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Section 1: 8-K (8-K)

blk-8k_20180112.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): January 12, 2018

 

 

BLACKROCK, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE

(State or other jurisdiction

of incorporation)

001-33099

(Commission

File Number)

32-0174431

(IRS Employer

Identification No.)

 

 

55 East 52nd Street, New York, New York

 

10055

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (212) 810-5300

 

_________________________________________________________________________________________________

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


Item 2.02. Results of Operations and Financial Condition

 

On January 12, 2018, BlackRock, Inc. (the “Company”) reported results of operations for the three months and year ended December 31, 2017.  A copy of the earnings release issued by the Company is attached as Exhibit 99.1. In addition, a copy of the Company’s Earnings Release Supplement for the quarter ended December 31, 2017 is being furnished as Exhibit 99.2 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits

 

(d)  Exhibits

 

99.1

Earnings release dated January 12, 2018 issued by the Company

99.2

Fourth Quarter 2017 Earnings – Earnings Release Supplement

 

 

 

 



EXHIBIT INDEX

 

99.1

Earnings release dated January 12, 2018 issued by the Company

99.2

Fourth Quarter 2017 Earnings – Earnings Release Supplement

 



SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

BlackRock, Inc.

 

(Registrant)

 

 

 

 

 

By: /s/ Gary S. Shedlin          

Date: January 12, 2018

Senior Managing Director and

 

Chief Financial Officer

 

Gary S. Shedlin

 

(Back To Top)

Section 2: EX-99.1 (EARNINGS RELEASE DATED JANUARY 12, 2018 ISSUED BY THE COMPANY)

blk-ex991_24.htm

Exhibit 99.1

 

 

 

 

 

 

Tom Wojcik, Investor Relations

 

Brian Beades, Media Relations

212.810.8127

 

212.810.5596

 

BlackRock Reports Full Year 2017 Diluted EPS of $30.23, or $22.60 as adjusted

Fourth Quarter 2017 Diluted EPS of $14.07, or $6.24 as adjusted

 

 

Record $367 billion of full year total net inflows reflects continued strength of diversified business model

 

$103 billion of fourth quarter net inflows, positive across active, index and iShares® and cash management

 

12% full year revenue growth driven by growth in base fees, performance fees, and technology and risk management revenue

 

15% increase in full year operating income (13% as adjusted) reflects operating margin expansion

 

59% increase in full year diluted EPS reflects net tax benefit from Tax Cuts and Jobs Act (17% as adjusted)

 

Returned $2.8 billion to shareholders in 2017

 

Board of Directors approves 15% increase in quarterly cash dividend to $2.88 per share

FINANCIAL RESULTS

 

 

Q4

 

Q4

 

 

 

 

 

Q3

 

 

 

 

 

Full Year

 

 

 

 

(in millions, except per share data)

2017

 

2016

 

Change

 

 

2017

 

Change

 

 

2017

 

2016

 

Change

 

AUM

$

6,288,195

 

$

5,147,852

 

 

22

%

 

$

5,976,892

 

 

5

%

 

$

6,288,195

 

$

5,147,852

 

 

22

%

Total net flows

$

102,929

 

$

98,050

 

 

 

 

 

$

96,112

 

 

 

 

 

$

367,254

 

$

202,191

 

 

 

 

GAAP basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

3,469

 

$

2,890

 

 

20

%

 

$

3,233

 

 

7

%

 

$

12,491

 

$

11,155

 

 

12

%

Operating income

$

1,489

 

$

1,225

 

 

22

%

 

$

1,394

 

 

7

%

 

$

5,272

 

$

4,570

 

 

15

%

Operating margin

 

42.9

%

 

42.4

%

 

50

bps

 

 

43.1

%

 

(20

) bps

 

 

42.2

%

 

41.0

%

 

120

bps

Net income(1) (2)

$

2,304

 

$

851

 

 

171

%

 

$

947

 

 

143

%

 

$

4,970

 

$

3,172

 

 

57

%

Diluted EPS

$

14.07

 

$

5.13

 

 

174

%

 

$

5.78

 

 

143

%

 

$

30.23

 

$

19.04

 

 

59

%

Weighted average diluted shares

 

163.8

 

 

165.9

 

 

(1

)%

 

 

163.8

 

 

-

%

 

 

164.4

 

 

166.6

 

 

(1

)%

As Adjusted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income(3)

$

1,492

 

$

1,232

 

 

21

%

 

$

1,398

 

 

7

%

 

$

5,287

 

$

4,674

 

 

13

%

Operating margin(3)

 

44.8

%

 

44.4

%

 

40

bps

 

 

45.0

%

 

(20

) bps

 

 

44.1

%

 

43.7

%

 

40

bps

Net income(1) (3)

$

1,022

 

$

852

 

 

20

%

 

$

969

 

 

5

%

 

$

3,716

 

$

3,214

 

 

16

%

Diluted EPS(3)

$

6.24

 

$

5.14

 

 

21

%

 

$

5.92

 

 

5

%

 

$

22.60

 

$

19.29

 

 

17

%

(1)

Net income represents net income attributable to BlackRock, Inc.  

(2)

GAAP net income for fourth quarter and full year 2017 reflects $1.2 billion of net tax benefit related to the Tax Cuts and Jobs Act.  See page 10 for more information.

(3)

See notes (1) through (3) to the Condensed Consolidated Statements of Income and Supplemental Information on pages 12 and 13 for more information on as adjusted items and the reconciliation to GAAP.

 

New York, January 12, 2018 — BlackRock, Inc. (NYSE: BLK) today reported financial results for the three months and year ended December 31, 2017.

 

“BlackRock’s record 2017 results reflect the long-term investments we’ve consistently made in our business to better serve clients,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “$367 billion of total net inflows for the year were the strongest flows in BlackRock’s history, and included $103 billion in the fourth quarter.

 

“Full year net inflows represented 7% organic asset growth and were positive across client types, asset classes, major regions and investment styles. Investors are increasingly seeking comprehensive solutions, and BlackRock’s differentiated ability to offer scaled investment strategies, industry leading risk management and portfolio construction technology and thought leadership is driving deeper client partnerships than ever before. And we continue to expand the global reach of our integrated platform to investors in high growth geographies like China, where earlier this month we obtained our private fund management registration to manufacture and distribute onshore investment products.

 

-1-


iShares ETFs generated $245 billion of full year net inflows, as an increasingly diverse set of institutional and retail clients are using ETFs for asset allocation and alpha generation. Investors are using both equity and fixed income ETFs in their portfolios for Core and precision exposures and as financial instruments. Investments made in iShares ETFs drove expanded market share in 2017 and enabled us to once again capture the #1 share of industry ETF flows globally, in the United States and Europe, and in both equity and fixed income products.

“In alpha-seeking strategies, we are leveraging the powerful combination of human investment expertise and sophisticated data analytics. Performance across our alpha-seeking strategies remains strong and drove $24 billion of net inflows in 2017.

 

“Technology and risk management revenue, powered by Aladdin®, increased 14% for the full year, and demand remains strong across our full range of capabilities. In 2017, we expanded our technology reach, scaling our distribution capabilities through Aladdin Risk for Wealth Management, Cachematrix, iCapital and Scalable Capital. We continue to invest in technology and data to generate improved alpha, better serve our clients and more efficiently run our business.

 

“Throughout BlackRock’s 30-year history, we have been driven by a fiduciary commitment to our clients, a culture of innovation, a passion for performance and a workplace that embraces diversity and inclusion. We are fortunate to have dedicated employees who share our vision of creating better financial futures for clients. We enter 2018 well positioned to continue investing for future growth, developing our talent and delivering differentiated value for clients and shareholders alike.”

 

 

CAPITAL MANAGEMENT

 

BlackRock’s Board of Directors approved a 15% increase in the quarterly cash dividend to $2.88 per share, payable March 22, 2018, to shareholders of record at the close of business on March 7, 2018.

 

RESULTS BY CLIENT TYPE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

Q4 2017

 

Q4 2017

 

December 31, 2017

 

Q4 2017

 

AUM

Base fees(1)

(in millions), (unaudited)

Net flows

 

AUM

 

Base fees(1)

 

% of Total

% of Total

Retail

$

11,391

 

$

628,377

 

$

858

 

 

10

%

 

 

29

%

 

iShares ETFs

 

54,800

 

 

1,752,239

 

 

1,123

 

 

28

%

 

 

39

%

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

2,187

 

 

1,139,308

 

 

508

 

 

18

%

 

 

18

%

 

Index

 

12,202

 

 

2,316,807

 

 

257

 

 

37

%

 

 

9

%

 

Total institutional

 

14,389

 

 

3,456,115

 

 

765

 

 

55

%

 

 

27

%

 

Long-term

 

80,580

 

 

5,836,731

 

 

2,746

 

 

93

%

 

 

95

%

 

Cash management

 

23,406

 

 

449,949

 

 

150

 

 

7

%

 

 

5

%

 

Advisory

 

(1,057

)

 

1,515

 

 

-

 

 

-

 

 

 

-

 

 

Total

$

102,929

 

$

6,288,195

 

$

2,896

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS BY PRODUCT TYPE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

Q4 2017

 

Q4 2017

 

December 31, 2017

 

Q4 2017

 

AUM

Base fees(1)

(in millions), (unaudited)

Net flows

 

AUM

 

Base fees(1)

 

% of Total

% of Total

Equity

$

35,782

 

$

3,371,641

 

$

1,493

 

 

53

%

 

 

51

%

 

Fixed income

 

42,951

 

 

1,855,465

 

 

754

 

 

30

%

 

 

26

%

 

Multi-asset

 

4,923

 

 

480,278

 

 

305

 

 

8

%

 

 

11

%

 

Alternatives

 

(3,076

)

 

129,347

 

 

194

 

 

2

%

 

 

7

%

 

Long-term

 

80,580

 

 

5,836,731

 

 

2,746

 

 

93

%

 

 

95

%

 

Cash management

 

23,406

 

 

449,949

 

 

150

 

 

7

%

 

 

5

%

 

Advisory

 

(1,057

)

 

1,515

 

 

-

 

 

-

 

 

 

-

 

 

Total

$

102,929

 

$

6,288,195

 

$

2,896

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS BY INVESTMENT STYLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

Q4 2017

 

Q4 2017

 

December 31, 2017

 

Q4 2017

 

AUM

Base fees(1)

(in millions), (unaudited)

Net flows

 

AUM

 

Base fees(1)

 

% of Total

% of Total

Active

$

12,962

 

$

1,696,005

 

$

1,353

 

 

27

%

 

 

47

%

 

Index and iShares ETFs

 

67,618

 

 

4,140,726

 

 

1,393

 

 

66

%

 

 

48

%

 

Long-term

 

80,580

 

 

5,836,731

 

 

2,746

 

 

93

%

 

 

95

%

 

Cash management

 

23,406

 

 

449,949

 

 

150

 

 

7

%

 

 

5

%

 

Advisory

 

(1,057

)

 

1,515

 

 

-

 

 

-

 

 

 

-

 

 

Total

$

102,929

 

$

6,288,195

 

$

2,896

 

 

100

%

 

 

100

%

 

(1)

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


-2-


BUSINESS HIGHLIGHTS

 

Long-term net inflows were positive across all major regions, with net inflows of $55.3 billion, $17.9 billion and $7.4 billion from clients in the Americas, EMEA and Asia-Pacific, respectively. At December 31, 2017, BlackRock managed 63% of its long-term AUM for clients in the Americas, 29% for clients in EMEA and 8% for clients in Asia-Pacific.

The Company’s net flows by client type for the fourth quarter of 2017 are presented below.

 

Retail long-term net inflows of $11.4 billion reflected net inflows of $7.4 billion in the United States and $4.0 billion internationally. Fixed income net inflows of $8.0 billion were diversified across our top-performing active platform, led by net inflows into unconstrained, short duration and municipals categories. Multi-asset net inflows of $2.0 billion were largely due to inflows into the Multi-asset Income fund family. Equity net inflows of $1.1 billion were paced by flows into international equities.

 

iShares ETFs long-term net inflows of $54.8 billion reflected strength in iShares Core, precision exposure and financial instrument ETFs. Equity net inflows of $44.9 billion were driven by both U.S. and international equity market exposures. Fixed income net inflows of $8.7 billion reflected inflows into broad fixed income and investment grade corporate funds. Commodities iShares generated $1.0 billion of net inflows.

 

Institutional active long-term net inflows of $2.2 billion were led by multi-asset net inflows of $2.9 billion, reflecting ongoing demand for our LifePath® target-date series and factors strategies, and fixed income net inflows of $2.3 billion. Equity net outflows of $1.2 billion were primarily due to outflows in fundamental active equities. Alternatives net inflows were $2.1 billion, excluding $3.9 billion of capital return associated with real estate and private equity fund-of-funds, or $1.8 billion of total net outflows. Momentum in illiquid alternatives fundraising continued, with $17 billion of committed capital available to invest on behalf of clients.

 

Institutional index long-term net inflows of $12.2 billion included fixed income net inflows of $24.0 billion, led by demand for liability-driven solutions, partially offset by equity net outflows of $9.0 billion. Alternatives net outflows of $2.5 billion were primarily due to outflows from passive currency overlays.

 

Cash management AUM increased 6% from the prior quarter to $449.9 billion.

 

INVESTMENT PERFORMANCE AT DECEMBER 31, 2017 (1)  

 

 

One-year period

Three-year period

Five-year period

  Fixed income:

 

 

 

  Actively managed AUM above benchmark or peer median

 

 

 

Taxable

81%

73%

90%

Tax-exempt

52%

68%

72%

  Index AUM within or above applicable tolerance

96%

93%

99%

  Equity:

 

 

 

  Actively managed AUM above benchmark or peer median

 

 

 

Fundamental

70%

72%

73%

Systematic

83%

87%

90%

  Index AUM within or above applicable tolerance

96%

99%

98%

(1)

Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 14 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 Friday, January 12, 2018 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 6567048). 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 Friday, January 12, 2018 and ending at midnight on Friday, January 26, 2018. 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 6567048. To access the webcast, please visit the investor relations section of www.blackrock.com.


-3-


About BlackRock

BlackRock helps investors build better financial futures.  As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. As of December 31, 2017, the firm managed approximately $6.288 trillion in assets on behalf of investors worldwide.  For additional information on BlackRock, please visit www.blackrock.com | Twitter: @blackrock | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock.

-4-


CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

2017

 

 

2016

 

 

Change

 

 

2017

 

 

Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and

  securities lending revenue

$

2,896

 

 

$

2,486

 

 

$

410

 

 

$

2,792

 

 

$

104

 

Investment advisory performance fees

 

285

 

 

 

129

 

 

 

156

 

 

 

191

 

 

 

94

 

Technology and risk management revenue(a)

 

180

 

 

 

156

 

 

 

24

 

 

 

175

 

 

 

5

 

Distribution fees

 

7

 

 

 

9

 

 

 

(2

)

 

 

5

 

 

 

2

 

Advisory and other revenue(a)

 

101

 

 

 

110

 

 

 

(9

)

 

 

70

 

 

 

31

 

Total revenue

 

3,469

 

 

 

2,890

 

 

 

579

 

 

 

3,233

 

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

1,147

 

 

 

987

 

 

 

160

 

 

 

1,088

 

 

 

59

 

Distribution and servicing costs

 

131

 

 

 

109

 

 

 

22

 

 

 

123

 

 

 

8

 

Amortization of deferred sales commissions

 

4

 

 

 

7

 

 

 

(3

)

 

 

4

 

 

 

-

 

Direct fund expense

 

238

 

 

 

183

 

 

 

55

 

 

 

234

 

 

 

4

 

General and administration

 

448

 

 

 

355

 

 

 

93

 

 

 

363

 

 

 

85

 

Amortization of intangible assets

 

12

 

 

 

24

 

 

 

(12

)

 

 

27

 

 

 

(15

)

Total expense

 

1,980

 

 

 

1,665

 

 

 

315

 

 

 

1,839

 

 

 

141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

1,489

 

 

 

1,225

 

 

 

264

 

 

 

1,394

 

 

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on investments

 

33

 

 

 

6

 

 

 

27

 

 

 

41

 

 

 

(8

)

Interest and dividend income

 

14

 

 

 

7

 

 

 

7

 

 

 

15

 

 

 

(1

)

Interest expense

 

(46

)

 

 

(51

)

 

 

5

 

 

 

(46

)

 

 

-

 

Total nonoperating income (expense)

 

1

 

 

 

(38

)

 

 

39

 

 

 

10

 

 

 

(9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

1,490

 

 

 

1,187

 

 

 

303

 

 

 

1,404

 

 

 

86

 

Income tax expense (benefit)

 

(820

)

 

 

336

 

 

 

(1,156

)

 

 

445

 

 

 

(1,265

)

Net income

 

2,310

 

 

 

851

 

 

 

1,459

 

 

 

959

 

 

 

1,351

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

6

 

 

 

-

 

 

 

6

 

 

 

12

 

 

 

(6

)

Net income attributable to BlackRock, Inc.

$

2,304

 

 

$

851

 

 

$

1,453

 

 

$

947

 

 

$

1,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

161,272,950

 

 

 

163,441,552

 

 

 

(2,168,602

)

 

 

161,872,716

 

 

 

(599,766

)

Diluted

 

163,777,534

 

 

 

165,854,167

 

 

 

(2,076,633

)

 

 

163,773,546

 

 

 

3,988

 

Earnings per share attributable to BlackRock, Inc.

   common stockholders (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

14.29

 

 

$

5.21

 

 

$

9.08

 

 

$

5.85

 

 

$

8.44

 

Diluted

$

14.07

 

 

$

5.13

 

 

$

8.94

 

 

$

5.78

 

 

$

8.29

 

Cash dividends declared and paid per share

$

2.50

 

 

$

2.29

 

 

$

0.21

 

 

$

2.50

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUM (end of period)

$

6,288,195

 

 

$

5,147,852

 

 

$

1,140,343

 

 

$

5,976,892

 

 

$

311,303

 

Shares outstanding (end of period)

 

161,046,825

 

 

 

163,121,291

 

 

 

(2,074,466

)

 

 

161,597,770

 

 

 

(550,945

)

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

42.9

%

 

 

42.4

%

 

 

50

bps

 

 

43.1

%

 

 

(20

) bps

Effective tax rate

 

(55.2

)%

 

 

28.3

%

 

 

(8,350

) bps

 

 

32.0

%

 

 

(8,720

) bps

As adjusted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (1)

$

1,492

 

 

$

1,232

 

 

$

260

 

 

$

1,398

 

 

$

94

 

Operating margin (1)

 

44.8

%

 

 

44.4

%

 

 

40

bps

 

 

45.0

%

 

 

(20

) bps

Nonoperating income (expense), less net income

  (loss) attributable to noncontrolling interests

$

(5

)

 

$

(38

)

 

$

33

 

 

$

(2

)

 

$

(3

)

Net income attributable to BlackRock, Inc. (2)

$

1,022

 

 

$

852

 

 

$

170

 

 

$

969

 

 

$

53

 

Diluted earnings attributable to BlackRock, Inc.

     common stockholders per share (2) (3)

$

6.24

 

 

$

5.14

 

 

$

1.10

 

 

$

5.92

 

 

$

0.32

 

Effective tax rate

 

31.3

%

 

 

28.6

%

 

 

270

bps

 

 

30.6

%

 

 

70

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See pages 12-13 for the reconciliation to GAAP and notes (1) through (3) for more information on as adjusted items.

 

 

(a) Beginning with the first quarter of 2017, Aladdin revenue previously reported within “BlackRock Solutions® and advisory” has been presented within “Technology and risk management revenue” on the condensed consolidated statements of income.  The remaining previously reported “BlackRock Solutions and advisory” revenue is currently reported as part of “Advisory and other revenue.” Under the historical presentation, BlackRock Solutions and advisory revenue would have totaled $234 million for the three months ended December 31, 2017. The prior period amount reported for BlackRock Solutions and advisory of $197 million for the three months ended December 31, 2016 has been reclassified to conform to the current presentation.  See page 9 for further information.

-5-


CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

2017

 

 

2016

 

 

Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and securities

      lending revenue

$

10,893

 

 

$

9,880

 

 

$

1,013

 

Investment advisory performance fees

 

594

 

 

 

295

 

 

 

299

 

Technology and risk management revenue(a)

 

677

 

 

 

595

 

 

 

82

 

Distribution fees

 

24

 

 

 

41

 

 

 

(17

)

Advisory and other revenue(a)

 

303

 

 

 

344

 

 

 

(41

)

Total revenue

 

12,491

 

 

 

11,155

 

 

 

1,336

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

4,255

 

 

 

3,880

 

 

 

375

 

Distribution and servicing costs

 

492

 

 

 

429

 

 

 

63

 

Amortization of deferred sales commissions

 

17

 

 

 

34

 

 

 

(17

)

Direct fund expense

 

904

 

 

 

766

 

 

 

138

 

General and administration

 

1,462