BlackRock Inc. - FORM 8-K - EX-99.1 - BLACKROCK'S FINANCIAL INFORMATION RECAST FOR THE NEW REVENUE RECOGNITION STANDAR

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8-K - 8-K - BlackRock Inc.	blk-8k_20180322.htm

Exhibit 99.1

BLACKROCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except per share data), (unaudited)




	Recast			Previously Reported						Recast			Previously Reported
	2017			2017			Change			2016			2016			Change
Revenue
Investment advisory, administration fees and securities lending revenue	$	10,868		$	10,893		$	(25	)	$	9,848		$	9,880		$	(32	)
Investment advisory performance fees		594			594			-			295			295			-
Technology and risk management revenue		657			677			(20	)		588			595			(7	)
Distribution fees		1,183			24			1,159			1,198			41			1,157
Advisory and other revenue		298			303			(5	)		332			344			(12	)
Total revenue		13,600			12,491			1,109			12,261			11,155			1,106

Expense
Employee compensation and benefits		4,253			4,255			(2	)		3,878			3,880			(2	)
Distribution and servicing costs		1,663			492			1,171			1,608			429			1,179
Amortization of deferred sales commissions		-			17			(17	)		-			34			(34	)
Direct fund expense		895			904			(9	)		757			766			(9	)
General and administration		1,446			1,462			(16	)		1,278			1,301			(23	)
Restructuring charge		-			-			-			76			76			-
Amortization of intangible assets		89			89			-			99			99			-
Total expense		8,346			7,219			1,127			7,696			6,585			1,111

Operating income		5,254			5,272			(18	)		4,565			4,570			(5	)

Total nonoperating income (expense)		5			5			-			(110	)		(110	)		-
Income before income taxes		5,259			5,277			(18	)		4,455			4,460			(5	)
Income tax expense		270			270			-			1,289			1,290			(1	)
Net income		4,989			5,007			(18	)		3,166			3,170			(4	)
Less:
Net income (loss) attributable to noncontrolling interests		37			37			-			(2	)		(2	)		-
Net income attributable to BlackRock, Inc.	$	4,952		$	4,970		$	(18	)	$	3,168		$	3,172		$	(4	)

Earnings per share attributable to BlackRock, Inc. common stockholders
Basic	$	30.54		$	30.65		$	(0.11	)	$	19.27		$	19.29		$	(0.02	)
Diluted	$	30.12		$	30.23		$	(0.11	)	$	19.02		$	19.04		$	(0.02	)

Supplemental information:

GAAP:
Operating margin		38.6	%		42.2	%		(360	) bps		37.2	%		41.0	%		(380	) bps
Compensation and benefits expense-to-revenue ratio		31.3	%		34.1	%		(280	) bps		31.6	%		34.8	%		(320	) bps
As adjusted:
Operating income (1)	$	5,269		$	5,287		$	(18	)	$	4,669		$	4,674		$	(5	)
Operating margin (1)		44.1	%		44.1	%		-	bps		43.8	%		43.7	%		10	bps
Compensation and benefits expense-to-revenue ratio (2)		35.5	%		33.9	%		160	bps		36.1	%		34.5	%		160	bps
Net income attributable to BlackRock, Inc. (3)	$	3,698		$	3,716		$	(18	)	$	3,210		$	3,214		$	(4	)
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4)	$	22.49		$	22.60		$	(0.11	)	$	19.27		$	19.29		$	(0.02	)

Recast results reflect the adoption of the new standard related to revenue recognition. Previously reported results were derived from the financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017. The compensation and benefits expense-to-revenue ratio, as adjusted, previously reported is equal to Employee compensation and benefits, as adjusted, divided by Revenue, GAAP basis. The compensation and benefits expense-to-revenue ratio, as adjusted, recast for the new standard is equal to Employee compensation and benefits, as adjusted, divided by Revenue used for operating margin. In addition, certain reclassifications have been made to conform with the current presentation.

See pages 4-7 for the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.

- 1 -

BLACKROCK, INC.

2017 QUARTERLY INFORMATION

(In millions, except per share amounts), (Unaudited)


Year Ended December 31, 2017

Quarter Ended	March 31						June 30						September 30						December 31

	Recast						Recast						Recast						Recast
	for New			Previously			for New			Previously			for New			Previously			for New			Previously
	Standard			Reported			Standard			Reported			Standard			Reported			Standard			Reported

Revenue
Investment advisory, administration fees and securities lending revenue	$	2,523		$	2,530		$	2,667		$	2,675		$	2,781		$	2,792		$	2,897		$	2,896
Investment advisory performance fees		70			70			48			48			191			191			285			285
Technology and risk management revenue		154			158			158			164			169			175			176			180
Distribution fees		287			7			292			5			298			5			306			7
Advisory and other revenue		58			59			71			73			69			70			100			101
Total revenue		3,092			2,824			3,236			2,965			3,508			3,233			3,764			3,469

Expense
Employee compensation and benefits		1,021			1,021			998			999			1,087			1,088			1,147			1,147
Distribution and servicing costs		401			117			410			121			419			123			433			131
Amortization of deferred sales commissions		-			5			-			4			-			4			-			4
Direct fund expense		206			208			221			224			231			234			237			238
General and administration		296			301			345			350			355			363			450			448
Amortization of intangible assets		25			25			25			25			27			27			12			12
Total expense		1,949			1,677			1,999			1,723			2,119			1,839			2,279			1,980

Operating income		1,143			1,147			1,237			1,242			1,389			1,394			1,485			1,489

Total nonoperating income (expense)		(7	)		(7	)		1			1			10			10			1			1
Income before income taxes		1,136			1,140			1,238			1,243			1,399			1,404			1,486			1,490
Income tax expense (benefit)		268			269			374			376			443			445			(815	)		(820	)
Net income		868			871			864			867			956			959			2,301			2,310
Less:
Net income (loss) attributable to noncontrolling interests		9			9			10			10			12			12			6			6
Net income attributable to BlackRock, Inc.	$	859		$	862		$	854		$	857		$	944		$	947		$	2,295		$	2,304

Earnings per share attributable to BlackRock, Inc. common stockholders
Basic	$	5.27		$	5.29		$	5.26		$	5.27		$	5.83		$	5.85		$	14.23		$	14.29
Diluted	$	5.21		$	5.23		$	5.20		$	5.22		$	5.76		$	5.78		$	14.01		$	14.07

Supplemental information:

GAAP:
Operating margin		37.0	%		40.6	%		38.2	%		41.9	%		39.6	%		43.1	%		39.5	%		42.9	%
As adjusted:
Operating income (1)	$	1,147		$	1,151		$	1,241		$	1,246		$	1,393		$	1,398		$	1,488		$	1,492
Operating margin (1)		42.6	%		42.6	%		43.9	%		43.9	%		45.1	%		45.0	%		44.7	%		44.8	%
Net income attributable to BlackRock, Inc. (3)	$	862		$	865		$	857		$	860		$	966		$	969		$	1,013		$	1,022
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4)	$	5.23		$	5.25		$	5.22		$	5.24		$	5.90		$	5.92		$	6.19		$	6.24

Recast results reflect the adoption of the new standard related to revenue recognition. Previously reported results were derived from the financial statements included in previously filed Form 10-Ks and 10-Qs. In addition, certain reclassifications have been made to conform with the current presentation.

See pages 4-7 for the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.

- 2 -

BLACKROCK, INC.

2016 QUARTERLY INFORMATION

(In millions, except per share amounts), (Unaudited)


Year Ended December 31, 2016

Quarter Ended	March 31						June 30						September 30						December 31

	Recast						Recast						Recast						Recast
	for New			Previously			for New			Previously			for New			Previously			for New			Previously
	Standard			Reported			Standard			Reported			Standard			Reported			Standard			Reported

Revenue
Investment advisory, administration fees and securities lending revenue	$	2,350		$	2,359		$	2,482		$	2,489		$	2,540		$	2,546		$	2,476		$	2,486
Investment advisory performance fees		34			34			74			74			58			58			129			129
Technology and risk management revenue		139			141			147			146			149			152			153			156
Distribution fees		298			11			308			11			304			10			288			9
Advisory and other revenue		73			79			81			84			69			71			109			110
Total revenue		2,894			2,624			3,092			2,804			3,120			2,837			3,155			2,890

Expense
Employee compensation and benefits		947			947			976			977			968			969			987			987
Distribution and servicing costs		388			97			412			109			414			114			394			109
Amortization of deferred sales commissions		-			10			-			9			-			8			-			7
Direct fund expense		186			188			193			195			198			200			180			183
General and administration		311			318			311			316			308			312			348			355
Restructuring charge		76			76			-			-			-			-			-			-
Amortization of intangible assets		25			25			25			25			25			25			24			24
Total expense		1,933			1,661			1,917			1,631			1,913			1,628			1,933			1,665

Operating income		961			963			1,175			1,173			1,207			1,209			1,222			1,225

Total nonoperating income (expense)		(48	)		(48	)		(25	)		(25	)		1			1			(38	)		(38	)
Income before income taxes		913			915			1,150			1,148			1,208			1,210			1,184			1,187
Income tax expense (benefit)		267			268			354			353			333			333			335			336
Net income		646			647			796			795			875			877			849			851
Less:
Net income (loss) attributable to noncontrolling interests		(10	)		(10	)		6			6			2			2			-			-
Net income attributable to BlackRock, Inc.	$	656		$	657		$	790		$	789		$	873		$	875		$	849		$	851

Earnings per share attributable to BlackRock, Inc. common stockholders
Basic	$	3.97		$	3.97		$	4.79		$	4.79		$	5.32		$	5.33		$	5.19		$	5.21
Diluted	$	3.92		$	3.92		$	4.74		$	4.73		$	5.25		$	5.26		$	5.12		$	5.13

Supplemental information:

GAAP:
Operating margin		33.2	%		36.7	%		38.0	%		41.8	%		38.7	%		42.6	%		38.7	%		42.4	%
As adjusted:
Operating income (1)	$	1,045		$	1,047		$	1,181		$	1,179		$	1,214		$	1,216		$	1,229		$	1,232
Operating margin (1)		41.7	%		41.6	%		44.1	%		43.9	%		44.9	%		44.8	%		44.5	%		44.4	%
Net income attributable to BlackRock, Inc. (3)	$	710		$	711		$	798		$	797		$	852		$	854		$	850		$	852
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4)	$	4.24		$	4.25		$	4.79		$	4.78		$	5.12		$	5.14		$	5.12		$	5.14

See pages 4-7 for the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.

- 3 -

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF U.S. GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED

	2017						2016
	Recast						Recast
	for New			Previously			for New			Previously
(in millions), (unaudited)	Standard			Reported			Standard			Reported
Operating income, GAAP basis	$	5,254		$	5,272		$	4,565		$	4,570
Non-GAAP expense adjustments:
Restructuring charge		-			-			76			76
PNC LTIP funding obligation		15			15			28			28
Operating income, as adjusted	$	5,269		$	5,287		$	4,669		$	4,674
Revenue, GAAP basis	$	13,600		$	12,491		$	12,261		$	11,155
Non-GAAP adjustments:
Distribution and servicing costs		(1,663	)		(492	)		(1,608	)		(429	)
Amortization of deferred sales commissions		-			(17	)		-			(34	)
Revenue used for operating margin measurement	$	11,937		$	11,982		$	10,653		$	10,692
Operating margin, GAAP basis		38.6	%		42.2	%		37.2	%		41.0	%
Operating margin, as adjusted		44.1	%		44.1	%		43.8	%		43.7	%

See note (1) on page 7 for more information on as adjusted items.

RECONCILIATION OF U.S. GAAP COMPENSATION AND BENEFITS EXPENSE-TO-REVENUE RATIO TO COMPENSATION AND BENEFITS EXPENSE-TO-REVENUE RATIO, AS ADJUSTED

	2017						2016
				Ratios Based						Ratios Based
	Recast			on Previously			Recast			on Previously
	for New			Reported			for New			Reported
(in millions), (unaudited)	Standard			Amounts			Standard			Amounts
Employee compensation and benefits, GAAP basis	$	4,253		$	4,255		$	3,878		$	3,880
Less Non-GAAP expense adjustment:
PNC LTIP funding obligation		15			15			28			28
Employee compensation and benefits, as adjusted	$	4,238		$	4,240		$	3,850		$	3,852
Revenue, GAAP basis	$	13,600		$	12,491		$	12,261		$	11,155
Non-GAAP adjustments:
Distribution and servicing costs		(1,663	)					(1,608	)
Amortization of deferred sales commissions		-						-
Revenue used for operating margin measurement	$	11,937					$	10,653
Compensation and benefits expense-to-revenue ratio, GAAP basis		31.3	%		34.1	%		31.6	%		34.8	%
Compensation and benefits expense-to-revenue ratio, as adjusted		35.5	%		33.9	%		36.1	%		34.5	%

See note (2) on page 7 for more information on as adjusted items.

RECONCILIATION OF U.S. GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED

	2017						2016
	Recast						Recast
	for New			Previously			for New			Previously
(in millions, except per share data), (unaudited)	Standard			Reported			Standard			Reported
Net income attributable to BlackRock, Inc., GAAP basis	$	4,952		$	4,970		$	3,168		$	3,172
Non-GAAP adjustments:
Restructuring charge (including $23 tax benefit)		-			-			53			53
PNC LTIP funding obligation, net of tax		11			11			19			19
The Tax Cuts and Jobs Act:
Deferred tax revaluation (noncash)		(1,758	)		(1,758	)		-			-
Deemed repatriation tax		477			477			-			-
Other income tax matters		16			16			(30	)		(30	)
Net income attributable to BlackRock, Inc., as adjusted	$	3,698		$	3,716		$	3,210		$	3,214
Diluted weighted-average common shares outstanding		164.4			164.4			166.6			166.6
Diluted earnings per common share, GAAP basis	$	30.12		$	30.23		$	19.02		$	19.04
Diluted earnings per common share, as adjusted	$	22.49		$	22.60		$	19.27		$	19.29

See notes (3) and (4) on page 7 for more information on as adjusted items.

- 4 -


RECONCILIATION OF 2017 U.S. GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED
Year Ended December 31, 2017

Quarter Ended	March 31						June 30						September 30						December 31
	Recast						Recast						Recast						Recast
	for New			Previously			for New			Previously			for New			Previously			for New			Previously
(in millions), (unaudited)	Standard			Reported			Standard			Reported			Standard			Reported			Standard			Reported
Operating income, GAAP basis	$	1,143		$	1,147		$	1,237		$	1,242		$	1,389		$	1,394		$	1,485		$	1,489
Non-GAAP expense adjustments:
PNC LTIP funding obligation		4			4			4			4			4			4			3			3
Operating income, as adjusted	$	1,147		$	1,151		$	1,241		$	1,246		$	1,393		$	1,398		$	1,488		$	1,492
Revenue, GAAP basis	$	3,092		$	2,824		$	3,236		$	2,965		$	3,508		$	3,233		$	3,764		$	3,469
Non-GAAP adjustments:
Distribution and servicing costs		(401	)		(117	)		(410	)		(121	)		(419	)		(123	)		(433	)		(131	)
Amortization of deferred sales commissions		-			(5	)		-			(4	)		-			(4	)		-			(4	)
Revenue used for operating margin measurement	$	2,691		$	2,702		$	2,826		$	2,840		$	3,089		$	3,106		$	3,331		$	3,334
Operating margin, GAAP basis		37.0	%		40.6	%		38.2	%		41.9	%		39.6	%		43.1	%		39.5	%		42.9	%
Operating margin, as adjusted		42.6	%		42.6	%		43.9	%		43.9	%		45.1	%		45.0	%		44.7	%		44.8	%

See note (1) on page 7 for more information on as adjusted items.

RECONCILIATION OF 2017 U.S. GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
Year Ended December 31, 2017

Quarter Ended	March 31						June 30						September 30						December 31
	Recast						Recast						Recast						Recast
	for New			Previously			for New			Previously			for New			Previously			for New			Previously
(in millions, except for per share data), (unaudited)	Standard			Reported			Standard			Reported			Standard			Reported			Standard			Reported
Net income attributable to BlackRock, Inc., GAAP basis	$	859		$	862		$	854		$	857		$	944		$	947		$	2,295		$	2,304
Non-GAAP adjustments:
PNC LTIP funding obligation, net of tax		3			3			3			3			3			3			2			2
The Tax Cuts and Jobs Act:
Deferred tax revaluation (noncash)		-			-			-			-			-			-			(1,758	)		(1,758	)
Deemed repatriation tax		-			-			-			-			-			-			477			477
Other income tax matters		-			-			-			-			19			19			(3	)		(3	)
Net income attributable to BlackRock, Inc., as adjusted	$	862		$	865		$	857		$	860		$	966		$	969		$	1,013		$	1,022
Diluted weighted-average common shares outstanding		164.9			164.9			164.1			164.1			163.8			163.8			163.8			163.8
Diluted earnings per common share, GAAP basis	$	5.21		$	5.23		$	5.20		$	5.22		$	5.76		$	5.78		$	14.01		$	14.07
Diluted earnings per common share, as adjusted	$	5.23		$	5.25		$	5.22		$	5.24		$	5.90		$	5.92		$	6.19		$	6.24

See notes (3) and (4) on page 7 for more information on as adjusted items.

- 5 -


RECONCILIATION OF 2016 U.S. GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED
Year Ended December 31, 2016

Quarter Ended	March 31						June 30						September 30						December 31
	Recast						Recast						Recast						Recast
	for New			Previously			for New			Previously			for New			Previously			for New			Previously
(in millions), (unaudited)	Standard			Reported			Standard			Reported			Standard			Reported			Standard			Reported
Operating income, GAAP basis	$	961		$	963		$	1,175		$	1,173		$	1,207		$	1,209		$	1,222		$	1,225
Non-GAAP expense adjustments:
Restructuring charge		76			76			-			-			-			-			-			-
PNC LTIP funding obligation		8			8			6			6			7			7			7			7
Operating income, as adjusted	$	1,045		$	1,047		$	1,181		$	1,179		$	1,214		$	1,216		$	1,229		$	1,232
Revenue, GAAP basis	$	2,894		$	2,624		$	3,092		$	2,804		$	3,120		$	2,837		$	3,155		$	2,890
Non-GAAP adjustments:
Distribution and servicing costs		(388	)		(97	)		(412	)		(109	)		(414	)		(114	)		(394	)		(109	)
Amortization of deferred sales commissions		-			(10	)		-			(9	)		-			(8	)		-			(7	)
Revenue used for operating margin measurement	$	2,506		$	2,517		$	2,680		$	2,686		$	2,706		$	2,715		$	2,761		$	2,774
Operating margin, GAAP basis		33.2	%		36.7	%		38.0	%		41.8	%		38.7	%		42.6	%		38.7	%		42.4	%
Operating margin, as adjusted		41.7	%		41.6	%		44.1	%		43.9	%		44.9	%		44.8	%		44.5	%		44.4	%

See note (1) on page 7 for more information on as adjusted items.

RECONCILIATION OF 2016 U.S. GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
Year Ended December 31, 2016

Quarter Ended	March 31						June 30						September 30						December 31
	Recast						Recast						Recast						Recast
	for New			Previously			for New			Previously			for New			Previously			for New			Previously
(in millions, except for per share data), (unaudited)	Standard			Reported			Standard			Reported			Standard			Reported			Standard			Reported
Net income attributable to BlackRock, Inc., GAAP basis	$	656		$	657		$	790		$	789		$	873		$	875		$	849		$	851
Non-GAAP adjustments:
Restructuring charge (including $23 tax benefit)		53			53			-			-			-			-			-			-
PNC LTIP funding obligation, net of tax		5			5			4			4			5			5			5			5
Other income tax matters		(4	)		(4	)		4			4			(26	)		(26	)		(4	)		(4	)
Net income attributable to BlackRock, Inc., as adjusted	$	710		$	711		$	798		$	797		$	852		$	854		$	850		$	852
Diluted weighted-average common shares outstanding		167.4			167.4			166.6			166.6			166.3			166.3			165.9			165.9
Diluted earnings per common share, GAAP basis	$	3.92		$	3.92		$	4.74		$	4.73		$	5.25		$	5.26		$	5.12		$	5.13
Diluted earnings per common share, as adjusted	$	4.24		$	4.25		$	4.79		$	4.78		$	5.12		$	5.14		$	5.12		$	5.14

See notes (3) and (4) on page 7 for more information on as adjusted items.

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NOTES TO NON-GAAP FINANCIAL MEASURES

(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 considers them to be helpful, for both management and investors, in evaluating 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. Non-GAAP measures may not be comparable to other similarly titled measures of other companies.

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 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. 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 PNC has been excluded because it ultimately does not impact BlackRock’s book value. In 2016, a restructuring charge primarily comprised of severance and accelerated amortization expense of previously granted deferred compensation awards has been excluded to provide an analysis of BlackRock’s ongoing operations and to ensure comparability among periods presented.

•

Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Company’s products. 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) Compensation and benefits expense-to-revenue ratio, as adjusted:

Management believes compensation and benefits expense-to-revenue ratio, as adjusted, is an effective indicator of BlackRock’s financial performance over time and, therefore, provides useful disclosure to investors.

•

Employee compensation and benefits, as adjusted, includes a non-GAAP expense adjustment. The portion of compensation expense associated with certain LTIP funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately does not impact BlackRock’s book value.

•

The compensation and benefits expense-to-revenue ratio, as adjusted, that is derived from previously reported amounts is equal to Employee compensation and benefits, as adjusted, divided by Revenue, GAAP basis. Due to the adoption of the new revenue recognition standard, the Company’s compensation and benefits expense-to-revenue ratio, as adjusted, is presently equal to Employee compensation and benefits, as adjusted, divided by Revenue used for operating margin. Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Company’s products.

(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. The noncash deferred tax revaluation benefit of $1,758 million and the other income tax matters were primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill. These 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. A deemed repatriation tax expense of $477 million has been excluded from the 2017 as adjusted results due to the one-time nature and to ensure comparability among periods presented.

Per share amounts reflect net income attributable to BlackRock, Inc., 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.

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BlackRock Inc. - FORM 8-K - EX-99.1 - BLACKROCK'S FINANCIAL INFORMATION RECAST FOR THE NEW REVENUE RECOGNITION STANDAR - March 22, 2018

Attached files

BlackRock Inc. Reports