Exhibit 99.1
BLACKROCK
Contact
Paul L. Audet: (212) 409-3555
invrel@blackrock.com
BlackRock, Inc. Reports Third Quarter Earnings and Diluted EPS of $33.2 Million and $0.51,
Up 21% Year-Over-Year and Announces Terms of Proposed New Long-Term
Retention and Incentive Program
New York, October 11, 2002 – BlackRock, Inc. (NYSE:BLK) today reported net income of $33.2 million for the third quarter ended September 30, 2002, a 21% increase compared with $27.4 million earned in the third quarter of 2001 and a 5% decrease compared with $34.8 million earned in the second quarter of 2002. Diluted earnings per share for the third quarter of 2002 were $0.51 compared with $0.42 and $0.53 for the third quarter of 2001 and the second quarter of 2002, respectively. Operating income of $55.5 million increased 30% compared with $42.5 million earned in the third quarter of 2001 (See Table 1).
Net income for the nine months ended September 30, 2002 was $99.4 million, a 26% increase compared with $79.1 million earned in the nine months ended September 30, 2001. Diluted earnings per share for the nine months ended September 30, 2002 were $1.52, a 25% increase compared with $1.22 for the nine months ended September 30, 2001. Operating income for the nine months ended September 30, 2002 was $160.1 million, a 26% increase compared with $127.2 million earned during the nine months ended September 30, 2001.
Assets under management (“AUM”) at September 30, 2002 were $245.9 billion, a 9% increase compared with $225.6 billion at September 30, 2001 and a 2% decrease from the $249.8 billion reported at June 30, 2002. The $20.3 billion increase in AUM from September 30, 2001 reflects net new business of $22.3 billion in long-dated products and outflows of $7.7 billion in liquidity assets, including $2.4 billion in low-fee securities lending accounts. The $3.9 billion decrease in AUM from second quarter 2002 reflects net new business of $1.5 billion in long-dated products and outflows of $7.0 billion in liquidity assets.
“Our third quarter results demonstrate our ability to achieve strong earnings in the face of extraordinarily adverse business and market conditions,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “We remain confident in our ability to generate organic growth over time driven by sustained competitive performance in our traditional products, ongoing delivery of exceptional client service, continuing strong financial discipline and success in making highly selective investments that broaden our capabilities.”
Third Quarter Highlights
v | Adverse markets continued to dampen the effect of new business efforts, with over $3.4 billion, or 86%, of the net decrease in assets under management attributable to sharp declines in both domestic and international equity markets. |
v | Net new business continued to be strong in several channels, including $2.8 billion from international clients and $830 million in net new closed-end fund assets. |
v | We recorded net new business in fixed income of $1.2 billion, bringing the year-to-date total to $19.1 billion. In addition, we successfully completed the offering of a new high yield collateralized bond obligation, adding net new alternative investment assets of $312 million during the quarter. |
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October 11, 2002
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v | Equities continued to be a mixed story, with net new business of $476 million in international equities offset by $509 million outflows in domestic equities. Importantly, momentum is building in our emerging cap value effort, which we launched at the beginning of the year. In addition, we announced the acquisition of Cyllenius Capital Management, which largely completes the build-out of our fundamental emerging cap growth team and adds an all-cap growth equity hedge fund to our product offerings. |
v | Liquidity flows remained exceptionally volatile, with assets down $7.0 billion from second quarter-end. As in previous quarters, however, assets rebounded immediately after quarter-end, recovering $3.5 billion in the first 7 business days of October. Given the historically low level of interest rates, we remain highly cautious on liquidity balances for the remainder of this year. |
v | We closed the quarter with $6.3 billion of wins to be funded and a very active pipeline of searches in process for fixed income, international equity and domestic emerging cap equity. We expect to complete the Cyllenius acquisition during the fourth quarter; and we continue to consider a variety of strategic initiatives that can further enhance and expand our product and distribution capabilities over time. |
Total revenue for the quarter ended September 30, 2002 increased $2.4 million or 2% to $137.1 million compared with the third quarter of 2001. The increase was primarily the result of a $10.2 million or 18% increase in separate account base fees and a $4.4 million increase in other income partially offset by an $11.5 million decrease in separate account performance fees and a $0.7 million decrease in mutual fund fees. The increase in separate account base fees was driven by a $27.5 billion or 23% increase in fixed income separate account assets. The decrease in separate account performance fees was attributable to investment performance on the firm’s fixed income hedge fund which, as noted in our second quarter earnings release and Form 10-Q filing, has resulted in a high water mark for the fund. BlackRock cannot generate additional performance fees on the fund until such time as positive investment performance exceeds the high water mark. The decrease in mutual fund revenue for the third quarter included an $11.4 million or 39% decline in revenue earned on theBlackRock Funds largely due to a $4.8 billion or 53% decline in equity mutual fund assets from September 30, 2001 resulting from redemptions by PNC affiliated entities and clients as well as a significant decline in the equity markets. The decrease inBlackRock Fund revenue was partially offset by strong growth inBlackRock Provident Institutional Fund, closed-end fund and short-term investment fund revenues, which increased $10.6 million or 46%. The increase in other income was primarily due to increased sales ofBlackRock Solutions products and services.
Total revenue for the nine months ended September 30, 2002 increased $36.2 million or 9% from the prior year. The year-to-year increase was primarily the result of a $22.0 million or 10% increase in separate account revenue and a $14.7 million or 53% increase in other income primarily associated with increased sales ofBlackRock Solutions products and services. The year-to-year increase in separate account revenue was driven by a 20% increase in separate account base fee revenue of $32.8 million due to strong organic growth in assets under management, which was partially offset by a decrease in performance fees of $10.8 million. Mutual fund revenue for the nine-month period decreased slightly compared to 2001 as increases in BPIF and closed-end fund revenue of $18.7 million and $8.1 million, respectively, were more than offset by a $27.4 million reduction inBlackRock Fund revenue. The increase in BPIF revenue was reflective of an increase in average assets under management of approximately $12 billion or 28% while the increase in closed-end fund revenue was due to a $3.4 billion
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October 11, 2002
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increase in assets associated with new funds. The decrease inBlackRock Fund revenue was largely attributable to a $4.8 billion decline in equity mutual fund assets.
BlackRock’s operating margin for the third quarter of 2002 was 42.9% compared with 35.5% for the third quarter of 2001. The third quarter 2002 operating margin included a 1.5% benefit resulting from losses on employee investment elections in the Company’s deferred compensation plans, which equally reduce compensation and benefits and investment income. Total expense for the third quarter of 2002 decreased $10.6 million or 12% to $81.6 million compared with $92.3 million for the third quarter of 2001. The decrease was attributable to decreases in compensation and benefits, fund administration and servicing costs – affiliates and amortization of intangible assets of $3.8 million, $7.2 million and $2.4 million, respectively, partially offset by an increase in general and administration expense of $2.8 million. The decrease in compensation and benefits was primarily due to reductions in incentive compensation expense associated with the reduction in hedge fund performance fees and the previously noted employee investment losses in the Company’s voluntary and involuntary deferred compensation plans. The reduction in fund administration and servicing costs-affiliates reflects reductions of PNC client investments in theBlackRock Funds due to redemptions and market declines and the effect of a revised investment services agreement with PNC. The decline in amortization of intangible assets was due to the Company’s adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” The increase in general and administration expense was largely due to higher marketing and promotional expenses associated with closed-end fund launches and increased sales of other products and services. In addition occupancy and technology related expenses increased due to the completion of the new corporate headquarters at 40 East 52nd Street, New York, New York. Non-operating income for the third quarter 2002 decreased $2.5 million primarily due to investment losses on Rabbi Trust assets associated with the Company’s deferred compensation plans.
Total expense for the nine months ended September 30, 2002 increased $3.2 million or 1% compared with the nine months ended September 30, 2001. The increase was the result of higher compensation and benefits and general and administration expenses of $13.5 million and $11.5 million, respectively, offset by lower fund administration and servicing costs-affiliates and amortization of intangible assets of $14.5 million and $7.2 million, respectively. The increased level of compensation and benefit expense was primarily due to higher staffing levels to support business growth and increased incentive compensation expense based on the growth in operating income. General and administration expense increases were driven by occupancy and technology related expenses associated with the completion of the new corporate headquarters at 40 East 52nd Street, New York, New York and higher marketing and promotional expenses related to increased sales of existing products and the launch of new closed-end funds. Decreases in fund administration and servicing costs-affiliates primarily reflect reductions of PNC client investments in theBlackRock Funds. The decline in amortization of intangible assets was due to the Company’s adoption of SFAS No. 142.
Outlook. Based on current conditions, particularly the recent significant declines experienced in the domestic and international equity markets, management expects that fourth quarter diluted earnings per share will be in a range of $0.50-$0.52 with full year 2002 results increasing 22%-24% to $2.02-$2.04. If recent economic weakness and equity market deterioration persist, management would expect that 2003 diluted earnings per share would trend to the lower half of our previous guidance range of $2.28-$2.38.
New Retention and Incentive Program.In addition, BlackRock today announced the terms of a new long-term retention and incentive program for key employees that it has developed with The PNC Financial Services Group, Inc. (NYSE: PNC). The program, which consists of both stock options and deferred compensation, seeks to provide continuity of the management team, whose contracts expire at
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October 11, 2002
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the end of this year, while promoting development of the firm’s future leaders. In addition, the program is designed to mitigate the dilution to BlackRock’s public shareholders, most significantly through the use of performance hurdles for deferred compensation vesting, and funding to be provided by PNC, as more fully described below.
“In investment management, our people are our most important assets,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “Our greatest challenge is, and always will be, attracting and retaining highly talented professionals who can help us achieve our growth targets and create long-term shareholder value. The program announced today will be vital in helping us meet these challenges.”
The new program seeks to achieve these objectives through the use of both stock options and deferred compensation that will reward stock price appreciation over the next four years. Specifically, options on up to 3.5 million shares of BlackRock stock may be granted at market, subject to vesting at December 31, 2006. In addition, up to $240 million of deferred compensation may be awarded, with payment subject to the achievement of performance hurdles no later than March 2007. If the performance hurdles are achieved, up to $200 million of the deferred compensation plan will be funded with a contribution from PNC of up to 4 million shares of BlackRock common stock to be distributed to plan participants, less withholding, along with an option to put such distributed shares back to BlackRock at fair market value. BlackRock will fund the remainder with up to $40 million in cash.
“Over the past year, we have worked very closely with both BlackRock’s and PNC’s Boards of Directors to craft a program that balances the needs of the business with the interests of our public shareholders,” added Mr. Fink. “PNC’s willingness to fund a substantial portion of the deferred compensation plan out of its BlackRock holdings clearly demonstrates a desire to ensure that the strength and depth of BlackRock’s team is sustained for the benefit of all shareholders. We could not have developed a program of this nature without PNC’s support and participation.”
Initially, BlackRock expects to award approximately 3.36 million option shares and approximately $130 million of deferred compensation to over 100 senior professionals. The remainder of the program awards will be reserved for grants over the next two years to professionals who exhibit leadership qualities and demonstrate the potential to make significant contributions to the firm over time. “This program is being used to build the firm’s future, not reward past contributions. Both the initial allocations and the magnitude of the amount reserved for future grants are fully consistent with that philosophy,” noted Mr. Fink.
The initial grant of stock options is expected to have a value of approximately $50 million under the Black-Scholes option pricing model. If expensed, it is currently expected that the options would reduce reported quarterly diluted earnings per share over the period from October 1, 2002 through December 31, 2006 by approximately $0.03. The stock options will be granted under BlackRock’s Stock Award and Incentive Plan, which was previously approved by BlackRock’s shareholders.
The deferred compensation will vest at the end of any three-month period beginning in 2005 or 2006 during which the daily average closing price of BlackRock’s common stock is $65 per share. If that performance hurdle is not achieved, the Compensation Committee of BlackRock’s Board of Directors may, in its sole discretion, vest a portion of the program if the company realizes compound annual growth in diluted earnings per share of at least 10% from January 1, 2002 to December 31, 2006 and BlackRock’s publicly-traded stock performs in the top half of its peer group during that time. Awards under the plan may also fully vest upon certain change in control events. There will be no expense recognition associated with the deferred compensation unless vesting occurs or a partial vesting determination by the Compensation Committee of BlackRock’s Board is considered reasonable and
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October 11, 2002
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probable. Notwithstanding the fact the deferred compensation awards will not be paid until early-2007, at such time as vesting occurs, BlackRock will record compensation expense, less any applicable taxes. In addition, at the time that the deferred compensation awards are distributed, BlackRock will record an increase in shareholder’s equity equal to the fair market value of the BlackRock common stock distributed to employees from shares surrendered by PNC. There will be no change in fully diluted shares upon vesting of the deferred compensation because the shares contributed by PNC to fund the awards are already issued and outstanding.
The terms of the program are subject to regulatory approval and to approval by BlackRock’s shareholders at the next annual meeting in May 2003.
About BlackRock. BlackRock is one of the largest publicly traded investment management firms in the United States with $246 billion of assets under management as of September 30, 2002. BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of equity, fixed income, liquidity and alternative investment products. In addition, BlackRock provides risk management and investment system services to a growing number of institutional investors under the BlackRock Solutions name. Clients are served from the Company’s headquarters in New York City, as well as offices in Boston, Edinburgh, Hong Kong, San Francisco, Tokyo and Wilmington. BlackRock is majority-owned by The PNC Financial Services Group (NYSE: PNC) and by BlackRock employees.
Forward Looking Statements. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to BlackRock’s outlook for fourth quarter 2002 and full years 2002 and 2003 earnings, fixed income hedge fund investment performance, potential new business opportunities, liquidity asset levels and other future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “pipeline,” “believe,” “comfortable,” “expect,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “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 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 Securities and Exchange Commission (the “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 investment performance of BlackRock’s advised or sponsored investment products and separately managed accounts; (4) the impact of increased competition; (5) the impact of capital improvement projects; (6) the impact of future acquisitions; (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
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October 11, 2002
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agencies relating to BlackRock or PNC; (11) terrorist activities, which may adversely affect the general economy, financial and capital markets, specific industries, and BlackRock; and (12) the ability to attract and retain highly talented professionals.
BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2001 and BlackRock’s subsequent reports filed with the Securities and Exchange Commission, accessible on the SEC’s website at<http://www.sec.gov>, discuss these factors in more detail and identify additional factors that can affect forward-looking statements.
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TABLE 1
BlackRock, Inc.
Financial Highlights
(Dollar amounts in thousands, except share data)
(unaudited)
Three months ended | Variance vs. | |||||||||||||||||||||||||
September 30, | June 30, | September 30, 2001 | June 30, 2002 | |||||||||||||||||||||||
2002 | 2001 | 2002 | Amount | % | Amount | % | ||||||||||||||||||||
Total revenue | $ | 137,132 | $ | 134,782 | $ | 156,695 | $ | 2,350 | 2 | % | $ | (19,563 | ) | -12 | % | |||||||||||
Total expense | $ | 81,636 | $ | 92,250 | $ | 101,990 | $ | (10,614 | ) | -12 | % | $ | (20,354 | ) | -20 | % | ||||||||||
Operating income | $ | 55,496 | $ | 42,532 | $ | 54,705 | $ | 12,964 | 30 | % | $ | 791 | 1 | % | ||||||||||||
Net income | $ | 33,165 | $ | 27,376 | $ | 34,836 | $ | 5,789 | 21 | % | $ | (1,671 | ) | -5 | % | |||||||||||
Diluted earnings per share | $ | 0.51 | $ | 0.42 | $ | 0.53 | $ | 0.09 | 21 | % | $ | (0.02 | ) | -4 | % | |||||||||||
Average diluted shares outstanding | 65,338,340 | 64,947,840 | 65,333,228 | 390,500 | 1 | % | 5,112 | 0 | % | |||||||||||||||||
EBITDA (a) | $ | 61,160 | $ | 52,190 | $ | 63,684 | $ | 8,970 | 17 | % | $ | (2,524 | ) | -4 | % | |||||||||||
Operating margin (b) | 42.9 | % | 35.5 | % | 37.8 | % | ||||||||||||||||||||
Assets under management ($ in millions) | $ | 245,863 | $ | 225,596 | $ | 249,778 | $ | 20,267 | 9 | % | $ | (3,915 | ) | -2 | % |
Nine months ended | ||||||||||||||
September 30, | Variance | |||||||||||||
2002 | 2001 | Amount | % | |||||||||||
Total revenue | $ | 439,940 | $ | 403,753 | $ | 36,187 | 9 | % | ||||||
Total expense | $ | 279,804 | $ | 276,593 | $ | 3,211 | 1 | % | ||||||
Operating income | $ | 160,136 | $ | 127,160 | $ | 32,976 | 26 | % | ||||||
Net income | $ | 99,401 | $ | 79,102 | $ | 20,299 | 26 | % | ||||||
Diluted earnings per share | $ | 1.52 | $ | 1.22 | $ | 0.30 | 25 | % | ||||||
Average diluted shares outstanding | 65,303,080 | 64,897,087 | 405,993 | 1 | % | |||||||||
EBITDA(a) | $ | 183,530 | $ | 153,443 | $ | 30,087 | 20 | % | ||||||
Operating margin(b) | 39.3 | % | 35.7 | % | ||||||||||
Assets under management ($ in millions) | $ | 245,863 | $ | 225,596 | $ | 20,267 | 9 | % |
(a) Earnings before interest expense, taxes, depreciation and amortization.
(b) Operating income divided by total revenue less fund administration and servicing costs-affiliates.
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TABLE 2
BlackRock, Inc.
Condensed Consolidated Statements of Income
(Dollar amounts in thousands, except share data)
(unaudited)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
2002 | 2001 | % Change | 2002 | 2001 | % Change | |||||||||||||||||
Revenue | ||||||||||||||||||||||
Investment advisory and administration fees | ||||||||||||||||||||||
Mutual funds | $ | 52,009 | $ | 52,751 | (1.4 | )% | $ | 162,004 | $ | 162,458 | (0.3 | )% | ||||||||||
Separate accounts | 70,149 | 71,430 | (1.8 | ) | 235,420 | 213,439 | 10.3 | |||||||||||||||
Total investment advisory and administration fees | 122,158 | 124,181 | (1.6 | ) | 397,424 | 375,897 | 5.7 | |||||||||||||||
Other income | 14,974 | 10,601 | 41.3 | 42,516 | 27,856 | 52.6 | ||||||||||||||||
Total revenue | 137,132 | 134,782 | 1.7 | 439,940 | 403,753 | 9.0 | ||||||||||||||||
Expense | ||||||||||||||||||||||
Employee compensation and benefits | 50,156 | 53,932 | (7.0 | ) | 178,372 | 164,896 | 8.2 | |||||||||||||||
Fund administration and servicing costs—affiliates | 7,831 | 15,016 | (47.8 | ) | 32,925 | 47,428 | (30.6 | ) | ||||||||||||||
General and administration | 23,448 | 20,689 | 13.3 | 67,904 | 56,428 | 20.3 | ||||||||||||||||
Amortization of intangible assets | 201 | 2,613 | (92.3 | ) | 603 | 7,841 | (92.3 | ) | ||||||||||||||
Total expense | 81,636 | 92,250 | (11.5 | ) | 279,804 | 276,593 | 1.2 | |||||||||||||||
Operating income | 55,496 | 42,532 | 30.5 | 160,136 | 127,160 | 25.9 | ||||||||||||||||
Non-operating income (expense) | ||||||||||||||||||||||
Investment income | 408 | 2,890 | (85.9 | ) | 7,443 | 7,384 | 0.8 | |||||||||||||||
Interest expense | (164 | ) | (172 | ) | (4.7 | ) | (519 | ) | (574 | ) | (9.6 | ) | ||||||||||
244 | 2,718 | (91.0 | ) | 6,924 | 6,810 | 1.7 | ||||||||||||||||
Income before income taxes | 55,740 | 45,250 | 23.2 | 167,060 | 133,970 | 24.7 | ||||||||||||||||
Income taxes | 22,575 | 17,874 | 26.3 | 67,659 | 54,868 | 23.3 | ||||||||||||||||
Net income | $ | 33,165 | $ | 27,376 | 21.1 | $ | 99,401 | $ | 79,102 | 25.7 | ||||||||||||
Weighted-average shares outstanding | ||||||||||||||||||||||
Basic | 64,798,908 | 64,284,768 | 0.8 | % | 64,725,309 | 64,231,342 | 0.8 | % | ||||||||||||||
Diluted | 65,338,340 | 64,947,840 | 0.6 | % | 65,303,080 | 64,897,087 | 0.6 | % | ||||||||||||||
Earnings per share | ||||||||||||||||||||||
Basic | $ | 0.51 | $ | 0.43 | 18.6 | % | $ | 1.54 | $ | 1.23 | 25.2 | % | ||||||||||
Diluted | $ | 0.51 | $ | 0.42 | 21.4 | % | $ | 1.52 | $ | 1.22 | 24.6 | % |
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TABLE 3
BlackRock, Inc.
Condensed Consolidated Statements of Financial Condition
(Dollar amounts in thousands)
(unaudited)
September 30, 2002 | December 31, 2001 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 213,675 | $ | 186,451 | ||
Accounts receivable | 111,844 | 96,659 | ||||
Investments | 180,462 | 139,126 | ||||
Property and equipment, net | 93,527 | 70,510 | ||||
Intangible assets, net | 181,082 | 181,688 | ||||
Other assets | 8,984 | 10,044 | ||||
Total assets | $ | 789,574 | $ | 684,478 | ||
Liabilities and stockholders’ equity | ||||||
Accrued compensation | $ | 140,847 | $ | 146,019 | ||
Accounts payable and accrued liabilities | 35,195 | 35,047 | ||||
Acquired management contract obligation | 6,578 | 7,344 | ||||
Other liabilities | 11,030 | 9,951 | ||||
Total liabilities | 193,650 | 198,361 | ||||
Stockholders’ equity | 595,924 | 486,117 | ||||
Total liabilities and stockholders’ equity | $ | 789,574 | $ | 684,478 | ||
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TABLE 4
BlackRock, Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
(unaudited)
Nine months ended | ||||||||
September 30, | ||||||||
2002 | 2001 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 99,401 | $ | 79,102 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 15,951 | 18,899 | ||||||
Stock-based compensation | 4,104 | 3,784 | ||||||
Deferred income taxes | 12,039 | 2,619 | ||||||
Tax benefit from stock-based compensation | 6,668 | 5,230 | ||||||
Purchase of investments, trading, net | (17,350 | ) | — | |||||
Net loss on investments | 621 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Increase in accounts receivable | (13,629 | ) | (13,184 | ) | ||||
Increase in receivable from affiliates | (13,595 | ) | (798 | ) | ||||
Decrease in other assets | 1,060 | 2,552 | ||||||
Increase (decrease) in accrued compensation | 378 | (8,292 | ) | |||||
Increase in accounts payable and accrued liabilities | 148 | 29,012 | ||||||
Increase in other liabilities | 1,079 | 867 | ||||||
Cash provided by operating activities | 96,875 | 119,791 | ||||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (38,365 | ) | (26,602 | ) | ||||
Purchase of investments | (25,816 | ) | (126,305 | ) | ||||
Cash used in investing activities | (64,181 | ) | (152,907 | ) | ||||
Cash flows from financing activities | ||||||||
Issuance of class A common stock | 2,212 | 281 | ||||||
Purchase of treasury stock | (9,826 | ) | (6,472 | ) | ||||
Reissuance of treasury stock | 1,691 | 246 | ||||||
Acquired management contract obligation payment | (766 | ) | (696 | ) | ||||
Cash used in financing activities | (6,689 | ) | (6,641 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1,219 | (1 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 27,224 | (39,758 | ) | |||||
Cash and cash equivalents, beginning of period | 186,451 | 192,590 | ||||||
Cash and cash equivalents, end of period | $ | 213,675 | $ | 152,832 | ||||
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TABLE 5
BlackRock, Inc.
Assets Under Management
(Dollar amounts in millions)
(unaudited)
September 30, | December 31, | ||||||||
2002 | 2001 | 2001 | |||||||
All Accounts | |||||||||
Fixed income | $ | 164,310 | $ | 132,321 | $ | 135,242 | |||
Liquidity | 63,557 | 71,277 | 79,753 | ||||||
Equity | 12,506 | 17,119 | 18,280 | ||||||
Alternative investment products | 5,490 | 4,879 | 5,309 | ||||||
Total | $ | 245,863 | $ | 225,596 | $ | 238,584 | |||
Separate Accounts | |||||||||
Fixed income | $ | 145,839 | $ | 118,336 | $ | 119,488 | |||
Liquidity | 5,438 | 6,987 | 6,831 | ||||||
Liquidity-Securities lending | 5,693 | 8,069 | 10,781 | ||||||
Equity | 8,322 | 8,185 | 9,577 | ||||||
Alternative investment products | 5,490 | 4,879 | 5,309 | ||||||
Subtotal | 170,782 | 146,456 | 151,986 | ||||||
Mutual Funds | |||||||||
Fixed income | 18,471 | 13,985 | 15,754 | ||||||
Liquidity | 52,426 | 56,221 | 62,141 | ||||||
Equity | 4,184 | 8,934 | 8,703 | ||||||
Subtotal | 75,081 | 79,140 | 86,598 | ||||||
Total | $ | 245,863 | $ | 225,596 | $ | 238,584 | |||
Component Changes in Assets Under Management
(Dollar amounts in millions)
(unaudited)
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2002 | 2001 | 2002 | 2001 | |||||||||||||
All Accounts | ||||||||||||||||
Beginning assets under management | $ | 249,778 | $ | 212,694 | $ | 238,584 | $ | 203,769 | ||||||||
Net subscriptions (redemptions) | (5,546 | ) | 11,006 | 2,352 | 19,080 | |||||||||||
Market appreciation | 1,631 | 1,896 | 4,927 | 2,747 | ||||||||||||
Ending assets under management | $ | 245,863 | $ | 225,596 | $ | 245,863 | $ | 225,596 | ||||||||
Separate Accounts | ||||||||||||||||
Beginning assets under management | $ | 168,176 | $ | 140,005 | $ | 151,986 | $ | 133,743 | ||||||||
Net subscriptions | 357 | 2,775 | 12,435 | 6,672 | ||||||||||||
Market appreciation | 2,249 | 3,676 | 6,361 | 6,041 | ||||||||||||
Ending assets under management | 170,782 | 146,456 | 170,782 | 146,456 | ||||||||||||
Mutual Funds | ||||||||||||||||
Beginning assets under management | 81,602 | 72,689 | 86,598 | 70,026 | ||||||||||||
Net subscriptions (redemptions) | (5,903 | ) | 8,231 | (10,083 | ) | 12,408 | ||||||||||
Market depreciation | (618 | ) | (1,780 | ) | (1,434 | ) | (3,294 | ) | ||||||||
Ending assets under management | 75,081 | 79,140 | 75,081 | 79,140 | ||||||||||||
Total | $ | 245,863 | $ | 225,596 | $ | 245,863 | $ | 225,596 | ||||||||
11
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
2001 | 2002 | Nine months ended September 30, 2002 | ||||||||||||||||||||||||||
June 30 | September 30 | December 31 | March 31 | June 30 | September 30 | |||||||||||||||||||||||
Separate Accounts | ||||||||||||||||||||||||||||
Fixed Income | ||||||||||||||||||||||||||||
Beginning assets under management | $ | 107,371 | $ | 110,483 | $ | 118,336 | $ | 119,488 | $ | 123,983 | 140,738 | $ | 119,488 | |||||||||||||||
Net subscriptions | 2,682 | 2,959 | 1,731 | 4,437 | 12,270 | 281 | 16,988 | |||||||||||||||||||||
Market appreciation (depreciation) | 430 | 4,894 | (579 | ) | 58 | 4,485 | 4,820 | 9,363 | ||||||||||||||||||||
Ending assets under management | 110,483 | 118,336 | 119,488 | 123,983 | 140,738 | 145,839 | 145,839 | |||||||||||||||||||||
Liquidity | ||||||||||||||||||||||||||||
Beginning assets under management | 5,713 | 6,782 | 6,987 | 6,831 | 5,441 | 5,516 | 6,831 | |||||||||||||||||||||
Net subscriptions (redemptions) | 1,042 | 181 | (171 | ) | (1,395 | ) | 80 | (92 | ) | (1,407 | ) | |||||||||||||||||
Market appreciation (depreciation) | 27 | 24 | 15 | 5 | (5 | ) | 14 | 14 | ||||||||||||||||||||
Ending assets under management | 6,782 | 6,987 | 6,831 | 5,441 | 5,516 | 5,438 | 5,438 | |||||||||||||||||||||
Liquidity-Securities lending | ||||||||||||||||||||||||||||
Beginning assets under management | 7,514 | 10,004 | 8,069 | 10,781 | 9,544 | 6,435 | 10,781 | |||||||||||||||||||||
Net subscriptions (redemptions) | 2,490 | (1,935 | ) | 2,712 | (1,237 | ) | (3,109 | ) | (742 | ) | (5,088 | ) | ||||||||||||||||
Ending assets under management | 10,004 | 8,069 | 10,781 | 9,544 | 6,435 | 5,693 | 5,693 | |||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Beginning assets under management | 7,796 | 8,257 | 8,185 | 9,577 | 9,445 | 10,119 | 9,577 | |||||||||||||||||||||
Net subscriptions (redemptions) | 488 | 1,144 | 675 | (80 | ) | 884 | 598 | 1,402 | ||||||||||||||||||||
Market appreciation (depreciation) | (27 | ) | (1,216 | ) | 717 | (52 | ) | (210 | ) | (2,395 | ) | (2,657 | ) | |||||||||||||||
Ending assets under management | 8,257 | 8,185 | 9,577 | 9,445 | 10,119 | 8,322 | 8,322 | |||||||||||||||||||||
Alternative investment products | ||||||||||||||||||||||||||||
Beginning assets under management | 4,317 | 4,479 | 4,879 | 5,309 | 5,541 | 5,368 | 5,309 | |||||||||||||||||||||
Net subscriptions | 169 | 426 | 411 | 164 | 64 | 312 | 540 | |||||||||||||||||||||
Market appreciation (depreciation) | (7 | ) | (26 | ) | 19 | 68 | (237 | ) | (190 | ) | (359 | ) | ||||||||||||||||
Ending assets under management | 4,479 | 4,879 | 5,309 | 5,541 | 5,368 | 5,490 | 5,490 | |||||||||||||||||||||
Total Separate Accounts | ||||||||||||||||||||||||||||
Beginning assets under management | 132,711 | 140,005 | 146,456 | 151,986 | 153,954 | 168,176 | 151,986 | |||||||||||||||||||||
Net subscriptions | 6,871 | 2,775 | 5,358 | 1,889 | 10,189 | 357 | 12,435 | |||||||||||||||||||||
Market appreciation | 423 | 3,676 | 172 | 79 | 4,033 | 2,249 | 6,361 | |||||||||||||||||||||
Ending assets under management | $ | 140,005 | $ | 146,456 | $ | 151,986 | $ | 153,954 | $ | 168,176 | $ | 170,782 | $ | 170,782 | ||||||||||||||
Mutual Funds | ||||||||||||||||||||||||||||
Fixed Income | ||||||||||||||||||||||||||||
Beginning assets under management | $ | 13,600 | $ | 12,326 | $ | 13,985 | $ | 15,754 | $ | 16,270 | 17,175 | $ | 15,754 | |||||||||||||||
Net subscriptions (redemptions) | (1,207 | ) | 1,397 | 2,000 | 644 | 565 | 950 | 2,159 | ||||||||||||||||||||
Market appreciation (depreciation) | (67 | ) | 262 | (231 | ) | (128 | ) | 340 | 346 | 558 | ||||||||||||||||||
Ending assets under management | 12,326 | 13,985 | 15,754 | 16,270 | 17,175 | 18,471 | 18,471 | |||||||||||||||||||||
Liquidity | ||||||||||||||||||||||||||||
Beginning assets under management | 44,252 | 48,829 | 56,221 | 62,141 | 59,994 | 58,648 | 62,141 | |||||||||||||||||||||
Net subscriptions (redemptions) | 4,577 | 7,392 | 5,920 | (2,147 | ) | (1,347 | ) | (6,223 | ) | (9,717 | ) | |||||||||||||||||
Market appreciation | — | — | — | — | 1 | 1 | 2 | |||||||||||||||||||||
Ending assets under management | 48,829 | 56,221 | 62,141 | 59,994 | 58,648 | 52,426 | 52,426 | |||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Beginning assets under management | 11,073 | 11,534 | 8,934 | 8,703 | 7,898 | 5,779 | 8,703 | |||||||||||||||||||||
Net redemptions | (69 | ) | (558 | ) | (1,040 | ) | (697 | ) | (1,198 | ) | (630 | ) | (2,525 | ) | ||||||||||||||
Market appreciation (depreciation) | 530 | (2,042 | ) | 809 | (108 | ) | (921 | ) | (965 | ) | (1,994 | ) | ||||||||||||||||
Ending assets under management | 11,534 | 8,934 | 8,703 | 7,898 | 5,779 | 4,184 | 4,184 | |||||||||||||||||||||
Total Mutual Funds | ||||||||||||||||||||||||||||
Beginning assets under management | 68,925 | 72,689 | 79,140 | 86,598 | 84,162 | 81,602 | 86,598 | |||||||||||||||||||||
Net subscriptions (redemptions) | 3,301 | 8,231 | 6,880 | (2,200 | ) | (1,980 | ) | (5,903 | ) | (10,083 | ) | |||||||||||||||||
Market appreciation (depreciation) | 463 | (1,780 | ) | 578 | (236 | ) | (580 | ) | (618 | ) | (1,434 | ) | ||||||||||||||||
Ending assets under management | $ | 72,689 | $ | 79,140 | $ | 86,598 | $ | 84,162 | $ | 81,602 | $ | 75,081 | $ | 75,081 | ||||||||||||||
12
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
2001 | 2002 | Nine months ended September 30, 2002 | ||||||||||||||||||||||||||
June 30 | September 30 | December 31 | March 31 | June 30 | September 30 | |||||||||||||||||||||||
Mutual Funds | ||||||||||||||||||||||||||||
BlackRock Funds | ||||||||||||||||||||||||||||
Beginning assets under management | $ | 24,383 | $ | 24,589 | $ | 22,790 | $ | 24,195 | $ | 22,176 | $ | 20,264 | $ | 24,195 | ||||||||||||||
Net subscriptions (redemptions) | (253 | ) | 49 | 755 | (1,830 | ) | (1,123 | ) | (976 | ) | (3,929 | ) | ||||||||||||||||
Market appreciation (depreciation) | 459 | (1,848 | ) | 650 | (189 | ) | (789 | ) | (804 | ) | (1,782 | ) | ||||||||||||||||
Ending assets under management | 24,589 | 22,790 | 24,195 | 22,176 | 20,264 | 18,484 | 18,484 | |||||||||||||||||||||
BlackRock Global Series | ||||||||||||||||||||||||||||
Beginning assets under management | 105 | 134 | 127 | 149 | 247 | 208 | 149 | |||||||||||||||||||||
Net subscriptions (redemptions) | 33 | 1 | 13 | 95 | (52 | ) | (4 | ) | 39 | |||||||||||||||||||
Market appreciation (depreciation) | (4 | ) | (8 | ) | 9 | 3 | 13 | (16 | ) | — | ||||||||||||||||||
Ending assets under management | 134 | 127 | 149 | 247 | 208 | 188 | 188 | |||||||||||||||||||||
BPIF | ||||||||||||||||||||||||||||
Beginning assets under management | 37,047 | 41,954 | 48,889 | 53,167 | 52,534 | 51,127 | 53,167 | |||||||||||||||||||||
Net subscriptions (redemptions) | 4,907 | 6,935 | 4,278 | (633 | ) | (1,407 | ) | (5,799 | ) | (7,839 | ) | |||||||||||||||||
Ending assets under management | 41,954 | 48,889 | 53,167 | 52,534 | 51,127 | 45,328 | 45,328 | |||||||||||||||||||||
Closed End | ||||||||||||||||||||||||||||
Beginning assets under management | 6,841 | 5,440 | 6,728 | 8,512 | 8,611 | 9,393 | 8,512 | |||||||||||||||||||||
Net subscriptions (redemptions) | (1,409 | ) | 1,212 | 1,865 | 149 | 586 | 830 | 1,565 | ||||||||||||||||||||
Market appreciation (depreciation) | 8 | 76 | (81 | ) | (50 | ) | 196 | 202 | 348 | |||||||||||||||||||
Ending assets under management | 5,440 | 6,728 | 8,512 | 8,611 | 9,393 | 10,425 | 10,425 | |||||||||||||||||||||
Short Term Investment Funds (STIF) | ||||||||||||||||||||||||||||
Beginning assets under management | 549 | 572 | 606 | 575 | 594 | 610 | 575 | |||||||||||||||||||||
Net subscriptions (redemptions) | 23 | 34 | (31 | ) | 19 | 16 | 46 | 81 | ||||||||||||||||||||
Ending assets under management | 572 | 606 | 575 | 594 | 610 | 656 | 656 | |||||||||||||||||||||
Total Mutual Funds | ||||||||||||||||||||||||||||
Beginning assets under management | 68,925 | 72,689 | 79,140 | 86,598 | 84,162 | 81,602 | 86,598 | |||||||||||||||||||||
Net subscriptions (redemptions) | 3,301 | 8,231 | 6,880 | (2,200 | ) | (1,980 | ) | (5,903 | ) | (10,083 | ) | |||||||||||||||||
Market appreciation (depreciation) | 463 | (1,780 | ) | 578 | (236 | ) | (580 | ) | (618 | ) | (1,434 | ) | ||||||||||||||||
Ending assets under management | $ | 72,689 | $ | 79,140 | $ | 86,598 | $ | 84,162 | $ | 81,602 | $ | 75,081 | $ | 75,081 | ||||||||||||||
13