UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE

ACT OF 1934.

For the quarterly period ended ~~September 30, 2013~~March 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE

ACT OF 1934.

For the transition period from to .

Commission file number 001-33099

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

Delaware

32-0174431

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer Identification No.)

55 East 52nd Street, New York, NY 10055

(Address of Principal Executive Offices)

(Zip Code)

(212) 810-5300

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes		X		No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes		X		No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or, a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer X	Accelerated filer	Non-accelerated filer
Smaller reporting company		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes		No			X

As of ~~October 31, 2013,~~April 30, 2014, there were ~~167,090,120~~166,817,871 shares of the registrant’s common stock outstanding.

BlackRock, Inc.

Index to Form 10-Q

PART I

FINANCIAL INFORMATION


		Page

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Financial Condition		1

	Condensed Consolidated Statements of Income		2

	Condensed Consolidated Statements of Comprehensive Income		3

	Condensed Consolidated Statements of Changes in Equity		4

	Condensed Consolidated Statements of Cash Flows		6

	Notes to Condensed Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		4338

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		8069

Item 4.	Controls and Procedures		8371

PART II

OTHER INFORMATION



Item 1.	Legal Proceedings	8472

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8473

Item 6.	Exhibits	8573

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

BlackRock, Inc.

Condensed Consolidated Statements of Financial Condition

~~(in millions, except share data)~~

(unaudited)


	September 30, 2013			December 31, 2012
(in millions, except share data)							March 31, 2014			December 31, 2013
Assets
Cash and cash equivalents		$ 3,987			$ 4,606			$ 4,394			$ 4,390
Accounts receivable		4,311			2,250			2,868			2,247
Investments		1,878			1,750			2,092			2,151
Assets of consolidated variable interest entities:
Cash and cash equivalents		93			297			191			161
Bank loans, other investments and other assets		2,107			2,264			2,183			2,325
Separate account assets		146,646			134,768			155,097			155,113
Separate account collateral held under securities lending agreements		21,962			23,021			17,762			21,788
Property and equipment (net of accumulated depreciation of $649 and $572 at September 30, 2013 and December 31, 2012, respectively)		523			557
Intangible assets (net of accumulated amortization of $1,019 and $899 at September 30, 2013 and December 31, 2012, respectively)		17,513			17,402
Property and equipment (net of accumulated depreciation of $641 and $611 at March 31, 2014 and December 31, 2013, respectively)								508			525
Intangible assets (net of accumulated amortization of $1,097 and $1,057 at March 31, 2014 and December 31, 2013, respectively)								17,459			17,501
Goodwill		12,938			12,910			12,975			12,980
Other assets		759			626			768			692

Total assets		$212,717			$200,451			$216,297			$219,873

Liabilities
Accrued compensation and benefits		$ 1,322			$ 1,547			$ 668			$ 1,747
Accounts payable and accrued liabilities		3,322			1,055			1,615			1,084
Short-term borrowings		-			100
Liabilities of consolidated variable interest entities:
Borrowings		2,068			2,402			2,244			2,369
Other liabilities		88			103			106			74
Long-term borrowings		4,938			5,687			5,936			4,939
Separate account liabilities		146,646			134,768			155,097			155,113
Separate account collateral liabilities under securities lending agreements		21,962			23,021			17,762			21,788
Deferred income tax liabilities		5,237			5,293			5,241			5,085
Other liabilities		948			858			927			1,004

Total liabilities		186,531			174,834			189,596			193,203


Commitments and contingencies (Note 12)
Temporary equity
Redeemable noncontrolling interests		41			32			88			54
Permanent Equity
BlackRock, Inc. stockholders’ equity
Common stock, $0.01 par value;		2			2			2			2
Shares authorized: 500,000,000 at September 30, 2013 and December 31, 2012;
Shares issued: 171,252,185 at September 30, 2013 and December 31, 2012;
Shares outstanding: 167,277,854 and 168,875,304 at September 30, 2013 and December 31, 2012, respectively
Shares authorized: 500,000,000 at March 31, 2014 and December 31, 2013;
Shares issued: 171,252,185 at March 31, 2014 and December 31, 2013;
Shares outstanding: 167,003,034 and 166,589,688 at March 31, 2014 and December 31, 2013, respectively
Preferred stock (Note 16)		-			-			-			-
Additional paid-in capital		19,391			19,419			19,087			19,473
Retained earnings		7,653			6,444			8,598			8,208
Appropriated retained earnings		25			29			6			22
Accumulated other comprehensive loss		(79	)		(59	)		(35	)		(35	)
Treasury stock, common, at cost (3,974,331 and 2,376,881 shares held at September 30, 2013 and December 31, 2012, respectively)		(993	)		(432	)
Treasury stock, common, at cost (4,249,151 and 4,662,497 shares held at March 31, 2014 and December 31, 2013, respectively)								(1,180	)		(1,210	)

Total BlackRock, Inc. stockholders’ equity		25,999			25,403			26,478			26,460
Nonredeemable noncontrolling interests		127			155			117			135
Nonredeemable noncontrolling interests of consolidated variable interest entities		19			27			18			21

Total permanent equity		26,145			25,585			26,613			26,616

Total liabilities, temporary equity and permanent equity		$212,717			$200,451			$216,297			$219,873

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Income

~~(in millions, except share data)~~

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share data)													Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
Revenue
Investment advisory, administration fees and securities lending revenue
Related parties		$1,478			$1,319			$4,403			$3,900			$1,611			$1,455
Other third parties		675			705			2,056			2,091			680			674

Total investment advisory, administration fees and securities lending revenue		2,153			2,024			6,459			5,991			2,291			2,129
Investment advisory performance fees		96			103			293			224			158			108
BlackRock Solutions and advisory		156			128			420			382			154			126
Distribution fees		19			19			54			58			19			17
Other revenue		48			46			177			143			48			69

Total revenue		2,472			2,320			7,403			6,798			2,670			2,449
Expenses
Employee compensation and benefits		866			828			2,635			2,439			982			905
Distribution and servicing costs		85			94			266			282			89			91
Amortization of deferred sales commissions		14			13			38			43			15			12
Direct fund expenses		167			144			490			440			179			161
General and administration		334			327			1,130			958			313			331
Amortization of intangible assets		40			39			120			117			41			40

Total expenses		1,506			1,445			4,679			4,279			1,619			1,540

Operating income		966			875			2,724			2,519			1,051			909
Nonoperating income (expense)
Net gain (loss) on investments		32			75			235			143			76			62
Net gain (loss) on consolidated variable interest entities		(6	)		2			(2	)		1			(16	)		27
Interest and dividend income		8			10			18			27			10			6
Interest expense		(52	)		(57	)		(159	)		(158	)		(53	)		(54	)

Total nonoperating income (expense)		(18	)		30			92			13			17			41

Income before income taxes		948			905			2,816			2,532			1,068			950
Income tax expense		219			250			715			742			324			284

Net income		729			655			2,101			1,790			744			666
Less:
Net income (loss) attributable to redeemable noncontrolling interests		-			3			(1	)		7			1			-
Net income (loss) attributable to nonredeemable noncontrolling interests		(1	)		10			11			15			(13	)		34

Net income attributable to BlackRock, Inc.		$730			$642			$2,091			$1,768			$756			$632

Earnings per share attributable to BlackRock, Inc. common stockholders:
Basic		$4.30			$3.72			$12.26			$10.02			$4.47			$3.69
Diluted		$4.21			$3.65			$12.02			$9.87			$4.40			$3.62
Cash dividends declared and paid per share		$1.68			$1.50			$5.04			$4.50			$1.93			$1.68
Weighted-average common shares outstanding:
Basic		169,811,633			172,359,141			170,581,930			176,116,975			169,081,421			171,301,800
Diluted		173,371,508			175,450,532			174,012,876			178,956,699			171,933,803			174,561,132

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Comprehensive Income

~~(in millions)~~

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)													Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
Net income		$729			$655			$2,101			$1,790		$	744		$	666
Other comprehensive income (loss):
Other comprehensive income:
Change in net unrealized gains (losses) from available-for-sale investments, net of tax:
Unrealized holding gains (losses), net of tax⁽¹⁾		2			10			3			12			-			4
Less: reclassification adjustment included in net income⁽²⁾⁽¹⁾		1			(4	)		10			(5	)		8			3

Net change from available-for-sale investments, net of tax		1			14			(7	)		17			(8	)		1
Benefit plans, net of tax⁽³⁾		-			-			-			(1	)
Foreign currency translation adjustments		118			54			(13	)		53			8			(108	)

Other comprehensive income (loss)		119			68			(20	)		69			-			(107	)

Comprehensive income		848			723			2,081			1,859			744			559
Less: Comprehensive income (loss) attributable to noncontrolling interests		(1	)		13			10			22			(12	)		34

Comprehensive income attributable to BlackRock, Inc.		$849			$710			$2,071			$1,837		$	756		$	525

⁽¹⁾	The tax benefit (expense) was not material for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013. ~~The tax benefit (expense) was ($7) million for the three months ended September 30, 2012 and ($8) million for the nine months ended September 30, 2012.~~

⁽²⁾	~~The tax benefit (expense) was not material for the three and nine months ended September 30, 2013 and 2012.~~

⁽³⁾	~~The tax benefit (expense) for the nine months ended September 30, 2012 was not material.~~

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

~~(in millions)~~

(unaudited)


	Additional Paid-in Capital⁽¹⁾		Retained Earnings		Appropriated Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Common		Total BlackRock Stockholders’ Equity		Nonredeemable Noncontrolling Interests		Nonredeemable Noncontrolling Interests of Consolidated VIEs		Total Permanent Equity		Redeemable Noncontrolling Interests / Temporary Equity
December 31, 2012		$19,421		$6,444		$29		($59)		($432)		$25,403		$155		$27		$25,585		$32
(in millions)																					Additional Paid-in Capital⁽¹⁾		Retained Earnings		Appropriated Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Common		Total BlackRock Stockholders’ Equity		Nonredeemable Noncontrolling Interests		Nonredeemable Noncontrolling Interests of Consolidated VIEs		Total Permanent Equity		Redeemable Noncontrolling Interests / Temporary Equity
December 31, 2013																						$19,475		$8,208		$22		($35)		($1,210)		$26,460		$135		$21		$26,616		$54
Net income		-		2,091		-		-		-		2,091		13		(2)		2,102		(1)		-		756		-		-		-		756		3		(16)		743		1
Allocation of gains (losses) of consolidated collateralized loan obligations		-		-		(4)		-		-		(4)		-		4		-		-		-		-		(16)		-		-		(16)		-		16		-		-
Dividends paid		-		(882)		-		-		-		(882)		-		-		(882)		-		-		(366)		-		-		-		(366)		-		-		(366)		-
Stock-based compensation		339		-		-		-		1		340		-		-		340		-		126		-		-		-		1		127		-		-		127		-
Issuance of common shares related to employee stock transactions		(402)		-		-		-		422		20		-		-		20		-		(603)		-		-		-		604		1		-		-		1		-
Employee tax benefit withholdings related to employee stock transactions		-		-		-		-		(234)		(234)		-		-		(234)		-
Employee tax withholdings related to employee stock transactions																						-		-		-		-		(325)		(325)		-		-		(325)		-
Shares repurchased		-		-		-		-		(750)		(750)		-		-		(750)		-		-		-		-		-		(250)		(250)		-		-		(250)		-
Net tax benefit (shortfall) from stock-based compensation		35		-		-		-		-		35		-		-		35		-		91		-		-		-		-		91		-		-		91		-
Subscriptions (redemptions/distributions)-noncontrolling interest holders		-		-		-		-		-		-		(41)		124		83		104		-		-		-		-		-		-		(21)		(3)		(24)		49
Net consolidations (deconsolidations) of sponsored investment funds		-		-		-		-		-		-		-		(134)		(134)		(94)		-		-		-		-		-		-		-		-		-		(16)
Other comprehensive income (loss)		-		-		-		(20)		-		(20)		-		-		(20)		-

September 30, 2013		$19,393		$7,653		$25		($79)		($993)		$25,999		$127		$19		$26,145		$41
March 31, 2014																						$19,089		$8,598		$6		($35)		($1,180)		$26,478		$117		$18		$26,613		$88

⁽¹⁾	Amounts include $2 million of common stock at both ~~September 30,~~March 31, 2014 and December 31, 2013.

See accompanying notes to condensed consolidated financial statements.

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

(unaudited)


(in millions)	Additional Paid-in Capital⁽¹⁾		Retained Earnings		Appropriated Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Common		Total BlackRock Stockholders’ Equity		Nonredeemable Noncontrolling Interests		Nonredeemable Noncontrolling Interests of Consolidated VIEs		Total Permanent Equity		Redeemable Non- controlling Interests / Temporary Equity
December 31, 2012		$19,421		$6,444		$29		($59)		($432)		$25,403		$155		$27		$25,585		$32
Net income		-		632		-		-		-		632		7		27		666		-
Allocation of gains (losses) of consolidated collateralized loan obligations		-		-		26		-		-		26		-		(26)		-		-
Dividends paid		-		(309)		-		-		-		(309)		-		-		(309)		-
Stock-based compensation		127		-		-		-		-		127		-		-		127		-
Issuance of common shares related to employee stock transactions		(364)		-		-		-		370		6		-		-		6		-
Employee tax withholdings related to employee stock transactions		-		-		-		-		(211)		(211)		-		-		(211)		-
Shares repurchased		-		-		-		-		(250)		(250)		-		-		(250)		-
Net tax benefit (shortfall) from stock-based compensation		28		-		-		-		-		28		-		-		28		-
Subscriptions (redemptions/distributions)-noncontrolling interest holders		-		-		-		-		-		-		(18)		114		96		11
Net consolidations (deconsolidations) of sponsored investment funds		-		-		-		-		-		-		-		-		-		(7)
Other comprehensive income (loss)		-		-		-		(107)		-		(107)		-		-		(107)		-

March 31, 2013		$19,212		$6,767		$55		($166)		($523)		$25,345		$144		$142		$25,631		$36

⁽¹⁾	Amounts include $2 million of common stock at both March 31, 2013 and December 31, 2012.

See accompanying notes to condensed consolidated financial statements.

~~BlackRock, Inc.~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(in millions)~~

~~(unaudited)~~

Additional
Paid-in
Capital⁽¹⁾ Retained
Earnings Appropriated
Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Common
Shares
Held in
Escrow Treasury
Stock
Common Total
BlackRock
Stockholders’
Equity Nonredeemable
Noncontrolling
Interests Nonredeemable
Noncontrolling
Interests of
Consolidated
VIEs Total
Permanent
Equity Redeemable
Non-
controlling
Interests /
Temporary
Equity⁽²⁾
December 31, 2011
$20,276      $5,046      $72      ($127)      ($1)      ($218)      $25,048      $184      $38      $25,270      $92
Net income
-      1,768      -      -      -      -      1,768      14      1      1,783      7
Consolidation of a collateralized loan obligation⁽³⁾
-      -      (13)      -      -      -      (13)      -      -      (13)      -
Allocation of losses of consolidated collateralized loan obligations
-      -      (3)      -      -      -      (3)      -      3      -      -
Dividends paid
-      (804)      -      -      -      -      (804)      -      -      (804)      -
Stock-based compensation
344      -      -      -      -      -      344      -      -      344      -
Merrill Lynch cash capital contribution
7      -      -      -      -      -      7      -      -      7      -
Issuance of common shares related to employee stock transactions
(366)      -      -      -      -      419      53      -      -      53      -
Employee tax benefit withholdings related to employee stock transactions
-      -      -      -      -      (141)      (141)      -      -      (141)      -
Shares repurchased
(1,000)      -      -      -      -      (334)      (1,334)      -      -      (1,334)      -
Net tax benefit (shortfall) from stock-based compensation
63      -      -      -      -      -      63      -      -      63      -
Subscriptions (redemptions/distributions)-noncontrolling interest holders
-      -      -      -      -      -      -      (20)      (8)      (28)      221
Net consolidations (deconsolidations) of sponsored investment funds
-      -      -      -      -      -      -      (8)      -      (8)      (272)
Other comprehensive income (loss)
-      -      -      69      -      -      69      -      -      69      -

September 30, 2012
  $19,324        $6,010          $56          ($58)          ($1)        ($274)        $25,057          $170            $34        $25,261          $48

⁽¹⁾
~~Amounts include $2 million and $1 million of common stock at September 30, 2012 and December 31, 2011, respectively.~~
⁽²⁾
~~Amount at September 30, 2012 includes $20 million related to variable interest entities.~~
⁽³⁾
~~Consolidated during the three months ended September 30, 2012.~~
~~See accompanying notes to condensed consolidated financial statements.~~
BlackRock, Inc.
Condensed Consolidated Statements of Cash Flows
~~(in millions)~~
(unaudited)

       Nine Months Ended
    September 30,
(in millions)        Three Months Ended
     March 31,
   2013 2012    2014 2013
Cash flows from operating activities

Net income
   $2,101    $1,790       $744    $666
Adjustments to reconcile net income to cash flows from operating activities:

Depreciation and amortization
   215    219       73    72
Amortization of deferred sales commissions
   38    43       15    12
Stock-based compensation
   340    344       127    127
Deferred income tax expense (benefit)
   (44 ) (42 )    165    93
Gain related to PennyMac initial public offering
   (39 ) -
Gain related to the charitable contribution
   (80 ) -
Charitable contribution
   124    -
Net (gains) losses on nontrading investments
   (46 ) (32 )    (47 ) (21 )
Purchases of investments within consolidated sponsored investment funds
   (45 ) (83 )    (7 ) (18 )
Proceeds from sales and maturities of investments within consolidated sponsored investment funds
   112    48       69    29
Assets and liabilities of consolidated VIEs:

Change in cash and cash equivalents
   204    (32 )    (46 ) 7
Net (gains) losses within consolidated VIEs
   2    (1 )    16    (27 )
Net (purchases) proceeds within consolidated VIEs
   15    233       169    (41 )
(Earnings) losses from equity method investees
   (110 ) (124 )    (39 ) (50 )
Distributions of earnings from equity method investees
   39    29       7    17
Changes in operating assets and liabilities:

Accounts receivable
   (2,061 ) (493 )    (624 ) (376 )
Deferred sales commissions
   (42 ) (31 )
Investments, trading
   (205 ) (197 )    (95 ) 51
Other assets
   (97 ) (173 )    (82 ) 4
Accrued compensation and benefits
   (225 ) (199 )    (1,079 ) (947 )
Accounts payable and accrued liabilities
   2,264    489       521    597
Other liabilities
   16    98       (93 ) (5 )




Cash flows from operating activities
   2,476    1,886       (206 ) 190




Cash flows from investing activities

Purchases of investments
   (188 ) (397 )    (123 ) (90 )
Proceeds from sales and maturities of investments
   225    391       266    117
Distributions of capital from equity method investees
   51    51       8    25
Net consolidations (deconsolidations) of sponsored investment funds
   (63 ) (208 )    (3 ) (3 )
Acquisitions, net of cash acquired
   (240 ) (267 )
Purchases of property and equipment
   (60 ) (121 )    (15 ) (18 )




Cash flows from investing activities
   (275 ) (551 )    133    31




Cash flows from financing activities

Repayments of short-term borrowings
   (100 ) -       -    (100 )
Repayments of long-term borrowings
   (750 ) -
Proceeds from long-term borrowings
   -    1,495       997    -
Cash dividends paid
   (882 ) (804 )    (366 ) (309 )
Proceeds from stock options exercised
   15    47       -    5
Proceeds from issuance of common stock
   5    6       1    1
Repurchases of common stock
   (984 ) (1,475 )    (575 ) (461 )
Merrill Lynch cash capital contribution
   -    7
Net proceeds from (repayments of) borrowings by consolidated VIEs
   (343 ) (203 )    (120 ) (80 )
Net (redemptions/distributions paid) subscriptions received from noncontrolling interests holders
   187    193
Net (redemptions/distributions paid) / subscriptions received from noncontrolling interests holders
   25    107
Excess tax benefit from stock-based compensation
   40    73       102    32




Cash flows from financing activities
   (2,812 ) (661 )    64    (805 )




Effect of exchange rate changes on cash and cash equivalents
   (8 ) 43       13    (80 )




Net increase (decrease) in cash and cash equivalents
   (619 ) 717       4    (664 )
Cash and cash equivalents, beginning of period
   4,606    3,506       4,390    4,606




Cash and cash equivalents, end of period
   $3,987    $4,223       $4,394    $3,942




Supplemental disclosure of cash flow information:

Cash paid for:

Interest
   $125    $116       $23    $24
Interest on borrowings of consolidated VIEs
   $82    $52       $27    $29
Income taxes
   $746    $837       $178    $78
Supplemental schedule of noncash investing and financing transactions:

Issuance of common stock
   $402    $366       $603    $364
Increase (decrease) in noncontrolling interests due to net consolidation (deconsolidation) of sponsored investment funds
   ($228 ) ($280 )    ($16 ) ($7 )
Increase (decrease) in borrowings due to consolidation of VIEs
   $-    $406
See accompanying notes to condensed consolidated financial statements.
BlackRock, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1.  Business Overview
BlackRock, Inc. (together, with its subsidiaries, unless the context otherwise indicates, “BlackRock” or the “Company”) provides diversified investment management services to institutional clients, intermediary and individual investors through various investment vehicles. Investment management services primarily consist of the management of equity, fixed income, multi-asset, alternative investment and cash management products. BlackRock offers its investment products in a variety of vehicles, including open-end and closed-end mutual funds,iShares^® exchange-traded funds (“ETFs”), collective investment trusts and separate accounts. In addition, BlackRock provides market risk management, financial markets advisory and enterprise investment system services to a broad base of clients. Financial markets advisory services include valuation services relating to illiquid securities, dispositions and workout assignments (including long-term portfolio liquidation assignments), risk management and strategic planning and execution.
At ~~September 30, 2013,~~March 31, 2014, The PNC Financial Services Group, Inc. (“PNC”) held ~~20.9%~~20.8% of the Company’s voting common stock and ~~21.9%~~21.8% of the Company’s capital stock, which includes outstanding common and nonvoting preferred stock.
2.  Significant Accounting Policies
Basis of ~~Presentation.~~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. Noncontrolling interests on the condensed consolidated statements of financial condition include the portion of consolidated sponsored investment funds in which the Company does not have direct equity ownership. ~~Significant accounts~~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 condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2012,~~2013, which was filed with the Securities and Exchange Commission (“SEC”) on ~~March 1,~~ February 28, 2014 (“2013 ~~(“2012~~ Form 10-K”).
The interim financial information at ~~September 30, 2013~~March 31, 2014 and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ is unaudited. However, in the opinion of management, the interim information includes all normal recurring adjustments necessary for the fair presentation of the Company’s 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.
2.  Significant Accounting Policies (continued)

Fair Value ~~Measurements.~~Measurements.
Hierarchy of Fair Value Inputs.    The provisions of Accounting Standards Codification (“ASC”)~~820-10,~~ 820,Fair Value ~~Measurements and Disclosures~~Measurement (“ASC ~~820-10”~~820”), establish a hierarchy that prioritizes inputs to valuation techniques used to measure fair value and require companies to disclose the fair value of their financial instruments according to the fair value hierarchy (i.e., Level 1, 2 and 3 inputs, as defined). The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories:
Level 1 Inputs:
Quoted prices (unadjusted) in active markets for identical assets or liabilities at the reporting date.

Level 1 assets may include listed mutual funds (including those accounted for under the equity method of accounting as these mutual funds are investment companies that have publicly available net asset values (“NAVs”), which in accordance with GAAP, are calculated under fair value measures and the changes in fair values are equal to the earnings of such funds), ETFs, listed equities and certain exchange-traded derivatives.
Level 2 Inputs:
Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; quotes from pricing services or brokers for which the Company can determine that orderly transactions took place at the quoted price or that the inputs used to arrive at the price are observable; and inputs other than quoted prices that are observable, such as models or other valuation methodologies. As a practical expedient, the Company relies on the NAV (or its equivalent) of certain investments as their fair value.

Level 2 assets may include debt securities, bank loans, short-term floating-rate notes and asset-backed securities, securities held within consolidated hedge funds, certain equity method limited partnership interests in hedge funds valued based on NAV (or its equivalent) where the Company has the ability to redeem at the measurement date or within the near term without redemption restrictions, restricted public securities valued at a discount, as well as over-the-counter derivatives, including interest and inflation rate swaps and foreign currency exchange contracts that have inputs to the valuations that generally can be corroborated by observable market data.
Level 3 Inputs:
Unobservable inputs for the valuation of the asset or liability, which may include nonbinding broker quotes. Level 3 assets include investments for which there is little, if any, market activity. These inputs require significant management judgment or estimation. Certain investments that are valued using a NAV (or its equivalent) and are subject to current redemption restrictions that will not be lifted in the near term are included in Level 3.

Level 3 assets may include general and limited partnership interests in private equity funds, funds of private equity funds, real estate funds, hedge funds and funds of hedge funds, direct private equity investments held within consolidated funds, bank loans and bonds.
2.  Significant Accounting Policies (continued)

Fair Value Measurements. (continued)

Level 3 liabilities include borrowings of consolidated collateralized loan obligations (“CLOs”) valued based upon nonbinding single-broker quotes.

Level 3 inputs include BlackRock capital accounts for its partnership interests in various alternative investments, including distressed credit hedge funds, opportunistic funds, real estate and private equity funds, which may be adjusted by using the returns of certain market indices.
Significance of Inputs.    The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
Valuation Techniques.    The fair values of certain Level 3 assets and liabilities were determined using various methodologies as appropriate, including NAVs of underlying investments, third-party pricing vendors, broker quotes and market and income approaches. Such quotes and modeled prices are evaluated for reasonableness through various procedures, including due diligence reviews of third-party pricing vendors, variance analyses, consideration of the current market environment and other analytical procedures.
As a practical expedient, the Company ~~relies on~~uses NAV as the fair value for certain investments. The inputs to value these investments may include BlackRock capital accounts for its partnership interests in various alternative investments, including distressed credit hedge funds, opportunistic funds, real estate and private equity funds, which may be adjusted by using the returns of certain market indices. The various partnerships generally are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund. Fair value policies at the underlying fund generally require the fund to utilize pricing/valuation information from third-party sources, including independent appraisals. However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations that may be used as an input to value these investments.
A significant ~~amount~~number of inputs used to value equity, debt securities and bank loans is sourced from ~~well-recognized~~ third-party pricing vendors. Generally, prices obtained from pricing vendors are categorized as Level 1 inputs for identical securities traded in active markets and as Level 2 for other similar securities if the vendor uses observable inputs in determining the price. Annually, BlackRock’s internal valuation committee or other designated groups review both the valuation methodologies, including the general assumptions and methods used to value various asset classes, and operational processes with these vendors. ~~In addition, on~~On a quarterly basis, meetings are held with ~~the~~key vendors to identify any significant changes to the vendors’ processes.
In addition, quotes obtained from brokers generally are nonbinding and categorized as Level 3 inputs. However, if the Company is able to determine that market participants have transacted for the asset in an orderly manner near the quoted price or if the Company can determine that the inputs used by the broker are observable, the quote is classified as a Level 2 input.
~~2.  Significant Accounting Policies (continued)~~
~~Fair Value Measurements (continued)~~
Fair Value Option.    ASC 825-10,Financial Instruments (“ASC 825-10”), provides a fair value option election that allows companies an irrevocable election to use fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities.
2.  Significant Accounting Policies (continued)
Fair Value Measurements. (continued)
ASC 825-10 permits entities to elect to measure eligible financial assets and liabilities at fair value on an ongoing basis. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, which must be applied to an entire instrument, and not only specified risks, specific cash flows, or portions of that instrument, and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to ASC 825-10 are required to be reported separately from those instruments measured using another accounting method.
Upon the initial consolidation of certain CLOs, the Company elected to adopt the fair value option provisions for eligible assets and liabilities, including bank loans and borrowings of the CLOs to mitigate accounting mismatches between the carrying value of the assets and liabilities and to achieve operational simplification. To the extent there is a difference between the change in fair value of the assets and liabilities, the difference will be reflected as net income (loss) attributable to nonredeemable noncontrolling interests on the condensed consolidated statements of income and offset by a change in appropriated retained earnings on the condensed consolidated statements of financial condition.
Derivative Instruments and Hedging Activities.    ASC 815-10,Derivatives and Hedging(“ (“ASC 815-10”), establishes accounting and reporting standards for derivative instruments, including certain derivatives embedded in other contracts and for hedging activities. ASC 815-10 generally requires an entity to recognize all derivatives as either assets or liabilities on the condensed consolidated statements of financial condition and to measure those investments at fair value.
The Company does not use derivative financial instruments for trading or speculative purposes. The Company ~~uses~~may use derivative financial instruments primarily for purposes of hedging: (i) exposures to fluctuations in foreign currency exchange rates of certain assets and liabilities, (ii) market exposures for certain seed investments and (iii) future cash flows on floating-rate notes. The Company may also use derivatives within its separate account assets, which are segregated funds held for purposes of funding individual and group pension contracts. In addition, certain consolidated sponsored investment funds may also invest in derivatives as a part of their investment strategy.
Changes in the fair value of the Company’s derivative financial instruments are generally recognized in earnings and, where applicable, are offset by the corresponding gain or loss on the related foreign-denominated assets or liabilities or hedged investments, on the condensed consolidated statements of income.
Separate Account Assets and Liabilities.    Separate account assets are maintained by BlackRock Life Limited, a wholly owned subsidiary of the Company, which is a registered life insurance company in the United Kingdom, and represent segregated assets held for purposes of funding individual and group pension contracts. The life insurance company does not underwrite any insurance contracts that involve any insurance risk transfer from the insured to the life insurance company. The separate account assets primarily include equity securities, debt securities, money market funds and derivatives. The separate account assets are not subject to general claims of the creditors of BlackRock. These separate account assets and the related equal and offsetting liabilities are recorded as separate account assets and separate account liabilities on the condensed consolidated statements of financial condition in accordance with ~~the~~ ASC 944-80,Financial Services – Separate Accounts.
2.  Significant Accounting Policies (continued)
The net investment income attributable to separate account assets supporting individual and group pension contracts accrues directly to the contract owner and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these separate account assets and liabilities, BlackRock earns policy administration and management fees associated with these products, which are included in investment advisory, administration fees and securities lending revenue on the condensed consolidated statements of income.
~~2.  Significant Accounting Policies (continued)~~
Separate Account Collateral Assets Held and Liabilities Under Securities Lending Agreements.    The Company facilitates securities lending arrangements whereby securities held by separate ~~accounts~~account assets maintained by BlackRock Life Limited are lent to third parties under global master securities lending agreements. In exchange, the Company receives collateral with minimum values generally ranging from approximately 102% to 112% of the value of the securities lent in order to reduce counterparty risk. The required collateral value is calculated on a daily basis. The global master securities lending agreements provide the Company the right to request additional collateral or, in the event of ~~customer~~borrower default, the right to liquidate ~~collateral or to request additional~~ collateral. Under the Company’s securities lending arrangements, the Company can resell or ~~re-pledge~~repledge the collateral and the borrower can resell or ~~re-pledge~~repledge the loaned securities. The securities lending transactions entered into by the Company are accompanied by an agreement that entitles the Company to request the borrower to return the securities at any time; therefore, these transactions are not reported as sales under ASC 860,Transfers and Servicing.
As a result of the Company’s ability to resell or ~~re-pledge~~repledge the collateral, the Company records on the condensed consolidated statements of financial condition the cash and noncash collateral received under these arrangements as its own asset in addition to an equal and offsetting collateral liability for the obligation to return the collateral. During the ~~nine~~three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ the Company had not ~~re-sold~~resold or ~~re-pledged~~repledged any of the collateral received under these arrangements. At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, the fair value of loaned securities held by separate account assets was approximately ~~$20.2~~$16.1 billion and ~~$21.0~~$19.7 billion, respectively, and the fair value of the collateral held under these securities lending agreements was approximately ~~$22.0~~$17.8 billion and ~~$23.0~~$21.8 billion, respectively.
Appropriated Retained Earnings.    Upon the initial consolidation of CLOs, BlackRock records ~~a cumulative effect~~an adjustment to appropriated retained earnings on the condensed consolidated statements of financial condition equal to the difference between the fair value of the CLOs’ assets and the fair value of their liabilities. Such amounts are recorded as appropriated retained earnings as the CLO noteholders ~~not BlackRock,~~ ultimately will receive the benefits or absorb the losses associated with the CLOs’ assets and liabilities. The net change in the fair value of the CLOs’ assets and liabilities is recorded as net income (loss) attributable to nonredeemable noncontrolling interests and as ~~an adjustment~~a change to appropriated retained earnings.
Accounting Pronouncements Adopted in the ~~Nine~~Three Months Ended ~~September 30, 2013~~
~~Amendments to Accumulated Other Comprehensive Income Disclosures.~~    ~~On February 5, 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-02,~~~~Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income~~ ~~(“ASU 2013-02”), which added new disclosure requirements for items reclassified out of accumulated other comprehensive income (“AOCI”). See Note 15,~~~~Accumulated Other Comprehensive Income (Loss)~~.
~~Disclosures About Offsetting Assets and Liabilities.~~    ~~On December 16, 2011, the FASB issued ASU 2011-11,~~~~Disclosures About Offsetting Assets and Liabilities~~ (“ASU 2011-11”), which created new disclosure requirements about the nature of an entity’s rights of setoff and related arrangements associated with its financial instruments and derivative instruments. On JanuaryMarch 31, ~~2013, the FASB issued ASU 2013-01,~~~~Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities~~(“ASU 2013-01”), that provides clarification about which instruments and transactions are subject to ASU 2011-11. The adoption of ASU 2011-11 and ASU 2013-01 on January 1, 2013 was not material to the condensed consolidated financial statements.
~~2.  Significant Accounting Policies (continued)~~
~~Benchmark Interest Rate for Hedge Accounting.~~    ~~In July 2013, the FASB issued ASU 2013-10,~~~~Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes~~(“ASU 2013-10”). ASU 2013-10 provides for the inclusion of certain interest rate benchmarks for hedge accounting purposes. The adoption of ASU 2013-10 in the third quarter 2013 did not have a material impact on the condensed consolidated financial statements.
~~Recent Accounting Pronouncements Not Yet Adopted~~2014
Cumulative Translation Adjustment.    In March 2013, the FASB issued ASU 2013-05,Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries orGroups of Assets within a Foreign Entity or of an Investment in a Foreign Entity(“ASU 2013-05”). ASU 2013-05 addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer
2.  Significant Accounting Policies (continued)
holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. ~~ASU 2013-05 is effective for the Company on January 1, 2014.~~ The ~~Company does not believe the~~ adoption of ASU 2013-05 ~~will have a~~on January 1, 2014 was not material ~~impact on~~to the condensed consolidated financial statements.
Investment Company Guidance.    In June 2013, the FASB issued ASU 2013-08,Financial Services —– Investment Companies: Amendments to the Scope, Measurement, and Disclosure Requirements(“ASU 2013-08”). ASU 2013-08 amends the current criteria for an entity to qualify as an investment company, creates new disclosure requirements and amends the measurement criteria for certain interests in other investment companies. ~~ASU 2013-08 is effective for the Company on January 1, 2014.~~ The ~~Company does not believe the~~ adoption of ASU 2013-08 ~~will have a~~on January 1, 2014 was not material ~~impact on~~to the condensed consolidated financial statements.
Presentation of an Unrecognized Tax Benefit.In July 2013, the FASB issued ASU 2013-11,Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists(“ (“ASU 2013-11”). ASU 2013-11 provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 is effective for the Company on January 1, 2014. The ~~Company does not believe the~~ adoption of ASU 2013-11 ~~will have a~~on January 1, 2014 was not material ~~impact on~~to the condensed consolidated financial statements.
3.  Investments
A summary of the carrying value of total investments is as follows:

(in millions) September 30,
2013    December 31,
2012 March 31,
2014    December 31,
2013
Available-for-sale investments
$168       $158    $150       $183
Held-to-maturity investments
57       112    32       83
Trading investments:

Consolidated sponsored investment funds
381       123    479       385
Other equity and debt securities
67       94    29       43
Deferred compensation plan mutual funds
57       53    61       58





Total trading investments
505       270    569       486
Other investments:

Consolidated sponsored investment funds
314       401    394       441
Equity method investments
564       595    697       697
Deferred compensation plan hedge fund equity method investments
11       9    38       39
Cost method investments⁽¹⁾
122       120    95       119
Carried interest
137       85    117       103





Total other investments
1,148       1,210    1,341       1,399





Total investments
            $1,878                   $1,750                $2,092                   $2,151





⁽¹⁾
Amounts primarily include Federal Reserve Bank Stock.
At ~~September 30, 2013,~~March 31, 2014, the Company consolidated ~~$695~~$873 million of investments held by consolidated sponsored investment funds (excluding ~~variable~~non-variable interest entities (“VIEs”)) of which ~~$381~~$479 million and ~~$314~~$394 million were classified as trading investments and other investments, respectively. At December 31, ~~2012,~~2013, the Company consolidated ~~$524~~$826 million of investments held by consolidated sponsored investment funds (excluding VIEs) of which ~~$123~~$385 million and ~~$401~~$441 million were classified as trading investments and other investments, respectively.
3.  Investments (continued)
Available-for-Sale Investments
A summary of the cost and carrying value of investments classified as available-for-sale investments is as follows:

(in millions)
Gross Unrealized Carrying
Value Gross Unrealized Carrying
Value
At September 30, 2013 Cost Gains Losses
March 31, 2014 Cost Gains Losses Carrying
Value
Equity securities of sponsored investment funds
td49    $4    ($3)
December 31, 2013
Equity securities of sponsored investment funds
$163    $6    ($4)    $165    $180    $4    ($4)    $180
Other securities
1    2    -    3    1    2    -    3

Total available-for-sale investments
$164    $8    ($4)    $168            $181            $6            ($4)            $183

At December 31, 2012
Equity securities of sponsored investment funds
$142    $14    ($1)    $155
Other securities
2    1    -    3

Total available-for-sale investments
        $144            $15            ($1)            $158

Available-for-sale investments primarily included seed investments in BlackRock sponsored investment mutual funds.
~~3.  Investments (continued)~~

Held-to-Maturity Investments
The carrying value of held-to-maturity investments was ~~$57~~$32 million and ~~$112~~$83 million at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, respectively. Held-to-maturity investments included foreign government debt held for regulatory purposes and the amortized cost (carrying value) of these investments approximated fair value. At ~~September 30, 2013, $43~~March 31, 2014, $18 million of these investments ~~would~~ mature in one year or less and $14 million ~~would~~ mature after 10 years.
Trading Investments
A summary of the cost and carrying value of trading investments is as follows:

(in millions)        September 30, 2013            December 31, 2012            March 31, 2014            December 31, 2013
   Cost
Carrying
Value
   Cost
Carrying
Value
   Cost    Carrying
Value    Cost    Carrying
Value








Trading investments:

Deferred compensation plan mutual funds
   $  51       $  57       $  46       $  53       $  48       $  61       $  49       $  58
Equity/Multi-asset mutual funds
   190       194       154       162
Equity securities/Multi-asset mutual funds
   238       241       174       184
Debt securities/fixed income mutual funds:

Corporate debt
   126       126       44       44       154       156       128       128
Government debt
   132       128       11       11       112       111       121       116








Total trading investments
           $499               $505               $255               $270               $552               $569               $472               $486








At ~~September 30, 2013,~~March 31, 2014, trading investments included ~~$187~~$212 million of equity securities and ~~$194~~$267 million of debt securities held by consolidated sponsored investment funds, ~~$57~~$61 million of certain deferred compensation plan mutual fund investments and ~~$67~~$29 million of other equity and debt securities.
At December 31, 2013, trading investments included $172 million of equity securities and $213 million of debt securities held by consolidated sponsored investment funds, $58 million of certain deferred compensation plan mutual fund investments and $43 million of other equity and debt securities.
3.  Investments (continued)
Other Investments
A summary of the cost and carrying value of other investments is as follows:

(in millions)        September 30, 2013            December 31, 2012            March 31, 2014            December 31, 2013
   Cost
Carrying
Value
   Cost
Carrying
Value
   Cost    Carrying
Value    Cost    Carrying
Value








Other investments:

Consolidated sponsored investment funds
   $303       $314       $378       $401       $381       $394       $420       $441
Equity method
   480       564       541       595       591       697       613       697
Deferred compensation plan hedge fund
equity method investments
   9       11       15       9
Deferred compensation plan equity method investments
   35       38       37       39
Cost method investments:

Federal Reserve Bank stock
   93       93       89       89       90       90       90       90
Other
   17       29       31       31       5       5       17       29








Total cost method investments
   110       122       120       120       95       95       107       119
Carried interest
   -       137       -       85       -       117       -       103








Total other investments
           $902               $1,148               $1,054               $1,210               $1,102               $1,341               $1,177               $1,399








Consolidated sponsored investment funds include third-party private equity funds, direct investments in private companies and third-party hedge funds held by BlackRock sponsored investment funds.
~~3.  Investments (continued)~~
~~Other Investments (continued)~~
Equity method investments primarily include BlackRock’s direct investment in certain BlackRock sponsored investment funds. See Note 10,Other Assets, for information on the Company’s investment in PennyMac Financial Services, Inc. (“PennyMac”), which is included in other assets on the condensed consolidated statements of financial condition.
Cost method investments include nonmarketable securities, including Federal Reserve Bank stock, which is held for regulatory purposes and is restricted from sale. At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, there were no indicators of impairment on these investments.
Carried interest represents allocations to BlackRock’s general partner capital accounts from certain funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds.
4.  Consolidated Sponsored Investment Funds
The Company consolidates certain sponsored investment funds primarily because it is deemed to control such funds. The investments owned by these consolidated sponsored investment funds are classified as trading or other investments. The following table presents the balances related to these consolidated funds that were included on the condensed consolidated statements of financial condition as well as BlackRock’s net interest in these funds:

(in millions)    September 30,
2013    December 31,
2012    March 31,
2014 December 31,
2013
Cash and cash equivalents
   $105       $133       $  88    $114
Investments:

Trading investments
   381       123       479    385
Other investments
   314       401       394    441
Other assets
   13       25       19    20
Other liabilities
   (33)       (65)       (12 ) (39 )
Noncontrolling interests
   (168)       (187)       (205 ) (189 )






BlackRock’s net interests in consolidated sponsored investment funds
                     $612                         $430                         $763                      $732






BlackRock’s total exposure to consolidated sponsored investment funds ~~of $612 million and $430 million at September 30, 2013 and December 31, 2012, respectively,~~ represents the value of ~~the Company’s~~its economic ownership interest in these sponsored investment funds. Valuation changes associated with investments held at fair value by these consolidated investment funds are reflected in nonoperating income (expense) and partially offset in net income (loss) attributable to noncontrolling interests for the portion not attributable to BlackRock.
In addition, at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, several consolidated CLOs and one sponsored investment fund, which were deemed to be VIEs, were excluded from the balances in the table above as the balances for these investment products are reported separately on the condensed consolidated statements of financial condition. See Note 6,Variable Interest Entities, for further discussion ofon these consolidated investment products.
The Company ismay not be readily able to access cash and cash equivalents held by consolidated sponsored investment funds to use in its operating activities. In addition, the Company ismay not be readily able to sell investments held by consolidated sponsored investment funds in order to obtain cash for use in the Company’s operations.
5.  Fair Value Disclosures
Fair Value Hierarchy
Assets and liabilities measured at fair value on a recurring basis and other assets not held at fair value

September 30, 2013
(in millions)

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other Assets
Not Held at Fair
Value⁽¹⁾
September 30,
2013

March 31, 2014
(in millions)

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other Assets
Not Held at Fair
Value⁽¹⁾
March 31,
2014

Assets:

Investments

Available-for-sale:

Equity securities (funds and CDOs)
$ 165    $ -    $ 1    $ -    $ 166
Debt securities
-    2    -    -    2

Total available-for-sale
165    2    1    -    168
Equity securities of sponsored investment funds
$ 148    $ 2    $ -    $ -    $ 150
Held-to-maturity debt securities
-    -    -    57    57    -    -    -    32    32
Trading:

Deferred compensation plan mutual funds
57    -    -    -    57    61    -    -    -    61
Equity/Multi-asset mutual funds
194    -    -    -    194    241    -    -    -    241
Debt securities / fixed income mutual funds
61    193    -    -    254    -    267    -    -    267

Total trading
312    193    -    -    505    302    267    -    -    569
Other investments:

Consolidated sponsored investment funds:

Hedge funds / Funds of funds
1    21    45    -    67    -    108    12    -    120
Private / public equity⁽²⁾
5    8    234    -    247    5    13    256    -    274

Total consolidated sponsored investment funds
6    29    279    -    314    5    121    268    -    394
Equity method:

Hedge funds / Funds of hedge funds
-    67    145    55    267    -    188    91    68    347
Private equity investments
-    -    98    -    98    -    -    101    -    101
Real estate funds
-    20    103    7    130    -    20    100    7    127
Fixed income mutual funds
63    -    -    -    63    114    -    -    -    114
Equity/Multi-asset, alternative mutual funds
6    -    -    -    6
Other
8    -    -    -    8

Total equity method
69    87    346    62    564    122    208    292    75    697
Deferred compensation plan hedge fund equity method investments
-    11    -    -    11
Deferred compensation plan equity method investments
-    7    31    -    38
Cost method investments
-    -    -    122    122    -    -    -    95    95
Carried interest
-    -    -    137    137    -    -    -    117    117

Total investments
552    322    626    378    1,878    577    605    591    319    2,092

Separate account assets
106,085    39,675    -    886    146,646    112,145    41,913    -    1,039    155,097
Separate account collateral held under securities lending agreements:

Equity securities
19,851    -    -    -    19,851    15,416    -    -    -    15,416
Debt securities
-    2,111    -    -    2,111    -    2,346    -    -    2,346

Total separate account collateral held under securities lending agreements
19,851    2,111    -    -    21,962    15,416    2,346    -    -    17,762
Other assets⁽³⁾
-    12    -    -    12
Assets of consolidated VIEs:

Bank loans and other assets
-    1,867    97    20    1,984    -    1,891    147    37    2,075
Bonds
-    64    35    -    99    -    54    28    -    82
Private / public equity⁽⁴⁾
-    7    17    -    24
Private / public equity⁽³⁾
-    13    13    -    26

Total assets of consolidated VIEs
-    1,938    149    20    2,107    -    1,958    188    37    2,183

Total
$ 126,488    $ 44,058    $ 775    $ 1,284    $ 172,605    $ 128,138    $ 46,822    $ 779    $ 1,395    $ 177,134

Liabilities:

Borrowings of consolidated VIEs
$ -    $ -    $ 2,068    $ -    $ 2,068    $ -    $ -    $ 2,244    $ -    $ 2,244
Separate account collateral liabilities under securities lending agreements
19,851    2,111    -    -    21,962    15,416    2,346    -    -    17,762
Other liabilities⁽⁵⁾
19    4    33    -    56
Other liabilities⁽⁴⁾
-    4    42    -    46

Total
$ 19,870    $ 2,115    $ 2,101    $ -    $ 24,086    $ 15,416    $ 2,350    $ 2,286    $ -    $ 20,052

⁽¹⁾
Amounts are comprised of investments held at cost or amortized cost, carried interest and certain equity method investments, which include sponsored investment ~~companies~~funds 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 liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.
⁽²⁾
Level 3 amounts include ~~$202~~$192 million and ~~$32~~$64 million of underlying third-party private equity funds and direct investments in private equity companies held by private equity funds, respectively.
⁽³⁾
~~Amount includes company-owned and split-dollar life insurance policies.~~
⁽⁴⁾
Level 3 amounts include ~~$15 million and $2~~$13 million of underlying third-party private equity funds ~~and direct investments in private equity companies~~ held by a private equity fund.
⁽⁵⁾⁽⁴⁾
Amounts include a credit default swap (see Note 7,Derivatives and Hedging, for more information)~~, securities sold short within consolidated sponsored investment funds and a contingent liability~~ andcontingent liabilities related to the ~~acquisition~~acquisitions of Credit Suisse’s ETF ~~franchise.~~franchise and MGPA (see Note 12,Commitments and Contingencies, for more information).
5.  Fair Value Disclosures (continued)
Fair Value Hierarchy (continued)

Assets and liabilities measured at fair value on a recurring basis and other assets not held at fair value

December 31, 2012
(in millions)
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other Assets
Not Held at
Fair Value ⁽¹⁾ December 31,
2012
December 31, 2013
(in millions)

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other Assets
Not Held at
Fair Value⁽¹⁾
December 31,
2013

Assets:

Investments

Available-for-sale:

Equity securities (funds and CDOs)
$ 155    $ -    $ 1    $ -    $ 156
Debt securities
-    2    -    -    2
Equity securities of sponsored investment funds
$ 180    $ -    $ -    $ -    $ 180
Other securities
-    3    -    -    3

Total available-for-sale
155    2    1    -    158    180    3    -    -    183
Held-to-maturity debt securities
-    -    -    112    112    -    -    -    83    83
Trading:

Deferred compensation plan mutual funds
53    -    -    -    53    58    -    -    -    58
Equity/Multi-asset mutual funds
159    3    -    -    162    184    -    -    -    184
Debt securities / fixed income mutual funds
5    50    -    -    55    31    213    -    -    244

Total trading
217    53    -    -    270    273    213    -    -    486
Other investments:

Consolidated sponsored investment funds:

Hedge funds / Funds of funds
3    39    73    -    115    -    135    24    -    159
Private / public equity⁽²⁾
10    10    266    -    286    5    13    223    41    282

Total consolidated sponsored investment funds
13    49    339    -    401    5    148    247    41    441
Equity method:

Hedge funds / Funds of hedge funds
-    61    161    39    261    -    177    99    63    339
Private equity investments
-    -    90    -    90    -    -    101    -    101
Real estate funds
-    19    88    15    122    -    20    98    7    125
Fixed income mutual funds
46    -    -    -    46    113    -    -    -    113
Equity/Multi-asset, alternative mutual funds
76    -    -    -    76    19    -    -    -    19

Total equity method
122    80    339    54    595    132    197    298    70    697
Deferred compensation plan hedge fund equity method investments
-    9    -    -    9
Deferred compensation plan equity method investments
-    10    29    -    39
Cost method investments
-    -    -    120    120    -    -    -    119    119
Carried interest
-    -    -    85    85    -    -    -    103    103

Total investments
507    193    679    371    1,750    590    571    574    416    2,151

Separate account assets
95,514    38,392    2    860    134,768    113,382    40,841    -    890    155,113
Separate account collateral held under securities lending agreements:

Equity securities
21,273    -    -    -    21,273    20,856    -    -    -    20,856
Debt securities
-    1,748    -    -    1,748    -    932    -    -    932

Total separate account collateral held under securities lending agreements
21,273    1,748    -    -    23,021    20,856    932    -    -    21,788
Other assets⁽³⁾
-    12    -    -    12    -    39    -    -    39
Assets of consolidated VIEs:

Bank loans
-    2,004    106    -    2,110
Assets of consolidated VIEs:

Bank loans and other assets
-    2,047    129    19    2,195
Bonds
-    78    46    -    124    -    71    35    -    106
Private / public equity⁽⁴⁾
2    6    22    -    30    -    10    14    -    24

Total assets of consolidated VIEs
2    2,088    174    -    2,264    -    2,128    178    19    2,325

Total
$ 117,296    $ 42,433    $ 855    $ 1,231    $ 161,815    $ 134,828    $ 44,511    $ 752    $ 1,325    $ 181,416

Liabilities:

Borrowings of consolidated VIEs
$ -    $ -    $ 2,402    $ -    $ 2,402    $ -    $ -    $ 2,369    $ -    $ 2,369
Separate account collateral liabilities under securities lending agreements
21,273    1,748    -    -    23,021    20,856    932    -    -    21,788
Other liabilities⁽⁵⁾
15    5    -    -    20    18    4    42    -    64

Total
$ 21,288    $ 1,753    $ 2,402    $ -    $ 25,443    $ 20,874    $ 936    $ 2,411    $ -    $ 24,221

⁽¹⁾
Amounts are comprised of investments held at cost or amortized cost, carried interest and certain equity method investments, which include sponsored investment ~~companies~~funds 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 liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.
⁽²⁾
Level 3 amounts include ~~$212~~$195 million and ~~$54~~$28 million of underlying third-party private equity funds and direct investments in private equity companies held by private equity funds, respectively.
⁽³⁾
Amount includes company-owned and split-dollar life insurance ~~policies.~~policies and unrealized gains on forward foreign currency exchange contracts.
⁽⁴⁾
Level 3 amounts include ~~$20 million and $2~~$14 million of underlying third-party private equity funds ~~and direct investments in private equity companies~~ held by a sponsored private equity fund of fund.
⁽⁵⁾
Amounts include a credit default swap (see Note 7,Derivatives and Hedging, for more information) ~~and~~, securities sold short within consolidated sponsored investment ~~funds.~~funds and contingent liabilities related to the acquisitions of Credit Suisse’s ETF franchise and MGPA (see Note 12,Commitments and Contingencies, for more information).
5.  Fair Value Disclosures (continued)

Fair Value Hierarchy (continued)
Level 3 Assets.  Level 3 investments of ~~$626~~$591 million and ~~$679~~$574 million at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, respectively, primarily related to equity method investments and consolidated sponsored investment funds. Level 3 assets within investments, except for direct investments in private equity companies held by private equity funds described below, were primarily valued based upon NAVs received from internal and third-party fund managers.
Direct investments in private equity companies held by private equity funds totaled ~~$34~~$64 million and ~~$56~~$28 million at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, respectively. Direct investments in private equity companies may be valued using the market approach or the income approach, or a combination thereof, and were valued based on an assessment of each underlying investment, incorporating evaluation of additional significant third-party financing, changes in valuations of comparable peer companies, the business environment of the companies, market indices, assumptions relating to appropriate risk adjustments for nonperformance and legal restrictions on disposition, among other factors. The fair value derived from the methods used is evaluated and weighted, as appropriate, considering the reasonableness of the range of values indicated. Under the market approach, fair value may be determined by reference to multiples of market-comparable companies or transactions, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples. Under the income approach, fair value may be determined by discounting the expected cash flows to a single present value amount using current expectations about those future amounts. Unobservable inputs used in a discounted cash flow model may include projections of operating performance generally covering a five-year period and a terminal value of the private equity direct investment. For securities utilizing the discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, risk premium or discount for lack of marketability in isolation could result in a significantly lower (higher) fair value measurement. For securities utilizing the market comparable companies valuation technique, a significant increase (decrease) in the EBITDA multiple in isolation could result in a significantly higher (lower) fair value measurement.
Level 3 assets recorded within separate account assets include single-broker nonbinding quotes for fixed income securities and equity securities that have unobservable inputs due to certain corporate actions.
Level 3 assets of consolidated VIEs include bank loans and bonds valued based on single-broker ~~non-binding~~nonbinding quotes and direct private equity investments and private equity funds valued based upon internal as well as third-party fund ~~manager valuations,~~managers, which may be adjusted by using the returns of certain market indices.
Level 3 Liabilities.  Level 3 ~~liabilities recorded as~~ borrowings of consolidated VIEs include CLO borrowings valued based upon single-broker ~~non-binding~~nonbinding quotes.
Level 3 other liabilities include contingent liabilities related to the acquisitions of Credit Suisse’s ETF franchise and MGPA, which were valued based upon discounted cash flow analyses using unobservable market data inputs.
5.  Fair Value Disclosures (continued)
Fair Value Hierarchy (continued)

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended ~~September 30, 2013~~March 31, 2014

(in millions) June 30,
2013 Realized
and
unrealized
gains
(losses) in
earnings
and OCI Purchases Sales and
maturities Issuances and
other
settlements⁽¹⁾ Transfers
into
Level 3 Transfers
out of
Level 3 September 30,
2013 Total net
gains (losses)
included in
earnings⁽²⁾ December 31,
2013 Realized
and
unrealized
gains
(losses) in
earnings
and OCI Purchases Sales and
maturities Issuances and
other
settlements⁽¹⁾ Transfers
into
Level 3⁽²⁾ Transfers
out of
Level 3 March 31,
2014 Total net
unrealized
gains (losses)
included in
earnings⁽³⁾
Assets:

Investments

Available-for-sale:

Equity securities (CDOs)
$1    $-    $-    $-    $-    $-    $-    $1    $-
Consolidated sponsored investment funds:

Hedge funds / Funds of funds
47    2    -    (2 ) (2 ) -    -    45    -    $24    $1    $-    ($12 ) ($1 ) $-    $-    $12    $-
Private equity
249    10    -    (23 ) -    -    (2 ) 234    7    223    1    5    (14 ) -    41    -    256    1
Equity method:

Hedge funds / Funds of hedge funds
157    1    1    (1 ) (13 ) -    -    145    1    99    2    4    (11 ) (3 ) -    -    91    2
Private equity investments
105    4    1    (10 ) (2 ) -    -    98    4    101    3    3    -    (6 ) -    -    101    4
Real estate funds
97    6    2    -    (2 ) -    -    103    6    98    2    2    -    (2 ) -    -    100    1
Deferred compensation plan equity method investments
29    2    -    -    -    -    -    31    2

Total Level 3 investments
656    23    4    (36 ) (19 ) -    (2 ) 626    18    574    11    14    (37 ) (12 ) 41    -    591    10

Assets of consolidated VIEs:

Bank loans
93    -    18    (8 )�� -    40    (46 ) 97    129    -    16    (13 ) -    73    (58 ) 147
Bonds
35    1    -    (1 ) -    -    -    35    35    -    -    (7 ) -    -    -    28
Private equity
19    -    -    (2 ) -    -    -    17    14    -    -    (1 ) -    -    -    13

Total Level 3 assets of consolidated VIEs
147    1    18    (11 ) -    40    (46 ) 149    n/a ⁽³⁾ 178    -    16    (21 ) -    73    (58 ) 188    n/a ⁽⁴⁾

Total Level 3 assets
$803    $24    $22    ($47 ) ($19 ) $40    ($48 ) $775    $752    $11    $30    ($58 ) ($12 ) $114    ($58 ) $779

Liabilities:

Borrowings of consolidated VIEs
        $2,145    ($5 ) $-    $-    ($82 ) $-    $-    $2,068    n/a ⁽³⁾         $2,369    $5    $-    $-    ($120 ) $-    $-    $2,244    n/a ⁽⁴⁾
Other liabilities
-    -    -    -    33    -    -    33    42    -    -    -    -    -    -    42    -

Total Level 3 liabilities
$2,145    ($5 ) $-    $-    ($49 ) $-    $-    $2,101    $2,411    $5    $-    $-    ($120 ) $-    $-    $2,286

n/a – not applicable
⁽¹⁾
~~Amounts~~Amount primarily ~~include~~includes distributions from equity method investees ~~repayments~~and repayment of borrowings of consolidated ~~VIEs and a contingent liability related to the acquisition of Credit Suisse’s ETF franchise.~~VIEs.
⁽²⁾
Includes investments previously held at cost.
⁽³⁾
Earnings attributable to the change in unrealized gains (losses) relating to assets still held at the reporting date.
⁽³⁾⁽⁴⁾
The net gain (loss) on consolidated VIEs is solely attributable to noncontrolling interests on the condensed consolidated statements of income.
5.  Fair Value Disclosures (continued)
Fair Value Hierarchy (continued)

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2013

(in millions)    December 31,
2012    Realized
and
unrealized
gains
(losses) in
earnings
and OCI Purchases    Sales and
maturities Issuances and
other
settlements⁽¹⁾ Transfers
into
Level 3    Transfers
out of
Level 3 September 30,
2013    Total net
gains
(losses)
included in
earnings⁽²⁾ December 31,
2012 Realized
and
unrealized
gains
(losses) in
earnings
and OCI Purchases Sales and
maturities Issuances and
other
settlements⁽¹⁾ Transfers
into
Level 3 Transfers
out of
Level 3 March 31,
2013 Total net
unrealized
gains
(losses)
included in
earnings⁽²⁾
Assets:

Investments

Available-for-sale:

Equity securities (CDOs)
   $1       $-    $-       $-    $-    $-       $-    $1       $-    $1    $-    $-    $-    $-    $-    $-    $1    $-
Consolidated sponsored investment funds:

Hedge funds / Funds of hedge funds
   73       8    12       (11 ) (30 ) -       (7 ) 45       6
Hedge funds / Funds of funds
73    4    12    -    -    -    (5 ) 84    4
Private equity
   266       26    12       (62 ) -    -       (8 ) 234       21    266    23    7    (29 ) -    -    (3 ) 264    20
Equity method:

Hedge funds / Funds of hedge funds
   161       10    2       (1 ) (27 ) -       -    145       10    161    4    1    -    (30 ) -    -    136    4
Private equity investments
   90       14    10       (10 ) (6 ) -       -    98       14    90    6    5    -    (2 ) -    -    99    6
Real estate funds
   88       14    5       -    (4 ) -       -    103       14    88    1    2    -    -    -    -    91    2




Total Level 3 investments
   679       72    41       (84 ) (67 ) -       (15 ) 626       65    679    38    27    (29 ) (32 ) -    (8 ) 675    36




Separate account assets
   2       -    -       (2 ) -    -       -    -       n/a ⁽³⁾ 2    -    -    (2 ) -    -    -    -    n/a ⁽³⁾
Assets of consolidated VIEs:

Bank loans
   106       (1 ) 91       (48 ) -    71       (122 ) 97       106    -    24    (11 ) -    15    (37 ) 97
Bonds
   46       -    4       (15 ) -    -       -    35       46    (1 ) 4    -    -    -    -    49
Private equity
   22       1    -       (6 ) -    -       -    17       22    1    -    (3 ) -    -    -    20
Fund of hedge funds
   -       -    134       -    (134 ) -       -    -       -    -    116    -    -    -    -    116




Total Level 3 assets of consolidated VIEs
   174       -    229       (69 ) (134 ) 71       (122 ) 149       n/a ⁽⁴⁾ 174    -    144    (14 ) -    15    (37 ) 282    n/a ⁽⁴⁾




Total Level 3 assets
   $855       $72    $270    �� ($155 ) ($201 ) $71       ($137 ) $775       $855    $38    $171    ($45 ) ($32 ) $15    ($45 ) $957




Liabilities:

Borrowings of consolidated VIEs
           $2,402       ($9 ) $-       $-    ($343 ) $-       $-    $2,068       n/a ⁽⁴⁾         $2,402    ($10 ) $-    $-    ($80 ) $-    $-    $2,332    n/a ⁽⁴⁾
Other liabilities
   -       -    -       -    33    -       -    33




Total Level 3 liabilities
   $2,402       ($9 ) $-       $-    ($310 ) $-       $-    $2,101




n/a – not applicable
⁽¹⁾
~~Amounts~~Amount primarily ~~include~~includes distributions from equity method investees ~~repayments~~and repayment of borrowings of consolidated VIEs, elimination of investment related to a deconsolidation of a consolidated VIE, a reclassification of an investment from a consolidated sponsored investment fund to an equity method investment due to a change in ownership percentage and a contingent liability related to the acquisition of Credit Suisse’s ETF franchise.VIEs.
⁽²⁾
Earnings attributable to the change in unrealized gains (losses) relating to assets still held at the reporting date.
⁽³⁾
The net investment income attributable to separate account assets accrues directly to the contract owners and is not reported on the condensed consolidated statements of income.
⁽⁴⁾
The net gain (loss) on consolidated VIEs is solely attributable to noncontrolling interests on the condensed consolidated statements of income.
~~5.  Fair Value Disclosures (continued)~~
~~Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended September 30, 2012~~

(in millions) June 30,
2012 Realized
and
unrealized
gains
(losses) in
earnings
and OCI Purchases Sales and
maturities Issuances and
other
settlements⁽¹⁾ Transfers
into
Level 3 Transfers
out of
Level 3 September 30,
2012 Total net gains
(losses)
included in
earnings⁽²⁾
Assets:

Investments

Available-for-sale:

Equity securities (CDOs)
$1    $-    $-    $-    $-    $-    $-    $1    $-
Consolidated sponsored investment funds:

Hedge funds / Funds of funds
46    8    3    (2 ) -    -    -    55    8
Private equity
298    22    -    (14 ) (8 ) -    -    298    20
Equity method:

Hedge funds / Funds of hedge funds
187    14    -    -    (21 ) -    -    180    14
Private equity investments
88    1    1    -    -    -    -    90    2
Real estate funds
101    6    6    (7 ) (3 ) -    -    103    4

Total Level 3 investments
721    51    10    (23 ) (32 ) -    -    727    48

Separate account assets
7    (4 ) 6    (7 ) -    34    -    36    n/a ⁽³⁾
Assets of consolidated VIEs:

Bank loans
85    2    7    (24 ) 7    36    (24 ) 89
Bonds
44    1    -    -    -    -    -    45
Private equity
25    2    2    (3 ) -    -    -    26

Total Level 3 assets of consolidated VIEs
154    5    9    (27 ) 7    36    (24 ) 160    n/a ⁽⁴⁾

Total Level 3 assets
$882    $52    $25    ($57 ) ($25 ) $70    ($24 ) $923

Liabilities:

Borrowings of consolidated VIEs
        $1,439    ($27 ) $-    $-    $377    $-    $-    $1,843    n/a ⁽⁴⁾
~~n/a~~ ~~– not applicable~~
⁽¹⁾
~~Amount primarily includes distributions from equity method investees, repayments of borrowings of consolidated VIEs, and loans and borrowings related to the consolidation of one additional CLO.~~
⁽²⁾
~~Earnings attributable to the change in unrealized gains (losses) relating to assets still held at the reporting date.~~
⁽³⁾
~~The net investment income attributable to separate account assets accrues directly to the contract owners and is not reported on the condensed consolidated statements of income.~~
⁽⁴⁾
~~The net gain (loss) on consolidated VIEs is solely attributable to noncontrolling interests on the condensed consolidated statements of income.~~
5.  Fair Value Disclosures (continued)

~~Changes in Level 3 Assets and Liabilities Measured at~~ Fair Value ~~on a Recurring Basis for the Nine Months Ended September 30, 2012~~Hierarchy (continued)

(in millions) December 31,
2011 Realized
and
unrealized
gains
(losses) in
earnings
and OCI Purchases Sales and
maturities Issuances and
other
settlements⁽¹⁾ Transfers
into
Level 3 Transfers
out of
Level 3 September 30,
2012 Total net gains
(losses)
included in
earnings⁽²⁾
Assets:

Investments

Available-for-sale:

Equity securities (CDOs)
$1    $-    $-    $-    $-    $-    $-    $1    $-
Consolidated sponsored investment funds:

Hedge funds / Funds of funds
22    4    30    (2 ) (2 ) 3    -    55    4
Private equity
313    43    2    (46 ) (8 ) -    (6 ) 298    38
Equity method:

Hedge funds / Funds of hedge funds
193    33    -    -    (46 ) -    -    180    33
Private equity investments
85    7    4    -    (6 ) -    -    90    8
Real estate funds
88    8    19    (7 ) (5 ) -    -    103    6

Total Level 3 investments
702    95    55    (55 ) (67 ) 3    (6 ) 727    89

Separate account assets
10    (5 ) 10    (18 ) -    48    (9 ) 36    n/a ⁽³⁾
Assets of consolidated VIEs:

Bank loans
83    2    25    (31 ) 7    89    (86 ) 89
Bonds
40    3    2    -    -    -    -    45
Private equity
27    4    2    (7 ) -    -    -    26

Total Level 3 assets of consolidated VIEs
150    9    29    (38 ) 7    89    (86 ) 160    n/a ⁽⁴⁾

Total Level 3 assets
$862    $99    $94    ($111 ) ($60 ) $140    ($101 ) $923

Liabilities:

Borrowings of consolidated VIEs
        $1,574    ($66 ) $-    $-    $203    $-    $-    $1,843    n/a ⁽⁴⁾
~~n/a~~ ~~– not applicable~~
⁽¹⁾
~~Amount primarily includes distributions from equity method investees, repayments of borrowings of consolidated VIEs, and loans and borrowings related to the consolidation of one additional CLO.~~
⁽²⁾
~~Earnings attributable to the change in unrealized gains (losses) relating to assets still held at the reporting date.~~
⁽³⁾
~~The net investment income attributable to separate account assets accrues directly to the contract owners and is not reported on the condensed consolidated statements of income.~~
⁽⁴⁾
~~The net gain (loss) on consolidated VIEs is solely attributable to noncontrolling interests on the condensed consolidated statements of income.~~
~~5.  Fair Value Disclosures (continued)~~
Realized and Unrealized Gains (Losses) for Level 3 Assets and Liabilities. Realized and unrealized gains (losses) recorded for Level 3 assets and liabilities are reported in nonoperating income (expense) on the condensed consolidated statements of income. A portion of net income (loss) for consolidated investments and all of the net income (loss) for consolidated VIEs are allocated to noncontrolling interests to reflect net income (loss) not attributable to the Company.
Transfers in and/or out of Levels. Transfers in and/or out of levels are reflected when significant inputs, including market inputs or performance attributes, used for the fair value measurement become observable/unobservable, or when the Company determines it has the ability, or no longer has the ability, to redeem, in the near term, certain investments that the Company values using a NAV (or a capital account), or when the ~~book~~carrying value of certain equity method investments no longer represents fair value as determined under valuation methodologies.
~~Separate Account Assets~~.    During the three and nine months ended September 30, 2012, there were $34 million and $48 million, respectively, of transfers of equity securities into Level 3 from Level 1, primarily due to market inputs no longer being considered observable.
Assets of Consolidated VIEs.    During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013, there were ~~$46~~$58 million and ~~$122~~$37 million, respectively, of transfers out of Level 3 to Level 2 related to bank loans. In addition, during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013, there were ~~$40~~$73 million and ~~$71~~$15 million, respectively, of transfers into Level 3 from Level 2 related to bank loans. These transfers in and out of ~~Levels 2 and 3~~levels were primarily due to availability/unavailability of observable market inputs, including inputs from pricing vendors and brokers.
During the three and nine months ended September 30, 2012, there were $24 million and $86 million, respectively, of transfers out of Level 3 into Level 2 related to bank loans. In addition, during the three and nine months ended September 30, 2012, there were $36 million and $89 million, respectively, of transfers into Level 3 from Level 2 related to bank loans. These transfers in and out of Levels 2 and 3 were primarily due to availability/unavailability of observable market inputs, including inputs from pricing vendors and brokers.
Consolidated Sponsored Investment Funds.    During the ~~nine~~three months ended ~~September 30,~~March 31, 2013, there were $12 million of transfers out of Level 1 to Level 2 related to consolidated private equity funds. ~~This transfer was~~These transfers were due to a direct investment in a public company valued at a discount due to restrictions on sale.
Significant Other ~~Significant~~ Settlements. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2013, there were ~~$17~~$32 million ~~and $37 million, respectively,~~ of distributions from equity method investees categorized in Level 3.
During the nine months ended September 30, 2013, other settlements included $134 million related to a deconsolidation of a consolidated fund of hedge funds, which was previously classified as a VIE. This fund was deconsolidated during the second quarter 2013 due to the granting of additional substantive rights to unaffiliated investors of the fund.
In addition, during the nine months ended September 30, 2013, there was a $28 million reclassification of a Level 3 investment from a consolidated sponsored investment fund to an equity method investment due to a change in BlackRock’s ownership percentage.
~~During the three and nine months ended September 30, 2012, there were $24 million and $57 million, respectively, of distributions from equity method investees categorized in Level 3.~~
~~5.  Fair Value Disclosures (continued)~~
~~In addition, during the three and nine months ended September 30, 2012, other settlements included $406 million of borrowings related to the consolidation of one additional CLO.~~
Disclosures of Fair Value for Financial Instruments Not Held at Fair ~~Value.~~Value. At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, the fair value of the Company’s financial instruments not held at fair value are categorized in the table below:

September 30, 2013 December 31, 2012    March 31, 2014    December 31, 2013
(in millions)    Carrying
Amount    Estimated
Fair Value    Carrying
Amount    Estimated
Fair Value    Fair Value
Hierarchy    Carrying
Amount    Estimated
Fair Value    Carrying
Amount    Estimated
Fair Value    Fair Value
Hierarchy
Financial Assets:

Cash and cash equivalents
$ 3,987    $ 3,987    $ 4,606    $ 4,606    Level 1 ⁽¹⁾    $ 4,394       $ 4,394       $ 4,390       $ 4,390       Level 1 ⁽¹⁾,⁽²⁾
Accounts receivable
4,311    4,311    2,250    2,250    Level 1 ⁽²⁾    2,868       2,868       2,247       2,247       Level 1 ⁽³⁾
Cash and cash equivalents of consolidated VIEs
93    93    297    297    Level 1 ⁽¹⁾    191       191       161       161 ��    Level 1 ⁽¹⁾
Financial Liabilities:

Accounts payable and accrued liabilities
3,322    3,322    1,055    1,055    Level 1 ⁽²⁾    1,615       1,615       1,084       1,084       Level 1 ⁽³⁾
Short-term borrowings
-    -    100    100    Level 1 ⁽²⁾
Long-term borrowings
4,938    5,310    5,687    6,275    Level 2 ⁽³⁾    5,936       6,286       4,939       5,284       Level 2 ⁽⁴⁾

⁽¹⁾
Cash and cash equivalents are carried at either cost or amortized cost, ~~that~~which approximates fair value due to their short-term maturities.
⁽²⁾
At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, approximately ~~$76~~$131 million and ~~$98~~$64 million, respectively, of money market funds were recorded within cash and cash equivalents on the condensed consolidated statements of financial condition. Money market funds are valued based on quoted market prices, or $1.00 per share, which
5.  Fair Value Disclosures (continued)
Fair Value Hierarchy (continued)
generally is the NAV of the fund. At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, approximately ~~$105~~$88 million and ~~$133~~$114 million, respectively, related to cash and cash equivalents held by consolidated sponsored investment funds.

⁽²⁾⁽³⁾
The carrying amounts of accounts receivable, accounts payable and accrued liabilities ~~and short-term borrowings~~ approximate fair value due to their short-term nature.

⁽³⁾⁽⁴⁾
Long-term borrowings are recorded at amortized cost. The fair value of the long-term borrowings, including the current portion of long-term borrowings, is estimated using market prices at the end of ~~September 2013~~March 2014 and December ~~2012,~~2013, respectively. See Note 11,Borrowings, for ~~further information on~~ the ~~September 30, 2013~~ fair value of each of the Company’s long-term borrowings.
~~5.  Fair Value Disclosures (continued)~~
Investments in Certain Entities that Calculate Net Asset Value Per ~~Share~~Share.
As a practical expedient to value certain investments that do not have a readily determinable fair value and have attributes of an investment company, the Company relies on NAV as the fair value. The following tables list information regarding all investments that use a fair value measurement to account for both their financial assets and financial liabilities in their calculation of a NAV per share (or its equivalent).
~~September 30, 2013~~March 31, 2014

(in millions) Ref Fair Value Total Unfunded
Commitments
Redemption
Frequency
Redemption
Notice Period Ref Fair Value Total Unfunded
Commitments
Redemption
Frequency
Redemption
Notice Period
Consolidated sponsored investment funds:

Private equity funds of funds
(a ) $202    $25    n/r n/r
Consolidated sponsored investment funds:

Private equity funds/funds of funds
(a ) $192    $28    n/r n/r
Other funds of hedge funds
(b ) 57    -
Monthly (26%),
Quarterly (2%),
n/r (72%)
2 – 90 days (b ) 117    -      Quarterly (100%) 30 – 90 days
Equity method:⁽¹⁾

Hedge funds/funds of hedge funds
(c ) 212    92
Monthly (2%), Quarterly (32%)
n/r (66%)
15 – 90 days (c ) 279    41
Monthly(58%)
Quarterly(11%)
n/r(31%)
15 – 90 days
Private equity funds
(d ) 98    57    n/r n/r (d ) 101    62    n/r n/r
Real estate funds
(e ) 123    11
Quarterly (16%)
n/r (84%)
60 days (e ) 120    12
Quarterly(17%)
n/r(83%)
60 days
Deferred compensation plan hedge fund investments
(f ) 11    -    Monthly (27%), Quarterly (73%) 60 – 90 days
Deferred compensation plan investments
(f ) 38    7
Quarterly(19%)
n/r(81%)
60 – 90 days
Consolidated VIEs:

Private equity fund
(g ) 15    1    n/r n/r (g ) 13    1    n/r n/r

Total
$718    $186    $860    $151

5.  Fair Value Disclosures (continued)
Investments in Certain Entities that Calculate Net Asset Value Per Share. (continued)
December 31, 2013
(in millions) Ref Fair Value Total
Unfunded
Commitments
Redemption
Frequency
Redemption
Notice Period
Consolidated sponsored investment funds:

Private equity funds of funds
(a ) $195    $23    n/r n/r
Other funds of hedge funds
(b ) 155    -
Monthly(13%)
Quarterly(78%)
n/r(9%)
30 – 90 days
Equity method:⁽¹⁾

Hedge funds/funds of hedge funds
(c ) 276    84
Monthly(55%)
Quarterly(11%)
n/r(34%)
15 – 90 days
Private equity funds
(d ) 101    62    n/r n/r
Real estate funds
(e ) 118    12
Quarterly(17%)
n/r(83%)
60 days
Deferred compensation plan investments
(f ) 39    7
Monthly(8%)
Quarterly(18%)
n/r(74%)
60 – 90 days
Consolidated VIEs:

Private equity fund
(g ) 14    1    n/r n/r

Total
$898    $189

n/r – not redeemable

⁽¹⁾
Comprised of equity method investments, which include investment companies, which in accordance with GAAP account for their financial assets and most financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees approximates fair value.
~~5.  Fair Value Disclosures (continued)~~
~~Investments in Certain Entities that Calculate Net Asset Value Per Share (continued)~~
~~December 31, 2012~~

(in millions) Ref Fair Value Total
Unfunded
Commitments
Redemption
Frequency
Redemption
Notice Period
Consolidated sponsored investment funds:

Private equity funds of funds
(a ) $212    $32    n/r n/r
Other funds of hedge funds
(b ) 98    -
Monthly (22%)
Quarterly (11%)
n/r (67%)
1 – 90 days
Equity method:⁽¹⁾

Hedge funds/funds of hedge funds
(c ) 222    42
Monthly (2%)
Quarterly (28%)
n/r (70%)
15 – 90 days
Private equity funds
(d ) 90    135    n/r n/r
Real estate funds
(e ) 107    15
Quarterly (18%)
n/r (82%)
60 days
Deferred compensation plan hedge fund investments
(f ) 9    -
Monthly (33%)
Quarterly (67%)
60 – 90 days
Consolidated VIE:

Private equity funds
(g ) 20    1    n/r n/r
Trading:

Equity
(h ) 3    -    Daily (100%) None

Total
$761    $225

~~n/r~~ ~~– not redeemable~~
⁽¹⁾
~~Comprised of equity method investments, which include investment companies, which in accordance with GAAP~~ account for their financial assets and most financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees approximates fair value.

^(a)
This category includes the underlying third-party private equity funds within consolidated BlackRock sponsored private equity funds of funds. The fair values of the investments in the third-party funds have been estimated using capital accounts representing the Company’s ownership interest in each fund in the portfolio as well as other performance inputs. These investments are not subject to redemption; however, for certain funds, the Company may sell or transfer its interest, which may need approval by the general partner of the underlying funds. Due to the nature of the investments in this category, the Company reduces its investment by distributions that are received through the realization of the underlying assets of the funds. It is estimated that the underlying assets of these funds will be liquidated over a weighted-average period of approximately seven years at both ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012.~~2013. The total remaining unfunded commitments to other third-party funds were ~~$25~~$28 million and ~~$32~~$23 million at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, respectively. The Company was contractually obligated to fund $37 million and $30 million at ~~both September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, respectively, to the consolidated funds.

^(b)
This category includes consolidated funds of hedge funds that invest in multiple strategies to diversify risks. The fair values of the investments have been estimated using the NAV of the fund’s ownership interest in partners’ capital of each fund in the portfolio. Certain of the underlying funds can be redeemed as long as there are no restrictions in place. ~~At September 30, 2013 and December 31, 2012, the underlying funds that are currently restricted from redemptions within one year will be redeemable in approximately 12 to 24 months.~~ This category also includes a consolidated offshore feeder fund that invests in a master fund with multiple alternative investment strategies. The fair value of this investment has been estimated using the NAV of the master offshore fund held by the feeder fund. The investment is currently subject to restrictions in place by the underlying master fund.
~~5.  Fair Value Disclosures (continued)~~
~~Investments in Certain Entities that Calculate Net Asset Value Per Share (continued)~~

^(c)
This category includes hedge funds and funds of hedge funds that invest primarily in equities, fixed income securities, distressed credit, opportunistic and mortgage instruments and other third-party hedge funds. The fair values of the investments have been estimated using the NAV of the Company’s ownership interest in partners’ capital. It was estimated that the investments in the funds that are not subject to redemption will be liquidated over a weighted-average period of approximately ~~four and five~~three years at ~~September 30, 2013~~both March 31, 2014 and December 31, ~~2012, respectively.~~2013.

^(d)
This category includes several private equity funds that initially invest in nonmarketable securities of private companies, which ultimately may become public in the future. The fair values of these investments have been
5.  Fair Value Disclosures (continued)
Investments in Certain Entities that Calculate Net Asset Value Per Share. (continued)
estimated using capital accounts representing the Company’s ownership interest in the funds as well as other performance inputs. The Company’s investment in each fund is not subject to redemption and is normally returned through distributions as a result of the liquidation of the underlying assets of the private equity funds. It was estimated that the investments in these funds will be liquidated over a weighted-average period of approximately four years and five years at ~~both September 30, 2013~~March 31, 2014 and December 31, ~~2012.~~2013, respectively.

^(e)
This category includes several real estate funds that invest directly in real estate and real estate related assets. The fair values of the investments have been estimated using capital accounts representing the Company’s ownership interest in the funds. A majority of the Company’s investments are not subject to redemption or are not currently redeemable and is normally returned through distributions as a result of the liquidation of the underlying assets of the real estate funds. It is estimated that the investments in these funds not subject to redemptions will be liquidated over a weighted-average period of approximately seven years at ~~September 30, 2013~~both March 31, 2014 and ~~eight years at~~ December 31, ~~2012.~~2013.

^(f)
This category includes investments in several real estate funds and certain hedge funds that invest in energy and health science related equity securities. The fair values of the investments in this category have been estimated using capital accounts representing the Company’s ownership interest in partners’ capital as well as performance inputs. The investments in ~~these~~hedge funds will be redeemed upon settlement of certain deferred compensation liabilities. The real estate investments are not subject to redemption; however, distributions as a result of the liquidation of the underlying assets will be used to settle certain deferred compensation liabilities over time.

^(g)
This category includes the underlying third-party private equity funds within one consolidated BlackRock sponsored private equity fund of funds. The fair values of the investments in the third-party funds have been estimated using capital accounts representing the Company’s ownership interest in each fund in the portfolio as well as other performance inputs. These investments are not subject to redemption; however, for certain funds the Company may sell or transfer its interest, which may need approval by the general partner of the underlying third-party funds. Due to the nature of the investments in this category, the Company reduces its investment by distributions that are received through the realization of the underlying assets of the funds. It is estimated that the underlying assets of these funds will be liquidated over a weighted-average period of approximately two years at ~~September 30, 2013~~both March 31, 2014 and ~~three years at~~ December 31, ~~2012.~~2013. Total remaining unfunded commitments to other third-party funds were ~~$1 million~~not material at both ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, which commitments are required to be funded by capital contributions from noncontrolling interest holders.

~~(h)~~ This category includes consolidated offshore feeder funds that invest in master funds with multiple equity strategies to diversify risks. The fair values of the investments in this category have been estimated using the NAV of master offshore funds held by the feeder funds. Investments in this category generally can be redeemed at any time, as long as there are no restrictions in place by the underlying master funds.
Fair Value Option.    Upon the initial consolidation of certain CLOs, the Company elected to adopt the fair value option provisions for eligible assets and liabilities, including bank loans and borrowings of the CLOs to mitigate accounting mismatches between the carrying value of the assets and liabilities and to achieve operational simplification. To the extent there is a difference between the change in fair value of the assets and liabilities, the difference will be reflected as net income (loss) attributable to nonredeemable noncontrolling interests on the condensed consolidated statements of income and offset by a change in appropriated retained earnings on the condensed consolidated statements of financial condition.
~~5.  Fair Value Disclosures (continued)~~
Option.
The following table summarizes information at March 31, 2014 and December 31, 2013 related to those assets and liabilities ~~selected~~ for which the fair value ~~accounting at September 30, 2013 and December 31, 2012:~~option was elected:

(in millions)        September 30,
2013        December 31,
2012    March 31,
2014        December 31,
2013
CLO Bank Loans:

Aggregate principal amounts outstanding
   $1,976       $2,124       $2,055       $2,181
Fair value
   1,964       2,110       2,038       2,176








Aggregate unpaid principal balance in excess of (less than) fair value
   $12       $14       $17       $5








Unpaid principal balance of loans more than 90 days past due
   $12       $4       $14       $14
Aggregate fair value of loans more than 90 days past due
   7       -       -       9








Aggregate unpaid principal balance in excess of fair value for loans more than 90 days past due
   $5       $4       $14       $5








CLO Borrowings:

Aggregate principal amounts outstanding
   $2,201       $2,535       $2,336       $2,455
Fair value
   $2,068       $2,402       $2,244       $2,369
At ~~September 30, 2013,~~March 31, 2014, the principal amounts outstanding of the borrowings issued by the CLOs mature between 2016 and 2025.
5.  Fair Value Disclosures (continued)
Fair Value Option. (continued)
During the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ the change in fair value of the bank loans and bonds held by the CLOs resulted in a ~~$25~~$27 million and a ~~$45~~$72 million gain, respectively, which were offset by a ~~$28~~$22 million and a ~~$44 million loss, respectively, from the change in fair value of the CLO borrowings.~~
During the nine months ended September 30, 2013 and 2012, the change in fair value of the bank loans and bonds held by the CLOs resulted in a $104 million and a $123 million gain, respectively, which were offset by a $92 million and a $118$41 million loss, respectively, from the change in fair value of the CLO borrowings.
The net gains (losses) were recorded in net gain (loss) on consolidated VIEs on the condensed consolidated statements of income.
The change in fair value of the assets and liabilities included interest income and expense, respectively.
6.  Variable Interest Entities
In the normal course of business, the Company is the manager of various types of sponsored investment vehicles, including ~~collateralized debt obligations (“CDOs”)/~~CDOs/CLOs and sponsored investment funds, which may be considered VIEs. The Company receives advisory fees and/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 Company’s involvement in financing the operations of the VIEs is generally limited to its equity interests.
~~6.  Variable Interest Entities (continued)~~
The primary beneficiary (“PB”) of a VIE that is an investment fund that meets the conditions of ASU 2010-10,Amendments to Statement 167 for Certain Investment Funds (“ASU 2010-10”), 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 entity’s expected losses, receive a majority of the entity’s expected residual returns or both. In order to determine whether the Company is the PB of a VIE, management must make significant estimates and assumptions of probable future cash flows of the VIEs. Assumptions made in such analyses may 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, ~~pre-payments,~~prepayments, realization of gains, liquidity or marketability of certain securities, discount rates and the probability of certain other outcomes.
The PB of a CDO/CLO or other entity that is a VIE that does not meet the conditions of ASU 2010-10 is the enterprise that has the power to direct activities of the entity that most significantly impact the entity’s economic performance and has the obligation to absorb losses or the right to receive benefits that potentially could be significant to the entity.
6.  Variable Interest Entities (continued)
Consolidated VIEs.    Consolidated VIEs included CLOs in which BlackRock did not have an investment; however, BlackRock, as the collateral manager, was deemed to have both the power to control the activities of the CLOs and the right to receive benefits that could potentially be significant to the CLOs. In addition, BlackRock was the PB of one investment fund because it absorbed the majority of the variability due to its de facto ~~third-party~~related-party relationships with other partners in the fund. The assets of these VIEs are not available to creditors of the Company. In addition, the investors in these VIEs have no recourse to the credit of the Company. At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, the following balances related to VIEs were consolidated on the condensed consolidated statements of financial condition:

(in millions)      September 30, 2013        December 31, 2012        March 31, 2014        December 31, 2013
Assets of consolidated VIEs:

Cash and cash equivalents
               $93                   $297       $191       $161
Bank loans
   1,964       2,110       2,038       2,176
Bonds
   99       124       82       106
Other investments and other assets
   44       30       63       43








Total bank loans, bonds, other investments and other assets
   2,107       2,264       2,183       2,325
Liabilities of consolidated VIEs:

Borrowings
   (2,068)       (2,402)       (2,244)       (2,369)
Other liabilities
   (88)       (103)       (106)       (74)
Appropriated retained earnings
   (25)       (29)       (6)       (22)
Noncontrolling interests of consolidated VIEs
   (19)       (27)       (18)       (21)








Total BlackRock net interests in consolidated VIEs
   $-       $-       $-       $-








For the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ the Company recorded a nonoperating ~~loss~~expense of $6$16 million and a nonoperating ~~gain~~income of $2$27 million, respectively, offset by a $6$16 million net loss attributable to nonredeemable noncontrolling interests and a ~~$2 million net gain attributable to nonredeemable noncontrolling interests, respectively, on the condensed consolidated statements of income.~~
~~6.  Variable Interest Entities (continued)~~
For the nine months ended September 30, 2013 and 2012, the Company recorded a nonoperating loss of $2 million and a nonoperating gain of $1 million, respectively, offset by a $2 million net loss attributable to nonredeemable noncontrolling interests and a $1$27 million net gain attributable to nonredeemable noncontrolling interests, respectively, on the condensed consolidated statements of income.
At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, the weighted-average ~~maturities~~maturity of the bank loans and bonds ~~attributable to consolidated VIEs~~ were approximately ~~4.7~~4.6 and ~~4.5~~4.7 years, respectively.
6.  Variable Interest Entities (continued)
Non-Consolidated ~~VIEs.~~VIEs.    At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, the Company’s carrying value of assets and liabilities and its maximum risk of loss related to VIEs for which it was the sponsor or in which it held a variable interest, but for which it was not the PB, ~~was~~were as follows:

(in millions) Variable Interests on the Condensed
Consolidated
Statement of Financial Condition    Variable Interests on the Condensed
Consolidated
Statement of Financial Condition
At September 30, 2013 Investments Advisory
Fee
Receivables Other Net
Assets
(Liabilities) Maximum
Risk of Loss⁽¹⁾
At March 31, 2014    Investments    Advisory
Fee
Receivables    Other Net
Assets
(Liabilities)    Maximum
Risk of Loss⁽¹⁾
CDOs/CLOs
$1    $1    ($4)    $19       $-       $1       ($4)       $18
Other sponsored investment funds:

Collective trusts
- 166    - 166       -       185       -       185
Other
18    130    (5)    148       38       183       (4)       221









Total
$19    $297    ($9)    $333       $38       $369       ($8)       $424









At December 31, 2012

At December 31, 2013

CDOs/CLOs
$1    $1    ($5)    $19       $-       $1       ($4)       $18
Other sponsored investment funds:

Collective trusts
- 248    - 248       -       184       -       184
Other
17    61    (3)    77       37       137       (6)       174









Total
$18    $310    ($8)    $344       $37       $322       ($10)       $376









⁽¹⁾
At both ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, BlackRock’s maximum risk of loss associated with these VIEs primarily related to: (i) advisory fee receivables; (ii) BlackRock’s investments; and (iii) $17 million of credit protection sold by BlackRock to a third party in a synthetic CDO transaction.
The net assets related to the above CDOs/CLOs and other sponsored investment funds, including collective trusts, that the Company does not consolidate were as follows:
CDOs/CLOs

(in billions)        September 30, 2013            December 31, 2012            March 31, 2014            December 31, 2013
Assets at fair value
   $3       $4       $1       $1
Liabilities⁽¹⁾
   5       5       2       2








Net assets
   ($2)       ($1)       ($1)       ($1)








⁽¹⁾
Amounts primarily comprised of unpaid principal debt obligations to CDO/CLO debt holders.
~~6.  Variable Interest Entities (continued)~~
~~Other sponsored investments funds.~~ ~~Net~~The net assets of other sponsored investment funds that are nonconsolidated VIEs approximated $1.7 trillion to $1.8 trillion at March 31, 2014 and $1.6 trillion to $1.7 trillion at ~~September 30, 2013 and $1.5 trillion to $1.6 trillion at~~ December 31, ~~2012.~~2013. Net assets included ~~$1.4~~$1.5 trillion of collective trusts at ~~September 30, 2013~~March 31, 2014 and ~~$1.3~~$1.4 trillion of collective trusts at December 31, ~~2012.~~2013. Each collective trust has been aggregated separately and may include collective trusts that invest in other collective trusts. The net assets of these VIEs primarily are comprised of cash and cash equivalents and investments offset by liabilities primarily comprised of various accruals for the sponsored investment vehicles.
7.  Derivatives and Hedging
The Company maintains a program to enter into swaps to hedge against market price and interest rate exposures with respect to certain seed investments in sponsored investment products. At ~~September 30, 2013,~~March 31, 2014, the Company had outstanding total return swaps and ~~outstanding~~ interest rate swaps with an aggregate notional value of approximately ~~$113~~$153 million and ~~$68~~$121 million, respectively. At December 31, ~~2012,~~2013, the Company had outstanding total return swaps and interest rate swaps with an aggregate notional value of approximately ~~$206 million.~~
The Company executes forward foreign currency exchange contracts to mitigate the risk of foreign exchange risk movements. At September 30, 2013 and December 31, 2012, the Company had outstanding forward foreign currency exchange contracts with an aggregate notional value of approximately $680$117 million and ~~$79~~$71 million, respectively.
The Company has entered into a credit default swap, providing credit protection to a counterparty of approximately $17 million, representing the Company’s maximum risk of loss with respect to the provision of credit protection. The Company carries the credit default swap at fair value based on the expected future cash flows under the arrangement.
The fair values of the outstanding total return swaps, interest rate swaps ~~forward foreign currency exchange contracts~~ and the credit default swap were not material to the condensed consolidated statements of financial condition at ~~September 30, 2013~~both March 31, 2014 and December 31, ~~2012.~~2013.
The Company executes forward foreign currency exchange contracts to mitigate the risk of foreign exchange movements. At March 31, 2014, the Company had outstanding forward foreign currency exchange contracts with an aggregate notional value of approximately $195 million. The fair value of the forward foreign currency exchange contracts at March 31, 2014 was not material to the condensed consolidated statements of financial condition. At December 31, 2013, the Company had outstanding forward foreign currency exchange contracts with an aggregate notional value of approximately $792 million and a fair value of approximately $26 million.
Gains (losses) on the total return swaps, interest rate swaps, credit default swap and the forward foreign currency exchange contracts ~~and the credit default swap~~ were not material to the condensed consolidated statements of income for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012.~~2013.
The Company consolidates certain sponsored investment funds, which may utilize derivative instruments as a part of the funds’ investment strategies. The fair value of such derivatives at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013 was not material. The change in fair value of such derivatives, which is recorded in nonoperating income (expense), was not material for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012.~~
~~In May 2011, the Company entered into a designated cash flow hedge consisting of a $750 million interest rate swap to hedge future cash flows on the Company’s floating rate notes due in~~ 2013.
~~7.  Derivatives and Hedging (continued)~~
Interest on this swap was at a fixed rate of 1.03%, payable semi-annually on May 24 and November 24 of each year. During the second quarter 2013, the interest rate swap matured and the floating rate notes were fully repaid. Gains (losses) on the interest rate swap were not material to the condensed consolidated statements of income for the nine months ended September 30, 2013 and the three and nine months ended September 30, 2012.
8.  Goodwill
Goodwill activity during the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 was as follows:

(in millions)
December 31, ~~2012~~2013
               ~~$12,910~~
~~Acquisition~~⁽¹⁾
44$12,980
Goodwill adjustment related to Quellos ~~and other~~⁽²⁾⁽¹⁾
   (165 )


~~September 30, 2013~~March 31, 2014
   $~~12,938~~12,975


⁽¹⁾
~~Amount represents goodwill from the Company’s acquisition of Credit Suisse’s ETF franchise on July 1, 2013 for approximately $273 million (the “Credit Suisse ETF Transaction”).~~
⁽²⁾
The decrease in goodwill during the ~~nine~~three months ended ~~September 30, 2013 primarily~~March 31, 2014 resulted from a decline related to tax benefits realized from tax-deductible goodwill in excess of book goodwill from the acquisition of the fund-of-funds business of Quellos Group, LLC in October 2007 (the “Quellos Transaction”). 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 from the Quellos Transaction. The balance of the Quellos tax-deductible goodwill in excess of book goodwill was approximately ~~$301~~$285 million and ~~$324~~$293 million at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, respectively.
9.  Intangible Assets
The carrying amounts of identifiable intangible assets are summarized as follows:

(in millions)    Indefinite-lived
intangible assets    Finite-lived
intangible assets Total
intangible assets
December 31, 2012
               $16,760                   $642                $17,402
Acquisition⁽¹⁾
   231       -    231
Amortization expense
   -       (120 ) (120 )




September 30, 2013
   $16,991       $522    $17,513




⁽¹⁾
~~Amount represents indefinite-lived management contracts acquired in the Credit Suisse ETF Transaction.~~
(in millions)    Indefinite-lived
intangible assets Finite-lived
intangible assets Total
intangible assets
December 31, 2013
               $16,991                $510                $17,501
Amortization expense
   -    (41 ) (41 )
Other
   (1 ) -    (1 )


March 31, 2014
   $16,990    $469    $17,459


10.  Other Assets
~~At March 31, 2013, BlackRock held an approximately one-third economic equity~~The Company accounts for its interest in ~~Private National Mortgage Acceptance Company, LLC (“PNMAC”), which is accounted for~~PennyMac as an equity method investment and ~~is included~~includes the investment in other assets on the condensed consolidated statements of financial condition. On May 8, 2013, PennyMac became the sole managing member of PNMAC in connection with an initial public offering of PennyMac (the “PennyMac IPO”). As a result of the PennyMac IPO, BlackRock recorded a noncash, nonoperating pre-tax gain of $39 million related to the carrying value of its equity method investment.
~~10.   Other Assets (continued)~~
Subsequent to the PennyMac IPO, the Company contributed 6.1 million units of its PennyMac investment to a new donor advised fund (the “Charitable Contribution”). The fair value of the Charitable Contribution was $124 million and is included in general and administration expenses on the condensed consolidated statements of income. In connection with the Charitable Contribution, the Company also recorded a noncash, nonoperating pre-tax gain of $80 million related to the contributed investment and a tax benefit of approximately $57 million.
The carrying value and fair value of the Company’s ~~remaining~~ interest (approximately 20% or 16 million shares and units) ~~in PennyMac~~ was approximately ~~$120~~$135 million and ~~$292~~$259 million, respectively, at ~~September 30,~~March 31, 2014 and approximately $127 million and $273 million, respectively, at December 31, 2013. The fair value of the Company’s interest ~~in PennyMac~~ reflected the PennyMac stock price at ~~September 30, 2013.~~March 31, 2014 and December 31, 2013, respectively (a Level 1 input).
See Note 11,Other Assets, in the 2013 Form 10-K for more information.
11.  Borrowings
Short-Term Borrowings
~~2013~~2014 Revolving Credit Facility.    In March ~~2013,~~2014, the Company’s credit facility was amended to extend the maturity date by one year to March ~~2018 and the~~2019. The amount of the aggregate commitment ~~was increased to~~is $3.990 billion (the ~~“2013~~“2014 credit facility”). The ~~2013~~2014 credit facility permits the Company to request up to an additional $1.0 billion of borrowing capacity, subject to lender credit approval, increasing the overall size of the ~~2013~~2014 credit facility to an aggregate principal amount not to exceed $4.990 billion. Interest on borrowings outstanding accrues at a rate based on the applicable London Interbank Offered Rate plus a spread. The ~~2013~~2014 credit 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 unrestricted cash) of 3 to 1, which was satisfied with a ratio of less than 1 to 1 at ~~September 30, 2013.~~March 31, 2014. At ~~September 30, 2013,~~March 31, 2014, the Company had no amount outstanding under the ~~2013~~2014 credit facility.
Commercial Paper Program.    In April 2013, BlackRock increased the maximum aggregate amount for which the Company could issue unsecured commercial paper notes (the “CP Notes”) on a private-placement basis up to a maximum aggregate amount outstanding at any time of $3.990 billion. The commercial paper program is currently supported by the ~~2013~~2014 credit facility. At ~~September 30,~~March 31, 2014 and December 31, 2013, BlackRock had no CP Notes outstanding.
11.  Borrowings (continued)
Long-Term Borrowings
The carrying value and fair value of long-term borrowings determined using market prices at the end of ~~September 2013~~March 2014 included the following:

(in millions)   Maturity Amount
Unamortized
  Discount
Carrying Value Fair Value

3.50% Notes due 2014
$1,000    $-    $1,000    $1,036
1.375% Notes due 2015
750    -    750    762
6.25% Notes due 2017
700    (2)    698    818
5.00% Notes due 2019
1,000    (2)    998    1,147
4.25% Notes due 2021
750    (4)    746    798
3.375% Notes due 2022
750    (4)    746    749

Total Long-term Borrowings
$4,950    ($12)    $4,938    $5,310

~~In May 2013, the Company repaid $750 million of two-year floating rate notes at maturity.~~
(in millions)   Maturity Amount
Unamortized
  Discount
Carrying Value Fair Value

3.50% Notes due 2014
$1,000    $-    $1,000    $1,021
1.375% Notes due 2015
750    -    750    759
6.25% Notes due 2017
700    (2)    698    812
5.00% Notes due 2019
1,000    (2)    998    1,131
4.25% Notes due 2021
750    (3)    747    815
3.375% Notes due 2022
750    (4)    746    760
3.50% Notes due 2024
1,000    (3)    997    988

Total Long-term Borrowings
$5,950    ($14)    $5,936    $6,286

Long-term borrowings at December 31, ~~2012~~2013 had a carrying value of ~~$5.687~~$4.939 billion and a fair value of ~~$6.275~~$5,284 billion determined using market prices at the end of December ~~2012.~~2013.
2024 Notes.    In March 2014, the Company issued $1.0 billion in aggregate principal amount of 3.50% senior unsecured and unsubordinated notes maturing on March 18, 2024 (the “2024 Notes”). The net proceeds of the 2024 Notes are intended to be used for general corporate purposes, including refinancing of outstanding indebtedness. Interest is payable semi-annually in arrears on March 18 and September 18 of each year, or approximately $35 million per year. The 2024 Notes may be redeemed prior to maturity at any time in whole or in part at the option of the Company at a “make-whole” redemption price. The 2024 Notes were issued at a discount of $3 million that is being amortized over the term of the notes. The Company incurred approximately $6 million of debt issuance costs, which are being amortized over the term of the 2024 Notes.
See Note ~~11,~~ 12,Borrowings, in the ~~2012~~2013 Form 10-K for more ~~information.~~information regarding the Company’s borrowings.
12.  Commitments and Contingencies
Investment Commitments.    At ~~September 30, 2013,~~March 31, 2014, the Company had ~~$216~~$170 million of various capital commitments to fund sponsored investment funds, including funds of private equity funds, real estate funds, infrastructure funds, opportunistic funds and distressed credit funds. This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds. In addition to the capital commitments of $170 million, the Company had approximately $39 million of contingent commitments for certain funds which have investment periods that have expired. Generally, the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the expiration of the commitment. These unfunded commitments are not recorded on the condensed consolidated statements of financial condition. These commitments do not include potential future commitments approved by the Company, but which are not yet legally binding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its clients.
12.  Commitments and Contingencies (continued)
Contingencies
Contingent Payments.    The Company acts as the portfolio manager in a series of credit default swap transactions and has a maximum potential exposure of $17 million under a credit default swap between the Company and ~~the~~ counterparty. See Note 7,Derivatives and Hedging, for further discussion.
Contingent ~~Payment related~~Payments Related to ~~Credit Suisse ETF Transaction.~~    Business Acquisitions.    In connection with the Credit Suisse ETF Transaction, BlackRock is required to make contingent payments annually to Credit Suisse, subject to achieving specified thresholds during a ~~seven year~~seven-year period, subsequent to the acquisition date. In addition, BlackRock is required to make contingent payments related to the MGPA Transaction during a five-year period, subject to achieving specified thresholds, subsequent to the acquisition date. The fair value of the contingent payments at ~~September 30, 2013~~March 31, 2014 is not significant to the condensed consolidated statement of financial condition and is included in other liabilities.
Legal Proceedings.    From time to time, BlackRock receives subpoenas or other requests for information from various U.S. federal, state governmental and domestic and international regulatory authorities in connection with certain industry-wide or other investigations or proceedings. It is BlackRock’s 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 BlackRock’s activities. Additionally, certain ~~of the~~BlackRock-sponsored 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 effect on BlackRock’s results of operations, financial position, or cash flows. However, there is no assurance as to whether any such pending or threatened matters will have a material effect on BlackRock’s results of operations, financial position or cash flows in any future reporting period. Due to uncertainties surrounding the outcome of these matters, management cannot reasonably estimate the possible loss or range of loss that may arise from these matters.
Indemnifications.    In the ordinary course of business or in connection with certain acquisition agreements, 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 or the likelihood of any liability is considered remote. Consequently, no liability has been recorded on the condensed consolidated statements of financial condition.
~~12.  Commitments and Contingencies (continued)~~
~~Contingencies (continued)~~
In connection with securities lending transactions, BlackRock has issued certain indemnifications to certain securities lending clients against potential loss resulting from a borrower’s failure to fulfill its obligations under the securities lending agreement should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower’s obligation under the securities lending agreement. At ~~September 30, 2013,~~March 31, 2014, the Company indemnified certain of its clients for their securities lending loan balances of approximately ~~$115~~$129.5 billion. The Company held as agent, cash and securities totaling ~~$121~~$136.1 billion as collateral for indemnified securities on loan at ~~September 30, 2013.~~March 31, 2014. The fair value of these indemnifications was not material at ~~September 30, 2013.~~March 31, 2014.
13.  Stock-Based Compensation
Restricted stock and restricted stock units (“RSUs”) activity for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 is summarized below:

Outstanding at
   Restricted
Stock and
RSUs    Weighted-
Average
Grant Date
Fair Value    Restricted
Stock and
RSUs    Weighted-
Average
Grant Date
Fair Value
December 31, 2012
                   5,620,835               $197.90
December 31, 2013
                   4,612,813               $207.94
Granted
   1,645,277       $234.69       1,344,821               $318.31
Converted
   (2,502,869)       $204.46       (2,440,596)               $205.08
Forfeited
   (70,491)       $204.41       (20,504)               $232.80





September 30, 2013⁽¹⁾
   4,692,752       $207.20
March 31, 2014⁽¹⁾
   3,496,534               $252.42






⁽¹⁾
At ~~September 30, 2013,~~March 31, 2014, approximately ~~4.4~~3.3 million awards are expected to vest and ~~0.3~~0.2 million awards have vested but have not been converted.
The Company values restricted stock and RSUs at their grant-date fair value as measured by BlackRock’s common stock price.
In January ~~2013,~~2014, the Company granted ~~1,172,381~~1,022,295 RSUs to employees as part of annual incentive compensation that vest ratably over three years from the date of grant and ~~370,812~~287,963 RSUs to employees that cliff vest 100% on January 31, ~~2016.~~2017.
~~The~~At March 31, 2014, the intrinsic value of outstanding RSUs was ~~$1.3~~$1.1 billion reflecting a ~~closing~~ stock price of ~~$270.62~~$314.48 at ~~September 30, 2013.~~March 31, 2014.
At ~~September 30, 2013,~~March 31, 2014, total unrecognized stock-based compensation expense related to unvested RSUs was ~~$348~~$561 million. The unrecognized compensation cost is expected to be recognized over athe remaining weighted-average period of ~~0.9~~1.6 years.
~~13.    Stock-Based Compensation (continued)~~

Market Performance-based RSUs.
Market performance-based RSU activity for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 is summarized below:

Outstanding at
   Market
Performance-
Based RSUs    Weighted-
Average
Grant Date
Fair Value
December 31, 2012
               575,532       $ 115.03
Granted
   556,581       $ 126.76



September 30, 2013⁽¹⁾
   1,132,113       $ 120.80



Outstanding at
   Market
Performance-
Based RSUs    Weighted-
Average
Grant Date
Fair Value
December 31, 2013
               1,132,113       $120.80
Granted
   315,961       $195.30



March 31, 2014⁽¹⁾
   1,448,074       $ 137.05




⁽¹⁾
At ~~September 30, 2013,~~March 31, 2014, approximately ~~1.1~~1.4 million awards are expected to vest and noan immaterial amount of awards have vested and have not been converted.
~~The 556,581 market performance-based RSUs that~~In January 2014, the Company granted 315,961 market performance-based RSUs.
See Note 14,Stock-Based Compensation,in ~~January~~the 2013 ~~will be funded primarily by shares currently held by PNC (see~~~~Long-Term Incentive Plans Funded by PNC~~ ~~below).~~Form 10-K for more information on market performance-based RSUs.
At ~~September 30, 2013,~~March 31, 2014, total unrecognized stock-based compensation expense related to unvested market performance-based awards was ~~$96~~$138 million. The unrecognized compensation cost is expected to be recognized over athe remaining weighted-average period of ~~2.8~~2.7 years.
13.  Stock-Based Compensation (continued)
Market Performance-based RSUs. (continued)
Long-Term Incentive Plans Funded by PNC.    Under a share surrender agreement, PNC committed to provide up to 4 million shares of BlackRock stock, held by PNC, to fund certain BlackRock long-term incentive plans (“LTIP”). The current share surrender agreement commits PNC to provide BlackRock series C nonvoting participating preferred stock to fund the remaining committed shares. As of ~~December~~March 31, ~~2012, 2.5~~2014, 2.7 million shares had been surrendered by PNC. ~~In January 2013, 0.2 million additional shares were surrendered.~~
At ~~September 30, 2013,~~March 31, 2014, the remaining shares committed by PNC of 1.3 million were available to fund certain future long-term incentive awards.
Stock Options.    Stock ~~option activity for the nine months ended September 30, 2013 is summarized below:~~

Outstanding at
   Shares Under
Option Weighted-
Average
Exercise
Price
December 31, 2012
         1,099,909    $ 167.76
Exercised
   (85,090 ) $ 167.76


September 30, 2013
               1,014,819    $ 167.76


~~All~~ options ~~were vested~~outstanding at both ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012.~~2013 were 931,758 with a weighted average exercise price of $167.76. At March 31, 2014, all options were vested. The ~~aggregate intrinsic value~~remaining average life of stock options ~~exercised during the nine months ended September 30, 2013 was $8.3 million.~~outstanding at March 31, 2014 is approximately three years.
14.  Net Capital Requirements
The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions, including repatriation to the United States, may have adverse tax consequences that could discourage such transfers.
Capital ~~Requirements.~~Requirements.    At ~~September 30, 2013,~~March 31, 2014, the Company was required to maintain approximately ~~$1.1~~$1.2 billion in net capital in certain regulated subsidiaries, including BlackRock Institutional Trust Company, N.A. (a chartered national bank whose powers are limited to trust activities and which is subject to regulatory capital requirements administered by the Office of the Comptroller of the Currency), entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom and the Company’s broker-dealers. ~~The~~At such date, the Company was in compliance with all applicable regulatory net capital requirements.
15.  Accumulated Other Comprehensive Income (Loss)
The following table presents changes in AOCI by component for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013:

(in millions) Unrealized gains
(losses) on
available-for-sale
investments    Benefit plans    Foreign
currency
translation
adjustments    Total ⁽¹⁾ Unrealized gains
(losses) on
available-for-sale
investments    Benefit plans    Foreign
currency
translation
adjustments    Total⁽¹⁾
June 30, 2013
$8       ($4 )    ($202 )    ($198 )
December 31, 2013
$7       $6       ($48 )    ($35 )
Other comprehensive income (loss) before reclassifications⁽²⁾
2       -       118       120    -       -       8       8
Amount reclassified from AOCI⁽³⁾
(1 )    -       -       (1 ) (8 )    -       -       (8 )













Net other comprehensive income (loss) for the three months ended September 30, 2013
1       -       118       119
Net other comprehensive income (loss) for the three months ended March 31, 2014
(8 )    -       8       -













September 30, 2013
$9       ($4 )    ($84 )    ($79 )
March 31, 2014
($1 )    $6       ($40 )    ($35 )













(in millions) Unrealized gains
(losses) on
available-for-sale
investments    Benefit plans    Foreign
currency
translation
adjustments    Total ⁽¹⁾ Unrealized gains
(losses) on
available-for-sale
investments    Benefit plans    Foreign
currency
translation
adjustments    Total⁽¹⁾
December 31, 2012
$16       ($4 )    ($71 )    ($59 ) $ 16       ($ 4 )    ($ 71 )    ($ 59 )
Other comprehensive income (loss) before reclassifications⁽²⁾
3       -       (13 )    (10 ) 4       -       (108 )    (104 )
Amount reclassified from AOCI⁽³⁾
(10 )    -       -       (10 ) (3 )    -       -       (3 )













Net other comprehensive income (loss) for the nine months ended September 30, 2013
(7 )    -       (13 )    (20 )
Net other comprehensive income (loss) for the three months ended March 31, 2013
1       -       (108 )    (107 )













September 30, 2013
$9       ($4 )    ($84 )    ($79 )
March 31, 2013
$ 17       ($ 4 )    ($ 179 )    ($ 166 )













⁽¹⁾
All amounts are net of tax.
⁽²⁾
The tax benefit (expense) was not material for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013.
⁽³⁾
The tax benefit (expense) was not material for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013. The pre-tax amount reclassified from AOCI was included in net gain (loss) on investments on the condensed consolidated statements of income.
16.  Capital Stock
Nonvoting Participating Preferred ~~Stock.~~Stock.    The Company’s preferred shares authorized, issued and outstanding consisted of the following:

   September 30,
2013    December 31,
2012    March 31,
2014    December 31,
2013
Series A

Shares authorized, $0.01 par value
   20,000,000       20,000,000       20,000,000       20,000,000
Shares issued and outstanding
   -       -       -       -
Series B

Shares authorized, $0.01 par value
   150,000,000       150,000,000       150,000,000       150,000,000
Shares issued and outstanding
   823,188       823,188       823,188       823,188
Series C

Shares authorized, $0.01 par value
   6,000,000       6,000,000       6,000,000       6,000,000
Shares issued and outstanding
   1,311,887       1,517,237       1,311,887       1,311,887
Series D

Shares authorized, $0.01 par value
   20,000,000       20,000,000       20,000,000       20,000,000
Shares issued and outstanding
   -       -       -       -
Share Repurchase ~~Approval.~~Approvals.    In January 2013, the Board of Directors approved an increase in the availability under the Company’s existing share repurchase program to allow for the repurchase of up to 10.2 million shares of BlackRock common stock. The Company repurchased ~~2.9~~0.8 million common shares in open market-transactions under the share repurchase program for approximately ~~$750~~$250 million during the ~~nine~~three months ended ~~September 30, 2013.~~March 31, 2014. At ~~September 30, 2013,~~March 31, 2014, there were ~~7.3~~5.7 million shares still authorized to be repurchased.
17.  Earnings Per Share
Prior to the quarter ended March 31, 2013, the Company calculated earnings per share (“EPS”) pursuant to the two-class method as defined in ASC 260-10, Earnings per Share (“ASC 260-10”), which specifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of EPS pursuant to the two-class method. The majority of the Company’s participating securities vested in January 2013 and, therefore, beginning in the quarter ended March 31, 2013, the Company calculates EPS under the treasury stock method.
Due to the similarities in terms between BlackRock nonvoting participating preferred stock and the Company’s common stock, the Company considers its participating preferred stock to be a common stock equivalent for purposes of EPS calculations. As such, the Company has included the outstanding nonvoting participating preferred stock in the calculation of average basic and diluted shares outstanding.
~~17.  Earnings Per Share (continued)~~
The following table sets forth the computation of basic and diluted EPS for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013 under the treasury stock method:

( in millions, except share data) Three Months
Ended
September 30,
2013    Nine Months
Ended
September 30,
2013
Net income attributable to BlackRock
$730       $2,091
Basic weighted-average shares outstanding
169,811,633       170,581,930
Dilutive effect of nonparticipating RSUs and stock options
3,559,875       3,430,946



Total diluted weighted-average shares outstanding
173,371,508       174,012,876



Basic earnings per share
$4.30       $12.26
Diluted earnings per share
$4.21       $12.02
~~The following table sets forth the computation of basic and diluted EPS for the three and nine months ended September 30, 2012 under the two-class method:~~
Three Months Ended
March 31,
(in millions, except per share data) 2014 2013
Net income attributable to BlackRock
$756    $632
Basic weighted-average shares outstanding
169,081,421    171,301,800
Dilutive effect of:

Nonparticipating RSUs and stock options
2,852,382    3,259,332

Total diluted weighted-average shares outstanding
171,933,803    174,561,132

Basic earnings per share
$4.47    $3.69
Diluted earnings per share
$4.40    $3.62

(in millions, except share data) Three Months
Ended
September 30,
2012    Nine Months
Ended
September 30,
2012
Net income attributable to BlackRock
$642       $1,768
Less:

Dividends distributed to common shares
259       803
Dividends distributed to participating RSUs
-       1



Undistributed net income attributable to BlackRock
383       964
Percentage of undistributed net income allocated to common shares⁽¹⁾
99.9%       99.9%
Undistributed net income allocated to common shares
382       963
Plus:

Common share dividends
259       803



Net income attributable to common shares
$641       $1,766



Basic weighted-average shares outstanding
172,359,141       176,116,975
Dilutive effect of nonparticipating RSUs and stock options
3,091,391       2,839,724



Total diluted weighted-average shares outstanding
175,450,532       178,956,699



Basic earnings per share
$3.72       $10.02
Diluted earnings per share
$3.65       $9.87
⁽¹⁾
Allocation to common stockholders was based on the total of common shares and participating securities (which represent unvested RSUs that contain nonforfeitable rights to dividends). For the three months and nine months ended September 30, 2012, average outstanding participating securities were 0.2 million.
18.  ~~Income Taxes~~
The three and nine months ended September 30, 2013 included a $64 million net noncash benefit primarily related to the revaluation of certain deferred income tax liabilities, including legislation enacted in the United Kingdom and domestic state and local income tax changes. In addition, the nine months ended September 30, 2013 included the approximately $57 million tax benefit recognized in connection with the Charitable Contribution and a tax benefit of approximately $29 million, primarily due to the realization of tax loss carryforwards. See Note 10, Other Assets, for more information on the $57 million tax benefit.
The three and nine months ended September 30, 2012 included a $30 million net noncash benefit related to the revaluation of certain deferred income tax liabilities, including legislation enacted in the United Kingdom, domestic state and local income tax changes, and the tax effect resulting from changes in the Company’s organizational structure.
~~19.~~  Segment Information
The Company’s management directs BlackRock’s operations as one business, the asset management business. As such, the Company operates in one business segment in accordance with ASC 280-10,Segment ~~Reporting.~~Reporting.
The following table illustrates investment advisory, administration fees, securities lending revenue and performance fees,BlackRock Solutions^® and advisory revenue, distribution fees and other revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ respectively.

   Three Months Ended
September 30,    Nine Months Ended
September 30,
(in millions)      2013        2012        2013        2012
Equity
   $ 1,170       $ 1,073       $ 3,525       $ 3,196
Fixed income
   490       491       1,488       1,386
Multi-asset
   266       241       777       724
Alternatives
   248       232       718       642
Cash management
   75       90       244       267








Total investment advisory, administration fees, securities lending revenue and performance fees
   2,249       2,127       6,752       6,215
BlackRock Solutions and advisory
   156       128       420       382
Distribution fees
   19       19       54       58
Other revenue
   48       46       177       143








Total revenue
   $ 2,472       $ 2,320       $ 7,403       $ 6,798








~~19.  Segment Information (continued)~~
   Three Months Ended
March 31,
(in millions)      2014        2013
Equity
   $ 1,277       $ 1,161
Fixed income
   503       486
Multi-asset
   289       255
Alternatives
   306       249
Cash management
   74       86




Total investment advisory, administration fees, securities lending revenue and performance fees
   2,449       2,237
BlackRock Solutions and advisory
   154       126
Distribution fees
   19       17
Other revenue
   48       69




Total revenue
   $ 2,670       $ 2,449




The following table illustrates total revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ respectively, by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the customer resides.

(in millions)    Three Months Ended
September 30,    Nine Months Ended
September 30,    Three Months Ended
March 31,
Revenue
     2013        2012        2013        2012        2014          2013
Americas
   $ 1,632       $ 1,578       $ 4,967       $ 4,676       $1,782         $1,663
Europe
   726       629       2,060       1,795               757                     648
Asia-Pacific
   114       113       376       327       131         138












Total revenue
   $ 2,472       $ 2,320       $ 7,403       $ 6,798       $2,670         $2,449












The following table illustrates long-lived assets that consist of goodwill and property and equipment at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013 by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located.

(in millions)       September 30,
2013       December 31,
2012    March 31,
2014    December 31,
2013
Long-lived Assets

Americas
      $ 13,197                $ 13,238       $13,185       $13,204
Europe
      207          166               211                   214
Asia-Pacific
      57          63       87       87








Total long-lived assets
      $ 13,461                $ 13,467       $13,483       $13,505








18.  Segment Information (continued)
Americas primarily is comprised of the United States, Canada, Brazil, Chile and Mexico, while Europe primarily is ~~primarily~~ comprised of the United Kingdom. Asia-Pacific is comprised of Japan, Australia, Singapore, Hong Kong, Taiwan, Korea, India, Malaysia and China.
~~20.~~19.  Subsequent Events
~~Acquisitions~~
~~MGPA. In October 2013, the Company completed the acquisition of MGPA, an independently managed private equity real estate investment advisory company primarily in Asia and Europe.~~
~~Other~~
The Company conducted a review for ~~additional~~ subsequent events and determined that no ~~additional~~ subsequent events had occurred that would require accrual or disclosure.
Item  2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
~~Forward-looking Statements~~FORWARD-LOOKING STATEMENTS
This report, 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 report, 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;~~management (“AUM”); (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.
~~Overview~~OVERVIEW
BlackRock, Inc. (“BlackRock” or the “Company”) is the world’s largest publicly traded investment management firm. BlackRock has portfolio managers located around the world, primarily including the United States, the United Kingdom, ~~the Netherlands,~~ Japan, Hong Kong, Singapore, Australia and Germany. At ~~September 30, 2013,~~March 31, 2014, the Company managed ~~$4.096~~$4.401 trillion of assets under management (“AUM”) on behalf of institutional and individual investors worldwide. The Company provides a wide ~~array~~range of ~~products,~~capabilities, including passively and actively managed ~~products in~~strategies across various equity, fixed income, multi-asset, alternative investment and cash management products. BlackRock offers clients diversified access to global markets through separate accounts, collective investment trusts, open-end and closed-end mutual funds, exchange-traded products, hedge funds and funds of funds. BlackRock also provides global advisory services for private investment funds and retail products. The Company’s non-U.S. investment funds are based in a number of domiciles and cover a range of asset classes, including equities, fixed income, cash management and alternatives. In addition,BlackRock Solutions^® provides market risk management, financial markets advisory and enterprise investment system services to a broad base of clients. Financial markets advisory services include valuation services relating to illiquid securities, dispositions and workout assignments (including long-term portfolio liquidation assignments), risk management and strategic planning and execution.
In the United States, retail offerings include various open-end and closed-end funds, includingiShares^®, the global product leader in exchange-traded products for institutional and retail, ~~and~~including high net worth, ~~(“HNW”)~~ investors.~~iShares~~ ~~AUM totaled $856.9 billion at September 30, 2013~~. The BlackRock Global Funds, the Company’s primary retail fund group offered outside the United States, are authorized for distribution in 35 jurisdictions worldwide. Additional fund offerings include structured products, real estate funds, hedge funds, hedge funds of funds, private equity funds and funds of funds, and managed futures funds. These products are sold to both U.S. and non-U.S. ~~HNW,~~, retail and institutional investors in a wide variety of active and passive strategies covering equity, fixed income and alternative assets.
BlackRock’s client base consists of financial institutions and other corporate clients, pension plans, charities, official institutions, such as central banks, sovereign wealth funds, supranational authorities and other government entities ~~HNW individuals~~ and retail investors around the world. BlackRock maintains a significant sales and marketing presence both inside and outside the United States that is focused on establishing and maintaining retail and institutional investment management relationships by marketing its services to investors directly and through financial professionals, pension consultants and establishing third-party distribution relationships, including the distribution of BlackRock products and services through Merrill Lynch under a global distribution agreement, ~~in effect until~~which was automatically renewed for an additional three-year term after the initial term expired on January 1, 2014. ~~After such~~The term of the agreement ~~will~~may renew for ~~one automatic three-year extension if certain conditions are met.~~such annual or other periods as the parties may agree.
At ~~September 30, 2013,~~March 31, 2014, PNC held ~~20.9%~~20.8% of the Company’s voting common stock and ~~21.9%~~21.8% of the Company’s capital stock, which includes outstanding common and nonvoting preferred stock.
~~Executive Summary~~EXECUTIVE SUMMARY

Three Months Ended
September 30, Nine Months Ended
September 30,    Three Months Ended
March 31,
(in millions, except per share data) 2013 2012 2013 2012    2014    2013
GAAP basis:

Total revenue
$ 2,472     $ 2,320     $ 7,403     $ 6,798        $ 2,670        $ 2,449
Total expenses
1,506     1,445     4,679     4,279        1,619        1,540





Operating income
$ 966     $ 875     $ 2,724     $ 2,519        $ 1,051        $ 909
Operating margin
39.1%    37.7%    36.8%    37.1%       39.4%       37.1%
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests⁽¹⁾
(17)    17     82     (9)       29        7
Income tax expense
(219)    (250)    (715)    (742)       (324)       (284)





Net income attributable to BlackRock
$ 730     $ 642     $ 2,091     $ 1,768        $ 756        $ 632





Diluted earnings per common share
$ 4.21     $ 3.65     $ 12.02     $ 9.87        $ 4.40        $ 3.62
Effective tax rate
23.1%    28.1%    25.5%    29.6%       30.0%       31.0%
As adjusted⁽²⁾:

Total revenue
$ 2,472     $ 2,320     $ 7,403     $ 6,798        $ 2,670        $ 2,449
Total expenses
1,494     1,444     4,522     4,265        1,608        1,528





Operating income
$ 978     $ 876     $ 2,881     $ 2,533        $ 1,062        $ 921
Operating margin
41.2%    40.7%    40.8%    39.5%       41.4%       40.0%
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests⁽¹⁾
(21)    13     (6)    (15)       26        3
Income tax expense
(285)    (279)    (844)    (775)       (326)       (287)





Net income attributable to BlackRock
$ 672     $ 610     $ 2,031     $ 1,743        $ 762        $ 637





Diluted earnings per common share
$ 3.88     $ 3.47     $ 11.67     $ 9.73        $ 4.43        $ 3.65
Effective tax rate
29.9%    31.4%    29.4%    30.8%       30.0%       31.0%
Other:

Assets under management (end of period)
$ 4,096,356     $ 3,673,274     $ 4,096,356     $ 3,673,274        $ 4,400,925        $ 3,936,409
Diluted weighted-average common shares outstanding⁽³⁾
173.4     175.5     174.0     179.0        171,933,803        174,561,132
Shares outstanding (end of period)
169.4     172.0     169.4     172.0        169,138,109        171,102,532
Book value per share⁽⁴⁾
$ 153.32     $ 145.32     $ 153.32     $ 145.32        $ 156.51        $ 147.81
Cash dividends declared and paid per share
$ 1.68     $ 1.50     $ 5.04     $ 4.50        $ 1.93        $ 1.68

⁽¹⁾
Net of net income (loss) attributable to noncontrolling interests (“NCI”) (redeemable and nonredeemable).
⁽²⁾
As adjusted items are described in more detail inNon-GAAP Financial ~~Measures.~~Measures.
⁽³⁾
Nonvoting participating preferred ~~stock is~~shares are considered to be a common stock ~~equivalent~~equivalents for purposes of determining basic and diluted earnings per share calculations.
⁽⁴⁾
Total BlackRock stockholders’ equity, excluding appropriated retained earnings, divided by total common and preferred ~~stock~~shares outstanding at ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ respectively.
~~Three Months Ended September 30,~~THREE MONTHS ENDED MARCH 31, 2014 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2013 ~~Compared with Three Months Ended September 30, 2012~~
~~GAAP~~GAAP..    Operating income of ~~$966~~$1,051 million and operating margin of 39.4% increased ~~$91~~$142 million and 230 bps, respectively, from the ~~three months ended September 30, 2012 driven by higher~~first quarter of 2013. Operating income reflected continued growth in base fees, strong performance fees and higherBlackRock Solutions and advisory ~~revenue.~~revenue, partially offset by higher revenue-related expenses, including employee compensation and benefits, and direct fund expenses. The ~~third~~increase in these expenses was partially offset by lower general and administration expense. The first quarter ~~2012~~of 2013 results also included $18 million of launch costs for the $700 million Multi-Sector Income Trust closed-end fund ~~launch costs of $25 million.~~launched in February 2013. Nonoperating income (expense), less net income (loss) attributable to NCI ~~decreased $34~~increased $22 million, ~~primarily due to lower net~~including the positive ~~marks on investments during~~impact of the ~~current quarter compared with the prior year quarter. Income tax expense included~~monetization of a $64 million net noncash benefit for the third quarter 2013 and a $30 million net noncash benefit for the third quarter 2012. The net noncash benefits for both periods primarily related to the revaluation of certain deferred income tax liabilities, including legislation enactednon-strategic, opportunistic private equity investment in the ~~United Kingdom and domestic state and local income tax changes.~~first quarter of 2014. Earnings per diluted common share rose ~~$0.56,~~$0.78, or ~~15%~~22%, compared with the first quarter ~~ended September 30, 2012~~of 2013 due to higher net income and the benefit of share repurchases.
As Adjusted.    Operating income of ~~$978~~$1,062 million and operating margin of ~~41.2%~~41.4% increased ~~$102~~$141 million and 50140 bps, respectively, from the ~~third~~first quarter 2012. Nonoperating income (expense) decreased $34 million primarily due to the items explained above. Income tax expense on an as adjusted basis for the current quarter and prior year quarter excluded the $64 million and $30 million noncash benefits, respectively.of 2013. Earnings per diluted common share rose ~~$0.41,~~$0.78, or ~~12%~~21%, from the ~~prior year quarter.~~
~~Nine Months Ended September 30, 2013 Compared with Nine Months Ended September 30, 2012~~
~~GAAP.~~ ~~Operating income~~first quarter of $2,724 million increased $205 million from the nine months ended September 30, 2012. In the second quarter 2013, as a result of an initial public offering of PennyMac Financial Services, Inc. (the “PennyMac IPO”), the Company recorded a noncash, nonoperating pre-tax gain of $39 million related to the carrying value of its equity method investment. Subsequent to the PennyMac IPO, the Company made a charitable contribution of 6.1 million units of its equity method investment with a fair value of $124 million to a new donor advised fund (the “Charitable Contribution”). In connection with the Charitable Contribution, the Company also recorded a noncash, nonoperating pre-tax gain of $80 million related to the contributed investment. For further information, see Note 10,~~Other Assets~~~~, to the condensed consolidated financial statements.~~
Operating income reflects growth in base fees and strong performance fees, partially offset by higher expenses, primarily due to the $124 million expense related to the Charitable Contribution and higher revenue-related expenses. The results for the nine months ended September 30, 2013 also included $43 million of organizational alignment costs. Nonoperating income (expense), less net income (loss) attributable to NCI increased $91 million due to the $39 million pre-tax gain related to the PennyMac IPO and the $80 million gain related to the Charitable Contribution, partially offset by lower net positive marks on investments during the nine months ended September 30, 2013 compared with the prior year period. Income tax expense included the $64 million net noncash benefit for the nine months ended September 30, 2013 and the $30 million net noncash benefit for the nine months ended September 30, 2012 described above. In addition, the nine months ended September 30, 2013 included an approximately $57 million tax benefit recognized in connection with the Charitable Contribution and a tax benefit of approximately $29 million, primarily due to the realization of tax loss carryforwards. Earnings per diluted common share rose $2.15, or 22%, compared with the prior year period due to higher net income and the benefit of share repurchases.
~~As Adjusted~~. Operating income of $2,881 million and operating margin of 40.8% increased $348 million and 130 bps, respectively, from the nine months ended September 30, 2012. The current period results included the previously mentioned organizational alignment costs of $43 million and the $39 million pre-tax gain related to the PennyMac IPO. Income tax expense on an as adjusted basis excluded the $64 million net noncash benefit for the nine months ended September 30, 2013 and the $30 million net noncash benefit for the nine months ended September 30, 2012 described above. Earnings per diluted common share rose $1.94, or 20%, from the nine months ended September 30, 2012. The financial impact related to the Charitable Contribution has been excluded from as adjusted results for the nine months ended September 30, 2013.
SeeNon-GAAP Financial Measures for further information on as adjusted items.
For further discussion of BlackRock’s revenue, expenses, nonoperating results and income tax expense, seeDiscussion of Financial Results herein.
~~Non-GAAP Financial Measures~~NON-GAAP FINANCIAL MEASURES
BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”); however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP ~~basis~~ financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock’s financial performance over time. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Computations for all periods are derived from the condensed consolidated statements of income as follows:
~~(a)~~(1) Operating income, as adjusted, and operating margin, as adjusted:
Operating income, as adjusted, equals operating income, GAAP basis, excluding certain items management deems nonrecurring, recurring infrequently or transactions that ultimately will not impact BlackRock’s book ~~value, as indicated in the table below.~~value. Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time and, therefore, provide useful disclosure to investors.
~~(a) (continued)~~

Operating income, as adjusted, and operating margin, as adjusted

   Three Months Ended
September 30,    Nine Months Ended
September 30,    Three Months Ended
March 31,
(Amounts in millions)      2013        2012        2013        2012
(in millions)      2014        2013
Operating income, GAAP basis
   $966      $875      $2,724      $2,519      $1,051      $909
Non-GAAP expense adjustments:

PNC LTIP funding obligation
   8      5      25      16      8      8
Charitable Contribution
   -         -         124      -
U.K. lease exit costs
   -         (8)      -         (8)
Compensation expense related to appreciation (depreciation) on deferred compensation plans
   4      4      8      6      3      4












Operating income, as adjusted
   978         876      2,881         2,533      1,062      921
Closed-end fund launch costs
   -         22      16         22      -         16
Closed-end fund launch commissions
   -         3      2         3      -         2












Operating income used for operating margin measurement
   $978      $901      $2,899      $2,558            $1,062            $939












Revenue, GAAP basis
         $2,472            $2,320            $7,403            $6,798      $2,670      $2,449
Non-GAAP adjustments:

Distribution and servicing costs
   (85)      (94)      (266)      (282)      (89)      (91)
Amortization of deferred sales commissions
   (14)      (13)      (38)      (43)      (15)      (12)












Revenue used for operating margin measurement
   $2,373      $2,213      $7,099      $6,473      $2,566      $2,346












Operating margin, GAAP basis
   39.1%      37.7%      36.8%      37.1%      39.4%      37.1%












Operating margin, as adjusted
   41.2%      40.7%      40.8%      39.5%      41.4%      40.0%












Operating income, as adjusted, includes non-GAAP expense adjustments. In the third quarter 2012, non-GAAP adjustments included U.K. lease exit costs incurred in the third quarter 2012 that represent an adjustment related to the costs initially recorded in the third quarter 2011 related to costs to exit two locations in London. During the nine months ended September 30, 2013, the $124 million expense related to the Charitable Contribution has been excluded from operating income, as adjusted, due to its nonrecurring nature and because the noncash, nonoperating pre-tax gain of $80 million related to the contributed PennyMac investment is reported in nonoperating income (expense). The portion of compensation expense associated with certain long-term incentive plans (“LTIP”) funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately does not impact BlackRock’s book value. Compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense).
Management believes operating income exclusive of these items is a useful measure in evaluating BlackRock’s operating performance and helps enhance the comparability of this information for the reporting periods presented.
•
Operating margin, as adjusted,allows the Company to compare performance from period to period by adjusting for items that may not recur, recur infrequently or may have an economic offset in nonoperating income (expense). The Company also uses operating margin, as adjusted, to monitor corporate performance and efficiency and as a benchmark to compare its performance with other companies. Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock’s financial performance. The non-GAAP measure by itself may pose limitations because it does not include all of the Company’s revenues and expenses.
~~(a)~~(1) (continued)
Operating margin, as adjusted allows the Company to compare performance from period to period by adjusting for items that may not recur, recur infrequently or may have an economic offset in nonoperating income (expense). The Company also uses operating margin, as adjusted, to monitor corporate performance and efficiency and as a benchmark to compare its performance with other companies. Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock’s financial performance. The non-GAAP measure by itself may pose limitations because it does not include all of the Company’s revenues and expenses.
Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of closed-end fund launch costs and related commissions. Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenues associated with the expenditure of these costs will not fully impact the Company’s results until future periods.
Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties. Management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the Company earns. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenues.
~~(b)~~(2) Nonoperating income (expense), less net income (loss) attributable to ~~noncontrolling interests,~~NCI, as ~~adjusted~~adjusted:
Nonoperating income (expense), ~~is presented below.~~less net income (loss) attributable to NCI, as adjusted, equals nonoperating income (expense), GAAP basis, less net income (loss) attributable to NCI, adjusted for compensation expense associated with (appreciation) depreciation on investments related to certain BlackRock deferred compensation plans. The compensation expense offset is recorded in operating income. This compensation expense has been included in nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, to offset returns on investments set aside for these plans, which are reported in nonoperating income (expense), GAAP basis.
   Three Months Ended
March 31,
(in millions)        2014         2013
Nonoperating income (expense), GAAP basis
   $17 $41
Less: Net income (loss) attributable to NCI
   (12 ) 34


Nonoperating income (expense), net of NCI
   29 7
Compensation expense related to (appreciation) depreciation on deferred compensation plans
   (3 ) (4 )


Nonoperating income (expense), net of NCI, as adjusted
   $26 $3


Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides comparability of information among reporting periods and is an effective measure for reviewing BlackRock’s nonoperating contribution to results. As compensation expense associated with (appreciation) depreciation on investments related to certain deferred compensation plans, which is included in operating income, substantially offsets the gain (loss) on the investments set aside for these plans, management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides a useful measure, for both management and investors, of BlackRock’s nonoperating results that impact book value. During the nine months ended September 30, 2013, the noncash, nonoperating pre-tax gain of $80 million related to the contributed PennyMac investment has been excluded from nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted due to its nonrecurring nature and because the more than offsetting associated Charitable Contribution expense of $124 million is reported in operating income.
~~(b) (continued)~~
~~Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted~~

   Three Months Ended
September 30, Nine Months Ended
September 30,
(Amounts in millions)        2013         2012         2013         2012
Nonoperating income (expense), GAAP basis
   ($ 18 ) $ 30 $ 92 $ 13
Less: Net income (loss) attributable to NCI
   (1 ) 13 10 22


Nonoperating income (expense), net of NCI
   (17 ) 17 82 (9 )
Gain related to the Charitable Contribution
   -      -      (80 ) -
Compensation expense related to (appreciation) depreciation on deferred compensation plans
   (4 ) (4 ) (8 ) (6 )


Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted
   ($ 21 ) $ 13 ($ 6 ) ($ 15 )


~~(c)~~(3) Net income attributable to BlackRock, as adjusted:
Management believes net income attributable to BlackRock, as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, as adjusted, equals net income attributable to BlackRock, GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.
   Three Months Ended
March 31,
(in millions, except per share data)      2014        2013
Net income attributable to BlackRock, GAAP basis
   $756         $632
Non-GAAP adjustment, net of tax:⁽⁴⁾

PNC LTIP funding obligation
   6      5




Net income attributable to BlackRock, as adjusted
   $762      $637




Diluted weighted-average common shares outstanding⁽⁵⁾
   171.9      174.6
Diluted earnings per common share, GAAP basis⁽⁵⁾
   $4.40      $3.62
Diluted earnings per common share, as adjusted⁽⁵⁾
   $4.43      $3.65
See note ~~(a)~~(1) Operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding ~~obligation, Charitable Contribution and the U.K. lease exit costs.~~obligation.
The nine months ended September 30, 2013 included a tax benefit of approximately $57 million recognized in connection with the Charitable Contribution. The tax benefit has been excluded from net income attributable to BlackRock, as adjusted, due to the nonrecurring nature of the Charitable Contribution. The three and nine months ended September 30, 2013 and 2012 reflected adjustments related to the revaluation of certain deferred income tax liabilities, including legislation enacted in the United Kingdom and domestic state and local income tax changes. The resulting decrease in income taxes has been excluded from net income attributable to BlackRock, as adjusted, as these items will not have a cash flow impact and to ensure comparability among periods presented.
~~(c) (continued)~~
~~Net income attributable to BlackRock, Inc., as adjusted~~

   Three Months Ended
September 30,    Nine Months Ended
September 30,
(Amounts in millions, except per
share data)    2013      2012    2013    2012
Net income attributable to BlackRock, Inc., GAAP basis
   $730        $642      $2,091      $1,768
Non-GAAP adjustments, net of tax:^(d)

PNC LTIP funding obligation
   6        3      17      10
Amount related to the Charitable Contribution
   -        -      (13)      -
U.K. lease exit costs
   -        (5)      -      (5)
Income tax changes
   (64)      (30)      (64)      (30)








Net income attributable to BlackRock, Inc., as adjusted
   $672        $610      $2,031      $1,743








Allocation of net income, as adjusted, to common shares^(e)
   $672        $609      $2,031      $1,741
Diluted weighted-average common shares outstanding^(f)
   173.4           175.5      174.0      179.0
Diluted earnings per common share, GAAP basis^(f)
   $4.21        $3.65      $12.02      $9.87
Diluted earnings per common share, as adjusted^(f)
   $3.88        $3.47      $11.67      $9.73
~~(d)~~(4) For each period presented, the non-GAAP ~~adjustments, including~~adjustment related to the PNC LTIP funding obligation ~~and U.K. lease exit costs, were~~was tax effected at the respective blended rates applicable to the ~~adjustments. The nine months ended September 30, 2013 also included a tax benefit of approximately $57 million related to the Charitable Contribution.~~adjustment.
~~(e) For the three and nine months ended September 30, 2012, amounts exclude net income attributable to participating securities.~~
~~(f)~~(5) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.
Assets Under Management
AUM for reporting purposes generally is based upon how investment advisory and administration fees are calculated for each portfolio. Net asset values, total assets, committed assets or other measures may be used to determine portfolio AUM.
AUM and Net Subscriptions (Redemptions) by Client Type

AUM Net Subscriptions (Redemptions)⁽¹⁾    AUM    Net Subscriptions (Redemptions)
(in millions) September 30,
2013 June 30,
2013 September 30,
2012 Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2013 Twelve Months
Ended
September 30,
2013    March 31,
2014    December 31,
2013    March 31,
2013    Three Months
Ended
March 31,
2014 Twelve Months
Ended
March 31,
2014
Retail
$ 438,449    $ 414,379    $ 397,954    $ 8,344    $ 22,213    $ 26,322       $ 508,717       $ 487,777       $ 421,141       $ 14,002    $ 44,012
iShares
856,909    774,397    705,765    20,249    44,882    80,596       930,380       914,372       802,776       7,759    46,134
Institutional:

Active
890,070    861,231    880,726    53    (8,929 ) (16,984 )    939,654       932,410       878,741       (12,611 ) (3,241 )
Index
1,612,337    1,514,448    1,393,928    (3,361 ) 18,472    33,687       1,726,855       1,677,650       1,526,597       17,577    17,490









Total institutional
2,502,407    2,375,679    2,274,654    (3,308 ) 9,543    16,703       2,666,509       2,610,060       2,405,338       4,966    14,249









Total long-term
3,797,765    3,564,455    3,378,373    25,285    76,638    123,621       4,105,606       4,012,209       3,629,255       26,727    104,395









Cash management
260,077    252,562    248,331    4,469    (4,195 ) 10,221       263,533       275,554       261,329       (12,432 ) (2,541 )
Advisory⁽²⁾⁽¹⁾
38,514    39,990    46,570    (2,033 ) (6,036 ) (6,681 )    31,786       36,325       45,825       (3,773 ) (12,105 )









Total
$ 4,096,356    $ 3,857,007    $ 3,673,274    $27,721    $ 66,407    $ 127,161       $ 4,400,925       $ 4,324,088       $ 3,936,409       $ 10,522    $ 89,749









AUM and Net Subscriptions (Redemptions) by Product Type

AUM Net Subscriptions (Redemptions)⁽¹⁾    AUM    Net Subscriptions (Redemptions)
(in millions) September 30,
2013 June 30,
2013 September 30,
2012 Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2013 Twelve Months
Ended
September 30,
2013    March 31,
2014    December 31,
2013    March 31,
2013    Three Months
Ended
March 31,
2014 Twelve Months
Ended
March 31,
2014
Equity
$ 2,148,712    $ 1,973,115    $ 1,773,530    $ 11,256    $ 44,581    $ 75,773       $ 2,347,934       $ 2,317,695       $ 1,992,595       $ 3,824    $ 39,410
Fixed income
1,237,559    1,205,359    1,233,811    7,491    10,011    22,411       1,289,014       1,242,186       1,245,533       15,642    29,729
Multi-asset
308,117    289,305    257,607    4,863    24,943    29,029       353,231       341,214       283,566       4,989    38,258
Alternatives

Core
72,758    70,227    68,931    1,388    3,305    2,335       87,865       85,026       69,943       1,934    3,127
Currency and commodities⁽³⁾⁽²⁾
30,619    26,449    44,494    287    (6,202 ) (5,927 )    27,562       26,088       37,618       338    (6,129 )









Subtotal
103,377    96,676    113,425    1,675    (2,897 ) (3,592 )    115,427       111,114       107,561       2,272    (3,002 )









Total long-term
3,797,765    3,564,455    3,378,373    25,285    76,638    123,621       4,105,606       4,012,209       3,629,255       26,727    104,395









Cash management
260,077    252,562    248,331    4,469    (4,195 ) 10,221       263,533       275,554       261,329       (12,432 ) (2,541 )
Advisory⁽²⁾⁽¹⁾
38,514    39,990    46,570    (2,033 ) (6,036 ) (6,681 )    31,786       36,325       45,825       (3,773 ) (12,105 )









Total
$ 4,096,356    $ 3,857,007    $ 3,673,274    $ 27,721    $ 66,407    $ 127,161       $ 4,400,925       $ 4,324,088       $ 3,936,409       $ 10,522    $ 89,749









⁽¹⁾
~~Amounts include distributions representing return of capital and return on investment to investors.~~
⁽²⁾
Advisory AUM represents long-term portfolio liquidation assignments.
⁽³⁾⁽²⁾
Amounts include commodityiShares.
Component Changes in AUM for the ~~Third Quarter 2013~~Three Months Ended March 31, 2014
The following table presents the component changes in AUM by client type and product for the quarter ended ~~September 30, 2013.~~March 31, 2014.

(in millions) June 30,
2013 Net
subscriptions
(redemptions)⁽¹⁾ Acquisition⁽²⁾ Market
appreciation
(depreciation) Foreign
exchange⁽³⁾ September 30,
2013    December 31,
2013    Net
subscriptions
(redemptions) Market
change    FX
impact⁽¹⁾ March 31,
2014
Average
AUM⁽²⁾
Retail:

Equity
$ 161,441    $ 1,166    $ -    $ 10,261    $ 1,864    $ 174,732       $ 203,035       $ 2,183    $ 2,715       $ 305    $ 208,238       $ 204,108
Fixed income
141,541    2,256    -    (970 ) 359    143,186       151,475       6,058    2,854       61    160,448       156,082
Multi-asset
99,105    2,899    -    3,742    271    106,017       117,054       3,636    765       93    121,548       118,893
Alternatives
12,292    2,023    -    (2 ) 201    14,514       16,213       2,125    131       14    18,483       17,278









Retail subtotal
414,379    8,344    -    13,031    2,695    438,449       487,777       14,002    6,465       473    508,717       496,361
iShares:

Equity
577,268    21,069    13,021    38,444    3,726    653,528       718,135       934    5,774       (870 ) 723,973       711,373
Fixed income
180,943    (1,452 ) 1,294    222    1,834    182,841       178,835       6,624    2,860       (297 ) 188,022       185,214
Multi-asset
1,107    33    -    35    4    1,179       1,310       110    23       (6 ) 1,437       1,374
Alternatives
15,079    599    1,645    1,975    63    19,361       16,092       91    777       (12 ) 16,948       16,692









iShares subtotal
774,397    20,249    15,960    40,676    5,627    856,909       914,372       7,759    9,434       (1,185 ) 930,380       914,653
Institutional:

Active:

Equity
126,425    (6,098 ) -    7,585    2,952    130,864       138,726       (8,032 ) 1,508       172    132,374       135,369
Fixed income
490,490    4,922    -    2,393    5,438    503,243       505,109       (7,023 ) 10,768       838    509,692       508,127
Multi-asset
180,310    2,232    -    5,012    4,435    191,989       215,276       2,850    5,660       79    223,865       220,506
Alternatives
64,006    (1,003 ) -    347    624    63,974       73,299       (406 ) 676       154    73,723       73,550









Active subtotal
861,231    53    -    15,337    13,449    890,070       932,410       (12,611 ) 18,612       1,243    939,654       937,552
Index:

Equity
1,107,981    (4,881 ) -    71,638    14,850    1,189,588       1,257,799       8,739    14,818       1,993    1,283,349       1,257,400
Fixed income
392,385    1,765    -    913    13,226    408,289       406,767       9,983    12,646       1,456    430,852       417,821
Multi-asset
8,783    (301 ) -    175    275    8,932       7,574       (1,607 ) 346       68    6,381       6,662
Alternatives
5,299    56    -    (4 ) 177    5,528       5,510       462    278       23    6,273       5,972









Index subtotal
1,514,448    (3,361 ) -    72,722    28,528    1,612,337       1,677,650       17,577    28,088       3,540    1,726,855       1,687,855









Institutional subtotal
2,375,679    (3,308 ) -    88,059    41,977    2,502,407       2,610,060       4,966    46,700       4,783    2,666,509       2,625,407









Long-term
3,564,455    25,285    15,960    141,766    50,299    3,797,765       4,012,209       26,727    62,599       4,071    4,105,606       $ 4,036,421









Cash management
252,562    4,469    -    104    2,942    260,077       275,554       (12,432 ) 126       285    263,533
Advisory⁽⁴⁾⁽³⁾
39,990    (2,033 ) -    (195 ) 752    38,514       36,325       (3,773 ) 235       (1,001 ) 31,786








Total
$ 3,857,007    $ 27,721    $ 15,960    $ 141,675    $ 53,993    $ 4,096,356       $ 4,324,088       $ 10,522    $ 62,960       $ 3,355    $ 4,400,925








⁽¹⁾
Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
⁽²⁾
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.
⁽³⁾
Advisory AUM represents long-term portfolio liquidation assignments.
The following table presents component changes in AUM by product for the three months ended March 31, 2014.
(in millions)    December 31,
2013    Net
subscriptions
(redemptions) Market
change    FX
impact⁽¹⁾ March 31,
2014    Average
AUM⁽²⁾
Equity:

Active
   $ 317,262       $ (6,916 ) $ 4,117       $ 387    $ 314,850       $ 314,522
iShares
   718,135       934    5,774       (870 ) 723,973       711,373
Fixed income:

Active
   652,209       (1,458 ) 13,530       870    665,151       659,491
iShares
   178,835       6,624    2,860       (297 ) 188,022       185,214
Multi-asset
   341,214       4,989    6,794       234    353,231       347,435
Alternatives:

Core
   85,026       1,934    807       98    87,865       86,402
Currency and
    commodities⁽³⁾
   26,088       338    1,055       81    27,562       27,090








Subtotal
   2,318,769       6,445    34,937       503    2,360,654       2,331,527
Non-ETF Index:

Equity
   1,282,298       9,806    14,924       2,083    1,309,111       1,282,355
Fixed income
   411,142       10,476    12,738       1,485    435,841       422,539








Subtotal Non-ETF Index
   1,693,440       20,282    27,662       3,568    1,744,952       1,704,894








Long-term
   4,012,209       26,727    62,599       4,071    4,105,606       $ 4,036,421








Cash management
   275,554       (12,432 ) 126       285    263,533
Advisory⁽⁴⁾
   36,325       (3,773 ) 235       (1,001 ) 31,786







Total
   $ 4,324,088       $ 10,522    $ 62,960       $ 3,355    $ 4,400,925







⁽¹⁾
Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
⁽²⁾
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months.
⁽³⁾
Amounts include commodityiShares.
⁽⁴⁾
Advisory AUM represents long-term portfolio liquidation assignments.
AUM increased $76.8 billion, or 2%, to $4.401 trillion at March 31, 2014 from $4.324 trillion at December 31, 2013, driven largely by net market appreciation and positive net inflows.
Net market appreciation of $63.0 billion reflected $29.1 billion appreciation in fixed income products across the majority of strategies and growth in equity markets, which contributed $24.8 billion.
AUM increased $3.4 billion from foreign exchange movements primarily resulting from the weakening of the U.S. dollar, largely against the pound sterling and Japanese yen, partially offset by the strengthening of the U.S. dollar against the Canadian dollar.
Net Subscriptions (Redemptions).    Net subscriptions of $10.5 billion reflected $26.7 billion of long-term net inflows across all client types, including $14.0 billion, $7.8 billion, and $4.9 billion from retail,iShares and institutional clients, respectively. Net subscriptions in long-term products of $26.7 billion reflected the following:
Net Subscriptions
^·
Non-ETF index fixed income net inflows of $10.5 billion, including strong liability driven investment activity;
^·
Non-ETF index equity net inflows of $9.8 billion, reflecting flows into developed market mandates;
^·
iShares net inflows of $7.8 billion, including U.S and EuropeaniShares net inflows of $3.2 billion and $4.8 billion, respectively.Strong demand for local currency and U.S. targeted duration mandates drove fixed income net inflows of $6.6 billion;
^·
Multi-asset net inflows of $5.0 billion driven by $3.6 billion into retail strategies, concentrated in the flagship Global Allocation and Multi-Asset Income funds, and continued institutional demand for theLifePath^® target-date suite; and
^·
Alternatives net inflows of $2.3 billion, with the Global Long/Short Credit and Global Long/Short Equity funds each gathering more than $0.7 billion in net assets.
Net Redemptions
^·
Active equity net outflows of $6.9 billion were driven by scientific active equity outflows of $4.2 billion, which were primarily due to a redemption from a single client, while fundamental equity outflows of $2.7 billion were focused in the United States and driven by a large subadvisory client due to historical performance.
Cash Management Net Redemptions. Cash management net outflows of $12.4 billion were primarily comprised of net outflows from Americas institutional and retail clients out of prime strategies, partially offset by net inflows from EMEA institutional clients in offshore funds.
Advisory Net Redemptions. Advisory net outflows of $3.8 billion were driven by portfolio liquidations. The execution of these liquidations contributed toBlackRock Solutions and advisory revenue in the current quarter.
Component Changes in AUM for the Twelve Months Ended March 31, 2014
The following table presents the component changes in AUM by client type and product for the twelve months ended March 31, 2014.
(in millions)
March 31,
2013 Net
subscriptions
(redemptions) Adjustments⁽¹⁾ Acquisitions⁽²⁾ Market
change FX
impact⁽³⁾ March 31,
2014 Average
AUM⁽⁴⁾
Retail:

Equity
$169,402    $ 6,434    $ 13,066    $ - $ 16,430    $ 2,906    $ 208,238    $ 182,265
Fixed income
143,711    14,819    3,897    - (2,592 ) 613    160,448    147,871
Multi-asset
97,373    15,569    2,663    - 5,790    153    121,548    108,386
Alternatives
10,655    7,190    - 136    218    284    18,483    14,366

Retail subtotal
421,141    44,012    19,626    136    19,846    3,956    508,717    452,888
iShares:

Equity
588,694    48,773    - 13,021    71,236    2,249    723,973    653,926
Fixed income
189,501    189    - 1,294    (4,655 ) 1,693    188,022    185,498
Multi-asset
1,035    336    - - 79    (13 ) 1,437    1,218
Alternatives
23,546    (3,164 ) - 1,645    (5,125 ) 46    16,948    18,327

iShares subtotal
802,776    46,134    - 15,960    61,535    3,975    930,380    858,969
Institutional:

Active:

Equity
130,138    (18,893 ) - - 19,130    1,999    132,374    132,312
Fixed income
505,391    (2,808 ) - - 2,846    4,263    509,692    503,606
Multi-asset
175,524    25,973    3,335    - 13,229    5,804    223,865    196,969
Alternatives
67,688    (7,513 ) - 10,836    2,626    86    73,723    69,168

Active subtotal
878,741    (3,241 ) 3,335    10,836    37,831    12,152    939,654    902,055
Index:

Equity
1,104,361    3,096    (18,238 ) - 184,591    9,539    1,283,349    1,191,932
Fixed income
406,930    17,529    (4,723 ) - (2,651 ) 13,767    430,852    408,955
Multi-asset
9,634    (3,620 ) - - 375    (8 ) 6,381    8,173
Alternatives
5,672    485    - - (145 ) 261    6,273    5,656

Index subtotal
1,526,597    17,490    (22,961 ) - 182,170    23,559    1,726,855    1,614,716

Institutional subtotal
2,405,338    14,249    (19,626 ) 10,836    220,001    35,711    2,666,509    2,516,771

Long-term
3,629,255    104,395    - 26,932    301,382    43,642    4,105,606    $ 3,828,628

Cash management
261,329    (2,541 ) - - 419    4,326    263,533
Advisory⁽⁵⁾
45,825    (12,105 ) - - (241 ) (1,693 ) 31,786

Total
$3,936,409    $ 89,749    $ - $ 26,932    $ 301,560    $ 46,275    $ 4,400,925

⁽¹⁾
Amounts include ~~distributions representing return~~$19.6 billion of ~~capital~~AUM related to fund ranges reclassed from institutional to retail and ~~return on investment~~$6.0 billion of AUM reclassed from non-ETF index equity and fixed income to ~~investors.~~multi-asset.
⁽²⁾
Amounts represent $16.0 billion of AUM acquired ~~from~~in the ~~Company’s acquisition of~~ Credit Suisse’s ETF franchise onacquisition in July 1, 2013 (the “Credit Suisse ETF Transaction”). and $11.0 billion of AUM acquired in the MGPA acquisition in October 2013.
⁽³⁾
Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
⁽⁴⁾
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.
⁽⁵⁾
Advisory AUM represents long-term portfolio liquidation assignments.
The following table presents component changes in AUM by product for the ~~quarter~~twelve months ended ~~September 30, 2013.~~March 31, 2014.

(in millions) March 31,
2013 Net
subscriptions
(redemptions) Adjustments⁽¹⁾ Acquisitions⁽²⁾ Market
Change FX
impact⁽³⁾ March 31,
2014 Average
AUM⁽⁴⁾

June 30,
2013 Net
subscriptions
(redemptions)⁽¹⁾ Acquisition⁽²⁾ Market
appreciation
(depreciation) Foreign
exchange⁽³⁾ September 30,
2013
Equity:

Active
$ 280,332    $ (5,062 ) $ —      $ 17,409    $ 4,805    $ 297,484    $ 291,759    $ (15,418 ) $ - $ - $ 33,913    $ 4,596    $ 314,850    $ 301,043
iShares
577,268    21,069    13,021    38,444    3,726    653,528    588,694    48,773    - 13,021    71,236    2,249    723,973    653,926
Fixed income:

Active
631,808    7,167    —      1,423    5,795    646,193    648,865    11,364    - - 164    4,758    665,151    649,856
iShares
180,943    (1,452 ) 1,294    222    1,834    182,841    189,501    189    - 1,294    (4,655 ) 1,693    188,022    185,498
Multi-asset
289,305    4,863    —      8,964    4,985    308,117    283,566    38,258    5,998    - 19,473    5,936    353,231    314,746
Alternatives:

Core
70,227    1,388    —      390    753    72,758    69,943    3,127    - 10,972    3,020    803    87,865    77,901
Currency and commodities⁽⁴⁾
26,449    287    1,645    1,926    312    30,619
Currency and commodities⁽⁵⁾
37,618    (6,129 ) - 1,645    (5,446 ) (126 ) 27,562    29,616

Subtotal
2,056,332    28,260    15,960    68,778    22,210    2,191,540    2,109,946    80,164    5,998    26,932    117,705    19,909    2,360,654    2,212,586
Non-ETF Index:

Equity
1,115,515    (4,751 ) —      72,075    14,861    1,197,700    1,112,142    6,055    (5,172 ) - 186,238    9,848    1,309,111    1,205,466
Fixed income
392,608    1,776    —      913    13,228    408,525    407,167    18,176    (826 ) - (2,561 ) 13,885    435,841    410,576

Subtotal Non-ETF Index
1,508,123    (2,975 ) —      72,988    28,089    1,606,225    1,519,309    24,231    (5,998 ) - 183,677    23,733    1,744,952    1,616,042

Long-term
3,564,455    25,285    15,960    141,766    50,299    3,797,765    3,629,255    104,395    - 26,932    301,382    43,642    4,105,606    $ 3,828,628

Cash management
252,562    4,469    —      104    2,942    260,077    261,329    (2,541 ) - - 419    4,326    263,533
Advisory⁽⁵⁾
39,990    (2,033 ) —      (195 ) 752    38,514
Advisory⁽⁶⁾
45,825    (12,105 ) - - (241 ) (1,693 ) 31,786

Total
$ 3,857,007    $ 27,721    $ 15,960    $ 141,675    $ 53,993    $ 4,096,356    $ 3,936,409    $ 89,749    $ - $ 26,932    $ 301,560    $ 46,275    $ 4,400,925

⁽¹⁾
Amounts include ~~distributions representing return~~$6.0 billion of ~~capital~~AUM reclassed from non-ETF index equity and ~~return on investment~~fixed income to ~~investors.~~multi-asset.
⁽²⁾
Amounts represent $16.0 billion of AUM acquired in the Credit Suisse ETF ~~Transaction.~~Transaction in July 2013 and $11.0 billion of AUM acquired in the MGPA acquisition in October 2013.
⁽³⁾
Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
⁽⁴⁾
Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months.
⁽⁵⁾
Amounts include commodity~~iShares~~ iShares..
⁽⁵⁾⁽⁶⁾
Advisory AUM represents long-term portfolio liquidation assignments.
AUM increased ~~$239.3~~approximately $464.5 billion, or 12%, to ~~$4.096~~$4.401 trillion at ~~September 30, 2013~~March 31, 2014 from ~~$3.857~~$3.936 trillion at ~~June 30,~~March 31, 2013, largely driven by market ~~appreciation of $141.7 billion,~~gains, positive net inflows, an increase in AUM from foreign exchange ~~gains, long-term net inflows~~movements and acquired AUM related to the MGPA acquisition and the Credit Suisse ETF Transaction.
Net market appreciation of ~~$141.7~~$301.6 billion ~~primarily~~ included ~~appreciation of $127.9~~$291.4 billion from equity products, primarily due to ~~improved~~higher U.S. and global equity ~~markets.~~markets, and $19.5 billion from multi-asset products, concentrated in target-date strategies and asset allocation strategies.
AUM increased ~~$54.0~~$46.3 billion from foreign exchange movements resulting from the weakening of the U.S. dollar, ~~largely~~primarily against the pound sterling and euro, partially offset by the ~~euro.~~strengthening of the U.S. dollar against the Japanese yen and Canadian dollar.
Net Subscriptions (Redemptions)..    Net subscriptions of ~~$27.7~~$89.7 billion reflected ~~$25.3~~$104.4 billion oflong-term net inflows ~~driven by~~~~iShares~~ ~~net inflows of $20.2~~across all client types, including $46.1 billion, $44.0 billion and $14.3 billion fromiShares, retail ~~net inflows of $8.3 billion.~~and institutional clients, respectively. Net subscriptions in long-term products of ~~$25.3~~$104.4 billion reflected the following:
Net Subscriptions

^·
EquityiSharesnet inflows of ~~$20.2~~$48.8 billion, ~~including $16.4 billion of~~concentrated in U.S. and ~~$5.0 billion of European~~~~iShares~~ ~~net inflows~~.~~Strong demand for emerging markets and broad market European~~global equity ~~exposure in the latter part of the quarter drove equity~~offerings;
^·
Multi-asset products net inflows of ~~$21.1 billion;~~$38.3 billion, reflecting strong demand for target-date funds, includingLifePath portfolios;
^·
Non-ETF index fixed income products net inflows of $18.2 billion concentrated in U.S. targeted duration and local currency strategies, partially offset by outflows from U.S. core strategies;
^·
Active fixed income net inflows of ~~$7.2 billion, reflecting inflows to U.S. core and local currency strategies, partially offset by outflows from U.S. municipal and targeted-duration products; and~~
^·
~~Multi-asset net inflows of $4.9 billion, reflecting strong flows into institutional active multi-asset products driven by continued demand for the LifePath~~^® ~~target-date suite, which had net inflows of $3.0 billion, and retail inflows of $2.9 billion with particular demand for the flagship Multi-asset Income and Global Allocation funds.~~
~~Net Redemptions~~
^·
~~Active equity net outflows of $5.1~~$11.4 billion concentrated in U.S. ~~equity~~sector products and ~~regional and country specific strategies; and~~
^·
~~Non-ETF index equity net outflows of $4.8 billion, primarily in U.S equities, partially offset by inflows into regional and country specific and global strategies.~~
Cash Management Net Subscriptions.    Cash management net inflows of $4.5 billion primarily were comprised of net inflows from Americas and EMEA institutional clients in government strategies and offshore funds, respectively.
~~Advisory Net Redemptions. Planned portfolio liquidations drove advisory net outflows of $2.0 billion.~~
~~Component Changes in AUM for the Nine Months Ended September 30, 2013~~
~~The following table presents the component changes in AUM by client type and product for the nine months ended September 30, 2013.~~

(in millions) December 31,
2012 Net
subscriptions
(redemptions)⁽¹⁾ Acquisition⁽²⁾ Market
appreciation
(depreciation) Foreign
exchange⁽³⁾ September 30,
2013
Retail:

Equity
$ 164,748    $ (1,198 ) $ -    $ 11,221    $ (39 ) $ 174,732
Fixed income
138,425    10,327    -    (5,640 ) 74    143,186
Multi-asset
90,626    8,278    -    7,253    (140 ) 106,017
Alternatives
9,685    4,806    -    (18 ) 41    14,514

Retail subtotal
403,484    22,213    -    12,816    (64 ) 438,449
iShares:

Equity
534,648    50,004    13,021    55,395    460    653,528
Fixed income
192,852    (3,917 ) 1,294    (7,661 ) 273    182,841
Multi-asset
869    261    -    53    (4 ) 1,179
Alternatives
24,337    (1,466 ) 1,645    (5,174 ) 19    19,361

iShares subtotal
752,706    44,882    15,960    42,613    748    856,909
Institutional:

Active:

Equity
129,024    (14,680 ) -    18,255    (1,735 ) 130,864
Fixed income
518,102    (4,121 ) -    (7,915 ) (2,823 ) 503,243
Multi-asset
166,708    16,840    -    7,575    866    191,989
Alternatives
70,861    (6,968 ) -    1,014    (933 ) 63,974

Active subtotal
884,695    (8,929 ) -    18,929    (4,625 ) 890,070
Index:

Equity
1,017,081    10,455    -    170,209    (8,157 ) 1,189,588
Fixed income
409,943    7,722    -    (5,126 ) (4,250 ) 408,289
Multi-asset
9,545    (436 ) -    283    (460 ) 8,932
Alternatives
4,912    731    -    (132 ) 17    5,528

Index subtotal
1,441,481    18,472    -    165,234    (12,850 ) 1,612,337

Institutional subtotal
2,326,176    9,543    -    184,163    (17,475 ) 2,502,407

Long-term
3,482,366    76,638    15,960    239,592    (16,791 ) 3,797,765

Cash management
263,743    (4,195 ) -    236    293    260,077
Advisory⁽⁴⁾
45,479    (6,036 ) -    (370 ) (559 ) 38,514

Total
$ 3,791,588    $ 66,407    $ 15,960    $ 239,458    $ (17,057 ) $ 4,096,356

⁽¹⁾
~~Amounts include distributions representing return of capital and return on investment to investors.~~
⁽²⁾
~~Amounts represent AUM acquired in the Credit Suisse ETF Transaction.~~
⁽³⁾
~~Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.~~
⁽⁴⁾
~~Advisory AUM represents long-term portfolio liquidation assignments.~~
~~The following table presents component changes in AUM by product for the nine months ended September 30, 2013.~~

(in millions) December 31,
2012 Net
subscriptions
(redemptions)⁽¹⁾ Acquisition⁽²⁾ Market
appreciation
(depreciation) Foreign
exchange⁽³⁾ September 30,
2013
Equity:

Active
$ 287,215    $ (16,269 ) $ -    $ 28,279    $ (1,741 ) $ 297,484
iShares
534,648    50,004    13,021    55,395    460    653,528
Fixed income:

Active
656,331    6,154    -    (13,549 ) (2,743 ) 646,193
iShares
192,852    (3,917 ) 1,294    (7,661 ) 273    182,841
Multi-asset
267,748    24,943    -    15,164    262    308,117
Alternatives:

Core
68,367    3,305    -    1,243    (157 ) 72,758
Currency and
    commodities⁽⁴⁾
41,428    (6,202 ) 1,645    (5,553 ) (699 ) 30,619

Subtotal
2,048,589    58,018    15,960    73,318    (4,345 ) 2,191,540
Non-ETF Index:

Equity
1,023,638    10,846    -    171,406    (8,190 ) 1,197,700
Fixed income
410,139    7,774    -    (5,132 ) (4,256 ) 408,525

Subtotal Non-ETF Index
1,433,777    18,620    -    166,274    (12,446 ) 1,606,225

Long-term
3,482,366    76,638    15,960    239,592    (16,791 ) 3,797,765
Cash management
263,743    (4,195 ) -    236    293    260,077
Advisory⁽⁵⁾
45,479    (6,036 ) -    (370 ) (559 ) 38,514

Total
$ 3,791,588    $ 66,407    $ 15,960    $ 239,458    $ (17,057 ) $ 4,096,356

⁽¹⁾
~~Amounts include distributions representing return of capital and return on investment to investors.~~
⁽²⁾
~~Amounts represent AUM acquired in the Credit Suisse ETF Transaction.~~
⁽³⁾
~~Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.~~
⁽⁴⁾
~~Amounts include commodity~~~~iShares~~.
⁽⁵⁾
~~Advisory AUM represents long-term portfolio liquidation assignments.~~
AUM increased approximately $304.8 billion to $4.096 trillion at September 30, 2013 from $3.792 trillion at December 31, 2012, largely driven by market appreciation of $239.5 billion, net inflows and acquired AUM related to the Credit Suisse ETF Transaction. The increase in AUM was partially offset by foreign exchange losses.
Net market appreciation of $239.5 billion included $255.1 billion from equity products, primarily due to improved U.S. and global equity markets and $15.2 billion from multi-asset products, concentrated in global strategies, partially offset by depreciation of $26.3 billion from fixed income products across all fixed income strategies.
~~The $17.1 billion decrease in AUM from foreign exchange movements was due to the strengthening of the U.S. dollar, primarily against the Japanese yen.~~
~~Net Subscriptions (Redemptions).~~    Net subscriptions reflected positive long-term net inflows of $76.6 billion, partially offset by outflows from cash management and advisory clients. Net long-term subscriptions reflected net subscriptions of $44.9 billion from~~iShares, $22.2 billion from~~
~~retail clients and $9.5 billion from institutional clients. Net subscriptions in long-term products totaling $76.6 billion, reflected the following:~~
~~Net Subscriptions~~
^·
~~Equity~~~~iShares~~ ~~net inflows of $50.0 billion, across diverse strategies;~~
^·
~~Multi-asset net inflows of $24.9 billion, reflecting strong flows of $16.8 billion into institutional active multi-asset products, driven by continued demand for the~~~~LifePath~~ ~~target date suite and $8.3 billion from retail clients with a particular demand for the flagship Multi-asset Income and Global Allocation funds;~~
^·
~~Fixed income active net inflows of $6.2 billion, reflecting inflows into~~ local currency ~~U.S. core and sector specific~~ strategies, partially offset by outflows from U.S. targeted duration strategies;
^·
Non-ETF index equity products net inflows of ~~$10.8~~$6.1 billion primarily ininto global strategies, partially offset by outflows from U.S. and regional and country specific ~~and U.S. equity strategies;~~
^·
~~Non-ETF index fixed income net inflows of $7.8 billion, concentrated in local currency and U.S. targeted duration~~ strategies; and
^·
~~Alternative~~Alternatives core net inflows of ~~$3.3~~$3.1 billion ~~concentrated in~~primarily into retail ~~mutual~~hedge funds.
Net Redemptions

^·
Active equity net outflows of ~~$16.3~~$15.4 billion ~~concentrated in U.S.~~with $7.7 billion each from fundamental and ~~global~~scientific active equity ~~and sector specific strategies; and~~
^·
~~Alternatives currency and commodities net outflows of $6.2 billion, primarily related to active currency redemptions.~~
~~Cash Management Net Redemptions.~~     Cash management net outflows of $4.2 billion were driven by net outflows from Americas institutional clients primarily in prime strategies, partially offset by inflows from Americas institutional clients into government funds.
~~Advisory Net Redemptions.~~ ~~Planned portfolio liquidation disbursements drove advisory net outflows of $6.0 billion.~~
~~Component Changes in AUM for the Twelve Months Ended September 30, 2013~~
~~The following table presents component changes in AUM by client type and product for the twelve months ended September 30, 2013.~~

(in millions) September 30,
2012 Net
subscriptions
(redemptions)⁽¹⁾ Acquisition⁽²⁾ Market
appreciation
(depreciation) Foreign
exchange⁽³⁾ September 30,
2013
Retail:

Equity
$ 164,759    $ (1,565 ) $ -    $ 11,291    $ 247    $ 174,732
Fixed income
133,737    14,629    -    (5,318 ) 138    143,186
Multi-asset
90,034    8,177    -    7,936    (130 ) 106,017
Alternatives
9,424    5,081    -    (55 ) 64    14,514

Retail subtotal
397,954    26,322    -    13,854    319    438,449
iShares:

Equity
491,534    80,079    13,021    67,727    1,167    653,528
Fixed income
187,771    544    1,294    (7,510 ) 742    182,841
Multi-asset
817    310    -    58    (6 ) 1,179
Alternatives
25,643    (337 ) 1,645    (7,618 ) 28    19,361

iShares subtotal
705,765    80,596    15,960    52,657    1,931    856,909
Institutional:

Active:

Equity
130,013    (19,133 ) -    22,403    (2,419 ) 130,864
Fixed income
519,260    (8,815 ) -    (2,643 ) (4,559 ) 503,243
Multi-asset
158,190    20,055    -    11,754    1,990    191,989
Alternatives
73,263    (9,091 ) -    1,458    (1,656 ) 63,974

Active subtotal
880,726    (16,984 ) -    32,972    (6,644 ) 890,070
Index:

Equity
987,224    16,392    -    198,328    (12,356 ) 1,189,588
Fixed income
393,043    16,053    -    3,702    (4,509 ) 408,289
Multi-asset
8,566    487    -    706    (827 ) 8,932
Alternatives
5,095    755    -    (351 ) 29    5,528

Index subtotal
1,393,928    33,687    -    202,385    (17,663 ) 1,612,337

Institutional subtotal
2,274,654    16,703    -    235,357    (24,307 ) 2,502,407

Long-term
3,378,373    123,621    15,960    301,868    (22,057 ) 3,797,765

Cash management
248,331    10,221    -    519    1,006    260,077
Advisory⁽⁴⁾
46,570    (6,681 ) -    (618 ) (757 ) 38,514

Total
$ 3,673,274    $ 127,161    $ 15,960    $ 301,769    $ (21,808 ) $ 4,096,356

⁽¹⁾
~~Amounts include distributions representing return of capital and return on investment to investors.~~
⁽²⁾
~~Amounts represent AUM acquired in the Credit Suisse ETF Transaction.~~
⁽³⁾
~~Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.~~
⁽⁴⁾
~~Advisory AUM represents long-term portfolio liquidation assignments.~~
~~The following table presents the component changes in AUM by product for the twelve months ended September 30, 2013.~~

(in millions) September 30,
2012 Net
subscriptions
(redemptions)⁽¹⁾ Acquisition⁽²⁾ Market
appreciation
(depreciation) Foreign
exchange⁽³⁾ September 30,
2013
Equity:

Active
$ 288,799    $ (21,712 ) $ -    $ 32,533    $ (2,136 ) $ 297,484
iShares
491,534    80,079    13,021    67,727    1,167    653,528
Fixed income:

Active
652,780    5,780    -    (7,952 ) (4,415 ) 646,193
iShares
187,771    544    1,294    (7,510 ) 742    182,841
Multi-asset
257,607    29,029    -    20,454    1,027    308,117
Alternatives:

Core
68,931    2,335    -    1,714    (222 ) 72,758
Currency and
    commodities⁽⁴⁾
44,494    (5,927 ) 1,645    (8,280 ) (1,313 ) 30,619

Subtotal
1,991,916    90,128    15,960    98,686    (5,150 ) 2,191,540
Non-ETF Index:

Equity
993,197    17,406    -    199,489    (12,392 ) 1,197,700
Fixed income
393,260    16,087    -    3,693    (4,515 ) 408,525

Subtotal Non-ETF Index
1,386,457    33,493    -    203,182    (16,907 ) 1,606,225

Long-term
3,378,373    123,621    15,960    301,868    (22,057 ) 3,797,765
Cash management
248,331    10,221    -    519    1,006    260,077
Advisory⁽⁵⁾
46,570    (6,681 ) -    (618 ) (757 ) 38,514

Total
$ 3,673,274    $ 127,161    $ 15,960    $ 301,769    $ (21,808 ) $ 4,096,356

⁽¹⁾
~~Amounts include distributions representing return of capital and return on investment to investors.~~
⁽²⁾
~~Amounts represent AUM acquired in the Credit Suisse ETF Transaction.~~
⁽³⁾
~~Foreign exchange reflects the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.~~
⁽⁴⁾
~~Amounts include commodity~~~~iShares~~.
⁽⁵⁾
~~Advisory AUM represents long-term portfolio liquidation assignments.~~
AUM increased approximately $423.1 billion to $4.096 trillion at September 30, 2013 from $3.673 trillion at September 30, 2012, largely driven by market appreciation of $301.8 billion, net inflows of $127.2 billion and acquired AUM related to the Credit Suisse ETF Transaction. The increase in AUM was partially offset by foreign exchange losses.
~~Net market appreciation of $301.8 billion was driven by $299.7 billion from equity products, primarily due to improved U.S. and global equity markets.~~
The $21.8 billion decrease in AUM from foreign exchange movements was due to the strengthening of the U.S. dollar, primarily against the Japanese yen, partially offset by the weakening of the U.S. dollar against the euro.
~~Net Subscriptions (Redemptions).~~ ~~Net subscriptions were driven by long-term net inflows of $123.6 billion reflecting net inflows of $80.6 billion from~~~~iShares~~~~, $26.3 billion from retail clients and $16.7 billion from institutional clients. Net subscriptions in long-term products totaling $123.6 billion, reflected the following:~~
~~Net Subscriptions~~
^·
~~Equity~~~~iShares~~ ~~net inflows of $80.1 billion across diverse strategies, including regional, country specific, and U.S. equity strategies;~~
^·
~~Non-ETF index equity net inflows of $17.4 billion primarily in global strategies, partially offset by outflows from U.S. equity products, and regional and country specific strategies;~~
^·
~~Multi-asset net inflows of $29.0 billion, reflecting strong flows of $20.1 billion into institutional active multi-asset products driven by continued demand for the~~~~LifePath~~ ~~target date suite;~~products; and
^·
~~Non-ETF index fixed income~~Alternatives currency and commodities net ~~inflows~~outflows of ~~$16.1~~$6.1 billion concentrated in ~~local~~low fee active currency mandates and ~~global strategies.~~
~~Net Redemptions~~iShares commodities.
^·
~~Active equity net outflows of $21.7 billion, concentrated in U.S., global and sector strategies.~~
Cash Management Net ~~Subscriptions.~~Redemptions. Cash management net ~~inflows~~outflows of ~~$10.2~~$2.5 billion were comprised of net ~~inflows~~outflows from Americas institutional and retail clients primarily ~~into government~~out of prime strategies, partially offset by net ~~outflows~~inflows from ~~international~~European institutional clients ~~from~~concentrated in offshore ~~funds.~~funds and Americas institutional clients into government strategies.
Advisory Net Redemptions. ~~Planned portfolio liquidation disbursements drove advisory~~Advisory net outflows of ~~$6.7 billion.~~$12.1 billion were driven by portfolio liquidations.
~~Discussion of Financial Results~~DISCUSSION OF FINANCIAL RESULTS
The Company’s results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ are discussed below. For a further description of the Company’s revenues and expenses, see the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2012~~2013 (“~~2012~~2013 Form 10-K”).
Revenue
Revenues increased $152 million, or 7%, from the prior year quarter and $605 million, or 9%, from the nine months ended September 30, 2012, reflecting base fee growth. The nine months ended September 30, 2013 also reflected strong performance fees.

   Three Months Ended
September 30,    Nine Months Ended
September 30,
(in millions)    2013    2012    2013    2012
Investment advisory, administration fees and securities lending revenue:

Equity:

Active
   $ 425       $ 431       $ 1,290       $ 1,313
iShares
   589       486       1,744       1,426
Fixed income:

Active
   314       301       948       865
iShares
   113       116       349       321
Multi-asset
   262       239       763       718
Alternatives:

Core
   142       130       414       395
Currency and commodities
   27       31       82       97








Subtotal
   1,872       1,734       5,590       5,135
Non-ETF Index⁽¹⁾:

Equity
   145       139       446       418
Fixed income
   61       61       179       171








Subtotal Non-ETF Index
   206       200       625       589








Long-term
   2,078       1,934       6,215       5,724
Cash management
   75       90       244       267








Total base fees
   2,153       2,024       6,459       5,991
Investment advisory performance fees:

Equity
   11       17       45       39
Fixed income
   2       13       12       29
Multi-asset
   4       2       14       6
Alternatives
   79       71       222       150








Total
   96       103       293       224
BlackRock Solutionsand advisory
   156       128       420       382
Distribution fees
   19       19       54       58
Other revenue
   48       46       177       143








Total revenue
       $ 2,472           $ 2,320           $ 7,403           $ 6,798








⁽¹⁾
~~Certain prior period information has been reclassified to conform to the current period presentation.~~
   Three Months Ended
March 31,
(in millions)    2014    2013
Investment advisory, administration fees and securities lending revenue:

Equity:

Active
   $ 463       $ 433
iShares
   634       571
Fixed income:

Active
   324       312
iShares
   113       116
Multi-asset
   286       248
Alternatives:

Core
   159       136
Currency and commodities
   22       30




Subtotal
   2,001       1,846
Non-ETF Index:

Equity
   158       140
Fixed income
   58       57




Subtotal Non-ETF Index
   216       197




Long-term
   2,217       2,043
Cash management
   74       86




Total base fees
   2,291       2,129
Investment advisory performance fees:

Equity
   22       17
Fixed income
   8       1
Multi-asset
   3       7
Alternatives
   125       83




Total
   158       108
BlackRock Solutionsand advisory
   154       126
Distribution fees
   19       17
Other revenue
   48       69




Total revenue
   $ 2,670       $ 2,449




The table below lists the asset type mix of investment advisory, administration fees and securities lending revenue (collectively “base fees”) and mix of average AUM by asset class:

Three Months Ended
September 30, Nine Months Ended
September 30, Mix of Base Fees    Mix of Average AUM
by Asset Class⁽¹⁾
Mix of Base
Fees Mix of Average
AUM by
Asset Class⁽¹⁾ Mix of Base Fees Mix of Average
AUM by
Asset Class⁽¹⁾ Three months ended
March 31,    Three months ended
March 31,
  2013     2012     2013     2012     2013     2012     2013     2012   2014 2013    2014 2013
Equity:

Active
20%    21%    7%    8%    20%    22%    7%    8%    20 % 20 % 7 % 8 %
iShares
27%    24%    16%    13%    27%    24%    15%    13%    28 % 27 % 17 % 15 %
Fixed income:

Active
15%    15%    15%    18%    15%    14%    17%    18%    14 % 15 % 15 % 16 %
iShares
5%    6%    5%    5%    5%    5%    5%    5%    5 % 5 % 4 % 5 %
Multi-asset
12%    12%    8%    7%    12%    12%    7%    7%    12 % 12 % 8 % 7 %
Alternatives:

Core
7%    6%    2%    2%    6%    7%    2%    2%    7 % 6 % 2 % 2 %
Currency and commodities
1%    2%    1%    1%    1%    2%    1%    1%    1 % 1 % 1 % 1 %

Subtotal
87%    86%    54%    54%    86%    86%    54%    54%    87 % 86 % 54 % 54 %
Non-ETF Index:

Equity
7%    7%    29%    27%    7%    7%    29%    26%    7 % 7 % 30 % 28 %
Fixed income
3%    3%    10%    12%    3%    3%    10%    13%    3 % 3 % 10 % 11 %

Subtotal Non-ETF Index
10%    10%    39%    39%    10%    10%    39%    39%
Subtotal Non-ETF Index:
10 % 10 % 40 % 39 %

Long-term
97%    96%    93%    93%    96%    96%    93%    93%    97 % 96 % 94 % 93 %

Cash management
3%    4%    7%    7%    4%    4%    7%    7%    3 % 4 % 6 % 7 %

Total excluding Advisory AUM
100%    100%    100%    100%    100%    100%    100%    100%    100 % 100 % 100 % 100 %

⁽⁽¹⁾¹⁾
Average AUM ~~for the three and nine months ended September 30, 2013~~ is calculated as the average of the month-end spot AUM amounts for the trailing four ~~months and ten months, respectively.~~months.
For the quarter and nine months ended September 30, 2013, non-ETF index equity and non-ETF index fixed income were only 10%, respectively, of total base fees; however, AUM associated with these base fees represented 39% of total average AUM.
Three Months Ended ~~September 30, 2013~~March 31, 2014 Compared with Three Months ~~ended September 30, 2012~~Ended March 31, 2013
Revenues increased $221 million, or 9%, from the first quarter of 2013, reflecting growth in markets, long-term net inflows and strength in performance fees andBlackRock Solutions and advisory revenue, partially offset by lower other revenue.
Investment advisory, administration fees and securities lending revenue of ~~$2,153~~$2,291 million for the current quarter increased $162 million from $2,129 million in the ~~third~~first quarter of 2013 ~~increased $129 million, or 6%, from $2,024 million in the third quarter 2012~~ due to growth in long-term average AUM. Securities lending fees of $105 million in the current quarter decreased ~~$30~~$7 million from the ~~prior year~~first quarter of 2013, primarily related to ~~$99 million driven by~~ lower spreads, ~~consistent with industry trends.~~
~~BlackRock Solutions and advisory revenue~~partially offset by an increase in ~~the third quarter 2013 totaled $156 million compared with $128 million in the prior year quarter. The current quarter reflected an $18 million increase in~~~~Aladdin~~^® ~~business revenues to $112 million and higher advisory assignments revenue.~~
~~Nine Months Ended September 30, 2013 Compared with Nine Months ended September 30, 2012~~
~~Investment advisory, administration fees and~~average balances of securities ~~lending revenue~~ of $6,459 million for the nine months ended September 30, 2013 increased $468 million from $5,991 million in the prior year period due to growth in long-term average AUM. Securities lending fees decreased $50 million from the prior year period to $347 million in the nine months ended September 30, 2013 driven by lower spreads consistent with industry trends.on loan.
Investment advisory performance fees were ~~$293~~$158 million in the ~~nine months ended September 30, 2013~~current quarter compared with ~~$224~~$108 million in the ~~prior year period,~~first quarter of 2013. The current quarter primarily ~~reflecting higher fees from alternative products.~~reflected a large fee associated with the planned final liquidation of the closed-end mortgage fund that was partially liquidated in the fourth quarter of 2013.
BlackRock Solutions and advisory revenue in the ~~nine months ended September 30, 2013~~current quarter totaled ~~$420~~$154 million compared with ~~$382~~$126 million in the ~~prior year period.~~first quarter of 2013. The current ~~period~~quarter reflected ~~a $32~~higher revenue from advisory assignments and higher revenue fromAladdin^® mandates.BlackRock Solutions and advisory revenue included $109 million ~~increase~~ inAladdin business revenues ~~to $309~~in the current quarter compared with $99 million ~~and higher advisory assignments revenue.~~in the first quarter of 2013.
Other revenue ~~increased $34~~decreased $21 million ~~largely reflecting higher~~from the first quarter of 2013 due to lower transition management service fees and lower earnings from certain ~~advisory company equity method investments and higher transition management service fees.~~strategic investments.
Expenses
Expenses increased $61 million, or 4%, from the prior year quarter and $400 million, or 9%, from the nine months ended September 30, 2012, primarily reflecting higher revenue-related expenses and the $124 million expense related to the Charitable Contribution.

Three Months Ended
September 30, Nine Months Ended
September 30,    Three Months Ended
March 31,
(in millions) 2013 2012 2013 2012    2014    2013⁽¹⁾
Expenses, GAAP:

Employee compensation and benefits
      $ 866          $ 828          $ 2,635          $ 2,439       $ 982       $ 905
Distribution and servicing costs
85    94    266    282       89       91
Amortization of deferred sales commissions
14    13    38    43       15       12
Direct fund expenses
167    144    490    440       179       161
General and administration:

Marketing and promotional
96    74    291    265       89       89
Occupancy and office related
67    58    194    180       62       65
Portfolio services
51    52    148    148       50       50
Technology
39    38    117    115       41       38
Professional services
30    24    89    76       25       28
Communications
9    10    27    30       10       9
Closed-end fund launch costs
-    22    16    22       -       16
Charitable Contribution
-    -    124    -
Other general and administration
42    49    124    122       36       36





Total general and administration expenses
334    327    1,130    958       313       331
Amortization of intangible assets
40    39    120    117       41       40





Total expenses, GAAP
      $   1,506          $   1,445          $   4,679          $   4,279       $ 1,619       $ 1,540





Less non-GAAP expense adjustments⁽¹⁾:

Less non-GAAP expense adjustments⁽²⁾:

Employee compensation and benefits:

PNC LTIP funding obligation
8    5    25    16       8       8
Compensation expense related to appreciation (depreciation) on deferred compensation plans
4    4    8    6       3       4
General and administration:

U.K. lease exit costs
-    (8 ) -    (8 )
Charitable Contribution
-    -    124    -





Total non-GAAP expense adjustments
12    1    157    14       11       12
Expenses, as adjusted:

Employee compensation and benefits
854    819    2,602    2,417       971       893
Distribution and servicing costs
85    94    266    282       89       91
Amortization of deferred sales commissions
14    13    38    43       15       12
Direct fund expenses
167    144    490    440       179       161
General and administration
334    335    1,006    966       313       331
Amortization of intangible assets
40    39    120    117       41       40





Total expenses, as adjusted
$ 1,494    $ 1,444    $ 4,522    $ 4,265       $ 1,608       $ 1,528





⁽¹⁾
Certain prior period information has been reclassified to conform to current period presentation.
⁽²⁾
See Non-GAAP Financial Measures for further information on as adjusted items.
Three Months Ended ~~September 30, 2013~~March 31, 2014 Compared with Three Months ~~ended September 30, 2012~~Ended March 31, 2013
GAAP.  Expenses increased $79 million, or 5%, from the first quarter of 2013, primarily reflecting higher revenue-related expenses, partially offset by lower general and administration expenses.
Employee compensation and benefits expense increased ~~$38~~$77 million, or 5%9%, to ~~$866~~$982 million in the current quarter from ~~$828~~$905 million in the ~~prior year~~first quarter of 2013, reflecting higher headcount and higher incentive compensation driven by higher operating income. Employees at ~~September 30, 2013~~March 31, 2014 totaled approximately ~~11,200~~11,500 compared with approximately ~~10,400~~10,600 at ~~September 30, 2012.~~March 31, 2013.
Distribution and servicing costs totaled ~~$85~~$89 million in the current quarter compared with ~~$94~~$91 million in the ~~prior year quarter.~~first quarter of 2013. These costs included payments to Bank of America/Merrill Lynch under a global distribution agreement and PNC, as well as other third parties, primarily associated with the distribution and servicing of client investments in certain BlackRock products. ~~The three months ended September 30,~~Distribution and servicing costs for the first quarter of 2014 and 2013 ~~and 2012~~ included ~~$45~~$46 million and ~~$51~~$47 million, respectively, of costs attributable to Bank of ~~America and affiliates.~~America/Merrill Lynch.
Direct fund expenses increased ~~$23~~$18 million from the first quarter of 2013, reflecting higher average AUM, primarily related toiShares, where BlackRock pays certain nonadvisory expenses of the ~~funds primarily linked to the use of certain index trademarks, reference data for certain indices, custodial services, fund administration and fund accounting.~~funds.
General and administration expenses ~~increased $7~~decreased $18 million ~~reflecting higher marketing and promotional costs than~~from the ~~prior year~~first quarter ~~largely offset by~~of 2013, primarily related to the impact of closed-end fund launch costs of ~~$22~~$16 million (excluding $3$2 million included in employee compensation and benefits expense) ~~recorded~~ in the ~~prior year quarter.~~first quarter of 2013, a one-time benefit from the reversal of a real estate-related retirement obligation which is no longer required to be funded and lower various other expenses, partially offset by the impact of foreign currency exchange movements.
~~Nine Months Ended September 30, 2013 Compared with Nine Months ended September 30, 2012~~
~~Employee~~As Adjusted.  Expenses, as adjusted, increased $80 million, or 5%, to $1,608 million in the current quarter from $1,528 million in the first quarter of 2013. The increase in total expenses, as adjusted, is primarily attributable to increases in employee compensation and benefits ~~expense~~ ~~increased $196 million, or 8%, to $2,635 million~~and direct fund expenses, partially offset by a decline in ~~the nine months ended September 30, 2013 from $2,439 million in the prior year period, reflecting increased headcount~~general and ~~higher incentive compensation driven by higher operating income, including higher performance fees.~~administration expenses.
~~Distribution and servicing costs~~ totaled $266 million in the nine months ended September 30, 2013 compared with $282 million in the nine months ended September 30, 2012. The nine months ended September 30, 2013 and 2012 included $139 million and $148 million, respectively, of costs attributable to Bank of America and affiliates.NONOPERATING RESULTS
~~Direct fund expenses~~ increased $50 million, reflecting higher average AUM where BlackRock pays certain nonadvisory expenses of the funds primarily linked to the use of certain index trademarks, reference data for certain indices, custodial services, fund administration and fund accounting.
~~General and administration expenses~~ ~~increased $172 million, largely driven by the $124 million expense related to the Charitable Contribution and higher marketing and promotional costs.~~
~~Nonoperating Results~~
Nonoperating income (expense), less net income (loss) attributable to NCI for the ~~three~~quarters ended March 31, 2014 and ~~nine months ended September 30,~~ 2013 ~~and 2012~~ was as follows:

Three Months Ended
September 30, Nine Months Ended
September 30, Three Month Ended
March 31,
(in millions)     2013         2012         2013         2012     2014 2013
Nonoperating income (expense), GAAP basis
($18) $30      $92   $13            $ 17       $ 41
Less: Net income (loss) attributable to NCI⁽¹⁾
(1) 13   10           22   (12 ) 34

Nonoperating income (expense)⁽²⁾
(17)         17           82   (9) 29 7
Gain related to the Charitable Contribution
-      -      (80) -
Compensation expense related to (appreciation) depreciation on deferred compensation plans
(4)    (4) (8)    (6) (3 ) (4 )

Nonoperating income (expense), as adjusted⁽²⁾
($21) $13   ($6) ($15)       $ 26       $ 3

⁽¹⁾
Amounts included losses of $6$16 million and ~~a gain~~gains of $2$27 million attributable to consolidated variable interest entities (“VIEs”) for the ~~three months~~quarters ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012, respectively. Amounts included losses of $2 million and a gain of $1 million attributable to consolidated VIEs for the nine months ended September 30, 2013 and 2012,~~ respectively.
⁽²⁾
Net of net income (loss) attributable to NCI.
The components of nonoperating income (expense), less net income (loss) attributable to NCI, for the ~~three~~quarters ended March 31, 2014 and ~~nine months ended September 30,~~ 2013 ~~and 2012~~ were as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,    Three Months Ended
March 31,
(in millions)     2013         2012         2013         2012            2014         2013
Net gain (loss) on investments⁽¹⁾

Private equity
$12    $20    $35    $37       $44 $19
Real estate
7    5    17    9       2 3
Distressed credit/mortgage funds
5    26    28    54
Distressed credit/mortgage funds/opportunistic funds
   10 19
Hedge funds/funds of hedge funds
(3 ) 7    5    17       11 3
Other investments⁽²⁾
2    2    11    (1 )    2 7



Subtotal
        23            60            96            116               69         51
Gain related to PennyMac IPO
-    -    39    -
Gain related to the Charitable Contribution
-    -    80    -
Investments related to deferred compensation plans
4    4    8    6       3 4



Total net gain (loss) on investments
27    64    223    122       72 55
Interest and dividend income
8    10    18    27       10 6
Interest expense
(52 ) (57 ) (159 ) (158 )    (53 ) (54 )



Net interest expense
(44 ) (47 ) (141 ) (131 )    (43 ) (48 )



Total nonoperating income (expense)⁽¹⁾
(17 ) 17    82    (9 )    29 7
Gain related to the Charitable Contribution
-    -    (80 ) -
Compensation expense related to (appreciation) depreciation on deferred compensation plans
(4 ) (4 ) (8 ) (6 )    (3 ) (4 )



Nonoperating income (expense), as adjusted⁽¹⁾
($21 ) $13    ($6 ) ($15 )    $26 $3



⁽¹⁾
Net of net income (loss) attributable to NCI.
⁽²⁾
Amounts included net gains (losses) related to equity and fixed income investments, and BlackRock’s seed capital hedging program.
Three Months Ended ~~September 30, 2013~~March 31, 2014 Compared with Three Months Ended ~~September 30, 2012.~~March 31, 2013
Net gains on investments of ~~$27~~$69 million in the ~~three months ended September 30, 2013 decreased $37~~current quarter increased $18 million from the ~~prior year~~first quarter of 2013 due to ~~lower net~~the positive ~~marks, primarily on distressed credit/mortgage funds.~~impact of the monetization of a non-strategic, opportunistic private equity investment.
Net interest expense decreased $3$5 million from the ~~three months ended September 30, 2012.~~first quarter of 2013, primarily due to higher dividend income. For further information on the Company’s long-term debt, seeLiquidity and Capital Resources herein.
~~Nine Months Ended September 30, 2013 Compared with Nine Months Ended September 30, 2012.~~
Net gains on investments of $223 million in the nine months ended September 30, 2013 increased $101 million from the prior year period due to the $39 million gain related to the PennyMac IPO and the $80 million gain related to the Charitable Contribution, partially offset by lower net positive marks.
~~Net interest expense increased $10 million from the nine months ended September 30, 2012 primarily due to lower dividend income.~~
Income Tax Expense
~~Income tax expense for the three and nine months ended September 30, 2013 and 2012 was as follows:~~
   GAAP    As Adjusted
(in millions)    Three Months Ended
September 30,    Nine Months Ended
September 30,    Three Months Ended
September 30,    Nine Months Ended
September 30,    GAAP
Three Months Ended
March 31,    As adjusted
Three Months Ended
March 31,
   2013    2012    2013    2012    2013    2012    2013    2012    2014    2013    2014    2013
Income before income taxes⁽¹⁾
   $949       $892       $2,806       $2,510       $957       $889       $2,875       $2,518       $1,080       $916       $1,088       $924
Income tax expense
   $219       $250       $715       $742       $285       $279       $844       $775       $324       $284       $326       $287
Effective tax rate
   23.1%       28.1%       25.5%       29.6%       29.9%       31.4%       29.4%       30.8%       30.0%       31.0%       30.0%       31.0%

⁽¹⁾
Net of net income (loss) attributable to NCI.
The three and nine months ended September 30, 2013 included a $64 million net noncash benefit primarily related to the revaluation of certain deferred income tax liabilities, including legislation enacted in the United Kingdom and domestic state and local income tax changes. In addition, the nine months ended September 30, 2013 included the approximately $57 million tax benefit recognized in connection with the Charitable Contribution and a tax benefit of approximately $29 million, primarily due to the realization of tax loss carryforwards. The $64 million net noncash benefit and the $57 million tax benefit related to the Charitable Contribution were excluded from as adjusted results.
The three and nine months ended September 30, 2012 included a $30 million net noncash benefit, which was excluded from as adjusted results, related to the revaluation of certain deferred income tax liabilities, including legislation enacted in the United Kingdom, domestic state and local income tax changes, and the tax effect resulting from changes in the Company’s organizational structure.
~~Balance Sheet Overview~~BALANCE SHEET OVERVIEW
As Adjusted Balance Sheet
The following table presents a reconciliation of the condensed consolidated statement of financial condition presented on a GAAP basis to the condensed consolidated statement of financial condition, excluding the impact of separate account assets and separate account collateral held under securities lending agreements (directly related to lending separate account securities) and separate account liabilities and separate account collateral liabilities under securities lending agreements, consolidated VIEs and consolidated sponsored investment funds.
The Company presents the as adjusted balance sheet as additional information to enable investors to exclude certain assets that have equal and offsetting liabilities or noncontrolling interests that ultimately do not have an impact on stockholders’ equity (excluding appropriated retained earnings related to consolidated collateralized loan obligations (“CLOs”)) or cash flows. Management views the as adjusted balance sheet, a non-GAAP financial measure, as an economic presentation of its total assets and liabilities; however, it does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Separate Account Assets and Liabilities and Separate Account Collateral Held under Securities Lending Agreements
Separate account assets are maintained by BlackRock Life Limited, a wholly owned subsidiary of the Company, which is a registered life insurance company in the United Kingdom, and represent segregated assets held for purposes of funding individual and group pension contracts. The Company records equal and offsetting separate account liabilities. The separate account assets are not available to creditors of the Company and the holders of the pension contracts have no recourse to the Company’s assets. The net investment income attributable to separate account assets accrues directly to the contract owners and is not reported on the condensed consolidated statements of income. While BlackRock has no economic interest in these assets or liabilities, BlackRock earns an investment advisory fee for the service of managing these assets on behalf of the clients.
In addition, the Company records on its condensed consolidated statements of financial condition the separate account collateral received under securities lending arrangements as its own asset in addition to an equal and offsetting separate account collateral liability for the obligation to return the collateral.
Consolidated VIEs
At ~~September 30, 2013,~~March 31, 2014, BlackRock’s consolidated VIEs included multiple CLOs and one private investment fund. The assets of these VIEs are not available to creditors of the Company and the Company has no obligation to settle the liabilities of the VIEs. While BlackRock has no material economic interest in these assets or liabilities, BlackRock earns an investment advisory fee, as well as a potential performance fee, for the service of managing these assets on behalf of clients.
Consolidated Sponsored Investment Funds
The Company consolidates certain sponsored investment funds primarily because it is deemed to control such funds. The Company ismay not be readily able to access cash and cash equivalents held by consolidated sponsored investment funds to use in its operating activities. In addition, the Company ismay not be readily able to sell investments held by consolidated sponsored investment funds in order to obtain cash for use in the Company’s operations.
September 30, 2013 March 31, 2014
Segregated client assets
generating advisory fees in
which BlackRock has no
economic interest or
liability Segregated client assets
generating advisory fees in
which BlackRock has no
economic interest or
liability
(in millions) GAAP
Basis Separate
Account
Assets/
Collateral Consolidated
VIEs Consolidated
Sponsored
Investment
Funds As
Adjusted GAAP
Basis Separate
Account
Assets/
Collateral Consolidated
VIEs Consolidated
Sponsored
Investment
Funds As
Adjusted
Assets

Cash and cash equivalents
$ 3,987    $ —   $ —   $ 105    $ 3,882    $ 4,394    $ - $ - $ 88    $ 4,306
Accounts receivable
4,311    —   —   —   4,311    2,868    - - - 2,868
Investments
1,878    —   —   83    1,795    2,092    - - 110    1,982
Assets of consolidated VIEs
2,200    —   2,200    —   —   2,374    - 2,374    - -
Separate account assets and separate account collateral held under securities lending agreements
168,608    168,608    —   —   —   172,859    172,859    - - -
Other assets⁽¹⁾
1,282    —   —   13    1,269    1,276    - - 19    1,257

Subtotal
182,266      168,608        2,200           201    11,257    185,863      172,859        2,374           217    10,413
Goodwill and intangible assets, net
30,451    —   —   —     30,451    30,434    - - -   30,434

Total assets
$ 212,717    $ 168,608    $ 2,200    $ 201    $ 41,708    $ 216,297    $ 172,859    $ 2,374    $ 217    $ 40,847

Liabilities

Accrued compensation and benefits
$ 1,322    $ —   $ —   $ —   $ 1,322    $ 668    $ - $ - $ - $ 668
Accounts payable and accrued liabilities
3,322    —   —   —   3,322    1,615    - - - 1,615
Liabilities of consolidated VIEs
2,156    —   2,156    —   —   2,350    - 2,350    - -
Long-term borrowings
4,938    —   —   —   4,938
Borrowings
5,936    - - - 5,936
Separate account liabilities and separate account collateral liabilities under securities lending agreements
168,608    168,608    —   —   —   172,859    172,859    - - -
Deferred income tax liabilities
5,237    —   —   —   5,237    5,241    - - - 5,241
Other liabilities
948    —   —   33    915    927    - - 12    915

Total liabilities
186,531    168,608    2,156    33    15,734    189,596    172,859    2,350    12    14,375

Equity

Total stockholders’ equity⁽²⁾
25,999    —   25    —   25,974    26,478    - 6    - 26,472
Noncontrolling interests
187    —   19    168    —   223    - 18    205    -

Total equity
26,186    —   44    168    25,974    26,701    - 24    205    26,472

Total liabilities and equity
$ 212,717    $ 168,608    $ 2,200    $ 201    $ 41,708    $ 216,297    $ 172,859    $ 2,374    $ 217    $ 40,847

⁽¹⁾
Amounts include property and equipment and other assets.
⁽²⁾
GAAP amount includes ~~$25~~$6 million of appropriated retained earnings related solely to consolidated CLOs in which the Company has no equity exposure.
The following discussion summarizes the significant changes in assets and liabilities on a GAAP basis. The discussion does not include changes related to assets and liabilities that are equal and offsetting and have no impact on BlackRock’s stockholders’ equity.
Assets.Cash and cash equivalents at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013 included ~~$105~~$88 million and ~~$133~~$114 million, respectively, of cash held by consolidated sponsored investment funds (seeLiquidity and Capital Resources for details on the change in cash and cash equivalents during the ~~nine~~three months ended ~~September 30, 2013)~~March 31, 2014).
Accounts receivable at ~~September 30, 2013~~March 31, 2014 increased ~~$2,061~~$621 million from December 31, ~~2012, primarily reflecting~~2013 due to an increase in unit trust receivables (substantially offset by an increase in unit trust payables recorded within accounts payable and accrued liabilities)~~, partially offset by lower performance fee receivables.~~. Investments ~~increased $128~~decreased $59 million from December 31, ~~2012~~2013 (for more information seeInvestments herein). Goodwill and intangible assets ~~increased $139~~decreased $47 million from December 31, ~~2012,~~2013, primarily due to ~~the Credit Suisse ETF Transaction, partially offset by $120~~$41 million of amortization of intangible ~~assets amortization expense.~~assets. Other assets (including property, plant and equipment) increased ~~$99~~$59 million from December 31, ~~2012,~~2013, primarily related to an increase in current taxes receivable ~~higher earnings from certain advisory company equity method investments~~ and ~~an increase in~~ other ~~receivables,~~assets, partially offset by a decrease in property and ~~equipment.~~equipment due to depreciation.
Liabilities.    Accrued compensation and benefits at ~~September 30, 2013~~March 31, 2014 decreased ~~$225~~$1,079 million from December 31, ~~2012,~~2013, primarily due to ~~2012~~2013 incentive compensation cash payments in the first quarter ~~2013,~~of 2014, partially offset by the effect of ~~2013~~2014 incentive compensation accruals. Accounts payable and accrued liabilities at March 31, 2014 increased ~~$2,267~~$531 million from December 31, ~~2012~~2013 due to higher unit trust payables (substantially offset by an increase in unit trust receivables recorded within accounts receivable) and increased accruals, including direct fund ~~and marketing expenses.~~expenses, partially offset by a decrease in current income taxes payable. Borrowings ~~decreased $849~~increased $997 million from December 31, ~~2012~~2013 resulting from net proceeds from the ~~repayments of $750 million and $100 million~~$1.0 billion new issuance of long-term ~~and short-term~~ borrowings ~~respectively.~~in March 2014.
Net deferred income tax liabilities at ~~September 30, 2013 decreased $56~~March 31, 2014 increased $156 million, primarily due to the effects of temporary differences associated with stock compensation and investment income. The change also reflects the revaluation of certain deferred income tax liabilities due to legislation enacted in the United Kingdom, domestic state and local income tax changes, and realization of tax loss carryforwards.compensation. Other liabilities ~~at September 30, 2013 increased $90~~decreased $77 million from December 31, ~~2012,~~2013, primarily resulting from ~~an increase~~a decrease in deferred ~~carried~~carry interest ~~a contingent liability related to the Credit Suisse ETF Transaction~~ and other operating liabilities.
Investments
Investments totaled ~~$1,878~~$2,092 million at ~~September 30, 2013~~March 31, 2014 and ~~$1,750~~$2,151 million at December 31, ~~2012.~~2013. Investments include consolidated investments held by sponsored investment funds deemed to be controlled by BlackRock. Management reviews BlackRock’s investments on an “economic” basis, which eliminates the portion of investments that does not impact BlackRock’s book ~~value.~~value or net income attributable to BlackRock. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
The Company presents total investments, as adjusted, to enable investors to understand the portion of its investments that is owned by the Company, net of NCI, as a gauge to measure the impact of changes in net nonoperating gain (loss) on investments to net income (loss) attributable to BlackRock.
The Company further presents net “economic” investment exposure, net of deferred compensation investments and hedged investments, to reflect another gauge for investors as the economic impact of investments held pursuant to deferred compensation arrangements is substantially offset by a change in compensation expense and the impact of hedged investments is substantially mitigated by swap hedges. Carried interest capital allocations are excluded as there is no impact to BlackRock’s stockholders’ equity until such amounts are realized as performance fees. Finally, the Company’s regulatory investment in Federal Reserve Bank stock, which is not subject to market or interest rate risk, is excluded from the Company’s net economic investment exposure.

(in millions)    September 30,
2013 December 31,
2012    March 31,
2014 December 31,
2013
Total investments, GAAP
           $ 1,878            $ 1,750               $ 2,092            $ 2,151
Investments held by consolidated sponsored investment funds⁽¹⁾
   (695 ) (524 )    (873 ) (826 )
Net exposure to consolidated investment funds
   612    430       763    732




Total investments, as adjusted
   1,795    1,656       1,982    2,057
Federal Reserve Bank stock
   (93 ) (89 )    (90 ) (90 )
Carried interest
   (137 ) (85 )    (117 ) (103 )
Deferred compensation investments
   (68 ) (62 )    (99 ) (97 )
Hedged investments
   (181 ) (209 )    (274 ) (184 )




Net “economic” investment exposure
           $         1,316            $         1,211
Total “economic” investment exposure
           $         1,402            $         1,583




⁽¹⁾
At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, approximately ~~$695~~$873 million and ~~$524~~$826 million, respectively, of BlackRock’s total GAAP investments were held in sponsored investment funds that were deemed to be controlled by BlackRock in accordance with GAAP, and, therefore, ~~are~~were consolidated even though BlackRock may not economically own a majority of such funds.
The following table represents the carrying value of the Company’s economic investment exposure, by asset type, at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012:~~2013:

(in millions)    September 30,
2013    December 31,
2012    March 31,
2014    December 31,
2013
Private equity
   $         279        $         298        $         292           $         328
Real estate
   130        122        127           125
Distressed credit/mortgage funds
   186        214
Distressed credit/mortgage funds/opportunistic funds
   142           148
Hedge funds/funds of hedge funds
   157        159        327           348
Other investments⁽¹⁾
   564        418        514           634








Net “economic” investment exposure
   $ 1,316        $ 1,211
Total “economic” investment exposure
   $ 1,402           $ 1,583








⁽¹⁾
Other investments primarily include seed investments in fixed income and equity funds/strategies as well as U.K. government securities held for regulatory purposes.
As adjusted investment activity for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 was as follows:

(in millions)
Investments, as adjusted, December 31, ~~2012~~2013
   $ ~~$1,656~~    2,057
Purchases/capital contributions
   ~~503~~229
Sales/maturities
   ~~(379)~~(339)
Distributions⁽¹⁾
   ~~(129)~~(44)
Market valuations/earnings from equity method investments
   9265
Carried interest capital allocations
   5214


Investments, as adjusted, ~~September 30, 2013~~March 31, 2014
   $ ~~$1,795~~    1,982


⁽¹⁾
~~Amount represents return of capital and return of investments.~~
The following table ~~presents~~represents investments, as adjusted at ~~September 30, 2013:~~March 31, 2014:

(in millions) Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other
Investments Not
Held at Fair
Value⁽¹⁾ Investments at
September 30,
2013 Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other
Investments Not
Held at Fair
Value⁽¹⁾ Investments at
March 31,
2014
Total investments, as adjusted⁽²⁾
$           588    $           300    $               529    $               378    $                   1,795    $           567    $           583    $           513    $           319    $           1,982

⁽¹⁾
Amount includes investments held at cost or amortized cost, carried interest and certain equity method investments, which include sponsored investment ~~companies,~~funds, which are not accounted for under a fair value measure. Certain equity method investees do not account for both their financial assets and financial liabilities under fair value measures, therefore, the Company’s investment in such equity method investees may not represent fair value.
⁽²⁾
Amounts include cash and cash equivalents, other assets and liabilities that are consolidated from non-VIE sponsored investment funds. See Note 5,Fair Value Disclosures, to the condensed consolidated financial statements contained in Part I, Item 1 of this filing, for total GAAP investments.
~~Liquidity and Capital Resources~~LIQUIDITY AND CAPITAL RESOURCES
BlackRock Cash Flows Excluding the Impact of Consolidated Sponsored Investment Funds and VIEs
BlackRock consolidates certain of its sponsored investment funds and CLOs, notwithstanding the fact BlackRock may only have a minority interest, if any, in these funds or CLOs. As a result, the condensed consolidated statements of cash flows include the cash flows of consolidated sponsored investment funds and CLOs. The Company uses an adjusted cash flow statement, which excludes the impact of consolidated sponsored investment funds and CLOs, as a supplemental non-GAAP measure to assess liquidity and capital requirements. The Company believes that its cash flows, excluding the impact of the consolidated sponsored investment funds and CLOs, provide investors with useful information on the cash flows of BlackRock relating to its ability to fund additional operating, investing and financing activities. BlackRock’s management does not advocate that investors consider such non-GAAP measures in isolation from, or as a substitute for, its cash flows presented in accordance with GAAP.
The following table presents a reconciliation of the condensed consolidated statements of cash flows presented on a GAAP basis to the condensed consolidated statements of cash flows, excluding the impact of the cash flows of consolidated sponsored investment funds and consolidated VIEs:

(in millions)    GAAP
Basis    Impact on
Cash Flows
of Consolidated
Sponsored
Investment
Funds    Impact on
Cash Flows
of
Consolidated
VIEs    Cash Flows
Excluding
Impact of
Consolidated
Sponsored
Investment
Funds and
VIEs    GAAP
Basis    Impact on
Cash Flows
of Consolidated
Sponsored
Investment
Funds    Impact on
Cash Flows
of
Consolidated
VIEs    Cash Flows
Excluding
Impact of
Consolidated
Sponsored
Investment
Funds and
VIEs
Cash and cash equivalents, December 31, 2012
   $ 4,606      $ 133        $ -        $ 4,473
Cash and cash equivalents, December 31, 2013
   $ 4,390         $ 114           $ -           $ 4,276
Cash flows from operating activities
   2,476                  17        219        2,240        (206)       1           123           (330)
Cash flows from investing activities
   (275)    (108)       -        (167)       133         (55)          -           188
Cash flows from financing activities
   (2,812)    63        (219)       (2,656)       64                     28           (123)          159
Effect of exchange rate changes on cash and cash equivalents
   (8)    -        -        (8)       13         -           -           13
















Net change in cash and cash equivalents
   (619)    (28)                   -        (591)       4         (26)                      -           30
















Cash and cash equivalents, September 30, 2013
   $ 3,987      $ 105        $ -        $ 3,882
Cash and cash equivalents, March 31, 2014
   $ 4,394         $ 88           $-           $ 4,306
















Sources of BlackRock’s operating cash primarily include investment advisory, administration fees and securities lending revenue, performance fees, revenue fromBlackRock Solutions and advisory products and services, other revenue and distribution fees.
BlackRock uses its cash to pay all operating expenses, interest and principal on the Company’s borrowings, income taxes, dividends on BlackRock’s capital stock, repurchases of the Company’s stock, capital expenditures and purchases of co-investments and seed investments.
Cash flows from operating activities, excluding the impact of consolidated sponsored investment funds and VIEs, primarily include the receipt of investment advisory and administration fees, securities lending revenue and other revenue offset by the payment of operating expenses incurred in the normal course of business, including ~~the effect of first quarter cash payments related to~~ year-end incentive ~~compensation.~~compensation accrued for in the prior year.
Cash ~~outflows~~inflows from investing activities, excluding the impact of consolidated sponsored investment funds and VIEs, for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 were ~~$167~~$188 million and primarily reflected ~~$240 million related to the Credit Suisse ETF Transaction, $190 million of investment purchases, partially offset by $272~~$319 million of net proceeds from sales and maturities of ~~investments.~~certain investments, partially offset by $124 million of investment purchases.
Cash ~~outflows~~inflows from financing activities, excluding the impact of consolidated sponsored investment funds and VIEs, for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 were ~~$2.7 billion,~~$159 million, primarily resulting from ~~$984~~cash inflows related to $1.0 billion of proceeds from issuance of long-term borrowings and $102 million of excess tax benefits from vested stock-based compensation awards. Cash inflows from financing activities were partially offset by $575 million of share repurchases, including ~~$750~~$250 million in open market transactions and ~~$234~~$325 million of employee tax withholdings related to employee stock transactions ~~a $750 million long-term debt repayment, $882~~and $366 million of cash dividend payments and a $100 million short-term debt repayment. Cash outflows from financing activities were partially offset by cash inflows related to $40 million of excess tax benefits from stock-based compensation.payments.
The Company manages its financial condition and funding to maintain appropriate liquidity for the business. Liquidity resources at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013 were as follows:

(in millions)    September 30,
2013    December 31,
2012    March 31,
2014    December 31,
2013
Cash and cash equivalents
   $ 3,987    $ 4,606    $ 4,394       $ 4,390
Cash and cash equivalents held by consolidated sponsored investment funds⁽¹⁾
   (105)       (133)       (88)       (114)








Sub-total
   3,882    4,473
Subtotal
   4,306       4,276
Credit facility – undrawn
   3,990       3,685    3,990       3,990








Total liquidity
   $         7,872       $         8,158    $         8,296       $         8,266








⁽¹⁾
The Company ismay not be able to access such cash to use in its operating activities.
Total liquidity ~~decreased $286~~increased $30 million during the ~~nine~~three months ended ~~September 30, 2013,~~March 31, 2014, primarily reflecting ~~the $750 million repayment of~~proceeds from long-term ~~borrowings,~~debt issuances in March 2014, partially offset by cash payments of ~~2012~~2013 year-end incentive awards and share repurchases ~~including $750 million in open market transactions, and cash dividend payments, partially offset by positive operating cash flow and the increased aggregate commitment~~ of ~~the 2013 credit facility to $3.990 billion.~~$575 million.
A significant portion of the Company’s ~~$1,795~~$1,982 million of total investments, as adjusted, is illiquid in nature and, as such, may not be readily convertible to cash.
Share Repurchase ~~Approval.~~Approvals.In January 2013, the Board of Directors approved an increase in the availability under the Company’s existing share repurchase program to allow for the repurchase of up to 10.2 million shares of BlackRock common stock. The Company repurchased ~~2.9~~0.8 million common shares in open market-transactions under the share repurchase program for approximately ~~$750~~$250 million during the ~~nine~~three months ended ~~September 30, 2013.~~March 31, 2014. At ~~September 30, 2013,~~March 31, 2014, there were ~~7.3~~5.7 million shares still authorized to be repurchased.
Net Capital Requirements.The Company is required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries of the Company may be restricted in their ability to transfer cash between different jurisdictions and to their parents. Additionally, transfers of cash between international jurisdictions, including repatriation to the United States, may have adverse tax consequences that could discourage such transfers.
BlackRock Institutional Trust Company, N.A. (“BTC”) is chartered as a national bank that does not accept client deposits and whose powers are limited to trust activities. BTC provides investment management services, including investment advisory and securities lending agency services, to institutional investors and other clients. BTC is subject to regulatory capital and liquid asset requirements administered by the Office of the Comptroller of the Currency.
At ~~September 30, 2013,~~March 31, 2014, the Company was required to maintain approximately ~~$1.1~~$1.2 billion compared with ~~$1.2~~$1.1 billion at December 31, ~~2012~~2013 in net capital in certain regulated subsidiaries, including BTC, entities regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom and the Company’s broker-dealers. ~~The~~At such date, the Company was in compliance with all applicable regulatory net capital requirements. ~~The decrease in net capital is primarily due to a reduction in the BTC minimum Tier 1 capital requirement from $500 million to $385 million in August 2013.~~
Short-Term Borrowings
~~2013~~2014 Revolving Credit ~~Facility.~~Facility.    In March ~~2013,~~2014, the Company’s credit facility was amended to extend the maturity date by one year to March ~~2018 and the~~2019. The amount of the aggregate commitment ~~was increased to~~is $3.990 billion (the ~~“2013~~“2014 credit facility”). The ~~2013~~2014 credit facility permits the Company to request
up to an additional $1.0 billion of borrowing capacity, subject to lender credit approval, increasing the overall size of the ~~2013~~2014 credit facility to an aggregate principal amount not to exceed $4.990 billion. Interest on borrowings outstanding accrues at a rate based on the applicable London Interbank Offered Rate plus a spread. The ~~2013~~2014 credit 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 unrestricted cash) of 3 to 1, which was satisfied with a ratio of less than 1 to 1 at ~~September 30, 2013.~~
March 31, 2014. The ~~2013~~2014 credit facility provides back-up liquidity, funds ongoing working capital for general corporate purposes and funds various investment opportunities. At ~~September 30, 2013,~~March 31, 2014, the Company had no amount outstanding under the ~~2013~~2014 credit facility.
Commercial Paper Program.In April 2013, BlackRock increased the maximum aggregate amount for which the Company could issue unsecured commercial paper notes (the “CP Notes”) on a private-placement basis up to a maximum aggregate amount outstanding at any time of $3.990 billion. The commercial paper program is currently supported by the ~~2013~~2014 credit facility. At ~~September 30,~~March 31, 2014 and December 31, 2013, BlackRock had no CP Notes outstanding.
Long-Term Borrowings
2024 Notes. In March 2014, the Company issued $1.0 billion in aggregate principal amount of 3.50% senior unsecured and unsubordinated notes maturing on March 18, 2024 (the “2024 Notes”). The net proceeds of the 2024 Notes are intended to be used for general corporate purposes, including refinancing of outstanding indebtedness. Interest is payable semi-annually in arrears on March 18 and September 18 of each year, or approximately $35 million per year. The 2024 Notes may be redeemed prior to maturity at any time in whole or in part at the option of the Company at a “make-whole” redemption price. The “make-whole” redemption price represents a price, subject to the specific terms of the 2024 Notes and related indenture, that is the greater of (a) the principal amount of the notes to be redeemed and (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis at the Treasury Rate plus 15 basis points, plus in each case accrued and unpaid interest thereon to the date of redemption. The 2024 Notes were issued at a discount of $3 million that is being amortized over the term of the notes. The Company incurred approximately $6 million of debt issuance costs, which are being amortized over the term of the 2024 Notes.
At ~~September 30, 2013,~~March 31, 2014, the principal amount of long-term borrowings outstanding was ~~$4.950~~$5.950 billion. See Note ~~11,~~12,Borrowings, in the ~~2012~~2013 Form 10-K for more information on borrowings outstanding atas of December 31, ~~2012.~~2013. During the ~~nine months~~quarter ended ~~September 30, 2013,~~March 31, 2014, the Company paid approximately ~~$124~~$22 million of interest on long-term borrowings. Future principal repayments and interest requirements at ~~September 30, 2013~~March 31, 2014 were as follows:

(in millions)
Year
       Principal            Interest        Total
    Payments            Principal            Interest        Total
    Payments
October-December 2013⁽¹⁾
   $        -       $     76    $     76
2014
          1,000    196              1,196
Remainder of 2014
   $1,000       $   192    $1,192
2015
   750    156    906    750    191    941
2016
   -    151    151    -    186    186
2017
   700    151    851    700    186    886
2018
   -    107    107    -    142    142
2019
   1,000    142    1,142
Thereafter
   2,500                  235    2,735           2,500                  269    2,769












Total
   $4,950    $1,072    $6,022    $5,950    $1,308            $7,258












⁽¹⁾
~~In May 2013, the Company repaid $750 million of two-year floating rate notes at maturity.~~
Investment Commitments.At ~~September 30, 2013,~~March 31, 2014, the Company had ~~$216~~$170 million of various capital commitments to fund sponsored investment funds, including funds of private equity funds, real estate funds, infrastructure funds, opportunistic funds and distressed credit funds. This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds. In addition to the capital commitments of $170 million, the Company had approximately $39 million of contingent commitments for certain funds which have investment periods that have expired. Generally, the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the
expiration of the commitment. These unfunded commitments are not recorded on the condensed consolidated statements of financial condition. These commitments do not include potential future commitments approved by the Company, but which are not yet legally binding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its clients.
Carried Interest ~~Claw-back.~~Clawback.    As a general partner in certain investment funds, including private equity partnerships and certain hedge funds, the Company may receive carried interest cash distributions from the partnerships in accordance with distribution provisions of the partnership agreements. The Company may, from time to time, be required to return all or a portion of such distributions to the limited partners in the event the limited partners do not achieve a return as specified in the various partnership agreements. Therefore, BlackRock records carried interest subject to such ~~claw-back~~clawback provisions in investments, or cash to the extent that it is distributed, and as a deferred carried interest liability on its condensed consolidated statements of financial condition. Carried interest is realized and recorded as performance fees on ~~its~~BlackRock’s condensed consolidated statements of income upon the earlier of the termination of the investment fund or when the likelihood of ~~claw-back~~clawback is considered mathematically improbable.
Contingent ~~Payment related~~Payments Related to ~~Credit Suisse ETF Transaction.~~ Business Acquisitions.    In connection with the Credit Suisse ETF Transaction, BlackRock is required to make contingent payments annually to Credit Suisse, subject to achieving specified thresholds during a ~~seven year~~seven-year period, subsequent to the acquisition date. In addition, BlackRock is required to make contingent payments related to the MGPA Transaction during a five-year period, subject to achieving specified thresholds, subsequent to the acquisition date. The fair value of the contingent payments at ~~September 30, 2013~~March 31, 2014 is not significant to the condensed consolidated statement of financial condition and is included in other liabilities.
Indemnifications.On behalf of certain clients, the Company lends securities to highly rated banks and broker-dealers. In these securities lending transactions, the borrower is required to provide and maintain collateral at or above regulatory minimums. Securities on loan are marked to market daily to determine if the borrower is required to pledge additional collateral. BlackRock has issued certain indemnifications to certain securities lending clients against potential losses resulting from a borrower’s failure to fulfill its obligations should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower’s obligations under the securities lending agreement. At ~~September 30, 2013,~~March 31, 2014, the Company indemnified certain of its clients for their securities lending loan balances of approximately ~~$115~~$129.5 billion. The Company held, as agent, cash and securities totaling ~~$121~~$136.1 billion as collateral for indemnified securities on loan at ~~September 30, 2013.~~March 31, 2014. The fair value of these indemnifications was not material at ~~September 30, 2013.~~March 31, 2014. The Company currently expects indemnified balances to continue to increase over time.
While the collateral pledged by a borrower is intended to be sufficient to offset the borrower’s obligations to return securities borrowed and any other amounts owing to the lender under the relevant securities lending agreement, in the event of a borrower default, the Company can give no
assurance that the collateral pledged by the borrower will be sufficient to fulfill such obligations. If the amount of such pledged collateral is not sufficient to fulfill such obligations to a client for whom the Company has provided indemnification, BlackRock would be responsible for the amount of the shortfall. These indemnifications cover only the collateral shortfall described above, and do not in any way guarantee, assume or otherwise insure the investment performance or return of any cash collateral vehicle into which securities lending cash collateral is invested.
Critical Accounting Policies
The preparation of the condensed consolidated 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 condensed consolidated financial statements and the reported amounts of ~~revenues~~revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. ~~In addition~~Management considers the following critical accounting policies important to ~~Consolidation~~understanding the condensed consolidated financial statements. For a summary of ~~VIEs, Fair Value Measurements, Goodwill~~these and ~~Intangible Assets and Performance Fees/Carried Interest discussed below,~~additional accounting policies see Note 2,Significant Accounting Policies, in the ~~Company’s~~ condensed consolidated financial statements contained in Part I, Item 1 of this filing and ~~the Company’s~~Critical Accounting Policiesin Management’s Discussion and Analysis of Financial Condition and Results of Operations in BlackRock’s ~~2012~~2013 Form 10-K and Note 2,Significant Accounting Policies, in the ~~2012~~2013 Form 10-K for further information.
Consolidation of Variable Interest Entities.    In the normal course of business, the Company is the manager of various types of sponsored investment vehicles, including collateralized debt obligations (“CDOs”) or CLOs and sponsored investment funds, which may be considered VIEs in accordance with GAAP. At ~~September 30, 2013,~~March 31, 2014, the Company’s VIEs primarily consisted of the following:
~~CLOs.~~ CLOs.    At ~~September 30, 2013,~~March 31, 2014, BlackRock was the manager of over 20 CLOs/CDOs and other securitization entities. BlackRock was determined to be the primary beneficiary (“PB”) for certain of these CLOs, which required BlackRock to consolidate these VIEs. BlackRock was deemed to be the PB because it has the power to direct the activities of the CLOs that most significantly impact the entities’ economic performance and has the right to receive benefits that potentially could be significant to the VIE. At ~~September 30, 2013,~~March 31, 2014, the Company had ~~$2,181~~$2,356 million and ~~$2,156~~$2,350 million in assets and liabilities, respectively, on its condensed consolidated ~~statements~~statement of financial condition related to these consolidated CLOs. ~~In addition, the~~The Company recorded appropriated retained earnings for the difference between the assets and liabilities of the CLOs recorded on the condensed consolidated statement of financial condition as the CLO noteholders ~~not BlackRock,~~ ultimately will receive the benefits or absorb the losses associated with the CLOs’ assets and liabilities. Changes in the fair value of the assets and liabilities of these CLOs have no impact on net income attributable to BlackRock or its cash flows. Excluding outstanding management receivables, the Company has no risk of loss with its involvement with these VIEs.
Sponsored Private Equity ~~Fund~~Funds of Funds.    At ~~September 30, 2013,~~March 31, 2014, BlackRock was determined to be the PB of one investment fund of funds and was deemed to absorb the majority of the variability due to its ~~de-facto~~de facto third-party relationships with other partners in the fund, which limited the ability of the partners to transfer or sell their interests without BlackRock’s consent as the general partner of the fund. At ~~September 30, 2013,~~March 31, 2014, the Company had recorded $2$3 million, ~~$17~~$15 million and ~~$19~~$18 million in cash and cash equivalents, investments and nonredeemable noncontrolling interests ofrelated to the consolidated VIE, respectively, on its condensed consolidated ~~statements~~statement of financial condition related to this VIE. Changes in the fair value of the assets and liabilities of this VIE recorded on the condensed consolidated statement of financial condition have no impact on net income attributable to BlackRock. Excluding outstanding management fee receivables, the Company has no risk of loss related to its involvement with this VIE.
Fair Value Measurements.    The provisions ofFair Value Measurements and Disclosures (“ASC 820-10”) establish a hierarchy that prioritizes inputs to valuation techniques used to measure fair value and require companies to disclose the fair value of their financial instruments according to the fair
value hierarchy (i.e., Level 1, 2 and 3 inputs, as defined). The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
Level 3 inputs include the most currently available information, including capital account balances for its partnership interests in various alternative investments, which may be adjusted by using the returns of certain market indices. Certain investments that are valued using net asset values and
are subject to current redemption restrictions that will not be lifted in the near term are included in Level 3. BlackRock’s ~~$626~~$591 million of Level 3 investments, or ~~33%~~28% of total GAAP investments at ~~September 30, 2013,~~March 31, 2014, primarily included co-investments in private equity ~~fund~~funds of funds and private equity funds, funds of hedge funds as well as alternative hedge funds that invest in distressed credit, opportunistic funds and mortgage securities and real estate equity products. Many of these investees are investment companies, which record their underlying investments at fair value based on fair value policies established by management of the underlying fund, which could include BlackRock employees. Fair value policies at the underlying fund generally require the fund to utilize pricing/valuation information, including independent appraisals from third-party sources. However, in some instances current valuation information, for illiquid securities or securities in markets that are not active, may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable. In these instances, fund management may perform model-based analytical valuations ~~that may be used~~ to value these investments.
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. See Note 2,Significant Accounting Policies, in the Company’s condensed consolidated financial statements contained in Part I, Item 1 of this filing for further information regarding fair value measurements.
~~Goodwill and Intangible Assets.~~The value of advisory contracts acquired in business acquisitions to manage AUM in proprietary open-end investment funds as well as collective trust funds without a specified termination date are classified as indefinite-lived intangible assets. The assignment of indefinite lives to such investment fund contracts is based upon the assumption there is no foreseeable limit on the contract period to manage these funds due to the likelihood of continued renewal at little or no cost. In addition, trade names/trademarks are considered indefinite-lived intangibles as they are expected to generate cash flows indefinitely. Goodwill represents the cost of a business acquisition in excess of the fair value of the net assets acquired. In accordance with the applicable provisions of ASC 350,~~Intangibles – Goodwill and Other~~ (“ASC 350”), indefinite-lived intangible assets and goodwill are not amortized. The Company performed its annual impairment assessment review for goodwill and indefinite and finite-lived intangible assets on BlackRock’s annual impairment test date of July 31st.
~~Goodwill.~~BlackRock assessed its goodwill for impairment on July 31st and considered such factors as the book value and the market capitalization of the Company. At July 31, 2013, the impairment assessment indicated no impairment charge was required. The Company continues to monitor its book value per share compared with closing prices of its common stock for potential indicators of impairment. At September 30, 2013, the Company’s common stock closed at $270.62, which exceeded its book value, after excluding appropriated retained earnings, of approximately $153.32 per share.
~~Indefinite-lived and finite-lived intangibles.~~ BlackRock assessed its indefinite-lived management contracts and trade names for impairment on July 31st. In evaluating whether it is more likely than not that the fair value of indefinite-lived intangibles is less than its carrying value, BlackRock performed certain quantitative assessments and assessed various significant qualitative factors including AUM, revenue basis points, projected AUM growth rates, operating margins, tax rates and discount rates. In addition, the Company considered other factors including: (i) macroeconomic conditions such as a deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; (ii) industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment, a decline in market-dependent multiples or metrics, a change in the market for an entity’s services, or regulatory, legal or political developments; and (iii) entity-specific events, such as a change in management or key personnel, overall financial performance and litigation that could affect significant inputs.
~~As of July 31, 2013, the Company determined that the impairment assessment performed indicated no impairment charges were required and the classification was still appropriate.~~
In addition, for finite-lived intangibles, management determined that no indicators existed which would result in an impairment charge or a change in the remaining useful life of its finite-lived intangible assets.

Performance Fees / Carried Interest. The Company receives investment advisory performance fees or incentive allocations, including carried interest allocations, from certain actively managed investment funds and certain separately managed accounts. These performance fees are earned upon exceeding specified relative ~~and/~~or absolute investment return thresholds. Such fees are recorded upon completion of the measurement period, which varies by product or account, and could be monthly, quarterly, annually or longer. For the ~~nine months~~quarters ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ performance fee revenue totaled ~~$293~~$158 million and ~~$224~~$108 million, respectively.

~~The~~ In addition, the Company receives carried interest from certain alternative investments upon exceeding performance thresholds. BlackRock may be required to return all, or part, of such carried interest depending upon future performance of these funds. ~~The Company records a deferred carried interest liability to the extent it receives cash or capital allocations related to carried interest prior to meeting the revenue recognition criteria.~~Therefore, BlackRock records carried interest subject to such ~~claw-back~~clawback provisions in investments or cash to the extent that it is distributed, on its condensed consolidated statements of financial condition. Carried interest is realized and recorded as performance fee revenue upon the earlier of the termination of the investment fund or when the likelihood of ~~claw-back~~clawback is considered mathematically improbable. The Company records realized carried interest as performance fees on its condensed consolidated statements of income.

The Company records a deferred carried interest liability to the extent it receives cash or capital allocations related to carried interest prior to meeting the revenue recognition criteria. At ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, the Company had ~~$144~~$72 million and ~~$97~~$108 million, respectively, of deferred carried interest recorded in other liabilities on the condensed consolidated statements of financial condition. The ultimate ~~amount~~recognition of performance fee revenue, ~~that will be recognized,~~ if any, for these products is unknown.

~~Recent Developments~~

~~Acquisitions~~

~~MGPA. In October 2013, the Company completed the acquisition of MGPA, an independently managed private equity real estate investment advisory company primarily in Asia and Europe.~~

Accounting Developments

For accounting pronouncements that the Company adopted during the ~~nine~~three months ended ~~September 30, 2013 and for recent accounting pronouncements not yet adopted,~~March 31, 2014, see Note 2,Significant Accounting Policies, in the condensed consolidated financial statements contained in Part I, Item 1 of this filing.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

AUM Market Price Risk. BlackRock’s investment advisory and administration fees are primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees expressed as a percentage of the returns realized on AUM. At ~~September 30, 2013,~~March 31, 2014, the majority of the Company’s investment advisory and administration fees were based on average or period end AUM of the applicable investment funds or separate accounts. Movements in equity market prices, interest rates/credit spreads, foreign exchange rates or all three could cause the value of AUM to decline, which would result in lower investment advisory and administration fees.

Corporate Investments Portfolio ~~Risks~~Risks.. As a leading investment management firm, BlackRock devotes significant resources across all of its operations to identifying, measuring, monitoring, managing and analyzing market and operating risks, including the management and oversight of its own investment portfolio. The Board of Directors of the Company has adopted guidelines for the review of investments to be made by the Company, requiring, among other things, that investments be reviewed by certain senior officers of the Company, and that certain investments may be referred to the Audit Committee or the Board of Directors, depending on the circumstances, for approval.

In the normal course of its business, BlackRock is exposed to equity market price risk, interest rate/credit spread risk and foreign exchange rate risk associated with its corporate investments.

BlackRock has investments primarily in sponsored investment products that invest in a variety of asset classes, including real estate, private equity and hedge funds. Investments generally are made for co-investment purposes, to establish a performance track record, to hedge exposure to certain deferred compensation plans or for regulatory purposes. Currently, the Company has a seed capital hedging program in which it enters into swaps to hedge market and interest rate exposure to certain investments. At ~~September 30, 2013,~~March 31, 2014, the Company had outstanding total return swaps and interest rate swaps with an aggregate notional value of approximately ~~$113~~$153 million and ~~$68~~$121 million, respectively.

At ~~September 30, 2013,~~March 31, 2014, approximately ~~$695~~$873 million of BlackRock’s total investments were maintained in sponsored investment funds deemed to be controlled by BlackRock in accordance with GAAP and, therefore, are consolidated even though BlackRock may not own a majority of such funds. Excluding the impact of the Federal Reserve Bank stock, carried interest, investments made to hedge exposure to certain deferred compensation plans and certain investments that are hedged via the seed capital hedging program, the Company’s economic exposure to its investment portfolio is ~~$1,316~~$1,402 million. SeeManagement’s Discussion and Analysis-Balance Sheet Overview-Investmentsfor further information on the Company’s investments.

~~The “economic” investment exposure of the portfolio is presented below:~~

Equity Market Price Risk.At ~~September 30, 2013,~~March 31, 2014, the Company’s net exposure to equity market price risk in its investment portfolio was approximately ~~$766~~$774 million of the Company’s total economic investment exposure. Investments subject to market price risk include private equity and real estate investments, hedge funds and funds of funds as well as mutual funds. The Company estimates that a hypothetical 10% adverse change in market prices would result in a decrease of approximately ~~$76.6~~$77.4 million in the carrying value of such investments.

Interest Rate/Credit Spread ~~Risk.~~Risk. At ~~September 30, 2013,~~March 31, 2014, the Company was exposed to interest-rate risk and credit spread risk as a result of approximately ~~$550~~$628 million of investments in debt securities and sponsored investment products that invest primarily in debt securities. Management considered a hypothetical 100 basis point fluctuation in interest rates or credit spreads and estimates that the impact of such a fluctuation on these investments, in the aggregate, would result in a decrease, or increase, of approximately ~~$15.2~~$7.9 million in the carrying value of such investments.

Foreign Exchange Rate Risk.As discussed above, the Company invests in sponsored investment products that invest in a variety of asset classes. The carrying value of the total economic investment exposure denominated in foreign currencies, primarily the pound sterling and euro, was ~~$187~~$123 million at ~~September 30, 2013.~~March 31, 2014. A 10% adverse change in the applicable foreign exchange rates would result in approximately a ~~$18.7~~$12.3 million decline in the carrying value of such investments.

Other Market Risks.The Company executes forward foreign currency exchange contracts to mitigate the risk of foreign exchange risk movements. At ~~September 30, 2013,~~March 31, 2014, the Company had outstanding forward foreign currency exchange contracts with an aggregate notional value of approximately ~~$680~~$195 million.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. Under the direction of BlackRock’s Chief Executive Officer and Chief Financial Officer, BlackRock evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) at ~~September 30, 2013.~~March 31, 2014. Based on this evaluation, BlackRock’s Chief Executive Officer and Chief Financial Officer have concluded that BlackRock’s disclosure controls and procedures were effective.

Internal Control over Financial Reporting. There have been no changes in internal control over financial reporting during the quarter ended ~~September 30, 2013~~March 31, 2014 that have materially affected or are reasonably likely to materially affect such internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, BlackRock receives subpoenas or other requests for information from various U.S. federal, state governmental and domestic and international regulatory authorities in connection with certain industry-wide or other investigations or proceedings. It is BlackRock’s 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 BlackRock’s activities. Additionally, certain ~~of the~~BlackRock-sponsored 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.

Italian Securities Regulator Proceeding

The Italian securities regulator, Commissione Nazionale per le Societa e la Borsa (“Consob”), initiated a civil proceeding on January 3, 2014 against Nigel Bolton, a portfolio manager and head of BlackRock Investment Management (UK) Limited’s European Equity Team (“EET”), in connection with the sale of shares in the Italian oil and gas services company Saipem, SpA in January 2013.

Consob alleges that Mr. Bolton, on behalf of certain BlackRock clients, sold, or influenced the sale of, approximately 10.7 million shares of Saipem using material, non-public information thereby avoiding client losses of over€114.5 million. The EET’s sale of Saipem shares occurred between January 25 and January 29, 2013, and Saipem announced negative news following the market close on January 29, 2013. While BlackRock is not charged in the proceeding, it may be liable for the actions of its employee.

BlackRock conducted a thorough investigation and found no evidence to support the allegations. As a result of the investigation, BlackRock believes that the sale of Saipem shares was made as a fiduciary based on publicly available information that was widely disseminated in the marketplace, including negative publicity and a third-party analyst research report reducing earnings estimates, which was issued to the market before trading on January 25, 2013.

Consob also alleges that BlackRock declined to provide Consob with information and was an obstacle to Consob’s investigation. BlackRock believes it has fully cooperated with Consob, and it will continue to do so.

While under Italian law the potential penalty could be greater than the loss actually avoided, BlackRock believes that Mr. Bolton will not be found liable and, as a result, neither Mr. Bolton nor BlackRock will incur any penalty.

All Legal Proceedings

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 effect on BlackRock’s results of operations, financial position, or cash flows. However, there is no assurance as to whether any such pending or threatened matters will have a material effect on BlackRock’s results of operations, financial position or cash flows in any future reporting period. Due to uncertainties surrounding the outcome of these matters, management cannot reasonably estimate the possible loss or range of loss that may arise from these matters.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended ~~September 30, 2013,~~March 31, 2014, the Company made the following purchases of its common stock, which is registered pursuant to Section 12(b) of the Exchange Act.

  Total Number
   of Shares
Purchased Average Price
  Paid per Share   Total Number of
Shares
Purchased as
Part of Publicly
  Announced Plans
or Programs Maximum
Number of
  Shares that May
Yet Be
Purchased
Under the Plans
or Programs⁽¹⁾
July 1, 2013 through July 31, 2013 302,546 ⁽²⁾ $279.66      255,000           8,013,755
August 1, 2013 through August 31, 2013 636,243 ⁽²⁾ $272.75   620,000   7,393,755
September 1, 2013 through September 30, 2013 38,495 ⁽²⁾ $263.26   33,400   7,360,355

Total
        977,284            $274.52           908,400


	Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs⁽¹⁾
January 1, 2014 through January 31, 2014		1,286,589	⁽²⁾		$306.33		260,000		6,275,555

February 1, 2014 through February 28, 2014		544,349	⁽²⁾		$300.10		513,500		5,762,055

March 1, 2014 through March 31, 2014		58,293	⁽²⁾		$304.17		51,200		5,710,855


Total		1,889,231			$304.46		824,700

⁽¹⁾	In January 2013, the Board of Directors approved an increase in the availability under the Company’s existing share repurchase program to allow for the repurchase of up to 10.2 million shares of BlackRock common stock with no stated expiration date.

⁽²⁾

Includes purchases made by the Company primarily to satisfy income tax withholding obligations of employees and members of the Company’s Board of Directors related to the vesting of certain restricted stock or restricted stock unit awards and purchases made by the Company as part of the publicly announced share repurchase program.

Item 6. Exhibits


Exhibit No.		Description
10.1(1)		Amendment No. 3, dated as of March 28, 2014, to BlackRock, Inc.’s Five-Year Revolving Credit Agreement, dated as of March 10, 2011, as amended by Amendment No. 1 thereto, dated as of March 30, 2012, and Amendment No. 2 thereto, dated as of March 28, 2013, by and among BlackRock, Inc., certain of its subsidiaries, Wells Fargo Bank, National Association, as administrative agent, swingline lender, issuing lender, L/C agent and a lender, and the banks and other financial institutions referred to therein.

12.1		Computation of Ratio of Earnings to Fixed Charges

31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1		Section 906 Certification of Chief Executive Officer and Chief Financial Officer

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

(1)	Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on March 31, 2014

SIGNATURES

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


	BLACKROCK, INC.
	(Registrant)

	By:	/s/ Gary Shedlin
Date: ~~November 8, 2013~~May 9, 2014		Gary S. Shedlin
		Senior Managing Director & Chief Financial Officer

EXHIBIT INDEX


Exhibit No.		Description
10.1(1)		Amendment No. 3, dated as of March 28, 2014, to BlackRock, Inc.’s Five-Year Revolving Credit Agreement, dated as of March 10, 2011, as amended by Amendment No. 1 thereto, dated as of March 30, 2012, and Amendment No. 2 thereto, dated as of March 28, 2013, by and among BlackRock, Inc., certain of its subsidiaries, Wells Fargo Bank, National Association, as administrative agent, swingline lender, issuing lender, L/C agent and a lender, and the banks and other financial institutions referred to therein.

12.1		Computation of Ratio of Earnings to Fixed Charges

31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1		Section 906 Certification of Chief Executive Officer and Chief Financial Officer

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

(1)	Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on March 31, 2014


(in millions)	September 30, 2013		December 31, 2012		March 31, 2014		December 31, 2013
Available-for-sale investments		$168		$158		$150		$183
Held-to-maturity investments		57		112		32		83
Trading investments:
Consolidated sponsored investment funds		381		123		479		385
Other equity and debt securities		67		94		29		43
Deferred compensation plan mutual funds		57		53		61		58

Total trading investments		505		270		569		486
Other investments:
Consolidated sponsored investment funds		314		401		394		441
Equity method investments		564		595		697		697
Deferred compensation plan hedge fund equity method investments		11		9		38		39
Cost method investments⁽¹⁾		122		120		95		119
Carried interest		137		85		117		103

Total other investments		1,148		1,210		1,341		1,399

Total investments		$1,878		$1,750		$2,092		$2,151


(in millions)
			Gross Unrealized				Carrying Value				Gross Unrealized				Carrying Value
At September 30, 2013	Cost		Gains		Losses		Carrying Value								Carrying Value
*March 31, 2014*									Cost		Gains		Losses		Carrying Value
Equity securities of sponsored investment funds										td49		$4		($3)	Carrying Value

*December 31, 2013*
Equity securities of sponsored investment funds		$163		$6		($4)		$165		$180		$4		($4)		$180
Other securities		1		2		-		3		1		2		-		3

Total available-for-sale investments		$164		$8		($4)		$168		$181		$6		($4)		$183


At December 31, 2012
Equity securities of sponsored investment funds		$142		$14		($1)		$155
Other securities		2		1		-		3

Total available-for-sale investments		$144		$15		($1)		$158


September 30, 2013 (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Other Assets Not Held at Fair Value⁽¹⁾		September 30, 2013
*March 31, 2014* (in millions)											Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Other Assets Not Held at Fair Value⁽¹⁾		March 31, 2014

Assets:
Investments
Available-for-sale:
Equity securities (funds and CDOs)	$	165	$	-	$	1	$	-	$	166
Debt securities		-		2		-		-		2

Total available-for-sale		165		2		1		-		168
Equity securities of sponsored investment funds											$	148	$	2	$	-	$	-	$	150
Held-to-maturity debt securities		-		-		-		57		57		-		-		-		32		32
Trading:
Deferred compensation plan mutual funds		57		-		-		-		57		61		-		-		-		61
Equity/Multi-asset mutual funds		194		-		-		-		194		241		-		-		-		241
Debt securities / fixed income mutual funds		61		193		-		-		254		-		267		-		-		267

Total trading		312		193		-		-		505		302		267		-		-		569
Other investments:
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		1		21		45		-		67		-		108		12		-		120
Private / public equity⁽²⁾		5		8		234		-		247		5		13		256		-		274

Total consolidated sponsored investment funds		6		29		279		-		314		5		121		268		-		394
Equity method:
Hedge funds / Funds of hedge funds		-		67		145		55		267		-		188		91		68		347
Private equity investments		-		-		98		-		98		-		-		101		-		101
Real estate funds		-		20		103		7		130		-		20		100		7		127
Fixed income mutual funds		63		-		-		-		63		114		-		-		-		114
Equity/Multi-asset, alternative mutual funds		6		-		-		-		6
Other												8		-		-		-		8

Total equity method		69		87		346		62		564		122		208		292		75		697
Deferred compensation plan hedge fund equity method investments		-		11		-		-		11
Deferred compensation plan equity method investments												-		7		31		-		38
Cost method investments		-		-		-		122		122		-		-		-		95		95
Carried interest		-		-		-		137		137		-		-		-		117		117

Total investments		552		322		626		378		1,878		577		605		591		319		2,092

Separate account assets		106,085		39,675		-		886		146,646		112,145		41,913		-		1,039		155,097
Separate account collateral held under securities lending agreements:
Equity securities		19,851		-		-		-		19,851		15,416		-		-		-		15,416
Debt securities		-		2,111		-		-		2,111		-		2,346		-		-		2,346

Total separate account collateral held under securities lending agreements		19,851		2,111		-		-		21,962		15,416		2,346		-		-		17,762
Other assets⁽³⁾		-		12		-		-		12
Assets of consolidated VIEs:
Bank loans and other assets		-		1,867		97		20		1,984		-		1,891		147		37		2,075
Bonds		-		64		35		-		99		-		54		28		-		82
Private / public equity⁽⁴⁾		-		7		17		-		24
Private / public equity⁽³⁾												-		13		13		-		26

Total assets of consolidated VIEs		-		1,938		149		20		2,107		-		1,958		188		37		2,183

Total	$	126,488	$	44,058	$	775	$	1,284	$	172,605	$	128,138	$	46,822	$	779	$	1,395	$	177,134

Liabilities:
Borrowings of consolidated VIEs	$	-	$	-	$	2,068	$	-	$	2,068	$	-	$	-	$	2,244	$	-	$	2,244
Separate account collateral liabilities under securities lending agreements		19,851		2,111		-		-		21,962		15,416		2,346		-		-		17,762
Other liabilities⁽⁵⁾		19		4		33		-		56
Other liabilities⁽⁴⁾												-		4		42		-		46

Total	$	19,870	$	2,115	$	2,101	$	-	$	24,086	$	15,416	$	2,350	$	2,286	$	-	$	20,052



December 31, 2012 (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Other Assets Not Held at Fair Value ⁽¹⁾		December 31, 2012
*December 31, 2013* (in millions)											Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Other Assets Not Held at Fair Value⁽¹⁾		December 31, 2013

Assets:
Investments
Available-for-sale:
Equity securities (funds and CDOs)	$	155	$	-	$	1	$	-	$	156
Debt securities		-		2		-		-		2
Equity securities of sponsored investment funds											$	180	$	-	$	-	$	-	$	180
Other securities												-		3		-		-		3

Total available-for-sale		155		2		1		-		158		180		3		-		-		183
Held-to-maturity debt securities		-		-		-		112		112		-		-		-		83		83
Trading:
Deferred compensation plan mutual funds		53		-		-		-		53		58		-		-		-		58
Equity/Multi-asset mutual funds		159		3		-		-		162		184		-		-		-		184
Debt securities / fixed income mutual funds		5		50		-		-		55		31		213		-		-		244

Total trading		217		53		-		-		270		273		213		-		-		486
Other investments:
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		3		39		73		-		115		-		135		24		-		159
Private / public equity⁽²⁾		10		10		266		-		286		5		13		223		41		282

Total consolidated sponsored investment funds		13		49		339		-		401		5		148		247		41		441
Equity method:
Hedge funds / Funds of hedge funds		-		61		161		39		261		-		177		99		63		339
Private equity investments		-		-		90		-		90		-		-		101		-		101
Real estate funds		-		19		88		15		122		-		20		98		7		125
Fixed income mutual funds		46		-		-		-		46		113		-		-		-		113
Equity/Multi-asset, alternative mutual funds		76		-		-		-		76		19		-		-		-		19

Total equity method		122		80		339		54		595		132		197		298		70		697
Deferred compensation plan hedge fund equity method investments		-		9		-		-		9
Deferred compensation plan equity method investments												-		10		29		-		39
Cost method investments		-		-		-		120		120		-		-		-		119		119
Carried interest		-		-		-		85		85		-		-		-		103		103

Total investments		507		193		679		371		1,750		590		571		574		416		2,151

Separate account assets		95,514		38,392		2		860		134,768		113,382		40,841		-		890		155,113
Separate account collateral held under securities lending agreements:
Equity securities		21,273		-		-		-		21,273		20,856		-		-		-		20,856
Debt securities		-		1,748		-		-		1,748		-		932		-		-		932

Total separate account collateral held under securities lending agreements		21,273		1,748		-		-		23,021		20,856		932		-		-		21,788
Other assets⁽³⁾		-		12		-		-		12		-		39		-		-		39
Assets of consolidated VIEs:
Bank loans		-		2,004		106		-		2,110
Assets of consolidated VIEs:
Bank loans and other assets												-		2,047		129		19		2,195
Bonds		-		78		46		-		124		-		71		35		-		106
Private / public equity⁽⁴⁾		2		6		22		-		30		-		10		14		-		24

Total assets of consolidated VIEs		2		2,088		174		-		2,264		-		2,128		178		19		2,325

Total	$	117,296	$	42,433	$	855	$	1,231	$	161,815	$	134,828	$	44,511	$	752	$	1,325	$	181,416

Liabilities:
Borrowings of consolidated VIEs	$	-	$	-	$	2,402	$	-	$	2,402	$	-	$	-	$	2,369	$	-	$	2,369
Separate account collateral liabilities under securities lending agreements		21,273		1,748		-		-		23,021		20,856		932		-		-		21,788
Other liabilities⁽⁵⁾		15		5		-		-		20		18		4		42		-		64

Total	$	21,288	$	1,753	$	2,402	$	-	$	25,443	$	20,874	$	936	$	2,411	$	-	$	24,221


(in millions)	June 30, 2013		Realized and unrealized gains (losses) in earnings and OCI			Purchases		Sales and maturities			Issuances and other settlements⁽¹⁾			Transfers into Level 3		Transfers out of Level 3			September 30, 2013		Total net gains (losses) included in earnings⁽²⁾			December 31, 2013		Realized and unrealized gains (losses) in earnings and OCI		Purchases		Sales and maturities			Issuances and other settlements⁽¹⁾			Transfers into Level 3⁽²⁾		Transfers out of Level 3			March 31, 2014		Total net unrealized gains (losses) included in earnings⁽³⁾
Assets:
Investments
Available-for-sale:
Equity securities (CDOs)		$1		$-			$-		$-			$-			$-		$-			$1		$-
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		47		2			-		(2	)		(2	)		-		-			45		-			$24		$1		$-		($12	)		($1	)		$-		$-			$12		$-
Private equity		249		10			-		(23	)		-			-		(2	)		234		7			223		1		5		(14	)		-			41		-			256		1
Equity method:
Hedge funds / Funds of hedge funds		157		1			1		(1	)		(13	)		-		-			145		1			99		2		4		(11	)		(3	)		-		-			91		2
Private equity investments		105		4			1		(10	)		(2	)		-		-			98		4			101		3		3		-			(6	)		-		-			101		4
Real estate funds		97		6			2		-			(2	)		-		-			103		6			98		2		2		-			(2	)		-		-			100		1
Deferred compensation plan equity method investments																									29		2		-		-			-			-		-			31		2

Total Level 3 investments		656		23			4		(36	)		(19	)		-		(2	)		626		18			574		11		14		(37	)		(12	)		41		-			591		10

Assets of consolidated VIEs:
Bank loans		93		-			18		(8	)��		-			40		(46	)		97					129		-		16		(13	)		-			73		(58	)		147
Bonds		35		1			-		(1	)		-			-		-			35					35		-		-		(7	)		-			-		-			28
Private equity		19		-			-		(2	)		-			-		-			17					14		-		-		(1	)		-			-		-			13

Total Level 3 assets of consolidated VIEs		147		1			18		(11	)		-			40		(46	)		149		n/a	⁽³⁾		178		-		16		(21	)		-			73		(58	)		188		n/a	⁽⁴⁾

Total Level 3 assets		$803		$24			$22		($47	)		($19	)		$40		($48	)		$775					$752		$11		$30		($58	)		($12	)		$114		($58	)		$779

Liabilities:
Borrowings of consolidated VIEs		$2,145		($5	)		$-		$-			($82	)		$-		$-			$2,068		n/a	⁽³⁾		$2,369		$5		$-		$-			($120	)		$-		$-			$2,244		n/a	⁽⁴⁾
Other liabilities		-		-			-		-			33			-		-			33					42		-		-		-			-			-		-			42		-

Total Level 3 liabilities		$2,145		($5	)		$-		$-			($49	)		$-		$-			$2,101					$2,411		$5		$-		$-			($120	)		$-		$-			$2,286


(in millions)	June 30, 2012		Realized and unrealized gains (losses) in earnings and OCI			Purchases		Sales and maturities			Issuances and other settlements⁽¹⁾			Transfers into Level 3		Transfers out of Level 3			September 30, 2012		Total net gains (losses) included in earnings⁽²⁾
Assets:
Investments
Available-for-sale:
Equity securities (CDOs)		$1		$-			$-		$-			$-			$-		$-			$1		$-
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		46		8			3		(2	)		-			-		-			55		8
Private equity		298		22			-		(14	)		(8	)		-		-			298		20
Equity method:
Hedge funds / Funds of hedge funds		187		14			-		-			(21	)		-		-			180		14
Private equity investments		88		1			1		-			-			-		-			90		2
Real estate funds		101		6			6		(7	)		(3	)		-		-			103		4

Total Level 3 investments		721		51			10		(23	)		(32	)		-		-			727		48

Separate account assets		7		(4	)		6		(7	)		-			34		-			36		n/a	⁽³⁾
Assets of consolidated VIEs:
Bank loans		85		2			7		(24	)		7			36		(24	)		89
Bonds		44		1			-		-			-			-		-			45
Private equity		25		2			2		(3	)		-			-		-			26

Total Level 3 assets of consolidated VIEs		154		5			9		(27	)		7			36		(24	)		160		n/a	⁽⁴⁾

Total Level 3 assets		$882		$52			$25		($57	)		($25	)		$70		($24	)		$923

Liabilities:
Borrowings of consolidated VIEs		$1,439		($27	)		$-		$-			$377			$-		$-			$1,843		n/a	⁽⁴⁾


(in millions)	December 31, 2011		Realized and unrealized gains (losses) in earnings and OCI			Purchases		Sales and maturities			Issuances and other settlements⁽¹⁾			Transfers into Level 3		Transfers out of Level 3			September 30, 2012		Total net gains (losses) included in earnings⁽²⁾
Assets:
Investments
Available-for-sale:
Equity securities (CDOs)		$1		$-			$-		$-			$-			$-		$-			$1		$-
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		22		4			30		(2	)		(2	)		3		-			55		4
Private equity		313		43			2		(46	)		(8	)		-		(6	)		298		38
Equity method:
Hedge funds / Funds of hedge funds		193		33			-		-			(46	)		-		-			180		33
Private equity investments		85		7			4		-			(6	)		-		-			90		8
Real estate funds		88		8			19		(7	)		(5	)		-		-			103		6

Total Level 3 investments		702		95			55		(55	)		(67	)		3		(6	)		727		89

Separate account assets		10		(5	)		10		(18	)		-			48		(9	)		36		n/a	⁽³⁾
Assets of consolidated VIEs:
Bank loans		83		2			25		(31	)		7			89		(86	)		89
Bonds		40		3			2		-			-			-		-			45
Private equity		27		4			2		(7	)		-			-		-			26

Total Level 3 assets of consolidated VIEs		150		9			29		(38	)		7			89		(86	)		160		n/a	⁽⁴⁾

Total Level 3 assets		$862		$99			$94		($111	)		($60	)		$140		($101	)		$923

Liabilities:
Borrowings of consolidated VIEs		$1,574		($66	)		$-		$-			$203			$-		$-			$1,843		n/a	⁽⁴⁾


(in millions)	Ref			Fair Value		Total Unfunded Commitments		Redemption Frequency	Redemption Notice Period	Ref			Fair Value		Total Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Consolidated sponsored investment funds:
Private equity funds of funds		(a	)		$202		$25	n/r	n/r
Consolidated sponsored investment funds:
Private equity funds/funds of funds											(a	)		$192		$28	n/r	n/r

Other funds of hedge funds		(b	)		57		-	Monthly (26%), Quarterly (2%), n/r (72%)	2 – 90 days		(b	)		117		-	Quarterly (100%)	30 – 90 days
Equity method:⁽¹⁾
Hedge funds/funds of hedge funds		(c	)		212		92	Monthly (2%), Quarterly (32%) n/r (66%)	15 – 90 days		(c	)		279		41	Monthly(58%) Quarterly(11%) n/r(31%)	15 – 90 days

Private equity funds		(d	)		98		57	n/r	n/r		(d	)		101		62	n/r	n/r

Real estate funds		(e	)		123		11	Quarterly (16%) n/r (84%)	60 days		(e	)		120		12	Quarterly(17%) n/r(83%)	60 days

Deferred compensation plan hedge fund investments		(f	)		11		-	Monthly (27%), Quarterly (73%)	60 – 90 days
Deferred compensation plan investments											(f	)		38		7	Quarterly(19%) n/r(81%)	60 – 90 days
Consolidated VIEs:
Private equity fund		(g	)		15		1	n/r	n/r		(g	)		13		1	n/r	n/r

Total					$718		$186							$860		$151


(in millions)	Variable Interests on the Condensed Consolidated Statement of Financial Condition								Variable Interests on the Condensed Consolidated Statement of Financial Condition
At September 30, 2013	Investments		Advisory Fee Receivables		Other Net Assets (Liabilities)		Maximum Risk of Loss⁽¹⁾
At March 31, 2014									Investments		Advisory Fee Receivables		Other Net Assets (Liabilities)		Maximum Risk of Loss⁽¹⁾
CDOs/CLOs		$1		$1		($4)		$19		$-		$1		($4)		$18
Other sponsored investment funds:
Collective trusts		-		166		-		166		-		185		-		185
Other		18		130		(5)		148		38		183		(4)		221

Total		$19		$297		($9)		$333		$38		$369		($8)		$424

At December 31, 2012

At December 31, 2013
CDOs/CLOs		$1		$1		($5)		$19		$-		$1		($4)		$18
Other sponsored investment funds:
Collective trusts		-		248		-		248		-		184		-		184
Other		17		61		(3)		77		37		137		(6)		174

Total		$18		$310		($8)		$344		$37		$322		($10)		$376


(in billions)	September 30, 2013		December 31, 2012		March 31, 2014		December 31, 2013
Assets at fair value		$3		$4		$1		$1
Liabilities⁽¹⁾		5		5		2		2

Net assets		($2)		($1)		($1)		($1)


(in millions)
December 31, ~~2012~~2013	~~$12,910~~
~~Acquisition~~⁽¹⁾	44$12,980
Goodwill adjustment related to Quellos ~~and other~~⁽²⁾⁽¹⁾	(165	)

~~September 30, 2013~~March 31, 2014	$~~12,938~~12,975


(in millions)	Indefinite-lived intangible assets		Finite-lived intangible assets			Total intangible assets
December 31, 2012		$16,760		$642			$17,402
Acquisition⁽¹⁾		231		-			231
Amortization expense		-		(120	)		(120	)

September 30, 2013		$16,991		$522			$17,513


(in millions)	Maturity Amount		Unamortized Discount		Carrying Value		Fair Value

3.50% Notes due 2014		$1,000		$-		$1,000		$1,036
1.375% Notes due 2015		750		-		750		762
6.25% Notes due 2017		700		(2)		698		818
5.00% Notes due 2019		1,000		(2)		998		1,147
4.25% Notes due 2021		750		(4)		746		798
3.375% Notes due 2022		750		(4)		746		749

Total Long-term Borrowings		$4,950		($12)		$4,938		$5,310


Outstanding at	Restricted Stock and RSUs		Weighted- Average Grant Date Fair Value		Restricted Stock and RSUs		Weighted- Average Grant Date Fair Value
December 31, 2012		5,620,835		$197.90
December 31, 2013						4,612,813		$207.94
Granted		1,645,277		$234.69		1,344,821		$318.31
Converted		(2,502,869)		$204.46		(2,440,596)		$205.08
Forfeited		(70,491)		$204.41		(20,504)		$232.80

September 30, 2013⁽¹⁾		4,692,752		$207.20
March 31, 2014⁽¹⁾						3,496,534		$252.42


Outstanding at	Market Performance- Based RSUs		Weighted- Average Grant Date Fair Value
December 31, 2012		575,532	$	115.03
Granted		556,581	$	126.76

September 30, 2013⁽¹⁾		1,132,113	$	120.80


Outstanding at	Shares Under Option			Weighted- Average Exercise Price
December 31, 2012		1,099,909		$	167.76
Exercised		(85,090	)	$	167.76

September 30, 2013		1,014,819		$	167.76


(in millions)	Unrealized gains (losses) on available-for-sale investments			Benefit plans			Foreign currency translation adjustments			Total ⁽¹⁾			Unrealized gains (losses) on available-for-sale investments			Benefit plans			Foreign currency translation adjustments			Total⁽¹⁾
June 30, 2013		$8			($4	)		($202	)		($198	)
December 31, 2013														$7			$6			($48	)		($35	)
Other comprehensive income (loss) before reclassifications⁽²⁾		2			-			118			120			-			-			8			8
Amount reclassified from AOCI⁽³⁾		(1	)		-			-			(1	)		(8	)		-			-			(8	)

Net other comprehensive income (loss) for the three months ended September 30, 2013		1			-			118			119
Net other comprehensive income (loss) for the three months ended March 31, 2014														(8	)		-			8			-

September 30, 2013		$9			($4	)		($84	)		($79	)
March 31, 2014														($1	)		$6			($40	)		($35	)


(in millions)	Unrealized gains (losses) on available-for-sale investments			Benefit plans			Foreign currency translation adjustments			Total ⁽¹⁾			Unrealized gains (losses) on available-for-sale investments			Benefit plans			Foreign currency translation adjustments			Total⁽¹⁾
December 31, 2012		$16			($4	)		($71	)		($59	)	$	16		($	4	)	($	71	)	($	59	)
Other comprehensive income (loss) before reclassifications⁽²⁾		3			-			(13	)		(10	)		4			-			(108	)		(104	)
Amount reclassified from AOCI⁽³⁾		(10	)		-			-			(10	)		(3	)		-			-			(3	)

Net other comprehensive income (loss) for the nine months ended September 30, 2013		(7	)		-			(13	)		(20	)
Net other comprehensive income (loss) for the three months ended March 31, 2013														1			-			(108	)		(107	)

September 30, 2013		$9			($4	)		($84	)		($79	)
March 31, 2013													$	17		($	4	)	($	179	)	($	166	)


( in millions, except share data)	Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
Net income attributable to BlackRock		$730		$2,091

Basic weighted-average shares outstanding		169,811,633		170,581,930
Dilutive effect of nonparticipating RSUs and stock options		3,559,875		3,430,946

Total diluted weighted-average shares outstanding		173,371,508		174,012,876


Basic earnings per share		$4.30		$12.26
Diluted earnings per share		$4.21		$12.02


(in millions, except share data)	Three Months Ended September 30, 2012		Nine Months Ended September 30, 2012
Net income attributable to BlackRock		$642		$1,768
Less:
Dividends distributed to common shares		259		803
Dividends distributed to participating RSUs		-		1

Undistributed net income attributable to BlackRock		383		964
Percentage of undistributed net income allocated to common shares⁽¹⁾		99.9%		99.9%
Undistributed net income allocated to common shares		382		963
Plus:
Common share dividends		259		803

Net income attributable to common shares		$641		$1,766

Basic weighted-average shares outstanding		172,359,141		176,116,975
Dilutive effect of nonparticipating RSUs and stock options		3,091,391		2,839,724

Total diluted weighted-average shares outstanding		175,450,532		178,956,699

Basic earnings per share		$3.72		$10.02
Diluted earnings per share		$3.65		$9.87


Operating income, as adjusted, and operating margin, as adjusted
	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(Amounts in millions)	2013		2012		2013		2012
(in millions)									2014		2013
Operating income, GAAP basis		$966		$875		$2,724		$2,519		$1,051		$909
Non-GAAP expense adjustments:
PNC LTIP funding obligation		8		5		25		16		8		8
Charitable Contribution		-		-		124		-
U.K. lease exit costs		-		(8)		-		(8)
Compensation expense related to appreciation (depreciation) on deferred compensation plans		4		4		8		6		3		4

Operating income, as adjusted		978		876		2,881		2,533		1,062		921
Closed-end fund launch costs		-		22		16		22		-		16
Closed-end fund launch commissions		-		3		2		3		-		2

Operating income used for operating margin measurement		$978		$901		$2,899		$2,558		$1,062		$939

Revenue, GAAP basis		$2,472		$2,320		$7,403		$6,798		$2,670		$2,449
Non-GAAP adjustments:
Distribution and servicing costs		(85)		(94)		(266)		(282)		(89)		(91)
Amortization of deferred sales commissions		(14)		(13)		(38)		(43)		(15)		(12)

Revenue used for operating margin measurement		$2,373		$2,213		$7,099		$6,473		$2,566		$2,346

Operating margin, GAAP basis		39.1%		37.7%		36.8%		37.1%		39.4%		37.1%

Operating margin, as adjusted		41.2%		40.7%		40.8%		39.5%		41.4%		40.0%


	Three Months Ended September 30,						Nine Months Ended September 30,
(Amounts in millions)	2013			2012			2013			2012
Nonoperating income (expense), GAAP basis	($	18	)	$	30		$	92		$	13
Less: Net income (loss) attributable to NCI		(1	)		13			10			22

Nonoperating income (expense), net of NCI		(17	)		17			82			(9	)
Gain related to the Charitable Contribution		-			-			(80	)		-
Compensation expense related to (appreciation) depreciation on deferred compensation plans		(4	)		(4	)		(8	)		(6	)

Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted	($	21	)	$	13		($	6	)	($	15	)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in millions, except per share data)	2013		2012		2013		2012
Net income attributable to BlackRock, Inc., GAAP basis		$730		$642		$2,091		$1,768
Non-GAAP adjustments, net of tax:^(d)
PNC LTIP funding obligation		6		3		17		10
Amount related to the Charitable Contribution		-		-		(13)		-
U.K. lease exit costs		-		(5)		-		(5)
Income tax changes		(64)		(30)		(64)		(30)

Net income attributable to BlackRock, Inc., as adjusted		$672		$610		$2,031		$1,743

Allocation of net income, as adjusted, to common shares^(e)		$672		$609		$2,031		$1,741
Diluted weighted-average common shares outstanding^(f)		173.4		175.5		174.0		179.0
Diluted earnings per common share, GAAP basis^(f)		$4.21		$3.65		$12.02		$9.87
Diluted earnings per common share, as adjusted^(f)		$3.88		$3.47		$11.67		$9.73


	AUM						Net Subscriptions (Redemptions)⁽¹⁾									AUM						Net Subscriptions (Redemptions)
(in millions)	September 30, 2013		June 30, 2013		September 30, 2012		Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013			Twelve Months Ended September 30, 2013			March 31, 2014		December 31, 2013		March 31, 2013		Three Months Ended March 31, 2014			Twelve Months Ended March 31, 2014
Retail	$	438,449	$	414,379	$	397,954	$	8,344		$	22,213		$	26,322		$	508,717	$	487,777	$	421,141	$	14,002		$	44,012
iShares		856,909		774,397		705,765		20,249			44,882			80,596			930,380		914,372		802,776		7,759			46,134
Institutional:
Active		890,070		861,231		880,726		53			(8,929	)		(16,984	)		939,654		932,410		878,741		(12,611	)		(3,241	)
Index		1,612,337		1,514,448		1,393,928		(3,361	)		18,472			33,687			1,726,855		1,677,650		1,526,597		17,577			17,490

Total institutional		2,502,407		2,375,679		2,274,654		(3,308	)		9,543			16,703			2,666,509		2,610,060		2,405,338		4,966			14,249

Total long-term		3,797,765		3,564,455		3,378,373		25,285			76,638			123,621			4,105,606		4,012,209		3,629,255		26,727			104,395

Cash management		260,077		252,562		248,331		4,469			(4,195	)		10,221			263,533		275,554		261,329		(12,432	)		(2,541	)
Advisory⁽²⁾⁽¹⁾		38,514		39,990		46,570		(2,033	)		(6,036	)		(6,681	)		31,786		36,325		45,825		(3,773	)		(12,105	)

Total	$	4,096,356	$	3,857,007	$	3,673,274		$27,721		$	66,407		$	127,161		$	4,400,925	$	4,324,088	$	3,936,409	$	10,522		$	89,749


(in millions)	June 30, 2013		Net subscriptions (redemptions)⁽¹⁾			Acquisition⁽²⁾		Market appreciation (depreciation)			Foreign exchange⁽³⁾		September 30, 2013		December 31, 2013		Net subscriptions (redemptions)			Market change		FX impact⁽¹⁾			March 31, 2014		Average AUM⁽²⁾
Retail:
Equity	$	161,441	$	1,166		$	-	$	10,261		$	1,864	$	174,732	$	203,035	$	2,183		$	2,715	$	305		$	208,238	$	204,108
Fixed income		141,541		2,256			-		(970	)		359		143,186		151,475		6,058			2,854		61			160,448		156,082
Multi-asset		99,105		2,899			-		3,742			271		106,017		117,054		3,636			765		93			121,548		118,893
Alternatives		12,292		2,023			-		(2	)		201		14,514		16,213		2,125			131		14			18,483		17,278

Retail subtotal		414,379		8,344			-		13,031			2,695		438,449		487,777		14,002			6,465		473			508,717		496,361
iShares:
Equity		577,268		21,069			13,021		38,444			3,726		653,528		718,135		934			5,774		(870	)		723,973		711,373
Fixed income		180,943		(1,452	)		1,294		222			1,834		182,841		178,835		6,624			2,860		(297	)		188,022		185,214
Multi-asset		1,107		33			-		35			4		1,179		1,310		110			23		(6	)		1,437		1,374
Alternatives		15,079		599			1,645		1,975			63		19,361		16,092		91			777		(12	)		16,948		16,692

iShares subtotal		774,397		20,249			15,960		40,676			5,627		856,909		914,372		7,759			9,434		(1,185	)		930,380		914,653
Institutional:
Active:
Equity		126,425		(6,098	)		-		7,585			2,952		130,864		138,726		(8,032	)		1,508		172			132,374		135,369
Fixed income		490,490		4,922			-		2,393			5,438		503,243		505,109		(7,023	)		10,768		838			509,692		508,127
Multi-asset		180,310		2,232			-		5,012			4,435		191,989		215,276		2,850			5,660		79			223,865		220,506
Alternatives		64,006		(1,003	)		-		347			624		63,974		73,299		(406	)		676		154			73,723		73,550

Active subtotal		861,231		53			-		15,337			13,449		890,070		932,410		(12,611	)		18,612		1,243			939,654		937,552
Index:
Equity		1,107,981		(4,881	)		-		71,638			14,850		1,189,588		1,257,799		8,739			14,818		1,993			1,283,349		1,257,400
Fixed income		392,385		1,765			-		913			13,226		408,289		406,767		9,983			12,646		1,456			430,852		417,821
Multi-asset		8,783		(301	)		-		175			275		8,932		7,574		(1,607	)		346		68			6,381		6,662
Alternatives		5,299		56			-		(4	)		177		5,528		5,510		462			278		23			6,273		5,972

Index subtotal		1,514,448		(3,361	)		-		72,722			28,528		1,612,337		1,677,650		17,577			28,088		3,540			1,726,855		1,687,855

Institutional subtotal		2,375,679		(3,308	)		-		88,059			41,977		2,502,407		2,610,060		4,966			46,700		4,783			2,666,509		2,625,407

Long-term		3,564,455		25,285			15,960		141,766			50,299		3,797,765		4,012,209		26,727			62,599		4,071			4,105,606	$	4,036,421

Cash management		252,562		4,469			-		104			2,942		260,077		275,554		(12,432	)		126		285			263,533
Advisory⁽⁴⁾⁽³⁾		39,990		(2,033	)		-		(195	)		752		38,514		36,325		(3,773	)		235		(1,001	)		31,786

Total	$	3,857,007	$	27,721		$	15,960	$	141,675		$	53,993	$	4,096,356	$	4,324,088	$	10,522		$	62,960	$	3,355		$	4,400,925


(in millions)	December 31, 2012		Net subscriptions (redemptions)⁽¹⁾			Acquisition⁽²⁾		Market appreciation (depreciation)			Foreign exchange⁽³⁾			September 30, 2013
Equity:
Active	$	287,215	$	(16,269	)	$	-	$	28,279		$	(1,741	)	$	297,484
iShares		534,648		50,004			13,021		55,395			460			653,528
Fixed income:
Active		656,331		6,154			-		(13,549	)		(2,743	)		646,193
iShares		192,852		(3,917	)		1,294		(7,661	)		273			182,841
Multi-asset		267,748		24,943			-		15,164			262			308,117
Alternatives:
Core		68,367		3,305			-		1,243			(157	)		72,758
Currency and commodities⁽⁴⁾		41,428		(6,202	)		1,645		(5,553	)		(699	)		30,619

Subtotal		2,048,589		58,018			15,960		73,318			(4,345	)		2,191,540
Non-ETF Index:
Equity		1,023,638		10,846			-		171,406			(8,190	)		1,197,700
Fixed income		410,139		7,774			-		(5,132	)		(4,256	)		408,525

Subtotal Non-ETF Index		1,433,777		18,620			-		166,274			(12,446	)		1,606,225

Long-term		3,482,366		76,638			15,960		239,592			(16,791	)		3,797,765
Cash management		263,743		(4,195	)		-		236			293			260,077
Advisory⁽⁵⁾		45,479		(6,036	)		-		(370	)		(559	)		38,514

Total	$	3,791,588	$	66,407		$	15,960	$	239,458		$	(17,057	)	$	4,096,356


	Three Months Ended September 30,								Nine Months Ended September 30,								Mix of Base Fees						Mix of Average AUM by Asset Class⁽¹⁾
	Mix of Base Fees				Mix of Average AUM by Asset Class⁽¹⁾				Mix of Base Fees				Mix of Average AUM by Asset Class⁽¹⁾				Three months ended March 31,						Three months ended March 31,
	2013		2012		2013		2012		2013		2012		2013		2012		2014			2013			2014			2013
Equity:
Active		20%		21%		7%		8%		20%		22%		7%		8%		20	%		20	%		7	%		8	%
iShares		27%		24%		16%		13%		27%		24%		15%		13%		28	%		27	%		17	%		15	%
Fixed income:
Active		15%		15%		15%		18%		15%		14%		17%		18%		14	%		15	%		15	%		16	%
iShares		5%		6%		5%		5%		5%		5%		5%		5%		5	%		5	%		4	%		5	%
Multi-asset		12%		12%		8%		7%		12%		12%		7%		7%		12	%		12	%		8	%		7	%
Alternatives:
Core		7%		6%		2%		2%		6%		7%		2%		2%		7	%		6	%		2	%		2	%
Currency and commodities		1%		2%		1%		1%		1%		2%		1%		1%		1	%		1	%		1	%		1	%

Subtotal		87%		86%		54%		54%		86%		86%		54%		54%		87	%		86	%		54	%		54	%
Non-ETF Index:
Equity		7%		7%		29%		27%		7%		7%		29%		26%		7	%		7	%		30	%		28	%
Fixed income		3%		3%		10%		12%		3%		3%		10%		13%		3	%		3	%		10	%		11	%

Subtotal Non-ETF Index		10%		10%		39%		39%		10%		10%		39%		39%
Subtotal Non-ETF Index:																		10	%		10	%		40	%		39	%

Long-term		97%		96%		93%		93%		96%		96%		93%		93%		97	%		96	%		94	%		93	%

Cash management		3%		4%		7%		7%		4%		4%		7%		7%		3	%		4	%		6	%		7	%

Total excluding Advisory AUM		100%		100%		100%		100%		100%		100%		100%		100%		100	%		100	%		100	%		100	%


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Month Ended March 31,
(in millions)	2013		2012		2013		2012		2014			2013
Nonoperating income (expense), GAAP basis		($18)		$30		$92		$13	$	17		$	41
Less: Net income (loss) attributable to NCI⁽¹⁾		(1)		13		10		22		(12	)		34

Nonoperating income (expense)⁽²⁾		(17)		17		82		(9)		29			7
Gain related to the Charitable Contribution		-		-		(80)		-
Compensation expense related to (appreciation) depreciation on deferred compensation plans		(4)		(4)		(8)		(6)		(3	)		(4	)

Nonoperating income (expense), as adjusted⁽²⁾		($21)		$13		($6)		($15)	$	26		$	3


	GAAP								As Adjusted
(in millions)	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				GAAP Three Months Ended March 31,				As adjusted Three Months Ended March 31,
	2013		2012		2013		2012		2013		2012		2013		2012		2014		2013		2014		2013
Income before income taxes⁽¹⁾		$949		$892		$2,806		$2,510		$957		$889		$2,875		$2,518		$1,080		$916		$1,088		$924
Income tax expense		$219		$250		$715		$742		$285		$279		$844		$775		$324		$284		$326		$287
Effective tax rate		23.1%		28.1%		25.5%		29.6%		29.9%		31.4%		29.4%		30.8%		30.0%		31.0%		30.0%		31.0%


	September 30, 2013										March 31, 2014
			Segregated client assets generating advisory fees in which BlackRock has no economic interest or liability										Segregated client assets generating advisory fees in which BlackRock has no economic interest or liability
(in millions)	GAAP Basis		Separate Account Assets/ Collateral		Consolidated VIEs		Consolidated Sponsored Investment Funds		As Adjusted		GAAP Basis		Separate Account Assets/ Collateral		Consolidated VIEs		Consolidated Sponsored Investment Funds		As Adjusted
Assets
Cash and cash equivalents	$	3,987	$	—	$	—	$	105	$	3,882	$	4,394	$	-	$	-	$	88	$	4,306
Accounts receivable		4,311		—		—		—		4,311		2,868		-		-		-		2,868
Investments		1,878		—		—		83		1,795		2,092		-		-		110		1,982
Assets of consolidated VIEs		2,200		—		2,200		—		—		2,374		-		2,374		-		-
Separate account assets and separate account collateral held under securities lending agreements		168,608		168,608		—		—		—		172,859		172,859		-		-		-
Other assets⁽¹⁾		1,282		—		—		13		1,269		1,276		-		-		19		1,257

Subtotal		182,266		168,608		2,200		201		11,257		185,863		172,859		2,374		217		10,413
Goodwill and intangible assets, net		30,451		—		—		—		30,451		30,434		-		-		-		30,434

Total assets	$	212,717	$	168,608	$	2,200	$	201	$	41,708	$	216,297	$	172,859	$	2,374	$	217	$	40,847

Liabilities
Accrued compensation and benefits	$	1,322	$	—	$	—	$	—	$	1,322	$	668	$	-	$	-	$	-	$	668
Accounts payable and accrued liabilities		3,322		—		—		—		3,322		1,615		-		-		-		1,615
Liabilities of consolidated VIEs		2,156		—		2,156		—		—		2,350		-		2,350		-		-
Long-term borrowings		4,938		—		—		—		4,938
Borrowings												5,936		-		-		-		5,936
Separate account liabilities and separate account collateral liabilities under securities lending agreements		168,608		168,608		—		—		—		172,859		172,859		-		-		-
Deferred income tax liabilities		5,237		—		—		—		5,237		5,241		-		-		-		5,241
Other liabilities		948		—		—		33		915		927		-		-		12		915

Total liabilities		186,531		168,608		2,156		33		15,734		189,596		172,859		2,350		12		14,375

Equity
Total stockholders’ equity⁽²⁾		25,999		—		25		—		25,974		26,478		-		6		-		26,472
Noncontrolling interests		187		—		19		168		—		223		-		18		205		-

Total equity		26,186		—		44		168		25,974		26,701		-		24		205		26,472

Total liabilities and equity	$	212,717	$	168,608	$	2,200	$	201	$	41,708	$	216,297	$	172,859	$	2,374	$	217	$	40,847


(in millions)
Investments, as adjusted, December 31, ~~2012~~2013	$	~~$1,656~~ 2,057
Purchases/capital contributions		~~503~~229
Sales/maturities		~~(379)~~(339)
Distributions⁽¹⁾		~~(129)~~(44)
Market valuations/earnings from equity method investments		9265
Carried interest capital allocations		5214

Investments, as adjusted, ~~September 30, 2013~~March 31, 2014	$	~~$1,795~~ 1,982