UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended SeptemberJune 30, 20062007

OR

For the transition period from            to            .

Commission file number 001-33099

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

40 East 52^nd52nd Street, New York, NY 10022

(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 is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

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 OctoberJuly 31, 2006,2007, there were 116,434,872115,840,166 shares of the registrant’s common stock outstanding.

BlackRock, Inc.

Index to Form 10-Q

PART I

FINANCIAL INFORMATION

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BlackRock, Inc.

Condensed Consolidated Statements of Financial Condition

(Dollar amounts in thousands)

(unaudited)

See accompanying notes to condensed consolidated financial statements.

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PART I - FINANCIAL INFORMATION (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Income

(Dollar amounts in thousands, except per share data)

(unaudited)

See accompanying notes to condensed consolidated financial statements.

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PART I - FINANCIAL INFORMATION (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Dollar amounts in thousands)

(unaudited)

See accompanying notes to condensed consolidated financial statements.

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PART I - FINANCIAL INFORMATION (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollar amounts in thousands)

(unaudited)

See accompanying notes to condensed consolidated financial statements.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Dollar amounts in thousands)

(unaudited)

See accompanying notes to condensed consolidated financial statements.

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PART I - FINANCIAL INFORMATION (continued)

BlackRock, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

(unaudited)

BlackRock, Inc. (together, withand its subsidiaries and its predecessors, unless the context otherwise indicates, “BlackRock”(“BlackRock” or the “Company”) providesprovide diversified investment management services to institutional retail clients. Institutionalclients and individual investors through various investment products. Investment management services primarily consist of the active management of fixed income, cash management and equity client accounts, the management of a number of open-end and closed-end mutual fund families serving the institutional and retail markets, and the management of alternative investment funds developed to serve various customer needs. ThroughBlackRock also offersSolutions^®, the Company provides risk management, investment system outsourcing, advisory and financial advisorytransition management services to institutional investors under the BlackRock Solutions^® brand name.

On September 29, 2006, pursuant to the Transaction Agreementthat combine capital markets expertise with proprietarially-developed systems and Plan of Merger (the “Transaction Agreement”), dated as of February 15, 2006, by and among BlackRock (formerly known as New Boise, Inc.) BlackRock Merger Sub., Inc. (formerly known as Boise Merger Sub., Inc., “Merger Sub”), BlackRock Holdco 2, Inc. (formerly known as BlackRock, Inc., “Old BlackRock”) and Merrill Lynch, Merger Sub merged with and into Old BlackRock with old surviving as a wholly-owned subsidiary of BlackRock and Merrill Lynch contributed the entities and assets that constitute its investment management business (the “MLIM business”) to BlackRock via a capital contribution, in exchange for 52,395,082 shares of common stock and 12,604,918 shares of series A non-voting participating preferred shares of BlackRock, representing a 45% voting interest and approximately 49.3% of the fully-diluted capital stock (such transactions, collectively, referred to as the “MLIM Transaction”). PNC ownership, which was at approximately 69% prior to the MLIM Transaction, was reduced to approximately 34% as a result of the MLIM Transaction.

In connection with the MLIM Transaction, BlackRock entered into a global distribution agreement with Merrill Lynch. The global distribution agreement provides a framework under which Merrill Lynch will distribute the Company’s investment advisory products. Pursuant to the global distribution agreement, among other things: 1) Merrill Lynch has agreed to cause each of its distributors to continue distributing BlackRock products that it distributed as of the date of the Transaction Agreement, on the same economic terms as were in effect as of the date of the Transaction Agreement or as the parties otherwise agree; 2) products introduced by BlackRock to Merrill Lynch for distribution that do not fall within an existing category, type or platform of products distributed by Merrill Lynch will be entitled to the most favorable economic terms offered by BlackRock to other distributors of the same product; and 3) with respect to any Merrill Lynch distributor that does not at the time in question distribute a particular BlackRock product, Merrill Lynch has agreed to, upon BlackRock’s request, use all commercially reasonable efforts to obtain distribution of any products by such Merrill Lynch distributor as BlackRock requests on the same terms as provided to such products by Merrill Lynch distributors already distributing the product. See Note 2 for additional information regarding the MLIM Transaction.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)technology.

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, its controlled subsidiaries and other entities consolidated pursuant to various accounting guidance.entities. Non-controlling interest includes minority interest as well as the portion of funds consolidated in accordance with GAAP which the Company does not have direct equity ownership. All significant accounts and transactions between consolidated entities have been eliminated.

The preparation of 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 and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. Certain financial information that normally is normally included in annual financial statements, including certain financial statement footnotes prepared in accordance with GAAP, 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, 2005,2006, which was filed with the Securities and Exchange Commission (“SEC”) on March 8, 2006.13, 2007.

The interim financial data as of SeptemberJune 30, 20062007 and for each of the three months and ninesix months ended SeptemberJune 30, 20062007 and 20052006 are unaudited. However, in the opinion of management, the interim data includes all normal recurring adjustments, as well as purchase accounting fair value adjustments related to the MLIM Transaction,Merrill Lynch Investment Managers (“MLIM”) transaction, necessary for athe fair statementpresentation 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. Certain amounts in the Company’s prior year condensed consolidated financial statements have been reclassified to conform to the 2006current presentation.

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PART I - FINANCIAL INFORMATION (continued)

Stock-based CompensationIncome Taxes

In December 2004,July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 48,Accounting for Uncertainty in Income Taxes and Related Implementation Issues. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in a Company’s financial statements in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123(R),Share-Based Payment. This statement is a revision of SFAS No. 123 and supersedes Accounting Principles Board Opinion (“APB”) No. 25,109,Accounting for Stock IssuedIncome Taxes. FIN No. 48 prescribes a threshold and measurement attribute for recognition in the financial statements of an asset or liability resulting from a tax position taken or expected to Employees.be taken in a tax return. FIN No. 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

BlackRock adopted the provisions of FIN No. 48 on January 1, 2007. As a result of the adoption, the Company recognized approximately $15,200 in increased income tax reserves related to uncertain tax positions. Approximately $13,600 of this increase related to taxes that would affect the effective tax rate if recognized, and this portion was accounted for as a reduction to the January 1, 2007 balance in retained earnings. The statement establishes standards forremaining $1,600 balance, if disallowed, would not affect the accounting for transactionsannual effective tax rate. Total gross unrecognized tax benefits at December 31, 2006 were approximately $52,100. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 2006 were approximately $25,700. As of June 30, 2007, the Company does not anticipate a significant change to the amount of unrecognized tax benefits within the next twelve months.

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. Interest related to tax matters at December 31, 2006 was approximately $4,600. The Company has not accrued any tax-related penalties.

BlackRock is subject to U.S. federal income tax as well as income tax in which an entity exchanges its equity instruments for goods or services, primarily focusingmultiple jurisdictions. The tax years after 2002 remain open to U.S. federal income tax examination, and the tax years after 2004 remain open to income tax examination in the United Kingdom. Prior to the closing of the MLIM transaction, BlackRock filed New York State and New York City income tax returns on a combined basis with The PNC Financial Services Group, Inc. (“PNC”) and the accounting for transactionstax years after 2001 remain open to income tax examination in which an entity obtains employee services in share-based payment transactions. Entities are required to measure the cost of employee services received in exchange for an award of equity instruments based onNew York State and New York City.

Stock-based compensation

The Company amortizes the grant-date fair value of the award (with limited exceptions). That cost is recognizedstock-based compensation awards made to retirement eligible employees over the period during which an employee is required to provide service (usuallyperiod. Upon notification of retirement, the vesting period) in exchange forCompany accelerates the award. The grant-date fair value of employee share options and similar instruments is measured using option-pricing models. If an equity award is modified after the grant date, incremental compensation cost is recognized in an amount equal to the excessunamortized portion of the fair value of the modified award over the fair valuecontractually-required retirement notification period.

Carried interest

The Company receives carried interest from private equity funds upon exceeding performance thresholds. BlackRock may be required to return all, or part, of such carried interest depending upon future performance of the original award immediately beforeprivate equity fund. BlackRock records carried interest subject to such clawback provisions as revenue on its condensed consolidated statements of income upon termination of the modification.private equity fund or when the likelihood of clawback is mathematically improbable. At June 30, 2007, the Company had $18,833 of deferred carried interest in other liabilities on the condensed consolidated statement of financial condition.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

The Company adopted SFAS No. 123(R), using the modified-prospective transition method, effective January 1, 2006, with no cumulative effect on net income. Under the modified-prospective transition method, the Company is recognizing compensation cost for share-based awards to employees based on their grant-date fair value from January 1, 2006, as well as compensation cost for awards that were granted prior to, but not vested as of, the date of adoption. Prior periods remain unchanged and pro forma disclosures previously required by SFAS No. 123 continue to be required. The impact of SFAS No. 123(R) was to reduce net income for the three months ended September 30, 2006 by $1,978, or $0.03 per basic and diluted share, and for the nine months ended September 30, 2006 by $5,934, or $0.09 per basic and diluted share. Pro forma basic and diluted earnings per share for the three months ended September 30, 2005, including the impact of stock options not expensed under SFAS No.

123(R), would have been $0.92 and $0.89, respectively, and for the nine months ended September 30, 2005 would have been $2.42 and $2.32, respectively. Net income for the three months and nine months ended September 30, 2005 would have been reduced by approximately $1,978 and $5,934, respectively. Significantly all of the Company’s stock options that were impacted by the implementation of SFAS No. 123(R) vest in January 2007.

Consolidation

In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force (“EITF”) on Issue No. 04-5,Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-5”). EITF No. 04-5 presumes that a general partner controls a limited partnership (including certain limited liability companies), and should therefore consolidate a limited partnership, unless the limited partners have the substantive ability to remove the general partner without cause based on a simple majority vote or can otherwise dissolve the limited partnership, or unless the limited partners have substantive participating rights over decision making. The guidance in EITF No. 04-5 was effective immediately for all newly formed partnerships and any modified limited partnership agreements. The guidance was effective for existing partnership agreements for financial reporting periods beginning after December 15, 2005. The adoption of EITF No. 04-5 on January 1, 2006 had no impact on the Company’s condensed consolidated financial statements. At September 30, 2006, the Company consolidated entities acquired in the MLIM Transaction as the result of the provisions of EITF No. 04-5.

Separate Account Assets and Liabilities

Effective September 29, 2006, in connection with the MLIM Transaction, the Company maintains certain separate accounts representing segregated funds held for purposes of funding individual and group pension contracts. The separate account assets are not subject to general claims of the creditors of BlackRock. These accounts and the related liabilities are recorded as separate account assets and separate account liabilities on the condensed consolidated statement of financial condition.

The net investment income and net realized and unrealized gains and losses attributable to separate account assets supporting individual and group pension contracts accrue directly to the contract owner and are not reported as revenue in the condensed consolidated statements of income. Policy administration and management fees associated with separate account products are included in investment advisory and administration fees in the condensed consolidated statements of income.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Impairment of Investments

In November 2005, the FASB issued FASB Staff Position (“FSP”) FAS 115-1/124-1,The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, which provides guidance for determining when impairment charges should be taken on certain debt and equity securities. FSP FAS 115-1/124-1 requires that debt and equity securities subject to the provisions of SFAS No. 115,Accounting for Certain Investments in Debt and Equity Securities, and equity securities subject to the provisions of APB No. 18,The Equity Method of Accounting for Investments in Common Stock, but which are not accounted for under the equity method (i.e., securities accounted for under the cost method) shall be reviewed for impairment when circumstances warrant. For securities subject to SFAS No. 115, a review for other-than-temporary impairments shall occur in each accounting period where the fair value of the security is less than its cost. For securities subject to APB No. 18, a review for other-than-temporary impairments shall occur in each accounting period where a) circumstances indicate that impairment may exist and b) the fair value of the security is less than its carrying value. The provisions of the FSP were required to be applied to reporting periods beginning after December 15, 2005. The adoption of FSP FAS 115-1/124-1 on January 1, 2006 had no material impact on the Company’s condensed consolidated financial statements.

Accounting Changes and Corrections

In June 2005, the FASB issued SFAS No. 154,Accounting Changes and Error Corrections. SFAS No. 154 replaces APB Opinion No. 20,Accounting Changes, and SFAS No. 3,Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented under the new accounting principle. SFAS No. 154 also requires that a change in the method of depreciating or amortizing a long-lived non-financial asset be accounted for prospectively as a change in estimate, and correction of errors in previously issued financial statements should be termed “restatements”. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 on January 1, 2006 had no impact on the Company’s condensed consolidated financial statements.

Disclosure of Fair Value

SFAS No. 107,Disclosure about Fair Value of Financial Instruments, requires disclosure of estimated fair values of certain financial instruments, both on and off the balance sheet. The Company’s methods and assumptions regarding the value of its financial instruments are set forth below:

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Disclosure of Fair Value (continued)

Recent Accounting Developments

In February 2006, the FASB issued SFAS No. 155,Accounting for Certain Hybrid Financial Instruments, which amends SFAS No. 133 and SFAS No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The Statement provides, among other things, that:

SFAS No. 155 is effective for all financial instruments acquired, issued or subject to remeasurement after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Upon adoption, differences between the total carrying amount of the individual components of an existing bifurcated hybrid financial instrument and the fair value of the combined hybrid financial instrument should be recognized as a cumulative effect adjustment to beginning retained earnings. Prior periods should not be restated. The Company intends to adopt the Statement on January 1, 2007 and does not expect the impact of adoption to be material to its consolidated financial statements.

In March 2006, the FASB issued SFAS No. 156,Accounting for Servicing of Financial Assets.SFAS No. 156 amends SFAS No. 140 to require that all separately recognized servicing assets and liabilities be initially measured at fair value, if practicable. SFAS No. 156 also permits servicers to subsequently measure each separate class of servicing assets and liabilities at fair value rather than at the lower of cost or market. For companies that elect to measure their servicing assets and liabilities at fair value, SFAS No. 156 requires the difference between the carrying value and fair value at the date of adoption to be recognized as a cumulative effect of a change in accounting principle as of the beginning of the fiscal year in which the election is made. The Company intends to adopt the Statement on January 1, 2007 and does not expect the impact of adoption to be material to its consolidated financial statements.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Recent Accounting Developments (continued)

In July 2006, the FASB issued FASB Interpretation (“FIN”) No. 48,Accounting for Uncertainty in Income Taxes and Related Implementation Issues. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in a Company’s financial statements in accordance with SFAS No. 109,Accounting for Income Taxes. FIN No. 48 prescribes a threshold and measurement attribute for recognition in the financial statements of an asset or liability resulting from a tax position taken or expected to be taken in a tax return. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN No. 48 is effective as of the beginning of fiscal years that begin after December 15, 2006. The Company is currently evaluating the effects of implementing this new standard.

In September 2006, the FASB issued SFASStatement of Financial Accounting Standards (“SFAS”) No. 157,Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. SFAS No. 157 requires companies to disclose the fair value of itstheir financial instruments according to a fair value hierarchy (i.e., levels 1, 2, and 3, as defined). Additionally, companies are required to provide enhanced 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 category of assets and liabilities. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and all interim periods within those fiscal years. The Company currently is currently evaluating the impact adoption maywill have on theits consolidated financial statements of the Company.statements.

In September 2006, the FASB issued SFAS No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans -–an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and recognize changes in the funded status in the year in which the changes occur. The statement also requires actuarial valuations to be performed as of the balance sheet date. The balance sheet recognition provisions of SFAS No. 158 arewere effective for fiscal years ending after December 15, 2006. The valuation date provisions are effective for fiscal years ending after December 15, 2007. The Company does not expectadopted the balance sheet recognition provisions of SFAS No. 158 on December 31, 2006 and the impact of adoption of SFAS No. 158 to bewas not material to its consolidated financial statements.

In September 2006,February 2007, the SecuritiesFASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”)Financial Liabilities. SFAS No. 108,Considering159 permits entities to choose to measure eligible financial instruments at fair value. The unrealized gains and losses on items for which the Effects of Prior Year Misstatements when Quantifying Misstatementsfair value option has been elected should be reported in Current Year Financial Statements. SAB 108 provides guidanceearnings. The decision to elect the fair value option is determined on an instrument by instrument basis, it should be applied to an entire instrument, and it is irrevocable. Assets and liabilities measured at fair value pursuant to the consideration of effectsfair value option should be reported separately in the balance sheet from those instruments measured using another measurement attribute. SFAS No. 159 is effective as of the prior year misstatements in quantifying current year misstatements for the purposebeginning of a materiality assessment. The SEC staff believes registrants must quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is effective for the first annual period endingfiscal year that begins after November 15, 2006 with early application encouraged.2007. The Company has assessedcurrently is analyzing the potential impact of SAB 108 on its consolidated financial statements and does not expect the impact or adoption to be materialof SFAS No. 159 to its consolidated financial statements.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Merrill Lynch Investment Managers

On September 29, 2006, the Company completed the MLIM Transaction and issued 52,395,082 shares of BlackRock common stock and 12,604,918 of series A participating preferred stock to Merrill Lynch in consideration for the MLIM business. Total consideration issued to Merrill Lynch was $9,083,661, including capitalized transaction costs and net of cash acquired. The acquisition of the MLIM business added to BlackRock’s existing investment management capabilities for retail and institutional investors through proprietary and third-party distribution channels globally. The investment management capabilities of the acquired MLIM business include equity, fixed income, cash management, index, enhanced index, balanced and alternative investments, which are offered through vehicles such as mutual funds, non-registered investment management vehicles, privately managed accounts and retail and institutional separate accounts with approximately $592.5 billion in assets under management (“AUM”) at September 29, 2006. The combined company is one of the world’s largest asset management firms with approximately $1.075 trillion in AUM, providing a full range of equity, fixed income, cash management and alternative investment products, with strong representation in both retail and institutional channels, in the U.S. and non-U.S. markets. In completing this transaction, the Company expects, among other things, increased opportunities for growth as the result of broad investment and risk management capabilities and global scale; increased retail presence in the U.S. and a stronger reputation in Europe and Asia; and new opportunities for distributing BlackRock investment management products through access to Merrill Lynch’s distribution network.

In connection with the MLIM Transaction, Merril Lynch and PNC have each entered into stockholder agreements with BlackRock. As of September 30, 2006, Merrill Lynch’s ownership represents 45% of the voting interest in BlackRock and approximately 49.3% of total capital stock outstanding on a fully diluted basis. Pursuant to the terms of the stockholder agreement, Merrill Lynch is restricted from owning more than 49.8% of the fully diluted capital stock of BlackRock. PNC, which owned approximately 69% of BlackRock prior to the MLIM Transaction, owns approximately 34% of the total outstanding capital stock as of September 30, 2006. Pursuant to the terms of the stockholder agreement, PNC is generally restricted from owning more than 35% of the fully capital stock of BlackRock, except in the case where an increase in PNC’s percentage ownership is due to a BlackRock share buyback, in which case PNC is permitted to own no more than 40% of the Company’s outstanding capital stock.

In addition to the ownership restrictions described above, the stockholder agreements include the following additional provisions, among others:

The series A participating preferred stock have the following terms:

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Merrill Lynch Investment Managers (continued)

In connection with the approval of the Transaction Agreement, the Company adopted a dividend policy establishing a targeted payout ratio of 40% of historical net income, with all subsequent quarterly dividend declarations under such policy remaining subject to the board of directors’ discretion. The PNC stockholder agreement refers to the board’s resolution adopting the policy including its resolution to not revise the dividend payout ratio downward except in furtherance of its board’s fiduciary duties or other prudent financial considerations.

In addition, Merrill Lynch has agreed that it will provide reimbursement to BlackRock for employee incentive awards issued to former MLIM employees who became BlackRock employees subsequent to the MLIM Transaction. Reimbursements will amount to 50% of eligible incentive compensation between $100 million and $200 million. In October 2006, the Company’s management development and compensation committee approved the issuance of $147,000 of incentive stock awards to former MLIM employees now employed by BlackRock (see Note 15).

The MLIM Transaction was accounted for under the purchase method of accounting in accordance with SFAS No. 141,Business Combinations. Accordingly, the purchase price was allocated to the estimated fair value of assets acquired and liabilities assumed based upon their estimated fair values at the date of the transaction. The excess of the purchase price over the fair value of assets acquired and liabilities assumed was recorded as goodwill. Third quarter results of operations include an estimate of one day of earnings (September 30, 2006) from the former MLIM business and one day of amortization expense associated with finite-life intangible assets acquired. The value of the consideration paid for the net assets acquired was determined using the average closing price of BlackRock’s common stock two days before, the day of, and two days after MLIM Transaction announcement date of February 15, 2006. Both the common stock and the series A participating preferred stock were valued at a price of $147.34 per share since both classes of stock participate equally in dividends and have transfer restrictions.

A summary of the estimated fair values of the assets acquired and liabilities assumed in this acquisition is as follows:

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Merrill Lynch Investment Managers (continued)

Approximately $26,322 of direct costs were capitalized in conjunction with the MLIM Transaction, primarily representing $20,000 of financial advisory fees and approximately $4,500 in legal and other professional fees. Certain capitalized costs have been estimated as of September 30, 2006 and are subject to adjustment. Finite-life intangible management contracts have a weighted average estimated useful life of 10.2 years.

The allocation of the purchase price is preliminary and subject to adjustment. Specifically, the following accounts are subject to change in their preliminary values:

The following unaudited pro forma condensed combined financial information does not purport to be indicative of actual financial position or results of BlackRock’s operations had the MLIM Transaction actually been consummated at the beginning of each period presented. Certain one-time charges have been eliminated. The pro forma adjustments reflecting the allocation of the purchase price of MLIM and the effect thereof on pro forma adjustments to the unaudited pro forma condensed financial information below are based on preliminary estimates and are subject to adjustment. The pro forma combined provision for income taxes may not represent the amount that would have resulted had BlackRock and MLIM filed consolidated income tax returns during the year presented. Management expects to realize net operating synergies from this transaction. The pro forma condensed combined financial information does not reflect the potential impact of these synergies.

BlackRock results contained $71 million and $91 million of MLIM integration costs during the three and nine months ended September 30, 2006, respectively. For purposes of the pro forma financial information above, these costs have been removed. In addition, in the first quarter of 2006, as a result of a Merrill Lynch policy modification, MLIM recorded an adjustment to earnings reflecting $109 million of accelerated vesting of certain stock awards. This adjustment has been reversed in the pro forma financial information above since management believes that this expense would be non-recurring.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Nomura-BlackRock Asset Management

On September 29, 2006, BlackRock acquired the 90% equity ownership stake in Nomura BlackRock Asset Management (“NBAM”) that was held by its joint venture partner, Nomura Asset Managers for a purchase price of five billion Japanese yen (approximately $42,408), subject to certain adjustment provisions. Prior to the NBAM transaction, NBAM was consolidated in the Company’s financial statements under FIN No. 46R,Variable Interest Entities, as a result of the preferential payments received by a BlackRock subsidiary which resulted in BlackRock being considered the primary beneficiary of NBAM.

The Company accounted for its acquisition of 90% of NBAM using step acquisition accounting in accordance with SFAS No. 141, resulting in a partial step up in basis of the assets of NBAM to fair value. As a result of the acquisition, the Company recorded finite-life intangible assets of $13,150 with an amortizable life of 10 years and goodwill of approximately $28,414. The value of the intangible assets and goodwill recorded as a result of the NBAM acquisition may change, primarily as the result of updating AUM and other assumptions as of September 29, 2006.

As of SeptemberAt June 30, 20062007 and December 31, 2005,2006, BlackRock had total investments of $1,616,211$2,484,127 and $298,668,$2,097,574, respectively. Of the total investments as of Septemberat June 30, 2006, $161,7192007, $124,863 were classified as available-for-sale investments, $233,276$577,777 were classified as trading investments and $1,221,216$1,781,487 were classified as other investments, which include equity and cost method investments.investments and investments held by certain consolidated private equity and other alternative funds.

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

Available-for-sale investments acquiredThe Company has reviewed the gross unrealized losses of $636 at June 30, 2007, all of which had been in a loss position for less than twelve months, and determined that these losses were not other than temporary primarily because the MLIM Transaction included $116,755Company has the ability and intent to hold the securities for a period of commingled investments, $9,536time sufficient to recover such losses. As a result, the Company recorded no impairments on such securities.

During the six months ended June 30, 2007 and 2006, the Company recorded impairments of $1,831 and $2,066, respectively, on certain collateralized debt obligationobligations (“CDO”CDOs”) investments and $4,979 of other investments, which amounts reflect the cost value and the carrying value as of September 30, 2006..

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

At September 30, 2006 and December 31, 2005, the Company’s available-for-sale investments had an aggregate cost basis of $160,115 and $30,192 and an aggregate fair value of $161,719 and $30,026, respectively. During the three and nine months ended September 30, 2006, the Company recorded impairments of $145 and $2,211, respectively, to certain CDO investments.

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

Trading investments acquired in the MLIM Transaction included $89,103 of equity securities, $47,352 of commingled investments and $24,681 of municipal debt securities. Other investments acquired in the MLIM Transaction included $964,071 of other fund investments consisting primarily of interests in private equity funds sponsored by the Company.

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PART I - FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Included in other investments at June 30, 2007 is $101,069$33,864 of investments accounted for using the cost method. FSPFASB Statement of Position FAS 115-1/124-1 requires that a company review cost method investments for other-than-temporary impairment whenever management estimates a fair value for such investments or when events or changes in circumstances have occurred that may have a significant adverse effect on the fair value of the investment. At SeptemberAs of June 30, 2006,2007, management reviewed $46,889 inthe carrying value of otherthese investments and estimated antheir aggregate fair value of $50,788 and found noto be $37,691. No impairments to exist.

In addition, $54,180 in cost basiswere recorded on such investments were not reviewed for other-than-temporary impairment because management’s review concluded that no events had occurred that indicated a potentially significant adverse impact onduring the fair value of the investment.six months ended June 30, 2007.

The carrying value of investments in debt securities by contractual maturity at SeptemberJune 30, 2007 and December 31, 2006 iswas as follows:

The Company consolidates certain investments, primarily because it is deemed to control such investments in accordance with GAAP. At June 30, 2007 and December 31, 2006, the following balances related to these entities were consolidated in the condensed consolidated statements of financial position:

Total consolidated net assets of $338,378 and $370,315 at June 30, 2007 and December 31, 2006, respectively, represent the fair value of the Company’s ownership interest in these investments. Valuation changes associated with these investments are reflected in non-operating income and non-controlling interest. Other net liabilities includes $357,431 and $95,815 of debt held by consolidated investments at June 30, 2007 and December 31, 2006, respectively, which are included in other liabilities on the condensed consolidated statements of financial condition.

The Company may not be able to access cash and cash equivalents held by consolidated investments to use in its operating activities. In connection with the MLIM Transaction,addition, the Company acquiredmay not be readily able to sell investments held by consolidated investments in order to obtain cash for use in its operations.

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PART I - FINANCIAL INFORMATION (continued)

From time to time, the Company may consolidate a fund investing primarilysponsored investment product that holds freestanding derivative financial instruments for trading purposes. The Company recognizes such derivative instruments at fair value and records the changes in municipal debt securities,fair value in non-operating income on the condensed consolidated statements of income. BlackRock also may enter into derivative financial instruments to economically hedge market price exposures with respect to seed investments in sponsored investment products or to hedge foreign currency exchange risk. The Company recognizes such derivative instruments at fair value and records the changes in fair value in general and administrative expense on the condensed consolidated statements of income. For the six months ended June 30, 2007 and 2006, the Company did not hold any derivatives designated in a formal hedge relationship under SFAS No. 133,Derivative Instruments and Hedging Activities, as amended.

During 2007, the Company entered into a series of total return swaps. At June 30, 2007, the outstanding total return swaps had an aggregate notional value of approximately $80,000 and net losses of approximately $3,378 and $3,670 for the three and six months ended June 30, 2007, respectively, which is consolidatedwere included in non-operating income in the Company’s condensed consolidated financial statements at Septemberof income.

During first quarter 2007, the Company also entered into a forward contract to sell 1.2 billion yen in August 2007 as a hedge against the foreign exchange risk associated with a consolidated sponsored investment product in Japan. The change in value of the forward contract substantially offsets the change in the value associated with foreign exchange related to the Company’s investment in the sponsored investment fund. For the three and six months ended June 30, 2006. The2007, the change in fair value of these debt securities at September 30, 2006,the forward contract was $24,681 andimmaterial. In August 2007, the securities, mature as follows: $529 in less than 5 years, $331 in 5-10 years and $23,821 in greater than 10 years.forward contract was extended through November 2007.

The following table sets forth the computation of basic and diluted earnings per share:

As of June 30, 2007, there were 1,570,376 securities which were excluded from the calculation of diluted earnings per share because to include them would have an anti-dilutive effect.

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PART I - FINANCIAL INFORMATION (continued)

Due to the similarities in terms between BlackRock series A non-voting participating preferred stock and the Company’s common stock, the Company considers the series A non-voting participating preferred stock to be common stock for purposes of earnings per share calculations. As such, the Company has included the outstanding series A non-voting participating preferred stock in the calculation of average basic shares outstanding for the three and six months ended June 30, 2007.

In connectionBlackRock, Inc. Long-Term Incentive Plan (“LTIP”)

The BlackRock, Inc. 2002 Long-Term Retention and Incentive Plan (“LTIP”) permitted the grant of up to $240,000 in deferred compensation awards (the “LTIP Awards”), of which the Company previously granted approximately $230,300. Approximately $210,000 of the LTIP awards were paid in January 2007. The awards were payable approximately 16.7% in cash and the remainder in BlackRock stock contributed by PNC and distributed to LTIP participants.

Under the terms of the LTIP, employees elected to put approximately 95% of the stock portion of the awards back to the Company at a total fair market value of approximately $165,700. On the payment date, the Company recorded a capital contribution from PNC for the amount of shares funded by PNC. For the shares not put back to the Company, no dilution resulted from the delivery of stock pursuant to the awards since they were funded by shares held by PNC and were issued and outstanding at December 31, 2006. Put elections made by employees were accounted for as treasury stock repurchases and are accretive to the Company’s earnings per share. The shares repurchased have been retained as treasury stock.

Under a related share surrender agreement, PNC committed to provide up to 4,000,000 shares of BlackRock common stock to fund compensation programs. The settlement of LTIP awards in January 2007 resulted in the surrender by PNC of approximately 1,000,000 shares of BlackRock common stock. The Company granted additional long-term incentive awards in January 2007 which included 1,540,050 restricted stock units that are intended to be settled using PNC shares in accordance with the MLIM Transactionshare surrender agreement. Approximately $20,000 previously issued LTIP awards will result in additional issuance of BlackRock shares owned by PNC in 2007 and 2008 at a conversion price approximating the market price on the settlement date. Of the committed shares available for future awards, BlackRock is able to grant up to approximately $11,000 in awards in the period prior to September 30, 2011 and additional awards to be settled with the remaining shares in subsequent periods.

Share-Based Payment

The Company adopted SFAS No. 123R,Share-Based Payment, on January 1, 2006, using the modified-prospective transition approach, with no cumulative effect on net income. The total stock-based compensation expense before taxes associated with stock-based employee compensation plans was $89,175 and $23,318 for the six months ended June 30, 2007 and 2006, respectively.

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PART I - FINANCIAL INFORMATION (continued)

Stock Options

Options outstanding at June 30, 2007 and changes during the six months ended June 30, 2007 were as follows: