Edgar Filing: BlackRock Inc.

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Form 10-Q

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 March 31, 2011

¨	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):

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 April 30, 2011, there were 132,318,957 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		3
		Condensed Consolidated Statements of Comprehensive Income		4
		Condensed Consolidated Statements of Changes in Equity		5
		Condensed Consolidated Statements of Cash Flows		7
		Notes to Condensed Consolidated Financial Statements		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			46

Item 3.	Quantitative and Qualitative Disclosures About Market Risk			88

Item 4.	Controls and Procedures			90

PART II OTHER INFORMATION

Item 1.	Legal Proceedings			91

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			91

Item 6.	Exhibits			92

- i -

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

BlackRock, Inc.

Condensed Consolidated Statements of Financial Condition

(Dollar amounts in millions, except per share data)

(unaudited)


	March 31, 2011		December 31, 2010

Assets
Cash and cash equivalents	$	2,779	$	3,367
Accounts receivable		2,223		2,095
Due from related parties		136		150
Investments		1,528		1,540
Assets of consolidated variable interest entities
Cash and cash equivalents		133		93
Bank loans and other investments		1,274		1,312
Separate account assets		121,903		121,137
Collateral held under securities lending agreements		17,236		17,638
Deferred sales commissions, net		60		66
Property and equipment (net of accumulated depreciation of $460 and $426 at March 31, 2011 and December 31, 2010, respectively)		479		428
Intangible assets (net of accumulated amortization of $655 and $615 at March 31, 2011 and December 31, 2010, respectively)		17,472		17,512
Goodwill		12,804		12,805
Other assets		395		316

Total assets	$	178,422	$	178,459


Liabilities
Accrued compensation and benefits	$	538	$	1,520
Accounts payable and accrued liabilities		1,366		1,068
Due to related parties		26		57
Short-term borrowings		—		100
Liabilities of consolidated variable interest entities
Borrowings		1,297		1,278
Other liabilities		7		7
Convertible debentures		63		67
Long-term borrowings		3,192		3,192
Separate account liabilities		121,903		121,137
Collateral liabilities under securities lending agreements		17,236		17,638
Deferred income tax liabilities		5,526		5,477
Other liabilities		552		584

Total liabilities		151,706		152,125

Commitments and contingencies (Note 11)
Temporary equity
Redeemable non-controlling interests		4		6

-1-

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Financial Condition (continued)

(Dollar amounts in millions, except per share data)

(unaudited)


	March 31, 2011			December 31, 2010

Permanent Equity
BlackRock, Inc. stockholders’ equity
Common stock, $0.01 par value;		1			1
Shares authorized: 500,000,000 at March 31, 2011 and December 31, 2010;
Shares issued: 132,282,360 and 131,923,624 at March 31, 2011 and December 31, 2010, respectively;
Shares outstanding: 132,268,423 and 131,216,561 at March 31, 2011 and December 31, 2010, respectively
Preferred stock (Note 14)		1			1
Additional paid-in capital		22,455			22,502
Retained earnings		4,019			3,723
Appropriated retained earnings		58			75
Accumulated other comprehensive loss		(52	)		(96	)
Escrow shares, common, at cost (3,603 shares held at March 31, 2011 and December 31, 2010)		(1	)		(1	)
Treasury stock, common, at cost (10,334 and 703,460 shares held at March 31, 2011 and December 31, 2010, respectively)		(2	)		(111	)

Total BlackRock, Inc. stockholders’ equity		26,479			26,094
Nonredeemable non-controlling interests		188			189
Nonredeemable non-controlling interests of consolidated variable interest entities		45			45

Total permanent equity		26,712			26,328

Total liabilities, temporary equity and permanent equity	$	178,422		$	178,459

See accompanying notes to condensed consolidated financial statements.

- 2 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Income

(Dollar amounts in millions, except per share data)

(unaudited)


	Three Months Ended March 31,
	2011			2010
Revenue
Investment advisory, administration fees and securities lending revenue
Related parties	$	1,357		$	1,149
Other third parties		627			604

Investment advisory, administration fees and securities lending revenue		1,984			1,753
Investment advisory performance fees		83			50
BlackRock Solutions and advisory		128			113
Distribution fees		28			28
Other revenue		59			51

Total revenue		2,282			1,995

Expenses
Employee compensation and benefits		830			773
Distribution and servicing costs
Related parties		1			64
Other third parties		108			36
Amortization of deferred sales commissions		22			26
Direct fund expenses		143			113
General and administration		340			289
Amortization of intangible assets		40			40

Total expenses		1,484			1,341

Operating income		798			654
Non-operating income (expense)
Net gain (loss) on investments		59			37
Net gain (loss) on consolidated variable interest entities		(15	)		1
Interest and dividend income		9			4
Interest expense		(38	)		(40	)

Total non-operating income (expense)		15			2

Income before income taxes		813			656
Income tax expense		249			228

Net income		564			428
Less:
Net income (loss) attributable to nonredeemable non-controlling interests		(4	)		5

Net income attributable to BlackRock, Inc.	$	568		$	423

Earnings per share attributable to BlackRock, Inc. common stockholders:
Basic	$	2.92		$	2.20
Diluted	$	2.89		$	2.17
Cash dividends declared and paid per share	$	1.375		$	1.00
Weighted-average common shares outstanding:
Basic		191,797,365			189,676,023
Diluted		194,296,504			192,152,251

See accompanying notes to condensed consolidated financial statements.

- 3 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Dollar amounts in millions)

(unaudited)


	Three Months Ended March 31,
	2011			2010
Net income	$	564		$	428
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			3
Less: reclassification adjustment included in net income		(1	)		1

Net change from available-for-sale investments, net of tax⁽¹⁾		—			2
Minimum pension liability adjustment		—			(1	)
Foreign currency translation adjustments		44			(70	)

Comprehensive income		608			359
Less: Comprehensive income (loss) attributable to non-controlling interests		(4	)		5

Comprehensive income attributable to BlackRock, Inc.	$	612		$	354

⁽¹⁾	The tax benefit (expense) on unrealized holding gains (losses) was zero and ($1) million during the three months ended March 31, 2011 and 2010, respectively.

See accompanying notes to condensed consolidated financial statements.

- 4 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

(Dollar amounts 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 Stockholders’ Equity			Nonredeemable Non-controlling Interests			Nonredeemable Non-controlling Interests of Consolidated VIEs			Total Permanent Equity			Redeemable Non-controlling Interests / Temporary Equity
December 31, 2010	$	22,504		$	3,723		$	75		($	96	)	($	1	)	($	111	)	$	26,094		$	189		$	45		$	26,328		$	6
Net income		—			568			—			—			—			—			568			11			(15	)		564			—
Allocation of losses of consolidated collateralized loan obligations		—			—			(17	)		—			—			—			(17	)		—			17			—			—
Dividends paid, net of dividend expense for unvested RSUs		—			(272	)		—			—			—			—			(272	)		—			—			(272	)		—
Stock-based compensation		137			—			—			—			—			—			137			—			—			137			—
Merrill Lynch capital contribution		8			—			—			—			—			—			8			—			—			8			—
Net issuance of common shares related to employee stock transactions		(205	)		—			—			—			—			109			(96	)		—			—			(96	)		—
Net tax benefit (shortfall) from stock-based compensation		13			—			—			—			—			—			13			—			—			13			—
Subscriptions/(redemptions/distributions) - non-controlling interest holders		—			—			—			—			—			—			—			(12	)		(2	)		(14	)		—
Net consolidations (deconsolidations) of sponsored investment funds		—			—			—			—			—			—			—			—			—			—			(2	)
Foreign currency translation adjustments		—			—			—			44			—			—			44			—			—			44			—

March 31, 2011	$	22,457		$	4,019		$	58		($	52	)	($	1	)	($	2	)	$	26,479		$	188		$	45		$	26,712		$	4

⁽¹⁾	Includes $1 million of common stock and $1 million of preferred stock at both March 31, 2011 and December 31, 2010.

See accompanying notes to condensed consolidated financial statements.

- 5 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Equity

(Dollar amounts 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 Stockholders’ Equity			Nonredeemable Non-controlling Interests			Nonredeemable Non-controlling Interests of Consolidated VIEs			Total Permanent Equity			Redeemable Non-controlling Interests / Temporary Equity
December 31, 2009	$	22,129		$	2,436		$	—	($	96	)	($	137	)	($	3	)	$	24,329		$	224		$	—		$	24,553		$	49
January 1, 2010 initial recognition of ASU 2009-17		—			—			114		—			—			—			114			(49	)		49			114			—
Net income		—			423			—		—			—			—			423			4			1			428			—
Dividends paid, net of dividend expense for unvested RSUs		—			(196	)		—		—			—			—			(196	)		—			—			(196	)		—
Stock-based compensation		108			—			—		—			—			—			108			—			—			108			—
PNC LTIP capital contribution		5			—			—		—			—			—			5			—			—			5			—
Exchange of common stock for preferred shares series B		128			—			—		—			—			(128	)		—			—			—			—			—
Net issuance of common shares related to employee stock transactions		(171	)		—			—		—			—			64			(107	)		—			—			(107	)		—
Convertible debt conversions, net of tax		(64	)		—			—		—			—			64			—			—			—			—			—
Net tax benefit (shortfall) from stock-based compensation		41			—			—		—			—			—			41			—			—			41			—
Minimum pension liability adjustment		—			—			—		(1	)		—			—			(1	)		—			—			(1	)		—
Subscriptions/(redemptions/distributions) - non-controlling interest holders		—			—			—		—			—			—			—			(6	)		(4	)		(10	)		19
Net consolidations (deconsolidations) of sponsored investment funds		—			—			—		—			—			—			—			—			—			—			11
Other changes in non-controlling interests		—			—			—		—			—			—			—			1			—			1			—
Foreign currency translation adjustments		—			—			—		(70	)		—			—			(70	)		—			—			(70	)		—
Change in net unrealized gain (loss) from available-for-sale investments, net of tax		—			—			—		2			—			—			2			—			—			2			—

March 31, 2010	$	22,176		$	2,663		$	114	($	165	)	($	137	)	($	3	)	$	24,648		$	174		$	46		$	24,868		$	79

⁽¹⁾	Includes $1 million of common stock and $1 million of preferred stock at both March 31, 2010 and December 31, 2009.

See accompanying notes to condensed consolidated financial statements.

- 6 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollar amounts in millions)

(unaudited)


	Three Months Ended March 31,
	2011			2010
Cash flows from operating activities
Net income	$	564		$	428
Adjustments to reconcile net income to cash from operating activities:
Depreciation and amortization		73			78
Amortization of deferred sales commissions		22			26
Stock-based compensation		137			108
Deferred income tax expense (benefit)		48			55
Net (gains) losses on non-trading investments		(22	)		(12	)
Purchases of investments within consolidated funds		(1	)		(8	)
Proceeds from sales and maturities of investments within consolidated funds		9			14
Assets and liabilities of consolidated VIEs:
Change in cash and cash equivalents		(40	)		(42	)
Net (gains) losses within consolidated VIEs		15			—
Net (purchases)/proceeds within consolidated VIEs		42			36
(Earnings) losses from equity method investees		(41	)		(35	)
Distributions of earnings from equity method investees		5			4
Other adjustments		—			(1	)
Changes in operating assets and liabilities:
Accounts receivable		(130	)		(157	)
Due from related parties		—			11
Deferred sales commissions		(16	)		(23	)
Investments, trading		(1	)		(59	)
Other assets		(68	)		149
Accrued compensation and benefits		(982	)		(863	)
Accounts payable and accrued liabilities		292			203
Due to related parties		(31	)		(99	)
Other liabilities		(31	)		23

Cash flows from operating activities		(156	)		(164	)

Cash flows from investing activities
Purchases of investments		(53	)		(28	)
Purchases of assets held for sale		—			(1	)
Proceeds from sales and maturities of investments		104			29
Distributions of capital from equity method investees		17			20
Net consolidations (deconsolidations) of sponsored investment funds		—			2
Acquisitions, net of cash acquired		—			(8	)
Purchases of property and equipment		(83	)		(44	)

Cash flows from investing activities		(15	)		(30	)

- 7 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(Dollar amounts in millions)

(unaudited)


	Three Months Ended March 31,
	2011			2010
Cash flows from financing activities
Repayments of short-term borrowings		(100	)		(1,354	)
Repayments of convertible debt		(4	)		(148	)
Cash dividends paid		(272	)		(196	)
Proceeds from stock options exercised		9			6
Proceeds from issuance of common stock		1			1
Repurchases of common stock		(106	)		(114	)
Merrill Lynch capital contribution		8			—
Net (redemptions/distributions paid)/subscriptions received from non-controlling interests holders		(14	)		9
Excess tax benefit from stock-based compensation		13			41

Cash flows from financing activities		(465	)		(1,755	)

Effect of exchange rate changes on cash and cash equivalents		48			(56	)

Net increase (decrease) in cash and cash equivalents		(588	)		(2,005	)
Cash and cash equivalents, beginning of period		3,367			4,708

Cash and cash equivalents, end of period	$	2,779		$	2,703

Supplemental disclosure of cash flow information is as follows:
Cash paid for:
Interest	$	24		$	26
Interest on borrowings of consolidated VIEs	$	15		$	12
Income taxes	$	132		$	67
Supplemental schedule of non-cash investing and financing transactions is as follows:
Issuance of common stock	$	206		$	230
Increase (decrease) in borrowings due to consolidation of VIEs	$	—		$	1,157

See accompanying notes to condensed consolidated financial statements.

- 8 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

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 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 class, 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.

On March 31, 2011, equity ownership of BlackRock was as follows:


	Voting Common Stock			Capital Stock⁽¹⁾
The PNC Financial Services Group, Inc. (“PNC”)		25.1	%		20.2	%
Barclays Bank PLC (“Barclays”)		2.3	%		19.5	%
Bank of America Corporation (“Bank of America”)/Merrill Lynch & Co., Inc.		—	%		7.1	%
Other		72.6	%		53.2	%

		100.0	%		100.0	%

⁽¹⁾	Includes outstanding common and non-voting preferred stock.

- 9 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

2. Significant Accounting Policies

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its controlled subsidiaries. Non-controlling interests 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 and transactions between consolidated entities have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain financial information that normally is included in annual financial statements, including certain financial statement footnotes, is not required for interim reporting purposes and has been condensed or omitted herein. These financial statements should be read in conjunction with the 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, 2010, which was filed with the Securities and Exchange Commission (“SEC”) on February 28, 2011.

The interim financial information at March 31, 2011 and for the three months ended March 31, 2011 and 2010 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.

Reclassifications

Certain items previously reported have been reclassified to conform to the current period presentation.

Fair Value Measurements

Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), requires among other things, disclosures about assets and liabilities that are measured and reported at fair value.

Hierarchy of Fair Value Inputs

The provisions of 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. Additionally, companies are required to provide additional disclosure regarding instruments in the Level 3 category (which have inputs to the valuation techniques that are unobservable and require significant management judgment), including a reconciliation of the beginning and ending balances separately for each major class of assets and liabilities and new disclosures with regards to significant transfers into and out of Levels 1 and 2. See Accounting Policies Adopted in the Three Months Ended March 31, 2011 below for more information on additional fair value disclosure requirements adopted in 2011.

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 are equal to the earnings of such funds), ETFs, equities and certain derivatives.

- 10 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

2. Significant Accounting Policies (continued)

Fair Value Measurements (continued)

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 were 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 equivalents) of certain investments as their fair value.

•

Level 2 assets in this category 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 and mutual funds valued based on NAV 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 non-binding 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 and are subject to current redemption restrictions that will not be lifted in the near term are included in Level 3.

•

Level 3 assets in this category 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 and bank loans.

Level 3 inputs include BlackRock capital accounts for its partnership interests in various alternative investments, including distressed credit hedge funds, real estate and private equity funds, which may be adjusted by using the returns of certain market indices. The various partnerships 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, 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 as an input to value these investments.

•

Level 3 liabilities included in this category include borrowings of consolidated collateralized loan obligations valued based upon non-binding single broker quotes.

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.

Fair Value Option

ASC 825-10, Financial Instruments (“ASC 825-10”), provides a fair value option election that allows companies to irrevocably elect fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities. 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, must be applied to an entire 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.

- 11 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

2. Significant Accounting Policies (continued)

Collateral Assets Held and Liabilities Under Securities Lending Agreements

The Company facilitates securities lending arrangements whereby securities held by separate account assets maintained by the life insurance companies are lent to third parties. In exchange, the Company receives collateral, principally cash and securities, with minimums generally ranging from approximately 102% to 112% of the value of the securities lent in order to reduce counterparty risk. Under the Company’s securities lending arrangements, the Company can resell or re-pledge the collateral and the borrower can re-sell or re-pledge 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 the collateral, the Company records on its condensed consolidated statements of financial condition the collateral received under these arrangements (both cash and non-cash), as its own asset in addition to an equal and offsetting collateral liability for the obligation to return the collateral. At March 31, 2011, the fair value of loaned securities held by separate account assets was approximately $15.9 billion and the collateral held under these securities lending agreements was approximately $17.2 billion. During the three months ended March 31, 2011 and 2010, the Company had not sold or repledged any of the collateral received under these arrangements.

Appropriated Retained Earnings

Upon adoption of Accounting Standards Update (“ASU”) 2009-17 on January 1, 2010, BlackRock consolidated three collateralized loan obligations (“CLOs”) and recorded a cumulative effect adjustment to appropriated retained earnings on the condensed consolidated statement 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. Subsequent to adoption of ASU 2009-17, the net change in the fair value of the CLOs’ assets and liabilities has been recorded as net income (loss) attributable to nonredeemable non-controlling interests and as an adjustment to appropriated retained earnings.

Comprehensive Income Attributable to BlackRock

Prior to the issuance of BlackRock’s third quarter 2010 Form 10-Q, the Company determined that pursuant to ASC 810, Consolidation, in the first quarter 2010 it should have presented the amount of comprehensive income attributable to non-controlling interests and comprehensive income attributable to BlackRock in its condensed consolidated statements of comprehensive income and it mislabeled total comprehensive income as being attributable to BlackRock. Therefore, the accompanying condensed consolidated statement of comprehensive income for the interim period ended March 31, 2010 has been corrected to include the required information.

- 12 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

2. Significant Accounting Policies (continued)

Accounting Policies Adopted in the Three Months Ended March 31, 2011

Additional Level 3 Fair Value Rollforward Disclosures

ASU 2010-06, Fair Value Measurements and Disclosures, requires separate disclosures about purchases, sales, issuances and other settlements in the rollforward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption on January 1, 2011 of the additional Level 3 rollforward disclosure requirements did not materially impact BlackRock’s financial statement disclosures.

3. Investments

A summary of the carrying value of total investments is as follows:


*(Dollar amounts in millions)*	March 31, 2011		December 31, 2010
Available-for-sale investments	$	59	$	45
Held-to-maturity investments		90		100
Trading investments:
Consolidated sponsored investment funds		76		60
Other equity securities		2		22
Deferred compensation plan mutual fund investments		52		49

Total trading investments		130		131
Other investments:
Consolidated sponsored investment funds		348		337
Equity method investments		528		556
Deferred compensation plan hedge fund equity method investments		25		27
Carried interest		13		13
Cost method investments		335		331

Total other investments		1,249		1,264


Total investments	$	1,528	$	1,540

At March 31, 2011, the Company consolidated $424 million of investments held by consolidated sponsored investment funds (non-VIEs) of which $76 million and $348 million were classified as trading investments and other investments, respectively.

At December 31, 2010, the Company consolidated $397 million of investments held by consolidated sponsored investment funds (non-VIEs) of which $60 million and $337 million were classified as trading investments and other investments, respectively.

- 13 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

3. Investments (continued)

Available-for-Sale Investments

A summary of the cost and carrying value of investments classified as available-for-sale is as follows:


*(Dollar amounts in millions)*
			Gross Unrealized					Carrying Value
March 31, 2011	Cost		Gains		Losses			Carrying Value
Available-for-sale investments:
Equity securities:
Sponsored investment funds	$	48	$	3	($	1	)	$	50
Collateralized debt obligations (“CDOs”)		1		1		—			2
Debt securities:
Mortgage debt		4		1		—			5
Asset-backed debt		1		1		—			2

Total available-for-sale investments	$	54	$	6	($	1	)	$	59


			Gross Unrealized					Carrying Value
December 31, 2010	Cost		Gains		Losses			Carrying Value
Available-for-sale investments:
Equity securities:
Sponsored investment funds	$	33	$	4	($	1	)	$	36
Collateralized debt obligations		2		—		—			2
Debt securities:
Mortgage debt		4		2		—			6
Asset-backed debt		1		—		—			1

Total available-for-sale investments	$	40	$	6	($	1	)	$	45

Available-for-sale investments include seed investments in BlackRock sponsored investment funds and debt securities received upon closure of certain funds in lieu of the Company’s remaining investment in the funds.

The Company did not record any other-than-temporary impairments on available-for-sale debt or equity securities during the three months ended March 31, 2011 and 2010.

- 14 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

3. Investments (continued)

Available-for-Sale Investments (continued)

The cost and fair value of debt securities classified as available-for-sale at March 31, 2011 and December 31, 2010 by maturity date were as follows:


*(Dollar amounts in millions)*	1 Year or less		After 1 Year through 5 Years		After 5 Years through 10 Years		After 10 Years		Total
March 31, 2011
Mortgage debt	$	—	$	—	$	1	$	3	$	4
Asset-backed debt		—		—		—		1		1

Cost	$	—	$	—	$	1	$	4	$	5

Fair value	$	—	$	—	$	1	$	6	$	7

December 31, 2010
Mortgage debt	$	—	$	—	$	1	$	3	$	4
Asset-backed debt		—		—		—		1		1

Cost	$	—	$	—	$	1	$	4	$	5

Fair value	$	—	$	—	$	1	$	6	$	7

Held-to-Maturity Investments

A summary of the carrying value of held-to-maturity investments is as follows:


	Carrying Value
*(Dollar amounts in millions)*	March 31, 2011		December 31, 2010
Held-to-maturity investments:
Foreign government debt	$	90	$	100

Held-to-maturity investments include debt instruments held for regulatory purposes. The amortized cost (the carrying value) of these investments approximates fair value.

The amortized cost and fair value of debt securities classified as held-to-maturity at March 31, 2011 and December 31, 2010 by maturity date were as follows:


*(Dollar amounts in millions)*	1 Year or less		After 1 Year through 5 Years		After 5 Years through 10 Years		After 10 Years		Total
March 31, 2011
Amortized cost	$	45	$	39	$	—	$	6	$	90

Fair value	$	45	$	39	$	—	$	6	$	90

December 31, 2010
Amortized cost	$	18	$	76	$	—	$	6	$	100

Fair value	$	18	$	76	$	—	$	6	$	100

- 15 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

3. Investments (continued)

Trading Investments

A summary of the cost and carrying value of trading investments is as follows:


	March 31, 2011				December 31, 2010
*(Dollar amounts in millions)*	Cost		Carrying Value		Cost		Carrying Value
Trading investments:
Deferred compensation plan mutual fund investments	$	45	$	52	$	45	$	49
Equity securities		37		39		37		45
Debt securities:
Municipal debt		8		8		10		10
Corporate debt		31		31		25		27

Total trading investments	$	121	$	130	$	117	$	131

At March 31, 2011, trading investments include $38 million of equity and $38 million of debt securities held by consolidated sponsored investment funds, $52 million of certain deferred compensation plan mutual fund investments and $2 million of equity securities held in separate investment accounts for the purpose of establishing an investment history in various investment strategies before being marketed to investors.

Other Investments

A summary of the cost and carrying value of other investments is as follows:


	March 31, 2011				December 31, 2010
*(Dollar amounts in millions)*	Cost		Carrying Value		Cost		Carrying Value
Other investments:
Consolidated sponsored investment funds	$	316	$	348	$	319	$	337
Equity method		515		528		569		556
Deferred compensation plan hedge fund equity method investments		17		25		20		27
Carried interest		—		13		—		13
Cost method investments:
Federal Reserve Bank stock		326		326		325		325
Other		9		9		6		6

Total cost method investments		335		335		331		331

Total other investments	$	1,183	$	1,249	$	1,239	$	1,264

Consolidated sponsored investment funds include investments in third party private equity funds, direct investments in private companies and third party hedge funds held by BlackRock sponsored investment funds.

Equity method investments include BlackRock’s direct investment in BlackRock sponsored investment products.

Carried interest represents allocations to BlackRock general partner capital accounts for certain funds. These balances are subject to change upon cash distributions, additional allocations, or reallocations back to limited partners within the respective funds.

- 16 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

3. Investments (continued)

Other Investments (continued)

Cost method investments include non-marketable securities, including $326 million of Federal Reserve Bank stock at March 31, 2011, which is held for regulatory purposes and is restricted from sale. As of March 31, 2011, there were no indicators of impairments on these investments.

4. Consolidated Sponsored Investment Funds

The Company consolidates certain sponsored investment funds primarily because it is deemed to control such funds in accordance with GAAP. The investments that are owned by these consolidated sponsored investment funds are classified as other or trading investments. At March 31, 2011 and December 31, 2010, 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:


*(Dollar amounts in millions)*	March 31, 2011			December 31, 2010
Cash and cash equivalents	$	42		$	65
Investments:
Trading investments		76			60
Other investments		348			337
Other assets		11			3
Other liabilities		(26	)		(10	)
Non-controlling interests		(192	)		(195	)

BlackRock’s net interests in consolidated investment funds	$	259		$	260

At March 31, 2011 and December 31, 2010, one other consolidated sponsored investment fund and three consolidated CLOs, which are deemed to be variable interest entities (“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 on these consolidated products.

BlackRock’s total exposure to consolidated sponsored investment funds of $259 million and $260 million at March 31, 2011 and December 31, 2010, respectively, represents the value of the Company’s economic ownership interest in these sponsored investment funds. Valuation changes associated with these consolidated investment funds are reflected in non-operating income (expense) and partially offset in net income (loss) attributable to non-controlling interests for the portion not attributable to BlackRock.

The Company may 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 may not be readily able to sell investments held by consolidated sponsored investment funds in order to obtain cash for use in its operations.

- 17 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures

Fair Value Hierarchy

Total assets measured at fair value on a recurring basis of $140,726 million at March 31, 2011 were as follows:


	Assets measured at fair value
*(Dollar amounts 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, 2011
Assets:

Investments
Available-for-sale:
Equity securities (funds and CDOs)	$	50	$	—	$	2	$	—	$	52
Debt securities		—		7		—		—		7

Total available-for-sale		50		7		2		—		59
Held-to-maturity:
Debt securities		—		—		—		90		90
Trading:
Deferred compensation plan mutual fund investments		52		—		—		—		52
Equity securities		35		4		—		—		39
Debt securities		—		39		—		—		39

Total trading		87		43		—		—		130
Other investments:
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		—		1		20		—		21
Private / public equity		22		—		305		—		327

Total consolidated sponsored investment funds		22		1		325		—		348
Equity method:
Hedge funds / Funds of hedge funds		—		45		227		42		314
Private equity investments		—		—		70		20		90
Real estate funds		—		12		41		13		66
Fixed income mutual funds		51		—		—		—		51
Equity / Multi-asset class mutual funds		7		—		—		—		7

Total equity method		58		57		338		75		528
Deferred compensation plan hedge fund equity method investments		—		25		—		—		25
Carried interest		—		—		—		13		13
Cost method investments		—		—		—		335		335

Total investments		217		133		665		513		1,528
Separate account assets:
Equity securities		79,539		3		41		—		79,583
Debt securities		—		36,872		108		—		36,980
Derivatives		21		1,570		—		—		1,591
Money market funds		3,035		—		—		—		3,035
Other		—		—		—		714		714

Total separate account assets		82,595		38,445		149		714		121,903
Collateral held under securities lending agreements:
Equity securities		12,578		—		—		—		12,578
Debt securities		—		4,658		—		—		4,658

Total collateral held under securities lending agreements		12,578		4,658		—		—		17,236
Other assets⁽²⁾		—		12		—		—		12
Assets of consolidated VIEs:
Bank loans		—		1,081		38		—		1,119
Bonds		—		116		—		—		116
Private / public equity		4		3		32		—		39

Total assets of consolidated VIEs		4		1,200		70		—		1,274

Total assets measured at fair value	$	95,394	$	44,448	$	884	$	1,227	$	141,953

⁽¹⁾

Comprised of investments held at cost, amortized cost, carried interest and equity method investments, which include investment companies and other assets, which in accordance with GAAP are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.

⁽²⁾	Includes company-owned and split-dollar life insurance policies.

- 18 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures (continued)

Fair Value Hierarchy (continued)

Liabilities measured at fair value on a recurring basis at March 31, 2011 were as follows:


*(Dollar amounts in millions)*	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		March 31, 2011
Liabilities:
Borrowings of consolidated VIEs	$	—	$	—	$	1,297	$	1,297
Collateral liabilities under securities lending agreements		12,578		4,658		—		17,236
Other liabilities⁽¹⁾		—		3		—		3

Total liabilities measured at fair value	$	12,578	$	4,661	$	1,297	$	18,536

⁽¹⁾	Includes credit default swap (Pillars) recorded within other liabilities on the condensed consolidated statement of financial condition.

- 19 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures (continued)

Fair Value Hierarchy (continued)

Total assets measured at fair value on a recurring basis of $140,460 million at December 31, 2010 were as follows:


	Assets measured at fair value
*(Dollar amounts 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, 2010
Assets:

Investments
Available-for-sale:
Equity securities (funds and CDOs)	$	36	$	—	$	2	$	—	$	38
Debt securities		—		7		—		—		7

Total available-for-sale		36		7		2		—		45
Held-to-maturity:
Debt securities		—		—		—		100		100
Trading:
Deferred compensation plan mutual funds investments		49		—		—		—		49
Equity securities		36		9		—		—		45
Debt securities		—		37		—		—		37

Total trading		85		46		—		—		131
Other investments:
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		—		1		19		—		20
Private / public equity		18		—		299		—		317

Total consolidated sponsored investment funds		18		1		318		—		337
Equity method:
Hedge funds / Funds of hedge funds		—		44		226		34		304
Private equity investments		—		—		68		20		88
Real estate funds		—		8		36		10		54
Fixed income mutual funds		103		—		—		—		103
Equity / Multi-asset class mutual funds		7		—		—		—		7

Total equity method		110		52		330		64		556
Deferred compensation plan hedge fund equity method investments		—		27		—		—		27
Carried interest		—		—		—		13		13
Cost method investments		—		—		—		331		331

Total investments		249		133		650		508		1,540

Separate account assets:
Equity securities		79,727		3		4		—		79,734
Debt securities		—		36,415		170		—		36,585
Derivatives		1		1,598		—		—		1,599
Money market funds		2,549		—		—		—		2,549
Other		—		—		—		670		670

Total separate account assets		82,277		38,016		174		670		121,137
Collateral held under securities lending agreements:
Equity securities		15,237		—		—		—		15,237
Debt securities		—		2,401		—		—		2,401

Total collateral held under securities lending agreements		15,237		2,401		—		—		17,638
Other assets⁽²⁾		—		11		—		—		11
Assets of consolidated VIEs:
Bank loans		—		1,130		32		—		1,162
Bonds		—		113		—		—		113
Private / public equity		4		3		30		—		37

Total assets of consolidated VIEs		4		1,246		62		—		1,312

Total	$	97,767	$	41,807	$	886	$	1,178	$	141,638

⁽¹⁾

Comprised of investments held at cost, amortized cost, carried interest and equity method investments, which include investment companies, and other assets which in accordance with GAAP are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and financial liabilities under fair value measures, therefore, the Company’s investment in such equity method investees may not represent fair value.

⁽²⁾	Includes company-owned and split-dollar life insurance policies.

- 20 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures (continued)

Fair Value Hierarchy (continued)

Liabilities measured at fair value on a recurring basis at December 31, 2010 were as follows:


*(Dollar amounts in millions)*	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2010
Liabilities:
Borrowings of consolidated VIEs	$	—	$	—	$	1,278	$	1,278
Collateral liabilities under securities lending agreements		15,237		2,401		—		17,638
Other liabilities⁽¹⁾		—		3		—		3

Total liabilities measured at fair value	$	15,237	$	2,404	$	1,278	$	18,919

⁽¹⁾	Includes credit default swap (Pillars) recorded within other liabilities on the condensed consolidated statement of financial condition.

Separate Account Assets

BlackRock Pensions Limited and BlackRock Asset Management Pensions Limited, both wholly-owned subsidiaries of the Company, are registered life insurance companies in the United Kingdom that maintain separate account assets, representing segregated funds held for purposes of funding individual and group pension contracts, and equal and offsetting separate account non-financial liabilities. The net investment income and net gains and losses attributable to separate account assets accrue directly to the contract owners and are not reported on the Company’s condensed consolidated statements of income.

Money Market Funds within Cash and Cash Equivalents

At March 31, 2011 and December 31, 2010, approximately $63 million and $87 million, respectively, of money market funds were recorded within cash and cash equivalents on the Company’s condensed consolidated statements of financial condition. Money market funds are valued through the use of quoted market prices (a Level 1 input), or $1.00, which generally is the net asset value of the fund.

Level 3 Assets

Level 3 assets recorded within investments, which include equity method investments and consolidated investments of real estate funds, private equity funds and funds of private equity funds, are valued based upon valuations, including capital accounts, received from internal as well as third party fund managers. Fair valuations of the underlying funds are based on a combination of methods, which may include third-party independent appraisals and discounted cash flow techniques. Direct investments in private equity companies held by funds of private equity funds are 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 and market indices, among other factors.

Level 3 assets recorded within separate account assets include single broker non-binding quotes for fixed income securities and equity securities which have unobservable inputs due to certain corporate actions.

Level 3 assets of consolidated VIEs include bank loans valued based on single broker non-binding quotes and direct private equity investments and private equity funds valued based upon valuations received from internal as well as third party fund 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 quotes.

- 21 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

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 March 31, 2011


*(Dollar amounts in millions)*	December 31, 2010		Realized and unrealized gains / (losses) in earnings and OCI			Purchases		Sales			Issuances and other settlements⁽¹⁾			Transfers into Level 3		Transfers out of Level 3			March 31, 2011		Total net gains (losses) included in earnings⁽²⁾
Assets:
Investments:
Available-for-sale:
Equity securities (funds and CDOs)	$	2	$	—		$	—	$	—		$	—		$	—	$	—		$	2	$	—
Consolidated sponsored investment funds:
Hedge funds / Funds of funds		19		3			—		(1	)		—			—		(1	)		20		3
Private equity		299		12			1		(7	)		—			—		—			305		12
Equity method:
Hedge funds / Funds of hedge funds		226		16			2		(1	)		(16	)		—		—			227		16
Private equity investments		68		1			1		—			—			—		—			70		1
Real estate funds		36		1			4		—			—			—		—			41		1

Total Level 3 investments		650		33			8		(9	)		(16	)		—		(1	)		665		33
Separate account assets:
Equity securities		4		(1	)		3		(3	)		—			38		—			41
Debt securities		170		(1	)		96		(70	)		—			—		(87	)		108

Total Level 3 separate account assets		174		(2	)		99		(73	)		—			38		(87	)		149		n/a	⁽³⁾

Assets of consolidated VIEs:
Bank loans		32		(2	)		5		(3	)		—			14		(8	)		38
Private equity		30		2			—		—			—			—		—			32

Total Level 3 assets of consolidated VIEs		62		—			5		(3	)		—			14		(8	)		70		n/a	⁽⁴⁾

Total Level 3 assets	$	886	$	31		$	112	($	85	)	($	16	)	$	52	($	96	)	$	884

Liabilities:
Borrowings of consolidated VIEs	$	1,278	($	19	)	$	—	$	—		$	—		$	—	$	—		$	1,297		n/a	⁽⁴⁾

n/a – not applicable

⁽¹⁾	Includes distributions from equity method investees.

⁽²⁾	Earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date.

⁽³⁾	The net investment income and net gains and losses attributable to separate account assets accrue directly to the contract owners and are not reported on the Company’s condensed consolidated statements of income.

⁽⁴⁾	The net gain (loss) on consolidated VIEs is solely attributable to non-controlling interests on the Company’s condensed consolidated statements of income.

- 22 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

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 March 31, 2010


*(Dollar amounts in millions)*	December 31, 2009		Realized and unrealized gains / (losses), net			Purchases, sales, other settlements and issuances, net			Net transfers in and/or out of Level 3			March 31, 2010		Total net gains (losses) included in earnings⁽¹⁾
Assets:
Investments:
Consolidated sponsored investment funds:
Hedge funds / Funds of funds	$	26	$	—		($	1	)	$	—		$	25	($	1	)
Private equity		312		4			(36	)		—			280		5
Equity method:
Hedge funds / Funds of hedge funds		247		13			(23	)		—			237		14
Private equity investments		47		—			7			—			54		1
Real estate funds		36		(1	)		4			—			39		(1	)
Deferred compensation plan hedge funds		15		2			—			—			17		2

Total Level 3 investments		683		18			(49	)		—			652		20
Separate account assets:
Equity securities		5		—			(3	)		61			63
Debt securities		1,287		34			185			(416	)		1,090

Total Level 3 separate account assets		1,292		34			182			(355	)		1,153		n/a	⁽²⁾
Other assets		46		(12	)		(10	)		—			24		(12	)
Assets of consolidated VIEs:
Private equity		—		2			33			—			35

Total Level 3 assets	$	2,021	$	42		$	156		($	355	)	$	1,864

Liabilities:
Borrowings of consolidated VIEs	$	—	($	57	)	$	1,157		$	—		$	1,214		n/a	⁽³⁾

n/a – not applicable

⁽¹⁾	Earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date.

⁽²⁾	The net investment income and net gains and losses attributable to separate account assets accrue directly to the contract owners and are not reported on the Company’s condensed consolidated statements of income.

⁽³⁾	The net gain (loss) on consolidated VIEs is solely attributable to non-controlling interests on the Company’s condensed consolidated statements of income.

- 23 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

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 non-operating income (expense) on the Company’s condensed consolidated statements of income. A portion of net income (loss) for consolidated investments and all of the net income (loss) for consolidated VIEs is allocated to non-controlling interests to reflect net income (loss) not attributable to the Company.

Significant Transfers in and/or out of Levels

Transfers in and/or out of Levels are reflected as of the beginning of the period 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 value of certain equity method investments no longer represents fair value as determined under fair value methodologies.

Separate Account Assets

For the three months ended March 31, 2011 there were $87 million of transfers out of Level 3 to Level 2 related to debt securities held within separate account assets. The transfers out of Level 3 primarily were due to availability of observable market inputs, including additional inputs from pricing vendors and brokers.

For the three months ended March 31, 2011 there were $38 million of transfers of equity securities held within separate account assets into Level 3 from Level 1. The transfers into Level 3 were primarily due to market inputs no longer being considered observable.

Significant Other Settlements in 2011 and 2010

For the three months ended March 31, 2011 there were $16 million of distributions from equity method investees.

As of January 1, 2010, upon the adoption of ASU 2009-17, there was a $35 million reclassification of assets from Level 3 private equity investments to Level 3 private equity assets of consolidated VIEs, as well as the consolidation of $1,157 million of borrowings within the consolidated CLOs.

- 24 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures (continued)

Investments in Certain Entities that Calculate Net Asset Value Per Share

As a practical expedient to value certain investments, the Company relies on net asset values as the fair value for certain investments. The following tables lists 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 net asset value per share (or its equivalent).

At March 31, 2011

(Dollar amounts in millions)

Ref

Fair Value

Total
Unfunded
Commitments

Redemption
Frequency

Redemption
Notice Period

Trading:

Equity

(a)

—

Daily (100%)

none

Consolidated sponsored investment funds:

Private equity funds of funds

(b)

250

n/r

Other funds of hedge funds

(c)

—

Quarterly (100%)

30 – 90 days

Equity method:⁽¹⁾

Hedge funds/funds of hedge funds

(d)

273

Monthly (1%),
Quarterly (18%)
n/r (81%)

15 – 90 days

Private equity funds

(e)

n/r

Real estate funds

(f)

Quarterly (23%)
n/r (77%)

60 days

Deferred compensation plan hedge fund investments

(g)

—

Monthly (12%),
Quarterly (88%)

60 – 90 days

Consolidated VIE:

Private equity funds

(h)

n/r

Total

707

160

n/r – not redeemable

⁽¹⁾	Comprised of equity method investments, which include investment companies, which in accordance with GAAP account for both their financial assets and financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees approximates fair value.

- 25 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures (continued)

Investments in Certain Entities that Calculate Net Asset Value Per Share (continued)

At December 31, 2010

(Dollar amounts in millions)

Ref

Fair Value

Total
Unfunded
Commitments

Redemption
Frequency

Redemption
Notice Period

Trading:

Equity

(a)

—

Daily (100%)

none

Consolidated sponsored investment funds:

Private equity funds of funds

(b)

247

n/r

Other funds of hedge funds

(c)

—

Quarterly (84%)
Annual (16%)

30 – 90 days

Equity method:⁽¹⁾

Hedge funds/funds of hedge funds

(d)

269

Monthly (1%),
Quarterly (17%)
n/r (82%)

15 – 90 days

Private equity funds

(e)

n/r

Real estate funds

(f)

Quarterly (18%)
n/r (82%)

60 days

Deferred compensation plan hedge fund investments

(g)

—

Monthly (11%),
Quarterly (89%)

60 – 90 days

Consolidated VIE:

Private equity funds

(h)

n/r

Total

696

182

n/r – not redeemable

⁽¹⁾	Comprised of equity method investments, which include investment companies, which in accordance with GAAP account for both their financial assets and financial liabilities under fair value measures; therefore, the Company’s investment in such equity method investees approximates fair value.

(a)

This category includes several 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 net asset value 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.

- 26 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures (continued)

Investments in Certain Entities that Calculate Net Asset Value Per Share (continued)

(b)

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 the net asset value of the Company’s ownership interest in partners’ capital 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 8 years at both March 31, 2011 and December 31, 2010. The total remaining unfunded commitments to other third party funds was $55 million and $62 million at March 31, 2011 and December 31, 2010, respectively. The Company is contractually obligated to fund only $40 million and $42 million at March 31, 2011 and December 31, 2010, respectively, to the consolidated funds, while the remaining unfunded balances in the tables above are required to be funded by capital contributions from non-controlling interest holders.

(c)

This category includes several consolidated funds of hedge funds that invest in multiple strategies to diversify risks. The fair values of the investments in this category have been estimated using the net asset value of the fund’s ownership interest in partners’ capital of each fund in the portfolio. Investments in this category generally can be redeemed, as long as there are no restrictions in place by the underlying funds.

(d)

This category includes hedge funds and funds of hedge funds that invest primarily in equities, fixed income securities, distressed credit and mortgage instruments and other third party hedge funds. The fair values of the investments in this category have been estimated using the net asset value of the Company’s ownership interest in partners’ capital. It is estimated that the investments in the funds that are not subject to redemptions will be liquidated over a weighted-average period of less than 7 years at both March 31, 2011 and December 31, 2010.

(e)

This category includes several private equity funds that initially invest in non-marketable securities of private companies, which ultimately may become public in the future. The fair values of these investments have been estimated using the net asset value of the Company’s ownership interest in partners’ capital 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 is estimated that the investment in these funds will be liquidated over a weighted-average period of approximately 5 years at both March 31, 2011 and December 31, 2010.

(f)

This category includes several real estate funds that invest primarily to acquire, expand, renovate, finance, hold for investment, and ultimately sell income-producing apartment properties or to capitalize on the distress in the residential real estate market. The fair values of the investments in this category have been estimated using the net asset value of the Company’s ownership interest in partners’ capital. The majority of the Company’s investments in these funds is not subject to redemption 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 will be liquidated over a weighted-average period of approximately 7 years at both March 31, 2011 and December 31, 2010.

(g)

This category includes investments in 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 the net asset value of the Company’s ownership interest in partners’ capital as well as performance inputs. The investments in these funds will be liquidated upon settlement of certain deferred compensation liabilities.

- 27 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

5. Fair Value Disclosures (continued)

Investments in Certain Entities that Calculate Net Asset Value Per Share (continued)

(h)

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 the net asset value of the Company’s ownership interest in partners’ capital 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 4 years and 5 years at March 31, 2011 and December 31, 2010, respectively. Total remaining unfunded commitments to other third party funds is $2 million at both March 31, 2011 and December 31, 2010, which are required to be funded by capital contributions from non-controlling interest holders.

Fair Value Option

Upon the initial consolidation of three CLOs on January 1, 2010, 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 simplifications. 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 non-controlling 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.

The following table presents the fair value of those assets and liabilities selected for fair value accounting as of March 31, 2011 and December 31, 2010:


*(Dollar amounts in millions)*	March 31, 2011		December 31, 2010
CLO Bank Loans:
Aggregate principal amounts outstanding	$	1,132	$	1,245
Fair value	$	1,119	$	1,162
Aggregate unpaid principal balance in excess of fair value	$	13	$	83
Unpaid principal balance of loans more than 90 days past due	$	3	$	3
Aggregate fair value of loans more than 90 days past due	$	1	$	1
Aggregate unpaid principal balance in excess of fair value for loans more than 90 days past due	$	2	$	2
CLO Borrowings:
Aggregate principal amounts outstanding	$	1,425	$	1,430
Fair value	$	1,297	$	1,278

At March 31, 2011 the principal amounts outstanding of the borrowings issued by the CLOs mature between 2016 and 2019.

During the three months ended March 31, 2011 and 2010, the change in fair value of the bank loans, along with the bonds held at fair value, resulted in a $20 million gain and $67 million gain, respectively, which was offset by a $34 million loss and $67 million loss, respectively, in the fair value of the CLO borrowings. The net loss was recorded in net gain (loss) on consolidated VIEs on the condensed consolidated statement of income. The change in fair value of the assets and liabilities includes interest income and expense, respectively.

- 28 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

6. Variable Interest Entities

In the normal course of business, the Company is the manager of various types of sponsored investment vehicles, including 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 limited to its equity interests.

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, realization of gains, liquidity or marketability of certain securities, discount rates and the probability of certain other outcomes.

Effective January 1, 2010, 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.

VIEs in which BlackRock is the PB

At March 31, 2011 and December 31, 2010, BlackRock was the PB of four VIEs, which included three CLOs in which it 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 VIE. In addition, BlackRock was the PB of one sponsored private equity investment fund in which it had a non-substantive investment, which absorbed the majority of the variability due to its de-facto third 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 March 31, 2011 and December 31, 2010, the following balances related to these four VIEs were consolidated on the Company’s condensed consolidated statements of financial condition:


*(Dollar amounts in millions)*	March 31, 2011			December 31, 2010
Assets of consolidated VIEs:
Cash and cash equivalents	$	133		$	93
Bank loans		1,119			1,162
Bonds		116			113
Other investments		39			37

Total bank loans, bonds and other investments		1,274			1,312
Liabilities of consolidated VIEs:
Borrowings		(1,297	)		(1,278	)
Other liabilities		(7	)		(7	)
Appropriated retained earnings		(58	)		(75	)
Non-controlling interests of consolidated VIEs		(45	)		(45	)

Total net interests in consolidated VIEs	$	—		$	—

For the three months ended March 31, 2011 and 2010, the Company recorded non-operating gain (loss) of ($15) million and $1 million, respectively, offset by a ($15) million and a $1 million net gain (loss) attributable to nonredeemable non-controlling interests, respectively, on the Company’s condensed consolidated statements of income.

At March 31, 2011 and December 31, 2010 the weighted-average maturity of the bank loans and bonds was approximately 4.1 years and 4.2 years, respectively.

- 29 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

6. Variable Interest Entities (continued)

VIEs in which the Company holds significant variable interests or is the sponsor that holds a variable interest but is not the PB of the VIE

At March 31, 2011 and December 31, 2010, the Company’s carrying value of assets and liabilities and its maximum risk of loss related to VIEs in which it holds a significant variable interest or is the sponsor that holds a variable interest, but for which it was not the PB, were as follows:

At March 31, 2011


	*(Dollar amounts in millions)*
	Variable Interests on the Condensed Consolidated Statement of Financial Condition
	Investments		Advisory Fee Receivables		Other Net Assets (Liabilities)			Maximum Risk of Loss
CDOs/CLOs	$	2	$	3	($	3	)	$	22
Other sponsored investment funds:
Collective trusts		—		200		—			200
Private equity funds		13		—		—			13
Other		18		44		—			62

Total	$	33	$	247	($	3	)	$	297

The size of the net assets of the VIEs that the Company does not consolidate related to CDOs/CLOs and other sponsored investment funds, including collective trusts, were as follows:

•

CDOs/CLOs - approximately ($3) billion, comprised of approximately $6 billion of assets at fair value and $9 billion of liabilities, primarily comprised of unpaid principal debt obligations to CDO/CLO debt holders.

•

Other sponsored investments funds – approximately $1.6 trillion to $1.7 trillion of net assets

•

This amount includes approximately $1.4 trillion of collective trusts. Each collective trust has been aggregated separately and may include collective trusts that invest in other collective trusts.

•

The net assets of the VIEs are primarily comprised of cash and cash equivalents and investments offset by liabilities primarily comprised of various accruals for the sponsored investment vehicles.

At March 31, 2011, BlackRock’s maximum risk of loss associated with these VIEs primarily relates to: (i) BlackRock’s investments, (ii) advisory fee receivables and (iii) $17 million of credit protection sold by BlackRock to a third party in a synthetic CDO transaction.

- 30 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

6. Variable Interest Entities (continued)

VIEs in which BlackRock holds significant variable interests or is the sponsor that holds a variable interest but is not the PB of the VIE (continued)

At December 31, 2010


	*(Dollar amounts in millions)*
	Variable Interests on the Condensed Consolidated Statement of Financial Condition
	Investments		Advisory Fee Receivables		Other Net Assets (Liabilities)			Maximum Risk of Loss
CDOs/CLOs	$	2	$	3	($	3	)	$	22
Other sponsored investment funds:
Collective trusts		—		188		—			188
Private equity funds		14		—		(7	)		14
Other		14		52		—			66

Total	$	30	$	243	($	10	)	$	290

The size of the net assets of the VIEs that the Company does not consolidate related to CDOs/CLOs and other sponsored investment funds, including collective trusts, were as follows:

•

CDOs/CLOs - approximately ($4) billion, comprised of approximately $7 billion of assets at fair value and $11 billion of liabilities, primarily comprised of unpaid principal debt obligations to CDO/CLO debt holders.

•

Other sponsored investments funds – approximately $1.6 trillion to $1.7 trillion of net assets

•

This amount includes approximately $1.2 trillion of collective trusts. Each collective trust has been aggregated separately and may include collective trusts that invest in other collective trusts.

•

The net assets of the VIEs are primarily comprised of cash and cash equivalents and investments offset by liabilities primarily comprised of various accruals for the sponsored investment vehicles.

At December 31, 2010, BlackRock’s maximum risk of loss associated with these VIEs primarily relates to: (i) BlackRock’s investments, (ii) advisory fee receivables and (iii) $17 million of credit protection sold by BlackRock to a third party in a synthetic CDO transaction.

- 31 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

7. Derivatives and Hedging

For the three months ended March 31, 2011 and 2010, the Company did not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging (“ASC 815-10”).

The Company maintains a program to enter into a series of total return swaps to economically hedge against market price exposures with respect to certain seed investments in sponsored investment products. At March 31, 2011, the Company had three outstanding total return swaps with two counterparties with an aggregate notional value of approximately $7 million. At December 31, 2010, the Company had six outstanding total return swaps with two counterparties with an aggregate notional value of approximately $25 million.

The Company acts as the portfolio manager in a series of credit default swap transactions, referred to collectively as the Pillars synthetic CDO transaction (“Pillars”). The Company has entered into a credit default swap with Citibank, N.A. (“Citibank”), providing Citibank credit protection of approximately $17 million, representing the Company’s maximum risk of loss with respect to the provision of credit protection. The Company’s management has performed an assessment of its variable interest in Pillars (a collateral management agreement and the credit default swap) under ASC 810-10 and has concluded the Company is not Pillars’ PB. Pursuant to ASC 815-10, the Company carries the Pillars credit default swap at fair value based on the expected future cash flows under the arrangement.

On behalf of clients of the Company’s registered life insurance companies that maintain separate accounts representing segregated funds held for the purpose of funding individual and group pension contracts, the Company invests in various derivative instruments, which may include futures and forward foreign currency exchange contracts and interest rate and inflation rate swaps. Net realized and unrealized gains and losses attributable to derivatives held by separate account assets and liabilities accrue directly to the contract owners and are not reported in the Company’s condensed consolidated statements of income.

The Company consolidates certain sponsored investment funds, which may utilize derivative instruments as a part of the fund’s investment strategy. The change in fair value of such derivatives, which is recorded in non-operating income (expense), was not material to the Company’s condensed consolidated financial statements.

- 32 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

7. Derivatives and Hedging (continued)

The following tables present the fair value at March 31, 2011 and December 31, 2010 of derivative instruments not designated as hedging instruments:

March 31, 2011


	Assets				Liabilities
*(Dollar amounts in millions)*	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Credit default swap (Pillars)		Other assets	$	—		Other liabilities	$	3
Separate account derivatives		Separate account assets		1,591		Separate account liabilities		1,591

Total			$	1,591			$	1,594

December 31, 2010


	Assets				Liabilities
*(Dollar amounts in millions)*	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Credit default swap (Pillars)		Other assets	$	—		Other liabilities	$	3
Separate account derivatives		Separate account assets		1,599		Separate account liabilities		1,599

Total			$	1,599			$	1,602

The following table presents gains (losses) recognized in income on derivative instruments for the three months ended March 31, 2011 and 2010:


		Three months ended March 31,
*(Dollar amounts in millions)*	Income Statement Location	2011			2010
Foreign currency exchange contracts	General and administration expenses	$	—		($	4	)
Total return swaps	Non-operating income (expense)		(1	)		(1	)
Credit default swap (Pillars)	Non-operating income (expense)		—			—

Total		($	1	)	($	5	)

- 33 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

8. Goodwill

Goodwill at March 31, 2011 and changes during the three months ended March 31, 2011 were as follows:


*(Dollar amounts in millions)*
December 31, 2010	$	12,805
Impact of excess tax basis amortization		(5	)
Other additions		4

March 31, 2011	$	12,804

At March 31, 2011, the balance of the Quellos tax-deductible goodwill in excess of book goodwill was approximately $348 million. Goodwill related to the acquisition of the fund of funds business of Quellos Group, LLC (“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.

9. Intangible Assets

The carrying amounts of identifiable intangible assets are summarized as follows:


*(Dollar amounts in millions)*	Indefinite-lived intangible assets		Finite-lived intangible assets			Total intangible assets
December 31, 2010	$	16,597	$	915		$	17,512
Amortization expense		—		(40	)		(40	)

March 31, 2011	$	16,597	$	875		$	17,472

During the three months ended March 31, 2011, intangible assets decreased $40 million related to amortization expense of finite-lived intangibles.

- 34 -

PART I – FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

10. Borrowings

Short-Term Borrowings

2007 Revolving Credit Facility

In August 2007, the Company entered into a five-year $2.5 billion unsecured revolving credit facility (the “2007 facility”), which permitted the Company to request an additional $500 million of borrowing capacity, subject to lender credit approval, up to a maximum of $3.0 billion. At December 31, 2010 the Company had $100 million outstanding under the 2007 facility. On February 28, 2011, the $100 million was repaid and the 2007 facility was terminated in March 2011.

2011 Revolving Credit Facility

In March 2011, the Company entered into a five-year $3.5 billion unsecured revolving credit facility (the “2011 facility”), which replaced the 2007 facility. The 2011 facility permits the Company to request an additional $1.0 billion of borrowing capacity, subject to lender credit approval, up to a maximum of $4.5 billion. The 2011 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 March 31, 2011.

The 2011 facility provides back-up liquidity, funds ongoing working capital for general corporate purposes and funds various investment opportunities. At March 31, 2011, the Company did not have any borrowings outstanding under the 2011 facility. During May 2011, the Company borrowed $100 million from this facility.

Bank of America and Barclays each have a $255 million participation under the 2011 facility.

Commercial Paper Program

On October 14, 2009, BlackRock established a commercial paper program (the “CP Program”) under which the Company may 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 billion. The proceeds of the commercial paper issuances were used for the financing of a portion of the Barclays Global Investors (“BGI”) acquisition from Barclays (the “BGI Transaction”). Subsidiaries of Bank of America and Barclays, as well as other third parties, act as dealers under the CP Program. The CP Program was supported by the 2007 revolving credit facility and will be supported by the 2011 credit facility.

As of March 31, 2011 and December 31, 2010, the Company did not have any outstanding CP Notes.

- 35 -

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