BlackRock Reports Record Quarterly Diluted EPS Of $3.93, Or $3.96 As Adjusted

Computations for all periods are derived from the Company's condensed consolidated statements of income as follows:

(a) Operating income, as adjusted, and operating margin, as adjusted:

Operating income, as adjusted, equals operating income, GAAP basis, excluding certain items management deems non-recurring, or transactions that ultimately will not impact BlackRock’s book value, as indicated in the table below. Operating income used for operating margin measurement equals operating income, as adjusted, excluding the impact of closed-end fund launch costs and commissions. Operating margin, as adjusted, equals operating income used for operating margin measurement, divided by revenue used for operating margin measurement, as indicated in the table below.

		Three Months Ended						Year Ended
		December 31,				September 30,		December 31,
(Dollar amounts in millions)		2012		2011		2012		2012		2011
Operating income, GAAP basis		$1,005		$808		$875		$3,524		$3,249
Non-GAAP expense adjustments:
U.K. lease exit costs		-		-		(8)		(8)		63
Contribution to STIFs		30		-		-		30		-
Restructuring charges		-		32		-		-		32
PNC LTIP funding obligation		6		1		5		22		44
Merrill Lynch compensation contribution		-		-		-		-		7
Compensation expense related to appreciation (depreciation) on deferred compensation plans		-		-		4		6		(3)
Operating income, as adjusted		1,041		841		876		3,574		3,392
Closed-end fund launch costs		-		7		22		22		26
Closed-end fund launch commissions		-		1		3		3		3
Operating income used for operating margin measurement		$1,041		$849		$901		$3,599		$3,421
Revenue, GAAP basis		$2,539		$2,227		$2,320		$9,337		$9,081
Non-GAAP adjustments:
Distribution and servicing costs		(82)		(87)		(94)		(364)		(386)
Amortization of deferred sales commissions		(12)		(18)		(13)		(55)		(81)
Revenue used for operating margin measurement		$2,445		$2,122		$2,213		$8,918		$8,614
Operating margin, GAAP basis		39.6%		36.3%		37.7%		37.7%		35.8%
Operating margin, as adjusted		42.6%		40.0%		40.7%		40.4%		39.7%

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.

BlackRock, Inc.

Notes to Condensed Consolidated Statements of Income and Supplemental Information

(unaudited)

(continued)

(a) (continued)

Operating income, as adjusted:

Operating income, as adjusted reflects the non-GAAP expense adjustments discussed below. Contribution to STIFs represents a contribution to certain of the Company’s bank-managed STIFs. U.K. lease exit costs represent costs to exit two locations in London in third quarter 2011. The amount in third quarter 2012 represents an adjustment related to the estimated costs initially recorded in third quarter 2011. Restructuring charges consist of compensation costs and professional fees.

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