Comparison to the Third Quarter 2012
Operating income: Fourth quarter 2012 operating income was $1.0 billion compared with $875 million in third quarter 2012. Fourth quarter 2012 operating income included the previously mentioned one-time $30 million contribution to STIFs. Operating income, as adjusted, was $1.0 billion compared with $876 million in third quarter 2012.
Fourth quarter 2012 revenue increased $219 million from third quarter 2012, primarily due to the following:
- Investment advisory, administration fees and securities lending revenue of $2.1 billion in fourth quarter 2012 increased $57 million from third quarter 2012, driven by higher long-term average AUM, partially offset by lower securities lending fees. Securities lending fees were $113 million in fourth quarter 2012 compared with $129 million in third quarter 2012.
- Performance fees increased $136 million to $239 million in fourth quarter 2012 from $103 million in third quarter 2012. The current quarter reflected fees from a disposition-related opportunistic fund and higher performance fees from products with performance measurement periods ending on December 31 st.
- BlackRock Solutions and advisory revenue of $136 million in fourth quarter 2012 increased from $128 million in third quarter 2012 driven by higher one-time revenue from advisory assignments and higher revenue from Aladdin mandates.
- Other revenue increased $24 million, largely reflecting higher earnings from certain operating advisory company investments.
Fourth quarter 2012 total operating expenses of $1.5 billion increased $89 million from third quarter 2012. Fourth quarter 2012 operating expenses included the previously mentioned contribution related to STIFs. Operating expenses, as adjusted, of $1.5 billion increased $54 million from third quarter 2012. Results were primarily driven by the following:
- Employee compensation and benefits increased $20 million, primarily reflecting higher incentive compensation driven by higher operating income.
- Distribution and servicing costs decreased $12 million, driven by lower distribution costs.
- Direct fund expenses increased $7 million, primarily related to an increase in average iShares AUM where BlackRock pays certain non-advisory expenses of the funds.
- General and administration expenses increased $74 million, primarily due to the one-time $30 million contribution to STIFs, higher marketing and promotional expenses in connection with the brand campaign, and higher professional fees. The increase was partially offset by the non-recurrence of closed-end fund launch costs of $22 million recorded in third quarter 2012.
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