Statement Of Financial Position
Statement Of Financial Position Unclassified - Securities Based Operations (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Assets | ||
Cash and cash equivalents | $2,305 | $2,032 |
Accounts receivable | 1,067 | 901 |
Due from related parties | 104 | 309 |
Investments | 957 | 1,429 |
Separate account assets | 3,131 | 2,623 |
Deferred mutual fund sales commissions, net | 111 | 135 |
Property and equipment (net of accumulated depreciation of $295 at June 30, 2009 and $259 at December 31, 2008) | 252 | 260 |
Intangible assets (net of accumulated amortization of $396 at June 30, 2009 and $324 at December 31, 2008) | 6,371 | 6,441 |
Goodwill | 5,723 | 5,533 |
Other assets | 388 | 261 |
Total assets | 20,409 | 19,924 |
Liabilities | ||
Accrued compensation and benefits | 386 | 826 |
Accounts payable and accrued liabilities | 628 | 545 |
Due to related parties | 119 | 103 |
Short-term borrowings | 200 | 200 |
Convertible debentures | 247 | 245 |
Long-term borrowings | 695 | 697 |
Separate account liabilities | 3,131 | 2,623 |
Deferred tax liabilities | 1,767 | 1,826 |
Other liabilities | 263 | 299 |
Total liabilities | 7,436 | 7,364 |
Commitments and contingencies (Note 12) | 0 | 0 |
Temporary equity | ||
Redeemable non-controlling interests | 13 | 266 |
Convertible debentures | 2 | 0 |
Total temporary equity | 15 | 266 |
BlackRock, Inc. stockholders' equity | ||
Common stock, $0.01 par value; Shares authorized: 500,000,000 at June 30, 2009 and December 31, 2008; Shares issued: 50,826,457 at June 30, 2009 and 118,573,367 at December 31, 2008; Shares outstanding: 49,915,191 at June 30, 2009 and 117,291,110 at December 31, 2008 | 1 | 1 |
Preferred stock (Note 11) | 1 | 0 |
Additional paid-in capital | 10,891 | 10,473 |
Retained earnings | 2,076 | 1,982 |
Accumulated other comprehensive (loss) | (81) | (186) |
Escrow shares, common, at cost (911,266 shares held at June 30, 2009 and December 31, 2008) | (143) | (143) |
Treasury stock, common, at cost (0 and 370,991 shares held at June 30, 2009 and December 31, 2008, respectively) | 0 | (58) |
Total BlackRock, Inc. stockholders' equity | 12,745 | 12,069 |
Nonredeemable non-controlling interests | 213 | 225 |
Total permanent equity | 12,958 | 12,294 |
Total liabilities, temporary equity and permanent equity | $20,409 | $19,924 |
1_Statement Of Financial Positi
Statement Of Financial Position Unclassified - Securities Based Operations (Parenthetical) (USD $) | ||
In Millions, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Property and equipment, accumulated depreciation | $295 | $259 |
Intangible assets, accumulated amortization | $396 | $324 |
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 50,826,457 | 118,573,367 |
Common stock, shares outstanding | 49,915,191 | 117,291,110 |
Escrow shares, common shares | 911,266 | 911,266 |
Treasury stock, shares | 0 | 370,991 |
Statement Of Income Securities
Statement Of Income Securities Based Income (USD $) | ||||
In Millions, except Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Investment advisory and administration base fees | ||||
Related parties | $589 | $830 | $1,138 | $1,632 |
Other third parties | 261 | 331 | 511 | 661 |
Investment advisory performance fees | 17 | 57 | 28 | 99 |
Investment advisory and administration base and performance fees | 867 | 1,218 | 1,677 | 2,392 |
BlackRock Solutions and advisory | 116 | 100 | 256 | 160 |
Distribution fees | 23 | 34 | 48 | 69 |
Other revenue | 23 | 35 | 35 | 66 |
Total revenue | 1,029 | 1,387 | 2,016 | 2,687 |
Expenses | ||||
Employee compensation and benefits | 390 | 552 | 741 | 1,021 |
Portfolio administration and servicing costs | ||||
Related parties | 96 | 127 | 199 | 257 |
Other third parties | 29 | 25 | 53 | 49 |
Amortization of deferred mutual fund sales commissions | 26 | 33 | 53 | 63 |
General and administration | 191 | 208 | 344 | 422 |
Restructuring charges | 0 | 0 | 22 | 0 |
Amortization of intangible assets | 36 | 37 | 72 | 74 |
Total expenses | 768 | 982 | 1,484 | 1,886 |
Operating income | 261 | 405 | 532 | 801 |
Non-operating income (expense) | ||||
Net gain (loss) on investments | 88 | 0 | (84) | (20) |
Interest and dividend income | 4 | 14 | 12 | 32 |
Interest expense | (15) | (18) | (30) | (36) |
Total non-operating income (expense) | 77 | (4) | (102) | (24) |
Income before income taxes | 338 | 401 | 430 | 777 |
Income tax expense | 94 | 147 | 124 | 277 |
Net income | 244 | 254 | 306 | 500 |
Less: Net income (loss) attributable to redeemable non-controlling interests | 1 | 0 | 1 | (3) |
Net income (loss) attributable to nonredeemable non-controlling interests | 25 | (20) | 3 | (12) |
Net income attributable to BlackRock, Inc. | $218 | $274 | $302 | $515 |
Earnings per share attributable to BlackRock, Inc. common stockholders: | ||||
Basic | 1.62 | 2.04 | 2.25 | 3.85 |
Diluted | 1.59 | $2 | 2.22 | 3.78 |
Cash dividends declared and paid per share | 0.78 | 0.78 | 1.56 | 1.56 |
Weighted-average common shares outstanding: | ||||
Basic | 130,928,926 | 129,569,325 | 130,574,535 | 129,242,591 |
Diluted | 133,364,611 | 132,032,538 | 132,668,695 | 131,812,500 |
Statement Of Other Comprehensiv
Statement Of Other Comprehensive Income (USD $) | |||||||||||||||||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 | |||||||||||||||
Net income | $244 | $254 | $306 | $500 | |||||||||||||||
Other comprehensive income: | |||||||||||||||||||
Change in net unrealized gain (loss) from available-for-sale investments, net of tax | 8 | [1] | 1 | [1] | 15 | [1] | (4) | [1] | |||||||||||
Minimum pension liability adjustment | 0 | 0 | 1 | (1) | |||||||||||||||
Foreign currency translation adjustments | 103 | (1) | 89 | 25 | |||||||||||||||
Comprehensive income attributable to BlackRock, Inc. | $355 | $254 | $411 | $520 | |||||||||||||||
[1]The tax benefit (expense) on the change in net unrealized gain (loss) from available-for-sale investments was ($2) and ($1) during the three months ended June 30, 2009 and 2008, respectively, and ($5) and $1 during the six months ended June 30, 2009 and 2008, respectively. |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | |||||||||||||||||||
In Millions | Common And Preferred Stock
| Additional Paid-in Capital
| Retained Earnings
| Accumulated Other Comprehensive Income (Loss)
| Treasury Stock Common
| Total Stockholders' Equity
| Nonredeemable Non-controlling Interests
| Redeemable Non-controlling Interests (Temporary Equity)
| Total
| ||||||||||
Beginning Balance, as adjusted at Dec. 31, 2007 | $1 | $10,286 | $1,616 | $71 | ($188) | ($184) | $11,602 | $549 | $29 | $12,151 | |||||||||
Beginning Balance, as reported at Dec. 31, 2007 | 1 | 10,274 | 1,622 | 71 | (188) | (184) | 11,596 | 0 | 0 | 11,596 | |||||||||
January 1, 2009 initial recognition of APB 14-1, SFAS No. 160 and EITF Topic No. D-98 | 12 | (6) | 6 | 549 | 29 | 555 | |||||||||||||
Net income | 515 | 515 | (12) | (3) | 503 | ||||||||||||||
Dividends paid, net of dividend expense for unvested RSUs | (208) | (208) | (208) | ||||||||||||||||
Release of common stock from escrow agent in connection with Quellos Transaction | 45 | 45 | 45 | ||||||||||||||||
Stock-based compensation | 132 | 1 | 133 | 133 | |||||||||||||||
Net issuance of common shares related to employee stock transactions | (114) | 91 | (23) | (23) | |||||||||||||||
PNC capital contribution | 4 | 4 | 4 | ||||||||||||||||
Net tax benefit from stock-based awards | 47 | 47 | 47 | ||||||||||||||||
Minimum pension liability adjustment | (1) | (1) | (1) | ||||||||||||||||
Subscriptions/(redemptions/distributions) - non-controlling interest holders | 0 | 5 | (15) | 5 | |||||||||||||||
Deconsolidation of sponsored investment funds | 0 | (6) | 0 | ||||||||||||||||
Foreign currency translation adjustments | 25 | 25 | 25 | ||||||||||||||||
Other changes in non-controlling interests | 0 | (3) | (3) | ||||||||||||||||
Change in net unrealized gain (loss) from available-for sale investments, net of tax | (4) | (4) | (4) | [1] | |||||||||||||||
Ending Balance at Jun. 30, 2008 | 1 | 10,355 | 1,923 | 91 | (143) | (92) | 12,135 | 539 | 5 | 12,674 | |||||||||
Beginning Balance, as adjusted at Mar. 31, 2008 | 1 | ||||||||||||||||||
Ending Balance at Jun. 30, 2008 | 1 | ||||||||||||||||||
Beginning Balance, as adjusted at Dec. 31, 2008 | 1 | 10,473 | 1,982 | (186) | (143) | (58) | 12,069 | 225 | 266 | 12,294 | |||||||||
Beginning Balance, as reported at Dec. 31, 2008 | 1 | 10,461 | 1,991 | (186) | (143) | (58) | 12,066 | 0 | 0 | 12,066 | |||||||||
January 1, 2009 initial recognition of APB 14-1, SFAS No. 160 and EITF Topic No. D-98 | 12 | (9) | 3 | 225 | 266 | 228 | |||||||||||||
Reclass to temporary equity - convertible debt | (2) | (2) | 2 | (2) | |||||||||||||||
Net income | 302 | 302 | 3 | 1 | 305 | ||||||||||||||
Dividends paid, net of dividend expense for unvested RSUs | (208) | (208) | (208) | ||||||||||||||||
Stock-based compensation | 159 | 159 | 159 | ||||||||||||||||
Issuance of common shares to institutional investor | 1 | 299 | 300 | 300 | |||||||||||||||
Issuance of common shares for contingent consideration | 43 | 43 | 43 | ||||||||||||||||
Net issuance of common shares related to employee stock transactions | (83) | 58 | (25) | (25) | |||||||||||||||
PNC capital contribution | 6 | 6 | 6 | ||||||||||||||||
Net tax benefit from stock-based awards | (4) | (4) | (4) | ||||||||||||||||
Minimum pension liability adjustment | 1 | 1 | 1 | ||||||||||||||||
Subscriptions/(redemptions/distributions) - non-controlling interest holders | 0 | (4) | (254) | (4) | |||||||||||||||
Deconsolidation of sponsored investment funds | 0 | (9) | (9) | ||||||||||||||||
Foreign currency translation adjustments | 89 | 89 | 89 | ||||||||||||||||
Other changes in non-controlling interests | 0 | (2) | (2) | ||||||||||||||||
Change in net unrealized gain (loss) from available-for sale investments, net of tax | 15 | 15 | 15 | [1] | |||||||||||||||
Ending Balance at Jun. 30, 2009 | 2 | 10,891 | 2,076 | (81) | (143) | 0 | 12,745 | 213 | 15 | 12,958 | |||||||||
Beginning Balance, as adjusted at Mar. 31, 2009 | (143) | ||||||||||||||||||
Ending Balance at Jun. 30, 2009 | ($143) | ||||||||||||||||||
[1]The tax benefit (expense) on the change in net unrealized gain (loss) from available-for-sale investments was ($2) and ($1) during the three months ended June 30, 2009 and 2008, respectively, and ($5) and $1 during the six months ended June 30, 2009 and 2008, respectively. |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect Securities Based Operations (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash flows from operating activities | ||
Net income | $306 | $500 |
Adjustments to reconcile net income to cash from operating activities: | ||
Depreciation and other amortization | 115 | 117 |
Amortization of deferred mutual fund sales commissions | 53 | 63 |
Stock-based compensation | 159 | 133 |
Deferred income tax expense (benefit) | (59) | (67) |
Net gains (losses) on non-trading investments | 9 | 19 |
Purchases of other investments within consolidated funds | (17) | (86) |
Proceeds from sales and maturities of other investments within consolidated funds | 245 | 83 |
(Earnings) losses from equity method investees | 74 | (10) |
Distributions of earnings from equity method investees | 6 | 14 |
Other adjustments | 2 | (1) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (164) | (324) |
Due from related parties | 170 | (30) |
Deferred mutual fund sales commissions | (29) | (57) |
Investments, trading | (97) | 222 |
Other assets | (137) | 60 |
Accrued compensation and benefits | (434) | (415) |
Accounts payable and accrued liabilities | 69 | 256 |
Due to related parties | 16 | (20) |
Other liabilities | (13) | 24 |
Cash flows from operating activities | 274 | 481 |
Cash flows from investing activities | ||
Purchases of investments | (14) | (285) |
Purchases of assets held for sale | (1) | (59) |
Proceeds from sales and maturities of investments | 198 | 52 |
Return of capital from equity method investees | 20 | 8 |
Net consolidations (deconsolidations) of sponsored investment funds | 6 | 0 |
Contingent/other acquisition payments | (158) | 0 |
Purchases of property and equipment | (33) | (40) |
Proceeds from other investing activities | 0 | 5 |
Cash flows from investing activities | 18 | (319) |
Cash flows from financing activities | ||
Repayment of long-term borrowings | (1) | (1) |
Repayment of short-term borrowings | 0 | (100) |
Proceeds from short-term borrowings | 0 | 100 |
Cash dividends paid | (208) | (208) |
Proceeds from stock options exercised | 11 | 18 |
Proceeds from issuance of common stock | 304 | 3 |
Repurchases of common stock | (40) | (43) |
Net (redemptions/distributions paid)/ subscriptions received from non-controlling interest holders | (257) | (10) |
Excess tax benefit from stock-based compensation | 16 | 47 |
Net borrowings/ (repayment of borrowings) by consolidated sponsored investment funds | 70 | (202) |
Cash flows from financing activities | (105) | (396) |
Effect of exchange rate changes on cash and cash equivalents | 86 | 6 |
Net increase (decrease) in cash and cash equivalents | 273 | (228) |
Cash and cash equivalents, beginning of period | 2,032 | 1,656 |
Cash and cash equivalents, end of period | 2,305 | 1,428 |
Supplemental cash flow information: | ||
Cash paid for interest | 26 | 33 |
Cash paid for income taxes | 340 | 295 |
Supplemental non-cash investing and financing activities: | ||
Issuance of common stock | 77 | 109 |
Contingent common stock payment related to Quellos transaction | $43 | $0 |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
1.Significant Accounting Policies | 1. Significant Accounting Policies Basis of Presentation These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and include the accounts of the Company and its controlled subsidiaries. Non-controlling interests include the portion of consolidated sponsored investment funds in which the Company does not have direct equity ownership. Significant accounts and transactions between consolidated entities have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain financial information that normally is included in annual financial statements, including certain financial statement footnotes, is not required for interim reporting purposes and has been condensed or omitted herein. These financial statements should be read in conjunction with the Companys consolidated financial statements and notes related thereto included in the Companys Annual Report on Form 10-K for the year ended December31, 2008, which was filed with the Securities and Exchange Commission (SEC) on March2, 2009. The interim financial information at June30, 2009 and for the three and six months ended June30, 2009 and 2008 is unaudited. However, in the opinion of management, the interim information includes all normal recurring adjustments necessary for the fair presentation of the Companys results for the periods presented. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Certain prior year amounts have been revised or reclassified to conform to the 2009 presentation including those required by the retrospective adoption of Financial Accounting Standards Board (FASB) issued Staff Position (FSP) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1) (Accounting Standards Codification (ASC) 470-20, Debt with Conversion and Other Options), FSP Emerging Issues Task Force (EITF) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (FSP EITF 03-6-1) (ASC 260-10, Earnings per Share) and Statement of Financial Accounting Standards (SFAS) No.160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No.51 (ASC 810-10, Consolidation). Fair Value Measurements BlackRock adopted SFAS No.157, Fair Value Measurements (SFAS No.157) (ASC 820-10, Fair Value Measurements and Disclosures) as of January1, 2008, which requires, among other things, enhanced disclosures about assets and liabilities that are measured and reported at fair value. SFAS No.157 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value and requires co |
2.Investments | 2. Investments A summary of the carrying value of total investments is as follows: June30, 2009 December31, 2008 Available-for-sale investments $ 70 $ 101 Trading investments 134 122 Other investments: Consolidated sponsored investment funds (non cash management funds) 342 349 Consolidated sponsored cash management funds 326 Equity method investments 387 501 Deferred compensation plan hedge fund equity method investments 24 30 Total other investments 753 1,206 Total investments $ 957 $ 1,429 At June30, 2009, the Company had $418 of total investments held by consolidated sponsored investment funds of which $76 and $342 were classified as trading investments and other investments, respectively. At December31, 2008, the Company had $728 of total investments held by consolidated sponsored investment funds of which $53 and $675 were classified as trading investments and other investments, respectively. Available-for-sale investments A summary of the cost and carrying value of investments classified as available-for-sale, is as follows: June30, 2009 Cost GrossUnrealized Carrying Value Gains Losses Available-for-sale investments: Equity securities: Sponsored investment funds $ 8 $ $ (2 ) $ 6 Collateralized debt obligations (CDOs) 3 3 Debt securities: Mortgage debt 40 40 Asset-backed debt 14 1 15 Corporate debt 3 3 Foreign government debt 2 1 3 Total available-for-sale investments $ 70 $ 2 $ (2 ) $ 70 December31, 2008 Cost GrossUnrealized Carrying Value Gains Losses Available-for-sale investments: Sponsored investment funds $ 109 $ $ (16 ) $ 93 Collateralized debt obligations 6 (2 ) 4 Other debt securities 4 4 Total available-for-sale investments $ 119 $ $ (18 ) $ 101 Available-for-sale investments includes debt securities received upon closure of an enhanced cash fund, in lieu of the Companys remaining investment in the fund and securities purchased from another enhanced cash fund. During the six months ended June30, 2009 and 2008, the Company recorded other-than-temporary impairments of $4, including $2 related to credit loss impairments on debt securities, and $5, respectively which was recorded in non-operating income (expense) on the condensed consolidated statements of income. The $2 credit loss impairment was determined by comparing the estimated discounted cash flows versus the amortized cost for each individual security. The Company has reviewed the gross unrealized losses of $2 as of June30, 2009 related to available-fo |
3.Fair Value Disclosures | 3. Fair Value Disclosures Assets measured at fair value on a recurring basis at June30, 2009 were as follows: Quoted Pricesin Active Marketsfor Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) OtherAssets NotHeld at FairValue(1) June30, 2009 Assets: Investments: Available-for-sale $ 8 $ 59 $ 3 $ $ 70 Trading 124 10 134 Other investments: Consolidated sponsored investment funds (non cash management funds) 10 1 331 342 Equity method 10 348 29 387 Deferred compensation plan hedge fund equity method investments 10 14 24 Total investments 152 80 696 29 957 Separate account assets 3,020 88 3 20 3,131 Other assets(2) 11 50 61 Total assets measured at fair value $ 3,172 $ 179 $ 749 $ 49 $ 4,149 (1) Comprised of equity method investments, which include investment companies, and other assets which in accordance with GAAP are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and financial liabilities under fair value measures; therefore, the Companys investment in such equity method investee may not represent fair value. (2) Includes disposal group assets and company-owned and split-dollar life insurance policies. Assets measured at fair value on a recurring basis at December31, 2008 were as follows: Quoted Prices in Active Marketsfor Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) OtherAssets Not Held at FairValue(1) December31, 2008 Assets: Investments: Available-for-sale $ 63 $ 34 $ 4 $ $ 101 Trading 113 9 122 Other investments: Consolidated sponsored investment funds (non cash management funds) 21 328 349 Consolidated sponsored cash management funds 326 326 Equity method 461 40 501 Deferred compensation plan hedge fund investments 10 20 30 Total investments 176 400 813 40 1,429 Separate account assets 2,461 85 4 73 2,623 Other assets(2) 9 64 73 Total assets measured at fair value $ 2,637 $ 494 $ 881 $ 113 $ 4,125 (1) C |
4.Variable Interest Entities (VIEs) | 4. Variable Interest Entities (VIEs) In the normal course of business, the Company is the manager of various types of sponsored investment vehicles, including collateralized debt obligations and sponsored investment funds, which may be considered VIEs. The Company receives management fees or other incentive related fees for its services and may from time to time own equity or debt securities or enter into derivatives with the vehicles, each of which are considered variable interests. The Company enters into these variable interests principally to address client needs through the launch of such investment vehicles. The VIEs are primarily financed via capital contributed by equity and debt holders. The Companys involvement in financing the operations of the VIEs is limited to its equity interests, unfunded capital commitments for certain sponsored investment funds and two capital support agreements for two enhanced cash funds at December31, 2008 both of which have been terminated in 2009, due to closure of the funds. The primary beneficiary of a VIE is the enterprise that has a variable interest (or combination of variable interests, including those of related parties) that will absorb a majority of the entitys expected losses, receive a majority of the entitys expected residual returns or both. In order to determine whether the Company is the primary beneficiary of a VIE, management must make significant estimates and assumptions of probable future cash flows and assign probabilities to different cash flow scenarios. Assumptions made in such analyses include, but are not limited to, market prices of securities, market interest rates, potential credit defaults on individual securities or default rates on a portfolio of securities, realization of gains, liquidity or marketability of certain securities, discount rates and the probability of certain other outcomes. VIEs in which BlackRock is the Primary Beneficiary As a result of consolidating one VIE, a private sponsored investment fund, at June30, 2009, the Company recorded $52 of net assets, primarily investments and cash and cash equivalents. These net assets were offset by $52 of nonredeemable non-controlling interests which reflect the equity ownership of third parties, on the Companys condensed consolidated statements of financial condition. For the period ended June30, 2009, the Company recorded a non-operating expense of $6 offset by a $6 net loss attributable to nonredeemable non-controlling interests on its condensed consolidated statements of income. The Company has no risk of loss with its involvement with this VIE. As of December31, 2008 Maximum Risk of Loss VIE Net Assets That the Company Consolidates Equity Interests Capital Support Agreements Total Sponsored enhanced cash management funds $ 328 $ 88 $ 45 $ 133 Other sponsored investment funds 55 Total $ 383 $ 88 $ 45 $ 133 As a result of consolidating three private investment funds at December31, 2008, the Company recorded $383 of net assets, primarily investments |
5.Derivatives and Hedging | 5. Derivatives and Hedging For the six months ended June30, 2009 and 2008, the Company did not hold any derivatives designated in a formal hedge relationship under SFAS No.133, Accounting for Derivative Instruments and Hedging Activities (ASC 815, Derivatives and Hedging), as amended. During the six months ended June30, 2009 and 2008, the Company was a counterparty to a series of total return swaps to economically hedge against changes in fair value of certain investments in sponsored investment products. At June30, 2009, the outstanding total return swaps had an aggregate notional value of approximately $36 and net realized and change in unrealized gains/losses of approximately ($2) and $12 for the six months ended June30, 2009 and 2008, respectively, which were included in non-operating income (expense) in the Companys condensed consolidated statements of income. At June30, 2009, an unrealized gain of less than $1 was included in other assets on the condensed consolidated statement of financial condition. In December 2007, BlackRock entered into capital support agreements, up to $100, with two enhanced cash funds. These capital support agreements were backed by letters of credit issued under BlackRocks revolving credit facility. In December 2008, the capital support agreements were modified to be up to $45 and were no longer backed by the letters of credit. In January and May 2009, the capital support agreements were terminated, due to the closure of the related funds. During the six months ended June30, 2009, the Company provided approximately $4 of capital contributions to the funds under the capital support agreements. At December31, 2008, the derivative liability for the fair value of the capital support agreements for two funds totaled approximately $18. The fair value of these liabilities increased and decreased as BlackRocks obligation under the guarantee fluctuated based on the fair value of the derivative. Upon closure of the funds, the liability decreased $11, while the change in the liability was included in general and administration expenses. |
6.Goodwill | 6. Goodwill Goodwill at June30, 2009 and changes during the six months ended June30, 2009 were as follows: December31, 2008 $ 5,533 Net additions related to: Quellos 189 Other 1 June 30, 2009 $ 5,723 During the six months ended June30, 2009, the Company increased goodwill by $190. The increase relates primarily to a $156 cash payment and a common stock issuance of $43 related to the first contingent payment in connection with the Quellos Transaction, offset by a $10 decline related to tax benefits realized from tax-deductible goodwill in excess of book goodwill. At June30, 2009, the balance of the Quellos tax-deductible goodwill in excess of book goodwill was approximately $391. Goodwill related to the Quellos Transaction will continue to be reduced in future periods by the amount of tax benefits realized from tax-deductible goodwill in excess of book goodwill. |
7.Intangible Assets | 7. Intangible Assets The carrying amounts of identifiable intangible assets are summarized as follows: Indefinite-lived intangibleassets Finite-lived intangibleassets Total December 31, 2008 $ 5,378 $ 1,063 $ 6,441 Addition 2 2 Amortization expense (72 ) (72 ) June 30, 2009 $ 5,378 $ 993 $ 6,371 In April 2009, the Company acquired $2 of finite-life management contracts with a five-year estimated useful life associated with the acquisition of the R3 Capital Partners funds. |
8.Borrowings | 8. Borrowings Short-Term Borrowings In August 2007, the Company entered into a five-year $2,500 unsecured revolving credit facility (the 2007 facility). The 2007 facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to earnings before interest, taxes, depreciation and amortization, where net debt equals total debt less domestic unrestricted cash) of 3 to 1, which was satisfied at June30, 2009. At June30, 2009, the Company had $200 outstanding under the 2007 facility with an interest rate of 0.49% and a maturity date during July 2009. During July 2009, the Company rolled over the $200 in borrowings with an interest rate of 0.47% and a maturity date in August 2009. Lehman Commercial Paper, Inc. has a $140 participation under the 2007 facility; however, BlackRock does not expect that Lehman Commercial Paper, Inc. will honor its commitment to fund additional amounts. Bank of America, a related party, has a $140 participation under the 2007 facility. In June 2009, BlackRock Japan Co., Ltd., a wholly owned subsidiary of the Company, renewed its five billion Japanese yen commitment-line agreement with a banking institution (the Japan Commitment-line) for a term of one year.The Japan Commitment-line is intended to provide liquidity flexibility for operating requirements in Japan. At June30, 2009, the Company had no borrowings outstanding under the Japan Commitment-line. Convertible Debentures The carrying value of the convertible debentures included the following: June30, 2009 December31, 2008 2.625% Convertible debentures due in 2035 Maturity amount $ 249 $ 249 Unamortized discount (2 ) (4 ) Total $ 247 $ 245 The Company recognized $6 in each of the six months ended June30, 2009 and 2008 of interest expense, comprised in both periods of $4 related to the coupon and $2 related to amortization of the discount. At June30, 2009, the estimated fair value of the convertible debentures was $442, which was estimated using a market price at June30, 2009. Long-Term Borrowings The carrying value of long-term borrowings included the following: June30, 2009 December31, 2008 6.25% Senior notes due in 2017 Maturity amount $ 700 $ 700 Unamortized discount (5 ) (5 ) Total long-term senior notes 695 695 Other long-term borrowings 2 Total long-term borrowings $ 695 $ 697 At June30, 2009, the estimated fair value of the senior notes was $699, which was estimated using an applicable bond index at June30, 2009. |
9.Related Party Transactions | 9. Related Party Transactions At June30, 2009, the Company was committed to provide financing of up to $60, until March 2010, to Anthracite Capital, Inc. (Anthracite), a specialty commercial real estate finance company that is managed by a subsidiary of BlackRock. The financing is collateralized by Anthracite pledging its ownership interest in an investment fund which is also managed by a subsidiary of BlackRock. At June30, 2009, $33.5 of financing was outstanding which matured in July 2009. Upon maturity Anthracite rolled over the borrowings with a new maturity date of October 2009. As of June 2009, the value of the collateral was estimated to be $28.5, which resulted in the Company reducing the outstanding balance included in due from related parties on the Companys condensed consolidated statement of financial condition by $5 and recorded a charge to general and administration expense. Based on the value of the collateral and the borrowings outstanding of such date, the Company has no obligation to loan new amounts to Anthracite under this facility. The Company has granted waivers for certain breaches of financial covenants of Anthracites credit facility. In July 2008, the Company entered into an amended and restated stockholder agreement and an amended and restated global distribution agreement with Merrill Lynch. These changes to the stockholder agreement with Merrill Lynch, among other items, (i)provide Merrill Lynch with additional flexibility to form or acquire asset managers substantially all of the business of which is devoted to non-traditional investment management strategies such as short selling, leverage, arbitrage, specialty finance and quantitatively-driven structured trades; (ii)expand the definition of change in control of Merrill Lynch to include the disposition of two-thirds or more of its Global Private Client business; (iii)extend the general termination date to the later of July16, 2013 or the date Merrill Lynch's beneficial ownership of BlackRock voting securities falls below 20%; and (iv)clarify certain other provisions in the agreement. The changes in the global distribution agreement in relation to the prior agreement, among other things, (i)provide for an extension of the term to five years from the date of a change in control of Merrill Lynch (to January1, 2014 following Bank of Americas acquisition of Merrill Lynch) and one automatic 3-year extension if certain conditions are satisfied; (ii)strengthen the obligations of Merrill Lynch to achieve revenue neutrality across the range of BlackRock products distributed by Merrill Lynch if the pricing or structure of particular products is required to be changed; (iii)obligate Merrill Lynch to seek to obtain distribution arrangements for BlackRock products from buyers of any portion of its distribution business on the same terms as the global distribution agreement for a period of at least 3 years; and (iv)restrict the manner in which products managed by alternative asset managers in which Merrill Lynch has an interest may be distributed by Merrill Lynch. In connection with the closings under the exchange agreements, (see Note 11, Capital Stock), |
10.Restructuring Charges | 10. Restructuring Charges During the three months ended March31, 2009, the Company continued to reduce itsworkforce globally. This action was the result of business reengineering efforts designed to streamline operations, enhance competitiveness and better position the Company in the asset management marketplace. The Company recorded a pre-tax restructuring charge of $22($14after-tax) for the three months ended March31, 2009. This charge was comprised of $15 of severance and associated outplacement costs, $4 of property costs associated with the lease payments for the remaining term in excess of the estimated sublease proceeds and $3 of expenses related to the accelerated amortization of previously granted stock-based compensation awards. The following table presents a rollforward of the Companys restructuring liability, which is included within other liabilities on the Companys condensed consolidated statements of financial condition. Liability as of December31, 2008 $ 21 Additions 22 Cash payments (30 ) Non-cash charges (3 ) Liability as of June 30, 2009 $ 10 |
11.Capital Stock | 11. Capital Stock On January1, 2009, Bank of America acquired Merrill Lynch. In connection with this transaction, BlackRock entered into exchange agreements with each of Merrill Lynch andPNC pursuant to which each agreed to exchange a portion of the BlackRock common stock it held for an equal number of shares of non-voting participating preferred stock. On February27, 2009, Merrill Lynch exchanged (i)49,865,000 shares of BlackRocks common stock for a like number of shares of BlackRocks series B non-voting participating preferred stock, and (ii)12,604,918 shares of BlackRocks series A preferred stock for a like number of shares of series B preferred stock, and PNC exchanged (i)17,872,000 shares of BlackRocks common stock for a like number of shares of series B preferred stock and (ii)2,889,467 shares of BlackRocks common stock for a like number of shares of BlackRocks series C non-voting participating preferred stock.On June30, 2009, Bank of America/Merrill Lynchowned approximately 4.6% of BlackRocks voting common stock and 46.3% of BlackRocks capital stock on a fully diluted basis, and PNC owned approximately 43.9% of BlackRocks voting common stock and 30.8% of BlackRocks capital stock on a fully diluted basis. Below is a summary description of the series B and C preferred stock issued in the exchanges. The series B non-voting participating preferred stock: is non-voting except as otherwise provided by applicable law; participates in dividends on a basis generally equal to the common stock; benefits from a liquidation preference of $0.01 per share; and is mandatorily convertible to BlackRock common stock upon transfer to an unrelated party. The series C non-voting participating preferred stock: is non-voting except as otherwise provided by applicable law; participates in dividends on a basis generally equal to the common stock; benefits from a liquidation preference of $40.00 per share; and is only convertible to BlackRock common stock upon the termination of the obligations of PNC under its share surrender agreement with BlackRock. In June 2009, the Company issued 2,133,713 shares of BlackRock's common stock at $140.60 per share. The proceeds of the issuance will be used to fund the purchase of Barclays Global Investors (see Note 16, Pending Transaction). At June30, 2009 and December31, 2008, BlackRock had 20,000,000 series A non-voting participating preferred shares, $0.01 par value, authorized. At June30, 2009, BlackRock had 150,000,000 and 6,000,000 series B and series C, respectively non-voting participating preferred shares, $0.01 par value, authorized. The Companys common and preferred shares issued and outstanding and activity for the six months ended June30, 2009 was as follows: Shares Issued Shares Outstanding Common Shares Escrow Common Shares Treasury Common Shares Preferred Shares Series A Preferred Shares Series B Preferred Shares Series C Common Shares Preferred Shares Series A Preferred Shares Series B Preferred |
12.Commitments and Contingencies | 12. Commitments and Contingencies Commitments Investment / Loan Commitments At June30, 2009, the Company had approximately $277 of investment commitments relating primarily to funds of private equity funds, real estate funds and hedge funds. Amounts to be funded generally are callable at any point prior to the expiration of the commitment. Legal Proceedings From time to time, BlackRock receives subpoenas or other requests for information from various U.S. federal, state governmental and regulatory authorities in connection with certain industry-wide or other investigations or proceedings. It is BlackRocks policy to cooperate fully with such inquiries. The Company and certain of its subsidiaries have been named as defendants in various legal actions, including arbitrations and other litigation arising in connection with BlackRocks activities. Additionally, certain of the investment funds that the Company manages are subject to lawsuits, any of which potentially could harm the investment returns of the applicable fund or result in the Company being liable to the funds for any resulting damages. Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability, if any, arising out of regulatory matters or lawsuits will have a material adverse effect on BlackRocks earnings, financial position, or cash flows although, at the present time, management is not in a position to determine whether any such pending or threatened matters will have a material adverse effect on BlackRocks results of operations in any future reporting period. Indemnifications In the ordinary course of business, BlackRock enters into contracts pursuant to which it may agree to indemnify third parties in certain circumstances. The terms of these indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined. Under the Transaction Agreement in the MLIM Transaction, the Company has agreed to indemnify Merrill Lynch for losses it may incur arising from (1)any alleged or actual breach, failure to comply, violation or other deficiency with respect to any regulatory or fiduciary requirements relating to the operation of BlackRocks business, (2)any fees or expenses incurred or owed by BlackRock to any brokers, financial advisors or comparable other persons retained or employed by BlackRock in connection with the MLIM Transaction, and (3)certain specified tax covenants. Management believes that the likelihood of any liability arising under these indemnification provisions is remote.Management cannot estimate any potential maximum exposuredue both to the remoteness of any potential claims and the fact that items that wouldbe included within any such calculatedclaim would be beyond the control of BlackRock. Consequently, no liability has been recorded on the condensed consolidated statements of financial condition. Contingent Payments Related to Quellos Transaction On October1, 2007, the Company acquired the fund of funds business of Quellos. As part of this transaction Quellos is entitled to receive two contingent payments upon achieving certain |
13.Stock-Based Compensation | 13. Stock-Based Compensation The components of the Companys stock-based compensation expense are comprised of the following: ThreeMonthsEnded June30, SixMonthsEnded June30, 2009 2008 2009 2008 Stock-based compensation: Restricted stock and restricted stock units (RSUs) $ 59 $ 48 $ 123 $ 99 Stock options 3 6 4 Long-term incentive plans funded by PNC 15 15 30 30 Total stock-based compensation $ 77 $ 63 $ 159 $ 133 Stock Options Options outstanding at June30, 2009 and changes during the six months ended June30, 2009 were as follows: Outstanding at Shares Under Option Weighted Average Exercise Price December31, 2008 3,140,517 $ 88.82 Exercised (310,846 ) $ 36.64 June30, 2009 2,829,671 $ 94.55 The aggregate intrinsic value of options exercised during the six months ended June30, 2009 was $33. At June30, 2009, the Company had $27 in unrecognized stock-based compensation expense related to unvested stock options. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 2.3 years. Restricted Stock and RSUs Restricted stock and RSU activity at June30, 2009 and changes during the six months ended June30, 2009 were as follows: Outstanding at Unvested Restricted Stock and Units Weighted Average GrantDate FairValue December 31, 2008 4,603,953 $ 174.24 Granted 1,855,077 $ 117.73 Converted (818,013 ) $ 179.46 Forfeited (192,807 ) $ 156.37 June 30, 2009 5,448,210 $ 154.85 The Company values restricted stock and RSUs at their grant-date fair value as measured by BlackRocks common stock price. In January 2009, the Company granted 23,417 RSUs as long-term incentive compensation, which will be partially funded by shares currently held by PNC (see Long-Term Incentive Plans Funded by PNC below). The awards cliff vest five years from the date of grant. In January 2009, the Company granted 1,789,685 RSUs to employees as part of annual incentive compensation under the BlackRock, Inc. 1999 Stock Award and Incentive Plan (the Award Plan) that vest ratably over three years from the date of grant. At June30, 2009, there was $442 in total unrecognized compensation cost related to unvested restricted stock and RSUs. The unrecognized compensation cost is expected to be recognized over the remaining weighted average period of 2.1years. Long-Term Incentive Plans Funded by PNC Under a share surrender agreement, PNC committed to provide up to 4,000,000 shares of BlackRock common stock, held by PNC, to fund certain BlackRock long-term incentive plans (LTIP). During 2007, the Company granted additional long-term incentive awards, out of the Award Plan of approximately 1,600,000 RSUs that will be settled using BlackRock shares held by PNC in accordance with the share surrender agreement. The RSU awards vest |
14.Earnings Per Share | 14. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share for the three months ended June30, 2009 and 2008: Three Months Ended June30, 2009 2008 Basic Diluted Basic Diluted Net income attributable to BlackRock, Inc. allocated to: Common shares $ 212 $ 212 $ 264 $ 264 Participating RSUs 6 6 10 10 Total net income attributable to BlackRock, Inc. $ 218 $ 218 $ 274 $ 274 Weighted-average common shares outstanding 130,928,916 130,928,916 129,569,325 129,569,325 Dilutive effect of stock options and non-participating restricted stock units 1,392,767 1,231,272 Dilutive effect of convertible debt 1,042,928 655,806 Dilutive effect of acquisition-related contingent stock payments 576,135 Total weighted-average shares outstanding 133,364,611 132,032,538 Earnings per share attributable to BlackRock, Inc., common stockholders: $ 1.62 $ 1.59 $ 2.04 $ 2.00 The following table sets forth the computation of basic and diluted earnings per share for the six months ended June30, 2009 and 2008: Six Months Ended June30, 2009 2008 Basic Diluted Basic Diluted Net income attributable to BlackRock, Inc. allocated to: Common shares $ 294 $ 294 $ 498 $ 498 Participating RSUs 8 8 17 17 Total net income attributable to BlackRock, Inc. $ 302 $ 302 $ 515 $ 515 Weighted-average common shares outstanding 130,574,535 130,574,535 129,242,591 129,242,591 Dilutive potential shares from stock options and non-participating restricted stock units 1,154,851 1,325,001 Dilutive potential shares from convertible debt 939,309 668,773 Dilutive potential shares from acquisition-related contingent stock payments 576,135 Total weighted-average shares outstanding 132,668,695 131,812,500 Earnings per share attributable to BlackRock, Inc., common stockholders: $ 2.25 $ 2.22 $ 3.85 $ 3.78 Due to the similarities in terms between BlackRock series A, B and C non-voting participating preferred stock and the Companys common stock, the Company considers the series A, B and C non-voting participating preferred stock to be common stock equivalents for purposes of earnings per share calculations. As such, the Company has included the outstanding series A, B and C non-voting participating preferred stock in the calculation of average basic and diluted shares outstanding for the three and six months ended June30, 2009 and 2008. For the three and six months ended June30, 2009, 1,244,100 stock options and 1,249,792 |
15.Segment Information | 15. Segment Information The Companys management directs BlackRocks operations as one business, the asset management business. As such, the Company believes it operates in one business segment in accordance with SFAS No.131, Disclosures About Segments of an Enterprise and Related Information (ASC 280-10, Segment Reporting). The following table illustrates investment advisory and administration base and performance fees, BlackRock Solutions and advisory, distribution fees and other revenue for the three and six months ended June30, 2009 and 2008, respectively. ThreeMonthsEnded June30, SixMonthsEnded June30, 2009 2008 2009 2008 Fixed income $ 212 $ 234 $ 414 $ 457 Cash management 166 184 341 359 Equity and balanced 384 631 727 1,271 Alternative investment products 105 169 195 305 Total investment advisory and administration base and performance fees 867 1,218 1,677 2,392 BlackRock Solutions and advisory 116 100 256 160 Distribution fees 23 34 48 69 Other revenue 23 35 35 66 Total revenue $ 1,029 $ 1,387 $ 2,016 $ 2,687 The following tables illustrate the Companys total revenue for the three and six months ended June30, 2009 and 2008 by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the customer is sourced. Three Months Ended June30, Revenues 2009 %of total 2008 %of total North America $ 764 74 % $ 915 66 % Europe 223 22 % 389 28 % Asia-Pacific 42 4 % 83 6 % Total revenues $ 1,029 100 % $ 1,387 100 % Six Months Ended June30, Revenues 2009 %of total 2008 %of total North America $ 1,531 75 % $ 1,744 65 % Europe 414 21 % 806 30 % Asia-Pacific 71 4 % 137 5 % Total revenues $ 2,016 100 % $ 2,687 100 % The following table shows the Companys long-lived assets, including goodwill and property and equipment at June30, 2009 and December31, 2008 and does not necessarily reflect where the asset is physically located. Long-Lived Assets June30, 2009 December31, 2008 North America $ 5,899 99 % $ 5,714 99 % Europe 28 0 % 27 0 % Asia-Pacific 48 1 % 52 1 % Total long-lived assets $ 5,975 100 % $ 5,793 100 % North America primarily is comprised of the United States, while Europe primarily is comprised of the United Kingdom and Asia-Pacific primarily is comprised of Japan, Australia and Hong Kong. |
16.Pending Transaction | 16. Pending Transaction BlackRock will acquire from Barclays all of the outstanding equity interests of subsidiaries of Barclays conducting the business of BGI in exchange for an aggregate of approximately 37.8million shares of BlackRock common stock and participating preferred stock, subject to certain adjustments, and $6,600 in cash, subject to certain adjustments (the BGI Transaction). The value of the 37.8million shares will be determined at the time of closing, which is expected in December 2009, or early 2010, pending regulatory approvals and satisfaction of other customary closing conditions. The shares of common stock issued to Barclays pursuant to the BGI Transaction will represent approximately 4.9% of the outstanding shares of common stock of BlackRock immediately following the closing of the transaction, and the total equity consideration will represent approximately an aggregate 19.9% economic interest in BlackRock immediately following the closing of the transaction. The cash portion of the purchase price will be funded through a combination of existing cash, committed debt facilities and proceeds from the issuance of 19.9million capital shares to a group of institutional investors, including PNC. Both the debt facilities and the issuance of capital shares are 100% committed subject to the closing of the BGI Transaction. |
17.Subsequent Events | 17. Subsequent Events The Company has reviewed subsequent events occurring through August7, 2009, the date that these financial statements were issued and determined that no subsequent events occurred that would require accrual or additional disclosure. |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | |||
6 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| Jun. 30, 2008
| |
Entity [Text Block] | |||
Trading Symbol | BLK | ||
Entity Registrant Name | BlackRock Inc. | ||
Entity Central Index Key | 0001364742 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 50,931,608 | ||
Entity Public Float | $2,900,000,000 |