BlackRock Reports Quarterly Diluted EPS of $4.86, or $4.92 as adjusted

Full Year Diluted EPS of $16.87, or $16.58 as adjusted

$4.324 Trillion in assets under management at December 31, 2013, up 14% year-over-year

BlackRock Board of Directors Approves 15% Increase in Quarterly Dividend to $1.93

  • $40.5 billion of long-term net inflows for the fourth quarter and $117.1 billion for 2013
  • 13% operating income growth (10% as adjusted) from the fourth quarter of 2012 and full year growth of 9% (13% as adjusted)
  • Improved operating margin to 40.8% (42.7% as adjusted) for the quarter and to 37.9% (41.4% as adjusted) for the year
  • 24% diluted EPS growth from the fourth quarter of 2012 and full year growth of 22% (21% as adjusted)
  • Consistent capital management with $250 million of quarterly share repurchases, aggregating $1 billion for the year
  • Board of Directors has declared a quarterly cash dividend of $1.93 per share of common stock, payable March 24, 2014 to shareholders of record at the close of business on March 7, 2014

NEW YORK--()--BlackRock, Inc. (NYSE:BLK) today reported full year diluted EPS of $16.87, up 22% from 2012. Fourth quarter 2013 diluted EPS of $4.86 was up 24% from the fourth quarter of 2012. Revenue was up 9% from both the full year 2012 and the fourth quarter of 2012, reflecting growth in markets, long-term net inflows and strength in performance fees and BlackRock Solutions®. Full year 2013 operating income of $3.9 billion was up 9% from 2012. Fourth quarter 2013 operating income of $1.1 billion was up 13% from the fourth quarter of 2012. Operating margin of 37.9% was up 20 basis points for the full year 2013. Fourth quarter operating margin of 40.8% was up 120 basis points from the fourth quarter of 2012.

The BlackRock Board of Directors has declared a quarterly cash dividend of $1.93 per share of common stock, payable March 24, 2014 to shareholders of record at the close of business on March 7, 2014. Since inception of its dividend, BlackRock’s per share dividend has increased each year except 2009, when it was unchanged, and has grown at a compounded annual rate of 24%.

As adjusted results(1): Full year 2013 diluted EPS of $16.58 was up 21% from 2012. Fourth quarter diluted EPS of $4.92 was up 24% from a year ago. Full year 2013 operating income of $4.0 billion was up 13% from 2012. Fourth quarter 2013 operating income of $1.1 billion was up 10% from the fourth quarter of 2012. Operating margin of 41.4% was up 100 basis points for the full year. Fourth quarter 2013 operating margin of 42.7% was up 10 basis points from the fourth quarter of 2012.

“2013 was a strong year for BlackRock, with 21% growth in as adjusted EPS and 13% growth in as adjusted operating income, fueled by long-term net inflows of over $117 billion,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “Throughout the year we demonstrated the collective strength and stability of our diversified, multi-client platform. We saw growth across all of our businesses – Retail, iShares®, Institutional and BlackRock Solutions.”

                                 
           

 

 

(Amounts in millions, except

Q4 Q4 Q3

Full Year

per share data) 2013   2012   Change   2013   Change     2013       2012     Change
AUM $ 4,324,088 $ 3,791,588 14 % $ 4,096,356 6 % $ 4,324,088   $ 3,791,588 14 %

GAAP basis:

Revenue $ 2,777 $ 2,539 9 % $ 2,472 12 % $ 10,180 $ 9,337 9 %
Operating income $ 1,133 $ 1,005 13 % $ 966 17 % $ 3,857 $ 3,524 9 %
Operating margin 40.8 % 39.6 % 120 bps 39.1 % 170 bps 37.9 % 37.7 % 20 bps
Net income(2) $ 841 $ 690 22 % $ 730 15 % $ 2,932 $ 2,458 19 %
Diluted EPS $ 4.86 $ 3.93 24 % $ 4.21 15 % $ 16.87 $ 13.79 22 %
Weighted average diluted shares 173.0 175.2 (1 %) 173.4 - % 173.8 178.0 (2 %)

As Adjusted:

Operating income(1) $ 1,143 $ 1,041 10 % $ 978 17 % $ 4,024 $ 3,574 13 %
Operating margin(1) 42.7 % 42.6 % 10 bps 41.2 % 150 bps 41.4 % 40.4 % 100 bps
Net income(1) (2) $ 851 $ 695 22 % $ 672 27 % $ 2,882 $ 2,438 18 %
Diluted EPS(1)   $ 4.92     $ 3.96     24 %   $ 3.88     27 %   $ 16.58     $ 13.68     21 %
 

(1) See notes (a) through (f) to the Condensed Consolidated Statements of Income and Supplemental Information below for more information on as adjusted items and the reconciliation to GAAP.
(2) Net income represents net income attributable to BlackRock, Inc.

“Investment performance remains our highest priority, and BlackRock’s strong five-year track record in fixed income positions us well for growth in 2014. The changes we made to our U.S. Fundamental Active Equity team are paying dividends, with the four largest funds under new management all showing material performance improvement.

“Expanding our retail presence was a key strategic priority entering 2013. We continued to raise the profile of our BlackRock and iShares brands, evolve our product set and deepen our distribution relationships, driving results across our platform.

“We grew our Global Retail business organically by 10% with $38.8 billion of net inflows for the year, significantly outpacing our 3% organic growth in 2012. U.S. Retail flows were driven by investors seeking outcome-oriented solutions, including unconstrained fixed income, bundled multi-asset and alternative products, led by our high-performing flagship Strategic Income Opportunities fund, which raised net inflows of $6.9 billion in 2013. International Retail organic growth of 15% for the year showcased the progress we’ve made in diversifying our global offering, contributing nearly half of Retail flows in 2013.

“Increasing longevity and insufficient returns in traditional retirement savings vehicles have created a duration gap between retirement savings and actual needs. BlackRock continues to partner with clients to help them prepare more effectively for retirement. This dialogue helped drive $30 billion of defined contribution net inflows this year, increasing our total AUM in this channel to more than $525 billion. LifePath®, the industry’s first target-date product, was a critical driver of that success, surpassing $100 billion in assets managed on behalf of more than eight million individual investors.

“2013 marked BlackRock’s 25th anniversary, and though we have grown substantially over that time, we remain faithful to our founding principles and continue to challenge ourselves to meet the constantly evolving needs of our clients. Our experience over these past 25 years reinforces the critical importance of focusing on our role as a fiduciary to our clients. Especially in today’s regulatory climate, it is vital that every employee of BlackRock look to do the right thing in every situation every day.

“Finally, I want to thank BlackRock’s employees for their dedication and outstanding contribution to the success of the firm this past year. Looking ahead to 2014, we are confident that we have positioned BlackRock to meet investor needs in all market environments, and look forward to continuing to deliver for our clients and shareholders.”

Fourth Quarter Business Highlights

The following table presents long-term net flows, AUM, base fees and business mix by client and product type:

(Dollar amounts in millions)  

Q4 2013

Long-term

Net flows

  December 31, 2013

AUM

 

Q4 2013

Base Fees(1)

  December 31, 2013

AUM

% of Total

 

Q4 2013

Base Fees(1)

% of Total

Retail $ 16,587   $ 487,777   $ 753   12 %   35 %
iShares 19,089 914,372 780 23 % 35 %
Institutional:
Active 8,002 932,410 462 23 % 21 %
Index   (3,202 )     1,677,650     208   42 %   9 %
Total institutional   4,800       2,610,060     670   65 %   30 %
Total long-term $ 40,476     $ 4,012,209   $ 2,203   100 %   100 %
                     
                     
(Dollar amounts in millions)

Q4 2013

Long-term

Net flows

  December 31, 2013

AUM

 

Q4 2013

Base Fees(1)

  December 31, 2013

AUM

% of Total

 

Q4 2013

Base Fees(1)

% of Total

Equity

$

24,676

$ 2,317,695 $ 1,245 57 % 57 %
Fixed income 1,497 1,242,186 495 31 % 22 %
Multi-asset 17,355 341,214 276 9 % 13 %
Alternatives   (3,052 )     111,114     187   3 %   8 %
Total long-term $ 40,476     $ 4,012,209   $ 2,203   100 %   100 %
 

(1) Base fees include investment advisory, administration fees and securities lending revenue.

Long-term net inflows were positive across all regions, with net inflows of $31.6 billion, $6.5 billion and $2.4 billion from clients in the Americas (defined as the United States, Caribbean, Canada, Latin America and Iberia), EMEA and Asia-Pacific, respectively. At December 31, 2013, BlackRock managed 61% of long-term AUM for investors in the Americas and 39% for international clients.

A discussion of the Company’s net flows by client type for the fourth quarter of 2013 is presented below.

  • Retail global long-term net inflows of $16.6 billion included net inflows of $9.4 billion in the United States and $7.2 billion internationally. Long-term net inflows were diversified across all asset classes, led by multi-asset class net inflows of $6.5 billion, with particular demand for our Multi-Asset Income fund. Equity net inflows of $4.8 billion were driven by flows into our European Equities suite. Fixed income net inflows of $3.9 billion reflected strong interest in unconstrained fixed income offerings, such as our Strategic Income Opportunities fund, which had net inflows of $2.4 billion during the quarter. Alternative mutual funds generated over $1 billion in net inflows for the third straight quarter, driven by our Global Long/Short Credit fund.
  • iShares long-term net inflows of $19.1 billion included U.S. and European iShares net inflows of $11.0 billion and $8.3 billion, respectively. Demand for European equity exposures, global funds and Japanese equities drove equity net inflows of $24.1 billion, which were partially offset by fixed income and commodities net outflows of $3.5 billion and $1.6 billion, respectively. The Core Series generated $10.9 billion of net inflows, concentrated in U.S. equity.
  • Institutional active long-term net inflows of $8.0 billion reflected strong flows of $12.1 billion into multi-asset class products, reflecting demand for our LifePath target-date suite, including two large open-architecture glidepath assignments. Multi-asset class net inflows were partially offset by alternatives net outflows of $2.9 billion, driven by non-core active currency redemptions and return of capital, and equity net outflows of $1.8 billion.
  • Institutional index long-term net outflows of $3.2 billion were driven by equity and multi-asset class net outflows, which were partially offset by fixed income net inflows.

Cash management AUM increased 6% with $14.3 billion of net inflows to $275.6 billion.

Advisory AUM decreased 6% to $36.3 billion due to planned portfolio liquidations.

Investment performance at December 31, 2013 is presented in the following table:

             
Investment performance(1)
  One-year period   Three-year period   Five-year period
Fixed Income:

Actively managed products above benchmark or peer median

Taxable 77 % 87 % 88 %
Tax-exempt 53 % 66 % 67 %

Passively managed products within or above applicable tolerance

  97 %   99 %   91 %
Equity:

Actively managed products above benchmark or peer median

Fundamental 51 % 50 % 48 %
Scientific 94 % 96 % 91 %

Passively managed products within or above applicable tolerance

  94 %   98 %   94 %

(1) Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 16 for performance disclosure detail.

Fourth Quarter Financial Highlights

Comparison of the Fourth Quarter 2013 with the Fourth Quarter of 2012 GAAP Results

Operating income: Operating income totaled $1.1 billion compared with $1.0 billion in the prior year.

Revenue of $2.8 billion increased $238 million from the prior year, primarily due to the following:

  • Investment advisory, administration fees and securities lending revenue of $2.3 billion increased $199 million from the prior year due to growth in long-term average AUM. Securities lending fees totaled $100 million in the current quarter and $113 million in the prior year quarter. The decrease in securities lending fees primarily reflected lower spreads consistent with industry trends, partially offset by an increase in average balances of securities on loan.
  • Performance fees revenue totaled $268 million in the current quarter compared with $239 million in the fourth quarter of 2012, primarily reflecting strong performance in alternative products. Both quarters reflected significant fees from the liquidation of opportunistic funds.
  • BlackRock Solutions and advisory revenue totaled $157 million in the current quarter compared with $136 million in the fourth quarter of 2012. The current quarter reflected an $18 million increase in Aladdin® business revenues to $114 million.
  • Other revenue totaled $53 million in the current quarter compared with $70 million in the fourth quarter of 2012. The decrease largely reflected lower earnings from certain strategic investments.

Total operating expenses of $1.6 billion increased $110 million from the prior year, primarily due to the following:

  • Employee compensation and benefits totaled $925 million in the current quarter compared with $848 million in the fourth quarter of 2012. The increase reflected higher headcount and higher incentive compensation driven by higher operating income.
  • Direct fund expenses totaled $167 million compared with $151 million in the fourth quarter of 2012. The increase reflected higher average AUM where BlackRock pays certain nonadvisory expenses of the funds.
  • General and administration expenses totaled $410 million in the current quarter compared with $401 million in the fourth quarter of 2012. The current quarter reflected various lease exit costs and the fourth quarter of 2012 included a one-time $30 million contribution to the Company’s bank-managed short-term investment funds (“STIFs”).

Nonoperating income (expense): Nonoperating income, net of noncontrolling interests, in the current quarter of $15 million reflected higher net positive marks compared with the prior year quarter.

Income tax expense: Income tax expense totaled $307 million in the current quarter compared with $288 million in the fourth quarter of 2012. The GAAP effective income tax rate was 26.7% compared with 29.4% for the prior year quarter. The current quarter GAAP tax rate benefited from certain nonrecurring items. The fourth quarter of 2012 GAAP tax rate included $20 million of noncash benefits primarily associated with revaluation of certain deferred tax liabilities, which have been excluded from the as adjusted results. The as adjusted effective income tax rate was 26.5% for the current quarter and 31.4% for the fourth quarter of 2012.

Comparison of the Fourth Quarter 2013 with the Third Quarter of 2013 GAAP Results

Operating income: Operating income totaled $1.1 billion compared with $966 million in the prior quarter.

Revenue of $2.8 billion increased $305 million from the prior quarter, primarily due to the following:

  • Investment advisory, administration fees and securities lending revenue of $2.3 billion increased $127 million from the prior quarter due to growth in long-term average AUM. Securities lending fees totaled $100 million and $99 million in the current quarter and the third quarter of 2013, respectively. Securities lending fees were primarily affected by higher average balances of securities on loan and the overall decline in spreads.
  • Performance fees revenue totaled $268 million in the current quarter compared with $96 million in the third quarter of 2013. The increase primarily reflected strong performance in alternative products, a seasonally higher number of funds with performance measurement locks and a significant fee associated with the partial liquidation of a closed-end opportunistic mortgage fund.

Total operating expenses of $1.6 billion increased $138 million from the prior quarter, primarily due to the following:

  • Employee compensation and benefits totaled $925 million in the current quarter compared with $866 million in the third quarter of 2013. The increase reflected higher incentive compensation driven by higher operating income, including higher performance fees.
  • General and administration expenses totaled $410 million in the current quarter compared with $334 million in the third quarter of 2013. The increase primarily reflected higher marketing and promotional costs, various lease exit costs, higher professional services expenses and other general and administration expenses, including foreign currency exchange movements.

Nonoperating income (expense): Nonoperating income, net of noncontrolling interests, in the current quarter of $15 million reflected higher net positive marks compared with the third quarter of 2013.

Income tax expense: Income tax expense totaled $307 million in the current quarter compared with $219 million in the third quarter of 2013. The GAAP effective income tax rate was 26.7% compared with 23.1% for the third quarter. The current quarter GAAP tax rate benefited from certain nonrecurring items. The third quarter of 2013 GAAP tax rate included a $64 million net noncash benefit primarily related to the revaluation of certain deferred income tax liabilities, including the effect of legislation enacted in the United Kingdom and domestic state and local income tax changes, which has been excluded from the as adjusted results. The as adjusted effective income tax rate was 26.5% for the current quarter and 29.9% for the third quarter of 2013.

Teleconference, Webcast and Presentation Information

Chairman and Chief Executive Officer, Laurence D. Fink, and Chief Financial Officer, Gary Shedlin, will host a teleconference call for investors and analysts on Thursday, January 16, 2014 at 8:30 a.m. (Eastern Time). Members of the public who are interested in participating in the teleconference should dial, from the United States, (800) 374-0176, or from outside the United States, (706) 679-8281, shortly before 8:30 a.m. and reference the BlackRock Conference Call (ID Number 27105019). 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 Thursday, January 16, 2014 and ending at midnight on Thursday, January 30, 2014. To access the replay of the teleconference, callers from the United States should dial (800) 585-8367 and callers from outside the United States should dial (404) 537-3406 and enter the Conference ID Number 27105019. 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 December 31, 2013, BlackRock’s AUM was $4.324 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 December 31, 2013, the firm had approximately 11,400 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 Company’s website at www.blackrock.com.

   
Condensed Consolidated Statements of Income and Supplemental Information
(Dollar amounts in millions, except per share data), (unaudited)  
    Three Months
Three Months Ended Ended
December 31, September 30,
  2013     2012   Change   2013   Change
Revenue
Investment advisory, administration fees and securities lending revenue $ 2,280 $ 2,081 $ 199 $ 2,153 $ 127
Investment advisory performance fees 268 239 29 96 172
BlackRock Solutions and advisory 157 136 21 156 1
Distribution fees 19 13 6 19 -
Other revenue   53     70     (17 )   48     5  
Total revenue   2,777     2,539     238     2,472     305  
 
Expenses
Employee compensation and benefits 925 848 77 866 59
Distribution and servicing costs 87 82 5 85 2
Amortization of deferred sales commissions 14 12 2 14 -
Direct fund expenses 167 151 16 167 -
General and administration 410 401 9 334 76
Amortization of intangible assets   41     40     1     40     1  
Total expenses   1,644     1,534     110     1,506     138  
 
Operating income 1,133 1,005 128 966 167
 
Nonoperating income (expense)
Net gain (loss) on investments 70 20 50 32 38
Net gain (loss) on consolidated variable interest entities 2 (39 ) 41 (6 ) 8
Interest and dividend income 4 9 (5 ) 8 (4 )
Interest expense   (52 )   (57 )   5     (52 )   -  
Total nonoperating income (expense)   24     (67 )   91     (18 )   42  
 
Income before income taxes 1,157 938 219 948 209
Income tax expense   307     288     19     219     88  
Net income 850 650 200 729 121
Less:
Net income (loss) attributable to noncontrolling interests   9     (40 )   49     (1 )   10  
Net income attributable to BlackRock, Inc. $ 841   $ 690   $ 151   $ 730   $ 111  
 
Weighted-average common shares outstanding (f)
Basic 169,010,606 171,518,278 (2,507,672 ) 169,811,633 (801,027 )
Diluted 172,999,529 175,176,037 (2,176,508 ) 173,371,508 (371,979 )
Earnings per share attributable to BlackRock, Inc.
common stockholders (e) (f)
Basic $ 4.98 $ 4.02 $ 0.96 $ 4.30 $ 0.68
Diluted $ 4.86 $ 3.93 $ 0.93 $ 4.21 $ 0.65
Cash dividends declared and paid per share $ 1.68 $ 1.50 $ 0.18 $ 1.68

 

-

 

Supplemental information:

 
AUM (end of period) $ 4,324,088 $ 3,791,588 $ 532,500 $ 4,096,356 $ 227,732
Shares outstanding (end of period) 168,724,763 171,215,729 (2,490,966 ) 169,412,929 (688,166 )
GAAP:
Operating margin 40.8 % 39.6 % 120 bps 39.1 % 170 bps
Effective tax rate 26.7 % 29.4 % (270) bps 23.1 % 360 bps
As adjusted:
Operating income (a) $ 1,143 $ 1,041 $ 102 $ 978 $ 165
Operating margin (a) 42.7 % 42.6 % 10 bps 41.2 % 150 bps
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (b) $ 13 ($27 ) $ 40 ($21 ) $ 34
Net income attributable to BlackRock, Inc. (c) (d) $ 851 $ 695 $ 156 $ 672 $ 179
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (c) (d) (e) (f) $ 4.92 $ 3.96 $ 0.96 $ 3.88 $ 1.04
Effective tax rate 26.5 % 31.4 % (490) bps 29.9 % (340) bps
 
See notes (a) through (f) on pages 12-15 for more information on as adjusted items and the reconciliation to GAAP.
 
Condensed Consolidated Statements of Income and Supplemental Information  
(Dollar amounts in millions, except per share data), (unaudited)  
 
Year Ended
December 31,
  2013     2012   Change
Revenue
Investment advisory, administration fees and securities lending revenue $ 8,739 $ 8,072 $ 667
Investment advisory performance fees 561 463 98
BlackRock Solutions and advisory 577 518 59
Distribution fees 73 71 2
Other revenue   230     213     17  
Total revenue $ 10,180     9,337     843  
 
Expenses
Employee compensation and benefits 3,560 3,287 273
Distribution and servicing costs 353 364 (11 )
Amortization of deferred sales commissions 52 55 (3 )
Direct fund expenses 657 591 66
General and administration 1,540 1,359 181
Amortization of intangible assets   161     157     4  
Total expenses   6,323     5,813     510  
 
Operating income 3,857 3,524 333
 
Nonoperating income (expense)
Net gain (loss) on investments 305 163 142
Net gain (loss) on consolidated variable interest entities - (38 ) 38
Interest and dividend income 22 36 (14 )
Interest expense   (211 )   (215 )   4  
Total nonoperating income (expense)   116     (54 )   170  
 
Income before income taxes 3,973 3,470 503
Income tax expense   1,022     1,030     (8 )
Net income 2,951 2,440 511
Less:
Net income (loss) attributable to noncontrolling interests   19     (18 )   37  
Net income attributable to BlackRock, Inc. $ 2,932   $ 2,458   $ 474  
 
Weighted-average common shares outstanding (f)
Basic 170,185,870 174,961,018 (4,775,148 )
Diluted 173,828,902 178,017,679 (4,188,777 )
Earnings per share attributable to BlackRock, Inc.
common stockholders (e) (f)
Basic $ 17.23 $ 14.03 $ 3.20
Diluted $ 16.87 $ 13.79 $ 3.08
Cash dividends declared and paid per share $ 6.72 $ 6.00 $ 0.72
 

Supplemental information:

 
AUM (end of period) $ 4,324,088 $ 3,791,588 $ 532,500
Shares outstanding (end of period) 168,724,763 171,215,729 (2,490,966 )
GAAP:
Operating margin 37.9 % 37.7 % 20 bps
Effective tax rate 25.8 % 29.5 % (370) bps
As adjusted:
Operating income (a) $ 4,024 $ 3,574 $ 450
Operating margin (a) 41.4 % 40.4 % 100 bps
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (b) $ 7 ($42 ) $ 49
Net income attributable to BlackRock, Inc. (c) (d) $ 2,882 $ 2,438 $ 444
Diluted earnings attributable to BlackRock, Inc. common stockholders per share (c) (d) (e) (f) $ 16.58 $ 13.68 $ 2.90
Effective tax rate 28.5 % 31.0 % (250) bps
 
See notes (a) through (f) on pages 12-15 for more information on as adjusted items and the reconciliation to GAAP.
 
Assets Under Management        
(Dollar amounts in millions), (unaudited)
     
Current Quarter Component Changes by Client Type and Product
 
Net Market
September 30, subscriptions appreciation Foreign December 31, Q4 2013
  2013

(redemptions)

Adjustments (1)

Acquisition (2)

(depreciation)

exchange (3)

  2013

Average AUM (4)

 
Retail:
Equity $ 174,732 $ 4,836 $ 13,066 $ - $ 9,523 $ 878 $ 203,035 $ 187,254
Fixed income 143,186 3,869 3,897 - 303 220 151,475 146,902
Multi-asset 106,017 6,544 2,662 - 1,786 45 117,054 112,121
Alternatives   14,514   1,338     -     136   154     71     16,213   15,378
Retail subtotal 438,449 16,587 19,625 136 11,766 1,214 487,777 461,655
iShares:
Equity 653,528 24,115 - - 39,939 553 718,135 692,173
Fixed income 182,841 (3,533 ) - - (816 ) 343 178,835 181,439
Multi-asset 1,179 93 - - 43 (5 ) 1,310 1,244
Alternatives   19,361   (1,586 )   -     -   (1,689 )   6     16,092   17,991
iShares subtotal 856,909 19,089 - - 37,477 897 914,372 892,847
Institutional:
Active:
Equity 130,864 (1,824 ) - - 9,675 11 138,726 135,834
Fixed income 503,243 561 - - 1,668 (363 ) 505,109 505,593
Multi-asset 191,989 12,115 3,336 - 6,618 1,218 215,276 200,595
Alternatives   63,974   (2,850 )   -     10,836   1,579     (240 )   73,299   71,928
Active subtotal 890,070 8,002 3,336 10,836 19,540 626 932,410 913,950
Index:
Equity 1,189,588 (2,451 ) (18,238 ) - 90,123 (1,223 ) 1,257,799 1,232,908
Fixed income 408,289 600 (4,723 ) - 285 2,316 406,767 411,023
Multi-asset 8,932 (1,397 ) - - 193 (154 ) 7,574 8,099
Alternatives   5,528   46     -     -   (127 )   63     5,510   5,540
Index subtotal   1,612,337   (3,202 )   (22,961 )   -   90,474     1,002     1,677,650   1,657,570
Institutional subtotal   2,502,407   4,800     (19,625 )   10,836   110,014     1,628     2,610,060   2,571,520
Long-term   3,797,765   40,476     -     10,972   159,257     3,739     4,012,209 $ 3,926,022
Cash management 260,077 14,251 - - 159 1,067 275,554

Advisory (5)

  38,514   (1,407 )   -     -   (168 )   (614 )     36,325
Total $ 4,096,356 $ 53,320   $ -   $ 10,972 $ 159,248   $ 4,192     $ 4,324,088
 
 
Current Quarter Component Changes by Product
Net Market
September 30, subscriptions appreciation Foreign December 31, Q4 2013
  2013

(redemptions)

Adjustments (1)

Acquisition (2)

(depreciation)

exchange (3)

  2013

Average AUM (4)

 
Equity:
Active $ 297,484 $ 892 $ - $ - $ 18,251 $ 635 $ 317,262 $ 309,564
iShares 653,528 24,115 - - 39,939 553 718,135 692,173
Fixed income:
Active 646,193 4,289 - - 1,965 (238 ) 652,209 651,200
iShares 182,841 (3,533 ) - - (816 ) 343 178,835 181,439
Multi-asset 308,117 17,355 5,998 - 8,640 1,104 341,214 322,059
Alternatives:
Core 72,758 (602 ) - 10,972 1,769 129 85,026 82,166

Currency and commodities (6)

  30,619   (2,450 )   -     -   (1,852 )   (229 )   26,088   28,671
Subtotal 2,191,540 40,066 5,998 10,972 67,896 2,297 2,318,769 2,267,272
Non-ETF Index:
Equity 1,197,700 (331 ) (5,172 ) - 91,070 (969 ) 1,282,298 1,246,432
Fixed income   408,525   741     (826 )   -   291     2,411     411,142   412,318
Subtotal Non-ETF Index   1,606,225   410     (5,998 )   -   91,361     1,442     1,693,440   1,658,750
Long-term $ 3,797,765 $ 40,476   $ -   $ 10,972 $ 159,257   $ 3,739   $ 4,012,209 $ 3,926,022
 

(1) Amounts include $19.6 billion of AUM related to fund ranges reclassed from institutional to retail and $6.0 billion of AUM reclassed from non-ETF index equity and fixed income to multi-asset.

(2) Amounts represent $11.0 billion of AUM acquired in the MGPA acquisition in October 2013.

(3) Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

(4) Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.

(5) Advisory AUM represents long-term portfolio liquidation assignments.

(6) Amounts include commodity iShares.

 
Assets Under Management    
(Dollar amounts in millions), (unaudited)
           
Year-over-Year Component Changes by Client Type and Product
 
Net Market
December 31, subscriptions appreciation Foreign December 31,

Full Year

  2012

(redemptions)

 

Adjustments (1)

Acquisitions (2)

(depreciation)

exchange (3)

  2013

Average AUM (4)

 
Retail:
Equity $ 164,748 $ 3,641 $ 13,066 $ - $ 20,743 $ 837 $ 203,035 $ 173,886
Fixed income 138,425 14,197 3,897 - (5,338 ) 294 151,475 143,929
Multi-asset 90,626 14,821 2,663 - 9,039 (95 ) 117,054 102,276
Alternatives   9,685   6,145     -     136   136     111     16,213   12,585
Retail subtotal 403,484 38,804 19,626 136 24,580 1,147 487,777 432,676
iShares:
Equity 534,648 74,119 - 13,021 95,335 1,012 718,135 620,113
Fixed income 192,852 (7,450 ) - 1,294 (8,477 ) 616 178,835 186,264
Multi-asset 869 355 - - 96 (10 ) 1,310 1,115
Alternatives   24,337   (3,053 )   -     1,645   (6,863 )   26     16,092   20,084
iShares subtotal 752,706 63,971 - 15,960 80,091 1,644 914,372 827,576
Institutional:
Active:
Equity 129,024 (16,504 ) - - 27,930 (1,724 ) 138,726 131,254
Fixed income 518,102 (3,560 ) - - (6,247 ) (3,186 ) 505,109 504,769
Multi-asset 166,708 28,955 3,335 - 14,193 2,085 215,276 184,958
Alternatives   70,861   (9,819 )   -     10,836   2,593     (1,172 )   73,299   68,364
Active subtotal 884,695 (928 ) 3,335 10,836 38,469 (3,997 ) 932,410 889,345
Index:
Equity 1,017,081 8,001 (18,238 ) - 260,333 (9,378 ) 1,257,799 1,145,499
Fixed income 409,943 8,321 (4,723 ) - (4,840 ) (1,934 ) 406,767 405,502
Multi-asset 9,545 (1,833 ) - - 476 (614 ) 7,574 8,913
Alternatives   4,912   777     -     -   (259 )   80     5,510   5,440
Index subtotal   1,441,481   15,266     (22,961 )   -   255,710     (11,846 )   1,677,650   1,565,354
Institutional subtotal   2,326,176   14,338     (19,626 )   10,836   294,179     (15,843 )   2,610,060   2,454,699
Long-term   3,482,366   117,113     -     26,932   398,850     (13,052 )   4,012,209 $ 3,714,951
Cash management 263,743 10,056 - - 395 1,360 275,554

Advisory (5)

  45,479   (7,442 )   -     -   (538 )   (1,174 )     36,325
Total $ 3,791,588 $ 119,727   $ -   $ 26,932 $ 398,707   $ (12,866 )   $ 4,324,088
 
 
Year-over-Year Component Changes by Product
Net Market
December 31, subscriptions appreciation Foreign December 31,

Full Year

  2012

(redemptions)

 

Adjustments (1)

Acquisitions (2)

(depreciation)

exchange (3)

  2013

Average AUM (4)

 
Equity:
Active $ 287,215 $ (15,377 ) $ - $ - $ 46,530 $ (1,106 ) $ 317,262 $ 295,776
iShares 534,648 74,119 - 13,021 95,335 1,012 718,135 620,113
Fixed income:
Active 656,331 10,443 - - (11,584 ) (2,981 ) 652,209 648,143
iShares 192,852 (7,450 ) - 1,294 (8,477 ) 616 178,835 186,264
Multi-asset 267,748 42,298 5,998 - 23,804 1,366 341,214 297,262
Alternatives:
Core 68,367 2,703 - 10,972 3,012 (28 ) 85,026 73,827

Currency and commodities (6)

  41,428   (8,653 )   -     1,645   (7,405 )   (927 )   26,088   32,646
Subtotal 2,048,589 98,083 5,998 26,932 141,215 (2,048 ) 2,318,769 2,154,031
Non-ETF Index:
Equity 1,023,638 10,515 (5,172 ) - 262,476 (9,159 ) 1,282,298 1,154,863
Fixed income   410,139   8,515     (826 )   -   (4,841 )   (1,845 )   411,142   406,057
Subtotal Non-ETF Index   1,433,777   19,030     (5,998 )   -   257,635     (11,004 )   1,693,440   1,560,920
Long-term $ 3,482,366 $ 117,113   $ -   $ 26,932 $ 398,850   $ (13,052 ) $ 4,012,209 $ 3,714,951
 

(1) Amounts include $19.6 billion of AUM related to fund ranges reclassed from institutional to retail and $6.0 billion of AUM reclassed from non-ETF index equity and fixed income to multi-asset.

(2) Amounts represent $16.0 billion of AUM acquired in the Credit Suisse ETF acquisition in July 2013 and $11.0 billion of AUM acquired in the MGPA acquisition in October 2013.

(3) Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

(4) Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.

(5) Advisory AUM represents long-term portfolio liquidation assignments.

(6) Amounts include commodity iShares.

 
NOTE: Certain prior period information has been reclassified to conform to current period presentation.
 
Summary of Revenues
(Dollar amounts in millions), (unaudited)
        Three Months      
Three Months Ended Ended   Year Ended
December 31, September 30, December 31,
  2013   2012 $

  Change

  2013 $

  Change

  2013   2012 $ Change
 
Investment advisory, administration fees and securities lending revenue:
Equity:
Active $ 451 $ 440 $ 11 $ 425 $ 26 $ 1,741 $ 1,753 ($12 )
iShares 646 515 131 589 57 2,390 1,941 449
Fixed income:
Active 321 317 4 314 7 1,269 1,182 87
iShares 115 120 (5 ) 113 2 464 441 23
Multi-asset 276 239 37 262 14 1,039 957 82
Alternatives:
Core 162 130 32 142 20 576 525 51
Currency and commodities   25   34   (9 )   27   (2 )   107   131   (24 )
Subtotal 1,996 1,795 201 1,872 124 7,586 6,930 656
Non-ETF Index:
Equity 148 134 14 145 3 594 552 42
Fixed income   59   58   1     61   (2 )   238   229   9  
Subtotal Non-ETF Index   207   192   15     206   1     832   781   51  
Long-term 2,203 1,987 216 2,078 125 8,418 7,711 707
Cash management   77   94   (17 )   75   2     321   361   (40 )
Total base fees 2,280 2,081 199 2,153 127 8,739 8,072 667
 
Investment advisory performance fees:
Equity 46 49 (3 ) 11 35 91 88 3
Fixed income 13 19 (6 ) 2 11 25 48 (23 )
Multi-asset 10 9 1 4 6 24 15 9
Alternatives   199   162   37     79   120     421   312   109  
Total 268 239 29 96 172 561 463 98
 
BlackRock Solutions and advisory 157 136 21 156 1 577 518 59
Distribution fees 19 13 6 19 - 73 71 2
Other revenue   53   70   (17 )   48   5     230   213   17  
Total revenue $ 2,777 $ 2,539 $ 238   $ 2,472 $ 305   $ 10,180 $ 9,337 $ 843  
 
Summary of Nonoperating Income (Expense)        
(Dollar amounts in millions), (unaudited)                
         
 
Three Months
Three Months Ended Ended Year Ended
December 31, September 30, December 31,
  2013   2012   $ Change   2013   $ Change   2013     2012   $ Change
Nonoperating income (expense), GAAP basis $ 24 ($67 ) $ 91 ($18 ) $ 42 $ 116 ($54 ) $ 170
Less: Net income (loss) attributable to NCI   9   (40 )   49     (1 )   10     19     (18 )   37  
Nonoperating income (expense)(1) $ 15   ($27 ) $ 42     ($17 ) $ 32   $ 97     ($36 ) $ 133  
 
 
 
Estimated
economic Three Months
investments at Three Months Ended Ended Year Ended
December 31, December 31, September 30, December 31,

2013(2)

  2013   2012   $ Change   2013   $ Change   2013     2012   $ Change
Net gain (loss) on investments(1)
Private equity 15-20 % $ 17 ($1 ) $ 18 $ 12 $ 5 $ 52 $ 36 $ 16
Real estate 5-10 % 7 5 2 7 - 24 14 10
Distressed credit/mortgage funds 5-10 % 12 15 (3 ) 5 7 40 69 (29 )
Hedge funds/funds of hedge funds 20-25 % 20 3 17 (3 ) 23 25 20 5
Other investments(3) 40-45 %   5   (1 )   6     2     3     16     (2 )   18  
Subtotal 61 21 40 23 38 157 137 20
Gain related to PennyMac IPO - - - - - 39 - 39
Gain related to the Charitable Contribution - - - - - 80 - 80
Investments related to deferred compensation plans   2   -     2     4     (2 )   10     6     4  
Total net gain (loss) on investments(1) 63 21 42 27 36 286 143 143
Interest and dividend income 4 9 (5 ) 8 (4 ) 22 36 (14 )
Interest expense   (52 ) (57 )   5     (52 )   -     (211 )   (215 )   4  
Net interest expense   (48 ) (48 )   -     (44 )   (4 )   (189 )   (179 )   (10 )
Total nonoperating income (expense)(1) 15 (27 ) 42 (17 ) 32 97 (36 ) 133
Gain related to the Charitable Contribution - - - - - (80 ) - (80 )
Compensation expense related to (appreciation) depreciation on deferred compensation plans   (2 ) -     (2 )   (4 )   2     (10 )   (6 )   (4 )
Nonoperating income (expense), as adjusted(1) $ 13   ($27 ) $ 40     ($21 ) $ 34   $ 7     ($42 ) $ 49  
 
(1) Net of net income (loss) attributable to noncontrolling interests ("NCI").

(2) Percentages represent estimated percentages of BlackRock's corporate economic investment portfolio at December 31, 2013. Economic investment amounts at September 30, 2013 for private equity, real estate, distressed credit/mortgage funds, hedge funds/funds of hedge funds and other investments were $279 million, $130 million, $186 million, $157 million and $564 million, respectively. See the 2013 third quarter Form 10-Q for more information.

(3) Amounts include net gains (losses) related to equity, fixed income and commodity investments, and BlackRock's seed capital hedging program.

 
 
 
Economic Tangible Assets
(Dollar amounts in billions), (unaudited)
 
The Company presents economic tangible assets as additional information to enable investors to eliminate gross presentation of certain assets that have equal and offsetting liabilities or noncontrolling interests that ultimately do not have an impact on stockholders’ equity (excluding appropriated retained earnings related to consolidated collateralized loan obligations) or cash flows. In addition, goodwill and intangible assets are excluded from economic tangible assets.
          December 31,   December 31,
2013 (Est.)   2012  
 
Total balance sheet assets $ 220 $ 200
Separate account assets and separate account
collateral held under securities lending agreements (177 ) (158 )
Consolidated VIEs/sponsored investment funds (3 ) (2 )
Goodwill and intangible assets, net   (30 )   (30 )
Economic tangible assets $ 10   $ 10  
 

Economic tangible assets include cash, receivables, seed and co-investments, regulatory investments and other assets.

Notes to Condensed Consolidated Statements of Income and Supplemental Information (unaudited)

BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"); however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP basis financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock's financial performance over time. BlackRock's management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Computations for all periods are derived from the condensed consolidated statements of income as follows:

(a) Operating income, as adjusted, and operating margin, as adjusted:

Operating income, as adjusted, equals operating income, GAAP basis, excluding certain items management deems nonrecurring, recurring infrequently or transactions that ultimately will not impact BlackRock’s book value, as indicated in the table below. 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 and operating margin, as adjusted
  Three Months Ended   Year Ended
December 31,   September 30, December 31,
(Dollar amounts in millions)   2013       2012     2013     2013       2012  
Operating income, GAAP basis $ 1,133 $ 1,005 $ 966 $ 3,857 $ 3,524
Non-GAAP expense adjustments:
PNC LTIP funding obligation 8 6 8 33 22
Charitable Contribution - - - 124 -
U.K. lease exit costs - - - - (8 )
Contribution to STIFs - 30 - - 30
Compensation expense related to appreciation (depreciation) on deferred compensation plans   2     -     4     10     6  
Operating income, as adjusted 1,143 1,041 978 4,024 3,574
Closed-end fund launch costs - - - 16 22
Closed-end fund launch commissions   -     -     -     2     3  
Operating income used for operating margin measurement $ 1,143   $ 1,041   $ 978   $ 4,042   $ 3,599  
 
Revenue, GAAP basis $ 2,777 $ 2,539 $ 2,472 $ 10,180 $ 9,337
Non-GAAP adjustments:
Distribution and servicing costs (87 ) (82 ) (85 ) (353 ) (364 )
Amortization of deferred sales commissions   (14 )   (12 )   (14 )   (52 )   (55 )

Revenue used for operating margin measurement

$ 2,676   $ 2,445   $ 2,373   $ 9,775   $ 8,918  
 
Operating margin, GAAP basis   40.8 %   39.6 %   39.1 %   37.9 %   37.7 %
Operating margin, as adjusted   42.7 %   42.6 %   41.2 %   41.4 %   40.4 %
 

Notes to Condensed Consolidated Statements of Income and Supplemental Information (unaudited)

(a) (continued)

  • 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 2013, the Charitable Contribution has been excluded from operating income, as adjusted, due to its nonrecurring nature and because the noncash, nonoperating pre-tax gain of $80 million related to the contributed PennyMac investment is reported in nonoperating income (expense). The U.K. lease exit costs incurred in 2012 represent an adjustment related to the costs initially recorded in 2011 associated with costs to exit two London locations. Contribution to STIFs represents a contribution to certain of the Company’s bank-managed STIFs. Compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense).

    Management believes operating income exclusive of these items is a useful measure in evaluating BlackRock’s operating performance and helps enhance the comparability of this information for the reporting periods presented.
  • Operating margin, as adjusted, allows BlackRock to compare performance from period to period by adjusting for items that may not recur, recur infrequently or may have an economic offset in nonoperating income (expense). BlackRock also uses operating margin, as adjusted, to monitor corporate performance and efficiency and as a benchmark to compare its performance with other companies. Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock’s financial performance. The non-GAAP measure by itself may pose limitations because it does not include all of BlackRock’s revenues and expenses.

    Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of closed-end fund launch costs and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenues associated with the expenditure of these costs will not fully impact BlackRock’s results until future periods.

    Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the Company earns. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenues.

Notes to Condensed Consolidated Statements of Income and Supplemental Information (unaudited)

(b) Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests, as adjusted, is presented below. The compensation expense offset is recorded in operating income. This compensation expense has been included in nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, to offset returns on investments set aside for these plans, which are reported in nonoperating income (expense), GAAP basis.

Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides comparability of information among reporting periods and is an effective measure for reviewing BlackRock’s nonoperating contribution to results. As compensation expense associated with (appreciation) depreciation on investments related to certain deferred compensation plans, which is included in operating income, substantially offsets the gain (loss) on the investments set aside for these plans, management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides a useful measure, for both management and investors, of BlackRock’s nonoperating results that impact book value. During the year ended December 31, 2013, the noncash, nonoperating pre-tax gain of $80 million related to the contributed PennyMac investment has been excluded from nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted due to its nonrecurring nature and because the more than offsetting associated Charitable Contribution expense of $124 million is reported in operating income.

Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted
  Three Months Ended   Year Ended
December 31,   September 30, December 31,
  2013     2012   2013     2013     2012  
(Dollar amounts in millions)
Nonoperating income (expense), GAAP basis $ 24 ($67 ) ($18 ) $ 116 ($54 )
Less: Net income (loss) attributable to NCI   9   (40 ) (1 )   19   (18 )
Nonoperating income (expense), net of NCI 15 (27 ) (17 ) 97 (36 )
Gain related to Charitable Contribution - - - (80 ) -
Compensation expense related to (appreciation) depreciation on deferred compensation plans   (2 ) -   (4 )   (10 ) (6 )
 
Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted $ 13   ($27 ) ($21 ) $ 7   ($42 )
 

(c) Net income attributable to BlackRock, Inc., as adjusted: Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.

See note (a) Operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding obligation, Charitable Contribution, U.K. lease exit costs and contribution to STIFs.

Notes to Condensed Consolidated Statements of Income and Supplemental Information (unaudited)

The year ended December 31, 2013 included a tax benefit of approximately $48 million recognized in connection with the Charitable Contribution, including the $57 million recorded in the second quarter of 2013. The tax benefit has been excluded from net income attributable to BlackRock, Inc., as adjusted due to the nonrecurring nature of the Charitable Contribution. The year ended December 31, 2013 and 2012 reflected adjustments related to the revaluation of certain deferred income tax liabilities, including the effect of legislation enacted in the United Kingdom and domestic state and local income tax changes. The resulting decrease 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.

Net income attributable to BlackRock, Inc., as adjusted
  Three Months Ended   Year Ended
(Amounts in millions, except per share data) December 31,   September 30, December 31,
  2013       2012     2013     2013       2012  
Net income attributable to BlackRock, Inc., GAAP basis $ 841 $ 690 $ 730 $ 2,932 $ 2,458
Non-GAAP adjustments, net of tax:(d)
PNC LTIP funding obligation 6 4 6 23 14
Amount related to the Charitable Contribution 9 - - (4 ) -
U.K. lease exit costs - - - - (5 )
Contribution to STIFs - 21 - - 21
Income tax changes   (5 )   (20 )   (64 )   (69 )   (50 )
Net income attributable to BlackRock, Inc., as adjusted $ 851   $ 695   $ 672   $ 2,882   $ 2,438  
 
Allocation of net income, as adjusted, to common shares(e) $ 851 $ 694 $ 672 $ 2,882 $ 2,435
Diluted weighted-average common shares outstanding(f) 173.0 175.2 173.4 173.8 178.0
 
Diluted earnings per common share, GAAP basis(f) $ 4.86 $ 3.93 $ 4.21 $ 16.87 $ 13.79
Diluted earnings per common share, as adjusted(f)   $ 4.92     $ 3.96     $ 3.88     $ 16.58     $ 13.68  
 

(d) For each period presented, the non-GAAP adjustments, including the PNC LTIP funding obligation, U.K. lease exit costs and contribution to STIFs, were tax effected at the respective blended rates applicable to the adjustments. The year ended December 31, 2013 also included the tax benefit of approximately $48 million related to the Charitable Contribution.

(e) For the three and twelve months ended December 31, 2013, amounts exclude net income attributable to participating securities.

(f) 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 BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.

BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to risk factors previously disclosed in BlackRock’s Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this earnings release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the impact of legislative and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or The PNC Financial Services Group, Inc. (“PNC”); (10) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (11) the ability to attract and retain highly talented professionals; (12) fluctuations in the carrying value of BlackRock’s economic investments; (13) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (14) BlackRock’s success in maintaining the distribution of its products; (15) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (16) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.

BlackRock's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and BlackRock's subsequent filings with the SEC, accessible on the SEC's website at www.sec.gov and on BlackRock’s website at www.blackrock.com, discuss these factors in more detail and identify additional factors that can affect forward-looking statements. The information contained on the Company’s website is not a part of this earnings release.

Performance Notes

Past performance is not indicative of future results. Except as specified, the performance information shown is as of December 31, 2013 and is based on preliminarily 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 November 30, 2013. The performance data does not include accounts terminated prior to December 31, 2013 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 December 31, 2013 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.

Contacts

BlackRock, Inc.
Media Relations:
Brian Beades, 212-810-5596
or
Investor Relations:
Tom Wojcik, 212-810-81277

Sharing

Contacts

BlackRock, Inc.
Media Relations:
Brian Beades, 212-810-5596
or
Investor Relations:
Tom Wojcik, 212-810-81277