Q2 2013 Earnings

Press Release Supplement

July 18, 2013

1

Important Notes

This

presentation,

and

other

statements

that

BlackRock

may

make,

may

contain

forward-looking

statements

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act,

with

respect

to

BlackRock’s

future

financial

or

business

performance,

strategies

or

expectations.

Forward-looking

statements

are

typically

identified

by

words

or

phrases

such

as

“trend,”

“potential,”

“opportunity,”

“pipeline,”

“believe,”

“comfortable,”

“expect,”

“anticipate,”

“current,”

“intention,”

“estimate,”

“position,”

“assume,”

“outlook,”

“continue,”

“remain,”

“maintain,”

“sustain,”

“seek,”

“achieve,”

and

similar

expressions,

or

future

or

conditional

verbs

such

as

“will,”

“would,”

“should,”

“could,”

“may”

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

presentation

the

following

factors,

among

others,

could

cause

actual

results

to

differ

materially

from

forward-looking

statements

or

historical

performance:

(1)

the

introduction,

withdrawal,

success

and

timing

of

business

initiatives

and

strategies;

(2)

changes

and

volatility

in

political,

economic

or

industry

conditions,

the

interest

rate

environment,

foreign

exchange

rates

or

financial

and

capital

markets,

which

could

result

in

changes

in

demand

for

products

or

services

or

in

the

value

of

assets

under

management;

(3)

the

relative

and

absolute

investment

performance

of

BlackRock’s

investment

products;

(4)

the

impact

of

increased

competition;

(5)

the

impact

of

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

BlackRock;

(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.

This

presentation

also

includes

non-GAAP

financial

measures.

You

can

find

our

presentations

on

the

most

directly

comparable

GAAP

financial

measures

calculated

in

accordance

with

GAAP

and

our

reconciliations

in

the

appendix

to

this

earnings

release

supplement,

our

current

earnings

release

dated

July

18,

2013,

and

BlackRock’s

other

periodic

reports,

which

are

available

on

BlackRock’s

web

site

at

www.blackrock.com.

2

Table of Contents

Operating

and

Net

Income/Diluted

EPS,

as

adjusted

Page 3

Operating

Margin,

as

adjusted

Page 4

Q2

2013

Mix

by

Product,

Client

Type,

Style

and

Region

Page 5

Major

Market

Indices

and

Exchange

Rates

Page 6

Year-over-Year:

Q2

2013

vs.

Q2

2012

Pages 7-12

Sequential

Quarters:

Q2

2013

vs.

Q1

2013

Pages 13-18

Non-operating

and

Capital

Management

Pages 19-21

Appendix

Pages 22-29

3

EPS up 34% and operating income up 18% year-over-year

Operating and Net Income, as adjusted ($ in millions)

Diluted Earnings Per Share, as adjusted

For

further

information

and

reconciliation

between

GAAP

and

as

adjusted,

see

the

appendix,

notes

(a)

through

(f)

in

the

current

earnings

release

as

well

as

previously

filed

Form

10-Ks,

10-Qs

and

8-Ks.

•

Q2 2013 EPS reflects a $39 million non-cash, non-operating pre-tax gain related to the PennyMac IPO

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

4

Continued margin improvement

Operating

Margin,

as

adjusted

For

further

information

and

reconciliation

between

GAAP

and

as

adjusted,

see

the

appendix,

notes

(a)

through

(f)

in

the

current

earnings

release

as

well

as

previously

filed

Form

10-Ks,

10-Qs

and

8-Ks.

•

Sequential

results

reflect

seasonal

factors

primarily

related

to

higher

securities

lending

fees,

lower

payroll

taxes

and

lower

performance

fees

•

Q2

2013

and

Q1

2013

include

$9

million

and

$33

million

of

organizational

alignment

costs,

respectively

•

Amounts

related

to

the

PennyMac

Charitable

Contribution

have

been

excluded

from

as

adjusted

results,

among

other

items

5

A broadly diversified business across clients, products and geographies

Q2 2013 Long-term Base Fees of $2.094 billion

Long-term Assets Under Management of $3.564 trillion at June 30, 2013

Product Type

Client Type

Style

Region

Alternatives 3%

Alternatives 8%

Multi-asset

8%

Multi-asset

12%

Fixed Income

34%

Fixed Income

24%

Equity

55%

Equity

56%

iShares

22%

iShares

35%

Retail

12%

Retail

33%

Institutional

66%

Institutional

32%

AUM

Base Fees

AUM

Base Fees

Index

42%

Index

11%

iShares

22%

iShares

35%

Asia-Pacific

8%

Asia

-

Pacific 5%

EMEA

31%

EMEA

30%

Americas

61%

Americas

65%

Active

36%

Active

54%

AUM

Base Fees

AUM

Base Fees

6

Major market indices and exchange rates

Spot

Spot

June 30, 2013

vs.

Average Level

Average

Q2 2013 vs.

June 30,

2013

March 31,

2013

March 31,

2013

Q2 2013

Q2 2012

Q1 2013

Q2 2012

Q1 2013

Equity Indices:

Domestic

S&P 500

1,606

1,569

2.4%

1,610

1,350

1,513

19.3%

6.4%

Global

MSCI Barra World Index

1,434

1,435

(0.1%)

1,463

1,233

1,405

18.7%

4.1%

MSCI Europe Index

98

101

(3.0%)

101

86         

100

17.4%

1.0%

MSCI AC Asia Pacific Index

131

136

(3.7%)

136

118          

133

15.3%

2.0%

MSCI Emerging Markets Index

940

1,035

(9.1%)

1,004

963             1,059

4.2%

(5.2%)

S&P Global Natural Resources

3,083

3,415

(9.7%)

3,295

3,209

3,524

2.7%

(6.5%)

Fixed Income Index:

Barclays U.S. Aggregate Bond Index

1,799

1,842

(2.3%)

1,839

1,800

1,837

2.2%

0.1%

Foreign Exchange Rates:

GBP to USD

1.52

1.52

0.1%

1.54

1.58

1.55

(3.0%)

(1.0%)

EUR to USD

1.30

1.28

1.5%

1.31

1.28

1.32

1.8%

(1.1%)

Source: Bloomberg

Year-over-year

Q2 2013 vs. Q2 2012

*

*

*

*

*

*

*

*

*

*

*

8

Q2 2013 Compared to Q2 2012, as adjusted

EPS up 34% year-over-year driven by an increase in operating income of 18%

For

further

information

and

reconciliation

between

GAAP

and

as

adjusted,

see

the

appendix

and

notes

(a)

through

(f)

in

the

current

earnings

release.

•

Q2 2013 EPS reflects a $39 million non-cash, non-operating pre-tax gain related to the PennyMac IPO

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

9

Q2 2013 Compared to Q2 2012, as adjusted

Operating results reflect record base fees and margin expansion

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

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

10

Revenue reflects record base fees and higher performance fees

Q2 2013 Compared to Q2 2012

Total Revenue

Q2 2012

$2.23 billion

Q2 2013

$2.48 billion

11

Base fees (including securities lending) reflect growth across all traditional long-term

asset classes

Q2 2013 Compared to Q2 2012

Base fees

12

Expenses driven by higher revenue-related expenses

Expenses, as adjusted, by Category

Q2 2013 Compared to Q2 2012, as adjusted

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

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

(1) Compensation & benefits expense excludes organizational alignment costs incurred in Q2 2013, which is presented separately above.

(1)

Sequential Quarters

Q2 2013 vs. Q1 2013

************************

************************

************************

************************

************************

************************

************************

************************

************************

************************

************************

***********************

14

Results reflect base fee growth and seasonal factors

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

Q2 2013 Compared to Q1 2013, as adjusted

•

Sequential results reflect seasonal factors primarily related to

higher securities lending fees, lower payroll taxes and lower performance fees

•

Q2 2013 and Q1 2013 include $9 million and $33 million of organizational alignment costs, respectively

•

Q1 2013 included $18 million of pre-tax fund launch costs

•

Q2 2013 EPS reflects a $39 million non-cash, non-operating pre-tax gain related to the PennyMac IPO

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

15

Operating income reflects record base fees, margin expansion and

seasonal factors

Q2 2013 Compared to Q1 2013 , as adjusted

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

•

Sequential results reflect seasonal factors primarily related to

higher securities lending fees, lower payroll taxes and lower performance fees

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

16

Higher revenue driven by record base fees and seasonally higher securities lending

Q2 2013 Compared to Q1 2013

Total Revenue

17

Base fees (including securities lending) reflects growth from higher average AUM

Base Fees

Q2 2013 Compared to Q1 2013

18

Expenses reflects seasonal factors

(1)

Compensation & benefits expense excludes organizational alignment costs incurred in Q1 2013 and Q2 2013, which are presented separately above. G&A expense excludes Q1 2013 fund launch

costs, which are also presented separately above.

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

Expenses, as adjusted, by Category

Q2 2013 Compared to Q1 2013, as adjusted

•

Sequential results reflect seasonal factors primarily related to

lower payroll taxes

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

Non-operating and Capital Management

******

******

******

******

******

******

******

******

******

******

******

*****

20

Q2 2013 $12 million Non-Operating Income by Category, as adjusted

Q2 2013 non-operating income

$4

$4

$7

$5

$2

$39

($49)

($60)

($50)

($40)

($30)

($20)

($10)

$0

$10

$20

$30

$40

Private Equity

Real Estate

Distressed

Credit/ Mortgage

Funds

Hedge Funds/

Funds of Hedge

Funds

Other

Investments

Non-cash Gain

Related to

PennyMac IPO

Net Interest

Expense

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

Net Interest Expense

Investment Gains

$22 million Net Investment Gain

•

Amounts related to the PennyMac Charitable Contribution have been excluded from as adjusted results, among other items

21

Continued commitment to sound capital management

Operating cash flow

Share repurchases

Amounts above exclude repurchases of employee tax withholdings related to employee stock transactions.

Total payout ratio

Dividends and Dividend Payout Ratio

Payout ratio = (Dividends declared + shares repurchases) / GAAP Net income.

For further information and reconciliation between GAAP and as adjusted, see the previously filed Form 10-Ks,

Form 10-Qs and 8-Ks and the appendix to this earnings release supplement.

Dividend payout ratio = Dividends declared / GAAP Net income.

Appendix

*

*

*

*

*

*

*

*

*

*

*

*

23

Q2 2013 long-term AUM up 9% from Q2 2012

Q2 2013 Compared to Q2 2012

Long-term AUM

(1)

Net new business excludes the effect of a single low-fee non-ETP index fixed income outflow of $74.2 billion in the third quarter 2012, which is shown separately above.

(2)

Market includes $6.1 billion of AUM acquired from Swiss Re Private Equity Partners in September 2012.

24

Q2 2013 long-term AUM down 2% from Q1 2013

Q2 2013 Compared to Q1 2013

Long-term AUM

25

Quarterly operating income –

GAAP and as adjusted

Operating Income ($ in millions)

Non-GAAP Adjustments ($ in millions)

Non-GAAP adjustments include amounts related to the PennyMac Charitable Contribution, a contribution to short-term

investment funds (“STIFs”), PNC LTIP funding obligation and compensation related to appreciation (depreciation) on

certain deferred compensation plans.

For further information and reconciliation between GAAP and as adjusted, see notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks.

26

Quarterly net income –

GAAP and as adjusted

Net Income ($ in millions)

Non-GAAP Adjustments ($ in millions)

Non-GAAP adjustments include amounts related to the PennyMac Charitable Contribution,  a contribution to STIFs, PNC

LTIP funding obligation and income tax changes.

For further information and reconciliation between GAAP and as adjusted, see notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks.

27

Quarterly non-operating income (expense) –

GAAP and as adjusted

Non-Operating Income (Expense) ($ in millions)

Non-GAAP Adjustments ($ in millions)

Non-GAAP adjustments include net income (loss) attributable to non-controlling interests, a gain associated with the

PennyMac Charitable Contribution and compensation expense related to (appreciation) depreciation on certain deferred

compensation plans.

For further information and reconciliation between GAAP and as adjusted, see notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks.

28

Q2 2013 PennyMac Financial Impact

Both GAAP and as adjusted  results include a $39 million non-cash, pre-tax gain related to the carrying value of the Company’s equity method investment in PennyMac in connection with PennyMac’s initial

public offering.

29

Cash Flow GAAP and As Adjusted

(in millions)

2010

2011

2012

YTD

Q2 2012

EST YTD

Q2 2013

Operating Cash Flows

Operating Cash flows, GAAP basis

$2,488

$2,826

$2,240

$865

$1,300

Less: Non-GAAP adjustments

(1)

(77)

178

(483)

51

200

Operating Cash flows, as Adjusted

$2,565

$2,648

$2,723

$814

$1,100

Investing Cash Flows

Investing Cash flows, GAAP basis

($627)

($204)

($266)

($547)

$-

Less: Non-GAAP adjustments

(1)

(52)

24

(211)

(184)

-

Investing Cash flows, as  Adjusted

($575)

($228)

($55)

($363)

$-

Financing Cash Flows

Financing Cash flows, GAAP basis

($3,170)

($2,485)

($944)

($235)

($2,200)

Less: Non-GAAP adjustments

(1)

110

(71)

631

(3)

(100)

Financing Cash flows, as Adjusted

($3,280)

($2,414)

($1,575)

($232)

($2,100)

(1)

Non-GAAP

adjustments

include

the

impact

on

cash

flows

of

consolidated

sponsored

investment

funds

and

consolidated

VIEs

.

*

*

*

*

*

*

*

*

*

*

*

* * * * * * * * * *