- $70 billion of total net inflows,
including $55 billion in long-term net inflows, reflects positive
flows across all product types, investment styles and regions
- 4% increase in base fees year-over-year
driven by organic growth and market performance, offset by mix
change favoring fixed income and cash
- 13% growth in Aladdin® revenue
year-over-year reflects ongoing demand for risk management
technology
- Expansion in operating margin from
prior year driven by continued expense discipline in the current
quarter
- 5% increase in diluted EPS (3% as
adjusted) year-over-year
- Consistent capital management with $275
million of quarterly share repurchases
BlackRock, Inc. (NYSE:BLK):
FINANCIAL RESULTS
(in millions,
except per share data)
Q3
2016
Q3
2015
Change Q2
2016
Change Nine Months Ended September 30,
2016
2015 Change AUM $
5,117,421 $ 4,505,721 14 % $ 4,890,121 5 % $ 5,117,421 $
4,505,721 14 %
GAAP
basis:
Revenue $ 2,837 $ 2,910 (3 )% $ 2,804 1 % $ 8,265 $ 8,538 (3 )%
Operating income $ 1,209 $ 1,222 (1 )% $ 1,173 3 % $ 3,345 $ 3,527
(5 )% Operating margin 42.6 % 42.0 % 60 bps 41.8 % 80 bps 40.5 %
41.3 % (80) bps Net income(1) $ 875 $ 843 4 % $ 789 11 % $ 2,321 $
2,484 (7 )% Diluted EPS $ 5.26 $ 5.00 5 % $ 4.73 11 % $ 13.92 $
14.68 (5 )% Weighted average diluted shares 166.3 168.7 (1 )% 166.6
- % 166.8 169.2 (1 )%
As
Adjusted:
Operating income(2) $ 1,216 $ 1,227 (1 )% $ 1,179 3 % $ 3,442 $
3,552 (3 )% Operating margin(2) 44.8 % 43.9 % 90 bps 43.9 % 90 bps
43.5 % 43.4 % 10 bps Net income(1) (2) $ 854 $ 844 1 % $ 797 7 % $
2,362 $ 2,512 (6 )% Diluted EPS(2) $ 5.14 $
5.00 3 % $ 4.78 8 % $
14.16 $ 14.85 (5 )% (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 nine months ended September 30, 2016.
“BlackRock’s business model was built to thrive in all market
environments,” commented Laurence D. Fink, Chairman and CEO of
BlackRock. “In the third quarter, even as investor preferences
continued to migrate from equity to fixed income and cash, and away
from active strategies, the diversity of our platform drove nearly
$70 billion of total net inflows. Our $55 billion of long-term net
inflows were positive across both active and index strategies, and
positive across every asset class and region.
“Retail and institutional investors continued turning to iShares
as an effective way to express market views and generate alpha.
iShares once again captured the #1 market share of net new business
in the United States, in Europe and globally, across both equity
and fixed income. Our European fixed income ETFs reached $100
billion of AUM and fixed income remains an important growth area
for iShares.
“With pensions and insurers facing continued challenges to fund
future liabilities in a ‘lower-for-longer’ environment, we saw $8
billion of long-term active net inflows from institutional clients
in the quarter, reflecting demand for BlackRock’s customized fixed
income solutions and multi-asset strategies. Institutional demand
for investment and risk management technology remains strong and
drove 13% growth in our Aladdin revenue year-over-year.
“Regulatory change continues to have a material impact on our
industry. In retail, the DoL fiduciary rule will increasingly
influence the choices that financial intermediaries make for their
clients. Anticipating that change, BlackRock is using our scale to
provide distribution partners with the highest quality investment
strategies at the best value, as well as portfolio construction and
risk tools, to help them build better portfolios. In cash
management, where more than $1 trillion dollars has shifted from
prime to government funds as a result of money market reform, the
breadth of our platform and our ability to both embrace and adapt
ahead of change have enabled us to meet our clients’ evolving needs
and increase market share, and we saw $15 billion of net inflows
into cash management in the third quarter.
“I want to thank our employees for their ongoing commitment to
improving our clients’ financial futures. We continue to evolve our
business model and invest in our future to help clients achieve
their investment goals and deliver long-term value for
shareholders.”
LONG-TERM RESULTS BY CLIENT
TYPE
(in millions), (unaudited)
Q3 2016
Net flows
September 30, 2016
AUM
Q3 2016
Base Fees(1)
September 30, 2016
AUM
% of Total
Q3 2016
Base Fees(1)
% of Total
Retail
$(2,228
)
$554,778
$821
12
%
34
% iShares 51,257 1,246,166 901 26 % 37 % Institutional: Active
7,531 1,039,653 465 22 % 19 % Index (1,376 ) 1,877,501
241 40 % 10 % Total institutional 6,155
2,917,154 706 62 % 29 %
Total
long-term $55,184 $4,718,098
$2,428 100 % 100
%
LONG-TERM RESULTS BY PRODUCT
TYPE
(in millions), (unaudited)
Q3 2016
Net flows
September 30, 2016
AUM
Q3 2016
Base Fees(1)
September 30, 2016
AUM
% of Total
Q3 2016
Base Fees(1)
% of Total
Equity $13,350
$2,566,039
$1,270 54 % 52 % Fixed income 36,981 1,628,268
693 34 % 29 % Multi-asset 3,038 402,261 285 9 % 12 % Alternatives
1,815 121,530 180 3 % 7 %
Total
long-term $55,184 $4,718,098
$2,428 100 % 100 %
LONG-TERM RESULTS BY INVESTMENT
STYLE
(in millions), (unaudited)
Q3 2016
Net flows
September 30, 2016
AUM
Q3 2016
Base Fees(1)
September 30, 2016
AUM
% of Total
Q3 2016
Base Fees(1)
% of Total
Active $4,039
$1,547,473
$1,274 33 % 52 % Index and iShares 51,145
3,170,625 1,154 67 % 48 %
Total
long-term $55,184 $4,718,098
$2,428 100 % 100 %
(1) Base fees include investment advisory,
administration fees and securities lending revenue.
Long-Term Business Highlights
Long-term net inflows were positive across all major regions,
with net inflows of $38.7 billion, $13.4 billion and $3.1 billion
from clients in the Americas, EMEA and Asia-Pacific, respectively.
At September 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
third quarter of 2016 is presented below.
- Retail long-term net outflows of
$2.2 billion reflected net outflows of $1.9 billion and $0.3
billion from the United States and internationally, respectively.
Fixed income saw net inflows of $5.8 billion, paced by flows into
emerging market debt and high yield bond funds. Equity net outflows
of $3.9 billion were primarily related to outflows from European
and U.S. equities. Multi-asset net outflows of $3.5 billion were
largely due to outflows from world allocation strategies.
- iShares® long-term net
inflows of $51.3 billion were led by equity net inflows of $25.5
billion, with strength in emerging market precision exposures and
iShares Core ETFs. Fixed income net inflows of $22.7 billion were
diversified across corporate, emerging markets and core bond funds.
Commodities iShares generated $2.9 billion of net
inflows.
- Institutional active long-term
net inflows of $7.5 billion were led by multi-asset net inflows of
$6.5 billion, driven by ongoing demand for solutions offerings and
the LifePath® target-date series. Fixed income net inflows of $5.1
billion reflected strong flows from insurance clients in the
quarter. Equity net outflows of $3.4 billion were primarily due to
outflows from Scientific Active equities and European
equities.
- Institutional index long-term
net outflows of $1.4 billion reflected equity net outflows of $4.9
billion, partially offset by fixed income inflows of $3.4 billion,
driven by inflows into liability-driven investment solutions.
Cash management AUM increased 4% to $389.0 billion,
driven by $14.7 billion of net inflows, primarily into government
funds ahead of money market reform.
Advisory AUM ended the third quarter at $10.3
billion.
INVESTMENT PERFORMANCE AT SEPTEMBER 30,
2016 (1)
One-year period Three-year period
Five-year period Fixed Income: Actively
managed AUM above benchmark or peermedian
Taxable
59
%
79
%
88
%
Tax-exempt 60 % 60 % 65 % Index AUM within or above applicable
tolerance 89 % 98 % 98 %
Equity:
Actively managed AUM above benchmark or peermedian Fundamental 50 %
66 % 53 % Scientific 31 % 83 % 93 % Index AUM within or above
applicable tolerance 96 % 99 % 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 Tuesday, October
18, 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 92557521). 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 Tuesday, October 18, 2016 and
ending at midnight on Tuesday, November 1, 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
92557521. 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 September 30, 2016, BlackRock’s AUM was $5.1 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
September 30, 2016, the firm had approximately 13,000 employees in
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 September 30, June 30,
2016 2015 Change 2016 Change
Revenue Investment advisory, administration fees and
securities lending revenue $2,546 $2,456 $90 $2,489 $57 Investment
advisory performance fees 58 208 (150 ) 74 (16 ) BlackRock
Solutions and advisory 174 167 7 172 2 Distribution fees 10 14 (4 )
11 (1 ) Other revenue 49 65 (16 ) 58 (9 )
Total revenue 2,837 2,910 (73 ) 2,804 33
Expense Employee compensation and benefits 969
1,023 (54 ) 977 (8 ) Distribution and servicing costs 114 102 12
109 5 Amortization of deferred sales commissions 8 12 (4 ) 9 (1 )
Direct fund expense 200 198 2 195 5 General and administration 312
319 (7 ) 316 (4 ) Amortization of intangible assets 25 34
(9 ) 25 - Total expense 1,628 1,688
(60 ) 1,631 (3 ) Operating income 1,209 1,222 (13 )
1,173 36
Nonoperating income (expense) Net gain
(loss) on investments 31 (10 ) 41 20 11 Interest and dividend
income 22 12 10 6 16 Interest expense (52 ) (50 ) (2 ) (51 ) (1 )
Total nonoperating income (expense) 1 (48 ) 49 (25 )
26 Income before income taxes 1,210 1,174 36 1,148 62
Income tax expense 333 342 (9 ) 353 (20 )
Net income 877 832 45 795 82 Less:
Net income (loss) attributable to
noncontrollinginterests
2 (11 ) 13 6 (4 )
Net income attributable
to BlackRock, Inc. $875 $843 $32 $789
$86
Weighted-average common shares outstanding
Basic 164,129,214 166,045,291 (1,916,077 ) 164,758,612 (629,398 )
Diluted 166,256,598 168,665,303 (2,408,705 ) 166,639,290 (382,692 )
Earnings per share attributable to
BlackRock, Inc.common stockholders (4)
Basic $5.33 $5.08 $0.25 $4.79 $0.54 Diluted $5.26 $5.00 $0.26 $4.73
$0.53
Cash dividends declared and paid per share $2.29 $2.18
$0.11 $2.29 $ -
Supplemental
information:
AUM (end of period) $5,117,421 $4,505,721 $611,700
$4,890,121 $227,300 Shares outstanding (end of period) 163,858,070
166,057,085 (2,199,015 ) 164,463,297 (605,227 )
GAAP:
Operating margin 42.6 % 42.0 % 60 bps 41.8 % 80 bps Effective tax
rate 27.6 % 28.8 % (120) bps 30.9 % (330) bps
As adjusted:
Operating income (1) $1,216 $1,227 $(11 ) $1,179 $37 Operating
margin (1) 44.8 % 43.9 % 90 bps 43.9 % 90 bps
Nonoperating income (expense), less net
income(loss) attributable to noncontrolling interests (2)
$(1 ) $(32 ) $31 $(31 ) $30 Net income attributable to BlackRock,
Inc. (3) $854 $844 $10 $797 $57
Diluted earnings attributable to
BlackRock, Inc.common stockholders per share (3) (4)
$5.14 $5.00 $0.14 $4.78 $0.36 Effective tax rate 29.7 % 29.3 % 40
bps 30.6 % (90) 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)
Nine Months Ended September 30,
2016 2015 Change Revenue Investment
advisory, administration fees and securities lending revenue $7,394
$7,380 $14 Investment advisory performance fees 166 452 (286 )
BlackRock Solutions and advisory 517 475 42 Distribution fees 32 44
(12 ) Other revenue 156 187 (31 ) Total
revenue 8,265 8,538 (273 )
Expense
Employee compensation and benefits 2,893 3,016 (123 ) Distribution
and servicing costs 320 306 14 Amortization of deferred sales
commissions 27 37 (10 ) Direct fund expense 583 578 5 General and
administration 946 970 (24 ) Restructuring charge 76 - 76
Amortization of intangible assets 75 104 (29 ) Total
expense 4,920 5,011 (91 ) Operating income
3,345 3,527 (182 )
Nonoperating income (expense) Net
gain (loss) on investments 49 59 (10 ) Interest and dividend income
33 21 12 Interest expense (154 ) (153 ) (1 ) Total nonoperating
income (expense) (72 ) (73 ) 1 Income before income taxes
3,273 3,454 (181 ) Income tax expense 954 971 (17 )
Net income 2,319 2,483 (164 ) Less: Net income (loss)
attributable to noncontrolling interests (2 ) (1 ) (1 )
Net
income attributable to BlackRock, Inc. $2,321 $2,484
$(163 )
Weighted-average common shares outstanding
Basic 164,756,355 166,579,805 (1,823,450 ) Diluted 166,760,912
169,157,188 (2,396,276 )
Earnings per share attributable to
BlackRock, Inc. common stockholders (4) Basic $14.09 $14.91
$(0.82 ) Diluted $13.92 $14.68 $(0.76 )
Cash dividends declared
and paid per share $6.87 $6.54 $0.33
Supplemental
information:
AUM (end of period) $5,117,421 $4,505,721 $611,700 Shares
outstanding (end of period) 163,858,070 166,057,085 (2,199,015 )
GAAP: Operating margin 40.5 % 41.3 % (80) bps Effective tax
rate 29.1 % 28.1 % 100 bps
As adjusted: Operating income (1)
$3,442 $3,552 $(110 ) Operating margin (1) 43.5 % 43.4 % 10 bps
Nonoperating income (expense), less net
income (loss) attributable tononcontrolling interests (2)
$(70 ) $(71 ) $1 Net income attributable to BlackRock, Inc. (3)
$2,362 $2,512 $(150 )
Diluted earnings attributable to
BlackRock, Inc. common stockholders pershare(3) (4)
$14.16 $14.85 $(0.69 ) Effective tax rate 30.0 % 27.8 % 220 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 June
30, inflows September 30, 2016
(outflows) Market Change FX impact (1)
2016 Average AUM (2) Retail: Equity
$191,980 $(3,889 ) $8,550 $(510 ) $196,131 $195,266 Fixed income
223,710 5,801 1,228 103 230,842 228,099 Multi-asset 111,456 (3,452
) 3,435 (70 ) 111,369 112,263 Alternatives 17,281 (688 ) (190 ) 33
16,436 16,753 Retail subtotal 544,427 (2,228 ) 13,023 (444 )
554,778 552,381 iShares: Equity 826,768 25,519 38,628 95 891,010
868,747 Fixed income 304,896 22,730 1,607 229 329,462 320,249
Multi-asset 2,328 124 56 (2 ) 2,506 2,430 Alternatives 20,130 2,884
160 14 23,188 22,162 iShares subtotal
1,154,122 51,257 40,451 336 1,246,166 1,213,588 Institutional:
Active: Equity 120,127 (3,357 ) 7,455 (455 ) 123,770 122,790 Fixed
income 549,686 5,060 6,538 (485 ) 560,799 557,357 Multi-asset
264,937 6,533 8,909 27 280,406 274,516 Alternatives 74,971 (705 )
565 (153 ) 74,678 74,741 Active subtotal 1,009,721 7,531
23,467 (1,066 ) 1,039,653 1,029,404 Index: Equity 1,293,683 (4,923
) 68,226 (1,858 ) 1,355,128 1,335,780 Fixed income 488,364 3,390
21,566 (6,155 ) 507,165 499,187 Multi-asset 7,799 (167 ) 322 26
7,980 7,982 Alternatives 6,808 324 169 (73 ) 7,228
7,081 Index subtotal 1,796,654 (1,376 ) 90,283 (8,060 )
1,877,501 1,850,030 Institutional subtotal 2,806,375 6,155
113,750 (9,126 ) 2,917,154 2,879,434
Long-term
4,504,924 55,184 167,224 (9,234
) 4,718,098 4,645,403 Cash management 374,684
14,696 219 (617 ) 388,982 383,424 Advisory (3) 10,513 (71 ) (14 )
(87 ) 10,341 10,419
Total $4,890,121 $69,809
$167,429 $(9,938 )
$5,117,421 $5,039,246 Current Quarter
Component Changes by Product Type (Long-term) Net
June 30, inflows September 30, 2016
(outflows) Market Change FX impact (1)
2016 Average AUM (2) Equity: Active
$276,348 $(7,831 ) $13,725 $(516 ) $281,726 $281,136 iShares
826,768 25,519 38,628 95 891,010 868,747 Non-ETF index 1,329,442
(4,338 ) 70,506 (2,307 ) 1,393,303 1,372,700 Equity subtotal
2,432,558 13,350 122,859 (2,728 ) 2,566,039 2,522,583 Fixed income:
Active 765,431 10,182 7,455 (210 ) 782,858 777,109 iShares 304,896
22,730 1,607 229 329,462 320,249 Non-ETF index 496,329 4,069
21,877 (6,327 ) 515,948 507,534 Fixed income subtotal
1,566,656 36,981 30,939 (6,308 ) 1,628,268 1,604,892 Multi-asset
386,520 3,038 12,722 (19 ) 402,261 397,191 Alternatives: Core
89,912 (1,408 ) 372 (145 ) 88,731 89,149 Currency and
commodities (4)
29,278 3,223 332 (34 ) 32,799 31,588 Alternatives
subtotal 119,190 1,815 704 (179 ) 121,530 120,737
Long-term $4,504,924 $55,184
$167,224 $(9,234 ) $4,718,098
$4,645,403 Current Quarter Component Changes by
Investment Style (Long-term) Net June 30,
inflows September 30, 2016 (outflows)
Market Change FX impact (1) 2016
Average AUM (2) Active $1,510,424 $4,039 $33,900
$(890 ) $1,547,473 $1,536,517 Index and iShares 2,994,500 51,145
133,324 (8,344 ) 3,170,625 3,108,886
Long-term
$4,504,924 $55,184 $167,224
$(9,234 ) $4,718,098 $4,645,403 (1)
Foreign exchange reflects the impact of translating 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 Changes by Client Type and Product
Net December
31, inflows September 30, 2015
(outflows) Acquisition (1) Market
Change FX impact (2) 2016 Average
AUM (3) Retail: Equity $193,755 $(9,171 ) $ -
$13,929 $(2,382 ) $196,131 $192,072 Fixed income 212,653 10,239 -
7,929 21 230,842 220,956 Multi-asset 115,307 (7,668 ) - 4,216 (486
) 111,369 112,464 Alternatives 19,410 (2,279 ) - (803 ) 108
16,436 17,904 Retail subtotal 541,125 (8,879 ) - 25,271 (2,739 )
554,778 543,396 iShares: Equity 823,156 24,264 - 40,747 2,843
891,010 828,932 Fixed income 254,190 60,238 - 14,126 908 329,462
296,192 Multi-asset 2,730 (340 ) - 110 6 2,506 2,341 Alternatives
12,485 7,016 - 3,642 45 23,188 18,100 iShares
subtotal 1,092,561 91,178 - 58,625 3,802 1,246,166 1,145,565
Institutional: Active: Equity 121,442 (4,644 ) - 8,459 (1,487 )
123,770 119,626 Fixed income 514,428 8,967 - 34,779 2,625 560,799
542,375 Multi-asset 252,041 7,664 - 20,920 (219 ) 280,406 263,307
Alternatives 74,941 (375 ) - 549 (437 ) 74,678 74,835 Active
subtotal 962,852 11,612 - 64,707 482 1,039,653 1,000,143 Index:
Equity 1,285,419 (16,990 ) - 83,247 3,452 1,355,128 1,291,634 Fixed
income 441,097 15,204 - 71,566 (20,702 ) 507,165 475,562
Multi-asset 6,258 (285 ) - 1,569 438 7,980 7,443 Alternatives 6,003
960 - 576 (311 ) 7,228 6,518 Index subtotal 1,738,777
(1,111 ) - 156,958 (17,123 ) 1,877,501 1,781,157
Institutional subtotal 2,701,629 10,501 - 221,665
(16,641 ) 2,917,154 2,781,300
Long-term 4,335,315
92,800 - 305,561 (15,578 )
4,718,098 4,470,261 Cash management 299,884 11,556
80,635 206 (3,299 ) 388,982 345,881 Advisory (4) 10,213 (216 ) -
(120 ) 464 10,341 10,419
Total $4,645,412
$104,140 $80,635 $305,647
$(18,413 ) $5,117,421 $4,826,561
Year-to-Date Component Changes by Product Type (Long-term)
Net December 31, inflows September 30,
2015 (outflows) Acquisition Market
Change FX impact (2) 2016 Average
AUM (3) Equity: Active $281,319 $(15,680 ) $ -
$17,980 $(1,893 ) $281,726 $276,494 iShares 823,156 24,264 - 40,747
2,843 891,010 828,932 Non-ETF index 1,319,297 (15,125 ) - 87,655
1,476 1,393,303 1,326,838 Equity subtotal 2,423,772
(6,541 ) - 146,382 2,426 2,566,039 2,432,264 Fixed income: Active
719,653 18,110 - 41,727 3,368 782,858 755,462 iShares 254,190
60,238 - 14,126 908 329,462 296,192 Non-ETF index 448,525 16,300
- 72,547 (21,424 ) 515,948 483,431 Fixed income
subtotal 1,422,368 94,648 - 128,400 (17,148 ) 1,628,268 1,535,085
Multi-asset 376,336 (629 ) - 26,815 (261 ) 402,261 385,555
Alternatives: Core 92,085 (2,382 ) - (309 ) (663 ) 88,731 90,424
Currency and
commodities (5)
20,754 7,704 - 4,273 68 32,799 26,933
Alternatives subtotal 112,839 5,322 - 3,964 (595 )
121,530 117,357
Long-term $4,335,315 $92,800
$ - $305,561 $(15,578 )
$4,718,098 $4,470,261 Year-to-Date
Component Changes by Investment Style (Long-term) Net
December 31, inflows September 30, 2015
(outflows) Acquisition Market Change FX
impact (2) 2016 Average AUM (3)
Active $1,462,672 $(228 ) $ - $84,589 $440 $1,547,473 $1,500,466
Index and iShares 2,872,643 93,028 - 220,972 (16,018
) 3,170,625 2,969,795
Long-term $4,335,315
$92,800 $ - $305,561
$(15,578 ) $4,718,098 $4,470,261 (1)
Amount represents 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 ten
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 September
30, inflows September 30, 2015
(outflows) Acquisitions(1) Market
Change FX impact (2) 2016 Average
AUM (3) Retail: Equity $184,265 $(2,443 ) $ -
$18,203 $(3,894 ) $196,131 $192,360 Fixed income 210,605 14,175 -
6,755 (693 ) 230,842 218,901 Multi-asset 120,486 (11,233 ) 366
2,444 (694 ) 111,369 114,089 Alternatives 19,852 (2,358 ) - (1,025
) (33 ) 16,436 18,374 Retail subtotal 535,208 (1,859 ) 366 26,377
(5,314 ) 554,778 543,724 iShares: Equity 748,458 71,824 - 71,109
(381 ) 891,010 821,038 Fixed income 246,712 72,177 - 11,342 (769 )
329,462 286,110 Multi-asset 1,808 577 - 120 1 2,506 2,246
Alternatives 13,515 6,824 - 2,843 6 23,188
17,042 iShares subtotal 1,010,493 151,402 - 85,414 (1,143 )
1,246,166 1,126,436 Institutional: Active: Equity 116,718 (4,421 )
- 14,226 (2,753 ) 123,770 120,066 Fixed income 522,509 5,581 -
32,670 39 560,799 538,467 Multi-asset 245,776 10,674 - 27,244
(3,288 ) 280,406 261,256 Alternatives 74,351 160 560 362
(755 ) 74,678 74,820 Active subtotal 959,354 11,994 560
74,502 (6,757 ) 1,039,653 994,609 Index: Equity 1,223,796 (18,036 )
- 152,702 (3,334 ) 1,355,128 1,289,332 Fixed income 465,811 2,872 -
66,253 (27,771 ) 507,165 473,484 Multi-asset 6,931 (869 ) - 1,557
361 7,980 7,282 Alternatives 6,201 1,161 - 253 (387 )
7,228 6,454 Index subtotal 1,702,739 (14,872 ) - 220,765
(31,131 ) 1,877,501 1,776,552 Institutional subtotal 2,662,093
(2,878 ) 560 295,267 (37,888 ) 2,917,154 2,771,161
Long-term 4,207,794 146,665 926
407,058 (44,345 ) 4,718,098
4,441,321 Cash management 285,692 27,323 80,635 29 (4,697 )
388,982 332,029 Advisory (4) 12,235 (1,963 ) - (124 ) 193
10,341 10,596
Total $4,505,721 $172,025
$81,561 $406,963 $(48,849 )
$5,117,421 $4,783,946 Year-over-Year
Component Changes by Product Type (Long-term) Net
September 30, inflows September 30,
2015 (outflows) Acquisitions(1)
Market Change FX impact (2) 2016
Average AUM (3) Equity: Active $270,423
$(10,814 ) $ - $26,313 $(4,196 ) $281,726 $277,777 iShares 748,458
71,824 - 71,109 (381 ) 891,010 821,038 Non-ETF index 1,254,356
(14,086 ) - 158,818 (5,785 ) 1,393,303 1,323,981 Equity
subtotal 2,273,237 46,924 - 256,240 (10,362 ) 2,566,039 2,422,796
Fixed income: Active 725,802 18,341 - 38,470 245 782,858 749,590
iShares 246,712 72,177 - 11,342 (769 ) 329,462 286,110 Non-ETF
index 473,123 4,287 - 67,208 (28,670 ) 515,948
481,262 Fixed income subtotal 1,445,637 94,805 - 117,020 (29,194 )
1,628,268 1,516,962 Multi-asset 375,001 (851 ) 366 31,365 (3,620 )
402,261 384,873 Alternatives: Core 91,358 (1,424 ) 560 (667 )
(1,096 ) 88,731 90,760 Currency and
commodities (5)
22,561 7,211 - 3,100 (73 ) 32,799 25,930 Alternatives
subtotal 113,919 5,787 560 2,433 (1,169 ) 121,530
116,690
Long-term $4,207,794 $146,665
$926 $407,058 $(44,345 )
$4,718,098 $4,441,321 Year-over-Year
Component Changes by Investment Style (Long-term) Net
September 30, inflows September 30,
2015 (outflows) Acquisitions(1)
Market Change FX impact (2) 2016
Average AUM (3) Active $1,456,692 $4,771 $926 $93,805
$(8,721 ) $1,547,473 $1,495,906 Index and iShares 2,751,102 141,894
- 313,253 (35,624 ) 3,170,625 2,945,415
Long-term $4,207,794 $146,665
$926 $407,058 $(44,345 )
$4,718,098 $4,441,321 (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 EndedSeptember 30,
Change
Three MonthsEndedJune 30,
2016
Change
Nine Months EndedSeptember
30,
(in millions), (unaudited)
2016 2015
2016 2015 Change
Investment advisory, administration
feesand securities lending revenue:
Equity: Active $409 $427 $(18 ) $406 $3 $1,201 $1,296 $(95 )
iShares 691 673 18 656 35 1,970 2,085 (115 ) Non-ETF Index 170 158
12 174 (4 ) 508 511 (3 ) Equity subtotal 1,270 1,258 12
1,236 34 3,679 3,892 (213 ) Fixed income: Active 427 402 25 414 13
1,237 1,162 75 iShares 188 139 49 172 16 512 407 105 Non-ETF Index
78 70 8 69 9 217 210 7 Fixed income subtotal
693 611 82 655 38 1,966 1,779 187 Multi-asset 285 322 (37 ) 291 (6
) 860 942 (82 ) Alternatives: Core 156 166 (10 ) 168 (12 ) 488 481
7 Currency and commodities 24 18 6 20 4 61 56 5
Alternatives subtotal 180 184 (4 ) 188 (8 ) 549 537 12
Long-term 2,428 2,375 53
2,370 58 7,054 7,150 (96
) Cash management 118 81 37 119 (1 ) 340 230 110
Total base fees 2,546 2,456 90
2,489 57 7,394 7,380 14
Investment advisory performance fees: Equity 14 23 (9 ) 42 (28 ) 67
121 (54 ) Fixed income 2 3 (1 ) 2 - 9 10 (1 ) Multi-asset 1 3 (2 )
2 (1 ) 6 19 (13 ) Alternatives 41 179 (138 ) 28 13 84 302
(218 )
Total performance fees 58 208
(150 ) 74 (16 ) 166
452 (286 ) BlackRock Solutions
and advisory 174 167 7 172
2 517 475 42 Distribution fees
10 14 (4 ) 11 (1 )
32 44 (12 ) Other revenue
49 65 (16 ) 58 (9
) 156 187 (31 ) Total
revenue $2,837 $2,910 $(73 )
$2,804 $33 $8,265 $8,538
$(273 )
Highlights
- Investment advisory, administration
fees and securities lending revenue increased $90 million from the
third quarter of 2015 reflecting the impact of organic growth,
higher markets on long-term average AUM and the effect of AUM
acquired in the BofA Global Capital Management transaction,
partially offset by mix shift from equities to fixed income and
cash products. Securities lending revenue of $142 million in the
current quarter increased $27 million from the third quarter of
2015, primarily reflecting higher average balances of securities on
loan and higher spreads.Investment advisory, administration fees
and securities lending revenue increased $57 million from the
second quarter of 2016, driven by higher average AUM and the effect
of one additional day in the current quarter. Securities lending
revenue decreased $9 million from the second quarter of 2016.
- Performance fees decreased $150 million
from the third quarter of 2015, primarily reflecting strong
performance from a single hedge fund with an annual measurement
period that ended in the third quarter of 2015, and decreased $16
million from the second quarter of 2016.
- BlackRock Solutions® and advisory
revenue increased $7 million from the third quarter of 2015 and $2
million from the second quarter of 2016. BlackRock Solutions and
advisory revenue included $152 million of Aladdin revenue in the
current quarter compared with $135 million in the third quarter of
2015 and $146 million in the second quarter of 2016.
SUMMARY OF OPERATING EXPENSE
Three
Months EndedSeptember
30,
ThreeMonthsEnded
Nine Months Ended
September 30,
(in millions), (unaudited)
2016
2015 Change
June 30,2016
Change
2016 2015 Change Operating
Expense
Employee compensation andbenefits
$969 $1,023 $(54 ) $977 $(8 ) $2,893 $3,016 $(123 ) Distribution
and servicing costs 114 102 12 109 5 320 306 14
Amortization of deferred
salescommissions
8 12 (4 ) 9 (1 ) 27 37 (10 ) Direct fund expense 200 198 2 195 5
583 578 5 General and administration 312 319 (7 ) 316 (4 ) 946 970
(24 ) Restructuring charge - - - - - 76 - 76 Amortization of
intangible assets 25 34 (9 ) 25 - 75 104 (29 )
Total
Operating Expense $1,628 $1,688 $(60
) $1,631 $(3 ) $4,920
$5,011 $(91 )
Highlights
- Employee compensation and benefits
decreased $54 million from the third quarter of 2015, reflecting
lower incentive compensation, driven primarily by lower performance
fees, and decreased $8 million from the second quarter of
2016.
- General and administration expense
decreased $7 million from the third quarter of 2015, reflecting
expense discipline, and decreased $4 million from the second
quarter of 2016.
INCOME TAX EXPENSE
Three
Months EndedSeptember
30,
Three
Months Ended
Nine Months Ended
September 30,
(in millions), (unaudited)
2016 2015
Change June 30,
2016
Change
2016 2015 Change Income tax expense
$333 $342 $(9) $353 $(20) $954 $971 $(17)
Highlights
- The third quarter 2016 income tax
expense included a $26 million net noncash tax benefit, primarily
related to the revaluation of certain deferred income tax
liabilities as a result of legislation enacted in the United
Kingdom, and domestic state and local tax changes.
- The second quarter 2016 income tax
expense included a $4 million net noncash expense, primarily
related to the revaluation of certain deferred income tax
liabilities as a result of domestic state and local tax
changes.
- The third quarter 2015 income tax
expense included a $6 million noncash tax benefit, primarily
associated with the revaluation of certain deferred income tax
liabilities as a result of domestic state and local tax
changes.
SUMMARY OF NONOPERATING INCOME
(EXPENSE)
Three
MonthsEndedSeptember 30,
Three MonthsEndedJune
30,2016
Nine Months EndedSeptember
30,
(in millions), (unaudited)
2016 2015
Change Change 2016 2015
Change
Nonoperating income (expense),
GAAPbasis
$1 $(48 ) $49 $(25 ) $26 $(72 ) $(73 ) $1 Less: Net income (loss)
attributable to NCI 2 (11 ) 13 6 (4 ) (2 ) (1
) (1 ) Nonoperating income (expense)(1) $(1 ) $(37 ) $36
$(31 ) $30 $(70 ) $(72 ) $2
Estimatedeconomicinvestments atSeptember
30, 2016(2)
Three
MonthsEndedSeptember 30,
Three MonthsEndedJune
30,2016
Nine Months EndedSeptember 30, (in millions),
(unaudited)
2016 2015 Change Change
2016 2015 Change
Net gain (loss) oninvestments(1)
Private equity
15-20%
$2 $25 $(23 ) $7 $(5 ) $11 $35 $(24 ) Real assets 5-10% 2 5 (3 ) 1
1 5 9 (4 ) Other alternatives(3)
10-15%
9 (10 ) 19 4 5 13 (6 ) 19 Other investments(4)
60-65%
16 (19 ) 35 2 14 22 (23 ) 45
Subtotal 29 1 28 14 15 51 15 36 Other gains(5) -
- - - - - 45 (45 )
Total net gain (loss) on investments(1) 29 1 28 14 15 51 60
(9 ) Interest and dividend income 22 12 10 6 16 33 21 12 Interest
expense (52 ) (50 ) (2 ) (51 ) (1 ) (154 ) (153 ) (1 ) Net
interest expense (30 ) (38 ) 8 (45 ) 15 (121 ) (132 )
11 Total nonoperating income (expense)(1) (1 ) (37 )
36 (31 ) 30 (70 ) (72 ) 2
Compensation expense related
to(appreciation) depreciation on deferredcompensation plans
- 5 (5 ) - - - 1 (1 )
Nonoperating income (expense),
asadjusted(1)
$(1 ) $(32 ) $31 $(31 ) $30 $(70 ) $(71 ) $1
(1) Net of net income (loss) attributable to noncontrolling
interests (“NCI”). (2) Percentages represent estimated percentages
of BlackRock’s corporate economic investment portfolio at September
30, 2016. Economic investment amounts at June 30, 2016 for private
equity, real assets, other alternatives and other investments were
$351 million, $106 million, $230 million and $826 million,
respectively. (3) Amounts primarily include net gains (losses)
related to direct hedge fund strategies and hedge fund solutions.
(4) Amounts include net gains (losses) related to equity and fixed
income investments, and BlackRock’s seed capital hedging program.
(5) Amount for the nine months ended September 30, 2015 primarily
includes a gain related to the acquisition of certain assets of
BlackRock Kelso Capital Advisors LLC.
Highlights
- Net interest expense in the current
quarter reflected higher dividend income compared with third
quarter of 2015 and 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.
September 30, December 31, (in
billions), (unaudited)
2016 (Est.) 2015 Total
balance sheet assets $227 $225
Separate account assets and separate
account collateral held undersecurities lending agreements
(184 ) (182 ) Consolidated sponsored investment funds - (1 )
Goodwill and intangible assets, net (31 ) (30 )
Economic
tangible assets $12 $12
RECONCILIATION OF U.S. GAAP OPERATING
INCOME AND OPERATING MARGIN TO OPERATING INCOMEAND OPERATING
MARGIN, AS ADJUSTED
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
(in millions), (unaudited)
2016 2015
2016 2016 2015 Operating income,
GAAP basis $1,209 $1,222 $1,173
$3,345 $3,527 Non-GAAP expense adjustments:
Restructuring charge - - - 76 - PNC LTIP funding obligation 7 10 6
21 26
Compensation expense related
toappreciation (depreciation) ondeferred compensation plans
- (5 ) - - (1 )
Operating income, as
adjusted 1,216 1,227 1,179 3,442
3,552
Product launch costs andcommissions
- - - - 5
Operating income used for operatingmargin
measurement
$1,216 $1,227 $1,179 $3,442 $3,557
Revenue, GAAP basis $2,837 $2,910 $2,804 $8,265
$8,538 Non-GAAP adjustments: Distribution and servicing costs (114
) (102 ) (109 ) (320 ) (306 )
Amortization of deferred
salescommissions
(8 ) (12 ) (9 ) (27 ) (37 )
Revenue used for operating
marginmeasurement
$2,715 $2,796 $2,686 $7,918 $8,195
Operating margin, GAAP basis 42.6
% 42.0 % 41.8 % 40.5
% 41.3 % Operating margin, as
adjusted 44.8 % 43.9 % 43.9
% 43.5 % 43.4 %
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 Nine Months Ended
September 30, June 30, September 30,
(in millions), (unaudited)
2016 2015
2016 2016 2015 Nonoperating income
(expense), GAAP basis $1 $(48 )
$(25 ) $(72 ) $(73 )
Less: Net income (loss) attributable to NCI 2 (11 ) 6
(2 ) (1 ) Nonoperating income (expense), net of NCI (1 ) (37
) (31 ) (70 ) (72 )
Compensation expense related to
(appreciation)depreciation on deferred compensation plans
- 5 - - 1
Nonoperating income (expense), less net
income(loss) attributable to NCI, as adjusted
$(1 ) $(32 ) $(31 )
$(70 ) $(71 )
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 Nine Months Ended
September 30, June 30, September 30,
(in millions, except per share data), (unaudited)
2016
2015 2016 2016 2015
Net income attributable to BlackRock, Inc., GAAP basis
$875 $843 $789 $2,321 $2,484
Non-GAAP adjustments:
Restructuring charge (including $23 tax
benefit)
- - - 53 - PNC LTIP funding obligation, net of tax 5 7 4 14 18
Income tax matters (26 ) (6 ) 4 (26 ) 10
Net income
attributable to BlackRock, Inc., as adjusted $854
$844 $797 $2,362 $2,512
Diluted weighted-average common shares outstanding(4) 166.3
168.7 166.6 166.8 169.2
Diluted earnings per common share, GAAP
basis(4) $5.26 $5.00 $4.73
$13.92 $14.68 Diluted earnings per common share,
as adjusted(4) $5.14 $5.00 $4.78
$14.16 $14.85
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 the 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. Amounts for income tax matters represent net noncash
(benefits) expense primarily associated with the revaluation of
certain deferred tax liabilities related to intangible assets and
goodwill. 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 September 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 August 31, 2016. The performance data does not include accounts
terminated prior to September 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
September 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.
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BlackRockTom Wojcik, 212-810-8127Investor RelationsorBrian
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