Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - BlackRock Inc. | d759108d8k.htm |
| EX-99.2 - SECOND QUARTER 2014 EARNINGS - EARNINGS RELEASE SUPPLEMENT - BlackRock Inc. | d759108dex992.htm |
Exhibit 99.1
| Tom Wojcik, Investor Relations |
Brian Beades, Media Relations | |||
| 212.810.8127 |
212.810.5596 |
BlackRock Reports Second Quarter 2014 Diluted EPS of $4.72, or $4.89 as adjusted
| • | 19% AUM growth from the second quarter of 2013 |
| • | $38.0 billion of long-term net inflows for the second quarter of 2014 |
| • | 32% operating income growth (15% as adjusted) from the second quarter of 2013 |
| • | 40.4% operating margin (42.4% as adjusted) for the second quarter of 2014 |
| • | 13% diluted EPS growth (18% as adjusted) from the second quarter of 2013 |
| • | Consistent capital management with $250 million of quarterly share repurchases |
FINANCIAL RESULTS
| (in millions, except per share data) | Q2 2014 |
Q2 2013 |
Change | Q1 2014 |
Change | Six Months Ended June 30, |
Change | |||||||||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||||||||||||||||
| AUM |
$ | 4,593,612 | $ | 3,857,007 | 19 | % | $ | 4,400,925 | 4 | % | $ | 4,593,612 | $ | 3,857,007 | 19 | % | ||||||||||||||||||||
| GAAP basis: |
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| Revenue |
$ | 2,778 | $ | 2,482 | 12 | % | $ | 2,670 | 4 | % | $ | 5,448 | $ | 4,931 | 10 | % | ||||||||||||||||||||
| Operating income |
$ | 1,122 | $ | 849 | 32 | % | $ | 1,051 | 7 | % | $ | 2,173 | $ | 1,758 | 24 | % | ||||||||||||||||||||
| Operating margin |
40.4 | % | 34.2 | % | 620 | bps | 39.4 | % | 100 | bps | 39.9 | % | 35.7 | % | 420 | bps | ||||||||||||||||||||
| Net income(1) |
$ | 808 | $ | 729 | 11 | % | $ | 756 | 7 | % | $ | 1,564 | $ | 1,361 | 15 | % | ||||||||||||||||||||
| Diluted EPS |
$ | 4.72 | $ | 4.19 | 13 | % | $ | 4.40 | 7 | % | $ | 9.12 | $ | 7.81 | 17 | % | ||||||||||||||||||||
| Weighted average diluted shares |
171.2 | 173.9 | (2 | %) | 171.9 | — | % | 171.5 | 174.3 | (2 | %) | |||||||||||||||||||||||||
| As Adjusted: |
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| Operating income(2) |
$ | 1,133 | $ | 982 | 15 | % | $ | 1,062 | 7 | % | $ | 2,195 | $ | 1,903 | 15 | % | ||||||||||||||||||||
| Operating margin(2) |
42.4 | % | 41.3 | % | 110 | bps | 41.4 | % | 100 | bps | 41.9 | % | 40.6 | % | 130 | bps | ||||||||||||||||||||
| Net income(1) (2) |
$ | 837 | $ | 722 | 16 | % | $ | 762 | 10 | % | $ | 1,599 | $ | 1,359 | 18 | % | ||||||||||||||||||||
| Diluted EPS(2) |
$ | 4.89 | $ | 4.15 | 18 | % | $ | 4.43 | 10 | % | $ | 9.32 | $ | 7.80 | 19 | % | ||||||||||||||||||||
| (1) | Net income represents net income attributable to BlackRock, Inc. |
| (2) | See notes (1) through (5) to the Condensed Consolidated Statements of Income and Supplemental Information on pages 13 through 16 for more information on as adjusted items and the reconciliation to GAAP. |
New York, July 16, 2014 — BlackRock, Inc. (NYSE:BLK) today reported financial results for the three and six months ended June 30, 2014.
“In the second quarter, we saw strong revenue growth driven by a combination of robust organic revenue gains and market tailwinds. Our results, with revenue up 12% and as adjusted EPS up 18% year-over-year, once again demonstrate the benefits of our diverse platform,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “During the quarter we generated 4% annualized organic growth or $38.0 billion in long-term net new business. We continue to execute on long-term growth strategies by focusing on key industry trends impacting our clients, including ETFs, alternatives, retirement, outcomes and solutions.
“We saw $13.1 billion of long-term net inflows in Retail as we continued to raise our brand profile, evolve our product set and deepen our distribution relationships. Retail flows were driven by clients’ interest in efficient beta and our outcome-oriented strategies – including multi-asset, alternatives and unconstrained fixed income offerings. This included $3.0 billion in flows to our unconstrained Strategic Income Opportunities fund and $1.1 billion to our Multi-Asset Income fund.
“iShares flows of $30.4 billion led the industry in market share for the quarter. Liquidity-oriented investors increased their participation in rising developed and emerging markets, while buy-and-hold investors continued to access our Core Series product suite, which attracted $5.5 billion in the US alone this quarter.
“Among institutional clients, we continued to see strong interest in our multi-asset class offerings, such as our LifePath target-date suite and fiduciary mandates, as well as illiquid alternatives, where we again raised more than $1 billion in commitments.
-1-
“BlackRock remains committed to top quartile performance across all of our investment products. Our active fixed income product suite continues to excel, with 90% of taxable assets above benchmark or peer median for the three-year period. Similarly strong investment track records in our scientific active equity, alternatives and index businesses are delivering results for our clients and position us well for future growth. While performance in fundamental equities remains challenged, we continue to make substantial investments to restructure this business and remain confident in our new teams, their processes and the future outlook for growth over time.
“Looking ahead to the second half of 2014, our commitment to alpha generation, product innovation and broad-based distribution positions us well to drive results for our clients and shareholders. The depth of our platform is built on the quality of our people and the strength of our culture, and I want to once again thank BlackRock employees for their commitment to helping our clients build better financial futures.”
RESULTS BY CLIENT TYPE
| (in millions), (unaudited) | Q2 2014 Net flows |
June 30, 2014 AUM |
Q2 2014 Base Fees(1) |
June 30, 2014 AUM % of Total |
Q2 2014 Base Fees(1) % of Total |
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| Retail |
$ | 13,128 | $ | 534,502 | $ | 823 | 12 | % | 35 | % | ||||||||||||
| iShares |
30,445 | 993,832 | 817 | 23 | % | 35 | % | |||||||||||||||
| Institutional: |
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| Active |
1,013 | 970,433 | 470 | 23 | % | 20 | % | |||||||||||||||
| Index |
(6,562 | ) | 1,795,938 | 251 | 42 | % | 10 | % | ||||||||||||||
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| Total institutional |
(5,549 | ) | 2,766,371 | 721 | 65 | % | 30 | % | ||||||||||||||
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| Total long-term |
$ | 38,024 | $ | 4,294,705 | $ | 2,361 | 100 | % | 100 | % | ||||||||||||
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RESULTS BY PRODUCT
| (in millions), (unaudited) | Q2 2014 Net flows |
June 30, 2014 AUM |
Q2 2014 Base Fees(1) |
June 30, 2014 AUM % of Total |
Q2 2014 Base Fees(1) % of Total |
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| Equity |
$ | 9,707 | $ | 2,462,585 | $ | 1,338 | 57 | % | 56 | % | ||||||||||||
| Fixed income |
21,255 | 1,340,725 | 539 | 31 | % | 23 | % | |||||||||||||||
| Multi-asset |
6,795 | 374,473 | 300 | 9 | % | 13 | % | |||||||||||||||
| Alternatives |
267 | 116,922 | 184 | 3 | % | 8 | % | |||||||||||||||
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| Total long-term |
$ | 38,024 | $ | 4,294,705 | $ | 2,361 | 100 | % | 100 | % | ||||||||||||
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| (1) | Base fees include investment advisory, administration fees and securities lending revenue. |
Long-Term Business Highlights
Long-term net inflows of $27.4 billion and $13.7 billion from clients in the Americas and EMEA, respectively, were partially offset by net outflows of $3.1 billion from Asia-Pacific clients. At June 30, 2014, BlackRock managed 60% of long-term AUM for investors in the Americas and 40% for clients in EMEA and Asia-Pacific.
A discussion of the Company’s net flows by client type for the second quarter of 2014 is presented below.
| • | Retail long-term net inflows of $13.1 billion included net inflows of $4.2 billion in the United States and $8.9 billion internationally. Flows were led by fixed income net inflows of $10.1 billion, which reflected strong interest in unconstrained fixed income offerings, including $3.0 billion of net inflows into our Strategic Income Opportunities fund. Equity net inflows of $1.5 billion were driven by strong flows into European index mutual funds. Multi-asset class net inflows were led by our Multi-Asset Income fund which raised over $1 billion of net new assets. Alternative U.S. mutual funds generated $0.7 billion in net inflows. |
| • | iShares® long-term net inflows of $30.4 billion included U.S. and European iShares net inflows of $23.1 billion and $8.2 billion, respectively. Equity net inflows totaled $20.6 billion, with strength in both developed and emerging markets. Fixed income net inflows of $9.5 billion represented the leading share of fixed income industry ETF flows for the quarter. The U.S. Core Series generated $5.5 billion of net inflows. |
| • | Institutional active long-term net inflows of $1.0 billion were led by multi-asset class net inflows of $5.3 billion, which reflected ongoing demand for our LifePath® target-date suite and fiduciary mandate wins. Equity net outflows of $4.5 billion included fundamental net outflows of $2.4 billion and scientific net outflows of $2.1 billion. Alternatives net outflows of $0.6 billion included $0.9 billion of capital successfully returned to investors. |
-2-
| • | Institutional index long-term net outflows of $6.6 billion were driven by equity net outflows of $7.9 billion related to client asset allocation decisions. |
Cash management AUM increased 2% to $268.4 billion.
Advisory AUM decreased 4% to $30.5 billion due to disposition portfolio liquidations. The execution of these liquidations contributed to BlackRock Solutions® and advisory revenue in the quarter.
INVESTMENT PERFORMANCE AT JUNE 30, 2014(1)
| One-year period |
Three-year period |
Five-year period |
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| Fixed Income: |
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| Actively managed products above benchmark or peer median |
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| Taxable |
83 | % | 90 | % | 91 | % | ||||||
| Tax-exempt |
69 | % | 70 | % | 72 | % | ||||||
| Index products within or above applicable tolerance |
97 | % | 98 | % | 98 | % | ||||||
| Equity: |
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| Actively managed products above benchmark or peer median |
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| Fundamental |
35 | % | 47 | % | 49 | % | ||||||
| Scientific |
81 | % | 93 | % | 93 | % | ||||||
| Index products within or above applicable tolerance |
95 | % | 97 | % | 97 | % | ||||||
| (1) | Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 17 for performance disclosure detail. |
Teleconference, Webcast and Presentation Information
Chairman and Chief Executive Officer, Laurence D. Fink, and Chief Financial Officer, Gary S. Shedlin, will host a teleconference call for investors and analysts on Wednesday, July 16, 2014 at 8:30 a.m. (Eastern Time). Members of the public who are interested in participating in the teleconference should dial, from the United States, (800) 374-0176, or from outside the United States, (706) 679-8281, shortly before 8:30 a.m. and reference the BlackRock Conference Call (ID Number 68909181). A live, listen-only webcast will also be available via the investor relations section of www.blackrock.com.
Both the teleconference and webcast will be available for replay by 12:30 p.m. (Eastern Time) on Wednesday, July 16, 2014 and ending at midnight on Wednesday, July 30, 2014. To access the replay of the teleconference, callers from the United States should dial (800) 585-8367 and callers from outside the United States should dial (404) 537-3406 and enter the Conference ID Number 68909181. To access the webcast, please visit the investor relations section of www.blackrock.com.
About BlackRock
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At June 30, 2014, BlackRock’s AUM was $4.594 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of June 30, 2014, the firm had approximately 11,600 employees in more than 30 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa.
For additional information, please visit the Company’s website at www.blackrock.com | Twitter: @blackrock_news | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock
-3-
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except per share data), (unaudited)
| Three Months Ended June 30, |
Three Months Ended March 31, |
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| 2014 | 2013 | Change | 2014 | Change | ||||||||||||||||
| Revenue |
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| Investment advisory, administration fees and securities lending revenue |
$ | 2,434 | $ | 2,177 | $ | 257 | $ | 2,291 | $ | 143 | ||||||||||
| Investment advisory performance fees |
115 | 89 | 26 | 158 | (43 | ) | ||||||||||||||
| BlackRock Solutions and advisory |
146 | 138 | 8 | 154 | (8 | ) | ||||||||||||||
| Distribution fees |
18 | 18 | — | 19 | (1 | ) | ||||||||||||||
| Other revenue |
65 | 60 | 5 | 48 | 17 | |||||||||||||||
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| Total revenue |
2,778 | 2,482 | 296 | 2,670 | 108 | |||||||||||||||
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| Expense |
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| Employee compensation and benefits |
948 | 864 | 84 | 982 | (34 | ) | ||||||||||||||
| Distribution and servicing costs |
89 | 90 | (1 | ) | 89 | — | ||||||||||||||
| Amortization of deferred sales commissions |
14 | 12 | 2 | 15 | (1 | ) | ||||||||||||||
| Direct fund expense |
187 | 162 | 25 | 179 | 8 | |||||||||||||||
| General and administration |
377 | 465 | (88 | ) | 313 | 64 | ||||||||||||||
| Amortization of intangible assets |
41 | 40 | 1 | 41 | — | |||||||||||||||
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| Total expense |
1,656 | 1,633 | 23 | 1,619 | 37 | |||||||||||||||
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| Operating income |
1,122 | 849 | 273 | 1,051 | 71 | |||||||||||||||
| Nonoperating income (expense) |
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| Net gain (loss) on investments |
45 | 141 | (96 | ) | 76 | (31 | ) | |||||||||||||
| Net gain (loss) on consolidated variable interest entities |
28 | (23 | ) | 51 | (16 | ) | 44 | |||||||||||||
| Interest and dividend income |
3 | 4 | (1 | ) | 10 | (7 | ) | |||||||||||||
| Interest expense |
(60 | ) | (53 | ) | (7 | ) | (53 | ) | (7 | ) | ||||||||||
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| Total nonoperating income (expense) |
16 | 69 | (53 | ) | 17 | (1 | ) | |||||||||||||
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| Income before income taxes |
1,138 | 918 | 220 | 1,068 | 70 | |||||||||||||||
| Income tax expense |
297 | 212 | 85 | 324 | (27 | ) | ||||||||||||||
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| Net income |
841 | 706 | 135 | 744 | 97 | |||||||||||||||
| Less: |
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| Net income (loss) attributable to noncontrolling interests |
33 | (23 | ) | 56 | (12 | ) | 45 | |||||||||||||
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| Net income attributable to BlackRock, Inc. |
$ | 808 | $ | 729 | $ | 79 | $ | 756 | $ | 52 | ||||||||||
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| Weighted-average common shares outstanding |
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| Basic |
168,712,221 | 170,648,731 | (1,936,510 | ) | 169,081,421 | (369,200 | ) | |||||||||||||
| Diluted |
171,150,153 | 173,873,583 | (2,723,430 | ) | 171,933,803 | (783,650 | ) | |||||||||||||
| Earnings per share attributable to BlackRock, Inc. common stockholders (5) |
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| Basic |
$ | 4.79 | $ | 4.27 | $ | 0.52 | $ | 4.47 | $ | 0.32 | ||||||||||
| Diluted |
$ | 4.72 | $ | 4.19 | $ | 0.53 | $ | 4.40 | $ | 0.32 | ||||||||||
| Cash dividends declared and paid per share |
$ | 1.93 | $ | 1.68 | $ | 0.25 | $ | 1.93 | $ | — | ||||||||||
| Supplemental information: |
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| AUM (end of period) |
$ | 4,593,612 | $ | 3,857,007 | $ | 736,605 | $ | 4,400,925 | $ | 192,687 | ||||||||||
| Shares outstanding (end of period) |
168,363,315 | 170,285,093 | (1,921,778 | ) | 169,138,109 | (774,794 | ) | |||||||||||||
| GAAP: |
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| Operating margin |
40.4 | % | 34.2 | % | 620 bps | 39.4 | % | 100 bps | ||||||||||||
| Effective tax rate |
26.8 | % | 22.5 | % | 430 bps | 30.0 | % | (320) bps | ||||||||||||
| As adjusted: |
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| Operating income (1) |
$ | 1,133 | $ | 982 | $ | 151 | $ | 1,062 | $ | 71 | ||||||||||
| Operating margin (1) |
42.4 | % | 41.3 | % | 110 bps | 41.4 | % | 100 bps | ||||||||||||
| Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2) |
($20 | ) | $ | 12 | ($32 | ) | $ | 26 | ($46 | ) | ||||||||||
| Net income attributable to BlackRock, Inc. (3) (4) |
$ | 837 | $ | 722 | $ | 115 | $ | 762 | $ | 75 | ||||||||||
| Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4) (5) |
$ | 4.89 | $ | 4.15 | $ | 0.74 | $ | 4.43 | $ | 0.46 | ||||||||||
| Effective tax rate |
24.8 | % | 27.3 | % | (250) bps | 30.0 | % | (520) bps | ||||||||||||
See pages 13-16 for the reconciliation to GAAP and notes (1) through (5) for more information on as adjusted items.
-4-
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except per share data), (unaudited)
| Six Months Ended | ||||||||||||
| June 30, | ||||||||||||
| 2014 | 2013 | Change | ||||||||||
| Revenue |
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| Investment advisory, administration fees and securities lending revenue |
$ | 4,725 | $ | 4,306 | $ | 419 | ||||||
| Investment advisory performance fees |
273 | 197 | 76 | |||||||||
| BlackRock Solutions and advisory |
300 | 264 | 36 | |||||||||
| Distribution fees |
37 | 35 | 2 | |||||||||
| Other revenue |
113 | 129 | (16 | ) | ||||||||
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| Total revenue |
5,448 | 4,931 | 517 | |||||||||
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| Expense |
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| Employee compensation and benefits |
1,930 | 1,769 | 161 | |||||||||
| Distribution and servicing costs |
178 | 181 | (3 | ) | ||||||||
| Amortization of deferred sales commissions |
29 | 24 | 5 | |||||||||
| Direct fund expense |
366 | 323 | 43 | |||||||||
| General and administration |
690 | 796 | (106 | ) | ||||||||
| Amortization of intangible assets |
82 | 80 | 2 | |||||||||
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| Total expense |
3,275 | 3,173 | 102 | |||||||||
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| Operating income |
2,173 | 1,758 | 415 | |||||||||
| Nonoperating income (expense) |
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| Net gain (loss) on investments |
121 | 203 | (82 | ) | ||||||||
| Net gain (loss) on consolidated variable interest entities |
12 | 4 | 8 | |||||||||
| Interest and dividend income |
13 | 10 | 3 | |||||||||
| Interest expense |
(113 | ) | (107 | ) | (6 | ) | ||||||
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| Total nonoperating income (expense) |
33 | 110 | (77 | ) | ||||||||
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| Income before income taxes |
2,206 | 1,868 | 338 | |||||||||
| Income tax expense |
621 | 496 | 125 | |||||||||
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| Net income |
1,585 | 1,372 | 213 | |||||||||
| Less: |
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| Net income (loss) attributable to noncontrolling interests |
21 | 11 | 10 | |||||||||
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| Net income attributable to BlackRock, Inc. |
$ | 1,564 | $ | 1,361 | $ | 203 | ||||||
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| Weighted-average common shares outstanding |
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| Basic |
168,895,801 | 170,973,462 | (2,077,661 | ) | ||||||||
| Diluted |
171,540,018 | 174,268,870 | (2,728,852 | ) | ||||||||
| Earnings per share attributable to BlackRock, Inc. common stockholders (5) |
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| Basic |
$ | 9.26 | $ | 7.96 | $ | 1.30 | ||||||
| Diluted |
$ | 9.12 | $ | 7.81 | $ | 1.31 | ||||||
| Cash dividends declared and paid per share |
$ | 3.86 | $ | 3.36 | $ | 0.50 | ||||||
| Supplemental information: |
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| AUM (end of period) |
$ | 4,593,612 | $ | 3,857,007 | $ | 736,605 | ||||||
| Shares outstanding (end of period) |
168,363,315 | 170,285,093 | (1,921,778 | ) | ||||||||
| GAAP: |
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| Operating margin |
39.9 | % | 35.7 | % | 420 bps | |||||||
| Effective tax rate |
28.4 | % | 26.7 | % | 170 bps | |||||||
| As adjusted: |
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| Operating income (1) |
$ | 2,195 | $ | 1,903 | $ | 292 | ||||||
| Operating margin (1) |
41.9 | % | 40.6 | % | 130 bps | |||||||
| Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2) |
$ | 6 | $ | 15 | ($9 | ) | ||||||
| Net income attributable to BlackRock, Inc. (3) (4) |
$ | 1,599 | $ | 1,359 | $ | 240 | ||||||
| Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4) (5) |
$ | 9.32 | $ | 7.80 | $ | 1.52 | ||||||
| Effective tax rate |
27.4 | % | 29.1 | % | (170) bps | |||||||
See pages 13-16 for the reconciliation to GAAP and notes (1) through (5) for more information on as adjusted items.
-5-
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Current Quarter Component Changes by Client Type and Product
| March 31, 2014 |
Net subscriptions (redemptions) |
Market change | FX impact (1) | June 30, 2014 |
Average AUM (2) | |||||||||||||||||||
| Retail: |
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| Equity |
$ | 208,238 | $ | 1,524 | $ | 6,006 | $ | 701 | $ | 216,469 | $ | 211,420 | ||||||||||||
| Fixed income |
160,448 | 10,132 | 2,027 | 65 | 172,672 | 166,365 | ||||||||||||||||||
| Multi-asset |
121,548 | 1,031 | 3,703 | 110 | 126,392 | 123,650 | ||||||||||||||||||
| Alternatives |
18,483 | 441 | 59 | (14 | ) | 18,969 | 18,891 | |||||||||||||||||
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|
|
|
|
|
|
|
|
|
|||||||||||||
| Retail subtotal |
508,717 | 13,128 | 11,795 | 862 | 534,502 | 520,326 | ||||||||||||||||||
| iShares: |
||||||||||||||||||||||||
| Equity |
723,973 | 20,636 | 28,447 | 997 | 774,053 | 746,481 | ||||||||||||||||||
| Fixed income |
188,022 | 9,474 | 2,678 | 345 | 200,519 | 195,811 | ||||||||||||||||||
| Multi-asset |
1,437 | 133 | 48 | 6 | 1,624 | 1,529 | ||||||||||||||||||
| Alternatives |
16,948 | 202 | 480 | 6 | 17,636 | 17,108 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| iShares subtotal |
930,380 | 30,445 | 31,653 | 1,354 | 993,832 | 960,929 | ||||||||||||||||||
| Institutional: |
||||||||||||||||||||||||
| Active: |
||||||||||||||||||||||||
| Equity |
132,374 | (4,515 | ) | 4,746 | 1,175 | 133,780 | 132,447 | |||||||||||||||||
| Fixed income |
509,692 | 852 | 10,814 | 2,307 | 523,665 | 516,970 | ||||||||||||||||||
| Multi-asset |
223,865 | 5,257 | 9,285 | 800 | 239,207 | 231,654 | ||||||||||||||||||
| Alternatives |
73,723 | (581 | ) | 409 | 230 | 73,781 | 73,662 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Active subtotal |
939,654 | 1,013 | 25,254 | 4,512 | 970,433 | 954,733 | ||||||||||||||||||
| Index: |
||||||||||||||||||||||||
| Equity |
1,283,349 | (7,938 | ) | 56,886 | 5,986 | 1,338,283 | 1,305,563 | |||||||||||||||||
| Fixed income |
430,852 | 797 | 6,101 | 6,119 | 443,869 | 438,521 | ||||||||||||||||||
| Multi-asset |
6,381 | 374 | 432 | 63 | 7,250 | 6,721 | ||||||||||||||||||
| Alternatives |
6,273 | 205 | (26 | ) | 84 | 6,536 | 6,406 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Index subtotal |
1,726,855 | (6,562 | ) | 63,393 | 12,252 | 1,795,938 | 1,757,211 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Institutional subtotal |
2,666,509 | (5,549 | ) | 88,647 | 16,764 | 2,766,371 | 2,711,944 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Long-term |
4,105,606 | 38,024 | 132,095 | 18,980 | 4,294,705 | $ | 4,193,199 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Cash management |
263,533 | 3,512 | 380 | 963 | 268,388 | |||||||||||||||||||
| Advisory (3) |
31,786 | (2,018 | ) | 171 | 580 | 30,519 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
$ | 4,400,925 | $ | 39,518 | $ | 132,646 | $ | 20,523 | $ | 4,593,612 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Current Quarter Component Changes by Product
| March 31, 2014 |
Net subscriptions (redemptions) |
Market change | FX impact (1) | June 30, 2014 |
Average AUM (2) | |||||||||||||||||||
| Equity: |
||||||||||||||||||||||||
| Active |
$ | 314,850 | $ | (5,342 | ) | $ | 9,835 | $ | 1,487 | $ | 320,830 | $ | 316,479 | |||||||||||
| iShares |
723,973 | 20,636 | 28,447 | 997 | 774,053 | 746,481 | ||||||||||||||||||
| Fixed income: |
||||||||||||||||||||||||
| Active |
665,151 | 9,566 | 12,749 | 2,258 | 689,724 | 677,946 | ||||||||||||||||||
| iShares |
188,022 | 9,474 | 2,678 | 345 | 200,519 | 195,811 | ||||||||||||||||||
| Multi-asset |
353,231 | 6,795 | 13,468 | 979 | 374,473 | 363,554 | ||||||||||||||||||
| Alternatives: |
||||||||||||||||||||||||
| Core |
87,865 | 274 | 464 | 155 | 88,758 | 88,449 | ||||||||||||||||||
| Currency and commodities (4) |
27,562 | (7 | ) | 458 | 151 | 28,164 | 27,618 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Subtotal |
2,360,654 | 41,396 | 68,099 | 6,372 | 2,476,521 | 2,416,338 | ||||||||||||||||||
| Non-ETF Index: |
||||||||||||||||||||||||
| Equity |
1,309,111 | (5,587 | ) | 57,803 | 6,375 | 1,367,702 | 1,332,951 | |||||||||||||||||
| Fixed income |
435,841 | 2,215 | 6,193 | 6,233 | 450,482 | 443,910 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Subtotal Non-ETF Index |
1,744,952 | (3,372 | ) | 63,996 | 12,608 | 1,818,184 | 1,776,861 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Long-term |
$ | 4,105,606 | $ | 38,024 | $ | 132,095 | $ | 18,980 | $ | 4,294,705 | $ | 4,193,199 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. |
| (2) | Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months. |
| (3) | Advisory AUM represents long-term portfolio liquidation assignments. |
| (4) | Amounts include commodity iShares. |
-6-
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Year-to-Date Component Changes by Client Type and Product
| December 31, 2013 |
Net subscriptions (redemptions) |
Market change | FX impact (1) | June 30, 2014 |
Average AUM (2) | |||||||||||||||||||
| Retail: |
||||||||||||||||||||||||
| Equity |
$ | 203,035 | $ | 3,707 | $ | 8,721 | $ | 1,006 | $ | 216,469 | $ | 207,697 | ||||||||||||
| Fixed income |
151,475 | 16,190 | 4,881 | 126 | 172,672 | 161,335 | ||||||||||||||||||
| Multi-asset |
117,054 | 4,668 | 4,467 | 203 | 126,392 | 121,232 | ||||||||||||||||||
| Alternatives |
16,213 | 2,566 | 190 | — | 18,969 | 18,027 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Retail subtotal |
487,777 | 27,131 | 18,259 | 1,335 | 534,502 | 508,291 | ||||||||||||||||||
| iShares: |
||||||||||||||||||||||||
| Equity |
718,135 | 21,569 | 34,222 | 127 | 774,053 | 729,635 | ||||||||||||||||||
| Fixed income |
178,835 | 16,098 | 5,539 | 47 | 200,519 | 190,868 | ||||||||||||||||||
| Multi-asset |
1,310 | 244 | 68 | 2 | 1,624 | 1,454 | ||||||||||||||||||
| Alternatives |
16,092 | 292 | 1,257 | (5 | ) | 17,636 | 16,893 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| iShares subtotal |
914,372 | 38,203 | 41,086 | 171 | 993,832 | 938,850 | ||||||||||||||||||
| Institutional: |
||||||||||||||||||||||||
| Active: |
||||||||||||||||||||||||
| Equity |
138,726 | (12,548 | ) | 6,255 | 1,347 | 133,780 | 134,127 | |||||||||||||||||
| Fixed income |
505,109 | (6,169 | ) | 21,580 | 3,145 | 523,665 | 512,957 | |||||||||||||||||
| Multi-asset |
215,276 | 8,106 | 14,949 | 876 | 239,207 | 226,396 | ||||||||||||||||||
| Alternatives |
73,299 | (987 | ) | 1,083 | 386 | 73,781 | 73,590 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Active subtotal |
932,410 | (11,598 | ) | 43,867 | 5,754 | 970,433 | 947,070 | |||||||||||||||||
| Index: |
||||||||||||||||||||||||
| Equity |
1,257,799 | 803 | 71,702 | 7,979 | 1,338,283 | 1,281,215 | ||||||||||||||||||
| Fixed income |
406,767 | 10,778 | 18,749 | 7,575 | 443,869 | 427,788 | ||||||||||||||||||
| Multi-asset |
7,574 | (1,233 | ) | 776 | 133 | 7,250 | 6,736 | |||||||||||||||||
| Alternatives |
5,510 | 667 | 253 | 106 | 6,536 | 6,177 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Index subtotal |
1,677,650 | 11,015 | 91,480 | 15,793 | 1,795,938 | 1,721,916 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Institutional subtotal |
2,610,060 | (583 | ) | 135,347 | 21,547 | 2,766,371 | 2,668,986 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Long-term |
4,012,209 | 64,751 | 194,692 | 23,053 | 4,294,705 | $ | 4,116,127 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Cash management |
275,554 | (8,920 | ) | 505 | 1,249 | 268,388 | ||||||||||||||||||
| Advisory (3) |
36,325 | (5,791 | ) | 407 | (422 | ) | 30,519 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
$ | 4,324,088 | $ | 50,040 | $ | 195,604 | $ | 23,880 | $ | 4,593,612 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Year-to-Date Component Changes by Product
| December 31, 2013 |
Net subscriptions (redemptions) |
Market change | FX impact (1) | June 30, 2014 |
Average AUM (2) | |||||||||||||||||||
| Equity: |
||||||||||||||||||||||||
| Active |
$ | 317,262 | $ | (12,257 | ) | $ | 13,951 | $ | 1,874 | $ | 320,830 | $ | 315,594 | |||||||||||
| iShares |
718,135 | 21,569 | 34,222 | 127 | 774,053 | 729,635 | ||||||||||||||||||
| Fixed income: |
||||||||||||||||||||||||
| Active |
652,209 | 8,108 | 26,279 | 3,128 | 689,724 | 669,229 | ||||||||||||||||||
| iShares |
178,835 | 16,098 | 5,539 | 47 | 200,519 | 190,868 | ||||||||||||||||||
| Multi-asset |
341,214 | 11,785 | 20,260 | 1,214 | 374,473 | 355,818 | ||||||||||||||||||
| Alternatives: |
||||||||||||||||||||||||
| Core |
85,026 | 2,208 | 1,269 | 255 | 88,758 | 87,362 | ||||||||||||||||||
| Currency and commodities (4) |
26,088 | 330 | 1,514 | 232 | 28,164 | 27,325 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Subtotal |
2,318,769 | 47,841 | 103,034 | 6,877 | 2,476,521 | 2,375,831 | ||||||||||||||||||
| Non-ETF Index: |
||||||||||||||||||||||||
| Equity |
1,282,298 | 4,219 | 72,727 | 8,458 | 1,367,702 | 1,307,445 | ||||||||||||||||||
| Fixed income |
411,142 | 12,691 | 18,931 | 7,718 | 450,482 | 432,851 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Subtotal Non-ETF Index |
1,693,440 | 16,910 | 91,658 | 16,176 | 1,818,184 | 1,740,296 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Long-term |
$ | 4,012,209 | $ | 64,751 | $ | 194,692 | $ | 23,053 | $ | 4,294,705 | $ | 4,116,127 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. |
| (2) | Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing seven months. |
| (3) | Advisory AUM represents long-term portfolio liquidation assignments. |
| (4) | Amounts include commodity iShares. |
-7-
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Year-over-Year Component Changes by Client Type and Product
| June 30, 2013 |
Net subscriptions (redemptions) |
Adjustments (1) | Acquisitions (2) | Market change |
FX impact (3) | June 30, 2014 |
Average AUM (4) |
|||||||||||||||||||||||||
| Retail: |
||||||||||||||||||||||||||||||||
| Equity |
$ | 161,441 | $ | 9,710 | $ | 13,066 | $ | — | $ | 28,505 | $ | 3,747 | $ | 216,469 | $ | 192,279 | ||||||||||||||||
| Fixed income |
141,541 | 22,315 | 3,897 | — | 4,214 | 705 | 172,672 | 153,028 | ||||||||||||||||||||||||
| Multi-asset |
99,105 | 14,111 | 2,663 | — | 9,994 | 519 | 126,392 | 114,171 | ||||||||||||||||||||||||
| Alternatives |
12,292 | 5,927 | — | 136 | 342 | 272 | 18,969 | 16,220 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Retail subtotal |
414,379 | 52,063 | 19,626 | 136 | 43,055 | 5,243 | 534,502 | 475,698 | ||||||||||||||||||||||||
| iShares: |
||||||||||||||||||||||||||||||||
| Equity |
577,268 | 66,754 | — | 13,021 | 112,605 | 4,405 | 774,053 | 689,973 | ||||||||||||||||||||||||
| Fixed income |
180,943 | 11,112 | — | 1,294 | 4,945 | 2,225 | 200,519 | 186,723 | ||||||||||||||||||||||||
| Multi-asset |
1,107 | 370 | — | — | 147 | — | 1,624 | 1,326 | ||||||||||||||||||||||||
| Alternatives |
15,079 | (694 | ) | — | 1,645 | 1,543 | 63 | 17,636 | 17,544 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| iShares subtotal |
774,397 | 77,542 | — | 15,960 | 119,240 | 6,693 | 993,832 | 895,566 | ||||||||||||||||||||||||
| Institutional: |
||||||||||||||||||||||||||||||||
| Active: |
||||||||||||||||||||||||||||||||
| Equity |
126,425 | (20,470 | ) | — | — | 23,515 | 4,310 | 133,780 | 132,440 | |||||||||||||||||||||||
| Fixed income |
490,490 | (687 | ) | — | — | 25,642 | 8,220 | 523,665 | 506,559 | |||||||||||||||||||||||
| Multi-asset |
180,310 | 22,454 | 3,335 | — | 26,578 | 6,530 | 239,207 | 209,548 | ||||||||||||||||||||||||
| Alternatives |
64,006 | (4,841 | ) | — | 10,836 | 3,010 | 770 | 73,781 | 70,829 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Active subtotal |
861,231 | (3,544 | ) | 3,335 | 10,836 | 78,745 | 19,830 | 970,433 | 919,376 | |||||||||||||||||||||||
| Index: |
||||||||||||||||||||||||||||||||
| Equity |
1,107,981 | (6,530 | ) | (18,238 | ) | — | 233,464 | 21,606 | 1,338,283 | 1,235,124 | ||||||||||||||||||||||
| Fixed income |
392,385 | 13,144 | (4,723 | ) | — | 19,947 | 23,116 | 443,869 | 415,862 | |||||||||||||||||||||||
| Multi-asset |
8,783 | (2,931 | ) | — | — | 1,145 | 253 | 7,250 | 7,547 | |||||||||||||||||||||||
| Alternatives |
5,299 | 769 | — | — | 122 | 346 | 6,536 | 5,855 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Index subtotal |
1,514,448 | 4,452 | (22,961 | ) | — | 254,678 | 45,321 | 1,795,938 | 1,664,388 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Institutional subtotal |
2,375,679 | 908 | (19,626 | ) | 10,836 | 333,423 | 65,151 | 2,766,371 | 2,583,764 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Long-term |
3,564,455 | 130,513 | — | 26,932 | 495,718 | 77,087 | 4,294,705 | $ | 3,955,028 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Cash management |
252,562 | 9,799 | — | — | 768 | 5,259 | 268,388 | |||||||||||||||||||||||||
| Advisory (5) |
39,990 | (9,231 | ) | — | — | 44 | (284 | ) | 30,519 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total |
$ | 3,857,007 | $ | 131,081 | $ | — | $ | 26,932 | $ | 496,530 | $ | 82,062 | $ | 4,593,612 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Year-over-Year Component Changes by Product
| June 30, 2013 |
Net subscriptions (redemptions) |
Adjustments (1) | Acquisitions (2) | Market change |
FX impact (3) | June 30, 2014 |
Average AUM (4) |
|||||||||||||||||||||||||
| Equity: |
||||||||||||||||||||||||||||||||
| Active |
$ | 280,332 | $ | (16,428 | ) | $ | — | $ | — | $ | 49,612 | $ | 7,314 | $ | 320,830 | $ | 306,534 | |||||||||||||||
| iShares |
577,268 | 66,754 | — | 13,021 | 112,605 | 4,405 | 774,053 | 689,973 | ||||||||||||||||||||||||
| Fixed income: |
||||||||||||||||||||||||||||||||
| Active |
631,808 | 19,563 | — | — | 29,667 | 8,686 | 689,724 | 656,746 | ||||||||||||||||||||||||
| iShares |
180,943 | 11,112 | — | 1,294 | 4,945 | 2,225 | 200,519 | 186,723 | ||||||||||||||||||||||||
| Multi-asset |
289,305 | 34,004 | 5,998 | — | 37,864 | 7,302 | 374,473 | 332,592 | ||||||||||||||||||||||||
| Alternatives: |
||||||||||||||||||||||||||||||||
| Core |
70,227 | 2,994 | — | 10,972 | 3,428 | 1,137 | 88,758 | 82,177 | ||||||||||||||||||||||||
| Currency and commodities (6) |
26,449 | (1,833 | ) | — | 1,645 | 1,589 | 314 | 28,164 | 28,271 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Subtotal |
2,056,332 | 116,166 | 5,998 | 26,932 | 239,710 | 31,383 | 2,476,521 | 2,283,016 | ||||||||||||||||||||||||
| Non-ETF Index: |
||||||||||||||||||||||||||||||||
| Equity |
1,115,515 | (862 | ) | (5,172 | ) | — | 235,872 | 22,349 | 1,367,702 | 1,253,309 | ||||||||||||||||||||||
| Fixed income |
392,608 | 15,209 | (826 | ) | — | 20,136 | 23,355 | 450,482 | 418,703 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Subtotal Non-ETF Index |
1,508,123 | 14,347 | (5,998 | ) | — | 256,008 | 45,704 | 1,818,184 | 1,672,012 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Long-term |
$ | 3,564,455 | $ | 130,513 | $ | — | $ | 26,932 | $ | 495,718 | $ | 77,087 | $ | 4,294,705 | $ | 3,955,028 | ||||||||||||||||
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| (1) | Amounts include $19.6 billion of AUM related to fund ranges reclassed from institutional to retail and $6.0 billion of AUM reclassed from non-ETF index equity and fixed income to multi-asset. |
| (2) | Amounts represent $16.0 billion of AUM acquired in the Credit Suisse ETF franchise acquisition in July 2013 and $11.0 billion of AUM acquired in the MGPA acquisition in October 2013. |
| (3) | Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. |
| (4) | Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months. |
| (5) | Advisory AUM represents long-term portfolio liquidation assignments. |
| (6) | Amounts include commodity iShares. |
-8-
SUMMARY OF REVENUE
(in millions), (unaudited)
| Three Months Ended June 30, |
Three Months Ended March 31, 2014 |
Six Months Ended June 30, |
||||||||||||||||||||||||||||||
| 2014 | 2013 | Change | Change | 2014 | 2013 | Change | ||||||||||||||||||||||||||
| Investment advisory, administration fees and securities lending revenue: |
||||||||||||||||||||||||||||||||
| Equity: |
||||||||||||||||||||||||||||||||
| Active |
$ | 478 | $ | 432 | $ | 46 | $ | 463 | $ | 15 | $ | 941 | $ | 865 | $ | 76 | ||||||||||||||||
| iShares |
677 | 584 | 93 | 634 | 43 | 1,311 | 1,155 | 156 | ||||||||||||||||||||||||
| Fixed income: |
||||||||||||||||||||||||||||||||
| Active |
346 | 322 | 24 | 324 | 22 | 670 | 634 | 36 | ||||||||||||||||||||||||
| iShares |
122 | 120 | 2 | 113 | 9 | 235 | 236 | (1 | ) | |||||||||||||||||||||||
| Multi-asset |
300 | 253 | 47 | 286 | 14 | 586 | 501 | 85 | ||||||||||||||||||||||||
| Alternatives: |
||||||||||||||||||||||||||||||||
| Core |
161 | 136 | 25 | 159 | 2 | 320 | 272 | 48 | ||||||||||||||||||||||||
| Currency and commodities |
23 | 25 | (2 | ) | 22 | 1 | 45 | 55 | (10 | ) | ||||||||||||||||||||||
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| Subtotal |
2,107 | 1,872 | 235 | 2,001 | 106 | 4,108 | 3,718 | 390 | ||||||||||||||||||||||||
| Non-ETF Index: |
||||||||||||||||||||||||||||||||
| Equity |
183 | 161 | 22 | 158 | 25 | 341 | 301 | 40 | ||||||||||||||||||||||||
| Fixed income |
71 | 61 | 10 | 58 | 13 | 129 | 118 | 11 | ||||||||||||||||||||||||
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| Subtotal Non-ETF Index |
254 | 222 | 32 | 216 | 38 | 470 | 419 | 51 | ||||||||||||||||||||||||
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| Long-term |
2,361 | 2,094 | 267 | 2,217 | 144 | 4,578 | 4,137 | 441 | ||||||||||||||||||||||||
| Cash management |
73 | 83 | (10 | ) | 74 | (1 | ) | 147 | 169 | (22 | ) | |||||||||||||||||||||
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| Total base fees |
2,434 | 2,177 | 257 | 2,291 | 143 | 4,725 | 4,306 | 419 | ||||||||||||||||||||||||
| Investment advisory performance fees: |
||||||||||||||||||||||||||||||||
| Equity |
31 | 17 | 14 | 22 | 9 | 53 | 34 | 19 | ||||||||||||||||||||||||
| Fixed income |
5 | 9 | (4 | ) | 8 | (3 | ) | 13 | 10 | 3 | ||||||||||||||||||||||
| Multi-asset |
10 | 3 | 7 | 3 | 7 | 13 | 10 | 3 | ||||||||||||||||||||||||
| Alternatives |
69 | 60 | 9 | 125 | (56 | ) | 194 | 143 | 51 | |||||||||||||||||||||||
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| Total |
115 | 89 | 26 | 158 | (43 | ) | 273 | 197 | 76 | |||||||||||||||||||||||
| BlackRock Solutions and advisory |
146 | 138 | 8 | 154 | (8 | ) | 300 | 264 | 36 | |||||||||||||||||||||||
| Distribution fees |
18 | 18 | — | 19 | (1 | ) | 37 | 35 | 2 | |||||||||||||||||||||||
| Other revenue |
65 | 60 | 5 | 48 | 17 | 113 | 129 | (16 | ) | |||||||||||||||||||||||
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| Total revenue |
$ | 2,778 | $ | 2,482 | $ | 296 | $ | 2,670 | $ | 108 | $ | 5,448 | $ | 4,931 | $ | 517 | ||||||||||||||||
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Highlights
| • | Investment advisory, administration fees and securities lending revenue increased $257 million from the second quarter of 2013 due to higher long-term average AUM. Securities lending fees of $140 million in the current quarter increased $4 million from the second quarter of 2013. |
Investment advisory, administration fees and securities lending revenue increased $143 million from the first quarter of 2014 due to higher long-term average AUM, the effect of one additional revenue day in the current quarter and seasonally higher securities lending fees. Securities lending fees increased $35 million from the first quarter of 2014 driven by higher seasonal demand.
| • | Performance fees increased $26 million from the second quarter of 2013, primarily reflecting higher fees from equity and alternative products. |
Performance fees declined $43 million from the first quarter of 2014, primarily reflecting a large performance fee in the first quarter of 2014 associated with the planned final liquidation of a closed-end mortgage fund.
| • | BlackRock Solutions and advisory revenue increased $8 million from the second quarter of 2013 due to higher revenue from Aladdin® mandates. BlackRock Solutions and advisory revenue included $109 million in Aladdin business revenue in the current quarter compared with $98 million in the second quarter of 2013. |
| • | Other revenue increased $17 million from the first quarter of 2014, primarily due to higher transition management service fees and higher earnings from certain strategic investments. |
-9-
SUMMARY OF EXPENSE
(in millions), (unaudited)
| Three Months Ended June 30, |
Three Months Ended March 31, 2014 |
Six Months Ended June 30, |
||||||||||||||||||||||||||||||
| 2014 | 2013 | Change | Change | 2014 | 2013 | Change | ||||||||||||||||||||||||||
| Operating Expense |
||||||||||||||||||||||||||||||||
| Employee compensation and benefits |
$ | 948 | $ | 864 | $ | 84 | $ | 982 | ($34 | ) | $ | 1,930 | $ | 1,769 | $ | 161 | ||||||||||||||||
| Distribution and servicing costs |
89 | 90 | (1 | ) | 89 | — | 178 | 181 | (3 | ) | ||||||||||||||||||||||
| Amortization of deferred sales commissions |
14 | 12 | 2 | 15 | (1 | ) | 29 | 24 | 5 | |||||||||||||||||||||||
| Direct fund expense |
187 | 162 | 25 | 179 | 8 | 366 | 323 | 43 | ||||||||||||||||||||||||
| General and administration |
377 | 465 | (88 | ) | 313 | 64 | 690 | 796 | (106 | ) | ||||||||||||||||||||||
| Amortization of intangible assets |
41 | 40 | 1 | 41 | — | 82 | 80 | 2 | ||||||||||||||||||||||||
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| Total Operating Expense |
$ | 1,656 | $ | 1,633 | $ | 23 | $ | 1,619 | $ | 37 | $ | 3,275 | $ | 3,173 | $ | 102 | ||||||||||||||||
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Highlights
| • | Employee compensation and benefits increased $84 million from the second quarter of 2013, reflecting higher headcount and higher incentive compensation driven by higher operating income. |
Employee compensation and benefits decreased $34 million from the first quarter of 2014, primarily reflecting lower seasonal employer payroll taxes, partially offset by higher incentive compensation.
| • | General and administration expense decreased $88 million from the second quarter of 2013, largely driven by the $124 million expense related to the charitable contribution of approximately six million units of the Company’s equity method investment in PennyMac in the second quarter of 2013 (the “Charitable Contribution”), which has been excluded from as adjusted results. The second quarter of 2014 included higher other expense, including elevated legal and regulatory expense. |
General and administration expense increased $64 million from the first quarter of 2014, primarily reflecting the timing of marketing and promotional spend, increased occupancy expense, reflecting a one-time benefit from the reversal of a real estate-related retirement obligation in the first quarter of 2014, which is no longer required to be funded and higher other expense, including elevated legal and regulatory expense.
-10-
SUMMARY OF NONOPERATING INCOME (EXPENSE)
(in millions), (unaudited)
| Three Months Ended June 30, |
Three Months Ended March 31, 2014 |
Six Months Ended June 30, |
||||||||||||||||||||||||||||||
| 2014 | 2013 | Change | Change | 2014 | 2013 | Change | ||||||||||||||||||||||||||
| Nonoperating income (expense), GAAP basis |
$ | 16 | $ | 69 | ($53 | ) | $ | 17 | ($1 | ) | $ | 33 | $ | 110 | ($77 | ) | ||||||||||||||||
| Less: Net income (loss) attributable to NCI |
33 | (23 | ) | 56 | (12 | ) | 45 | 21 | 11 | 10 | ||||||||||||||||||||||
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| Nonoperating income (expense)(1) |
($17 | ) | $ | 92 | ($109 | ) | $ | 29 | ($46 | ) | $ | 12 | $ | 99 | ($87 | ) | ||||||||||||||||
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| Estimated economic investments at June 30, 2014(2) |
Three Months Ended June 30, |
Three Months Ended March 31, 2014 |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||||
| 2014 | 2013 | Change | Change | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
| Net gain (loss) on investments(1) |
||||||||||||||||||||||||||||||||||||
| Private equity |
20-25 | % | $ | 12 | $ | 4 | $ | 8 | $ | 44 | ($32 | ) | $ | 56 | $ | 23 | $ | 33 | ||||||||||||||||||
| Real estate |
5-10 | % | 8 | 7 | 1 | 2 | 6 | 10 | 10 | — | ||||||||||||||||||||||||||
| Distressed credit/mortgage funds/opportunistic funds |
5-10 | % | 6 | 4 | 2 | 10 | (4 | ) | 16 | 23 | (7 | ) | ||||||||||||||||||||||||
| Hedge funds/funds of hedge funds |
20-25 | % | 8 | 5 | 3 | 11 | (3 | ) | 19 | 8 | 11 | |||||||||||||||||||||||||
| Other investments(3) |
35-40 | % | 3 | 2 | 1 | 2 | 1 | 5 | 9 | (4 | ) | |||||||||||||||||||||||||
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| Subtotal |
37 | 22 | 15 | 69 | (32 | ) | 106 | 73 | 33 | |||||||||||||||||||||||||||
| Gain related to the PennyMac IPO |
— | 39 | (39 | ) | — | — | — | 39 | (39 | ) | ||||||||||||||||||||||||||
| Gain related to the Charitable Contribution |
— | 80 | (80 | ) | — | — | — | 80 | (80 | ) | ||||||||||||||||||||||||||
| Investments related to deferred compensation plans |
3 | — | 3 | 3 | — | 6 | 4 | 2 | ||||||||||||||||||||||||||||
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| Total net gain (loss) on investments(1) |
40 | 141 | (101 | ) | 72 | (32 | ) | 112 | 196 | (84 | ) | |||||||||||||||||||||||||
| Interest and dividend income |
3 | 4 | (1 | ) | 10 | (7 | ) | 13 | 10 | 3 | ||||||||||||||||||||||||||
| Interest expense |
(60 | ) | (53 | ) | (7 | ) | (53 | ) | (7 | ) | (113 | ) | (107 | ) | (6 | ) | ||||||||||||||||||||
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| Net interest expense |
(57 | ) | (49 | ) | (8 | ) | (43 | ) | (14 | ) | (100 | ) | (97 | ) | (3 | ) | ||||||||||||||||||||
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| Total nonoperating income (expense)(1) |
(17 | ) | 92 | (109 | ) | 29 | (46 | ) | 12 | 99 | (87 | ) | ||||||||||||||||||||||||
| Gain related to the Charitable Contribution |
— | (80 | ) | 80 | — | — | — | (80 | ) | 80 | ||||||||||||||||||||||||||
| Compensation expense related to (appreciation) depreciation on deferred compensation plans |
(3 | ) | — | (3 | ) | (3 | ) | — | (6 | ) | (4 | ) | (2 | ) | ||||||||||||||||||||||
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| Nonoperating income (expense), as adjusted(1) |
($20 | ) | $ | 12 | ($32 | ) | $ | 26 | ($46 | ) | $ | 6 | $ | 15 | ($9 | ) | ||||||||||||||||||||
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| (1) | Net of net income (loss) attributable to noncontrolling interests (“NCI”). |
| (2) | Percentages represent estimated percentages of BlackRock’s corporate economic investment portfolio at June 30, 2014. Economic investment amounts at March 31, 2014 for private equity, real estate, distressed credit/mortgage funds/opportunistic funds, hedge funds/funds of hedge funds and other investments were $292 million, $127 million, $142 million, $327 million and $514 million, respectively. See the 2014 first quarter Form 10-Q for more information. |
| (3) | Amounts include net gains (losses) related to equity and fixed income investments, and BlackRock’s seed capital hedging program. |
Highlights
| • | Net gains on investments for the current quarter decreased $101 million from the second quarter of 2013. The second quarter of 2013 included a noncash, nonoperating pre-tax gain of $80 million related to the Charitable Contribution, which has been excluded from as adjusted results, and a $39 million gain related to the Company’s interest in PennyMac subsequent to its initial public offering (the “PennyMac IPO”). |
Net gains on investments for the current quarter decreased $32 million from the first quarter of 2014 due to the positive impact of the monetization of a non-strategic, opportunistic private equity investment included in the prior quarter.
-11-
INCOME TAX EXPENSE
(in millions), (unaudited)
| Three Months Ended June 30, |
Three Months Ended March 31, 2014 |
Six Months Ended June 30, |
||||||||||||||||||||||||||||||
| 2014 | 2013 | Change | Change | 2014 | 2013 | Change | ||||||||||||||||||||||||||
| Income tax expense |
$ | 297 | $ | 212 | $ | 85 | $ | 324 | ($27 | ) | $ | 621 | $ | 496 | $ | 125 | ||||||||||||||||
Highlights
| • | The second quarter 2014 GAAP effective income tax rate was 26.8% compared with 22.5% for the second quarter of 2013. The second quarter 2014 GAAP effective income tax rate, as adjusted was 24.8% compared with 27.3% for the second quarter of 2013. |
The second quarter 2014 GAAP tax rate included a $23 million net noncash expense, primarily associated with the revaluation of certain deferred tax liabilities arising from the state and local tax effect of changes in the Company’s organizational structure, which has been excluded from the as adjusted results. In addition, the second quarter 2014 GAAP tax rate benefited from an improvement in the geographic mix of earnings and included a $34 million net tax benefit related to several favorable nonrecurring items.
The second quarter 2013 GAAP tax rate included a net tax benefit of approximately $57 million recognized in connection with the Charitable Contribution, which has been excluded from as adjusted results. In addition, the second quarter 2013 GAAP tax rate included a tax benefit of approximately $29 million, primarily due to the realization of loss carryforwards.
ECONOMIC TANGIBLE ASSETS
(in billions), (unaudited)
The Company presents economic tangible assets as additional information to enable investors to eliminate gross presentation of certain assets that have equal and offsetting liabilities or noncontrolling interests that ultimately do not have an impact on stockholders’ equity (excluding appropriated retained earnings related to consolidated collateralized loan obligations) or cash flows. In addition, goodwill and intangible assets are excluded from economic tangible assets.
Economic tangible assets include cash, receivables, seed and co-investments, regulatory investments and other assets.
| June 30, 2014 (Est.) |
December 31, 2013 |
|||||||
| Total balance sheet assets |
$ | 227 | $ | 220 | ||||
| Separate account assets and separate account collateral held under securities lending agreements |
(181 | ) | (177 | ) | ||||
| Consolidated VIEs/sponsored investment funds |
(3 | ) | (3 | ) | ||||
| Goodwill and intangible assets, net |
(30 | ) | (30 | ) | ||||
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| Economic tangible assets |
$ | 13 | $ | 10 | ||||
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-12-
RECONCILIATION OF U.S. GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED
(in millions), (unaudited)
| Three Months Ended | Six Months Ended June 30, |
|||||||||||||||||||
| June 30, | March 31, 2014 |
|||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Operating income, GAAP basis |
$ | 1,122 | $ | 849 | $ | 1,051 | $ | 2,173 | $ | 1,758 | ||||||||||
| Non-GAAP expense adjustments: |
||||||||||||||||||||
| PNC LTIP funding obligation |
8 | 9 | 8 | 16 | 17 | |||||||||||||||
| Charitable Contribution |
— | 124 | — | — | 124 | |||||||||||||||
| Compensation expense related to appreciation (depreciation) on deferred compensation plans |
3 | — | 3 | 6 | 4 | |||||||||||||||
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| Operating income, as adjusted |
1,133 | 982 | 1,062 | 2,195 | 1,903 | |||||||||||||||
| Closed-end fund launch costs |
— | — | — | — | 16 | |||||||||||||||
| Closed-end fund launch commissions |
— | — | — | — | 2 | |||||||||||||||
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| Operating income used for operating margin measurement |
$ | 1,133 | $ | 982 | $ | 1,062 | $ | 2,195 | $ | 1,921 | ||||||||||
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| Revenue, GAAP basis |
$ | 2,778 | $ | 2,482 | $ | 2,670 | $ | 5,448 | $ | 4,931 | ||||||||||
| Non-GAAP adjustments: |
||||||||||||||||||||
| Distribution and servicing costs |
(89 | ) | (90 | ) | (89 | ) | (178 | ) | (181 | ) | ||||||||||
| Amortization of deferred sales commissions |
(14 | ) | (12 | ) | (15 | ) | (29 | ) | (24 | ) | ||||||||||
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|||||||||||
| Revenue used for operating margin measurement |
$ | 2,675 | $ | 2,380 | $ | 2,566 | $ | 5,241 | $ | 4,726 | ||||||||||
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| Operating margin, GAAP basis |
40.4 | % | 34.2 | % | 39.4 | % | 39.9 | % | 35.7 | % | ||||||||||
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| Operating margin, as adjusted |
42.4 | % | 41.3 | % | 41.4 | % | 41.9 | % | 40.6 | % | ||||||||||
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See note (1) to the Condensed Consolidated Statements of Income and Supplemental Information on page 15 for more information on as adjusted items and the reconciliation to GAAP.
RECONCILIATION OF U.S. GAAP NONOPERATING INCOME NET OF NCI TO NONOPERATING INCOME NET OF NCI, AS ADJUSTED
(in millions), (unaudited)
| Three Months Ended | Six Months Ended June 30, |
|||||||||||||||||||
| June 30, | March 31, 2014 |
|||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Nonoperating income (expense), GAAP basis |
$ | 16 | $ | 69 | $ | 17 | $ | 33 | $ | 110 | ||||||||||
| Less: Net income (loss) attributable to NCI |
33 | (23 | ) | (12 | ) | 21 | 11 | |||||||||||||
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|||||||||||
| Nonoperating income (expense), net of NCI |
(17 | ) | 92 | 29 | 12 | 99 | ||||||||||||||
| Gain related to Charitable Contribution |
— | (80 | ) | — | — | (80 | ) | |||||||||||||
| Compensation expense related to (appreciation) depreciation on deferred compensation plans |
(3 | ) | — | (3 | ) | (6 | ) | (4 | ) | |||||||||||
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| Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted |
($20 | ) | $ | 12 | $ | 26 | $ | 6 | $ | 15 | ||||||||||
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See note (2) to the Condensed Consolidated Statements of Income and Supplemental Information on page 16 for more information on as adjusted items and the reconciliation to GAAP.
-13-
RECONCILIATION OF U.S. GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
(in millions, except per share data), (unaudited)
| Three Months Ended | Six Months Ended June 30, |
|||||||||||||||||||
| June 30, | March 31, 2014 |
|||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Net income attributable to BlackRock, Inc., GAAP basis |
$ | 808 | $ | 729 | $ | 756 | $ | 1,564 | $ | 1,361 | ||||||||||
| Non-GAAP adjustments, net of tax:(4) |
||||||||||||||||||||
| PNC LTIP funding obligation |
6 | 6 | 6 | 12 | 11 | |||||||||||||||
| Income tax changes |
23 | — | — | 23 | — | |||||||||||||||
| Amount related to the Charitable Contribution |
— | (13 | ) | — | — | (13 | ) | |||||||||||||
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|||||||||||
| Net income attributable to BlackRock, Inc., as adjusted |
$ | 837 | $ | 722 | $ | 762 | $ | 1,599 | $ | 1,359 | ||||||||||
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|||||||||||
| Diluted weighted-average common shares outstanding(5) |
171.2 | 173.9 | 171.9 | 171.5 | 174.3 | |||||||||||||||
| Diluted earnings per common share, GAAP basis(5) |
$ | 4.72 | $ | 4.19 | $ | 4.40 | $ | 9.12 | $ | 7.81 | ||||||||||
| Diluted earnings per common share, as adjusted(5) |
$ | 4.89 | $ | 4.15 | $ | 4.43 | $ | 9.32 | $ | 7.80 | ||||||||||
See notes (3) through (5) to the Condensed Consolidated Statements of Income and Supplemental Information on page 16 for more information on as adjusted items and the reconciliation to GAAP.
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NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION (unaudited)
BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”); however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock’s financial performance over time. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Computations for all periods are derived from the condensed consolidated statements of income as follows:
(1) Operating income, as adjusted, and operating margin, as adjusted:
Operating income, as adjusted, equals operating income, GAAP basis, excluding certain items management deems nonrecurring, recurring infrequently or transactions that ultimately will not impact BlackRock’s book value. Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time and, therefore, provide useful disclosure to investors.
| • | Operating income, as adjusted, includes non-GAAP expense adjustments. The portion of compensation expense associated with certain long-term incentive plans (“LTIP”) funded, or to be funded, through share distributions to participants of BlackRock stock held by The PNC Financial Services Group, Inc. (“PNC”) has been excluded because it ultimately does not impact BlackRock’s book value. The second quarter of 2013 included a $124 million expense related to the Charitable Contribution that has been excluded from operating income, as adjusted due to its nonrecurring nature and because the noncash, nonoperating pre-tax gain of $80 million related to the contributed PennyMac investment is reported in nonoperating income (expense). Compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense). |
Management believes operating income exclusive of these items is a useful measure in evaluating BlackRock’s operating performance and helps enhance the comparability of this information for the reporting periods presented.
| • | Operating margin, as adjusted, allows BlackRock to compare performance from period to period by adjusting for items that may not recur, recur infrequently or may have an economic offset in nonoperating income (expense). BlackRock also uses operating margin, as adjusted, to monitor corporate performance and efficiency and as a benchmark to compare its performance with other companies. Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock’s financial performance. The non-GAAP measure by itself may pose limitations because it does not include all of BlackRock’s revenue and expense. |
Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of closed-end fund launch costs and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenue associated with the expenditure of these costs will not fully impact BlackRock’s results until future periods.
Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the Company earns. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenue.
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(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted:
Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, equals nonoperating income (expense), GAAP basis, less net income (loss) attributable to NCI, adjusted for compensation expense associated with (appreciation) depreciation on investments related to certain BlackRock deferred compensation plans. The compensation expense offset is recorded in operating income. This compensation expense has been included in nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, to offset returns on investments set aside for these plans, which are reported in nonoperating income (expense), GAAP basis.
Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides comparability of information among reporting periods and is an effective measure for reviewing BlackRock’s nonoperating contribution to results. As compensation expense associated with (appreciation) depreciation on investments related to certain deferred compensation plans, which is included in operating income, substantially offsets the gain (loss) on the investments set aside for these plans, management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides a useful measure, for both management and investors, of BlackRock’s nonoperating results that impact book value. During the second quarter of 2013, the noncash, nonoperating pre-tax gain of $80 million related to the contributed PennyMac investment has been excluded from nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted due to its nonrecurring nature and because the more than offsetting associated Charitable Contribution expense of $124 million is reported in operating income.
(3) Net income attributable to BlackRock, Inc., as adjusted:
Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.
See note (1) Operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding obligation and the Charitable Contribution.
The three and six months ended June 30, 2014 included a $23 million net noncash tax expense primarily related to the revaluation of certain deferred tax liabilities. The resulting increase in income taxes has been excluded from net income attributable to BlackRock, Inc., as adjusted, as these items will not have a cash flow impact and to ensure comparability among periods presented. The three and six months ended June 30, 2013 included a tax benefit of approximately $57 million recognized in connection with the Charitable Contribution. The tax benefit has been excluded from net income attributable to BlackRock, Inc., as adjusted due to the nonrecurring nature of the Charitable Contribution.
(4) For each period presented, the non-GAAP adjustments related to the PNC LTIP funding obligation was tax effected at the respective blended rates applicable to the adjustments. The three and six months ended June 30, 2014 included a $23 million net noncash tax expense primarily related to the revaluation of certain deferred tax liabilities. The three and six months ended June 30, 2013 included a tax benefit of approximately $57 million recognized in connection with the Charitable Contribution.
(5) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.
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Forward-looking Statements
This earnings release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.
BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to risk factors previously disclosed in BlackRock’s Securities and Exchange Commission (“SEC”) reports and those identified elsewhere, in this earnings release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the impact of legislative and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or PNC; (10) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (11) the ability to attract and retain highly talented professionals; (12) fluctuations in the carrying value of BlackRock’s economic investments; (13) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (14) BlackRock’s success in maintaining the distribution of its products; (15) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (16) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.
BlackRock’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and BlackRock’s subsequent filings with the SEC, accessible on the SEC’s website at www.sec.gov and on BlackRock’s website at www.blackrock.com, discuss these factors in more detail and identify additional factors that can affect forward-looking statements. The information contained on the Company’s website is not a part of this earnings release.
Performance Notes
Past performance is not indicative of future results. Except as specified, the performance information shown is as of June 30, 2014 and is based on preliminary data available at that time. The performance data shown reflects information for all actively and passively managed equity and fixed income accounts, including U.S. registered investment companies, European-domiciled retail funds and separate accounts for which performance data is available, including performance data for high net worth accounts available as of May 31, 2014. The performance data does not include accounts terminated prior to June 30, 2014 and accounts for which data has not yet been verified. If such accounts had been included, the performance data provided may have substantially differed from that shown.
Performance comparisons shown are gross-of-fees for U.S. retail, institutional and high net worth separate accounts as well as EMEA institutional separate accounts, and net-of-fee for European domiciled retail funds. The performance tracking shown for institutional index accounts is based on gross-of-fee performance and includes all institutional accounts and all iShares funds globally using an index strategy. AUM information is based on AUM available as of June 30, 2014 for each account or fund in the asset class shown without adjustment for overlapping management of the same account or fund. Fund performance reflects the reinvestment of dividends and distributions.
Source of performance information and peer medians is BlackRock, Inc. and is based in part on data from Lipper Inc. for U.S. funds and Morningstar, Inc. for non-U.S. funds.
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