BlackRock Inc. - FORM 8-K - EX-99.2 - THIRD QUARTER 2010 EARNINGS - PRESS RELEASE SUPPLEMENT

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8-K - FORM 8-K - BlackRock Inc.	d8k.htm
EX-99.1 - PRESS RELEASE - BlackRock Inc.	dex991.htm

Q3 2010 Earnings

Press Release Supplement

20 October 2010

Exhibit 99.2

$307

$302

$400

$561

$727

$741

$737

2009

2010

$463

$469

$379

$110

$239

$293

$537

Strong financial performance marked by record EPS

$0.81

$2.40

$2.37

$1.75

$2.75

$2.39

$2.10

2009

2010

Operating and Net Income, as Adjusted

Diluted Earnings Per Share, as Adjusted

Reconciliation between GAAP and as Adjusted is provided in the appendix

Operating Income

Net Income

37.4%

38.7%

36.8%

38.9%

38.8%

38.4%

2007

2008

2009

Pro Forma

2010

While operating margins appear flat to reported BLK standalone results, margins actually have expanded by approximately

1.9 points YTD versus 2009 BLK/BGI ProForma

38.7% YTD

We have expanded margins while investing in the business

Operating Margins, as Adjusted

For

further

information

and

reconciliation

between

GAAP

and

Adjusted,

see

note

(a)

the

current

earnings

release

well

previously

filed

Forms

10-K,

10-Q

and

8-K’s

Equity markets have been volatile

Dow Jones

Q2 2010 Spot to Spot

Q3 2010 Spot to Spot

Q2-10 Average: 10,565

Q3-10 Average: 10,390

6/30

7/31

8/31

Q3-09 Average: 9,221

Q3 2009 Spot to Spot

9/30 3/31

4/30

5/31

6/30

7/31

9/30

Equity

markets

2010

were

lower

average

than

2010,

but

higher

than

year

ago

6,000

7,000

8,000

9,000

10,000

11,000

12,000

8/31

Improving operating & non-operating results

$2.75

$2.37

$0.23

$0.15

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Q2-10 EPS

Operating EPS

Non-Operating EPS

Q3-10 EPS

$0.38

Increasing EPS

Favorable tax rulings and the resolution of certain tax matters resulted in a YTD tax rate of 33.5% on an as adjusted basis.

The Q3 EPS impact of the lower tax rate related to the first 6 months was $0.11.

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

Strong investment performance drives revenue growth

$2,092

$2,032

$64

($13)

Q2-10

Performance Fees

Other Revenue

Base Fees

BRS & Advisory

Q3-10

$60 million

Decreasing Revenue

Increasing Revenue

86%

Base Fees

Performance Fees

BRS and Advisory

Other Revenue

$2.09 billion

Q3-10 Total Revenue

Q3-10 Compared to Q2-10

$1,800

$2,000

$2,200

Base fees stable despite lower average markets

15%

10%

28%

25%

Active FI

Index FI

Active Equity

Index Equity

Multi-Asset

Alternatives

Cash

Q3-10 Base Fees

Q3-10 Compared to Q2-10

$1.79 billion

$1,600

$1,800

$2,000

$1,792

$1,794

$15

($18)

($17)

Q2-10

Index FI

Active FI

Multi-Asset

Cash

Alternatives

Index

Equity

Active Equity

Q3-10

Decreasing Base Fees

Increasing Base Fees

$2 million

$1,291

$1,355

$17

$52

($14)

($1)

Q2-10

G&A

Deferred

Commissions

Comp &

Benefits

Fund Launch

Costs

Distribution &

Svcing

Direct Fund

Exp

Q3-10

Expense increases linked to higher AUM and revenue

AUM / Revenue related

Increasing Expenses

Decreasing Expenses

55%

23%

Employee Comp & Benefits

Distribution & Servicing Costs

Amort. of Deferred Sales Commissions

Direct Fund Expenses

General & Administration

Amortization of Intangibles

$1.36 billion

Q3-10 Expense, as Adjusted, by Category

Q3-10 Compared to Q2-10

For further information and reconciliation between GAAP and as Adjusted, see note (a) in the current earnings release

$1,100

$1,200

$1,300

$1,400

Substantial free cash flow

To be reinvested in the business and available for dividends

$3.00

$3.12

$2.68

$1.68

$1.20

$1.00

$0.80

51%

48%

53%

56%

50%

64%

83%

33%

2010 YTD

2009

2008

2007

2006

2005

2004

2003*

Dividend

Payout Ratio

2010 YTD Share Repurchase = 0.9 million shares

* 2003 dividend has been annualized

Payout ratio = (dividends + share repurchases) / GAAP net income

Appendix

For further information and reconciliation between GAAP and as Adjusted, see note (a) in the current earnings release as well as previously filed Form 10-Q’s

$737

$400

$302

$307

$561

$727

$741

Operating income –

GAAP and As Adjusted

$271

$261

$357

$389

$654

$697

$707

2009

2010

Operating Income ($ in millions)

Non-GAAP Adjustments ($ in millions)

$30

$44

$73

$172

$43

$41

$36

2009

2010

GAAP

As Adjusted

Non-GAAP adjustments include BGI transaction / integration costs, PNC LTIP funding obligation, Merrill Lynch

compensation contribution, Restructuring, and Compensation related to appreciation (depreciation) on deferred

compensation plans

$463

$469

$379

$110

$239

$293

$537

$218

$317

$256

$423

$432

$551

$84

2009

2010

Net income –

GAAP and As Adjusted

$31

$46

$123

($14)

$26

$21

($24)

2009

2010

Net Income ($ in millions)

Non-GAAP Adjustments ($ in millions)

Non-GAAP adjustments include BGI transaction / integration costs, PNC LTIP funding obligation, Merrill Lynch

compensation contribution, Restructuring, and Tax law changes

GAAP

As Adjusted

For further information and reconciliation between GAAP and as Adjusted, see notes (c) through (d) in the current earnings release as well as previously filed Form 10-Q’s

Forward looking statements

This presentation, 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” or similar expressions.

BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and

uncertainties, which change over time. Forward-looking statements speak only as of the date they are made,

and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results

could differ materially from those anticipated in forward-looking statements and future results could differ

materially from historical performance.

Forward looking statements

In addition to risk factors previously disclosed in BlackRock’s Securities and Exchange Commission reports and

those identified elsewhere in this presentation 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 capital improvement projects; (6) the impact of future acquisitions

or divestitures; (7) the unfavorable resolution of legal proceedings; (8) the extent and timing of any share

repurchases; (9) the impact, extent and timing of technological changes and the adequacy of intellectual property

protection; (10) the impact of legislative and regulatory actions and reforms, including the recently approved Dodd-

Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of

government agencies relating to BlackRock, Barclays, Bank of America, Merrill Lynch or PNC; (11) terrorist

activities and international hostilities, which may adversely affect the general economy, domestic and local financial

and capital markets, specific industries or BlackRock; (12) the ability to attract and retain highly talented

professionals; (13) fluctuations in the carrying value of BlackRock’s economic investments; (14) the impact of

changes to tax legislation and, generally, the tax position of the Company; (15) BlackRock’s success in maintaining

the distribution of its products; (16) the impact of BlackRock electing to provide support to its products from time to

time; (17) the impact of problems at other financial institutions or the failure or negative performance of products at

other financial institutions; and (18) the ability of BlackRock to integrate the operations of BGI.

BlackRock Inc. - FORM 8-K - EX-99.2 - THIRD QUARTER 2010 EARNINGS - PRESS RELEASE SUPPLEMENT - October 20, 2010

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