UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended JuneSeptember 30, 2007

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 52nd 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 JulyOctober 31, 2007, there were 115,840,166116,824,060 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

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)

BlackRock, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

(unaudited)

BlackRock, Inc. and its subsidiaries (“BlackRock” or the “Company”) provide diversified investment management services to institutional clients 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 fund families and the management of alternative investment funds developed to serve various customer needs. ThroughBlackRock Solutions^®, the Company provides risk management, system outsourcing, investment accounting services, advisory and transition management services that combine capital markets expertise with proprietarially-developedproprietarily-developed systems and technology.

1. 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, its controlled subsidiaries and other consolidated entities. Non-controlling interest includes minority interest as well as the portion of consolidated sponsored investment 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 included in annual financial statements, including certain financial statement footnotes is not required for interim reporting purposes and has been condensed or omitted herein. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, which was filed with the Securities and Exchange Commission (“SEC”) on March 13, 2007.

The interim financial datainformation as of JuneSeptember 30, 2007 and for the three months and sixnine months ended JuneSeptember 30, 2007 and 2006 areis unaudited. However, in the opinion of management, the interim datainformation includes all normal recurring adjustments as well as purchase accounting fair value adjustments related to the Merrill Lynch Investment Managers (“MLIM”) transaction, 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. Certain amounts in the Company’s prior yearperiod condensed consolidated financial statements have been reclassified to conform to the current presentation.

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PART I -— FINANCIAL INFORMATION (continued)

1. Significant Accounting Policies (continued)

Income Taxes

In 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’scompany’s financial statements in accordance with Statement of Financial Accounting Standards (“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 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 remaining $1,600 balance, if disallowed, would not affect the annual 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 JuneSeptember 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 toaccrued on uncertain tax matterspositions was approximately $4,600 at December 31, 2006 was approximately $4,600.and $7,100 at September 30, 2007. The Company has not accrued any tax-related penalties.

BlackRock is subject to U.S. federal income tax as well as income tax in multiple 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 MLIMMerrill Lynch Investments Managers (“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 tax years after 2001 remain open to income tax examination in New York State and New York City.

Stock-based compensationCompensation

The Company amortizes the grant-date fair value of stock-based compensation awards made to retirement eligible employees over the required service period. Upon notification of retirement, the Company accelerates the unamortized portion of the award over the contractually-required retirement notification period.period, if applicable.

Carried interestInterest

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 private equity fund.funds. BlackRock records carried interest subject to such clawback provisions as revenue on its condensed consolidated statements of income upon the earlier of termination of theeach private equity fund or when the likelihood of clawback is mathematically improbable. At JuneSeptember 30, 2007, the Company had $18,833$17,399 of deferred carried interest recorded in other liabilities on the condensed consolidated statementstatements of financial condition.

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PART I -— FINANCIAL INFORMATION (continued)

1. Significant Accounting Policies (continued)

Goodwill and Intangible Assets

Prior to 2007, the Company performed its annual impairment tests for goodwill and indefinite-lived intangible assets, as required by SFAS No. 142,Goodwill and Other Intangible Assets, as of September 30^th. During the quarter ended September 30, 2007, the Company changed its annual impairment test date to July 31^st in order to provide additional time during the quarter for testing due to the significant increase in these assets as a result of recent acquisitions. Impairment tests performed as of July 31, 2007 and September 30, 2006 indicated that no impairment charges were required. The Company’s management believes that this change in the method of applying an accounting principle is preferable under the circumstances and does not result in adjustments to the Company’s consolidated financial statements when applied retrospectively, nor would it result in the delay, acceleration or avoidance of recording a potential future impairment. This change in the method of applying SFAS No. 142 had no impact on the condensed consolidated statements of income for the three or nine months ended September 30, 2007 or other prior periods.

Recent Accounting Developments

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”)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 their 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.2007. The Company currently is evaluating the impact adoption will have onto its consolidated financial 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)132. 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 were 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 adopted the balance sheet recognition provisions of SFAS No. 158 on December 31, 2006 and the impact of adoption was not material to its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure eligible financial instrumentsassets and liabilities at fair value. The unrealized gains and losses on items for which the fair value option hasis been elected should be reported in earnings. 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 fair 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 beginning of the first fiscal year that begins after November 15, 2007. The Company currently is analyzing the potential impact of adoption of SFAS No. 159 to its consolidated financial statements.

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PART I -— FINANCIAL INFORMATION (continued)

1. Significant Accounting Policies (continued)

In June 2007, the Emerging Issues Task Force (“EITF”) ratified EITF Issue No. 06-11,Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (“EITF 06-11”). Under the provisions of EITF 06-11 a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for equity classified as nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital. The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. EITF 06-11 should be applied prospectively to the income tax benefits that result from dividends on equity-classified employee share-based payment awards that are declared in fiscal years beginning after December 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the potential impact of EITF 06-11 to its consolidated financial statements.

2. Investments

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

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PART I — FINANCIAL INFORMATION (continued)

At June 30, 2007 and December 31, 2006, BlackRock had total investments of $2,484,127 and $2,097,574, respectively. Of the total investments at June 30, 2007, $124,863 were classified as available-for-sale investments, $577,777 were classified as trading investments and $1,781,487 were classified as other investments, which include equity and cost method investments and investments held by certain consolidated private equity and other alternative funds.2. Investments (continued)

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

The Company has reviewed the gross unrealized losses of $636$3,183 at JuneSeptember 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 Company has the ability and intent to hold the securities for a period of time sufficient to recover such losses. As a result, the Company recorded no impairments on such securities.

During the sixnine months ended JuneSeptember 30, 2007 and 2006, the Company recorded realized impairments of $1,831$3,228 and $2,066,$2,211, respectively, on certain collateralized debt obligations (“CDOs”).

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PART I -— FINANCIAL INFORMATION (continued)

2. Investments (continued)

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

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PART I -— FINANCIAL INFORMATION (continued)

2. Investments (continued)

Included in other investments at JuneSeptember 30, 2007 is $33,864$55,118 of investments accounted for using the cost method. FASB 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. As of JuneSeptember 30, 2007, management reviewed the carrying value of these investments and estimated their aggregate fair value to be $37,691.$61,708. No impairments were recorded on such investments during the sixnine months ended JuneSeptember 30, 2007.

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

The Company consolidates certain investments,sponsored investment funds primarily because it is deemed to control such investments in accordance with GAAP. The investments that are owned by these consolidated investment funds are classified as trading and other investments. At JuneSeptember 30, 2007 and December 31, 2006, the following balances related to these entitiesfunds were consolidated in the condensed consolidated statements of financial position:

TotalBlackRock’s total exposure to consolidated net assetssponsored investment funds of $338,378$346,510 and $370,315$324,491 at JuneSeptember 30, 2007 and December 31, 2006, respectively, representrepresents the fair value of the Company’s economic ownership interest in these investments.sponsored investment funds. Valuation changes associated with these investmentsconsolidated investment funds are reflected in non-operating income and non-controlling interest. Other net liabilities includes $357,431$276,198 and $95,815 of debt held by consolidated investmentssponsored investment funds at JuneSeptember 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 readily able to access cash and cash equivalents held by consolidated investmentssponsored investment funds to use in its operating activities. In addition, the Company may not be readily able to sell investments held by consolidated investmentssponsored investment funds in order to obtain cash for use in its operations.

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PART I -— FINANCIAL INFORMATION (continued)

3. Derivatives and Hedging

From time to time,

During 2007, the Company may consolidateentered into a sponsored 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 fair value in non-operating income on the condensed consolidated statementsseries of income. BlackRock also may enter into derivative financial instrumentstotal return swaps 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 fairproducts. At September 30, 2007, the outstanding total return swaps had an aggregate notional value of approximately $82,000 and recordsnet losses of approximately $210 and $3,880 for the changesthree and nine months ended September 30, 2007, respectively, which were included in fair valuenon-operating income in general and administrative expense on the Company’s condensed consolidated statements of income.

During first quarter 2007, the Company 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 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. In August 2007 and November 2007, the forward contract was extended through November 2007 and December 2007, respectively. For the sixthree and nine months ended JuneSeptember 30, 2007, the change in fair value of the forward contracts were immaterial.

For the nine months ended September 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 were included in non-operating income in the Company’s condensed consolidated statements of income.4. Earnings Per Share

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, 2007, the change in fair value of the forward contract was immaterial. In August 2007, the forward contract was extended through November 2007.

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

As of JuneDuring the three and nine months ended September 30, 2007, there were 1,570,376 securities which1,545,735 stock options 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)

4. Earnings Per Share (continued)

Due to the similarities in terms between BlackRockthe Company’s 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 weighted average basic shares outstanding for the three and sixnine months ended JuneSeptember 30, 2007.2007 and September 30, 2006.

5. Stock-Based Compensation

BlackRock, Inc. 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 associated with stock-based employee compensation plans was $142,329 and $78,567 for the nine months ended September 30, 2007 and 2006, respectively.

Long-Term Incentive Plan (“LTIP”)Plans

The BlackRock, Inc. 2002 Long-Term Retention and Incentive Plan (“LTIP”(the “2002 LTIP Awards”) 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 2002 LTIP awardsAwards were paid in January 2007. The awards2002 LTIP Awards were payable approximately 16.7% in cash and the remainder in BlackRock stock contributed by PNC and distributed to plan participants. Approximately $20,000 of previously issued 2002 LTIP participants.Awards will result in the settlement of BlackRock shares held by PNC through 2010 at a conversion price approximating the market price on the settlement date.

The settlement of the 2002 LTIP Awards in January 2007 resulted in the surrender by PNC of approximately 1,000,000 shares of BlackRock common stock. Under the terms of the 2002 LTIP Awards, 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 compensationlong term incentive 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 BlackRock shares held by PNC shares in accordance with the share 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 additional awards in the period prior to September 30,29, 2011 and additional awards to be settled with the remaining shares in periods 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.to September 29, 2011.

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PART I -— FINANCIAL INFORMATION (continued)

5. Stock-Based Compensation (continued)

Stock Options

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

During the first sixnine months of 2007, the Company recorded goodwill adjustments of $204,944$197,504 primarily related to the MLIM transaction as the result of the Company’s ongoing review of its purchase price allocation of the net assets acquired in the MLIM transaction. Additional net deferred tax liabilities totaling $169,469$157,283 were recorded primarily as a result of $199,018 of adjustments to changes in expected applicable state tax rates, offset by $35,549 related to additional expected compensation deductions.deductions and $6,186 of other tax-related adjustments. Additionally, the Company established a reserve and the related deferred tax asset for an out-of-market lease assumed in the MLIM transaction in the net amount of $23,166..

7. Borrowings

Short Term Borrowing:

In December 2006, the Company entered into aan unsecured revolving credit agreementfacility with a syndicate of banking institutions. The agreement,This facility, as amended in February 2007 (the “Credit Agreement”“2006 facility”) permits, permitted the Company to borrow up to $800,000$800,000.

In August 2007, the Company terminated the 2006 facility and entered into a new five year $2,500,000 unsecured revolving credit facility (the “2007 facility”), which permits the Company to request an additional $200,000$500,000 of borrowing capacity, subject to lender credit approval, up to a maximum of $1,000,000.$3,000,000. The term of the2007 facility is five years and interest currently accrues at the applicable London Interbank Offer Rate (“LIBOR”) plus 0.20%. The Company pays a commitment fee of 0.04% per annum on the undrawn balance. Additionally, for each day that the total amount outstanding is greater than 50% of the total commitments by all lenders,requires the Company pays a utilization fee of 0.05% per annum on the total amount outstanding. Financial convenants in the Credit Agreement require BlackRocknot to maintainexceed a maximum debt/leverage ratio (ratio of net debt to EBITDA, ratiowhere net debt equals total debt less domestic unrestricted cash) of 3.03 to 1, which was satisfied at September 30, 2007.

The 2007 facility was used to refinance the 2006 facility and a minimum EBITDA/interest expense ratio of 4.0. At June 30, 2007, the Company was in compliance with such covenants. The facility is intended towill provide back-up liquidity, fund ongoing working capital for general corporate purposes and fund various investment opportunities as well as BlackRock’s near-term operating cash requirements.opportunities. At JuneSeptember 30, 2007, the Company had $360,000$450,000 outstanding onunder the facility.2007 facility with interest rates between 5.105% to 5.845% and maturity dates between October 2007 and September 2008.

During JulyLong Term Borrowings:

In September 2007, the Company repaid $120,000issued $700,000 in aggregate principal amount of 6.25% senior unsecured notes maturing on September 15, 2017 (the “Notes”). The Notes were issued at a discount of $5,628, which is being amortized over their ten-year term. The Company incurred approximately $4,000 in debt issuance costs, which are included in other assets on the facilitycondensed consolidated statements of financial condition and extendedare being amortized over the remaining balance into August 2007.

In June 2007,term of the Company announced that it entered into an agreement under which it will acquire certain assetsNotes. A portion of the net proceeds of the Notes was used to fund the initial cash payment for its acquisition of the fund of funds business of Quellos Group, LLC (“Quellos”) and the remainder will be used for up to $1,700,000. Under the terms of the transaction, which has been approved by the Company’s board of directors, Quellos will receive, at closing, $562,000 in cash and $188,000 in BlackRock common stock. In addition, Quellos may receive up to an additional $970,000 in cash and/or stock over three and a half years contingent upon certain measures. BlackRock’s acquisition of Quellos is expected to close on or around October 1, 2007, pending regulatory approvals and satisfaction of other customary closing conditions.general corporate purposes.

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PART I -— FINANCIAL INFORMATION (continued)

8. Deferred Mutual Fund Sales Commissions

In April 2007, the Company assumed from a subsidiary of PNC certain distribution financing arrangements to receive certain cash flows from sponsored open-ended mutual funds sold without a front-end sales charge (“back-end load shares”). The fair value of these assets was capitalized and is being amortized over periods between one andup to six years. The Company also assumed the rights to related distribution and service fees from certain funds and contingent deferred sales commissions upon shareholder redemption of certain back-end load shares prior to the end of the contingent deferred sales period. The Company paid $33,996 in exchange for the above rights.

Supplemental disclosure9. Termination of cash flow informationFund Administration and Servicing Arrangements with Merrill Lynch

Effective September 28, 2007, the Company insourced certain closed-end fund administration and servicing arrangements in place with Merrill Lynch & Co., Inc. (“Merrill Lynch”). In connection with this insourcing, the Company terminated 40 agreements with Merrill Lynch with original terms ranging from 30 to 40 years and made a one-time payment to Merrill Lynch of approximately $128,114 on October 31, 2007. The payment is reported as follows:“termination of closed-end fund administration and servicing arrangements” on the condensed consolidated statements of income and is recorded in “due to affiliates” on the condensed consolidated statements of financial condition. As a result of these terminations, Merrill Lynch was discharged of any further duty to provide the services and BlackRock was discharged from any further payment obligations..

10. Income Taxes

Supplemental scheduleIn the third quarter of non-cash transactions is as follows:2007, the United Kingdom and Germany enacted legislation which will reduce the corporate income tax in those jurisdictions, effective in April and January 2008, respectively. Accordingly, the Company revalued its deferred tax liabilities attributable to the two jurisdictions. The revaluation of deferred taxes resulted in a tax benefit of $51,400 in the third quarter of 2007.

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PART I -— FINANCIAL INFORMATION (continued)

11. Supplemental Cash Flow Information

Supplemental disclosure of cash flow information is as follows:

Supplemental schedule of non-cash investing and financing transactions is as follows:

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PART I — FINANCIAL INFORMATION (continued)

12. Commitments and Contingencies

Legal Proceedings

BlackRock has received subpoenas from various U.S. federal and state governmental and regulatory authorities and various information requests from the SEC in connection with industry-wide investigations of U.S. mutual fund matters. BlackRock is continuing to cooperate fully in these matters. From time to time, BlackRock is subject to other regulatory inquiries and proceedings.

The Company, including a number of the legal entities acquired in the MLIM transaction,Transaction, has been named as a defendant in various legal actions, including arbitrations, class actions and other litigation and regulatory proceedings arising in connection with BlackRock’s activities. Additionally, the investment funds that the Company manages are subject to lawsuits, any of which could harm the investment returns of the applicable fund or result in managersthe Company being liable to the funds for any resulting damages. While Merrill Lynch has agreed to indemnify the Company for certain of the pre-closing liabilities related to legal and regulatory proceedings acquired in the MLIM transaction,Transaction, entities that BlackRock now owns may be named as defendants in these matters and the Company’s reputation may be negatively impacted.

Management, after consultation with legal counsel, does not currently anticipate that the aggregate liability, if any, arising out of such regulatory matters or lawsuits will have a material adverse effect on BlackRock’s financial position, although at the present time, management is not in a position to determine whether any such pending or threatened matters will have a material adverse effect on BlackRock’s results of operations and cash flows in any future reporting period.

Indemnifications

In the ordinary course of business, BlackRock enters into contracts with clients and third party service providers. In many of the contracts, BlackRock agrees to indemnify the client or third party service provider in certain circumstances. The terms of such indemnity obligations vary from contract to contract and the amount of indemnification liability, if any, cannot be determined.

In conjunction with the MLIM transaction,Transaction, the Company has agreed to indemnify Merrill Lynch for losses it may incur arising from (1) inaccuracy in or breach of representations or warranties related to the Company’s SEC reports, absence of undisclosed liabilities, litigation and compliance with laws and government regulations, without giving effect to any materiality or material adverse effect qualifiers, (2) any alleged or actual breach, failure to comply, violation or other deficiency with respect to any regulatory or fiduciary requirements relating to the operation of BlackRock’s business, (3) any fees or expenses incurred or owed by BlackRock to any brokers, financial advisors or comparable other person retained or employed by BlackRock in connection with the transactions,transaction, and (4) certain specified tax covenants.

Merrill Lynch is not entitled to indemnification for any losses arising from the circumstances and events described in (1) above until the aggregate losses (other than individual losses less than $100) of Merrill Lynch exceed $100,000. In the event that such losses exceed $100,000, Merrill Lynch is entitled to be indemnified only for such losses (other than individual losses less than $100) in excess of $100,000. Merrill Lynch is not entitled to indemnification payments pursuant to (1) above in excess of $1,600,000 or for claims made more than 18 months from the closing of the MLIM transaction.Transaction. These limitations do not apply to losses arising from the circumstances and events described in (2), (3) and (4) above, which survive indefinitely.

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PART I -— FINANCIAL INFORMATION (continued)

12. Commitments and Contingencies (continued)

Indemnifications (continued)

Management believes that the likelihood of any liability arising under these indemnification provisions to be remote and, as such, no liability has been recorded on the condensed consolidated statements of financial condition. Management cannot estimate any potential maximum exposure due both to the remoteness of any potential claims and the fact that items that would be included within any such calculated claim would be beyond the control of BlackRock.

13. Subsequent Events

In JulyJune 2007, the United Kingdom enactedCompany announced that it had entered into an income tax law change that generally reduces corporate income tax rates.asset purchase agreement under which it would acquire certain assets of the fund of funds business of Quellos for up to $1,720,000. This transaction closed on October 1, 2007, and BlackRock paid Quellos $562,500 in cash and $187,500 in BlackRock common stock. The common stock will be held in escrow for up to three years and is available to satisfy certain indemnification obligations of Quellos under the asset purchase agreement. In addition, Germany isQuellos may receive up to an additional $970,000 in cash and stock over three and a half years contingent upon certain operating measures.

In April 2003, the processCompany acquired 80% of enactingan investment manager of a change to its income taxation laws. The Company is in the processfund of determining the impact of such changes, which could be material.

Effective Julyhedge funds. On October 1, 2007, the Company terminatedpaid $27,000 to purchase the State Street Research & Management Company Retirement Plan (“the Plan”). Upon terminationremaining 20% of the Plan, participants were eligible to elect to receive a distribution of their benefits in the form of a one time lump sum payment or an annuity, to be purchased from an insurer at market rates. The Company expects to distribute the assets of the Plan in second quarter 2008. Additional costs of the termination are not expected to be material to the Company’s consolidated statements of income.investment manager.

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PART I -— FINANCIAL INFORMATION (continued)

Forward-looking Statements

This report, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.

BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to factors previously disclosed in BlackRock’s SEC reports and those identified elsewhere in this report the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products, including its separately managed accounts and the investments of the former MLIM business:products; (4) the impact of increased competition; (5) the impact of capital improvement projects; (6) the impact of future acquisitions or divestitures; (7) the unfavorable resolution of legal proceedings; (8) the extent and timing of any share repurchases; (9) the impact, extent and timing of technological changes and the adequacy of intellectual property protection; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock, Merrill Lynch or PNC; (11) terrorist activities and international hostilities, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries, and BlackRock; (12) the ability to attract and retain highly talented professionals; (13) fluctuations in the carrying value of BlackRock’s investments; (14) fluctuations in foreign currency exchange rates, which may adversely affect the value of advisory and administration fees earned by BlackRock and the carrying value of certain investments denominated in foreign currencies; (14)(15) the impact of changes to tax legislation and, generally, the tax position of the Company; (15)(16) BlackRock’s ability to successfully integrate the MLIM businessand Quellos businesses with its existing business; (16)(17) the ability of BlackRock to effectively manage the former MLIM and Quellos assets along with its historical assets under management; (17)and (18) BlackRock’s success in maintaining the distribution of its products; and (18) the ability of BlackRock to consummate the transaction with Quellos Group, LLC and realize the benefits of such transaction.products.

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PART I -— FINANCIAL INFORMATION (continued)

Overview

BlackRock, Inc. (“BlackRock” or the “Company”) is one of the largest publicly traded investment management firms in the United States with $1.230$1.3 trillion of assets under management (“AUM”) at JuneSeptember 30, 2007. BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of fixed income, cash management, equity and alternative investment separate accounts and funds. In addition, BlackRock provides risk management, investment system outsourcing and financial advisory services to institutional investors.

On September 29, 2006, BlackRock and Merrill Lynch & Co., Inc. (“Merrill Lynch”) closed a transaction pursuant to which Merrill Lynch contributed its investment management business, Merrill Lynch Investment Managers (“MLIM”), to BlackRock in exchange for an aggregate of 65 million shares of newly issued BlackRock common and non-voting participating preferred stock (the “MLIM Transaction”). Currently,At September 30, 2007, Merrill Lynch ownsowned approximately 45%45.4% of the Company’s voting common stock and approximately 49.5%49.6% of the total capital stock on a fully diluted basis of the combined companyCompany and The PNC Financial Services Group, Inc. (“PNC”) ownsowned approximately 34%33.7% of the capital stock of the combined company.stock.

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PART I -— FINANCIAL INFORMATION (continued)

BlackRock, Inc.

Financial Highlights

(Dollar amounts in thousands, except per share data)

The following table summarizes BlackRock’s operating performance for each of the three months ended September 30, 2007, June 30, 2007 March 31, 2007 and JuneSeptember 30, 2006 and the sixnine months ended JuneSeptember 30, 2007 and JuneSeptember 30, 2006. Certain prior period amounts have been reclassified to conform to the current presentation:presentation.