to the Charitable Contribution
|
|
|
|
-
|
|
(80)
|
|
80
|
|
-
|
|
-
|
|
-
|
|
(80)
|
|
80
|
Compensation expense related to (appreciation) depreciation on
deferred compensation plans
|
|
|
|
(3)
|
|
-
|
|
(3)
|
|
(3)
|
|
-
|
|
(6)
|
|
(4)
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income (expense), as adjusted(1)
|
|
|
|
($20)
|
|
$12
|
|
($32)
|
|
$26
|
|
($46)
|
|
$6
|
|
$15
|
|
($9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net of net income (loss) attributable to noncontrolling interests
(“NCI”).
|
(2)
|
|
Percentages represent estimated percentages of BlackRock’s corporate
economic investment portfolio at June 30, 2014. Economic investment
amounts at March 31, 2014 for private equity, real estate,
distressed credit/mortgage funds/opportunistic funds, hedge
funds/funds of hedge funds and other investments were $292 million,
$127 million, $142 million, $327 million and $514 million,
respectively. See the 2014 first quarter Form 10-Q for more
information.
|
(3)
|
|
Amounts include net gains (losses) related to equity and fixed
income investments, and BlackRock’s seed capital hedging program.
|
Highlights
-
Net gains on investments for the current quarter decreased $101
million from the second quarter of 2013. The second quarter of 2013
included a noncash, nonoperating pre-tax gain of $80 million related
to the Charitable Contribution, which has been excluded from as
adjusted results, and a $39 million gain related to the Company’s
interest in PennyMac subsequent to its initial public offering (the
“PennyMac IPO”).
Net gains on investments for the current
quarter decreased $32 million from the first quarter of 2014 due to
the positive impact of the monetization of a non-strategic,
opportunistic private equity investment included in the prior quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
|
(in millions), (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended June 30,
|
|
|
|
Three
Months Ended March 31,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
Income tax expense
|
|
$297
|
|
$212
|
|
$85
|
|
$324
|
|
($27)
|
|
$621
|
|
$496
|
|
$125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlights
-
The second quarter 2014 GAAP effective income tax rate was 26.8%
compared with 22.5% for the second quarter of 2013. The second quarter
2014 GAAP effective income tax rate, as adjusted was 24.8% compared
with 27.3% for the second quarter of 2013.
The second
quarter 2014 GAAP tax rate included a $23 million net noncash expense,
primarily associated with the revaluation of certain deferred tax
liabilities arising from the state and local tax effect of changes in
the Company’s organizational structure, which has been excluded from
the as adjusted results. In addition, the second quarter 2014 GAAP tax
rate benefited from an improvement in the geographic mix of earnings
and included a $34 million net tax benefit related to several
favorable nonrecurring items.
The second quarter 2013 GAAP
tax rate included a net tax benefit of approximately $57 million
recognized in connection with the Charitable Contribution, which has
been excluded from as adjusted results. In addition, the second
quarter 2013 GAAP tax rate included a tax benefit of approximately $29
million, primarily due to the realization of loss carryforwards.
ECONOMIC TANGIBLE ASSETS
(in billions), (unaudited)
The Company presents economic tangible assets as additional information
to enable investors to eliminate gross presentation of certain assets
that have equal and offsetting liabilities or noncontrolling interests
that ultimately do not have an impact on stockholders’ equity (excluding
appropriated retained earnings related to consolidated collateralized
loan obligations) or cash flows. In addition, goodwill and intangible
assets are excluded from economic tangible assets.
Economic tangible assets include cash, receivables, seed and
co-investments, regulatory investments and other assets.
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2014 (Est.)
|
|
2013
|
Total balance sheet assets
|
|
$227
|
|
$220
|
Separate account assets and separate account collateral held under
securities lending agreements
|
|
(181)
|
|
(177)
|
Consolidated VIEs/sponsored investment funds
|
|
(3)
|
|
(3)
|
Goodwill and intangible assets, net
|
|
(30)
|
|
(30)
|
Economic tangible assets
|
|
$13
|
|
$10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF U.S. GAAP OPERATING INCOME AND OPERATING
MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED
|
(in millions), (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
Operating income, GAAP basis
|
|
$1,122
|
|
$849
|
|
$1,051
|
|
$2,173
|
|
$1,758
|
Non-GAAP expense adjustments:
|
|
|
|
|
|
|
|
|
|
|
PNC LTIP funding obligation
|
|
8
|
|
9
|
|
8
|
|
16
|
|
17
|
Charitable Contribution
|
|
-
|
|
124
|
|
-
|
|
-
|
|
124
|
Compensation expense related to appreciation (depreciation) on
deferred compensation plans
|
|
3
|
|
-
|
|
3
|
|
6
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
Operating income, as adjusted
|
|
1,133
|
|
982
|
|
1,062
|
|
2,195
|
|
1,903
|
Closed-end fund launch costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
16
|
Closed-end fund launch commissions
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Operating income used for operating margin measurement
|
|
$1,133
|
|
$982
|
|
$1,062
|
|
$2,195
|
|
$1,921
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, GAAP basis
|
|
$2,778
|
|
$2,482
|
|
$2,670
|
|
$5,448
|
|
$4,931
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
Distribution and servicing costs
|
|
(89)
|
|
(90)
|
|
(89)
|
|
(178)
|
|
(181)
|
Amortization of deferred sales commissions
|
|
(14)
|
|
(12)
|
|
(15)
|
|
(29)
|
|
(24)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue used for operating margin measurement
|
|
$2,675
|
|
$2,380
|
|
$2,566
|
|
$5,241
|
|
$4,726
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin, GAAP basis
|
|
40.4%
|
|
34.2%
|
|
39.4%
|
|
39.9%
|
|
35.7%
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin, as adjusted
|
|
42.4%
|
|
41.3%
|
|
41.4%
|
|
41.9%
|
|
40.6%
|
|
|
|
|
|
|
|
|
|
|
|
See note (1) to the Condensed Consolidated Statements of Income
and Supplemental Information for more information on as adjusted
items and the reconciliation to GAAP.
|
|
|
|
|
|
|
RECONCILIATION OF U.S. GAAP NONOPERATING INCOME NET OF NCI TO
NONOPERATING INCOME NET OF NCI, AS ADJUSTED
|
(in millions), (unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
Nonoperating income (expense), GAAP basis
|
|
$16
|
|
$69
|
|
$17
|
|
$33
|
|
$110
|
Less: Net income (loss) attributable to NCI
|
|
33
|
|
(23)
|
|
(12)
|
|
21
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income (expense), net of NCI
|
|
(17)
|
|
92
|
|
29
|
|
12
|
|
99
|
Gain related to Charitable Contribution
|
|
-
|
|
(80)
|
|
-
|
|
-
|
|
(80)
|
Compensation expense related to (appreciation) depreciation on
deferred compensation plans
|
|
(3)
|
|
-
|
|
(3)
|
|
(6)
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating income (expense), less net income (loss) attributable
to NCI, as adjusted
|
|
($20)
|
|
$12
|
|
$26
|
|
$6
|
|
$15
|
|
|
|
|
|
|
|
|
|
|
|
See note (2) to the Condensed Consolidated Statements of Income
and Supplemental Information for more information on as adjusted
items and the reconciliation to GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF U.S. GAAP NET INCOME ATTRIBUTABLE TO
BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
|
(in millions, except per share data), (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
Net income attributable to BlackRock, Inc., GAAP basis
|
|
$808
|
|
$729
|
|
$756
|
|
$1,564
|
|
$1,361
|
Non-GAAP adjustments, net of tax:(4)
|
|
|
|
|
|
|
|
|
|
|
PNC LTIP funding obligation
|
|
6
|
|
6
|
|
6
|
|
12
|
|
11
|
Income tax changes
|
|
23
|
|
-
|
|
-
|
|
23
|
|
-
|
Amount related to the Charitable Contribution
|
|
-
|
|
(13)
|
|
-
|
|
-
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to BlackRock, Inc., as adjusted
|
|
$837
|
|
$722
|
|
$762
|
|
$1,599
|
|
$1,359
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average common shares outstanding(5)
|
|
171.2
|
|
173.9
|
|
171.9
|
|
171.5
|
|
174.3
|
Diluted earnings per common share, GAAP basis(5)
|
|
$4.72
|
|
$4.19
|
|
$4.40
|
|
$9.12
|
|
$7.81
|
Diluted earnings per common share, as adjusted(5)
|
|
$4.89
|
|
$4.15
|
|
$4.43
|
|
$9.32
|
|
$7.80
|
|
|
|
|
|
|
|
|
|
|
|
See notes (3) through (5) to the Condensed Consolidated Statements
of Income and Supplemental Information for more information on as
adjusted items and the reconciliation to GAAP.
|
NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL
INFORMATION (unaudited)
BlackRock reports its financial results in accordance with accounting
principles generally accepted in the United States (“GAAP”); however,
management believes evaluating the Company’s ongoing operating results
may be enhanced if investors have additional non-GAAP financial
measures. Management reviews non-GAAP financial measures to assess
ongoing operations and, for the reasons described below, considers them
to be effective indicators, for both management and investors, of
BlackRock’s financial performance over time. BlackRock’s management does
not advocate that investors consider such non-GAAP financial measures in
isolation from, or as a substitute for, financial information prepared
in accordance with GAAP.
Computations for all periods are derived from the condensed consolidated
statements of income as follows:
(1) Operating income, as adjusted, and operating margin, as adjusted:
Operating income, as adjusted, equals operating income, GAAP basis,
excluding certain items management deems nonrecurring, recurring
infrequently or transactions that ultimately will not impact BlackRock’s
book value. Management believes operating income, as adjusted, and
operating margin, as adjusted, are effective indicators of BlackRock’s
financial performance over time and, therefore, provide useful
disclosure to investors.
-
Operating income, as adjusted, includes non-GAAP
expense adjustments. The portion of compensation expense associated
with certain long-term incentive plans (“LTIP”) funded, or to be
funded, through share distributions to participants of BlackRock stock
held by The PNC Financial Services Group, Inc. (“PNC”) has been
excluded because it ultimately does not impact BlackRock’s book value.
The second quarter of 2013 included a $124 million expense related to
the Charitable Contribution that has been excluded from operating
income, as adjusted due to its nonrecurring nature and because the
noncash, nonoperating pre-tax gain of $80 million related to the
contributed PennyMac investment is reported in nonoperating income
(expense). Compensation expense associated with appreciation
(depreciation) on investments related to certain BlackRock deferred
compensation plans has been excluded as returns on investments set
aside for these plans, which substantially offset this expense, are
reported in nonoperating income (expense).
Management
believes operating income exclusive of these items is a useful measure
in evaluating BlackRock’s operating performance and helps enhance the
comparability of this information for the reporting periods presented.
-
Operating margin, as adjusted, allows BlackRock
to compare performance from period to period by adjusting for items
that may not recur, recur infrequently or may have an economic offset
in nonoperating income (expense). BlackRock also uses operating
margin, as adjusted, to monitor corporate performance and efficiency
and as a benchmark to compare its performance with other companies.
Management uses both GAAP and non-GAAP financial measures in
evaluating BlackRock’s financial performance. The non-GAAP measure by
itself may pose limitations because it does not include all of
BlackRock’s revenue and expense.
Operating income used for
measuring operating margin, as adjusted, is equal to operating income,
as adjusted, excluding the impact of closed-end fund launch costs and
related commissions. Management believes the exclusion of such costs
and related commissions is useful because these costs can fluctuate
considerably and revenue associated with the expenditure of these
costs will not fully impact BlackRock’s results until future periods.
Revenue
used for operating margin, as adjusted, excludes distribution and
servicing costs paid to related parties and other third parties.
Management believes the exclusion of such costs is useful because it
creates consistency in the treatment for certain contracts for similar
services, which due to the terms of the contracts, are accounted for
under GAAP on a net basis within investment advisory, administration
fees and securities lending revenue. Amortization of deferred sales
commissions is excluded from revenue used for operating margin
measurement, as adjusted, because such costs, over time, substantially
offset distribution fee revenue the Company earns. For each of these
items, BlackRock excludes from revenue used for operating margin, as
adjusted, the costs related to each of these items as a proxy for such
offsetting revenue.
(2) Nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted:
Nonoperating income (expense), less net income (loss) attributable to
NCI, as adjusted, equals nonoperating income (expense), GAAP basis, less
net income (loss) attributable to NCI, adjusted for compensation expense
associated with (appreciation) depreciation on investments related to
certain BlackRock deferred compensation plans. The compensation expense
offset is recorded in operating income. This compensation expense has
been included in nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted, to offset returns on investments set
aside for these plans, which are reported in nonoperating income
(expense), GAAP basis.
Management believes nonoperating income (expense), less net income
(loss) attributable to NCI, as adjusted, provides comparability of
information among reporting periods and is an effective measure for
reviewing BlackRock’s nonoperating contribution to results. As
compensation expense associated with (appreciation) depreciation on
investments related to certain deferred compensation plans, which is
included in operating income, substantially offsets the gain (loss) on
the investments set aside for these plans, management believes
nonoperating income (expense), less net income (loss) attributable to
NCI, as adjusted, provides a useful measure, for both management and
investors, of BlackRock’s nonoperating results that impact book value.
During the second quarter of 2013, the noncash, nonoperating pre-tax
gain of $80 million related to the contributed PennyMac investment has
been excluded from nonoperating income (expense), less net income (loss)
attributable to NCI, as adjusted due to its nonrecurring nature and
because the more than offsetting associated Charitable Contribution
expense of $124 million is reported in operating income.
(3) Net income attributable to BlackRock, Inc., as adjusted:
Management believes net income attributable to BlackRock, Inc., as
adjusted, and diluted earnings per common share, as adjusted, are useful
measures of BlackRock’s profitability and financial performance. Net
income attributable to BlackRock, Inc., as adjusted, equals net income
attributable to BlackRock, Inc., GAAP basis, adjusted for significant
nonrecurring items, charges that ultimately will not impact BlackRock’s
book value or certain tax items that do not impact cash flow.
See note (1) Operating income, as adjusted, and operating margin, as
adjusted, for information on the PNC LTIP funding obligation and the
Charitable Contribution.
The three and six months ended June 30, 2014 included a $23 million net
noncash tax expense primarily related to the revaluation of certain
deferred tax liabilities. The resulting increase in income taxes has
been excluded from net income attributable to BlackRock, Inc., as
adjusted, as these items will not have a cash flow impact and to ensure
comparability among periods presented. The three and six months ended
June 30, 2013 included a tax benefit of approximately $57 million
recognized in connection with the Charitable Contribution. The tax
benefit has been excluded from net income attributable to BlackRock,
Inc., as adjusted due to the nonrecurring nature of the Charitable
Contribution.
(4) For each period presented, the non-GAAP adjustments related
to the PNC LTIP funding obligation was tax effected at the respective
blended rates applicable to the adjustments. The three and six months
ended June 30, 2014 included a $23 million net noncash tax expense
primarily related to the revaluation of certain deferred tax
liabilities. The three and six months ended June 30, 2013 included a tax
benefit of approximately $57 million recognized in connection with the
Charitable Contribution.
(5) Nonvoting participating preferred stock is considered to be a
common stock equivalent for purposes of determining basic and diluted
earnings per share calculations.
Forward-looking Statements
This earnings release, and other statements that BlackRock may make, may
contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act, with respect to BlackRock’s future
financial or business performance, strategies or expectations.
Forward-looking statements are typically identified by words or phrases
such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,”
“comfortable,” “expect,” “anticipate,” “current,” “intention,”
“estimate,” “position,” “assume,” “outlook,” “continue,” “remain,”
“maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or
future or conditional verbs such as “will,” “would,” “should,” “could,”
“may” and similar expressions.
BlackRock cautions that forward-looking statements are subject to
numerous assumptions, risks and uncertainties, which change over time.
Forward-looking statements speak only as of the date they are made, and
BlackRock assumes no duty to and does not undertake to update
forward-looking statements. Actual results could differ materially from
those anticipated in forward-looking statements and future results could
differ materially from historical performance.
In addition to risk factors previously disclosed in BlackRock’s
Securities and Exchange Commission (“SEC”) reports and those identified
elsewhere, in this earnings release, the following factors, among
others, could cause actual results to differ materially from
forward-looking statements or historical performance: (1) the
introduction, withdrawal, success and timing of business initiatives and
strategies; (2) changes and volatility in political, economic or
industry conditions, the interest rate environment, foreign exchange
rates or financial and capital markets, which could result in changes in
demand for products or services or in the value of assets under
management; (3) the relative and absolute investment performance of
BlackRock’s investment products; (4) the impact of increased
competition; (5) the impact of future acquisitions or divestitures;
(6) the unfavorable resolution of legal proceedings; (7) the extent and
timing of any share repurchases; (8) the impact, extent and timing of
technological changes and the adequacy of intellectual property,
information and cyber security protection; (9) the impact of legislative
and regulatory actions and reforms, including the Dodd-Frank Wall Street
Reform and Consumer Protection Act, and regulatory, supervisory or
enforcement actions of government agencies relating to BlackRock or PNC;
(10) terrorist activities, international hostilities and natural
disasters, which may adversely affect the general economy, domestic and
local financial and capital markets, specific industries or BlackRock;
(11) the ability to attract and retain highly talented professionals;
(12) fluctuations in the carrying value of BlackRock’s economic
investments; (13) the impact of changes to tax legislation, including
income, payroll and transaction taxes, and taxation on products or
transactions, which could affect the value proposition to clients and,
generally, the tax position of the Company; (14) BlackRock’s success in
maintaining the distribution of its products; (15) the impact of
BlackRock electing to provide support to its products from time to time
and any potential liabilities related to securities lending or other
indemnification obligations; and (16) the impact of problems at other
financial institutions or the failure or negative performance of
products at other financial institutions.
BlackRock’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q
and BlackRock’s subsequent filings with the SEC, accessible on the SEC’s
website at www.sec.gov
and on BlackRock’s website at www.blackrock.com,
discuss these factors in more detail and identify additional factors
that can affect forward-looking statements. The information contained on
the Company’s website is not a part of this earnings release.
Performance Notes
Past performance is not indicative of future results. Except as
specified, the performance information shown is as of June 30, 2014 and
is based on preliminary data available at that time. The performance
data shown reflects information for all actively and passively managed
equity and fixed income accounts, including U.S. registered investment
companies, European-domiciled retail funds and separate accounts for
which performance data is available, including performance data for high
net worth accounts available as of May 31, 2014. The performance data
does not include accounts terminated prior to June 30, 2014 and accounts
for which data has not yet been verified. If such accounts had been
included, the performance data provided may have substantially differed
from that shown.
Performance comparisons shown are gross-of-fees for U.S. retail,
institutional and high net worth separate accounts as well as EMEA
institutional separate accounts, and net-of-fee for European domiciled
retail funds. The performance tracking shown for institutional index
accounts is based on gross-of-fee performance and includes all
institutional accounts and all iShares funds globally using an
index strategy. AUM information is based on AUM available as of June 30,
2014 for each account or fund in the asset class shown without
adjustment for overlapping management of the same account or fund. Fund
performance reflects the reinvestment of dividends and distributions.
Source of performance information and peer medians is BlackRock, Inc.
and is based in part on data from Lipper Inc. for U.S. funds and
Morningstar, Inc. for non-U.S. funds.
Copyright Business Wire 2014