- AUM of $4.9 trillion, up 4%
year-over-year and 3% sequentially
- $2 billion of long-term net inflows in
the second quarter of 2016, and $126 billion over the last twelve
months, demonstrate strength of diversified business model
- 2% decline in base fees year-over-year,
driven by mix shift from equities to fixed income and cash
- 13% growth in Aladdin® revenue from the
second quarter of 2015 reflects continued demand for risk
management
- 2% decline in diluted EPS (4% as
adjusted) year-over-year reflects mix shift and lower performance
fees
- Consistent capital management with $275
million of quarterly share repurchases
BlackRock, Inc. (NYSE:BLK):
FINANCIAL RESULTS
(in millions, except per share data)
Q2
2016
Q2
2015
Change Q1
2016
Change Six Months Ended June 30,
2016
2015 Change AUM $ 4,890,121 $ 4,721,294
4% $ 4,737,165 3% $ 4,890,121 $ 4,721,294 4%
GAAP
basis:
Revenue $ 2,804 $ 2,905 (3)% $ 2,624 7% $ 5,428 $ 5,628 (4)%
Operating income $ 1,173 $ 1,238 (5)% $ 963 22% $ 2,136 $ 2,305
(7)% Operating margin 41.8% 42.6% (80) bps 36.7% 510 bps 39.4%
41.0% (160) bps Net income(1) $ 789 $ 819 (4)% $ 657 20% $ 1,446 $
1,641 (12)% Diluted EPS $ 4.73 $ 4.84 (2)% $ 3.92 21% $ 8.66 $ 9.69
(11)% Weighted average diluted shares 166.6 169.1 (1)% 167.4 -%
167.0 169.4 (1)%
As
Adjusted:
Operating income(2) $ 1,179 $ 1,248 (6)% $ 1,047 13% $ 2,226 $
2,325 (4)% Operating margin(2) 43.9% 44.9% (100) bps 41.6% 230 bps
42.8% 43.2% (40) bps Net income(1) (2) $ 797 $ 838 (5)% $ 711 12% $
1,508 $ 1,668 (10)% Diluted EPS(2) $ 4.78 $ 4.96 (4)% $ 4.25 12% $
9.03 $ 9.85 (8)% (1) Net income
represents net income attributable to BlackRock, Inc.
(2) See notes (1) through (4) 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, 2016.
“Our clients are facing unprecedented challenges as they attempt
to navigate the current investment environment,” said Chairman and
Chief Executive Officer Laurence D. Fink. “Political and
macroeconomic uncertainty, historically low yields and elevated
market volatility are leading clients to pause, as evidenced by
more than $55 trillion in bank deposits in the US, China and Japan
alone.
“BlackRock generated $2 billion of long-term net flows in the
quarter and $126 billion of inflows over the last twelve months,
despite the impact of market headwinds and a slowdown in client
activity. Beta and mix shift favored fixed income and cash relative
to equities, and impacted second quarter base fees
year-over-year.
“This market environment is creating greater opportunities for
BlackRock to engage with clients – leading to more frequent and
substantive conversations than ever before. Clients are seeking
advice, goal-oriented investment solutions and risk management and
technological expertise. The differentiated platform we have
purposely built at BlackRock is resonating with clients. Our
combination of active, index and alternative investment
capabilities, powered by Aladdin’s industry-leading technology and
risk management, positions us well to capture flows when client
activity accelerates.
“We are seeing increasing evidence that our recent strategic
investments are driving growth. iShares generated $16 billion of
net new business during the quarter, with significant strength in
fixed income and ‘smart-beta’ ETFs, as clients utilize these tools
to manage risk and minimize volatility. We saw another strong
quarter of capital raising in infrastructure, bringing total
invested and committed capital to $8 billion, providing clients
access to attractive long-term returns and stimulating needed
economic growth. Finally, Aladdin revenue grew 13% year-over-year.
The increasing impact of technology on our industry continues to
drive demand, as we signed one of our largest ever institutional
clients during the quarter, and we remain focused on meeting the
growing need for technology solutions in the retail sector.
“Now more than ever, BlackRock is uniquely positioned to provide
innovative solutions to our clients' complex investment and
technology needs. Our focus remains on investing for the future so
BlackRock can help clients meet their financial goals and deliver
long-term value for shareholders.”
RESULTS BY CLIENT TYPE
(in millions), (unaudited)
Q2 2016Net flows
June 30, 2016AUM
Q2 2016Base
Fees(1)
June 30, 2016AUM% of
Total
Q2 2016Base
Fees(1)% of Total
Retail $ (6,292 )
$
544,427
$ 806 12 % 34 % iShares 15,675 1,154,122 845
26 % 36 % Institutional: Active (6,717 ) 1,009,721 479 22 % 20 %
Index (1,129 ) 1,796,654 240
40 % 10 % Total institutional (7,846 )
2,806,375 719 62 % 30 %
Total
long-term $ 1,537 $
4,504,924 $ 2,370 100
% 100 %
RESULTS BY PRODUCT TYPE
(in millions), (unaudited)
Q2 2016Net flows
June 30, 2016AUM
Q2 2016Base
Fees(1)
June 30, 2016AUM% of
Total
Q2 2016Base
Fees(1)% of Total
Equity $ (2,215 )
$
2,432,558
$ 1,236 54 % 52 % Fixed income 5,494 1,566,656
655 34 % 28 % Multi-asset (3,099 ) 386,520 291 9 % 12 %
Alternatives 1,357 119,190
188 3 % 8 %
Total long-term
$ 1,537 $ 4,504,924
$ 2,370 100 %
100 %
RESULTS BY INVESTMENT STYLE
(in millions), (unaudited)
Q2 2016Net flows
June 30, 2016AUM
Q2 2016Base
Fees(1)
June 30, 2016AUM% of
Total
Q2 2016Base
Fees(1)% of Total
Active
$
(12,812
)
$
1,510,424
$ 1,277 34 % 54 % Index and iShares
14,349 2,994,500 1,093 66
% 46 %
Total long-term $ 1,537
$ 4,504,924 $
2,370 100 % 100 %
(1) Base fees include investment advisory,
administration fees and securities lending revenue.
Long-Term Business Highlights
Long-term net inflows of $4.1 billion and $9.3 billion from
clients in the Americas and EMEA regions, respectively, were
partially offset by net outflows of $11.9 billion from clients in
Asia-Pacific. At June 30, 2016, BlackRock managed 63% of its
long-term AUM for investors in the Americas and 37% for clients in
EMEA and Asia-Pacific.
A discussion of the Company’s net flows by client type for the
second quarter of 2016 is presented below.
- Retail long-term net outflows of
$6.3 billion reflected net outflows of $2.7 billion and $3.6
billion from the United States and internationally, respectively.
Fixed income saw net inflows of $2.3 billion, paced by flows into
municipals and core bond funds. Equity net outflows of $4.9 billion
were primarily related to outflows from international equities
driven by market uncertainty and de-risking. Multi-asset net
outflows of $2.6 billion were largely due to outflows from world
allocation strategies.
- iShares long-term net inflows of
$15.7 billion were driven by fixed income net inflows of $10.0
billion, diversified across corporate, emerging market and
municipal bond funds. Equity net inflows of $3.4 billion reflected
strong flows into the Core Series and Minimum Volatility funds.
Commodities iShares generated $2.1 billion of net
inflows.
- Institutional active long-term
net outflows of $6.7 billion were primarily due to fixed income net
outflows of $7.0 billion, driven by client re-allocation
activity.
- Institutional index long-term
net outflows of $1.1 billion reflected equity net outflows of $1.2
billion.
Cash management AUM increased 28% to $374.7 billion,
primarily reflecting $80.6 billion in AUM acquired in the BofA®
Global Capital Management transaction.
Advisory AUM ended the second quarter at $10.5
billion.
INVESTMENT PERFORMANCE AT JUNE 30,
2016 (1)
One-year
period
Three-year
period
Five-year
period
Fixed Income: Actively managed AUM above benchmark or
peermedian
Taxable
53
%
80 % 91 % Tax-exempt
46
%
48
%
70
%
Index AUM within or above applicable tolerance
93
%
99
%
99
%
Equity: Actively managed AUM above benchmark or peermedian
Fundamental
63
%
67
%
51
%
Scientific
40
%
82
%
92
%
Index AUM within or above applicable tolerance
96
%
98
%
98
%
(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 Thursday, July
14, 2016 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 38298849). 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 Thursday, July 14, 2016 and ending
at midnight on Thursday, July 28, 2016. To access the replay of the
teleconference, callers from the United States should dial
(855) 859-2056 and callers from outside the United States
should dial (404) 537-3406 and enter the Conference ID Number
38298849. To access the webcast, please visit the investor
relations section of www.blackrock.com.
About BlackRock
BlackRock is a global leader in investment management, risk
management and advisory services for institutional and retail
clients. At June 30, 2016, BlackRock’s AUM was $4.890 trillion.
BlackRock helps clients around the world 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®. As of June
30, 2016, the firm had approximately 12,700 employees in more than
30 countries and a major presence in 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
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except shares and per share
data), (unaudited)
Three Months
Three Months Ended Ended June 30, March
31, 2016 2015 Change 2016
Change Revenue
Investment advisory, administration fees
andsecurities lending revenue
$2,489 $2,534 $(45 ) $2,359 $130 Investment advisory performance
fees 74 136 (62 ) 34 40 BlackRock Solutions and advisory 172 161 11
171 1 Distribution fees 11 13 (2 ) 11 - Other revenue 58 61
(3 ) 49 9 Total revenue 2,804 2,905
(101 ) 2,624 180
Expense Employee
compensation and benefits 977 1,012 (35 ) 947 30 Distribution and
servicing costs 109 105 4 97 12 Amortization of deferred sales
commissions 9 12 (3 ) 10 (1 ) Direct fund expense 195 191 4 188 7
General and administration 316 312 4 318 (2 ) Restructuring charge
- - - 76 (76 ) Amortization of intangible assets 25 35
(10 ) 25 - Total expense 1,631 1,667
(36 ) 1,661 (30 ) Operating income 1,173 1,238 (65 )
963 210
Nonoperating income (expense) Net gain (loss)
on investments 20 6 14 (2 ) 22 Interest and dividend income 6 5 1 5
1 Interest expense (51 ) (52 ) 1 (51 ) - Total
nonoperating income (expense) (25 ) (41 ) 16 (48 ) 23
Income before income taxes 1,148 1,197 (49 ) 915 233 Income tax
expense 353 371 (18 ) 268 85
Net
income 795 826 (31 ) 647 148 Less:
Net income (loss) attributable to
noncontrollinginterests
6 7 (1 ) (10 ) 16
Net income attributable
to BlackRock, Inc. $789 $819 $(30 ) $657
$132
Weighted-average common shares outstanding Basic
164,758,612 166,616,558 (1,857,946 ) 165,388,130 (629,518 ) Diluted
166,639,290 169,114,759 (2,475,469 ) 167,398,938 (759,648 )
Earnings per share attributable to
BlackRock, Inc.common stockholders (4)
Basic $4.79 $4.92 $(0.13 ) $3.97 $0.82 Diluted $4.73 $4.84 $(0.11 )
$3.92 $0.81
Cash dividends declared and paid per share $2.29
$2.18 $0.11 $2.29 $ -
Supplemental
information:
AUM (end of period) $4,890,121 $4,721,294 $168,827
$4,737,165 $152,956 Shares outstanding (end of period) 164,463,297
166,379,267 (1,915,970 ) 165,174,069 (710,772 )
GAAP:
Operating margin 41.8 % 42.6 % (80) bps 36.7 % 510 bps Effective
tax rate 30.9 % 31.2 % (30) bps 29.0 % 190 bps
As adjusted:
Operating income (1) $1,179 $1,248 $(69 ) $1,047 $132 Operating
margin (1) 43.9 % 44.9 % (100) bps 41.6 % 230 bps
Nonoperating income (expense), less net
income(loss) attributable to noncontrolling interests (2)
$(31 ) $(50 ) $19 $(38 ) $7 Net income attributable to BlackRock,
Inc. (3) $797 $838 $(41 ) $711 $86
Diluted earnings attributable to
BlackRock, Inc.common stockholders per share (3) (4)
$4.78 $4.96 $(0.18 ) $4.25 $0.53 Effective tax rate 30.6 % 30.1 %
50 bps 29.6 % 100 bps
See the reconciliation to GAAP and notes (1) through
(4) for more information on as adjusted items.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except shares and per share
data), (unaudited)
Six
Months Ended June 30, 2016
2015 Change Revenue Investment advisory,
administration fees and securities lending revenue $4,848 $4,924
$(76 ) Investment advisory performance fees 108 244 (136 )
BlackRock Solutions and advisory 343 308 35 Distribution fees 22 30
(8 ) Other revenue 107 122 (15 ) Total revenue 5,428
5,628 (200 )
Expense Employee compensation and
benefits 1,924 1,993 (69 ) Distribution and servicing costs 206 204
2 Amortization of deferred sales commissions 19 25 (6 ) Direct fund
expense 383 380 3 General and administration 634 651 (17 )
Restructuring charge 76 - 76 Amortization of intangible assets 50
70 (20 ) Total expense 3,292 3,323 (31
) Operating income 2,136 2,305 (169 )
Nonoperating
income (expense) Net gain (loss) on investments 18 69 (51 )
Interest and dividend income 11 9 2 Interest expense (102 ) (103 )
1 Total nonoperating income (expense) (73 ) (25 ) (48 )
Income before income taxes 2,063 2,280 (217 ) Income tax expense
621 629 (8 )
Net income 1,442 1,651 (209 )
Less: Net income (loss) attributable to noncontrolling interests (4
) 10 (14 )
Net income attributable to BlackRock, Inc.
$1,446 $1,641 $(195 )
Weighted-average
common shares outstanding Basic 165,073,371 166,851,492
(1,778,121 ) Diluted 167,023,559 169,418,964 (2,395,405 )
Earnings per share attributable to BlackRock, Inc. common
stockholders (4) Basic $8.76 $9.84 $(1.08 ) Diluted $8.66 $9.69
$(1.03 )
Cash dividends declared and paid per share $4.58
$4.36 $0.22
Supplemental
information:
AUM (end of period) $4,890,121 $4,721,294 $168,827 Shares
outstanding (end of period) 164,463,297 166,379,267 (1,915,970 )
GAAP: Operating margin 39.4 % 41.0 % (160) bps Effective tax
rate 30.1 % 27.7 % 240 bps
As adjusted: Operating income (1)
$2,226 $2,325 $(99 ) Operating margin (1) 42.8 % 43.2 % (40) bps
Nonoperating income (expense), less net
income (loss) attributable tononcontrolling interests (2)
$(69 ) $(39 ) $(30 ) Net income attributable to BlackRock, Inc. (3)
$1,508 $1,668 $(160 )
Diluted earnings attributable to
BlackRock, Inc. common stockholders pershare (3) (4)
$9.03 $9.85 $(0.82 ) Effective tax rate 30.1 % 27.0 % 310 bps
See the reconciliation to GAAP and notes (1) through
(4) 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, inflows June 30, 2016
(outflows) Acquisition (1) Market
Change FX impact (2) 2016 Average
AUM (3) Retail: Equity $193,436 $(4,887 ) $ -
$6,091 $(2,660 ) $191,980 $194,197 Fixed Income 217,209 2,317 -
5,250 (1,066 ) 223,710 221,062 Multi-Asset 113,291 (2,581 ) - 1,271
(525 ) 111,456 112,902 Alternatives 18,730 (1,141 ) - (162 ) (146 )
17,281 17,971 Retail subtotal 542,666 (6,292 ) - 12,450 (4,397 )
544,427 546,132 iShares: Equity 818,104 3,431 - 7,661 (2,428 )
826,768 826,127 Fixed Income 291,132 10,026 - 5,720 (1,982 )
304,896 297,883 Multi-Asset 2,166 122 - 41 (1 ) 2,328 2,255
Alternatives 16,152 2,096 - 1,915 (33 ) 20,130 17,905
iShares subtotal 1,127,554 15,675 - 15,337 (4,444 ) 1,154,122
1,144,170 Institutional: Active: Equity 118,833 482 - 2,529 (1,717
) 120,127 120,312 Fixed Income 544,244 (6,977 ) - 13,064 (645 )
549,686 545,509 Multi-Asset 262,010 (131 ) - 7,024 (3,966 ) 264,937
263,270 Alternatives 75,104 (91 ) - 526 (568 ) 74,971 75,404
Active subtotal 1,000,191 (6,717 ) - 23,143 (6,896 ) 1,009,721
1,004,495 Index: Equity 1,277,802 (1,241 ) - 20,404 (3,282 )
1,293,683 1,292,312 Fixed Income 472,568 128 - 30,198 (14,530 )
488,364 477,717 Multi-Asset 7,776 (509 ) - 330 202 7,799 7,570
Alternatives 6,003 493 - 487 (175 ) 6,808 6,406 Index
subtotal 1,764,149 (1,129 ) - 51,419 (17,785 ) 1,796,654
1,784,005 Institutional subtotal 2,764,340 (7,846 ) - 74,562
(24,681 ) 2,806,375 2,788,500
Long-term 4,434,560
1,537 - 102,349 (33,522
) 4,504,924 4,478,802 Cash Management 291,986
5,015 80,635 8 (2,960 ) 374,684 353,432 Advisory (4) 10,619 (48 ) -
15 (73 ) 10,513 10,624
Total $4,737,165
$6,504 $80,635 $102,372
$(36,555 ) $4,890,121 $4,842,858
Current Quarter Component
Changes by Product (Long-term)
Net March 31, inflows June
30, 2016 (outflows) Acquisition Market
Change FX impact (2) 2016 Average
AUM (3) Equity: Active $276,281 $(3,880 ) $ -
$7,093 $(3,146 ) $276,348 $278,552 iShares 818,104 3,431 - 7,661
(2,428 ) 826,768 826,127 Non-ETF index 1,313,790 (1,766 ) - 21,931
(4,513 ) 1,329,442 1,328,269 Equity subtotal 2,408,175
(2,215 ) - 36,685 (10,087 ) 2,432,558 2,432,948 Fixed income:
Active 753,711 (4,987 ) - 17,962 (1,255 ) 765,431 758,738 iShares
291,132 10,026 - 5,720 (1,982 ) 304,896 297,883 Non-ETF index
480,310 455 - 30,550 (14,986 ) 496,329 485,550 Fixed
income subtotal 1,525,153 5,494 - 54,232 (18,223 ) 1,566,656
1,542,171 Multi-asset 385,243 (3,099 ) - 8,666 (4,290 ) 386,520
385,997 Alternatives: Core 91,639 (1,153 ) - 313 (887 ) 89,912
91,072
Currency andcommodities (5)
24,350 2,510 - 2,453 (35 ) 29,278 26,614 Alternatives
subtotal 115,989 1,357 - 2,766 (922 ) 119,190 117,686
Long-term $4,434,560 $1,537 $ -
$102,349 $(33,522 ) $4,504,924
$4,478,802
Current
Quarter Component Changes by Investment Style (Long-term)
Net March 31,
inflows June 30, 2016 (outflows)
Acquisition Market Change FX impact (2)
2016 Average AUM (3) Active $1,499,128
$(12,812 ) $ - $33,714 $(9,606 ) $1,510,424 $1,506,836 Index and
iShares 2,935,432 14,349 - 68,635 (23,916 ) 2,994,500
2,971,966
Long-term $4,434,560 $1,537
$ - $102,349 $(33,522 )
$4,504,924 $4,478,802 (1)
Amount represents $80.6 billion of AUM
acquired in the BofA Global Capital Management transaction in April
2016.
(2) Foreign exchange reflects the impact of translating non-U.S.
dollar denominated AUM into U.S. dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot
AUM amounts for the trailing four months. (4) Advisory AUM
represents long-term portfolio liquidation assignments. (5)
Amounts include commodity iShares.
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Year-to-Date Changes by Client Type and Product
Net December
31, inflows June 30, 2015
(outflows) Acquisition (1) Market
Change FX impact (2) 2016 Average
AUM (3) Retail: Equity $193,755 $(5,282 ) $ -
$5,380 $(1,873 ) $191,980 $190,233 Fixed Income 212,653 4,438 -
6,701 (82 ) 223,710 217,268 Multi-Asset 115,307 (4,217 ) - 782 (416
) 111,456 112,436 Alternatives 19,410 (1,591 ) - (613 ) 75
17,281 18,472 Retail subtotal 541,125 (6,652 ) - 12,250 (2,296 )
544,427 538,409 iShares: Equity 823,156 (1,255 ) - 2,120 2,747
826,768 805,871 Fixed Income 254,190 37,508 - 12,519 679 304,896
283,690 Multi-Asset 2,730 (464 ) - 54 8 2,328 2,289 Alternatives
12,485 4,133 - 3,480 32 20,130 16,068 iShares
subtotal 1,092,561 39,922 - 18,173 3,466 1,154,122 1,107,918
Institutional: Active: Equity 121,442 (1,288 ) - 1,005 (1,032 )
120,127 117,890 Fixed Income 514,428 3,907 - 28,240 3,111 549,686
534,858 Multi-Asset 252,041 1,131 - 12,011 (246 ) 264,937 257,134
Alternatives 74,941 331 - (17 ) (284 ) 74,971 74,909 Active
subtotal 962,852 4,081 - 41,239 1,549 1,009,721 984,791 Index:
Equity 1,285,419 (12,067 ) - 15,021 5,310 1,293,683 1,266,701 Fixed
Income 441,097 11,814 - 50,001 (14,548 ) 488,364 463,891
Multi-Asset 6,258 (117 ) - 1,246 412 7,799 7,186 Alternatives 6,003
635 - 408 (238 ) 6,808 6,237 Index subtotal 1,738,777
265 - 66,676 (9,064 ) 1,796,654 1,744,015
Institutional subtotal 2,701,629 4,346 - 107,915
(7,515 ) 2,806,375 2,728,806
Long-term 4,335,315
37,616 - 138,338 (6,345
) 4,504,924 4,375,133 Cash Management 299,884
(3,140 ) 80,635 (13 ) (2,682 ) 374,684 328,543 Advisory (4) 10,213
(145 ) - (107 ) 552 10,513 10,433
Total
$4,645,412 $34,331 $80,635
$138,218 $(8,475 ) $4,890,121
$4,714,109
Year-to-Date Component Changes by Product (Long-term)
Net December 31,
inflows June 30, 2015 (outflows)
Acquisition Market Change FX impact (2)
2016 Average AUM (3) Equity: Active
$281,319 $(7,850 ) $ - $4,257 $(1,378 ) $276,348 $273,821 iShares
823,156 (1,255 ) - 2,120 2,747 826,768 805,871 Non-ETF index
1,319,297 (10,787 ) - 17,149 3,783 1,329,442
1,301,003 Equity subtotal 2,423,772 (19,892 ) - 23,526 5,152
2,432,558 2,380,695 Fixed income: Active 719,653 7,928 - 34,272
3,578 765,431 744,516 iShares 254,190 37,508 - 12,519 679 304,896
283,690 Non-ETF index 448,525 12,231 - 50,670 (15,097
) 496,329 471,501 Fixed income subtotal 1,422,368 57,667 - 97,461
(10,840 ) 1,566,656 1,499,707 Multi-asset 376,336 (3,667 ) - 14,093
(242 ) 386,520 379,045 Alternatives: Core 92,085 (973 ) - (683 )
(517 ) 89,912 91,079
Currency andcommodities (5)
20,754 4,481 - 3,941 102 29,278 24,607
Alternatives subtotal 112,839 3,508 - 3,258 (415 )
119,190 115,686
Long-term $4,335,315 $37,616
$ - $138,338 $(6,345 )
$4,504,924 $4,375,133
Year-to-Date Component Changes by Investment Style
(Long-term)
Net December 31, inflows June 30,
2015 (outflows) Acquisition Market
Change FX impact (2) 2016 Average
AUM (3) Active $1,462,672 $(4,266 ) $ - $50,688 $1,330
$1,510,424 $1,481,289 Index and iShares 2,872,643 41,882 -
87,650 (7,675 ) 2,994,500 2,893,844
Long-term
$4,335,315 $37,616 $ - $138,338
$(6,345 ) $4,504,924 $4,375,133
(1)
Amount represents $80.6 billion of AUM
acquired in the BofA Global Capital Management transaction in April
2016.
(2) Foreign exchange reflects the impact of converting non-U.S.
dollar denominated AUM into U.S. dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot
AUM amounts for the trailing seven months. (4) Advisory AUM
represents long-term portfolio liquidation assignments. (5)
Amounts include commodity iShares.
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Year-over-Year Component Changes by Client Type and Product
Net June
30, inflows June 30, 2015
(outflows)
Acquisition (1)
Market Change FX impact (2) 2016
Average AUM (3) Retail: Equity $203,373 $2,630
$ - $(9,364 ) $(4,659 ) $191,980 $193,092 Fixed Income 209,056
12,963 - 2,736 (1,045 ) 223,710 214,434 Multi-Asset 129,188 (7,639
) 366 (9,441 ) (1,018 ) 111,456 117,523 Alternatives 19,445 (1,029
) - (1,039 ) (96 ) 17,281 19,089 Retail subtotal 561,062 6,925 366
(17,108 ) (6,818 ) 544,427 544,138 iShares: Equity 828,057 51,620 -
(49,596 ) (3,313 ) 826,768 804,479 Fixed Income 230,735 67,678 -
8,511 (2,028 ) 304,896 265,625 Multi-Asset 1,844 527 - (35 ) (8 )
2,328 2,098 Alternatives 14,953 3,620 - 1,601 (44 )
20,130 15,033 iShares subtotal 1,075,589 123,445 - (39,519 ) (5,393
) 1,154,122 1,087,235 Institutional: Active: Equity 128,032 (158 )
- (3,722 ) (4,025 ) 120,127 120,420 Fixed Income 517,251 4,634 -
29,597 (1,796 ) 549,686 529,160 Multi-Asset 256,964 3,406 - 9,684
(5,117 ) 264,937 256,501 Alternatives 73,236 2,445 560 (332
) (938 ) 74,971 74,607 Active subtotal 975,483 10,327 560 35,227
(11,876 ) 1,009,721 980,688 Index: Equity 1,345,855 (14,886 ) -
(29,110 ) (8,176 ) 1,293,683 1,284,269 Fixed Income 465,392 201 -
54,776 (32,005 ) 488,364 465,324 Multi-Asset 7,013 (635 ) - 1,066
355 7,799 7,068 Alternatives 6,495 1,117 - (384 ) (420 )
6,808 6,277 Index subtotal 1,824,755 (14,203 ) - 26,348
(40,246 ) 1,796,654 1,762,938 Institutional subtotal 2,800,238
(3,876 ) 560 61,575 (52,122 ) 2,806,375 2,743,626
Long-term 4,436,889 126,494 926
4,948 (64,333 ) 4,504,924
4,374,999 Cash Management 271,506 27,698 80,635 270 (5,425 )
374,684 306,240 Advisory (4) 12,899 (2,025 ) - (36 ) (325 ) 10,513
11,097
Total $4,721,294 $152,167
$81,561 $5,182 $(70,083 )
$4,890,121 $4,692,336
Year-over-Year Component Changes by Product
(Long-term)
Net June 30, inflows June 30,
2015 (outflows)
Acquisition(1)
Market Change FX impact (2) 2016
Average AUM (3) Equity: Active $298,884
$(2,106 ) $ - $(14,478 ) $(5,952 ) $276,348 $280,032 iShares
828,057 51,620 - (49,596 ) (3,313 ) 826,768 804,479 Non-ETF index
1,378,376 (10,308 ) - (27,718 ) (10,908 ) 1,329,442 1,317,749
Equity subtotal 2,505,317 39,206 - (91,792 ) (20,173 ) 2,432,558
2,402,260 Fixed income: Active 718,853 16,912 - 31,538 (1,872 )
765,431 736,047 iShares 230,735 67,678 - 8,511 (2,028 ) 304,896
265,625 Non-ETF index 472,846 886 - 55,571 (32,974 )
496,329 472,871 Fixed income subtotal 1,422,434 85,476 - 95,620
(36,874 ) 1,566,656 1,474,543 Multi-asset 395,009 (4,341 ) 366
1,274 (5,788 ) 386,520 383,190 Alternatives: Core 89,954 2,079 560
(1,305 ) (1,376 ) 89,912 91,148
Currency andcommodities (5)
24,175 4,074 - 1,151 (122 ) 29,278 23,858
Alternatives subtotal 114,129 6,153 560 (154 ) (1,498 )
119,190 115,006
Long-term $4,436,889 $126,494
$926 $4,948 $(64,333 )
$4,504,924 $4,374,999
Year-over-Year Component Changes by Investment
Style (Long-term) Net
June 30, inflows June 30, 2015
(outflows)
Acquisition(1)
Market Change FX impact (2) 2016
Average AUM (3) Active $1,496,571 $11,987 $926
$15,933 $(14,993 ) $1,510,424 $1,483,802 Index and iShares
2,940,318 114,507 - (10,985 ) (49,340 ) 2,994,500 2,891,197
Long-term $4,436,889 $126,494
$926 $4,948 $(64,333 )
$4,504,924 $4,374,999 (1)
Amounts represent $560 million of AUM
acquired in the Infraestructura Institucional acquisition in
October 2015, $366 million of AUM acquired in the FutureAdvisor
acquisition in October 2015 and $80.6 billion of AUM acquired in
the BofA Global Capital Management transaction in April 2016. The
FutureAdvisor acquisition amount does not include AUM that was held
in iShares holdings.
(2) Foreign exchange reflects the impact of translating non-U.S.
dollar denominated AUM into U.S. dollars for reporting purposes.
(3) Average AUM is calculated as the average of the month-end spot
AUM amounts for the trailing thirteen months. (4) Advisory AUM
represents long-term portfolio liquidation assignments. (5)
Amounts include commodity iShares.
SUMMARY OF REVENUE
Three
Months EndedJune 30, Change
Three MonthsEndedMarch
31, 2016
Change Six Months EndedJune 30,
(in millions), (unaudited)
2016 2015
2016 2015 Change
Investment advisory, administration
feesand securities lending revenue:
Equity: Active $406 $447 $(41 ) $386 $20 $792 $869 $(77 )
iShares 656 728 (72 ) 623 33 1,279 1,412 (133 ) Non-ETF Index 174
190 (16 ) 164 10 338 353 (15 ) Equity subtotal 1,236 1,365
(129 ) 1,173 63 2,409 2,634 (225 ) Fixed income: Active 414 387 27
396 18 810 760 50 iShares 172 138 34 152 20 324 268 56 Non-ETF
Index 69 72 (3 ) 70 (1 ) 139 140 (1 ) Fixed income subtotal 655 597
58 618 37 1,273 1,168 105 Multi-asset 291 316 (25 ) 284 7 575 620
(45 ) Alternatives: Core 168 161 7 164 4 332 315 17 Currency and
commodities 20 19 1 17 3 37 38 (1 ) Alternatives
subtotal 188 180 8 181 7 369 353 16
Long-term 2,370 2,458 (88 )
2,256 114 4,626 4,775 (149
) Cash management 119 76 43 103 16 222 149 73
Total base fees 2,489 2,534 (45
) 2,359 130 4,848 4,924
(76 ) Investment advisory performance fees: Equity 42
61 (19 ) 11 31 53 98 (45 ) Fixed income 2 3 (1 ) 5 (3 ) 7 7 -
Multi-asset 2 8 (6 ) 3 (1 ) 5 16 (11 ) Alternatives 28 64 (36 ) 15
13 43 123 (80 )
Total performance fees 74
136 (62 ) 34 40 108
244 (136 ) BlackRock Solutions
and advisory 172 161 11 171
1 343 308 35 Distribution fees
11 13 (2 ) 11 - 22
30 (8 ) Other revenue 58
61 (3 ) 49 9 107
122 (15 ) Total revenue $2,804
$2,905 $(101 ) $2,624 $180
$5,428 $5,628 $(200 )
Highlights
- Investment advisory, administration
fees and securities lending revenue decreased $45 million from the
second quarter of 2015 reflecting mix shift from equities to fixed
income and cash products, partially offset by lower yield-related
waivers on certain money market funds and the effect of AUM
acquired in the BofA Global Capital Management transaction.
Securities lending revenue of $151 million in the current quarter
increased $4 million from the second quarter of 2015.Investment
advisory, administration fees and securities lending revenue
increased $130 million from the first quarter of 2016, driven by
higher average AUM.
- Performance fees decreased $62 million
from the second quarter of 2015, primarily reflecting lower fees
from alternative and equity products, and increased $40 million
from the first quarter of 2016.
- BlackRock Solutions® and advisory
revenue increased $11 million from the second quarter of 2015.
BlackRock Solutions and advisory revenue included $146 million of
Aladdin® revenue in the current quarter compared with $129 million
in the second quarter of 2015 and $141 million in the first quarter
of 2016.
SUMMARY OF OPERATING EXPENSE
Three
Months EndedJune 30,
ThreeMonthsEnded
Six Months Ended June
30,
(in millions), (unaudited)
2016 2015
Change
March 31,2016
Change
2016
2015
Change
Operating Expense
Employee compensation andbenefits
$977 $1,012 $(35 ) $947 $30 $1,924 $1,993 $(69 ) Distribution and
servicing costs 109 105 4 97 12 206 204 2
Amortization of deferred
salescommissions
9 12 (3 ) 10 (1 ) 19 25 (6 ) Direct fund expense 195 191 4 188 7
383 380 3 General and administration 316 312 4 318 (2 ) 634 651 (17
) Restructuring charge - - - 76 (76 ) 76 - 76 Amortization of
intangible assets 25 35 (10 ) 25 - 50 70 (20 )
Total
Operating Expense $1,631 $1,667 $(36
) $1,661 $(30 ) $3,292
$3,323 $(31 )
Highlights
- Employee compensation and benefits
decreased $35 million from the second quarter of 2015, reflecting
lower incentive compensation, driven primarily by lower operating
income and performance fees.Employee compensation and benefits
increased $30 million from the first quarter of 2016, reflecting
higher incentive compensation, driven by higher operating income
and performance fees, partially offset by lower seasonal employer
payroll taxes.
- A restructuring charge of $76 million,
primarily comprised of severance and accelerated amortization
expense of previously granted deferred compensation awards, was
recorded in the first quarter of 2016 in connection with a project
to streamline and simplify the organization.
INCOME TAX EXPENSE
ThreeMonths EndedJune
30,
ThreeMonthsEnded
Six Months Ended June
30,
(in millions), (unaudited)
2016 2015
Change
March 31, 2016
Change
2016 2015 Change Income tax
expense $353 $371 $(18) $268 $85 $621 $629 $(8)
Highlights
- The second quarter 2016 and 2015 income
tax expense included a $4 million and $13 million net noncash
expense, respectively, primarily related to the revaluation of
certain deferred income tax liabilities as a result of domestic
state and local tax changes.
- The first quarter 2016 income tax
expense included a $4 million net noncash benefit, primarily
related to the revaluation of certain deferred income tax
liabilities, including the effect of tax legislation enacted in
Japan and domestic state and local tax changes.
SUMMARY OF NONOPERATING INCOME
(EXPENSE)
Three MonthsEndedJune
30,
Three MonthsEndedMarch
31,2016
Six Months EndedJune 30,
(in millions), (unaudited)
2016 2015 Change Change
2016 2015
Change
Nonoperating income (expense), GAAP
basis
$(25 ) $(41 ) $16 $(48 ) $23 $(73 ) $(25 ) $(48 )
Less: Net income (loss) attributable to
NCI
6 7 (1 ) (10 ) 16 (4 ) 10 (14 )
Nonoperating income (expense)(1) $(31 ) $(48 ) $17 $(38 ) $7
$(69 ) $(35 ) $(34 )
Estimatedeconomicinvestments atJune 30, 2016(3)
Three MonthsEndedJune 30,
Three MonthsEndedMarch 31,2016
Six Months EndedJune
30,
(in millions), (unaudited)
2016 2015 Change
Change 2016 2015 Change Net gain (loss)
on investments(1) (2) Private equity 20-25 % $7 $9 $(2 ) $2 $5 $9
$10 $(1 ) Real assets 5-10 % 1 2 (1 ) 2 (1 ) 3 4 (1 ) Other
alternatives(4)
15-20
% 4 - 4 - 4 4 4 - Other investments(5) 50-55 % 2 (12 ) 14
4 (2 ) 6 (4 ) 10 Subtotal 14 (1
) 15 8 6 22 14 8 Other gains(6) - - - -
- - 45 (45 ) Total net gain (loss) on
investments(1) 14 (1 ) 15 8 6 22 59 (37 ) Interest and dividend
income 6 5 1 5 1 11 9 2 Interest expense (51 ) (52 ) 1 (51 )
- (102 ) (103 ) 1 Net interest expense (45 )
(47 ) 2 (46 ) 1 (91 ) (94 ) 3 Total
nonoperating income (expense)(1) (31 ) (48 ) 17 (38 ) 7 (69 ) (35 )
(34 )
Compensation expense related
to(appreciation) depreciation on deferredcompensation plans
- (2 ) 2 - - - (4 ) 4
Nonoperating income (expense),
asadjusted(1)
$(31 ) $(50 ) $19 $(38 ) $7 $(69 ) $(39 ) $(30 )
(1) Net of net income (loss) attributable to
noncontrolling interests (“NCI”). (2) Amounts include net gain
(loss) on consolidated variable interest entities. (3) Percentages
represent estimated percentages of BlackRock’s corporate economic
investment portfolio at June 30, 2016. Economic investment amounts
at March 31, 2016 for private equity, real assets, other
alternatives and other investments were $360 million, $104 million,
$227 million and $871 million, respectively. (4) Amounts primarily
include net gains (losses) related to direct hedge fund strategies
and hedge fund solutions. (5) Amounts include net gains (losses)
related to equity and fixed income investments, and BlackRock’s
seed capital hedging program. (6) Amount for the six months ended
June 30, 2015 primarily includes a gain related to the acquisition
of certain assets of BlackRock Kelso Capital Advisors LLC.
Highlights
- Net gain (loss) on investments
increased from the second quarter of 2015 and first quarter of 2016
due to higher marks in the second quarter of 2016.
ECONOMIC TANGIBLE ASSETS
The Company presents economic tangible assets as additional
information to enable investors to exclude certain assets that have
equal and offsetting liabilities or noncontrolling interests that
ultimately do not have an impact on stockholders’ equity 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, (in billions),
(unaudited)
2016 (Est.) 2015 Total balance sheet
assets
$222
$225 Separate account assets and separate account collateral
held under
securities lending agreements
(179
) (182 ) Consolidated sponsored investment funds
(1
)
(1 ) Goodwill and intangible assets, net (31 ) (30 )
Economic
tangible assets $11 $12
RECONCILIATION OF U.S. GAAP OPERATING
INCOME AND OPERATING MARGIN TO OPERATING INCOMEAND OPERATING
MARGIN, AS ADJUSTED
Three Months Ended Six Months
Ended June 30, March 31, June 30,
(in millions), (unaudited)
2016 2015
2016 2016 2015 Operating income,
GAAP basis $1,173 $1,238 $963
$2,136 $2,305 Non-GAAP expense adjustments:
Restructuring charge - - 76 76 - PNC LTIP funding obligation 6 8 8
14 16
Compensation expense related
toappreciation (depreciation) ondeferred compensation plans
- 2 - - 4
Operating
income, as adjusted 1,179 1,248 1,047
2,226 2,325
Product launch costs andcommissions
- 5 - - 5
Operating income used for operatingmargin
measurement
$1,179 $1,253 $1,047 $2,226 $2,330
Revenue, GAAP basis $2,804 $2,905 $2,624 $5,428
$5,628 Non-GAAP adjustments: Distribution and servicing costs (109
) (105 ) (97 ) (206 ) (204 )
Amortization of deferred
salescommissions
(9 ) (12 ) (10 ) (19 ) (25 )
Revenue used for operating
marginmeasurement
$2,686 $2,788 $2,517 $5,203 $5,399
Operating margin, GAAP basis 41.8
% 42.6 % 36.7 % 39.4
% 41.0 % Operating margin, as
adjusted 43.9 % 44.9 % 41.6
% 42.8 % 43.2 %
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 NETOF
NCI, AS ADJUSTED
Three Months Ended Six Months
Ended June 30, March 31, June 30,
(in millions), (unaudited)
2016 2015
2016 2016 2015 Nonoperating income
(expense), GAAP basis $(25 ) $(41 )
$(48 ) $(73 ) $(25 )
Less: Net income (loss) attributable to NCI 6 7 (10 )
(4 ) 10 Nonoperating income (expense), net of NCI (31
) (48 ) (38 ) (69 ) (35 )
Compensation expense related to
(appreciation)depreciation on deferred compensation plans
- (2 ) - - (4 )
Nonoperating income (expense), less net
income(loss) attributable to NCI, as adjusted
$(31 ) $(50 ) $(38 )
$(69 ) $(39 )
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 INCOMEATTRIBUTABLE TO
BLACKROCK, AS ADJUSTED
Three Months Ended Six Months
Ended June 30, March 31, June 30,
(in millions, except per share data),
(unaudited)
2016 2015 2016 2016
2015 Net income attributable to BlackRock, Inc., GAAP
basis $789 $819 $657 $1,446
$1,641 Non-GAAP adjustments: Restructuring charge, net of
tax - - 53 53 - PNC LTIP funding obligation, net of tax 4 6 5 9 11
Income tax matters 4 13 (4 ) - 16
Net income attributable
to BlackRock, Inc., as adjusted $797 $838
$711 $1,508 $1,668 Diluted
weighted-average common shares outstanding(4) 166.6 169.1 167.4
167.0 169.4
Diluted earnings per common share, GAAP
basis(4) $4.73 $4.84 $3.92
$8.66 $9.69 Diluted earnings per common share, as
adjusted(4) $4.78 $4.96 $4.25
$9.03 $9.85
See notes (3) and (4) 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. Management also uses non-GAAP financial
measures as a benchmark to compare its performance with other
companies and to enhance the comparability of this information for
the reporting periods presented. Non-GAAP measures may pose
limitations because they do not include all of BlackRock’s revenue
and expense. 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.
Management uses both GAAP and non-GAAP financial measures in
evaluating BlackRock’s financial performance. Adjustments to GAAP
financial measures (“non-GAAP adjustments”) include certain items
management deems nonrecurring or that occur infrequently,
transactions that ultimately will not impact BlackRock’s book value
or certain tax items that do not impact cash flow.
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: 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. A restructuring charge comprised of
severance and accelerated amortization expense of previously
granted deferred compensation awards has been excluded to provide
more meaningful analysis of BlackRock’s ongoing operations and to
ensure comparability among periods presented. 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. 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).
- Operating income used for measuring
operating margin, as adjusted, is equal to operating income, as
adjusted, excluding the impact of product launch costs (e.g.
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.
(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 aforementioned discussion regarding operating income, as
adjusted, and operating margin, as adjusted, for information on the
PNC LTIP funding obligation and restructuring charge.
For each period presented, the non-GAAP adjustment related to
the restructuring charge and PNC LTIP funding obligation was tax
effected at the respective blended rates applicable to the
adjustments. The three months ended June 30, 2016 and March 31,
2016 reflected a $4 million noncash expense and $4 million noncash
tax benefit, respectively, primarily associated with the
revaluation of certain deferred tax liabilities related to
intangible assets and goodwill. The three and six months ended June
30, 2015 included $13 million and $16 million, respectively, of net
noncash tax expense primarily related to the revaluation of certain
deferred tax liabilities. Amounts have been excluded from the as
adjusted results as these items will not have a cash flow impact
and to ensure comparability among periods presented.
Per share amounts reflect net income attributable to BlackRock,
as adjusted divided by diluted weighted average common shares
outstanding.
(4) 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, 2016
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, 2016. The performance data does not include accounts
terminated prior to June 30, 2016 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
institutional and high net worth separate accounts, and net-of-fees
for retail funds. The performance tracking shown for index accounts
is based on gross-of-fees 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, 2016 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160714005296/en/
BlackRock, Inc.Investor Relations:Tom Wojcik,
212-810-8127orMedia Relations:Brian Beades, 212-810-5596
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