Attached files
file | filename |
---|---|
8-K - FORM 8-K - BlackRock Inc. | d50688d8k.htm |
EX-99.2 - SECOND QUARTER 2015 EARNINGS - EARNINGS RELEASE SUPPLEMENT - BlackRock Inc. | d50688dex992.htm |
Exhibit 99.1
Tom Wojcik, Investor Relations | Brian Beades, Media Relations | |||
212.810.8127 | 212.810.5596 |
BlackRock Reports Second Quarter 2015 Diluted EPS of $4.84, or $4.96 as adjusted
| 5% revenue growth from the second quarter of 2014 driven by growth in base fees |
| 10% operating income growth from the second quarter of 2014 |
| 3% AUM growth from the second quarter of 2014 |
| $7.3 billion of long-term net outflows for the second quarter of 2015 |
| $23.6 billion of active and iShares net inflows drove organic base fee growth, offsetting the impact of $30.9 billion of low-fee non-ETF index net outflows |
| Consistent capital management with $275 million of quarterly share repurchases |
FINANCIAL RESULTS
(in millions, except per share data) |
Q2 2015 |
Q2 2014 |
Change | Q1 2015 |
Change | Six Months Ended June 30, | ||||||||||||||||||||||||||
2015 | 2014 | Change | ||||||||||||||||||||||||||||||
AUM |
$ | 4,721,294 | $ | 4,593,612 | 3 | % | $ | 4,774,192 | (1 | %) | $ | 4,721,294 | $ | 4,593,612 | 3 | % | ||||||||||||||||
GAAP basis: |
||||||||||||||||||||||||||||||||
Revenue |
$ | 2,905 | $ | 2,778 | 5 | % | $ | 2,723 | 7 | % | $ | 5,628 | $ | 5,448 | 3 | % | ||||||||||||||||
Operating income |
$ | 1,238 | $ | 1,122 | 10 | % | $ | 1,067 | 16 | % | $ | 2,305 | $ | 2,173 | 6 | % | ||||||||||||||||
Operating margin |
42.6 | % | 40.4 | % | 220 bps | 39.2 | % | 340 bps | 41.0 | % | 39.9 | % | 110 bps | |||||||||||||||||||
Net income(1) |
$ | 819 | $ | 808 | 1 | % | $ | 822 | 0 | % | $ | 1,641 | $ | 1,564 | 5 | % | ||||||||||||||||
Diluted EPS |
$ | 4.84 | $ | 4.72 | 3 | % | $ | 4.84 | 0 | % | $ | 9.69 | $ | 9.12 | 6 | % | ||||||||||||||||
Weighted average diluted shares |
169.1 | 171.2 | (1 | %) | 169.7 | 0 | % | 169.4 | 171.5 | (1 | %) | |||||||||||||||||||||
As Adjusted: |
||||||||||||||||||||||||||||||||
Operating income(2) |
$ | 1,248 | $ | 1,133 | 10 | % | $ | 1,077 | 16 | % | $ | 2,325 | $ | 2,195 | 6 | % | ||||||||||||||||
Operating margin(2) |
44.9 | % | 42.4 | % | 250 bps | 41.2 | % | 370 bps | 43.2 | % | 41.9 | % | 130 bps | |||||||||||||||||||
Net income(1) (2) |
$ | 838 | $ | 837 | 0 | % | $ | 830 | 1 | % | $ | 1,668 | $ | 1,599 | 4 | % | ||||||||||||||||
Diluted EPS(2) |
$ | 4.96 | $ | 4.89 | 1 | % | $ | 4.89 | 1 | % | $ | 9.85 | $ | 9.32 | 6 | % |
(1) | Net income represents net income attributable to BlackRock, Inc. |
(2) | See notes (1) through (4) to the Condensed Consolidated Statements of Income and Supplemental Information on pages 13 through 15 for more information on as adjusted items and the reconciliation to GAAP. |
New York, July 15, 2015 BlackRock, Inc. (NYSE:BLK) today reported financial results for the three and six months ended June 30, 2015.
Although continued market volatility impacted asset flows in the second quarter, BlackRocks diversified business model drove strong financial results, with revenue up 5% and operating income up 10% year-over-year commented Laurence D. Fink, Chairman and CEO of BlackRock. BlackRocks unique combination of active and index investment offerings, across all asset classes on a single platform, enables us to provide solutions for our clients evolving needs. Despite the impact of more than $30 billion of low-fee institutional index outflows, net inflows into higher-fee active and iShares products drove robust organic base fee growth for the quarter.
Year-to-date, a desire to reallocate and/or address cash needs drove ten of our largest clients to redeem over $40 billion of institutional index equity assets. However, those same clients reinvested across BlackRocks active equity and fixed income, multi-asset and alternatives strategies, resulting in a positive net revenue impact for the firm. This demonstrates the value of the deep, strategic relationships we maintain with our clients and validates the strength of our solutions-oriented business model.
In the face of a challenging quarter for industry flows in US active mutual funds, the strength of BlackRocks franchise positioned us to garner US retail net inflows of $7 billion growing our domestic market share and achieving a top-5 ranking in US retail mutual fund industry flows. Internationally, BlackRock saw more than $3 billion of net inflows and maintained its #1 position in cross-border mutual fund flows year-to-date, driven by strength in European and Asian equities.
Executing on our plan to reinvigorate the performance of our fundamental active equity platform remains critical to our success and, while we still have work to do, we are pleased that 78% and 61% of fundamental active equity assets performed above benchmark or peer median for the one- and three-year periods ended June 30, 2015. Long-term performance in active fixed income and scientific active equities remains strong, with 89% and 95% of assets above benchmark or peer median for the three-year period, respectively.
-1-
BlackRocks global platform and unique product offering across investment styles and asset classes combined with our Aladdin technology platform enable us to deliver solutions for our clients, no matter their near- or long-term goals. This differentiated business model allowed us to produce strong financial performance in the second quarter and positions us well for stable growth in the future. I would like to thank our employees for their ongoing commitment to superior investment performance and client service as we work to create better financial futures for our clients and drive long-term value for our shareholders.
RESULTS BY CLIENT TYPE
(in millions), (unaudited) |
Q2 2015 Net flows |
June 30, 2015 AUM |
Q2 2015 Base Fees(1) |
June 30, 2015 AUM % of Total |
Q2 2015 Base Fees(1) % of Total |
|||||||||||||||
Retail |
$ | 10,765 | $ | 561,062 | $ | 839 | 13 | % | 34 | % | ||||||||||
iShares |
10,850 | 1,075,589 | 884 | 24 | % | 36 | % | |||||||||||||
Institutional: |
||||||||||||||||||||
Active |
2,516 | 975,483 | 483 | 22 | % | 20 | % | |||||||||||||
Index |
(31,434 | ) | 1,824,755 | 252 | 41 | % | 10 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total institutional |
(28,918 | ) | 2,800,238 | 735 | 63 | % | 30 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total long-term |
($ | 7,303 | ) | $ | 4,436,889 | $ | 2,458 | 100 | % | 100 | % | |||||||||
|
|
|
|
|
|
|
|
|
|
RESULTS BY PRODUCT
(in millions), (unaudited) |
Q2 2015 Net flows |
June 30, 2015 AUM |
Q2 2015 Base Fees(1) |
June 30, 2015 AUM % of Total |
Q2 2015 Base Fees(1) % of Total |
|||||||||||||||
Equity |
($ | 27,261 | ) | $ | 2,505,317 | $ | 1,365 | 56 | % | 56 | % | |||||||||
Fixed income |
12,847 | 1,422,434 | 597 | 32 | % | 24 | % | |||||||||||||
Multi-asset |
5,049 | 395,009 | 316 | 9 | % | 13 | % | |||||||||||||
Alternatives |
2,062 | 114,129 | 180 | 3 | % | 7 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total long-term |
($ | 7,303 | ) | $ | 4,436,889 | $ | 2,458 | 100 | % | 100 | % | |||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Base fees include investment advisory, administration fees and securities lending revenue. |
Long-Term Business Highlights
Long-term net inflows of $17.5 billion in the Americas were offset by net outflows of $24.1 billion and $0.7 billion from clients in EMEA and Asia-Pacific, respectively. At June 30, 2015, BlackRock managed 62% of its long-term AUM for investors in the Americas and 38% for clients in EMEA and Asia-Pacific.
A discussion of the Companys net flows by client type for the second quarter of 2015 is presented below.
| Retail long-term net inflows of $10.8 billion included net inflows of $7.4 billion in the United States and $3.4 billion internationally. Net inflows were led by fixed income net inflows of $9.8 billion, which were diversified across exposures, with $2.7 billion of inflows into unconstrained strategies, $1.6 billion into the High Yield suite, and $1.2 billion into Total Return. In equities, European Equities raised $1.5 billion, while multi-asset net inflows were led by $1.6 billion into the Multi-Asset Income fund family. |
| iShares® long-term net inflows of $10.9 billion included equity net inflows of $8.8 billion, driven by demand for international developed market exposures. Fixed income net inflows of $1.5 billion reflected flows into investment grade corporate, U.S. aggregate and emerging markets bonds. |
| Institutional active long-term net inflows of $2.5 billion were led by multi-asset net inflows of $4.4 billion, reflecting solutions-based insurance fundings in the quarter and ongoing demand for the LifePath® target-date suite. Alternatives net inflows of $0.6 billion were led by flows into alternatives solutions and infrastructure, and included the impact of $1.0 billion of capital returned to investors. |
| Institutional index long-term net outflows of $31.4 billion were driven by equity net outflows of $34.6 billion linked to asset allocation, re-balancing and cash needs. |
Cash management AUM decreased 7% to $271.5 billion, driven by seasonal outflows.
Advisory AUM decreased $5.2 billion to $12.9 billion.
-2-
INVESTMENT PERFORMANCE AT JUNE 30, 2015(1)
One-year period | Three-year period | Five-year period | ||||||||||
Fixed Income: |
||||||||||||
Actively managed products above benchmark or peer median |
||||||||||||
Taxable |
71 | % | 89 | % | 91 | % | ||||||
Tax-exempt |
65 | % | 71 | % | 73 | % | ||||||
Index products within or above applicable tolerance |
96 | % | 98 | % | 98 | % | ||||||
Equity: |
||||||||||||
Actively managed products above benchmark or peer median |
||||||||||||
Fundamental |
78 | % | 61 | % | 52 | % | ||||||
Scientific |
85 | % | 95 | % | 96 | % | ||||||
Index products within or above applicable tolerance |
97 | % | 98 | % | 98 | % |
(1) | Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 15 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 15, 2015 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 74398078). 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 15, 2015 and ending at midnight on Wednesday, July 29, 2015. To access the replay of the teleconference, callers from the United States should dial (855) 859-2056 and callers from outside the United States should dial (404) 537-3406 and enter the Conference ID Number 74398078. 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, 2015, BlackRocks AUM was $4.721 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, 2015, the firm had approximately 12,400 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 Companys 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 shares and per share data), (unaudited)
Three Months | ||||||||||||||||||||
Three Months Ended | Ended | |||||||||||||||||||
June 30, | March 31, | |||||||||||||||||||
2015 | 2014 | Change | 2015 | Change | ||||||||||||||||
Revenue |
||||||||||||||||||||
Investment advisory, administration fees and securities lending revenue |
$ | 2,534 | $ | 2,434 | $ | 100 | $ | 2,390 | $ | 144 | ||||||||||
Investment advisory performance fees |
136 | 115 | 21 | 108 | 28 | |||||||||||||||
BlackRock Solutions and advisory |
161 | 146 | 15 | 147 | 14 | |||||||||||||||
Distribution fees |
13 | 18 | (5) | 17 | (4) | |||||||||||||||
Other revenue |
61 | 65 | (4) | 61 | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total revenue |
2,905 | 2,778 | 127 | 2,723 | 182 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Expense |
||||||||||||||||||||
Employee compensation and benefits |
1,012 | 948 | 64 | 981 | 31 | |||||||||||||||
Distribution and servicing costs |
105 | 89 | 16 | 99 | 6 | |||||||||||||||
Amortization of deferred sales commissions |
12 | 14 | (2) | 13 | (1) | |||||||||||||||
Direct fund expense |
191 | 187 | 4 | 189 | 2 | |||||||||||||||
General and administration |
312 | 377 | (65) | 339 | (27) | |||||||||||||||
Amortization of intangible assets |
35 | 41 | (6) | 35 | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total expense |
1,667 | 1,656 | 11 | 1,656 | 11 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income |
1,238 | 1,122 | 116 | 1,067 | 171 | |||||||||||||||
Nonoperating income (expense) |
||||||||||||||||||||
Net gain (loss) on investments |
(6) | 45 | (51) | 59 | (65) | |||||||||||||||
Net gain (loss) on consolidated variable interest entities |
12 | 28 | (16) | 4 | 8 | |||||||||||||||
Interest and dividend income |
5 | 3 | 2 | 4 | 1 | |||||||||||||||
Interest expense |
(52) | (60) | 8 | (51) | (1) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonoperating income (expense) |
(41) | 16 | (57) | 16 | (57) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income before income taxes |
1,197 | 1,138 | 59 | 1,083 | 114 | |||||||||||||||
Income tax expense |
371 | 297 | 74 | 258 | 113 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
826 | 841 | (15) | 825 | 1 | |||||||||||||||
Less: |
||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests |
7 | 33 | (26) | 3 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income attributable to BlackRock, Inc. |
$ | 819 | $ | 808 | $ | 11 | $ | 822 | ($ | 3) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Weighted-average common shares outstanding |
||||||||||||||||||||
Basic |
166,616,558 | 168,712,221 | (2,095,663) | 167,089,037 | (472,479) | |||||||||||||||
Diluted |
169,114,759 | 171,150,153 | (2,035,394) | 169,723,167 | (608,408) | |||||||||||||||
Earnings per share attributable to BlackRock, Inc. common stockholders (4) |
||||||||||||||||||||
Basic |
$ | 4.92 | $ | 4.79 | $ | 0.13 | $ | 4.92 | $ | | ||||||||||
Diluted |
$ | 4.84 | $ | 4.72 | $ | 0.12 | $ | 4.84 | $ | | ||||||||||
Cash dividends declared and paid per share |
$ | 2.18 | $ | 1.93 | $ | 0.25 | $ | 2.18 | $ | | ||||||||||
Supplemental information: |
||||||||||||||||||||
AUM (end of period) |
$ | 4,721,294 | $ | 4,593,612 | $ | 127,682 | $ | 4,774,192 | ($ | 52,898) | ||||||||||
Shares outstanding (end of period) |
166,379,267 | 168,363,315 | (1,984,048) | 167,084,582 | (705,315) | |||||||||||||||
GAAP: |
||||||||||||||||||||
Operating margin |
42.6 | % | 40.4 | % | 220 | bps | 39.2 | % | 340 | bps | ||||||||||
Effective tax rate |
31.2 | % | 26.8 | % | 440 | bps | 23.9 | % | 730 | bps | ||||||||||
As adjusted: |
||||||||||||||||||||
Operating income (1) |
$ | 1,248 | $ | 1,133 | $ | 115 | $ | 1,077 | $ | 171 | ||||||||||
Operating margin (1) |
44.9 | % | 42.4 | % | 250 | bps | 41.2 | % | 370 | bps | ||||||||||
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2) |
($ | 50) | ($ | 20) | ($ | 30) | $ | 11 | ($ | 61) | ||||||||||
Net income attributable to BlackRock, Inc. (3) |
$ | 838 | $ | 837 | $ | 1 | $ | 830 | $ | 8 | ||||||||||
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4) |
$ | 4.96 | $ | 4.89 | $ | 0.07 | $ | 4.89 | $ | 0.07 | ||||||||||
Effective tax rate |
30.1 | % | 24.8 | % | 530 | bps | 23.7 | % | 640 | bps |
Note: During the second quarter of 2015, the Company adopted new accounting guidance on consolidations effective January 1, 2015 using the modified retrospective method. Upon adoption, the Company recorded a change to total nonoperating income (expense) with an equal and offsetting change to noncontrolling interests for the three months ended March 31, 2015. There was no impact to net income attributable to BlackRock, Inc. or to BlackRocks earnings per share.
See pages 13 -15 for the reconciliation to GAAP and notes (1) through (4) 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, | ||||||||||||
2015 | 2014 | Change | ||||||||||
Revenue |
||||||||||||
Investment advisory, administration fees and securities lending revenue |
$ | 4,924 | $ | 4,725 | $ | 199 | ||||||
Investment advisory performance fees |
244 | 273 | (29) | |||||||||
BlackRock Solutions and advisory |
308 | 300 | 8 | |||||||||
Distribution fees |
30 | 37 | (7) | |||||||||
Other revenue |
122 | 113 | 9 | |||||||||
|
|
|
|
|
|
|||||||
Total revenue |
5,628 | 5,448 | 180 | |||||||||
|
|
|
|
|
|
|||||||
Expense |
||||||||||||
Employee compensation and benefits |
1,993 | 1,930 | 63 | |||||||||
Distribution and servicing costs |
204 | 178 | 26 | |||||||||
Amortization of deferred sales commissions |
25 | 29 | (4) | |||||||||
Direct fund expense |
380 | 366 | 14 | |||||||||
General and administration |
651 | 690 | (39) | |||||||||
Amortization of intangible assets |
70 | 82 | (12) | |||||||||
|
|
|
|
|
|
|||||||
Total expense |
3,323 | 3,275 | 48 | |||||||||
|
|
|
|
|
|
|||||||
Operating income |
2,305 | 2,173 | 132 | |||||||||
Nonoperating income (expense) |
||||||||||||
Net gain (loss) on investments |
53 | 121 | (68) | |||||||||
Net gain (loss) on consolidated variable interest entities |
16 | 12 | 4 | |||||||||
Interest and dividend income |
9 | 13 | (4) | |||||||||
Interest expense |
(103) | (113) | 10 | |||||||||
|
|
|
|
|
|
|||||||
Total nonoperating income (expense) |
(25) | 33 | (58) | |||||||||
|
|
|
|
|
|
|||||||
Income before income taxes |
2,280 | 2,206 | 74 | |||||||||
Income tax expense |
629 | 621 | 8 | |||||||||
|
|
|
|
|
|
|||||||
Net income |
1,651 | 1,585 | 66 | |||||||||
Less: |
||||||||||||
Net income (loss) attributable to noncontrolling interests |
10 | 21 | (11) | |||||||||
|
|
|
|
|
|
|||||||
Net income attributable to BlackRock, Inc. |
$ | 1,641 | $ | 1,564 | $ | 77 | ||||||
|
|
|
|
|
|
|||||||
Weighted-average common shares outstanding |
||||||||||||
Basic |
166,851,492 | 168,895,801 | (2,044,309) | |||||||||
Diluted |
169,418,964 | 171,540,018 | (2,121,054) | |||||||||
Earnings per share attributable to BlackRock, Inc. common stockholders (4) |
||||||||||||
Basic |
$ | 9.84 | $ | 9.26 | $ | 0.58 | ||||||
Diluted |
$ | 9.69 | $ | 9.12 | $ | 0.57 | ||||||
Cash dividends declared and paid per share |
$ | 4.36 | $ | 3.86 | $ | 0.50 | ||||||
Supplemental information: |
||||||||||||
AUM (end of period) |
$ | 4,721,294 | $ | 4,593,612 | $ | 127,682 | ||||||
Shares outstanding (end of period) |
166,379,267 | 168,363,315 | (1,984,048) | |||||||||
GAAP: |
||||||||||||
Operating margin |
41.0 | % | 39.9 | % | 110 | bps | ||||||
Effective tax rate |
27.7 | % | 28.4 | % | (70 | bps) | ||||||
As adjusted: |
||||||||||||
Operating income (1) |
$ | 2,325 | $ | 2,195 | $ | 130 | ||||||
Operating margin (1) |
43.2 | % | 41.9 | % | 130 | bps | ||||||
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2) |
($ | 39) | $ | 6 | ($ | 45) | ||||||
Net income attributable to BlackRock, Inc. (3) |
$ | 1,668 | $ | 1,599 | $ | 69 | ||||||
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4) |
$ | 9.85 | $ | 9.32 | $ | 0.53 | ||||||
Effective tax rate |
27.0 | % | 27.4 | % | (40 | bps) |
Note: During the second quarter of 2015, the Company adopted new accounting guidance on consolidations effective January 1, 2015 using the modified retrospective method. Upon adoption, the Company recorded a change to total nonoperating income (expense) with an equal and offsetting change to noncontrolling interests for the three months ended March 31, 2015. There was no impact to net income attributable to BlackRock, Inc. or to BlackRocks earnings per share.
See pages 13 -15 for the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.
-5-
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Current Quarter Component Changes by Client Type and Product
Net | ||||||||||||||||||||||||
March 31, | inflows | June 30, | ||||||||||||||||||||||
2015 | (outflows) | Market change | FX impact (1) | 2015 | Average AUM (2) | |||||||||||||||||||
Retail: |
||||||||||||||||||||||||
Equity |
$ | 201,706 | $ | 300 | ($ | 400 | ) | $ | 1,767 | $ | 203,373 | $ | 205,427 | |||||||||||
Fixed income |
201,405 | 9,802 | (2,688 | ) | 537 | 209,056 | 206,177 | |||||||||||||||||
Multi-asset |
128,402 | 714 | (312 | ) | 384 | 129,188 | 129,864 | |||||||||||||||||
Alternatives |
19,467 | (51 | ) | (47 | ) | 76 | 19,445 | 19,381 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Retail subtotal |
550,980 | 10,765 | (3,447 | ) | 2,764 | 561,062 | 560,849 | |||||||||||||||||
iShares: |
||||||||||||||||||||||||
Equity |
824,336 | 8,808 | (8,833 | ) | 3,746 | 828,057 | 833,952 | |||||||||||||||||
Fixed income |
233,183 | 1,544 | (6,089 | ) | 2,097 | 230,735 | 234,884 | |||||||||||||||||
Multi-asset |
1,772 | 101 | (31 | ) | 2 | 1,844 | 1,833 | |||||||||||||||||
Alternatives |
14,839 | 397 | (329 | ) | 46 | 14,953 | 15,006 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
iShares subtotal |
1,074,130 | 10,850 | (15,282 | ) | 5,891 | 1,075,589 | 1,085,675 | |||||||||||||||||
Institutional: |
||||||||||||||||||||||||
Active: |
||||||||||||||||||||||||
Equity |
128,036 | (1,761 | ) | (518 | ) | 2,275 | 128,032 | 129,512 | ||||||||||||||||
Fixed income |
526,117 | (760 | ) | (12,123 | ) | 4,017 | 517,251 | 524,246 | ||||||||||||||||
Multi-asset |
257,084 | 4,418 | (9,150 | ) | 4,612 | 256,964 | 259,498 | |||||||||||||||||
Alternatives |
73,045 | 619 | (953 | ) | 525 | 73,236 | 73,190 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Active subtotal |
984,282 | 2,516 | (22,744 | ) | 11,429 | 975,483 | 986,446 | |||||||||||||||||
Index: |
||||||||||||||||||||||||
Equity |
1,373,052 | (34,608 | ) | (3,072 | ) | 10,483 | 1,345,855 | 1,379,088 | ||||||||||||||||
Fixed income |
467,775 | 2,261 | (18,642 | ) | 13,998 | 465,392 | 468,699 | |||||||||||||||||
Multi-asset |
8,054 | (184 | ) | (926 | ) | 69 | 7,013 | 7,617 | ||||||||||||||||
Alternatives |
5,324 | 1,097 | (106 | ) | 180 | 6,495 | 5,807 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Index subtotal |
1,854,205 | (31,434 | ) | (22,746 | ) | 24,730 | 1,824,755 | 1,861,211 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Institutional subtotal |
2,838,487 | (28,918 | ) | (45,490 | ) | 36,159 | 2,800,238 | 2,847,657 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Long-term |
4,463,597 | (7,303 | ) | (64,219 | ) | 44,814 | 4,436,889 | $ | 4,494,181 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash management |
292,495 | (23,890 | ) | 26 | 2,875 | 271,506 | ||||||||||||||||||
Advisory (3) |
18,100 | (5,452 | ) | (136 | ) | 387 | 12,899 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 4,774,192 | ($ | 36,645 | ) | ($ | 64,329 | ) | $ | 48,076 | $ | 4,721,294 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
Current Quarter Component Changes by Product (Long-term)
Net | ||||||||||||||||||||||||
March 31, | inflows | June 30, | ||||||||||||||||||||||
2015 | (outflows) | Market change | FX impact (1) | 2015 | Average AUM (2) | |||||||||||||||||||
Equity: |
||||||||||||||||||||||||
Active |
$ | 298,118 | ($ | 2,079 | ) | ($ | 450 | ) | $ | 3,295 | $ | 298,884 | $ | 302,364 | ||||||||||
iShares |
824,336 | 8,808 | (8,833 | ) | 3,746 | 828,057 | 833,952 | |||||||||||||||||
Non-ETF index |
1,404,676 | (33,990 | ) | (3,540 | ) | 11,230 | 1,378,376 | 1,411,663 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Equity subtotal |
2,527,130 | (27,261 | ) | (12,823 | ) | 18,271 | 2,505,317 | 2,547,979 | ||||||||||||||||
Fixed income: |
||||||||||||||||||||||||
Active |
720,094 | 9,089 | (14,621 | ) | 4,291 | 718,853 | 722,831 | |||||||||||||||||
iShares |
233,183 | 1,544 | (6,089 | ) | 2,097 | 230,735 | 234,884 | |||||||||||||||||
Non-ETF index |
475,203 | 2,214 | (18,832 | ) | 14,261 | 472,846 | 476,291 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fixed income subtotal |
1,428,480 | 12,847 | (39,542 | ) | 20,649 | 1,422,434 | 1,434,006 | |||||||||||||||||
Multi-asset |
395,312 | 5,049 | (10,419 | ) | 5,067 | 395,009 | 398,812 | |||||||||||||||||
Alternatives: |
||||||||||||||||||||||||
Core |
89,086 | 1,229 | (1,014 | ) | 653 | 89,954 | 89,582 | |||||||||||||||||
Currency and commodities (4) |
23,589 | 833 | (421 | ) | 174 | 24,175 | 23,802 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Alternatives subtotal |
112,675 | 2,062 | (1,435 | ) | 827 | 114,129 | 113,384 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Long-term |
$ | 4,463,597 | ($ | 7,303 | ) | ($ | 64,219 | ) | $ | 44,814 | $ | 4,436,889 | $ | 4,494,181 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Current Quarter Component Changes by Investment Style (Long-term)
Net | ||||||||||||||||||||||||
March 31, | inflows | June 30, | ||||||||||||||||||||||
2015 | (outflows) | Market change | FX impact (1) | 2015 | Average AUM (2) | |||||||||||||||||||
Active |
$ | 1,496,210 | $ | 12,711 | ($ | 25,533 | ) | $ | 13,183 | $ | 1,496,571 | $ | 1,507,127 | |||||||||||
Index and iShares |
2,967,387 | (20,014 | ) | (38,686 | ) | 31,631 | 2,940,318 | 2,987,054 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Long-term |
$ | 4,463,597 | ($ | 7,303 | ) | ($ | 64,219 | ) | $ | 44,814 | $ | 4,436,889 | $ | 4,494,181 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(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 Changes by Client Type and Product
Net | ||||||||||||||||||||||||||||
December 31, | inflows | June 30, | ||||||||||||||||||||||||||
2014 | (outflows) | Acquisition(1) | Market change | FX impact (2) | 2015 | Average AUM (3) | ||||||||||||||||||||||
Retail: |
||||||||||||||||||||||||||||
Equity |
$ | 200,445 | $ | 631 | $ | | $ | 4,703 | ($ | 2,406 | ) | $ | 203,373 | $ | 203,459 | |||||||||||||
Fixed income |
189,820 | 22,589 | | (1,726 | ) | (1,627 | ) | 209,056 | 200,941 | |||||||||||||||||||
Multi-asset |
125,341 | 2,116 | | 2,113 | (382 | ) | 129,188 | 128,454 | ||||||||||||||||||||
Alternatives |
18,723 | (400 | ) | 1,293 | 249 | (420 | ) | 19,445 | 18,963 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Retail subtotal |
534,329 | 24,936 | 1,293 | 5,339 | (4,835 | ) | 561,062 | 551,817 | ||||||||||||||||||||
iShares: |
||||||||||||||||||||||||||||
Equity |
790,067 | 25,533 | | 19,366 | (6,909 | ) | 828,057 | 818,378 | ||||||||||||||||||||
Fixed income |
217,671 | 20,138 | | (3,498 | ) | (3,576 | ) | 230,735 | 231,196 | |||||||||||||||||||
Multi-asset |
1,773 | 83 | | (1 | ) | (11 | ) | 1,844 | 1,838 | |||||||||||||||||||
Alternatives |
14,717 | 573 | | (280 | ) | (57 | ) | 14,953 | 15,000 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
iShares subtotal |
1,024,228 | 46,327 | | 15,587 | (10,553 | ) | 1,075,589 | 1,066,412 | ||||||||||||||||||||
Institutional: |
||||||||||||||||||||||||||||
Active: |
||||||||||||||||||||||||||||
Equity |
125,143 | (1,593 | ) | | 5,688 | (1,206 | ) | 128,032 | 128,094 | |||||||||||||||||||
Fixed income |
518,590 | 4,964 | | (2,577 | ) | (3,726 | ) | 517,251 | 524,816 | |||||||||||||||||||
Multi-asset |
242,913 | 16,135 | | 3,400 | (5,484 | ) | 256,964 | 254,528 | ||||||||||||||||||||
Alternatives |
72,514 | 995 | | 140 | (413 | ) | 73,236 | 72,950 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Active subtotal |
959,160 | 20,501 | | 6,651 | (10,829 | ) | 975,483 | 980,388 | ||||||||||||||||||||
Index: |
||||||||||||||||||||||||||||
Equity |
1,335,456 | (30,891 | ) | | 50,287 | (8,997 | ) | 1,345,855 | 1,366,131 | |||||||||||||||||||
Fixed income |
467,572 | 1,444 | | (2,458 | ) | (1,166 | ) | 465,392 | 469,534 | |||||||||||||||||||
Multi-asset |
7,810 | (493 | ) | | (108 | ) | (196 | ) | 7,013 | 7,732 | ||||||||||||||||||
Alternatives |
5,286 | 1,312 | | (133 | ) | 30 | 6,495 | 5,620 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Index subtotal |
1,816,124 | (28,628 | ) | | 47,588 | (10,329 | ) | 1,824,755 | 1,849,017 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Institutional subtotal |
2,775,284 | (8,127 | ) | | 54,239 | (21,158 | ) | 2,800,238 | 2,829,406 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term |
4,333,841 | 63,136 | 1,293 | 75,165 | (36,546 | ) | 4,436,889 | $ | 4,447,634 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash management |
296,353 | (23,329 | ) | | (15 | ) | (1,503 | ) | 271,506 | |||||||||||||||||||
Advisory (4) |
21,701 | (7,749 | ) | | 391 | (1,444 | ) | 12,899 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
$ | 4,651,895 | $ | 32,058 | $ | 1,293 | $ | 75,541 | ($ | 39,493 | ) | $ | 4,721,294 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date Component Changes by Product (Long-term)
Net | ||||||||||||||||||||||||||||
December 31, | inflows | June 30, | ||||||||||||||||||||||||||
2014 | (outflows) | Acquisition(1) | Market change | FX impact (2) | 2015 | Average AUM (3) | ||||||||||||||||||||||
Equity: |
||||||||||||||||||||||||||||
Active |
$ | 292,802 | ($ | 1,533 | ) | $ | | $ | 10,995 | ($ | 3,380 | ) | $ | 298,884 | $ | 298,932 | ||||||||||||
iShares |
790,067 | 25,533 | | 19,366 | (6,909 | ) | 828,057 | 818,378 | ||||||||||||||||||||
Non-ETF index |
1,368,242 | (30,320 | ) | | 49,683 | (9,229 | ) | 1,378,376 | 1,398,752 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Equity subtotal |
2,451,111 | (6,320 | ) | | 80,044 | (19,518 | ) | 2,505,317 | 2,516,062 | |||||||||||||||||||
Fixed income: |
||||||||||||||||||||||||||||
Active |
701,324 | 26,944 | | (4,174 | ) | (5,241 | ) | 718,853 | 718,356 | |||||||||||||||||||
iShares |
217,671 | 20,138 | | (3,498 | ) | (3,576 | ) | 230,735 | 231,196 | |||||||||||||||||||
Non-ETF index |
474,658 | 2,053 | | (2,587 | ) | (1,278 | ) | 472,846 | 476,935 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Fixed income subtotal |
1,393,653 | 49,135 | | (10,259 | ) | (10,095 | ) | 1,422,434 | 1,426,487 | |||||||||||||||||||
Multi-asset |
377,837 | 17,841 | | 5,404 | (6,073 | ) | 395,009 | 392,552 | ||||||||||||||||||||
Alternatives: |
||||||||||||||||||||||||||||
Core |
88,006 | 1,028 | 1,293 | 411 | (784 | ) | 89,954 | 88,784 | ||||||||||||||||||||
Currency and commodities (5) |
23,234 | 1,452 | | (435 | ) | (76 | ) | 24,175 | 23,749 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Alternatives subtotal |
111,240 | 2,480 | 1,293 | (24 | ) | (860 | ) | 114,129 | 112,533 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term |
$ | 4,333,841 | $ | 63,136 | $ | 1,293 | $ | 75,165 | ($ | 36,546 | ) | $ | 4,436,889 | $ | 4,447,634 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date Component Changes by Investment Style (Long-term)
Net | ||||||||||||||||||||||||||||
December 31, | inflows | June 30, | ||||||||||||||||||||||||||
2014 | (outflows) | Acquisition(1) | Market change | FX impact (2) | 2015 | Average AUM (3) | ||||||||||||||||||||||
Active |
$ | 1,453,613 | $ | 44,256 | $ | 1,293 | $ | 12,730 | ($ | 15,321 | ) | $ | 1,496,571 | $ | 1,492,182 | |||||||||||||
Index and iShares |
2,880,228 | 18,880 | | 62,435 | (21,225 | ) | 2,940,318 | 2,955,452 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term |
$ | 4,333,841 | $ | 63,136 | $ | 1,293 | $ | 75,165 | ($ | 36,546 | ) | $ | 4,436,889 | $ | 4,447,634 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Amount represents $1.3 billion of AUM acquired in the acquisition of certain assets of BlackRock Kelso Capital Advisors LLC in March 2015. |
(2) | Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. |
(3) | Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing seven months. |
(4) | Advisory AUM represents long-term portfolio liquidation assignments. |
(5) | Amounts include commodity iShares. |
-7-
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Year-over-Year Component Changes by Client Type and Product
Net | ||||||||||||||||||||||||||||
June 30, | inflows | June 30, | ||||||||||||||||||||||||||
2014 | (outflows) | Acquisition(1) | Market change | FX impact (2) | 2015 | Average AUM (3) | ||||||||||||||||||||||
Retail: |
||||||||||||||||||||||||||||
Equity |
$ | 216,469 | ($ | 1,493 | ) | $ | | ($ | 2,188 | ) | ($ | 9,415 | ) | $ | 203,373 | $ | 206,230 | |||||||||||
Fixed income |
172,672 | 43,394 | | (2,909 | ) | (4,101 | ) | 209,056 | 190,498 | |||||||||||||||||||
Multi-asset |
126,392 | 10,813 | | (6,433 | ) | (1,584 | ) | 129,188 | 127,589 | |||||||||||||||||||
Alternatives |
18,969 | 36 | 1,293 | 210 | (1,063 | ) | 19,445 | 19,010 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Retail subtotal |
534,502 | 52,750 | 1,293 | (11,320 | ) | (16,163 | ) | 561,062 | 543,327 | |||||||||||||||||||
iShares: |
||||||||||||||||||||||||||||
Equity |
774,053 | 63,589 | | 11,662 | (21,247 | ) | 828,057 | 798,383 | ||||||||||||||||||||
Fixed income |
200,519 | 44,049 | | (4,133 | ) | (9,700 | ) | 230,735 | 219,806 | |||||||||||||||||||
Multi-asset |
1,624 | 278 | | (33 | ) | (25 | ) | 1,844 | 1,731 | |||||||||||||||||||
Alternatives |
17,636 | 810 | | (3,259 | ) | (234 | ) | 14,953 | 15,659 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
iShares subtotal |
993,832 | 108,726 | | 4,237 | (31,206 | ) | 1,075,589 | 1,035,579 | ||||||||||||||||||||
Institutional: |
||||||||||||||||||||||||||||
Active: |
||||||||||||||||||||||||||||
Equity |
133,780 | (7,694 | ) | | 9,369 | (7,423 | ) | 128,032 | 129,195 | |||||||||||||||||||
Fixed income |
523,665 | 4,191 | | 9,904 | (20,509 | ) | 517,251 | 522,187 | ||||||||||||||||||||
Multi-asset |
239,207 | 23,863 | | 11,891 | (17,997 | ) | 256,964 | 248,591 | ||||||||||||||||||||
Alternatives |
73,781 | 1,319 | | 548 | (2,412 | ) | 73,236 | 72,828 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Active subtotal |
970,433 | 21,679 | | 31,712 | (48,341 | ) | 975,483 | 972,801 | ||||||||||||||||||||
Index: |
||||||||||||||||||||||||||||
Equity |
1,338,283 | (21,851 | ) | | 81,155 | (51,732 | ) | 1,345,855 | 1,351,919 | |||||||||||||||||||
Fixed income |
443,869 | 17,031 | | 34,857 | (30,365 | ) | 465,392 | 460,652 | ||||||||||||||||||||
Multi-asset |
7,250 | 5 | | 766 | (1,008 | ) | 7,013 | 7,498 | ||||||||||||||||||||
Alternatives |
6,536 | 1,301 | | (1,078 | ) | (264 | ) | 6,495 | 5,857 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Index subtotal |
1,795,938 | (3,514 | ) | | 115,700 | (83,369 | ) | 1,824,755 | 1,825,926 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Institutional subtotal |
2,766,371 | 18,165 | | 147,412 | (131,710 | ) | 2,800,238 | 2,798,727 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term |
4,294,705 | 179,641 | 1,293 | 140,329 | (179,079 | ) | 4,436,889 | $ | 4,377,633 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash management |
268,388 | 11,288 | | 193 | (8,363 | ) | 271,506 | |||||||||||||||||||||
Advisory (4) |
30,519 | (15,131 | ) | | 1,094 | (3,583 | ) | 12,899 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
$ | 4,593,612 | $ | 175,798 | $ | 1,293 | $ | 141,616 | ($ | 191,025 | ) | $ | 4,721,294 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Year-over-Year Component Changes by Product (Long-term)
Net | ||||||||||||||||||||||||||||
June 30, | inflows | June 30, | ||||||||||||||||||||||||||
2014 | (outflows) | Acquisition(1) | Market change | FX impact (2) | 2015 | Average AUM (3) | ||||||||||||||||||||||
Equity: |
||||||||||||||||||||||||||||
Active |
$ | 320,830 | ($ | 14,157 | ) | $ | | $ | 6,911 | ($ | 14,700 | ) | $ | 298,884 | $ | 303,735 | ||||||||||||
iShares |
774,053 | 63,589 | | 11,662 | (21,247 | ) | 828,057 | 798,383 | ||||||||||||||||||||
Non-ETF index |
1,367,702 | (16,881 | ) | | 81,425 | (53,870 | ) | 1,378,376 | 1,383,609 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Equity subtotal |
2,462,585 | 32,551 | | 99,998 | (89,817 | ) | 2,505,317 | 2,485,727 | ||||||||||||||||||||
Fixed income: |
||||||||||||||||||||||||||||
Active |
689,724 | 46,529 | | 6,490 | (23,890 | ) | 718,853 | 705,640 | ||||||||||||||||||||
iShares |
200,519 | 44,049 | | (4,133 | ) | (9,700 | ) | 230,735 | 219,806 | |||||||||||||||||||
Non-ETF index |
450,482 | 18,087 | | 35,362 | (31,085 | ) | 472,846 | 467,697 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Fixed income subtotal |
1,340,725 | 108,665 | | 37,719 | (64,675 | ) | 1,422,434 | 1,393,143 | ||||||||||||||||||||
Multi-asset |
374,473 | 34,959 | | 6,191 | (20,614 | ) | 395,009 | 385,409 | ||||||||||||||||||||
Alternatives: |
||||||||||||||||||||||||||||
Core |
88,758 | 1,882 | 1,293 | 948 | (2,927 | ) | 89,954 | 88,513 | ||||||||||||||||||||
Currency and commodities (5) |
28,164 | 1,584 | | (4,527 | ) | (1,046 | ) | 24,175 | 24,841 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Alternatives subtotal |
116,922 | 3,466 | 1,293 | (3,579 | ) | (3,973 | ) | 114,129 | 113,354 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term |
$ | 4,294,705 | $ | 179,641 | $ | 1,293 | $ | 140,329 | ($ | 179,079 | ) | $ | 4,436,889 | $ | 4,377,633 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-over-Year Component Changes by Investment Style (Long-term)
Net | ||||||||||||||||||||||||||||
June 30, | inflows | June 30, | ||||||||||||||||||||||||||
2014 | (outflows) | Acquisition(1) | Market change | FX impact (2) | 2015 | Average AUM (3) | ||||||||||||||||||||||
Active |
$ | 1,468,823 | $ | 68,471 | $ | 1,293 | $ | 19,626 | ($ | 61,642 | ) | $ | 1,496,571 | $ | 1,477,361 | |||||||||||||
Index and iShares |
2,825,882 | 111,170 | | 120,703 | (117,437 | ) | 2,940,318 | 2,900,272 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term |
$ | 4,294,705 | $ | 179,641 | $ | 1,293 | $ | 140,329 | ($ | 179,079 | ) | $ | 4,436,889 | $ | 4,377,633 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Amount represents $1.3 billion of AUM acquired in the acquisition of certain assets of BlackRock Kelso Capital Advisors LLC in March 2015. |
(2) | Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. |
(3) | Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months. |
(4) | Advisory AUM represents long-term portfolio liquidation assignments. |
(5) | Amounts include commodity iShares. |
-8-
SUMMARY OF REVENUE
Three Months Ended June 30, |
Change | Three Months Ended March 31, 2015 |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||
(in millions), (unaudited) |
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||||||||||
Investment advisory, administration fees and securities lending revenue: |
||||||||||||||||||||||||||||||||
Equity: |
||||||||||||||||||||||||||||||||
Active |
$ | 447 | $ | 478 | ($ | 31 | ) | $ | 422 | $ | 25 | $ | 869 | $ | 941 | ($ | 72 | ) | ||||||||||||||
iShares |
728 | 677 | 51 | 684 | 44 | 1,412 | 1,311 | 101 | ||||||||||||||||||||||||
Non-ETF Index |
190 | 183 | 7 | 163 | 27 | 353 | 341 | 12 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Equity subtotal |
1,365 | 1,338 | 27 | 1,269 | 96 | 2,634 | 2,593 | 41 | ||||||||||||||||||||||||
Fixed income: |
||||||||||||||||||||||||||||||||
Active |
387 | 346 | 41 | 373 | 14 | 760 | 670 | 90 | ||||||||||||||||||||||||
iShares |
138 | 122 | 16 | 130 | 8 | 268 | 235 | 33 | ||||||||||||||||||||||||
Non-ETF Index |
72 | 71 | 1 | 68 | 4 | 140 | 129 | 11 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Fixed income subtotal |
597 | 539 | 58 | 571 | 26 | 1,168 | 1,034 | 134 | ||||||||||||||||||||||||
Multi-asset |
316 | 300 | 16 | 304 | 12 | 620 | 586 | 34 | ||||||||||||||||||||||||
Alternatives: |
||||||||||||||||||||||||||||||||
Core |
161 | 161 | | 154 | 7 | 315 | 320 | (5 | ) | |||||||||||||||||||||||
Currency and commodities |
19 | 23 | (4 | ) | 19 | | 38 | 45 | (7 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Alternatives subtotal |
180 | 184 | (4 | ) | 173 | 7 | 353 | 365 | (12 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Long-term |
2,458 | 2,361 | 97 | 2,317 | 141 | 4,775 | 4,578 | 197 | ||||||||||||||||||||||||
Cash management |
76 | 73 | 3 | 73 | 3 | 149 | 147 | 2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total base fees |
2,534 | 2,434 | 100 | 2,390 | 144 | 4,924 | 4,725 | 199 | ||||||||||||||||||||||||
Investment advisory performance fees: |
||||||||||||||||||||||||||||||||
Equity |
61 | 31 | 30 | 37 | 24 | 98 | 53 | 45 | ||||||||||||||||||||||||
Fixed income |
3 | 5 | (2 | ) | 4 | (1 | ) | 7 | 13 | (6 | ) | |||||||||||||||||||||
Multi-asset |
8 | 10 | (2 | ) | 8 | | 16 | 13 | 3 | |||||||||||||||||||||||
Alternatives |
64 | 69 | (5 | ) | 59 | 5 | 123 | 194 | (71 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total performance fees |
136 | 115 | 21 | 108 | 28 | 244 | 273 | (29 | ) | |||||||||||||||||||||||
BlackRock Solutions and advisory |
161 | 146 | 15 | 147 | 14 | 308 | 300 | 8 | ||||||||||||||||||||||||
Distribution fees |
13 | 18 | (5 | ) | 17 | (4 | ) | 30 | 37 | (7 | ) | |||||||||||||||||||||
Other revenue |
61 | 65 | (4 | ) | 61 | | 122 | 113 | 9 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total revenue |
$ | 2,905 | $ | 2,778 | $ | 127 | $ | 2,723 | $ | 182 | $ | 5,628 | $ | 5,448 | $ | 180 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlights
| Investment advisory, administration fees and securities lending revenue increased $100 million from the second quarter of 2014 driven by organic growth and market appreciation, which outpaced the impact of foreign exchange movements. Securities lending fees of $147 million in the current quarter increased $7 million from the second quarter of 2014. |
Investment advisory, administration fees and securities lending revenue increased $144 million from the first quarter of 2015 reflecting organic base fee growth, the effect of one additional revenue day in the current quarter and seasonally higher securities lending fees. Securities lending fees increased $33 million from the first quarter of 2015.
| Performance fees increased $21 million from the second quarter of 2014 and $28 million from the first quarter of 2015, primarily reflecting higher fees from equity products. |
| BlackRock Solutions® and advisory revenue increased $15 million from the second quarter of 2014 due to higher revenue from the Aladdin® business. BlackRock Solutions and advisory revenue included $129 million in Aladdin business revenue in the current quarter compared with $113 million in the second quarter of 2014. |
BlackRock Solutions and advisory revenue increased $14 million from the prior quarter due to higher Financial Markets Advisory Services revenue. BlackRock Solutions and advisory revenue included $129 million in Aladdin business revenue in the current quarter compared with $126 million in the first quarter of 2015.
-9-
SUMMARY OF OPERATING EXPENSE
Three Months Ended June 30, |
Three Months Ended March 31, 2015 |
Six Months Ended June 30, |
||||||||||||||||||||||||||||||
(in millions), (unaudited) |
2015 | 2014 | Change | Change | 2015 | 2014 | Change | |||||||||||||||||||||||||
Operating Expense |
||||||||||||||||||||||||||||||||
Employee compensation and benefits |
$ | 1,012 | $ | 948 | $ | 64 | $ | 981 | $ | 31 | $ | 1,993 | $ | 1,930 | $ | 63 | ||||||||||||||||
Distribution and servicing costs |
105 | 89 | 16 | 99 | 6 | 204 | 178 | 26 | ||||||||||||||||||||||||
Amortization of deferred sales commissions |
12 | 14 | (2 | ) | 13 | (1 | ) | 25 | 29 | (4 | ) | |||||||||||||||||||||
Direct fund expense |
191 | 187 | 4 | 189 | 2 | 380 | 366 | 14 | ||||||||||||||||||||||||
General and administration |
312 | 377 | (65 | ) | 339 | (27 | ) | 651 | 690 | (39 | ) | |||||||||||||||||||||
Amortization of intangible assets |
35 | 41 | (6 | ) | 35 | | 70 | 82 | (12 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total Operating Expense |
$ | 1,667 | $ | 1,656 | $ | 11 | $ | 1,656 | $ | 11 | $ | 3,323 | $ | 3,275 | $ | 48 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlights
| Employee compensation and benefits increased $64 million from the second quarter of 2014, reflecting higher headcount and higher incentive compensation driven by higher operating income, partially offset by the impact of foreign exchange movements. |
Employee compensation and benefits increased $31 million from the first quarter of 2015, primarily reflecting higher incentive compensation driven by higher operating income, partially offset by lower seasonal employer payroll taxes.
| General and administration expense decreased $65 million from the second quarter of 2014, primarily reflecting lower marketing and promotional expense, and lower legal and regulatory expense. |
General and administration expense decreased $27 million from the first quarter of 2015, primarily reflecting lower marketing and promotional expense.
INCOME TAX EXPENSE
Three Months Ended June 30, |
Three Months Ended March 31, 2015 |
Six Months Ended June 30, |
||||||||||||||||||||||||||||||
(in millions), (unaudited) |
2015 | 2014 | Change | Change | 2015 | 2014 | Change | |||||||||||||||||||||||||
Income tax expense |
$ | 371 | $ | 297 | $ | 74 | $ | 258 | $ | 113 | $ | 629 | $ | 621 | $ | 8 |
Highlights
| Income tax expense in the second quarter of 2015 included a $13 million net noncash expense, primarily associated with the revaluation of certain deferred income tax liabilities as a result of domestic state and local tax changes. |
Income tax expense in the first quarter of 2015 benefited from $69 million of nonrecurring items.
The second quarter 2014 GAAP tax rate included a $23 million net noncash expense, primarily associated with the revaluation of certain deferred income tax liabilities arising from the state and local tax effect of changes in the Companys organizational structure. In addition, the second quarter 2014 GAAP tax rate benefited from an improvement in the geographic mix of earnings and included a $34 million net tax benefit related to several favorable nonrecurring items.
-10-
SUMMARY OF NONOPERATING INCOME (EXPENSE)
Three Months Ended June 30, |
Three Months Ended March 31, 2015 |
Six Months Ended June 30, |
||||||||||||||||||||||||||||||
(in millions), (unaudited) |
2015 | 2014 | Change | Change | 2015 | 2014 | Change | |||||||||||||||||||||||||
Nonoperating income (expense), GAAP basis |
($ | 41 | ) | $ | 16 | ($ | 57 | ) | $ | 16 | ($ | 57 | ) | ($ | 25 | ) | $ | 33 | ($ | 58 | ) | |||||||||||
Less: Net income (loss) attributable to NCI |
7 | 33 | (26 | ) | 3 | 4 | 10 | 21 | (11 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Nonoperating income (expense)(1) |
($ | 48 | ) | ($ | 17 | ) | ($ | 31 | ) | $ | 13 | ($ | 61 | ) | ($ | 35 | ) | $ | 12 | ($ | 47 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated economic investments at June 30, 2015(3) |
Three Months Ended June 30, |
Three Months Ended March 31, 2015 |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
(in millions), (unaudited) |
2015 | 2014 | Change | Change | 2015 | 2014 | Change | |||||||||||||||||||||||||||
Net gain (loss) on investments(1) (2) |
||||||||||||||||||||||||||||||||||
Private equity |
25-30% | $ | 9 | $ | 12 | ($ | 3 | ) | $ | 1 | $ | 8 | $ | 10 | $ | 56 | ($ | 46 | ) | |||||||||||||||
Real estate |
5-10% | 2 | 8 | (6 | ) | 2 | | 4 | 10 | (6 | ) | |||||||||||||||||||||||
Other alternatives(4) |
10-15% | | 14 | (14 | ) | 4 | (4 | ) | 4 | 35 | (31 | ) | ||||||||||||||||||||||
Other investments(5) |
50-55% | (14 | ) | 3 | (17 | ) | 6 | (20 | ) | (8 | ) | 5 | (13 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Subtotal |
(3 | ) | 37 | (40 | ) | 13 | (16 | ) | 10 | 106 | (96 | ) | ||||||||||||||||||||||
Other gains(6) |
| | | 45 | (45 | ) | 45 | | 45 | |||||||||||||||||||||||||
Investments related to deferred compensation plans |
2 | 3 | (1 | ) | 2 | | 4 | 6 | (2 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total net gain (loss) on investments(1) |
(1 | ) | 40 | (41 | ) | 60 | (61 | ) | 59 | 112 | (53 | ) | ||||||||||||||||||||||
Interest and dividend income |
5 | 3 | 2 | 4 | 1 | 9 | 13 | (4 | ) | |||||||||||||||||||||||||
Interest expense |
(52 | ) | (60 | ) | 8 | (51 | ) | (1 | ) | (103 | ) | (113 | ) | 10 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net interest expense |
(47 | ) | (57 | ) | 10 | (47 | ) | | (94 | ) | (100 | ) | 6 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total nonoperating income (expense)(1) |
(48 | ) | (17 | ) | (31 | ) | 13 | (61 | ) | (35 | ) | 12 | (47 | ) | ||||||||||||||||||||
Compensation expense related to (appreciation) depreciation on deferred compensation plans |
(2 | ) | (3 | ) | 1 | (2 | ) | | (4 | ) | (6 | ) | 2 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Nonoperating income (expense), as adjusted(1) |
($ | 50 | ) | ($ | 20 | ) | ($ | 30 | ) | $ | 11 | ($ | 61 | ) | ($ | 39 | ) | $ | 6 | ($ | 45 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Net of net income (loss) attributable to noncontrolling interests (NCI). |
(2) | Amounts include net gain (loss) on consolidated variable interest entities. |
(3) | Percentages represent estimated percentages of BlackRocks corporate economic investment portfolio at June 30, 2015. Economic investment amounts at March 31, 2015 for private equity, real estate, other alternatives and other investments were $358 million, $118 million, $247 million and $688 million, respectively. See the 2015 first quarter Form 10-Q for more information. |
(4) | Amounts primarily include net gains (losses) related to direct hedge fund strategies and hedge fund solutions. The prior year quarter also included net gains related to opportunistic credit strategies. |
(5) | Amounts include net gains (losses) related to equity and fixed income investments, and BlackRocks seed capital hedging program. |
(6) | Amount primarily includes a gain related to the acquisition of certain assets of BlackRock Kelso Capital Advisors LLC. |
Highlights
| Net gain (loss) on investments decreased $41 million from the second quarter of 2014 due to lower marks in the second quarter of 2015. |
Net gain (loss) on investments decreased $61 million from the first quarter of 2015, primarily due to lower marks in the second quarter of 2015 and a $40 million gain related to BlackRock Kelso Capital Advisors LLC recorded in the first quarter of 2015.
-11-
ECONOMIC TANGIBLE ASSETS
The Company presents economic tangible assets as additional information to enable investors to exclude certain assets that have equal and offsetting liabilities or noncontrolling interests that ultimately do not have an impact on stockholders equity or cash flows. In addition, goodwill and intangible assets are excluded from economic tangible assets.
Economic tangible assets include cash, receivables, seed and co-investments, regulatory investments and other assets.
(in billions), (unaudited) |
June 30, 2015 (Est.) |
December 31, 2014 |
||||||
Total balance sheet assets |
$ | 236 | $ | 240 | ||||
Separate account assets and separate account collateral held under securities lending agreements |
(195 | ) | (195 | ) | ||||
Consolidated VIEs/sponsored investment funds(1) |
(1 | ) | (4 | ) | ||||
Goodwill and intangible assets, net |
(30 | ) | (30 | ) | ||||
|
|
|
|
|||||
Economic tangible assets |
$ | 10 | $ | 11 | ||||
|
|
|
|
(1) | During the second quarter of 2015, the Company adopted new accounting guidance on consolidations effective January 1, 2015 using the modified retrospective method. As a result of the adoption, the Companys estimated balance sheet at June 30, 2015 reflects the deconsolidation of the Companys previously consolidated collateralized loan obligations. |
-12-
RECONCILIATION OF U.S. GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, | March 31, 2015 |
June 30, | ||||||||||||||||||
(in millions), (unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Operating income, GAAP basis |
$ | 1,238 | $ | 1,122 | $ | 1,067 | $ | 2,305 | $ | 2,173 | ||||||||||
Non-GAAP expense adjustments: |
||||||||||||||||||||
PNC LTIP funding obligation |
8 | 8 | 8 | 16 | 16 | |||||||||||||||
Compensation expense related to appreciation (depreciation) on deferred compensation plans |
2 | 3 | 2 | 4 | 6 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income, as adjusted |
1,248 | 1,133 | 1,077 | 2,325 | 2,195 | |||||||||||||||
Product placement fee costs and commissions |
5 | | | 5 | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income used for operating margin measurement |
$ | 1,253 | $ | 1,133 | $ | 1,077 | $ | 2,330 | $ | 2,195 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenue, GAAP basis |
$ | 2,905 | $ | 2,778 | $ | 2,723 | $ | 5,628 | $ | 5,448 | ||||||||||
Non-GAAP adjustments: |
||||||||||||||||||||
Distribution and servicing costs |
(105 | ) | (89 | ) | (99 | ) | (204 | ) | (178 | ) | ||||||||||
Amortization of deferred sales commissions |
(12 | ) | (14 | ) | (13 | ) | (25 | ) | (29 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenue used for operating margin measurement |
$ | 2,788 | $ | 2,675 | $ | 2,611 | $ | 5,399 | $ | 5,241 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating margin, GAAP basis |
42.6 | % | 40.4 | % | 39.2 | % | 41.0 | % | 39.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating margin, as adjusted |
44.9 | % | 42.4 | % | 41.2 | % | 43.2 | % | 41.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
See note (1) to the Condensed Consolidated Statements of Income and Supplemental Information on page 14 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
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, | March 31, 2015 |
June 30, | ||||||||||||||||||
(in millions), (unaudited) |
2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Nonoperating income (expense), GAAP basis |
($ | 41 | ) | $ | 16 | $ | 16 | ($ | 25 | ) | $ | 33 | ||||||||
Less: Net income (loss) attributable to NCI |
7 | 33 | 3 | 10 | 21 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Nonoperating income (expense), net of NCI |
(48 | ) | (17 | ) | 13 | (35 | ) | 12 | ||||||||||||
Compensation expense related to (appreciation) depreciation on deferred compensation plans |
(2 | ) | (3 | ) | (2 | ) | (4 | ) | (6 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted |
($ | 50 | ) | ($ | 20 | ) | $ | 11 | ($ | 39 | ) | $ | 6 | |||||||
|
|
|
|
|
|
|
|
|
|
See note (2) to the Condensed Consolidated Statements of Income and Supplemental Information on page 14 for more information on as adjusted items and the reconciliation to GAAP.
RECONCILIATION OF U.S. GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, | March 31, 2015 |
June 30, | ||||||||||||||||||
(in millions, except per share data), (unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Net income attributable to BlackRock, Inc., GAAP basis |
$ | 819 | $ | 808 | $ | 822 | $ | 1,641 | $ | 1,564 | ||||||||||
Non-GAAP adjustments, net of tax: |
||||||||||||||||||||
PNC LTIP funding obligation |
6 | 6 | 5 | 11 | 12 | |||||||||||||||
Income tax matters |
13 | 23 | 3 | 16 | 23 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income attributable to BlackRock, Inc., as adjusted |
$ | 838 | $ | 837 | $ | 830 | $ | 1,668 | $ | 1,599 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Diluted weighted-average common shares outstanding(4) |
169.1 | 171.2 | 169.7 | 169.4 | 171.5 | |||||||||||||||
Diluted earnings per common share, GAAP basis(4) |
$ | 4.84 | $ | 4.72 | $ | 4.84 | $ | 9.69 | $ | 9.12 | ||||||||||
Diluted earnings per common share, as adjusted(4) |
$ | 4.96 | $ | 4.89 | $ | 4.89 | $ | 9.85 | $ | 9.32 |
See notes (3) and (4) to the Condensed Consolidated Statements of Income and Supplemental Information on page 14 and 15 for more information on as adjusted items and the reconciliation to GAAP.
-13-
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 Companys 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 BlackRocks 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 BlackRocks revenue and expense. BlackRocks management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Management uses both GAAP and non-GAAP financial measures in evaluating BlackRocks financial performance. Adjustments to GAAP financial measures (non-GAAP adjustments) include certain items management deems nonrecurring or occur infrequently, transactions that ultimately will not impact BlackRocks book value or certain tax items that do not impact cash flow.
Computations for all periods are derived from the condensed consolidated statements of income as follows:
(1) Operating income, as adjusted, and operating margin, as adjusted: Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRocks 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 BlackRocks book value. Compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense). |
| Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of closed-end fund launch costs and product placement fee 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 BlackRocks results until future periods. |
Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the Company earns. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenue.
(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted: Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, equals nonoperating income (expense), GAAP basis, less net income (loss) attributable to NCI, adjusted for compensation expense associated with (appreciation) depreciation on investments related to certain BlackRock deferred compensation plans. The compensation expense offset is recorded in operating income. This compensation expense has been included in nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, to offset returns on investments set aside for these plans, which are reported in nonoperating income (expense), GAAP basis.
(3) Net income attributable to BlackRock, Inc., as adjusted: See aforementioned discussion regarding operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding obligation.
For each period presented, the non-GAAP adjustment 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, 2015 included $13 million and $16 million, respectively, of net noncash tax expense primarily related to the revaluation of certain deferred tax liabilities. 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.
-14-
(4) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.
Forward-looking Statements
This earnings release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRocks 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 BlackRocks 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 BlackRocks 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 BlackRocks 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) BlackRocks 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.
BlackRocks Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and BlackRocks subsequent filings with the SEC, accessible on the SECs website at www.sec.gov and on BlackRocks 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 Companys 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, 2015 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, 2015. The performance data does not include accounts terminated prior to June 30, 2015 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, 2015 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.
-15-