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Section 1: 8-K (8-K)

blk-8k_20180322.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): March 22, 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 7.01. Regulation FD Disclosure

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements.

Effective January 1, 2018, BlackRock, Inc. (the “Company”) elected to adopt ASU 2014-09 on a full retrospective basis, which will require 2016 and 2017 to be recast. Refer to Exhibit 99.1 for financial information on a basis with the new standard for 2016 and 2017.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

 

(d)  Exhibits

 

99.1

BlackRock’s Financial Information Recast for the New Revenue Recognition Standard

 


 


 

EXHIBIT INDEX

 

99.1

BlackRock’s Financial Information Recast for the New Revenue Recognition Standard

 


 

 


 

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: March 22, 2018

Senior Managing Director and

 

Chief Financial Officer

 

Gary S. Shedlin

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (BLACKROCK'S FINANCIAL INFORMATION RECAST FOR THE NEW REVENUE RECOGNITION STANDARD)

blk-ex991_8.htm

 

Exhibit 99.1

 

BLACKROCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recast

 

 

Previously Reported

 

 

 

 

 

 

Recast

 

 

Previously Reported

 

 

 

 

 

 

 

 

2017

 

 

2017

 

 

Change

 

 

2016

 

 

2016

 

 

Change

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and securities

      lending revenue

$

10,868

 

 

$

10,893

 

 

$

(25

)

 

$

9,848

 

 

$

9,880

 

 

$

(32

)

 

 

Investment advisory performance fees

 

594

 

 

 

594

 

 

 

-

 

 

 

295

 

 

 

295

 

 

 

-

 

 

 

Technology and risk management revenue

 

657

 

 

 

677

 

 

 

(20

)

 

 

588

 

 

 

595

 

 

 

(7

)

 

 

Distribution fees

 

1,183

 

 

 

24

 

 

 

1,159

 

 

 

1,198

 

 

 

41

 

 

 

1,157

 

 

 

Advisory and other revenue

 

298

 

 

 

303

 

 

 

(5

)

 

 

332

 

 

 

344

 

 

 

(12

)

 

 

Total revenue

 

13,600

 

 

 

12,491

 

 

 

1,109

 

 

 

12,261

 

 

 

11,155

 

 

 

1,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

4,253

 

 

 

4,255

 

 

 

(2

)

 

 

3,878

 

 

 

3,880

 

 

 

(2

)

 

 

Distribution and servicing costs

 

1,663

 

 

 

492

 

 

 

1,171

 

 

 

1,608

 

 

 

429

 

 

 

1,179

 

 

 

Amortization of deferred sales commissions

 

-

 

 

 

17

 

 

 

(17

)

 

 

-

 

 

 

34

 

 

 

(34

)

 

 

Direct fund expense

 

895

 

 

 

904

 

 

 

(9

)

 

 

757

 

 

 

766

 

 

 

(9

)

 

 

General and administration

 

1,446

 

 

 

1,462

 

 

 

(16

)

 

 

1,278

 

 

 

1,301

 

 

 

(23

)

 

 

Restructuring charge

 

-

 

 

 

-

 

 

 

-

 

 

 

76

 

 

 

76

 

 

 

-

 

 

 

Amortization of intangible assets

 

89

 

 

 

89

 

 

 

-

 

 

 

99

 

 

 

99

 

 

 

-

 

 

 

Total expense

 

8,346

 

 

 

7,219

 

 

 

1,127

 

 

 

7,696

 

 

 

6,585

 

 

 

1,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

5,254

 

 

 

5,272

 

 

 

(18

)

 

 

4,565

 

 

 

4,570

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating income (expense)

 

5

 

 

 

5

 

 

 

-

 

 

 

(110

)

 

 

(110

)

 

 

-

 

 

 

Income before income taxes

 

5,259

 

 

 

5,277

 

 

 

(18

)

 

 

4,455

 

 

 

4,460

 

 

 

(5

)

 

 

Income tax expense

 

270

 

 

 

270

 

 

 

-

 

 

 

1,289

 

 

 

1,290

 

 

 

(1

)

 

 

Net income

 

4,989

 

 

 

5,007

 

 

 

(18

)

 

 

3,166

 

 

 

3,170

 

 

 

(4

)

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

37

 

 

 

37

 

 

 

-

 

 

 

(2

)

 

 

(2

)

 

 

-

 

 

 

Net income attributable to BlackRock, Inc.

$

4,952

 

 

$

4,970

 

 

$

(18

)

 

$

3,168

 

 

$

3,172

 

 

$

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to BlackRock, Inc.

   common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

30.54

 

 

$

30.65

 

 

$

(0.11

)

 

$

19.27

 

 

$

19.29

 

 

$

(0.02

)

 

 

Diluted

$

30.12

 

 

$

30.23

 

 

$

(0.11

)

 

$

19.02

 

 

$

19.04

 

 

$

(0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

38.6

%

 

 

42.2

%

 

 

(360

) bps

 

 

37.2

%

 

 

41.0

%

 

 

(380

) bps

 

 

Compensation and benefits expense-to-revenue ratio

 

31.3

%

 

 

34.1

%

 

 

(280

) bps

 

 

31.6

%

 

 

34.8

%

 

 

(320

) bps

 

 

As adjusted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (1)

$

5,269

 

 

$

5,287

 

 

$

(18

)

 

$

4,669

 

 

$

4,674

 

 

$

(5

)

 

 

Operating margin (1)

 

44.1

%

 

 

44.1

%

 

 

-

  bps

 

 

43.8

%

 

 

43.7

%

 

 

10

  bps

 

 

Compensation and benefits expense-to-revenue ratio (2)

 

35.5

%

 

 

33.9

%

 

 

160

  bps

 

 

36.1

%

 

 

34.5

%

 

 

160

  bps

 

 

Net income attributable to BlackRock, Inc. (3)

$

3,698

 

 

$

3,716

 

 

$

(18

)

 

$

3,210

 

 

$

3,214

 

 

$

(4

)

 

 

Diluted earnings attributable to BlackRock, Inc.

   common stockholders per share (3) (4)

$

22.49

 

 

$

22.60

 

 

$

(0.11

)

 

$

19.27

 

 

$

19.29

 

 

$

(0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

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

- 1 -


 

BLACKROCK, INC.

2017 QUARTERLY INFORMATION

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Year Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Quarter Ended

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recast

 

 

 

 

 

 

Recast

 

 

 

 

 

 

Recast

 

 

 

 

 

 

Recast

 

 

 

 

 

 

 

 

 

 

for New

 

 

Previously

 

 

for New

 

 

Previously

 

 

for New

 

 

Previously

 

 

for New

 

 

Previously

 

 

 

 

 

 

Standard

 

 

Reported

 

 

Standard

 

 

Reported

 

 

Standard

 

 

Reported

 

 

Standard

 

 

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and

    securities lending revenue

 

$

2,523

 

 

$

2,530

 

 

$

2,667

 

 

$

2,675

 

 

$

2,781

 

 

$

2,792

 

 

$

2,897

 

 

$

2,896

 

 

 

 

Investment advisory performance fees

 

 

70

 

 

 

70

 

 

 

48

 

 

 

48

 

 

 

191

 

 

 

191

 

 

 

285

 

 

 

285

 

 

 

 

Technology and risk management revenue

 

 

154

 

 

 

158

 

 

 

158

 

 

 

164

 

 

 

169

 

 

 

175

 

 

 

176

 

 

 

180

 

 

 

 

Distribution fees

 

 

287

 

 

 

7

 

 

 

292

 

 

 

5

 

 

 

298

 

 

 

5

 

 

 

306

 

 

 

7

 

 

 

 

Advisory and other revenue

 

 

58

 

 

 

59

 

 

 

71

 

 

 

73

 

 

 

69

 

 

 

70

 

 

 

100

 

 

 

101

 

 

 

 

Total revenue

 

 

3,092

 

 

 

2,824

 

 

 

3,236

 

 

 

2,965

 

 

 

3,508

 

 

 

3,233

 

 

 

3,764

 

 

 

3,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

1,021

 

 

 

1,021

 

 

 

998

 

 

 

999

 

 

 

1,087

 

 

 

1,088

 

 

 

1,147

 

 

 

1,147

 

 

 

 

Distribution and servicing costs

 

 

401

 

 

 

117

 

 

 

410

 

 

 

121

 

 

 

419

 

 

 

123

 

 

 

433

 

 

 

131

 

 

 

 

Amortization of deferred sales commissions

 

 

-

 

 

 

5

 

 

 

-

 

 

 

4

 

 

 

-

 

 

 

4

 

 

 

-

 

 

 

4

 

 

 

 

Direct fund expense

 

 

206

 

 

 

208

 

 

 

221

 

 

 

224

 

 

 

231

 

 

 

234

 

 

 

237

 

 

 

238

 

 

 

 

General and administration

 

 

296

 

 

 

301

 

 

 

345

 

 

 

350

 

 

 

355

 

 

 

363

 

 

 

450

 

 

 

448

 

 

 

 

Amortization of intangible assets

 

 

25

 

 

 

25

 

 

 

25

 

 

 

25

 

 

 

27

 

 

 

27

 

 

 

12

 

 

 

12

 

 

 

 

Total expense

 

 

1,949

 

 

 

1,677

 

 

 

1,999

 

 

 

1,723

 

 

 

2,119

 

 

 

1,839

 

 

 

2,279

 

 

 

1,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,143

 

 

 

1,147

 

 

 

1,237

 

 

 

1,242

 

 

 

1,389

 

 

 

1,394

 

 

 

1,485

 

 

 

1,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating income (expense)

 

 

(7

)

 

 

(7

)

 

 

1

 

 

 

1

 

 

 

10

 

 

 

10

 

 

 

1

 

 

 

1

 

 

 

 

Income before income taxes

 

 

1,136

 

 

 

1,140

 

 

 

1,238

 

 

 

1,243

 

 

 

1,399

 

 

 

1,404

 

 

 

1,486

 

 

 

1,490

 

 

 

 

Income tax expense (benefit)

 

 

268

 

 

 

269

 

 

 

374

 

 

 

376

 

 

 

443

 

 

 

445

 

 

 

(815

)

 

 

(820

)

 

 

 

Net income

 

 

868

 

 

 

871

 

 

 

864

 

 

 

867

 

 

 

956

 

 

 

959

 

 

 

2,301

 

 

 

2,310

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to

    noncontrolling interests

 

 

9

 

 

 

9

 

 

 

10

 

 

 

10

 

 

 

12

 

 

 

12

 

 

 

6

 

 

 

6

 

 

 

 

Net income attributable to BlackRock, Inc.

 

$

859

 

 

$

862

 

 

$

854

 

 

$

857

 

 

$

944

 

 

$

947

 

 

$

2,295

 

 

$

2,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to BlackRock,

   Inc. common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

5.27

 

 

$

5.29

 

 

$

5.26

 

 

$

5.27

 

 

$

5.83

 

 

$

5.85

 

 

$

14.23

 

 

$

14.29