Agenda
8:00 – 8:15am Welcome Remarks Robert S. Kapito , President
8:20 – 8:40am Strategic Product Management: Optimizing the Platform J. Richard Kushel , Deputy COO & Head of Strategic Product Management
8:45 – 9:15am Combined Power of Alpha & Beta Quintin R. Price , Global Head of Alpha Strategies Amy L. Schioldager , Global Head of Beta Strategies
9:20 – 9:50am Retail: A Global Opportunity Robert W. Fairbairn , Global Head of Retail & iShares
9:55 – 10:10am Break
10:10 – 10:40am Institutional & BlackRock Solutions: Focused Execution Robert L. Goldstein , Global Head of Institutional & BlackRock Solutions
10:40 – 11:00am Aladdin Platform: Sustainable Differentiation Charles S. Hallac , COO
11:05 – 11:35am iShares: Growth from Here Mark K. Wiedman , Global Head of iShares
11:40 – 12:10pm Delivering Shareholder Value Gary S. Shedlin , CFO
12:10 – 12:15pm Break
12:15 – 12:45pm Luncheon
12:45 – 1:30pm Audience Discussion
1:30 – 2:00pm Closing Remarks & Final Questions Laurence D. Fink , Chairman & CEO Forward-looking Statements
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 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. BLACKROCK INVESTOR DAY 2013 Welcome Remarks
Robert S. Kapito, President Today’s goals
1 Deepen understanding of BlackRock
Provide enhanced access to a broad range of 2 senior leaders
3 Agenda
Strategic Product Management Richard Kushel Deputy COO & Head of SPM Quintin Price Global Head of Alpha Strategies Alpha Beta Amy Schioldager Global Head of Beta Strategies
Retail Robert Fairbairn Global Head of Retail & iShares
Institutional & Robert Goldstein Global Head of Institutional & BRS BRS
Aladdin Platform Charles Hallac Chief Operating Officer
iShares Mark Wiedman Global Head of iShares
Finance Gary Shedlin Chief Financial Officer
Keynote Laurence Fink Chairman & CEO
4 Today’s goals
1 Deepen understanding of BlackRock
Provide enhanced access to a broad range of 2 senior leaders
3 Communicate growth, differentiation and execution
5 The BlackRock Principles
6 Highly differentiated asset manager
Diversified global firm with $3.9 trillion in AUM & $2.4 billion in 1Q Revenue Unparalleled mix of active and passive strategies to meet evolving client needs Industry leader in advice-oriented solutions, risk management, and innovation
Product Client Type Region
8% 3% 8% 22% 31% 34% 55% 11% 67% 61%
Equity Fixed Income Institutional Retail Americas EMEA Multi-Asset Alternatives iShares Asia Pacific
Note: Charts above reflect long-term AUM at March 31, 2013 which excludes Cash Management & Advisory AUM.
7 BLACKROCK INVESTOR DAY Strategic Product Management: Optimizing the Platform
Rich Kushel, Deputy Chief Operating Officer Why Strategic Product Management?
Unifying function central to optimizing product set and driving organic growth
Discipline Focus Innovation
Apply fact-based Align distribution and Drive innovation to stay objective criteria to investment teams ahead of client needs and product decisions market opportunities Recognize that capacity Optimize decisions for is a dear resource clients and BlackRock Results driven by limited number of products
SPM is a key differentiator for BlackRock
9 Balancing product breadth and Discipline Focus Innovation complexity
Diverse set of products & customized offerings $3.93tn Assets Under Management 7,373 Portfolios across multiple fund structures
US Non-US US Mutual Separate Collective Mutual Other Funds Accounts ETFs Trusts Funds
AUM $bn $199 $803 $775 $168 $366 $1,624
Portfolio 199 627 1,004 329 945 4,269 Count
As of March 31, 2013; Source: BlackRock 10 Disciplined product approval process Discipline Focus Innovation
Rigorous approach to adding products to Product Executive the shelf Committee What need are we fulfilling for the client? Oversees strategic product direction
Is this consistent with the BlackRock Strategic Product Principles & our themes? Management
Shift dialogue to “should we” launch this, not simply “can we” Regional Product Development Committees Margin & materiality thresholds Americas EMEA
Asia ex- Japan Australia Focus on scalable opportunities Japan
11 Product rationalization creates capacity Discipline Focus Innovation and drives focus
BlackRock’s portfolio distribution is very long-tailed
Eliminate or reposition unnecessary or underperforming products based on product health criteria 250 funds closed to date 102 funds in closure 188 funds scheduled to close
Embed product rationalization as a core management practice
Example: Restructuring Australia product line-up Closed 94 funds across asset classes eliminating product overlap
Number of closures or scheduled closures representative of pooled funds Figures reflected as of March 31, 2013 and reflect 2012 & 2013 closures 12 Product health reviews objectively Discipline Focus Innovation assess offerings
SPM serves as an objective arbiter of how our products perform:
1. Performance data 2. Distribution data and commentary 3. Competitive / industry landscape
Five product health categories:
Category Killer Performing Watch List Remediation Provisional
All four pillars of Investment Material issues Critical Recently launched health show performance / identified with deficiencies or modified positive asset flows are pillars of health identified products momentum stable
13 Strategic product direction focuses Discipline Focus Innovation firm’s efforts
SPM partners with the client and investment businesses to execute on strategic themes Ensure that the firm is aligned on key product priorities
We use BlackRock’s themes to inform our firm-wide product strategy Themes reflect a 3 to 5 year view on market opportunities
Income ETFs Outcomes
Alternatives Emerging Markets Retirement
14 Innovation case study: EM Allocation Discipline Focus Innovation Fund
What was the situation we faced?
Investors continue to increase exposure Clients want… to EM… ~$760B flowed into Emerging Markets from 2010 to 2012 Multi-asset exposure 500 $436B Equity Debt Other Diversified exposure to Emerging markets 400
300 Less volatility $179B 200 $151B
100
- US Retail IntlInt'l Retail InstitutionalGlobal Inst’l
BlackRock has unique breadth of BlackRock is the largest EM manager… capabilities… Global Pac Basin Emerging Index & BlackRock accounts for ~10% of addressable Index Fund. Europe & Model- Equity Equity Frontiers based FI EM assets today
SAE AUM currently dominated by Beta strategies Asia Pacific Latin Emerging EM Debt Equity America Markets Not actively participating in active EM flows
Global EM India EM Asia Fixed Equity Equity Currency Income
Source: US Simfund, Global Simfund, eVestment 15 Innovation case study: EM Allocation Discipline Focus Innovation Fund
BlackRock Solution
Bring together capabilities into one global EM platform (headed by Jeff Shen)
Design differentiated product and build Asset Allocation capability to… • Access broadest EM opportunity set • Satisfy demand for EM exposure with less volatility • Leverage insights of diverse investment experts • Build upon success of Global Allocation franchise
Launch campaign in various outlets
EM Equity EM Debt Currency EM Allocation Fund Real Assets Pure Alpha
16 Optimizing the key challenges
Complexity vs. Breadth
Discipline vs. Innovation
17 BLACKROCK INVESTOR DAY 2013 Combined Power of Alpha & Beta
Quintin Price, Global Head of Alpha Strategies Amy Schioldager, Global Head of Beta Strategies Alpha & Beta at BlackRock
BlackRock manages a unique combination of active and passive investments on behalf of clients
Alpha & Beta at BlackRock
% of 1Q13 AUM % of 1Q13 Base Fees
Alpha Beta Beta 36% 45% 64% Alpha 55%
BlackRock Long-Term BlackRock Long-Term AUM: $3.629tn Base Fees: $2,043mm
Notes: Beta includes Index Equity, Index Fixed Income, and iShares.
19 Beta at BlackRock is Differentiated
Longevity and Innovation Performance Client Experience
40 years of indexing Expertise results in reliable and In depth consultations with experience consistent risk adjusted clients lead to customized Continuous innovators performance investment solutions contribute to broadest suite of Scale benefits translate to lower Backed by BlackRock’s best in investment strategies cost for clients class research, risk and analytics, client servicing
40 Years of Index Equity Management
Frontier Markets
Developed IMI Russell Index Strategies Funds Defined contribution US Equity Index EAFE Index capabilities Plus Plus iShares DJ Select Div EAFE Emerging EAFE Equity Emerging Exchange- Commodities iShares Small Cap Markets Small Index Market Equity Traded Funds Smart Beta Index Cap First 401(k) Minimum Securities Target Date Emerging Volatility Lending Fund (LifePath) World Equity Markets IMI iShares Benchmark Index pioneer Shares (WEBS) and innovator
1971 1981 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
20 Product Breadth Provides Pulse into Investor Behavior
Breadth of Beta exposures with room to grow through innovation
Index Equity Strategies
Traditional Non-Traditional
Fundamental Large Cap IMI Low Risk Beta Commodities Income Index
Minimum Small Cap Sectors Target Date Real Estate Risk Factors Volatility
Across Market Exposures
North America Global Developed Emerging / Frontier
21 Enhancing the Beta Investment Process
Regional expertise Leading technology and risk models Rapid dividend reinvestment Portfolio Construction
Internal crossing network Index changes 96% of AUM Best execution PhD staffed Research Benchmark at/above Efficient Knowledge Trading Strategies Advocacy Performance Trading Tolerance* Global Trading Research Team
Performance Daily review Oversight Investment Review Committee Independent Risk Team
* Index Equity 3 Year Performance as of March 2013; see Appendix for Performance Notes
22 Combined Power of Alpha and Beta
Providing individual product solutions and outcomes that leverage our broad spectrum of capabilities to meet evolving client needs Unparalleled combination of Active & Passive strategies on one platform Deliver solutions across Institutional, Retail and iShares clients Competition specializes in one or the other — we specialize in both
Index Enhanced Index Asset Allocation Active long- Pure alpha biased
Product Risk Beta Alpha Spectrum
23 Alpha Strategy Overview
People Product Process
Performance
24 Focus on the teams that Generate Alpha
Identifying opportunities to enhance performance, focusing our attention on them, and executing in a deliberate and effective manner
% of AUM above benchmark / peer median 3-year
Greater accountability, enhanced by new alignment Fixed Income 78% of divisional structure Enhanced performance in Fixed Income over 1 & 3 years, 5 year numbers expected to strengthen
Scientific Particularly strong performance in Emerging Markets 92% New alpha sources being explored for long-term Active Equity sustainable success
Fundamental Americas Equity re-stack largely complete Equity 39% New managers performing strongly overall
Performance data as of March 2013; see Appendix for Performance Notes
25 Addressing Underperformance: Where We Were - 3 Year
Date Of Manager Change 0 07/31/11 01/31/12 05/31/12 09/30/12 11/30/12
-1
Basic Value -2 51%ile* -2.08%
Retail Glb Emg Mkt 40%ile** -3 -2.76%
Retail Asia Ex-Jap 73%ile** -3.64% Flexible Equity Capital Appreciation 71%ile* 75%ile* -4 -3.92% -3.86%
Large Cap Core Active -Performance3yr Active (%) A-share 76%ile* -4.54%
-5
Large Cap Value 97%ile* -5.56% -6 Trailing 3yr manager performance at the manager change date. Percentile as of the manager change date *US percentile and returns sourced from Lipper ** International (UCITS) percentile and return sourced from Morningstar. All returns are net of fees and A-share class
26 Addressing Underperformance: Where We Are Since New PM Inception
Date Of Manager Change 6.00 Andrew Swan Retail Asia Ex-Jap 21%ile** 5.23%
4.00
Stournaras / Leavy Large Cap Value Bart Geer 2.00 43%ile* Basic Value Luiz Soares 1.32% 9%ile* Retail Glb Emg Mkt Large Cap Core 1.86% 47%ile** 47%ile* 1.17% 1.12% 0.00 09/30/11 03/31/12 07/31/12 08/31/12 12/31/12 02/28/13
Lawrence Kemp -2.00 Capital Appreciation 73%ile* -2.08%
-4.00
Active Inception Performance– SinceActive (%) A-share Tim Keefe Flexible Equity -6.00 97%ile* -5.51%
-8.00 Performance as of 05/31/13 *US percentile and return sourced from Lipper ** International (UCITS) percentile and return sourced from Morningstar . All returns are net of fees and A-share class
27 Alpha Products
Broad product set enabling solutions for range of client needs
Outcome-Oriented • Offering clients’ solutions for their specific needs
Scalable High Alpha Exposure • Premium product at • Offering cheap, highly premium price scalable solutions • Clearly differentiated • Market share driven from ETFs and low capability tracking error
Client Solutions
28 Can BlackRock Generate Consistent Alpha?
Alpha Investment Process
Structure Scale Performance is best delivered by Specialist teams are strengthened tightly knit, focused and accountable through interaction with each other teams (i.e. dialogue between growth and value)
Portfolio Research Construction & Trading Execution Specialized dedicated teams deliver In the majority of cases trade the most insightful, relevant and timely Risk Analytics execution is a specialized skill research Active Investing is evolving towards independent of portfolio construction a combined approach of art and science
29 Leveraging The Breadth Of BlackRock Client Case Study
Client Portfolio Overview Alpha & Beta on One Platform Large, global consumer electronics Challenge company Client outsourcing more pension liabilities as they reduce size of their pension office
BlackRock was the ideal partner due to unparalleled breadth of capabilities and alpha and beta solutions on one platform
BlackRock’s Solution
BlackRock delivers complete product suite • Manages 95% of Clients’ assets, as well as provide risk management services through Liability Matching Equity Aladdin platform • Provides both active and passive options EMD HY • Flexibility to shift between fund management Commodities Real Estate styles
Client increased exposure to cost-effective passive products
Further integrated with the firm through BlackRock Solutions risk reporting services
30 Key Takeaways
Performance, client experience and innovation differentiate Beta
People, products and investment process drive Alpha generation
Unmatched combination of Active and Passive on one platform
Alpha Beta
31 Appendix: Performance Notes
Past performance is not indicative of future results. The performance information shown is based on preliminarily available data. The performance information for actively managed accounts reflects U.S. open- end and closed-end mutual funds and similar EMEA-based products with respect to peer median comparisons, and actively managed institutional and high net worth separate accounts and funds located globally with respect to benchmark comparisons, as determined using objectively based internal parameters, using the most current verified information available as of March 31, 2013 (February 28, 2013 for high net worth accounts).
Accounts terminated prior to March 31, 2013 are not included. In addition, accounts that have not been verified as of April 12, 2013 have not been included. If such terminated and other accounts had been included, the performance information may have substantially differed from that shown. The performance information does not include funds or accounts that are not measured against a benchmark, any benchmark-based alternatives product, private equity products, CDOs, or accounts managed by BlackRock’s Financial Markets Advisory Group. Comparisons are based on gross-of-fee performance for U.S. retail, institutional and high net worth separate accounts and EMEA institutional separate accounts and net-of-fee performance for EMEA based retail products. The performance tracking information for institutional index accounts is based on gross-of-fee performance as of March 31, 2013, and includes all institutional accounts and all iShares funds globally using an index strategy.
AUM information is based on AUM for each account or fund in the asset class shown without adjustment for overlapping management of the same account or fund, as of March 31, 2013. 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. Fund performance reflects the reinvestment of dividends and distributions, but does not reflect sales charges.
32 BLACKROCK INVESTOR DAY 2013 Retail: A Global Opportunity
Robert Fairbairn, Global Head of Retail and iShares Global Retail at BlackRock
Global Retail represents 11% of BlackRock’s AUM and 33% of base fees Broad range of capabilities to meet client needs and deliver investment outcomes
Global Retail at BlackRock Diversified Asset Base
% of 1Q13 AUM % of 1Q13 Base Fees AUM by Asset 40% 34% 23% 3% Retail Retail Class $421bn $686mm Equity Fixed Income 11% Multi-Asset Alternatives
33% AUM by 64% 13%16% Vehicle 7%
Open-End MFs Closed-End MFs SMAs Other
AUM by 73% 19%7% BlackRock Long- BlackRock Long-Term Region 1% Term AUM: $3.629tn Base Fees: $2,043mm US EMEA & UK Asia Pacific LatAm & Iberia
34 BlackRock’s Retail Clients and Product Set
BlackRock has unparalleled global reach and scale Presence in 68 cities across 30 countries Registered in 47 jurisdictions Over 575 Retail sales professionals globally
Strength across vehicles Diverse client types
Open End MF / Separately Managed Gatekeepers and Financial Advisors Unit Trusts Accounts (SMAs) Due Diligence
Unit Linked / Variable ETFs Private Bankers Insurance Distributors Annuities
Consultants DC Advisors & Sub-Advisory Hedge Funds (e.g. Morningstar) Platforms
Investors and Tactical and Strategic Closed End Funds / Direct Platforms Models Investment Trusts Multi-Managers
35 Global Growth Strategy in Retail
Evolve our Product Set Enhance Distribution
Deliver the Firm
36 Evolve our Product Set: Strategic Themes
BlackRock’s themes inform our global product strategy Themes reflect a 3 to 5 year view on market opportunities
Outcome Income ETFs Investing
Emerging Alternatives Retirement Markets
37 Evolve our Product Set: US Retail
Strong Growth in Alternatives & Outcome Growth Strategy
US Retail Alts Mutual Fund Suite NNB ($mm) AUM = $1.5bn Capture share in US open-end $515 mutual fund market
$280 $230 $141 $161 Build on traditional areas of strength
1Q12 2Q12 3Q12 4Q12 1Q13 Compete aggressively in Multi-Asset Income Fund NNB ($mm) Alternatives and Outcome AUM = $2.3bn $1,108 Investing
$412 $264 $248 $126
1Q12 2Q12 3Q12 4Q12 1Q13
38 Evolve our Product Set: International Retail
AUM Diversification in International Retail Growth Strategy
33% 40% Continued product diversification:
Alternatives
1Q12 1Q13 Fixed Income
Revenue Diversification in International Retail Multi-Asset 25% 29%
Passive
1Q12 1Q13 Active Equity Passive Multi-Asset Active Fixed Alternatives
39 Enhance Distribution: US Retail
US Market AUM ($tn)
$5.4
$2.0 $1.5 $1.0
Wires/Broker Dealers Direct RIA Private Bank
Projected 2-3% 4-5% 6-7% 5-yr CAGR 1 4%
Market Leader 7-8% 15%+ 10%+ 10% Share of AUM
BLK Market 2 <1% <1% <1% Share of AUM 3%
1Source: Industry sources and BlackRock internal estimates 2Note: Wires ex-Merrill Lynch 40 Enhance Distribution: International Retail
Cross-Border Distribution Opportunity Growth Strategy
Total market AUM ($bn) BLK BLK Share (%) Rank Switzerland 175 6 4/43
Italy 171 7 5/41 Deepen existing client relationships Germany 126 8 5/41
Taiwan 73 15 3/30
United Kingdom 67 10 2/43 Penetrate new segments Luxembourg 63 4 7/42
France 44 5 5/42
Hong Kong 42 11 5/34 Capitalize on regulatory change Netherlands 30 10 4/40
Belgium 25 10 3/37
Sweden 16 10 4/37
Austria 14 8 5/39
Source: Lipper AssetWatch, as of March 31, 2013 41 Deliver the Firm
Uniquely equipped to deliver comprehensive solutions to Retail clients
Deep Expertise, Simply Delivered
Aligned distribution: “One BlackRock” to the client
Consultative, thematic approach
Asset allocation, building blocks, customized solutions
Models and tools
Clear, actionable investment content
42 Deliver the Firm: Spotlight on Aligned Distribution
Our combined distribution footprint is unparalleled as we deliver “One BlackRock” to clients
US Wholesalers By Firm
274 250 Externals Internals 200 185 184 175 166
104 90
47 24
US US BlackRock PIMCO American Invesco Oppenheimer Franklin Vanguard SPDR Invesco Retail iShares Funds Templeton PowerShares
Source: BlackRock, Market Metrics, as of 3Q12
43 Build the BlackRock Brand
44 Differentiation in Retail
Unparalleled, diverse Global distribution product set opportunities
Ability to deliver the full firm to clients
45 BLACKROCK INVESTOR DAY Institutional Client Business & BlackRock Solutions ® Focused Execution
Rob Goldstein, Head of Institutional Client Business & BlackRock Solutions Institutional Client Business at BlackRock
Institutional Client Business represents 67% of BlackRock’s AUM and 32% of base fees
Institutional Client Business at BlackRock Diversified Across Asset Classes & Styles
% of AUM % of Base Fees Institutional Institutional 5%22% 45% 17% 8%3% 1 AUM $2.4tn $645mm 32% 67% Base Fees 15% 22% 21% 9% 15% 18%
Active Equity Active Fixed Income BlackRock Long-Term BlackRock Long-Term Index Equity Index Fixed Income AUM: $3.629 tn Base Fees: $2,043 mm Multi-Asset Alternatives
1 BlackRock’s long-term Institutional base fees for 1Q 2013
47 Mature business serving a diverse client base
Institutional Client Business is organized into specialized teams focused on understanding the unique needs of each client With over 600 professionals in 33 cities around the globe
Institutional AUM by Client Type Institutional AUM by Region 1
Asia ex- Japan, 4% 2% Australia, 18% 2% Defined Benefit Japan, 6% Financial Institutions 45% Defined Contribution 8% North Official Institutions America, EMEA, 36% Corporate/Other 52% 18% Non-Profit 9%
Data as of March 31, 2013 1 AUM by market domicile
48 Key Questions
Can the Institutional business grow, given its size and the headwinds facing defined benefit pensions plans?
Is concentration a concern within BlackRock’s existing institutional client base?
What do we mean when we talk about providing outcome- oriented solutions to our institutional clients?
49 State of the industry: A two-speed marketplace
Increasingly a ‘two-speed’ market ‘Two speed’ Institutional Market 1 with limited natural growth Market AUM ($tn)
$11 Market AUM 3Y Growth Estimate Traditional DB business in secular decline
$8 7% $6 Specialty segments growing faster 5%
Defined Contribution 3% Insurers $1 Sovereign Wealth Funds / Official Institutions
-2% Defined Defined Insurers Sovereign Benefit Contribution Wealth Funds / Official Institutions
(1) Source: McKinsey Global AM database, as of December 2011.
50 Theme-based client approach
Beware the asymmetry in Revisit guidelines 1 fixed income—and prepare Adopt a more unconstrained, opportunistic for a different future approach
Demand institutional quality from alts managers Reappraisal of your 2 Alternatives Allocation Diversify among asset classes to uncover true risk and return drivers
Focus on achieving desired Allocate more effectively to reach desired 3 outcomes through goals, such as growth, downside protection, multi-asset approaches or reduction of unrewarded risk
Demand more from your Make low-turnover portfolios work harder 4 beta strategies Maximize liquidity budget
Adopt a more dynamic risk framework Strengthen allocations to 5 emerging markets Build optimal mix of emerging market exposures across asset classes and investment styles
Harness scientific techniques Systematically implement fundamental 6 to enhance diversification insights to optimize risk-adjusted and performance returns
51 Growth in the Institutional Client Business Strategy designed to capitalize on industry dynamics
Unique combination of a diversified platform and the ability to anticipate industry and client dynamics positions us well for future growth
Institutional Growth Strategy
1 Growing market share in key client segments
2 Deepening existing relationships
3 Continually building on our outcome-oriented approach
52 Significant growth opportunities in key client segments 1
Dedicated client teams capture further opportunities in fast growing client segments: Financial Institutions Official Institutions Defined Contribution
BLK Key Client Segment AUM Focus Areas
AUM ($bn) Financial Institutions Business mix evolving into Fixed Income, Equity Dividend, liquid and illiquid Alts and advisory $802.6 $652.7 $673.6 Official Institutions Specialized client teams and relationships to capture opportunities
Defined Contribution 2010 2011 2012 Expand share across mid-sized plans, LifePath, Fixed Financial Institutions Official Institutions DC Income products
53 Growth in the Defined Contribution segment 1
Uniquely positioned to capitalize on the shift of retirement assets from Defined Benefit to Defined Contribution Deep capabilities across index and active History of expertise with DC plans Industry leading target-date LifePath products
Defined Contribution Long-Term AUM ($bn) LifePath AUM ($bn) Organic Organic +11% +11% +9% +26% +19% +32% Growth Growth $404.9 $63.8 $330.0 $300.7 $44.0 $37.3
2010 2011 2012 2010 2011 2012 Passive Active Multi-Asset
54 Deepening existing client relationships 2
Focused on evolving our long-term client relationships across our broad capabilities Thought leadership, operating excellence and “client-first” thinking 60% of top 50 clients increased AUM in 1Q13
Opportunity to Cross-Sell
83% of top 50 clients own 3 or more products 35% of top 500 clients own only 1 product 83% 35% 35%
30%
% of Top Clients 50 % of Top 11%
6% Clients 500 % of Top
1 2 3+ 1 2 3+
Note: Product definition includes Index Equity and Fixed Income, Scientific and Fundamental Active Equity, Active Fixed Income, Model-Based Fixed Income, Alternatives, Multi-Asset, and BlackRock Solutions. Product definition excludes Cash, iShares, TRIM, and Securities Lending.
55 Building an outcome-oriented approach 3
As the landscape evolves, clients demand holistic portfolio solutions and multi-asset class products to achieve specific outcomes Analytics and advisory capabilities aligned to deliver unmatched integrated solutions Client Solutions team focused on complex, evolving institutional client needs
Holistic Model
Risk Advisory Diverse Analytics Services Platform
Outcome-oriented solutions
56 Client Solutions: Case Study
Client challenge Pension portfolio funding gap Regulator restricted reliance of parent entity support Client required to de-risk and implement a Liability Driven Investment Portfolio
BlackRock’s unique approach Corporate Bond Index Fund Tailored LDI portfolio solution (QIF) Equity Index Fund Training sessions to Educate Board on Asset Management
BlackRock has tools necessary to repeat
57 BlackRock Solutions: Key differentiator & growth driver
BlackRock Solutions helps clients navigate their investment processes and most complex capital markets challenges Aladdin Business Financial Markets Advisory (FMA)
BlackRock Solutions Revenue ($mm) FMA Capabilities One-time valuations and ongoing monitoring or strategic disposition assignments $510 $518 Managed over $160 billion of disposition $460 mandates since ‘08 Successfully disposed of $74.5 billion of assets on behalf of governments and private clients in 2012
2010 2011 2012
Financial Markets Advisory Aladdin Business
58 Aladdin Business
Aladdin Business comprises our industry-leading investment and risk management platform, Aladdin ®, and related risk reporting services Recurring revenue stream represents 75% of BlackRock Solutions revenue Continue to innovate and grow Aladdin Business capabilities Clients implement Aladdin as single platform for global operating model Transformed fixed income platform into true multi-asset platform Continually expanding to an increasingly global set of clients
Aladdin Business Revenue ($mm) Over $13 Trillion Assets on Aladdin ($tn) 1
$13.7 $374 Onboarded $335 $10.0 $10.2 $286 $9.1 >$3T $251 in client $212 assets $171
2007 2008 2009 2010 2011 2012 2009 2010 2011 2012 1 Includes BlackRock managed assets
59 BlackRock Solutions is positioned to address key market themes
Key Themes How BlackRock Solutions Helps
Global Investment Platform • Aladdin ® serves as a consolidated, Consolidation scalable investment and risk management platform
Clients seeking Risk Solutions across • Enterprise risk reporting across Asset Classes fixed income, equities and alternatives • Provide customized advice, Regulatory change and capital valuation, and disposition constraints across Financial Institutions management
• Model entire client portfolio to Clients seeking Outcome-Oriented determine best solution for desired Solutions outcome
60 Key takeaways
ICB and BlackRock Solutions are sizeable and consistent contributors to BlackRock’s financial results
ICB and BlackRock Solutions are separate businesses that collaborate on client solutions and outcome-oriented investment approaches
Our institutional strategy is formed by industry dynamics, a close familiarity with our clients and BlackRock’s unique capabilities
Our strategy is supported by client-first thinking and “Focused Execution”, ensuring that we deliver the best of BlackRock to our clients
Our solutions orientation means we know when to stop asking “what do you want” and start asking “what are you solving for”
61 BLACKROCK INVESTOR DAY 2013 Aladdin: Sustainable Differentiation
Charles S. Hallac, Chief Operating Officer Aladdin is BlackRock’s Core Operating System BlackRock is a complex global business
Over 10,500 employees including more than 1,600 investment professionals $3.94tn in assets managed across more than 10,500 portfolios
Investment Centers
64 One platform, one process, one culture
Why a common platform is at the heart of Aladdin building one firm Single Set of Data Simplifies large, complex business Consistent Process Presents one face to the client Shared Research Brings together people from around the world Risk Management Tools Catalyzes a common culture Creates operational leverage for everyone
65 Aladdin’s functionality supports the whole firm
Portfolio & Risk Analysis Trade Execution • Daily risk exposure reporting • Order management • Pre-tradePortfolio analytics & Risk Analysis • TradeTrade execution Execution & capture • Trade modeling & allocation • Real-time risk & cash reporting
Risk Management, Control & Oversight • Real-time compliance monitoring Risk Management, • Daily exposure limit monitoring • Value-at-risk,Control tracking & Oversight error, stress testing
Portfolio Administration Data Control & Oversight • Cash & position reconciliation • Security data management • PerformancePortfolio Administration attribution • TradeData Control confirmation & Operations & routing • NAV calculation • Corporate action processing
66 What is Aladdin?
Aladdin is the core operating system of the company Sophisticated technology fueled by a set of data integrity processes Common language understood by employees across the world Collection of tools that transforms data into information
Best-of-breed model Enterprise model
Third External Party Communications Data
Aladdin
Data Hub & Investment Client Reporting Accounting
Other investment systems
Client non- investment systems
67 A global platform
$14tn in assets managed across 170+ clients
BLK Investment Centers
Aladdin Client User Base
68 Provides scalability and consistency
54 Aladdin clients 30,000 portfolios 96 Risk clients 17,000 users $14 trillion analyzed each day 3,000 risk factors in our models 100,000,000 Monte Carlo simulations/day 25 million lines of code 182 total assignments 1.5 billion BMS messages/day 700 developers 54 million Green Package reports/month Global solution with 24x7 support
69 Aladdin Demonstration iShares: Growth From Here
Mark Wiedman, Global Head of iShares iShares at BlackRock
% of 1Q13 AUM % of 1Q13 Base Fees
iShares iShares 22% 35%
Rest of firm Rest of firm
BlackRock Long-Term BlackRock Long-Term AUM: $3.629tn Base Fees: $2,043mm
72 4 questions
1. How has the iShares business performed?
2. What is the growth outlook for ETFs?
3. What are iShares’ competitive advantages?
4. What is our strategy to win?
73 iShares results – powered by organic growth
iShares AUM & Organic Growth ($bn) iShares Revenue ($mm) $803 $753 $710 Record 20% level 27% $593 $594
2011 2012 1Q13 1Q12 1Q13
Organic 14.4% 13.6% (1) Growth Net new $85.2 $25.6 (2) business
(1) 1Q13 annualized organic growth (2) 1Q13 flows only
74 We aim to be the global leader in flows and assets
60%Flows – market share AUM – market share
35% 40% 36% iShares 44% 39% 30% Vanguard iShares 20% 30% 29% 17% Other 0% -4% State 18% 18% State Street Street -20% Vanguard 14% -33% 8% -40% 2009 2010 2011 2012 1Q'13 1Q'10 2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13
Source: BlackRock and Bloomberg
75 4 questions
1. How has the iShares business performed?
2. What is the growth outlook for ETFs?
3. What are iShares’ competitive advantages?
4. What is our strategy to win?
76 Over a decade and still growing strong…
ETF industry and iShares both grew 27% in 2012
Global ETF and iShares AUM ($ bn)
2,100 Total ETF Industry $2,057 bn
1,400
700 iShares $803 bn
0 Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12 Oct-12 Mar-13
Source: BlackRock and Bloomberg
77 … and still a lot more room to grow
ETFs compete with 4 types of assets There is huge runway for growth ($ tn)
Derivatives 57.9
Active Single Mutual ETFs security Funds holdings 26.9
10.2
Index funds / 1.5 separate accounts U.S. ETFs U.S. Mutual Net Credit U.S. Equity Institutional Funds Derivatives & Debt Outstanding Securities Retail
(3) Global OTC CDS notional amounts outstanding. Sources: SimFund, Bank for International Settlements, Bloomberg, SIFMA. ETFs as of May 31, 2013. Mutual Funds (excluding money market funds) as of April 30, 2013. Net Credit Derivatives outstanding as of December 31, 2012. Total US Equity and Debt Securities as of March 31, 2013.
78 4 questions
1. How has the iShares business performed?
2. What is the growth outlook for ETFs?
3. What are iShares’ competitive advantages?
4. What is our strategy to win?
79 iShares’ competitive advantages are truly global
1. A global brand
2. Product breadth, quality, and liquidity
3. Global footprint
4. Operating scale
…with the result of truly global growth
80 1. Our global brand
81 2. Two global and multiple local product lines
Canada $52bn EMEA 128 funds $170bn
206 U.S. funds $495bn
282 Asia Pacific funds $37bn
27 funds
Lat Am & Iberia $49bn
21 funds
Fund counts as of March 31, 2013. $ figures represent client AUM (excluding iPath).
82 3. Global footprint
Canada 29
U.S. 328 EMEA 137 Asia Pac 58
Lat Am & Iberia 60
As of March 31, 2013. Note: US figure includes 53 in global functions. All figures include Marketing.
83 4. Operating scale
Top 10 ETF providers by AUM globally ($bn)
803
365
249
80 52 38 28 28 26 25
As of March 31, 2013. Source: BlackRock and Bloomberg.
84 4. Operating scale
Top 10 ETF providers by AUM globally ($bn)
803
365
249 170 80 52 38 28 28 26 25
As of March 31, 2013. Source: BlackRock and Bloomberg.
85 Result – strong growth around the world
2012 ETF industry product growth 2012 iShares client growth
57%
47% Market 18% growth Market 14% 36% 34% growth 29% 28% 5% 12% 25% 23% 20% 10% 20% 14% Organic 9% 39% 12% 33% Organic growth 29% 9% growth 24% 20% 18% 16% 15% 11% 11%
Lat Am & EMEA US Canada Asia Pac US Canada EMEA Asia Pac Lat Am Iberia & Iberia
As of December 31, 2012. Source: BlackRock and Bloomberg.
86 4 questions
1. How has the iShares business performed?
2. What is the growth outlook for ETFs?
3. What are iShares’ competitive advantages?
4. What is our strategy to win?
87 5 global growth themes
U.S. market Global market share growth expansion
Fixed income market growth
Innovation in ETF usage
Acquisitions for product and market access
88 U.S. market share: The context
We aim to be the leader in assets and flows in the most mature ETF market
U.S. AUM – market share 140%U.S. flows – market share
48% 100% 90% 41% iShares 60% 36% Vanguard 27% 20% 25% 24% State 31% iShares Street -8% State 19% -20% 16% Vanguard Street Other 17% -60% 12% -86% -100% 2009 2010 2011 2012 1Q'13 1Q'10 2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13
Source: BlackRock and Bloomberg
89 U.S. market share: Strategies for leadership
1. iShares Core Series
2. Strategic alliance with Fidelity
3. Integration of wealth advisory sales force
4. Marketing / brand
90 U.S. market share: The pricing story
Pricing in the U.S. has been broadly consistent over time
In core exposures, we have faced increasing pricing pressure
Average price of U.S. ETFs Average price of U.S. core exposures
60 25 23 23 21 20 50 20 Int’l Equity 40 15
30 All U.S. ETFs 10 Fixed Inc
Asset-weighted bps 20 Dom Equity Asset-weighted bps 5
10 0 2007 2008 2009 2010 2011 2012 2009 2010 2011 2012
Source: U.S. ETP Reference Guide. Excludes inverse and leveraged funds. Core pricing based on 84 funds classified as core exposures by BlackRock.
91 U.S. market share: The iShares Core Series
Launched in October 2012
iShares Core Series Flows into the Core Series since launch
9 3.7 8.3
6 4.6 $ billions $ 3
0 Oct 15 - Dec 31 1Q Total since 2012 2013 launch
92 U.S. market share: Fidelity
Fidelity: The leading distributor in self-directed, with over 10 million clients
Start of the partnership: iShares is Fidelity’s featured index ETF brand Fidelity increases offering of commission-free iShares from 30 to 65 Fidelity uses BLK as its preferred partner in ETF solution products BLK also acts as sub-advisor to Fidelity-branded passive sector ETFs
93 Global market expansion: Grow in every region
Institutions Retail Examples of expansion segments A tale of 2 cities
Sovereign Post-retrocession world Insurance Wealth Funds U.K. Germany
Central Banks Banks Holland Switzerland
Global U.S. Canada Asset Pension Managers Plans Retrocession world
Asia Pac Lat Am
Southern France Europe
94 Fixed income: Raise ETF penetration
Global equity market = $53tn Global fixed income market = $100tn
Equity Fixed Mutual Income Funds Mutual Funds 17% 6% 0.3% 3% Equity Fixed ETFs Income ETFs
Global market and MFs as of December 2012. MFs and ETFs of December 2012. Global market as of June 2013. MFs and ETFs as of December 2012. Source: The World Bank, Cerulli, BlackRock, Bloomberg. Source: McKinsey, Cerulli, BlackRock, Bloomberg.
95 Innovation: New applications and products
New applications New product types
Pension fund converts $1.5B EEMV Minimum Volatility fixed income portfolio to ETFs
Insurer hedges with a Enhanced Beta ETFs & Treasury ETF β Factor ETFs
Bank allocates its balance IBCB iSharesBonds sheet risk capital with ETFs
Insurer uses ETFs to aggregate fixed income
96 4 questions
1. iShares business performance
2. The growth outlook for ETFs
3. iShares’ competitive advantages
4. Strategy to win
97 Disclosures
Carefully consider the iShares Funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds’ prospectuses, which may be obtained by calling 1-800- iShares (1-800-474-2737) or by visiting www.iShares.com. Read the prospectus carefully before investing. Investing involves risk, including possible loss of principal.
98 Disclosures
The information provided is not intended to be a complete analysis of every material fact respecting any strategy and has been presented for educational purposes only. Asset allocation models and diversification do not promise any level of performance or guarantee against loss of principal. Shares of iShares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained. Mutual funds and iShares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the iShares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well. When comparing stocks or bonds and iShares Funds, it should be remembered that management fees associated with fund investments, like iShares Funds, are not borne by investors in individual stocks or bonds. The annual management fees of iShares Funds may be substantially less than those of most mutual funds. Buying and selling shares of iShares Funds will result in brokerage commissions, but the savings from lower annual fees can help offset these costs. Index returns are for illustrative purposes only and do not represent actual iShares Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. BlackRock does not provide tax advice. Please note that (i) any discussion of US tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.
99 Disclosures
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., European Public Real Estate Association (“EPRA ®”), FTSE International Limited (“FTSE”), JPMorgan Chase & Co., MSCI Inc., Markit Indices Limited, Morningstar, Inc., The NASDAQ OMX Group, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Russell Investment Group, S&P Dow Jones Indices LLC or Standard & Poor’s, nor are they sponsored, endorsed or issued by Barclays Capital, Inc. None of these companies make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with the companies listed above. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50 / Residential / Retail / Mortgage or Industrial / Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA / NAREIT Developed Real Estate ex-US / North America / Europe / Asia Index; all rights vest in FTSE, NAREIT and EPRA. All rights in the FTSE Developed Small Cap ex-North America Index vest in FTSE. “FTSE ®” is a trademark jointly owned by the London Stock Exchange plc and The Financial Times Limited and is used by FTSE under license. ©2013 BlackRock. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners. iS-10011-0613
Not FDIC Insured • No Bank Guarantee • May Lose Value
100 BLACKROCK INVESTOR DAY 2013 Delivering Shareholder Value
Gary Shedlin, Chief Financial Officer Delivering shareholder value
Total Return
CAGR since BLK IPO 3,000 BLK NthAm Fin S&P 500 Svcs Index 2,500 26% 1% 2%
2,000 MLIM BGI
1,500
1,000
500
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 BLK Index S&P 500
Note: Index used is the S&P North America financial services sector index Source: Factset
102 Drivers of shareholder value
Organic Growth
Operating Leverage
Capital Management
103 Organic AUM growth improving
Total Long Term Organic NNB Growth
Total BLK: 5% 2% 3% 5% Global AUM (A) : 0% 1% 2% -- 16% 14% 14%
12%
9% 9% 9% 9% 8%
4% 4% 3% 3% 1% 0% 1% 0% 2010 2011 2012 Q1 2013 Annualized Institutional Retail/HNW iShares
Note: Excludes the effect of two single client low-fee institutional index fixed income outflows in 2012 and merger-related outflows in 2011 and 2010 (A) Source: McKinsey & Company
104 Organic revenue growth impacted by mix change
Mix change and strategic focus should result in revenue growth higher than AUM growth iShares and Retail represent 34% of our AUM, but represent 66% of our revenue
2012 Results (A) by Client Type
$3.4 trillion $7.7 billion
34% Institutional 66% Retail 2x 34% iShares 12% 32% 22%
AUM Base Fees
(A) AUM and base fees for long-term assets only which do not include cash management and advisory AUM
105 Proven ability to leverage scale
Adjusted EPS and Operating Margin
+1.7% +1.4%
40.4% 40.0% 38.7% 39.3% 39.7% 38.2% 38.6%
21% CAGR $13.68 $11.85 $10.94
$6.30 $7.13 16% $3.65 $3.16
2008 2009 2010 2011 2012 Q1 2012 Q1 2013
For further information and reconciliation between GAAP and as adjusted, see the previously filed Form 10-Ks, Form 10-Qs, 8-Ks and the appendix to this presentation
106 Balance sheet is asset lite
While our GAAP total assets are $200bn, tangible assets are only $9bn
$200 $158
$3 $30
$9
March 2013 Separate Account Investment Goodwill Economic Tangible GAAP Assets Assets / Sec Lending Vehicles Intangibles Assets Collateral
107 Strong cash generating business
Operating cash flow, as adjusted ($bn) Prioritization of Cash Use
19% $3.0(A) CAGR Business Investment $2.6 $2.6
Tactical Acquisitions
$1.5 $1.2 Dividends
Share Repurchases
2008 2009 2010 2011 2012
(A) Adjusted for ~$300m related to trading seed investment For further information and reconciliation between GAAP and as adjusted, see the previously filed Form 10-Ks, Form 10-Qs, 8-Ks and the appendix to this presentation
108 Consistent and predictable capital management
Business • Investment for Growth Investment • Investment in Infrastructure
Tactical • Claymore Investments • Credit Suisse ETF Acquisitions • Swiss Re PE Partners • MGPA
• >20% CAGR in dividend per share since 2006 Dividends • Dividend payout ratio in range of 40-50%
• Consistent share repurchase program Share Repurchases • Not a market timer
109 EPS: Impact of organic growth and operating leverage
Organic Other Op. EPS Revenue AUM Leverage Growth Market (BRS, Capital Growth Return Perf. Fees) Mgmt ? ? ? • Target: 5% • Street • Street • Constant estimates estimates payout ratio
Operating Margin EPS Growth 40% 42% 44%
3% 11% 12% 13%
5% 12% 14% 15% Growth
Org. AUM AUM Org. 7% 14% 15% 16%
Note: Assumptions around beta and other revenue growth consistent with street estimates. Capital management assumes constant payout ratio. This slide is for illustrative purposes only and should not be considered a forecast.
110 Appendix Reconciliation to Non-GAAP Measures
Full Year Q1 Q1 2008 2009 2010 2011 2012 2012 2013 (Dollar amounts in millions, except per share data) Operating income, GAAP basis $1,593 $1,278 $2,998 $3,249 $3,524 $815 $909 Non-GAAP expense adjustments (1) 69 292 169 143 50 10 12 Operating income, as adjusted 1,662 1,570 3,167 3,392 3,574 825 921 Closed-end fund launch costs and commissions 9 3 17 29 2 5 - 18 Operating income used for operating margin measurement 1,671 1,573 3,184 3,421 3,599 825 939
Revenue, GAAP basis 5,064 4,700 8,612 9,081 9,337 2,249 2,449 Non-GAAP adjustments (2) : (742) (577) (510) (467) (419) (111) (103) Revenue used for operating margin measurement 4,322 4,123 8,102 8,614 8,918 2,138 2,346
Operating margin, GAAP basis 31.5% 27.2% 34.8% 35.8% 37.7% 36.2% 37.1% Operating margin, as adjusted 38.7% 38.2% 39.3% 39.7% 40.4% 38.6% 40.0%
Net income attributable to BlackRock, Inc., GAAP basis 784 875 2,063 2,337 2,458 572 632 Non-GAAP adjustments, net of tax (3) 72 146 76 (98) (20) 3 5 Net income attributable to BlackRock, Inc., as adjusted 856 1,021 2,139 2,239 2,438 575 637
Allocation of net income, as adjusted, to common shares $828 $995 $2,109 $2,218 $2,435 $574 $637 Diluted weighted-average common shares outstanding 131,376,517 139,481,449 192,692,047 187,116,410 178,017,679 181,917,864 174,561,132
Diluted earnings per common share, GAAP basis $5.78 $6.11 $10.55 $12.37 $13.79 $3.14 $3.62 Diluted earnings per common share, as adjusted $6.30 $7.13 $10.94 $11.85 $13.68 $3.16 $3.65
(1) Non-GAAP expense adjustments include BGI transaction/integration costs, U.K. lease exit costs, a contribution to STIFs, restructuring charges, PNC funding LTIP obligation, Merrill Lynch compensation contribution and compensation related to appreciation (depreciation) on certain deferred compensation plans.
(2) Non-GAAP adjustments include distribution and servicing costs, amortization of deferred sales commission and reimbursable property management compensation.
(3) Non-GAAP expense adjustments include BGI transaction/integration costs, U.K. lease exit costs, a contribution to STIFs, restructuring charges, PNC funding LTIP obligation, Merrill Lynch compensation contribution and income tax law changes.
NOTE: For more information on the reconciliation of GAAP to as adjusted see the previously filed 10-Ks,10-Qs and 8-Ks.
112 Cash Flow GAAP and As Adjusted
(in millions) 2008 2009 2010 2011 2012
Operating Cash Flows Operating Cash flows, GAAP basis $ 1,916 $ 1,399 $ 2,488 $ 2,826 $ 2,240 Less: Non-GAAP adjustments (1) 413 168 (77) 178 (483) Operating Cash flows, as adjusted 1,503 1,231 2,565 2,648 2,723
Investing Cash Flows Investing Cash flows, GAAP basis (394) (5,519) (627) (204) (266) Less: Non-GAAP adjustments (1) (9) 31 (52) 24 (211) Investing Cash flows, as adjusted (385) (5,550) (575) (228) (55)
Financing Cash Flows Financing Cash flows, GAAP basis (887) 6,749 (3,170) (2,485) (944) Less: Non-GAAP adjustments (1) (410) (185) 110 (71) 631 Financing Cash flows, as adjusted $ (477) $ 6,934 $ (3,280) $ (2,414) $ (1,575)
(1) Non-GAAP adjustments include the impact on cash flows of consolidated sponsored investment funds and consolidated VIEs.
NOTE: For more information on the reconciliation of GAAP to as adjusted see the previously filed 10-Ks,10-Qs and 8-Ks.
113