BlackRock Inc. - FORM 8-K - EX-99.2 - THIRD QUARTER 2011 EARNINGS - PRESS RELEASE SUPPLEMENT

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8-K - FORM 8-K - BlackRock Inc.	d244729d8k.htm
EX-99.1 - PRESS RELEASE DATED OCTOBER 19, 2011 ISSUED BY THE COMPANY - BlackRock Inc.	d244729dex991.htm

Q3 2011 Earnings

Press Release Supplement

October 19, 2011

Exhibit 99.2

Third quarter operating results up 15% year-over-year despite market volatility

$849

$883

$819

$962

$737

$741

$727

2010

2011

Operating and Net Income, as Adjusted ($ in millions)

Diluted Earnings Per Share, as Adjusted

For

further

information

and

reconciliation

between

GAAP

and

Adjusted,

see

the

appendix,

notes

(a)

through

(e)

the

current

earnings

release, 2010 Form 10-K or 2011 Form 10-Qs.

Operating Income

Net Income

Q3 2011 included full quarter effect of Bank of America buy-back

$521

$578

$670

$537

$463

$469

$582

$2.40

$2.96

$3.00

$2.75

$3.42

$2.83

$2.37

2010

2011

39.1%

39.7%

40.1%

40.7%

38.4%

37.4%

38.7%

38.2%

36.8%

38.9%

38.8%

2007

2008

2009

2010

2011

Operating margin remained strong

Operating Margin, as Adjusted

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release, 2010 Form 10-K or 2011 Form 10-Qs.

YTD 2011 = 39.6%

2011

year-to-date

margin

was

higher

than

the

full

year

and

third

quarter

2010

margins

Full Year 2010 = 39.3%

BGI/BLK

Pro Forma

Equity markets in Q3 2011 were negative and volatile due to global economic uncertainty

S&P 500

Q2 2011 Spot to Spot

Q3 2011 Spot to Spot

Q2-11 Average: 1,318

Q3-11 Average: 1,225

Q3 2010 Spot to Spot

The Q3 average S&P declined 7% from second quarter 2011 and increased 12% from third quarter 2010

Q3-10 Average: 1,096

7/31/10

8/31/10

9/30/10 3/31/11

5/31/11

6/30/11

7/31/11

8/31/11

9/30/11

6/30/10

4/30/11

800

900

1,000

1,100

1,200

1,300

1,400

Year-over-year

Q3 2011 vs. Q3 2010

*****************************

3% year-over-year EPS increase more than explained by growth in operating EPS

Q3-11 Compared to Q3-10, as Adjusted

$2.61

($0.43)

$0.51

$3.12

($0.10)

$0.40

$0.90

$1.40

$1.90

$2.40

$2.90

$3.40

Q3-10 EPS

Operating EPS

Non-Operating EPS

Q3-11 EPS

Increasing EPS

Total EPS:

$2.83

Total EPS:

$2.75

Non-Operating:

$0.14

Operating

EPS:

Operating

EPS:

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release.

Non-Operating:

($0.29)

Decreasing EPS

$0.08

15% year-over-year growth in operating income

Q3-11 Compared to Q3-10, as Adjusted

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release.

$112 million

Increasing Expenses

Increasing Revenue

$849

$737

($21)

$133

$700

$900

Q3-10

Revenue

Expenses

Q3-11

6% year-over-year revenue growth

Q3-11 Compared to Q3-10

Total Revenue

Q3-10

$2.09 billion

Q3-11

$2.23 billion

87%

Base Fees

Performance Fees

BRS and Advisory

Other Revenue

88%

Base Fees

Performance Fees

BRS and Advisory

Other Revenue

$133 million

Decreasing Revenue

Increasing Revenue

$2,225

$2,092

$16

($15)

$155

($23)

$1,800

$2,000

$2,200

$2,400

Q3-10

Base Fees

BRS & Advisory

Other Revenue

Performance Fees

Q3-11

9% year-over-year base fee increase driven by growth in all long-term asset classes

14%

26%

12%

23%

Active Fixed Income

iShares Fixed Income

Institutional Index Fixed Income

Active Equity

iShares Equity

Institutional Index Equity

Multi-Asset

Alternatives

Cash

Q3-11 Compared to Q3-10

Q3-11

$1.95 billion

Base fees

Q3-10

$1.79 billion

15%

25%

23%

10%

Active Fixed Income

iShares Fixed Income

Institutional Index Fixed Income

Active Equity

iShares Equity

Institutional Index Equity

Multi-Asset

Alternatives

Cash

Decreasing Base Fees

Increasing Base Fees

$155 million

$1,794

$1,949

$49

$43

$40

$19

$18

$15

$11

($43)

$1,700

$1,900

$2,100

Q3-10

iShares

Equity

Multi-Asset

Active

Equity

Institutional

Index Equity

Alternatives

Active

Fixed

Income

iShares

Fixed

Income

Institutional

Index Fixed

Income

Cash

Q3-11

2% year-over-year expense growth

55%

10%

24%

Employee Comp. & Benefits

Distribution & Servicing Costs

Amort. of Deferred Sales Commissions

Direct Fund Expenses

General & Administration

Amortization of Intangibles

$1.38 billion

Q3-11 Expense, as Adjusted, by Category

Q3-11 Compared to Q3-10, as Adjusted

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release.

Increasing Expenses

Decreasing Expenses

$21 million

$1,376

$1,355

($15)

($6)

($1)

$13

$15

$1,200

$1,300

$1,400

$1,500

Q3-10

Compensation

& Benefits

Direct Fund

Exp

G&A

Amort.-

Intangible

Assets

Amort.-

Deferred

Commissions

Distribution &

Servicing

Q3-11

Sequential Quarters

Q3 2011 vs. Q2 2011

**************************************************

Sequential

EPS

reflects

growth

operating

EPS

then

offset

lower

non-op

EPS

$3.12

$3.09

($0.20)

$0.03

($0.30)

$0.20

$0.70

$1.20

$1.70

$2.20

$2.70

$3.20

$3.70

Q2-11 EPS

Operating EPS

Non-Operating EPS

Q3-11 EPS

($0.17)

Increasing EPS

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release.

Decreasing EPS

Q3-11 Compared to Q2-11, as Adjusted

Total EPS:

$3.00

Total EPS:

$2.83

Operating

EPS:

Non-Operating:

($0.09)

Non-Operating:

($0.29)

Operating

EPS:

4% market-driven operating income decline from Q2 2011

Q3-11 Compared to Q2-11, as Adjusted

$883

$849

($122)

$88

$500

$600

$700

$800

$900

Q2-11

Revenue

Expenses

Q3-11

($34) million

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release.

Decreasing Revenue

Decreasing Expenses

5% market-driven revenue decline from Q2 2011 led by base fees

Q3-11 Compared to Q2-11

Total Revenue

Q2-11

$2.35 billion

Q3-11

$2.23 billion

90%

Base Fees

Performance Fees

BRS and Advisory

Other Revenue

88%

Base Fees

Performance Fees

BRS and Advisory

Other Revenue

($122) million

Decreasing Revenue

Increasing Revenue

Sec Lending: ($46)

$2,347

$2,225

($151)

$41

($13)

$2,000

$2,200

$2,400

Q2-11

Performance Fees

BRS & Advisory

Other Revenue

Base Fees

Q3-11

Base fee decline reflected market effects on Equity AUM and lower seasonal sec lending

14%

26%

12%

23%

Active Fixed Income

iShares Fixed Income

Institutional Index Fixed Income

Active Equity

iShares Equity

Institutional Index Equity

Multi-Asset

Alternatives

Cash

Q3-11 Base Fees

Q3-11 Compared to Q2-11

$1.95 billion

($151) million

Decreasing Base Fees

Increasing Base Fees

$1,949

$2,100

($53)

($46)

($31)

($10)

($8)

($4)

$1,800

$2,000

$2,200

Q2-11

Active

Fixed

Income

iShares

Fixed

Income

Multi-Asset

Institutional

Index Fixed

Income

Alternatives

Cash

Institutional

Index Equity

iShares

Equity

Active

Equity

Q3-11

Lower sequential expenses reflect the effects of lower AUM and revenue

$1.38 billion

Q3-11 Expense, as Adjusted, by Category

Q3-11 Compared to Q2-11, as Adjusted

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release.

55%

10%

24%

Employee Comp. & Benefits

Distribution & Servicing Costs

Amort. of Deferred Sales Commissions

Direct Fund Expenses

General & Administration

Amortization of Intangibles

Increasing Expenses

Decreasing Expenses

($88) million

($45)

($1)

($10)

($14)

($19)

$1,376

$1,464

$1,300

$1,400

$1,500

Q2-11

Amort.-

Intangible

Assets

Amort.-

Deferred

Commissions

Distribution &

Servicing

Direct Fund

Exp

G&A

Compensation

& Benefits

Q3-11

Non-operating and cash flow

**********************************

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release.

Q3 2011 net investment marks driven by widening distressed credit spreads

($4)

($27)

($9)

($6)

($37)

($40)

($30)

($20)

($10)

$10

$20

Private Equity

Real Estate

Distressed Credit/

Mortgage

Hedge Funds/

Funds of Hedge

Funds

Other Investments

Net Interest

Expense

Q3-11 $79 million Non-Operating Expense by Category, as Adjusted

Investment Losses/ Net Interest Expense

Investment Gain

$42 million Net

Investment Losses

Funds

Strong 2011 operating cash flow and payout ratio

$4.00

$3.12

$2.68

$1.68

$5.50

50%

56%

53%

48%

44%

43%

2011

2010

2009

2008

2007

2006

Dividend (A)

Payout Ratio (B)

Notes:

(A) 2003 and 2011 dividends have been annualized

(B) Payout ratio = (dividends + share repurchases) / GAAP net income. 2011 ratio includes Q1, Q2 & Q3 2011 data only.

Dividend Change

150%

with

$2.5

buyback

(C)

Excludes $2.5 bn share buyback

$1.9

$0.7

$0.6

$1.9

$1.4

$2.5

$1.4

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

2006

2007

2008

2009

2010

YTD

Sept

2010

Est. YTD

Sept

2011

Payout ratio reflects dividend growth and the $2.5 billion buyback

YTD 2011 Operating cash flow exceeded YTD 2010

$1.7

$0.7

$0.9

$1.5

$1.2

$2.6

$1.5

GAAP

As Adjusted

For further information and reconciliation between GAAP and as adjusted, see the Company’s Form 10-Qs

Declared:

and Form 10-Ks.

2/24/11

2/25/10

N/A

2/15/08

2/27/07

2/17/06

Appendix

**********************************************************

$849

$883

$962

$737

$741

$727

$819

Quarterly operating income –

GAAP and As Adjusted

$654

$697

$707

$940

$798

$866

$777

2010

2011

GAAP

As Adjusted

Operating Income ($ in millions)

Non-GAAP Adjustments ($ in millions)

Non-GAAP

adjustments

include

BGI

integration

costs,

PNC

LTIP

funding

obligation,

Merrill

Lynch

compensation

contribution, UK lease exit costs, and compensation related to appreciation (depreciation) on certain deferred

compensation plans

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release, 2010 Form 10-K or 2011 Form 10-Qs.

$73

$44

$30

$22

$21

$17

$72

2010

2011

Quarterly net income –

GAAP and As Adjusted

Net Income ($ in millions)

Non-GAAP Adjustments ($ in millions)

Non-GAAP

adjustments

include

BGI

integration

costs,

PNC

LTIP

funding

obligation,

Merrill

Lynch

compensation

contribution, UK lease exit costs, income tax law changes and a state tax election

GAAP

As Adjusted

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release, 2010 Form 10-K or 2011 Form 10-Qs.

$578

$582

$670

$469

$463

$537

$521

$432

$551

$657

$619

$595

$568

$423

2010

2011

($41)

$14

$13

($14)

$46

$31

2010

2011

($74)

GAAP

As Adjusted

Quarterly non-operating income –

GAAP and As Adjusted

Non-Operating Income (Expense) ($ in millions)

Non-GAAP Adjustments ($ in millions)

Non-GAAP adjustments include net income (loss) attributable to non-controlling interests, and compensation expense

related to (appreciation) depreciation on certain deferred compensation plans

For further information and reconciliation between GAAP and as Adjusted, see notes (a) through (e) in the current earnings release, 2010 Form 10-K or 2011 Form 10-Qs.

$47

($8)

($39)

($1)

($3)

$33

2010

2011

($112)

$78

$18

$15

($24)

2010

2011

$39

($28)

($6)

$20

$14

($27)

($75)

($79)

Forward-looking statements

This

presentation,

and

other

statements

that

BlackRock

may

make,

may

contain

forward-looking

statements

within

the

meaning

the

Private

Securities

Litigation

Reform

Act,

with

respect

BlackRock’s

future

financial

business

performance,

strategies

expectations.

Forward-looking

statements

are

typically

identified

words

phrases

such

“trend,”

“potential,”

“opportunity,”

“pipeline,”

“believe,”

“comfortable,”

“expect,”

“anticipate,”

“current,”

“intention,”

“estimate,”

“position,”

“assume,”

“outlook,”

“continue,”

“remain,”

“maintain,”

“sustain,”

“seek,”

“achieve,”

and

similar

expressions,

future

conditional

verbs

such

“will,”

“would,”

“should,”

“could,”

“may”

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.

Forward-looking statements

addition

risk

factors

previously

disclosed

BlackRock’s

Securities

and

Exchange

Commission

(“SEC”)

reports

and

those

identified

elsewhere

this

presentation

the

following

factors,

among

others,

could

cause

actual

results

differ

materially

from

forward-looking

statements

historical

performance:

(1)

the

introduction,

withdrawal,

success

and

timing

business

initiatives

and

strategies;

(2)

changes

and

volatility

political,

economic

industry

conditions,

the

interest

rate

environment,

foreign

exchange

rates

financial

and

capital

markets,

which

could

result

changes

demand

for

products

services

the

value

assets

under

management;

(3)

the

relative

and

absolute

investment

performance

BlackRock’s

investment

products;

(4)

the

impact

increased

competition;

(5)

the

impact

capital

improvement

projects;

(6)

the

impact

future

acquisitions

divestitures;

(7)

the

unfavorable

resolution

legal

proceedings;

(8)

the

extent

and

timing

any

repurchases;

(9)

the

impact,

extent

and

timing

technological

changes

and

the

adequacy

intellectual

property

and

information

security

protection;

(10)

the

impact

legislative

and

regulatory

actions

and

reforms,

including

the

Dodd-Frank

Wall

Street

Reform

and

Consumer

Protection

Act,

and

regulatory,

supervisory

enforcement

actions

government

agencies

relating

BlackRock,

Barclays

Bank

PLC

The

PNC

Financial

Services

Group,

Inc.;

(11)

terrorist

activities,

international

hostilities

and

natural

disasters,

which

may

adversely

affect

the

general

economy,

domestic

and

local

financial

and

capital

markets,

specific

industries

BlackRock;

(12)

the

ability

attract

and

retain

highly

talented

professionals;

(13)

fluctuations

the

carrying

value

BlackRock’s

economic

investments;

(14)

the

impact

changes

tax

legislation

and,

generally,

the

tax

position

the

Company;

(15)

BlackRock’s

success

maintaining

the

distribution

its

products;

(16)

the

impact

BlackRock

electing

provide

support

its

products

from

time

time;

(17)

the

impact

problems

other

financial

institutions

the

failure

negative

performance

products

other

financial

institutions;

and

(18)

the

ability

BlackRock

complete

the

integration

the

operations

Barclays

Global

Investors.

********************************************************

*********

BlackRock Inc. - FORM 8-K - EX-99.2 - THIRD QUARTER 2011 EARNINGS - PRESS RELEASE SUPPLEMENT - October 19, 2011

Attached files

BlackRock Inc. Reports