BlackRock Holdco 2 10-Q 2003 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2003
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________.
(Commission file number 001-15305)

BlackRock, Inc.
(Exact name of registrant as specified in its charter)
Delaware	51-0380803
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
40 East 52nd Street, New York, NY  10022
(Address of principal executive offices)
(Zip Code)
(212) 754-5300
(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.

Yesx Noo

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)

Yesx Noo

          As of July 31, 2003, there were 18,688,117 shares of the registrant’s class A common stock outstanding and 45,873,766 shares of the registrant’s class B common stock outstanding.

BlackRock Inc.
Index to Form 10-Q

PART I

FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition	1
	Consolidated Statements of Income	2
	Consolidated Statements of Cash Flows	3
	Notes to Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	41
PART II
OTHER INFORMATION
Item 4.	Submission of Matters to a Vote of Security Holders	42
Item 6.	Exhibits and Reports on Form 8-K	43

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PART I  –  FINANCIAL INFORMATION
Item 1.        Financial Statements

BlackRock, Inc.
Consolidated Statements of Financial Condition
(Dollar amounts in thousands)

	June 30, 2003			December 31, 2002
	(unaudited)
Assets
Cash and cash equivalents	$	180,833		$	255,234
Accounts receivable		119,344			113,789
Investments (cost: $297,878 and $211,325, respectively)		304,717			208,743
Property and equipment, net		90,292			93,923
Intangible assets, net		192,204			182,827
Receivable from affiliates		104			281
Other assets		13,174			9,391
Total assets	$	900,668		$	864,188
Liabilities
Accrued compensation	$	118,200		$	173,047
Accounts payable and accrued liabilities
Affiliate		35,175			23,977
Other		14,319			13,986
Acquired management contract obligation		5,736			6,578
Other liabilities		18,251			11,946
Total liabilities		191,681			229,534
Stockholders’ equity
Common stock, class A, 19,225,424 and 17,606,801 shares issued, respectively		192			176
Common stock, class B, 46,173,865 and 47,629,373 shares issued, respectively		461			476
Additional paid - in capital		198,362			199,990
Retained earnings		514,741			440,747
Unearned compensation		(964	)		(1,535	)
Accumulated other comprehensive loss		5,447			231
Treasury stock, class A, at cost, 109,357 and 38,714 shares issued, respectively		(4,891	)		(1,469	)
Treasury stock, class B, at cost, 299,832 and 281,281 shares issued, respectively		(4,361	)		(3,962	)
Total stockholders’ equity		708,987			634,654
Total liabilities and stockholders’ equity	$	900,668		$	864,188

See accompanying notes to consolidated financial statements.

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

BlackRock, Inc.
Consolidated Statements of Income
(Dollar amounts in thousands, except share data)
(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2003			2002			2003			2002
Revenue
Investment advisory and administration fees		��
Mutual funds	$	48,496		$	54,736		$	97,236		$	109,995
Separate accounts		79,517			88,755			157,142			165,271
Other income
Affiliate		1,250			1,250			2,500			2,500
Other		14,643			11,954			29,779			25,042
Total revenue		143,906			156,695			286,657			302,808
Expense
Employee compensation and benefits		55,819			67,830			111,205			128,217
Fund administration and servicing costs
Affiliate		6,686			11,916			13,629			25,094
Other		892			478			1,907			478
General and administration
Affiliate		1,984			1,887			4,045			3,787
Other		23,492			19,678			46,540			40,190
Amortization of intangible assets		231			201			463			402
Total expense		89,104			101,990			177,789			198,168
Operating income		54,802			54,705			108,868			104,640
Non-operating income (expense)
Investment income		8,233			4,014			11,762			7,034
Interest expense		(151	)		(171	)		(315	)		(354	)
Total non-operating income		8,082			3,843			11,447			6,680
Income before income taxes		62,884			58,548			120,315			111,320
Income taxes		24,210			23,712			46,321			45,085
Net income	$	38,674		$	34,836		$	73,994		$	66,235
Earnings per share
Basic	$	0.59		$	0.54		$	1.14		$	1.02
Diluted	$	0.58		$	0.53		$	1.12		$	1.01
Weighted-average shares outstanding
Basic		65,028,337			64,726,856			65,042,359			64,687,900
Diluted		66,164,326			65,333,228			66,018,501			65,261,868

See accompanying notes to consolidated financial statements.

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.       Financial Statements (continued)

BlackRock, Inc.
Consolidated Statements of Cash Flow
(Dollar amounts in thousands)
(unaudited)

	Six months ended June 30,
	2003			2002
Cash flows from operating activities
Net income	$	73,994		$	66,235
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,464			9,966
Stock-based compensation		4,610			3,105
Deferred income taxes		2,278			8,066
Tax benefit from stock-based compensation		4,167			6,304
Purchase of investments, trading, net		(17,385	)		(17,350	)
Net gain on investments		(4,700	)		(1,423	)
Changes in operating assets and liabilities:
Increase in accounts receivable		(5,307	)		(15,812	)
Decrease (increase) in receivable from affiliates		177			(14,306	)
(Increase) decrease in other assets		(3,756	)		1,055
Decrease in accrued compensation		(49,452	)		(20,434	)
Increase in accounts payable and accrued liabilities		6,936			2,705
Increase (decrease) in other liabilities		759			(1,240	)
Cash provided by operating activities		22,785			26,871
Cash flows from investing activities
Purchase of property and equipment		(6,299	)		(31,826	)
Purchase of investments		(67,481	)		(5,118	)
Acquisition of business, net of cash acquired		(4,584	)		—
Cash used in investing activities		(78,364	)		(36,944	)
Cash flows from financing activities
Issuance of class A common stock		623			760
Purchase of treasury stock		(22,333	)		(9,174	)
Reissuance of treasury stock		2,661			1,691
Acquired management contract obligation payment		(842	)		(766	)
Cash used in financing activities		(19,891	)		(7,489	)
Effect of exchange rate changes on cash and cash equivalents		1,069			644
Net decrease in cash and cash equivalents		(74,401	)		(16,918	)
Cash and cash equivalents, beginning of period		255,234			186,451
Cash and cash equivalents, end of period	$	180,833		$	169,533

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

BlackRock, Inc.
Notes to Consolidated Financial Statements
Three Months Ended June 30, 2003 and 2002
(Dollar amounts in thousands, except share data)
(unaudited)

1.          Significant Accounting Policies

Basis of Presentation

The consolidated interim financial statements of BlackRock, Inc. and its subsidiaries (“BlackRock” or the “Company”) included herein have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.  These consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.  The Company follows the same accounting policies in the preparation of interim reports as set forth in the annual report.  In the opinion of management, the consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations and cash flows of BlackRock for the interim periods presented and are not necessarily indicative of a full year’s results.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts reported in the financial statements.  Actual results could differ from those estimates.

Investments

The Company’s investments are classified as trading and available for sale.  Investments, trading, represent investments made by the Company and held in a Rabbi trust with respect to senior employee elections under the BlackRock Voluntary and Involuntary Deferred Compensation Plans and certain seed investments which are recorded at fair market value with unrealized gains and losses included in the accompanying consolidated statements of income as investment income (expense).  Investments, available for sale, consist primarily of investments in BlackRock funds, municipal bonds and alternative investment products and are stated at market values.  Securities which are not readily marketable (alternative investment products) are stated at their estimated fair market value as determined by the Company’s management. 

The resulting unrealized gains and losses on investments, available for sale, are included in the accumulated other comprehensive income or loss component of stockholders’ equity, net of tax.  Realized gains and losses on trading and available for sale investments are calculated on a specific identification basis and, along with interest and dividend income, are included in investment income (expense) in the accompanying consolidated statements of income.  The Company’s management periodically assesses impairment on investments to determine if it is other than temporary.  Several of the Company’s available for sale investments represent equity interests in collateralized debt obligations in which the Company acts in the capacity of collateral manager.  The Company reviews cash flow estimates throughout the life of each collateralized debt obligation to determine if an impairment charge is required to be taken through current earnings. If the updated estimate of future cash flows (taking into account both timing and amounts) is less than the last revised estimate and the reduction in estimated future cash flows is deemed to be other than temporary, an impairment is recognized based on the excess of the carrying amount of the

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

1.          Significant Accounting Policies (continued)

Investments (continued)

investment over its fair value.  In evaluating impairments on all other available for sale securities, the Company considers the length of time and the extent to which the security’s market value has been less than its cost, the financial condition and near-term prospects of the security’s issuer and the Company’s intended holding period for the security.  Any impairment on investments which is deemed other than temporary is recorded in non-operating income (expense) on the consolidated statements of income.

Stock-Based Compensation

Prior to 2003, the Company accounted for stock-based employee compensation plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations.  Stock compensation recorded prior to 2003 primarily represents the grant of restricted common stock to employees.  Effective January 1, 2003, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” prospectively to all employee awards granted, modified or settled after January 1, 2003.  Awards under the Company’s plans vest over periods ranging from two to four years.  Therefore, the cost related to stock-based employee compensation included in net income for the three and six month periods ended June 30, 2003 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS No. 123.  The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.

	Three months ended June 30,						Six months ended June 30,
	2003			2002			2003			2002
Net income, as reported	$	38,674		$	34,836		$	73,994		$	66,235
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		297			75			538			239
Deduct:  Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects		(3,659	)		(1,809	)		(7,319	)		(3,708	)
Pro forma net income	$	35,312		$	33,102		$	67,213		$	62,766
Earnings per share:
Basic - as reported	$	0.59		$	0.54		$	1.14		$	1.02
Basic - pro forma	$	0.54		$	0.51		$	1.03		$	0.97
Diluted - as reported	$	0.58		$	0.53		$	1.12		$	1.01
Diluted - pro forma	$	0.53		$	0.51		$	1.02		$	0.96

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

1.          Significant Accounting Policies (continued)

Consolidation of Variable Interest Entities

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities.”  FIN No. 46 addresses the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to variable interest entities (“VIE”) and generally would require that the assets, liabilities and results of operations of a VIE be consolidated into the financial statements of the enterprise that has a controlling financial interest in it.  The interpretation provides a framework for determining whether an entity should be evaluated for consolidation based on voting interests or significant financial support provided to the entity (“variable interests”).

An entity is classified as a VIE if total equity is not sufficient to permit the entity to finance its activities without additional subordinated financial support or its equity investors lack the direct or indirect ability to make decisions about an entity’s activities through voting rights, absorb the expected losses of the entity if they occur or receive the expected residual returns of the entity if they occur.  Once an entity is determined to be a VIE, its assets, liabilities and results of operations should be consolidated with those of its primary beneficiary.  The primary beneficiary of a VIE is the entity which either will absorb a majority of the VIE’s expected losses or has the right to receive a majority of the VIE’s expected residual returns.  The expected losses and residual returns of a VIE include expected variability in its net income or loss, fees to decision makers and fees to guarantors of substantially all VIE assets or liabilities and are calculated in accordance with Statement of Financial Accounting Concept No. 7, “Using Cash Flow Information and Present Value in Accounting Measurements.”

A public enterprise with a variable interest in a VIE created before January 31, 2003 must apply FIN No. 46 to that VIE as of the beginning of the first interim or annual reporting period beginning after June 15, 2003.  Additionally, if it is reasonably possible that an enterprise will consolidate or disclose information about a VIE when the guidance becomes effective, there are several disclosure requirements effective for all financial statements issued after January 31, 2003.

During the six months ended June 30, 2003, management made changes to the equity ownership and/or control structure of certain hedge funds previously identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 which has removed them from the scope of FIN No. 46.  As a result these entities will not be required to be consolidated in the third quarter of 2003.

Pursuant to the conceptual framework set forth in FIN No. 46, the Company’s management has concluded that the consolidation of the assets, liabilities and results of operations of four collateralized bond obligation funds (“CBOs”) and one collateralized loan obligation fund (“CLO”) organized as corporations or limited liability companies in its consolidated financial statements as of and for the period ended September 30, 2003 is reasonably possible.  The funds invest in high yield securities and offer opportunity for high return and are subject to greater risk than traditional investment products.  These funds are structured to take advantage of the yield differential between their assets and liabilities and have terms to maturity from eight to twelve years.  At June 30, 2003, aggregate assets and debt in the CBOs and CLO was approximately $2.3 billion and $2.0 billion, respectively.  If such assets and debt are required to be recorded, the Company would disclose that it claims no title to the assets and such liabilities are without recourse to BlackRock.  In its role as collateral manager for the CBOs, BlackRock is not exposed to risk of loss with respect to the CBOs debts. BlackRock’s equity ownership in these funds was approximately $14.4 million at June 30, 2003.  BlackRock’s maximum potential loss related to these VIEs is limited to the amount of its respective equity ownership in each of these investment vehicles.  Additionally, the Company has neither guaranteed nor is contractually liable for any of the VIEs’ obligations.

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

1.          Significant Accounting Policies (continued)

Consolidation of Variable Interest Entities (continued)

Assuming the consolidation of the CBOs’ and CLO’s assets, liabilities and results of operations effective July 1, 2003, the Company will record a cumulative effect of change in accounting principle not expected to exceed $1 million, after tax.  This charge primarily represents the difference between the carrying amounts of BlackRock’s investments in these entities accounted for under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” the Company’s current accounting treatment, and FIN No. 46.

Commencing in 2003, BlackRock acts as trading adviser and special member to an entity which has created a series of municipal securities trusts in which it has retained interests.  These trusts purchase fixed-rate, long-term, highly rated, insured or escrowed municipal bonds financed by the issuance of trust certificates.  The trust certificates entitle the holder to receive future payments of principal and variable interest and to tender such certificates at the option of the holder on a periodic basis.  A third party acts as placement agent for the entity and the trusts and as liquidity provider to the trusts.  The aggregate assets and debt in this entity (including the trusts) was approximately $153 million and $103 million, respectively.  BlackRock’s equity ownership was approximately $5.4 million at June 30, 2003.  The Company’s management has concluded that BlackRock is not the primary beneficiary of this entity and therefore will not consolidate the entity upon the Company’s adoption of FIN No. 46.

On July 17, 2003, BlackRock made a formal submission to the Securities and Exchange Commission’s (“SEC”) Office of the Chief Accountant requesting pre-clearance of our interpretation of certain issues associated with the implementation of FIN No. 46 which would result in a non-consolidation determination with respect to the previously noted CBOs and CLO.  There can be no assurance that the SEC’s review of our submission will result in non-consolidation of the CBOs and the CLO.

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

1.          Significant Accounting Policies (continued)

Reclassification of Prior Period’s Statements

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

Recent Accounting Pronouncements

In May 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.”  SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.  The adoption of this statement is not expected to have a material impact on the Company’s financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”  SFAS No. 150 addresses the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and requires the issuer to classify a financial instrument that is within the scope of a liability (or asset in some circumstances).  SFAS No. 150 became effective for all instruments issued after May 1, 2003 and is required to be applied to all financial instruments as of the beginning of the first interim or annual reporting period beginning after June 15, 2003.  The adoption of this statement is not expected to have a material impact on the Company’s financial statements.

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

2.          Investments, Trading and Available for Sale

A summary of the cost and fair market value of investments is as follows:

			Gross Unrealized
June 30, 2003	Cost		Gains		Losses			Fair Market Value
Mutual funds	$	10,711	$	423	$	(14	)	$	11,120
Equity securities		6,041		980		(49	)		6,972
Other		18,037		226		(222	)		18,041
Total investments, trading		34,789		1,629		(285	)		36,133
Mutual funds		158,616		2,625		(1,106	)		160,135
Municipal debt securities		77,332		699		—			78,031
Collateralized bond obligations		11,947		2,416		—			14,363
Other		15,194		861		—			16,055
Total investments, available for sale		263,089		6,601		(1,106	)		268,584
Total investments, trading and available for sale	$	297,878	$	8,230	$	(1,391	)	$	304,717

			Gross Unrealized
December 31, 2002	Cost		Gains		Losses			Fair Market  Value
Mutual funds	$	5,461	$	51	$	(381	)	$	5,131
Other		11,889		—		(1,123	)		10,766
Total investments, trading		17,350		51		(1,504	)		15,897
Mutual funds		158,262		1,095		(939	)		158,418
Municipal debt securities		13,823		448		—			14,271
Collateralized bond obligations		12,108		—		(1,733	)		10,375
Other		9,782		—		—			9,782
Total investments, available for sale		193,975		1,543		(2,672	)		192,846
Total investments, trading and available for sale	$	211,325	$	1,594	$	(4,176	)	$	208,743

All municipal debt securities have a maturity date in excess of ten years and an investment rating (provided by major rating agencies) of “AAA” or its equivalent.

BlackRock acts as investment advisor to all these investments. 

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

3.           Other Income

Other income consists of the following:

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Risk management and investment system services	$	13,619	$	11,890	$	28,099	$	24,583
Other		2,274		1,314		4,180		2,959
	$	15,893	$	13,204	$	32,279	$	27,542

4.           Intangible Assets

Intangible assets at June 30, 2003 consist of the following:

			June 30, 2003
	Weighted-avg. estimated useful life		Gross Carrying Amount		Accumulated  Amortization		Total Intangible Assets
Goodwill		N/A	$	243,474	$	65,842	$	177,632
Management contracts acquired		N/A		8,841		—		8,841
Total goodwill and unamortized intangible assets				252,315		65,842		186,473
Management contract acquired		10.0		8,040		2,513		5,527
Other		2.2		286		82		204
Total amortized intangible assets		9.7		8,326		2,595		5,731
Total intangible assets			$	260,641	$	68,437	$	192,204

			December 31, 2002
	Weighted-avg. estimated useful life		Gross Carrying Amount		Accumulated Amortization		Total Intangible Assets
Goodwill		N/A	$	240,797	$	65,842	$	174,955
Management contracts acquired		N/A		1,677		—		1,677
Total goodwill and unamortized intangible assets				242,474		65,842		176,632
Management contract acquired		10.0		8,040		2,111		5,929
Other		2.2		286		20		266
Total amortized intangible assets		9.7		8,326		2,131		6,195
Total intangible assets			$	250,800	$	67,973	$	182,827

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PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

4.          Intangible Assets (continued)

The $2,677 increase in goodwill during the six months ended June 30, 2003 consists entirely of additions related to the acquisitions of Cyllenius Capital Management, LLC, an equity hedge fund manager, on November 4, 2002, and HPB Management LLC, a fund of hedge funds manager, on April 30, 2003.

Future expected amortization of intangible assets expense is as follows:

2003	$	453
2004		906
2005		824
2006		804

5.          Common Stock

BlackRock’s class A, $0.01 par value, common stock authorized was 250,000,000 shares as of June 30, 2003 and December 31, 2002, respectively.  BlackRock’s class B, $0.01 par value, common stock authorized was 100,000,000 shares as of June 30, 2003 and December 31, 2002, respectively.

The Company’s common stock issued and outstanding and related activity during the six month period ended June 30, 2003 consists of the following:

	Shares issued											Shares outstanding
	Common shares Class					Treasury shares Class						Class
	A		B			A			B			A			B
December 31, 2002		17,606,801		47,629,373			(38,714	)		(281,281	)		17,568,087			47,348,092
Conversion of class B stock to class A stock		1,144,059		(1,455,508	)		311,449			—			1,455,508			(1,455,508	)
Issuance of class A common stock		474,564		—			—			—			474,564			—
Treasury stock transactions		—		—			(382,092	)		(18,551	)		(382,092	)		(18,551	)
June 30, 2003		19,225,424		46,173,865			(109,357	)		(299,832	)		19,116,067			45,874,033

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PART I  –  FINANCIAL INFORMATION  (continued)
Item 1.      Financial Statements  (continued)

6.          Comprehensive Income

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Net income	$	38,674	$	34,836	$	73,994	$	66,235
Other comprehensive income gain (loss):
Unrealized gain (loss) from investments, available for sale, net		3,705		943		4,147		(14	)
Foreign currency translation gain		1,424		1,056		1,069		644
Comprehensive income	$	43,803	$	36,835	$	79,210	$	66,865

7.          Earnings Per Share

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

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Net income	$	38,674	$	34,836	$	73,994	$	66,235
Basic weighted-average shares outstanding		65,028,337		64,726,856		65,042,359		64,687,900
Dilutive potential shares from forward sales		—		53,639		—		53,639
Dilutive potential shares from stock options		1,135,989		552,733		976,142		520,329
Dilutive weighted-average shares outstanding		66,164,326		65,333,228		66,018,501		65,261,868
Basic earnings per share	$	0.59	$	0.54	$	1.14	$	1.02
Diluted earnings per share	$	0.58	$	0.53	$	1.12	$	1.01

- 12 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 1.        Financial Statements (continued)

8.          Supplemental Statements of Cash Flow Information

Supplemental disclosure of cash flow information:

	Six months ended June 30,
	2003			2002
Cash paid for interest	$	658	��	$	734
Cash paid for income taxes	$	34,881		$	40,111

Supplemental schedule of noncash transactions:

	Six months ended June 30,
	2003		2002
Stock-based compensation	$	5,395	$	5,550
Short-term liability issued for acquisition	$	4,009	$	0

- 13 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations

BlackRock, Inc., a Delaware corporation (together, with its subsidiaries, “BlackRock” or the “Company”), is one of the largest publicly traded investment management firms in the United States with approximately $286.3 billion of assets under management at June 30, 2003.  BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of equity, fixed income, liquidity and alternative investment separate accounts and mutual funds, including BlackRock Funds and BlackRock Provident Institutional Funds (“BPIF”).  In addition, BlackRock provides risk management and investment system services and products to institutional investors under the BlackRock Solutions name. BlackRock is a majority-owned indirect subsidiary of The PNC Financial Services Group, Inc. (“PNC”), one of the largest diversified financial services companies in the United States, operating businesses engaged in regional community banking; wholesale banking, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund processing services.  As of June 30, 2003, PNC indirectly owned approximately 69% of BlackRock.

The following table summarizes BlackRock’s operating performance for the three months ended June 30, 2003, June 30, 2002 and March 31, 2003 and the six months ended June 30, 2003 and 2002:

BlackRock, Inc.
Financial Highlights
(Dollar amounts in thousands, except share data or otherwise stated)
(unaudited)

	Three months ended									Variance vs.
	June 30,						March 31,			June 30, 2002						March 31, 2003
	2003			2002			2003			Amount			%			Amount		%
Total revenue	$	143,906		$	156,695		$	142,751		$	(12,789	)		-8	%	$	1,155		1	%
Total expense	$	89,104		$	101,990		$	88,685		$	(12,886	)		-13	%	$	419		0	%
Operating income	$	54,802		$	54,705		$	54,066		$	97			0	%	$	736		1	%
Net income	$	38,674		$	34,836		$	35,320		$	3,838			11	%	$	3,354		9	%
Diluted earnings per share	$	0.58		$	0.53		$	0.54		$	0.05			9	%	$	0.04		7	%
Average diluted shares outstanding		66,164,326			65,333,228			65,867,032			831,098			1	%		297,294		0	%
Operating margin (a)		40.2	%		37.9	%		40.1	%
Assets under management ($ in millions)	$	286,309		$	249,778		$	273,599		$	36,531			15	%	$	12,710		5	%

	Six months ended
	June 30,						Variance
	2003			2002			Amount			%
Total revenue	$	286,657		$	302,808		$	(16,151	)		-5	%
Total expense	$	177,789		$	198,168		$	(20,379	)		-10	%
Operating income	$	108,868		$	104,640		$	4,228			4	%
Net income	$	73,994		$	66,235		$	7,759			12	%
Diluted earnings per share	$	1.12		$	1.01		$	0.11			11	%
Average diluted shares outstanding		66,018,501			65,261,868			756,633			1	%
Operating margin (a)		40.2	%		37.7	%
Assets under management ($ in millions)	$	286,309		$	249,778		$	36,531			15	%

- 14 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

BlackRock, Inc.
Financial Highlights  (continued)
(Dollar amounts in thousands, except share data or otherwise stated)
(unaudited)

Reconciliation of Non-GAAP Financial Measure

(a) Operating income divided by total revenue less fund administration and servicing costs.  Computations for all periods presented include affiliated and  non-affilated fund administration and servicing expense reported as a separate income statement line item and are derived from the Company's consolidated financial statements, as follows:

	Three months ended									Six months ended June 30,
	June 30,						March 31, 2003
	2003			2002						2003			2002
Operating income, as reported	$	54,802		$	54,705		$	54,066		$	108,868		$	104,640
Revenue, as reported		143,906			156,695			142,751			286,657			302,808
Less: fund administration and servicing costs		(7,578	)		(12,394	)		(7,958	)		(15,536	)		(25,572	)
Revenue used for operating margin measurement		136,328			144,301			134,793			271,121			277,236
Operating margin		38.1	%		34.9	%		37.9	%		38.0	%		34.6	%
Add back: Impact of excluding fund administration and servicing costs		2.1			3.0			2.2			2.2			3.1
Operating margin, as reported		40.2	%		37.9	%		40.1	%		40.2	%		37.7	%

We believe that operating margin, as reported, is an effective indicator of management's ability to effectively employ the Company's resources. Fund administration and servicing costs have been excluded from operating margin because these costs are a fixed, asset-based expense which can fluctuate based on the discretion of a third party.

- 15 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

General

BlackRock derives a substantial portion of its revenue from investment advisory and administration fees, which are recognized as the services are performed.  Such fees are primarily based on predetermined percentages of the market value of assets under management and are affected by changes in assets under management, including market appreciation or depreciation and net subscriptions or redemptions.  Net subscriptions or redemptions represent the sum of new client assets, additional fundings from existing clients, withdrawals of assets from and termination of client accounts and purchases and redemptions of mutual fund shares.

Investment advisory agreements for certain separate accounts and BlackRock’s alternative investment products provide for performance fees in addition to fees based on assets under management.  Performance fees are earned when investment performance exceeds a contractual threshold and, accordingly, may increase the volatility of BlackRock’s revenue and earnings.

BlackRock provides a variety of risk management and investment system services to insurance companies, finance companies, pension funds, foundations, consultants, mutual fund sponsors, REITs, commercial and mortgage banks, savings institutions and government agencies.  These services are provided under the brand name BlackRock Solutions and include a wide array of risk management services and enterprise investment system outsourcing to clients.  Fees earned for BlackRock Solutions services are either based on predetermined percentages of the market value of assets subject to the services or on fixed monthly or quarterly payments.  The fees earned on risk management advisory and investment system assignments are recorded as other income. 

Operating expense primarily consists of employee compensation and benefits, fund administration and servicing costs, and general and administration expense.  Employee compensation and benefits expense reflects salaries, deferred and incentive compensation and related benefit costs.  Fund administration and servicing costs expense reflects payments made to PNC affiliated entities and third parties, primarily associated with the administration and servicing of client investments in the BlackRock Funds and BlackRock Closed-end Funds.  Intangible assets at June 30, 2003 and December 31, 2002 were approximately $192.2 million and approximately $182.8 million, respectively, with amortization expense of approximately $0.5 million and $0.4 million for the six months ended June 30, 2003 and 2002, respectively.  Intangible assets reflect PNC’s acquisition of BlackRock Financial Management, L.P. (“BFM”) on February 28, 1995, a management contract acquired in connection with the agreement and plan of merger of CORE Cap, Inc. with Anthracite Capital, Inc., a BlackRock managed REIT, on May 15, 2000 and the acquisitions of Cyllenius Capital Management, LLC (“Cyllenius”), an equity hedge fund manager, on November 4, 2002, and HPB Management LLC (“HPB”), a fund of hedge funds manager, on April 30, 2003. 

- 16 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Assets Under Management

Assets under management (“AUM”) increased approximately $36.5 billion or 15% to $286.3 billion at June 30, 2003, compared with $249.8 billion at June 30, 2002.  The growth in assets under management was primarily attributable to an increase of $35.5 billion or 21% in separate accounts and $1.0 billion or 1% in mutual fund assets.

The increase in separate accounts at June 30, 2003, as compared with June 30, 2002, was the result of net subscriptions of $21.2 billion and market appreciation of $14.3 billion.  Net subscriptions largely reflected fixed income sales, increased liquidity-securities lending assets and net subscriptions in the Company’s alternative investment products during the year ended June 30, 2003 which were $18.3 billion, $1.9 billion and $1.0 billion, respectively.  The rise in fixed income separate account assets was attributable to new client sales and increased fundings from existing clients as the Company continued to deliver solid relative investment performance.  The increase in liquidity-securities lending separate accounts stems from an improvement in equity markets during the second quarter of 2003 resulting in higher levels of cash collateral managed for PFPC Worldwide, Inc., a PNC affiliate.  Net subscriptions in the Company’s alternative investment products reflected $0.7 billion in net new business in hedge funds and real estate products as well as the addition of $0.3 billion as a result of the acquisitions of Cyllenius and HPB during the period.  Market appreciation of $14.3 billion in separate accounts largely reflected appreciation in fixed income assets of $15.4 billion due to declining interest rates, partially offset by market depreciation in equity assets of $1.1 billion. 

The $1.0 billion increase in mutual fund assets since June 30, 2002 reflected net subscriptions of $0.6 billion and market appreciation of $0.4 billion.  Net subscriptions in the BlackRock Closed-end Funds and the BlackRock Global Series since June 30, 2002 were $1.9 billion and $0.3 billion, respectively, and were partially offset by $1.8 billion in net redemptions in the BlackRock Funds.  The increase in closed-end funds was the result of the Company’s offering of new closed-end fund assets totaling $2.5 billion, partially offset by a term trust maturity of $0.6 billion.  During July 2003, the Company completed the initial public offering of the BlackRock Limited Duration Income Trust.  BlackRock anticipates raising approximately $1.2 billion, including the trust’s underwriters’ overallotment and expected leverage, through this offering.  The successful launch of several global bond funds in the BlackRock Global Series during the first quarter of 2003 led to the increase in assets.  Net redemptions in the BlackRock Funds since June 30, 2002 were primarily due to PNC-related net redemptions of approximately $3.2 billion, which were partially offset by $1.4 billion in sales to third party customers. 

AUM in the second quarter of 2003 increased $12.7 billion or 5%, representing $5.1 billion in net subscriptions and $7.6 billion in market appreciation.  The $5.1 billion in net subscriptions during the second quarter of 2003 reflected separate account and mutual fund net subscriptions of $2.4 billion and $2.7 billion, respectively.  Net subscriptions in separate accounts primarily consisted of fundings in fixed income accounts and alternative investment products totaling $1.7 billion and $0.9 billion, respectively, partially offset by net redemptions in equity and liquidity accounts of $1.5 billion and $0.7 billion, respectively.  Mutual fund net subscriptions for the second quarter of 2003 were primarily attributable to $2.7 billion in net subscriptions in BPIF, reflecting, we believe, client withdrawals due to a decline in short term interest rates. 

- 17 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

BlackRock, Inc.
Assets Under Management
(Dollar amounts in millions)
(unaudited)

	June 30,				December 31,
	2003		2002		2002
All Accounts
Fixed income	$	195,960	$	157,913	$	175,586
Liquidity		71,585		70,599		78,512
Equity		12,412		15,898		13,464
Alternative investment products		6,352		5,368		5,279
Total	$	286,309	$	249,778	$	272,841
Separate Accounts
Fixed income	$	174,480	$	140,738	$	156,574
Liquidity		5,366		5,516		5,491
Liquidity-Securities lending		8,374		6,435		6,433
Equity		9,105		10,119		9,736
Alternative investment products		6,352		5,368		5,279
Subtotal		203,677		168,176		183,513
Mutual Funds
Fixed income		21,480		17,175		19,012
Liquidity		57,845		58,648		66,588
Equity		3,307		5,779		3,728
Subtotal		82,632		81,602		89,328
Total	$	286,309	$	249,778	$	272,841

- 18 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Assets Under Management  (continued)

The following tables present the component changes in BlackRock’s assets under management for the three and six months ended June 30, 2003 and 2002, respectively.  The data reflects certain reclassifications to conform with the current period’s presentation.

BlackRock, Inc.
Component Changes in Assets Under Management
(Dollar amounts in millions)
(unaudited)

	Three months ended June 30,					Six months ended June 30,
	2003		2002			2003			2002
All Accounts
Beginning assets under management	$	273,599	$	238,116		$	272,841		$	238,584
Net subscriptions		5,098		8,209			4,310			7,898
Market appreciation		7,612		3,453			9,158			3,296
Ending assets under management	$	286,309	$	249,778		$	286,309		$	249,778
Separate Accounts
Beginning assets under management	$	194,555	$	153,954		$	183,513		$	151,986
Net subscriptions		2,409		10,189			11,930			12,078
Market appreciation		6,713		4,033			8,234			4,112
Ending assets under management		203,677		168,176			203,677			168,176
Mutual Funds
Beginning assets under management		79,044		84,162			89,328			86,598
Net subscriptions (redemptions)		2,689		(1,980	)		(7,620	)		(4,180	)
Market appreciation (depreciation)		899		(580	)		924			(816	)
Ending assets under management		82,632		81,602			82,632			81,602
Total	$	286,309	$	249,778		$	286,309		$	249,778

- 19 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)

	Quarter Ended
	2002									2003
																	Six months ended
		June 30			September 30			December 31			March 31			June 30			June 30, 2003
Separate Accounts
Fixed Income
Beginning assets under management	$	123,983		$	140,738		$	145,839		$	156,574		$	167,778		$	156,574
Net subscriptions		12,270			281			7,455			8,889			1,682			10,571
Market appreciation		4,485			4,820			3,280			2,315			5,020			7,335
Ending assets under management		140,738			145,839			156,574			167,778			174,480			174,480
Liquidity
Beginning assets under management		5,441			5,516			5,438			5,491			6,040			5,491
Net subscriptions (redemptions)		80			(92	)		42			541			(677	)		(136	)
Market appreciation (depreciation)		(5	)		14			11			8			3			11
Ending assets under management		5,516			5,438			5,491			6,040			5,366			5,366
Liquidity-Securities lending
Beginning assets under management		9,544			6,435			5,693			6,433			6,344			6,433
Net subscriptions (redemptions)		(3,109	)		(742	)		740			(89	)		2,030			1,941
Ending assets under management		6,435			5,693			6,433			6,344			8,374			8,374
Equity
Beginning assets under management		9,445			10,119			8,322			9,736			8,995			9,736
Net subscriptions (redemptions)		884			598			867			174			(1,526	)		(1,352	)
Market appreciation (depreciation)		(210	)		(2,395	)		547			(915	)		1,636			721
Ending assets under management		10,119			8,322			9,736			8,995			9,105			9,105
Alternative investment products
Beginning assets under management		5,541			5,368			5,490			5,279			5,398			5,279
Net subscriptions (redemptions)		64			312			(217	)		6			900			906
Market appreciation (depreciation)		(237	)		(190	)		6			113			54			167
Ending assets under management		5,368			5,490			5,279			5,398			6,352			6,352
Total Separate Accounts
Beginning assets under management		153,954			168,176			170,782			183,513			194,555			183,513
Net subscriptions		10,189			357			8,887			9,521			2,409			11,930
Market appreciation		4,033			2,249			3,844			1,521			6,713			8,234
Ending assets under management	$	168,176		$	170,782		$	183,513		$	194,555		$	203,677		$	203,677
Mutual Funds
Fixed Income
Beginning assets under management	$	16,270		$	17,175		$	18,471		$	19,012		$	20,280		$	19,012
Net subscriptions		565			950			677			1,104			788			1,892
Market appreciation (depreciation)		340			346			(136	)		164			412			576
Ending assets under management		17,175			18,471			19,012			20,280			21,480			21,480
Liquidity
Beginning assets under management		59,994			58,648			52,426			66,588			55,594			66,588
Net subscriptions (redemptions)		(1,347	)		(6,223	)		14,160			(10,995	)		2,247			(8,748	)
Market appreciation		1			1			2			1			4			5
Ending assets under management		58,648			52,426			66,588			55,594			57,845			57,845
Equity
Beginning assets under management		7,898			5,779			4,184			3,728			3,170			3,728
Net redemptions		(1,198	)		(630	)		(698	)		(418	)		(346	)		(764	)
Market appreciation (depreciation)		(921	)		(965	)		242			(140	)		483			343
Ending assets under management		5,779			4,184			3,728			3,170			3,307			3,307
Total Mutual Funds
Beginning assets under management		84,162			81,602			75,081			89,328			79,044			89,328
Net subscriptions (redemptions)		(1,980	)		(5,903	)		14,139			(10,309	)		2,689			(7,620	)
Market appreciation (depreciation)		(580	)		(618	)		108			25			899			924
Ending assets under management	$	81,602		$	75,081		$	89,328		$	79,044		$	82,632		$	82,632

- 20 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)

	Quarter Ended															Six months ended June 30, 2003
	2002									2003
	June 30			September 30			December 31			March 31			June 30
Mutual Funds
BlackRock Funds
Beginning assets under management	$	22,176		$	20,264		$	18,484		$	18,115		$	18,013		$	18,115
Net subscriptions (redemptions)		(1,123	)		(976	)		(604	)		18			(213	)		(195	)
Market appreciation (depreciation)		(789	)		(804	)		235			(120	)		610			490
Ending assets under management		20,264			18,484			18,115			18,013			18,410			18,410
BlackRock Global Series
Beginning assets under management		247			208			188			211			500			211
Net subscriptions (redemptions)		(52	)		(4	)		9			287			44			331
Market appreciation (depreciation)		13			(16	)		14			2			45			47
Ending assets under management		208			188			211			500			589			589
BPIF
Beginning assets under management		52,534			51,127			45,328			59,576			48,489			59,576
Net subscriptions (redemptions)		(1,407	)		(5,799	)		14,248			(11,087	)		2,674			(8,413	)
Ending assets under management		51,127			45,328			59,576			48,489			51,163			51,163
Closed End
Beginning assets under management		8,611			9,393			10,425			10,771			11,294			10,771
Net subscriptions		586			830			487			380			185			565
Market appreciation (depreciation)		196			202			(141	)		143			244			387
Ending assets under management		9,393			10,425			10,771			11,294			11,723			11,723
Short Term Investment Funds (STIF)
Beginning assets under management		594			610			656			655			748			655
Net subscriptions (redemptions)		16			46			(1	)		93			(1	)		92
Ending assets under management		610			656			655			748			747			747
Total Mutual Funds
Beginning assets under management		84,162			81,602			75,081			89,328			79,044			89,328
Net subscriptions (redemptions)		(1,980	)		(5,903	)		14,139			(10,309	)		2,689			(7,620	)
Market appreciation (depreciation)		(580	)		(618	)		108			25			899			924
Ending assets under management	$	81,602		$	75,081		$	89,328		$	79,044		$	82,632		$	82,632

- 21 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended June 30, 2003 as compared with the three months ended June 30, 2002.

Revenue

Total revenue for the three months ended June 30, 2003 decreased $12.8 million or 8% to $143.9 million, compared with $156.7 million for the three months ended June 30, 2002.  Investment advisory and administration fees decreased $15.5 million or 11% to$128.0 million for the three months ended June 30, 2003, compared with $143.5 million for the three months ended June 30, 2002.  The decrease in investment advisory and administration fees was primarily due to decreases in mutual fund revenue and alternative investment product performance fees, partially offset by increases in separate account base fees.  Other income of $15.9 million increased $2.7 million or 20% for the three months ended June 30, 2003 compared with $13.2 million for the three months ended June 30, 2002 primarily due to increased sales of BlackRock Solutions products and services and increased earnings from the Company’s joint venture, Nomura BlackRock Asset Management Co., Ltd.

	Three months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited)
Investment advisory and administration fees:
Mutual funds	$	48,496	$	54,736	$	(6,240	)		(11.4	)%
Separate accounts		79,517		88,755		(9,238	)		(10.4	)
Total investment advisory and administration fees		128,013		143,491		(15,478	)		(10.8	)
Other income		15,893		13,204		2,689			20.4
Total revenue	$	143,906	$	156,695	$	(12,789	)		(8.2	)%

Mutual fund advisory and administration fees decreased $6.2 million to $48.5 million for the three months ended June 30, 2003, compared with $54.7 million for the three months ended June 30, 2002.  The decrease in mutual fund revenue was the result of decreases in BlackRock Funds and BPIF revenue of $5.8 million and $2.9 million, respectively, partially offset by an increase in closed-end fund revenue of $2.4 million.  The decrease in BlackRock Funds revenue was attributable to a decrease in assets of $1.9 billion or 9% primarily due to net redemptions in PNC-related assets over the last twelve months of $3.2 billion, partially offset by third party subscriptions of $1.4 billion during the same period. During the three months ended June 30, 2003, average assets in the BlackRock Funds decreased $3.2 billion or 15% compared with the three months ended June 30, 2003.  The decrease in BPIF revenue was due to a decrease in average assets under management of $7.1 billion or 13% compared with the second quarter of 2002.  The rise in closed-end fund revenue was a result of an increase in assets of $2.3 billion or 25% at June 30, 2003 primarily due to the Company’s new fund offerings.  During July 2003, the Company completed the initial public offering of the BlackRock Limited Duration Income Trust.  BlackRock anticipates raising up to $1.2 billion, including the trust’s underwriters’ overallotment and expected leverage, through this offering and earning annualized fees of up to $6.5 million.  

- 22 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended June 30, 2003 as compared with the three months ended June 30, 2002.  (continued)

Revenue  (continued)

Separate account revenue decreased $9.2 million or 10% to $79.5 million for the three months ended June 30, 2003, compared with $88.8 million for the three months ended June 30, 2002.  Separate account base fees increased $12.5 million or 19% to $78.0 million for the three months ended June 30, 2003, compared with $65.5 million for the three months ended June 30, 2002, as a result of a $35.5 billion or 21% increase in separate account assets under management.  Performance fees of $1.6 million for the three months ended June 30, 2003 decreased $21.7 million or 93%, compared with $23.3 million for the three months ended June 30, 2002 primarily due to significantly lower performance fees earned on alternative investment products, primarily the Company’s fixed income hedge fund.  While the fund has realized positive performance, the Company expects to earn minimal performance fees from its fixed income hedge fund during 2003 until positive investment performance exceeds a previously established high water mark.

	Three months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited)
Mutual funds revenue
BlackRock Funds	$	17,056	$	22,892	$	(5,836	)		(25.5	)%
Closed End Funds		12,301		9,873		2,428			24.6
BPIF		18,854		21,763		(2,909	)		(13.4	)
STIF		285		208		77			37.0
Total mutual funds revenue		48,496		54,736		(6,240	)		(11.4	)
Separate accounts revenue
Separate account base fees		77,957		65,451		12,506			19.1
Separate account performance fees		1,560		23,304		(21,744	)		(93.3	)
Total separate accounts revenue		79,517		88,755		(9,238	)		(10.4	)
Total investment advisory and administration fees		128,013		143,491		(15,478	)		(10.8	)
Other income		15,893		13,204		2,689			20.4
Total revenue	$	143,906	$	156,695	$	(12,789	)		(8.2	)%

- 23 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended June 30, 2003 as compared with the three months ended June 30, 2002.  (continued)

Expense

The operating margin for the second quarter of 2003 was 40.2% compared with 37.9% for the second quarter of 2002.  The increase in operating margin was attributable to a reduction of total expense of $12.9 million or 13% to $89.1 million for the three months ended June 30, 2003, compared with $102.0 million for the three months ended June 30, 2002.  The change primarily reflects decreases in employee compensation and benefits expense and fund administration and servicing costs, partially offset by an increase in general and administration expense. 

	Three months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited )
Employee compensation and benefits	$	55,819	$	67,830	$	(12,011	)		(17.7	)%
Fund administration and servicing costs
Affiliates		6,686		11,916	$	(5,230	)		(43.9	)
Other		892		478		414			86.6
General and administration		25,476		21,565		3,911			18.1
Amortization of intangible assets		231		201		30			14.9
Total expense	$	89,104	$	101,990	$	(12,886	)		(12.6	)%

Employee compensation and benefits decreased $12.0 million primarily due to decreases of $12.2 million in direct incentives on alternative product performance fees and $3.2 million in general bonus accruals during the second quarter of 2003, partially offset by an increase of $2.3 million in salary and benefits and $1.1 million in appreciation on Rabbi trust assets related to the Company’s deferred compensation plans.  Salary and benefit costs rose reflecting increased headcount to support business growth.  For the three months ended June 30, 2003, fund administration and servicing costs declined $4.8 million or 39% compared with the three months ended June 30, 2002.  The decrease consisted of $5.2 million related to lower levels of PNC-related accounts invested in the BlackRock investment products and a revised investment management services agreement with PNC, partially offset by a $0.4 million increase in related new closed-end fund servicing provided by third parties.  During July 2003, the Company completed the initial public offering of the BlackRock Limited Duration Income Trust.  BlackRock anticipates raising up to $1.2 billion, including the trust’s underwriters’ overallotment and expected leverage, through this offering which will result in annualized third party fund administration and servicing costs of approximately $1.8 million.  General and administration expense increased $3.9 million or 18% to $25.5 million for the three months ended June 30, 2003 compared with $21.6 million for the three months ended June 30, 2002, largely due to foreign currency translation adjustments, new business activity and corporate facilities investments. 

- 24 -

PART I  –  FINANCIAL INFORMATION (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Operating results for the three months ended June 30, 2003 as compared with the three months ended June 30, 2002.  (continued)

Expense  (continued)

	Three months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited)
General and administration expense:
Marketing and promotional	$	6,797	$	6,103	$	694			11.4	%
Occupancy expense		5,400		5,020		380			7.6
Technology		4,388		4,535		(147	)		(3.2	)
Other general and administration		8,891		5,907		2,984			50.5
Total general and administration expense	$	25,476	$	21,565	$	3,911			18.1	%

Marketing and promotional expenses of $6.8 million for the three months ended June 30, 2003 increased $0.7 million or 11% primarily due to increased costs for retail and institutional marketing activities.  Occupancy expense of $5.4 million for the three months ended June 30, 2003 increased $0.4 million due to office expansion, higher real estate taxes and operating expense escalations related to the Company’s New York headquarters.  Other expense increased $3.0 million or 51% for the three months ended June 30, 2003 primarily due to foreign currency translation adjustments, which resulted in a $0.4 loss during the three months ended June 30, 2003 and a gain of $1.4 million during the three months ended June 30, 2002, increased portfolio and market data expenses of $0.4 million and higher insurance costs of $0.3 million.  General and administration expense rose $2.1 million or 9% during the three months ended June 30, 2003 as compared to the three months ended June 30, 2002, exclusive of foreign currency translation adjustments. 

- 25 -

PART I – FINANCIAL INFORMATION  (continued)
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Operating results for the three months ended June 30, 2003 as compared with the three months ended June 30, 2002.  (continued)

Operating Income and Net Income

Operating income was $54.8 million for the three months ended June 30, 2003, representing a $0.1 million increase compared with the three months ended June 30, 2002.  Non-operating income increased $4.2 million or 110% to $8.1 million for the three months ended June 30, 2003 as compared with the three months ended June 30, 2002.  The rise was due to increased investment income of $1.4 million on Rabbi trust assets related to the Company’s deferred compensation plans, $1.1 million in realized gains related to sales of investments, increased interest and dividend income primarily due to higher balances of corporate cash and investments of $0.9 million, and $0.8 million in securities gains on seed investments in two quantitative equity products accounted for as trading securities.  Income tax expense was $24.2 million and $23.7 million, representing effective tax rates of 38.5% and 40.5% for the three months ended June 30, 2003 and June 30, 2002, respectively.  The decrease in the Company’s effective tax rate, which increased net income by approximately $1.3 million, is due to a previously disclosed decision that the Company will file certain combined and unitary state income tax returns with PNC Bank, National Association (“PNC Bank”), and/or one or more PNC Bank subsidiaries.  Net income totaled $38.7 million for the three months ended June 30, 2003 compared with $34.8 million for the three months ended June 30, 2002, representing an increase of $3.8 million or 11%.

- 26 -

PART I – FINANCIAL INFORMATION  (continued)
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Operating results for the six months ended June 30, 2003 as compared with the six months ended June 30, 2002.

Revenue

Total revenue for the six months ended June 30, 2003 decreased $16.2 million or 5% to $286.7 million, compared with $302.8 million for the six months ended June 30, 2002. Investment advisory and administration fees decreased $20.9 million or 8% to $254.4 million for the six months ended June 30, 2003, compared with $275.3 million for the six months ended June 30, 2002. The decrease in investment advisory and administration fees was primarily due to decreases in mutual fund revenue and alternative investment product performance fees, partially offset by an increase in separate account base fees. Other income of $32.3 million increased $4.7 million or 17% for the six months ended June 30, 2003 compared with $27.5 million for the six months ended June 30, 2002 primarily due to increased sales of BlackRock Solutions products and services.

	Six months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited)
Investment advisory and administration fees:
Mutual funds	$	97,236	$	109,995	$	(12,759	)		(11.6	)%
Separate accounts		157,142		165,271		(8,129	)		(4.9	)
Total investment advisory and administration fees		254,378		275,266		(20,888	)		(7.6	)
Other income		32,279		27,542		4,737			17.2
Total revenue	$	286,657	$	302,808	$	(16,151	)		(5.3	)%

Mutual fund advisory and administration fees decreased $12.8 million to $97.2 million for the six months ended June 30, 2003, compared with $110.0 million for the six months ended June 30, 2002.  The decrease in mutual fund revenue was the result of decreases in BlackRock Funds and BPIF revenue of $15.3 million and $1.8 million, respectively, partially offset by an increase in closed-end fund revenue of $4.3 million.  The decrease in BlackRock Funds revenue was attributable to a decrease in assets of $1.9 billion or 9% primarily due to net redemptions in PNC-related assets over the last twelve months of $3.2 billion, partially offset by third party subscriptions of $1.4 billion during the same period. During the six months ended June 30, 2003, average assets in the BlackRock Funds decreased $4.0 billion or 18% compared with the three months ended June 30, 2003.  The decrease in BPIF revenue was due to a decrease in average assets under management of $3.1 billion or 6% compared with the prior period.  The rise in closed-end fund revenue was a result of an increase in assets of $2.3 billion or 25% at June 30, 2003 primarily due to the Company’s new fund offerings.

- 27 -

PART I – FINANCIAL INFORMATION  (continued)
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Operating results for the six months ended June 30, 2003 as compared with the six months ended June 30, 2002.

Revenue (continued)

Separate account revenue decreased $8.1 million or 5% to $157.1 million for the six months ended June 30, 2003, compared with $165.2 million for the six months ended June 30, 2002.  Separate account base fees revenue increased $24.5 million or 19% to $152.5 million for the six months ended June 30, 2003, compared with $128.0 million for the six months ended June 30, 2002, as a result of a $35.5 billion or 21% increase in separate account assets under management.  Performance fees of $4.7 million for the six months ended June 30, 2003 decreased $32.6 million or 88%, compared with $37.3 million for the six months ended June 30, 2002 primarily due to lower performance fees earned on the Company’s fixed income hedge fund.  While the fund has realized positive performance, the Company expects to earn minimal performance fees from its fixed income hedge fund during 2003 until positive investment performance exceeds a high water mark established in 2002.

	Six months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited)
Mutual funds revenue
BlackRock Funds	$	33,242	$	48,587	$	(15,345	)		(31.6	)%
Closed End Funds		23,614		19,361		4,253			22.0
BPIF		39,853		41,637		(1,784	)		(4.3	)
STIF		527		410		117			28.5
Total mutual funds revenue		97,236		109,995		(12,759	)		(11.6	)
Separate accounts revenue
Separate account base fees		152,470		127,950		24,520			19.2
Separate account performance fees		4,672		37,321		(32,649	)		(87.5	)
Total separate accounts revenue		157,142		165,271		(8,129	)		(4.9	)
Total investment advisory and administration fees		254,378		275,266		(20,888	)		(7.6	)
Other income		32,279		27,542		4,737			17.2
Total revenue	$	286,657	$	302,808	$	(16,151	)		(5.3	)%

- 28 -

PART I – FINANCIAL INFORMATION  (continued)
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Operating results for the six months ended June 30, 2003 as compared with the six months ended June 30, 2002.  (continued)

Expense

The operating margin for the first six months of 2003 was 40.2% compared with 37.7% for the first six months of 2002.  The increase in operating margin was attributable to a reduction of total expense of $20.4 million or 10% to $177.8 million for the six months ended June 30, 2003, compared with $198.2 million for the six months ended June 30, 2002.  The change primarily reflects decreases in employee compensation and benefits expense and fund administration and servicing costs, partially offset by an increase in general and administration expense. 

	Six months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited)
Employee compensation and benefits	$	111,205	$	128,217	$	(17,012	)		(13.3	)%
Fund administration and servicing costs
Affiliates		13,629		25,094	$	(11,465	)		(45.7	)
Other		1,907		478		1,429			299.0
General and administration		50,585		43,977		6,608			15.0
Amortization of intangible assets		463		402		61			15.2
Total expense	$	177,789	$	198,168	$	(20,379	)		(10.3	)%

Employee compensation and benefits decreased $17.0 million primarily due to decreases of $19.7 million in direct incentives on alternative product performance fees and $3.7 million in general bonus accruals during the first six months of 2003, partially offset by an increase of $5.3 million in salary and benefits and $1.4 million in appreciation on Rabbi trust assets related to the Company’s deferred compensation plans.  Salary and benefit costs rose reflecting increased headcount to support business growth.  For the six months ended June 30, 2003, total fund administration and servicing costs declined $10.0 million or 39% compared with the six months ended June 30, 2002.  The decrease consisted of $11.5 million related to lower levels of PNC-related accounts invested in the BlackRock investment products and a revised investment management services agreement with PNC, partially offset by a $1.4 million increase in related new closed-end fund servicing provided by third parties.  General and administration expenses increased $6.6 million or 15% to $50.6 million for the six months ended June 30, 2003 compared with $44.0 million for the six months ended June 30, 2002, largely due to foreign currency translation adjustments, new business activity and corporate facilities investments. 

- 29 -

PART I – FINANCIAL INFORMATION  (continued)
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2003 as compared with the six months ended June 30, 2002. (continued)

Expense (continued)

	Six months ended June 30,				Variance
Dollar amounts in thousands	2003		2002		Amount			%
	(unaudited)
General and administration expense:
Marketing and promotional	$	13,464	$	12,019	$	1,445			12.0	%
Occupancy expense		11,012		9,742		1,270			13.0
Technology		8,490		8,932		(442	)		(4.9	)
Other general and administration		17,619		13,284		4,335			32.6
Total general and administration expense	$	50,585	$	43,977	$	6,608			15.0	%

Marketing and promotional expenses of $13.5 million for the six months ended June 30, 2003 increased $1.4 million or 12% primarily due to increased costs for retail and institutional marketing activities.  Occupancy expense of $11.0 million for the six months ended June 30, 2003 increased $1.3 million due to office expansion, higher real estate taxes and operating expense escalations related to the Company’s New York headquarters.  Other expense increased $4.3 million or 33% for the six months ended June 30, 2003 primarily due to foreign currency translation adjustments, which resulted in a $0.3 loss during the six months ended June 30, 2003 and a gain of $1.4 million during the six months ended June 30, 2002, increased portfolio and market data expenses of $1.1 million and higher insurance costs of $0.5 million.  General and administration expense rose $4.9 million or 11% during the six months ended June 30, 2003 as compared to the six months ended June 30, 2002, exclusive of foreign currency translation adjustments.

- 30 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Operating results for the six months ended June 30, 2003 as compared with the six months ended June 30, 2002.  (continued)

Operating Income and Net Income

Operating income was $108.9 million for the six months ended June 30, 2003, representing a $4.2 million increase compared with the six months ended June 30, 2002.  Non-operating income increased $4.8 million or 71% to $11.4 million for the six months ended June 30, 2003 as compared with the six months ended June 30, 2002.  The rise was due to increased investment income of $1.7 million on Rabbi trust assets related to the Company’s deferred compensation plans, increased interest and dividend income primarily due to higher balances of corporate cash and investments of $1.6 million, and $1.0 million in securities gains on seed investments in two quantitative equity products accounted for as trading securities.  Income tax expense was $46.3 million and $45.1 million, representing effective tax rates of 38.5% and 40.5% for the six months ended June 30, 2003 and June 30, 2002, respectively.  The decrease in the Company’s effective tax rate, which increased net income by approximately $2.4 million, is due to a previously disclosed decision that the Company will file certain combined and unitary state income tax returns with PNC Bank and/or one or more PNC Bank subsidiaries.  Net income totaled $74.0 million for the six months ended June 30, 2003 compared with $66.2 million for the six months ended June 30, 2002, representing an increase of $7.8 million or 12%.

Liquidity and Capital Resources

BlackRock meets its working capital requirements through cash generated by its operating activities.  Cash provided in the Company’s operating activities totaled $22.8 million for the six months ended June 30, 2003.  Operating activities included an annual incentive payment of $93.2 million related to 2002 employee bonuses and net purchases of investments, trading, of approximately $17.4 million for the six months ended June 30, 2003 which represented investments related to senior employee elections under the Company’s Voluntary and Involuntary Deferred Compensation Plans and seed investments in two quantitative equity products.

Net cash flow used in investing activities was $78.4 million for the six months ended June 30, 2003 primarily consisting of net investment purchases.  During the six months ended June 30, 2003, investment activity primarily reflected a net investment of corporate funds in municipal bonds of $63.6 million and a seed investment in a new alternative investment product of approximately $5.0 million. 

Net cash flow used in financing activities was $19.9 million for the six months ended June 30, 2003. Financing activities primarily represented treasury stock activity for the six months ended June 30, 2003.  During the six months ended June 30, 2003, the Company repurchased 378,100 shares in open market purchases at a total cost of $16.0 million pursuant to a one million share repurchase program approved by the Board of Directors.  Subsequent to June 30, 2003, the Company completed this repurchase program at a total cost of $43.7 million and, on August 7, 2003, received authorization from its Board of Directors to purchase an additional 1,000,000 shares under the program.  On January 31, 2003, in connection with the BlackRock Long-Term Deferred Compensation Plan, BlackRock repurchased approximately 139,000 shares of class A common stock at a fair market value of $42.25 per share from certain employees to facilitate required employee income tax payments.  Approximately $3.3 million received by the Company related to the exercise of employee stock options offset these expenditures during the six months ended June 30, 2003.

Total capital at June 30, 2003 was $709.0 million and was comprised entirely of stockholders’ equity.

- 31 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Operating results for the six months ended June 30, 2003 as compared with the six months ended June 30, 2002.  (continued)

Contractual Obligations and Commercial Commitments

The Company leases its primary office space under agreements which expire through 2017.  In connection with certain lease agreements, the Company is responsible for escalation payments.

In connection with the management contract acquired associated with the agreement and plan of merger of CORE Cap, Inc. with Anthracite Capital, Inc., a BlackRock managed REIT, the Company recorded an $8.0 million liability using an imputed interest rate of 10%.  For the six months ended June 30, 2003, the related expense was $0.3 million.  At June 30, 2003, the future commitment under the agreement was $8.0 million.

The Company has entered into a commitment to invest $7.7 million in Carbon Capital, Inc., an alternative investment fund sponsored by BlackRock, of which $5.0 million remained unfunded at June 30, 2003.

In the ordinary course of business, BlackRock enters into contracts with third parties pursuant to which the third parties provide services on behalf of BlackRock.  In many of the contracts, BlackRock agrees to indemnify the third party service provider under certain circumstances.  The terms of the indemnity vary from contract to contract and the amount of indemnification liability, if any, cannot be determined.

On November 4, 2002, the Company acquired certain assets and liabilities of Cyllenius, an equity hedge fund manager, for $1.9 million in cash at closing.  The ultimate purchase price for Cyllenius may include future contingent payments which are performance-based and are not subject to a maximum or the continued employment of former Cyllenius employees with the Company.  The first payment, which will be made on or about August 31, 2003, became measurable on June 30, 2003 and will be approximately $4.0 million.  The Company is unable to estimate its potential commitment for the final contingent payment, which will be made on or about January 30, 2004, at this time.

Summary of Commitments (unaudited):

(Dollar amounts in thousands)	Total		2003		2004		2005		2006		2007		Thereafter
Lease Commitments	$	167,147	$	5,801	$	11,607	$	10,871	$	10,915	$	10,915	$	117,038
Acquired Management Contract		8,000		—		1,500		1,500		1,000		1,000		3,000
Cyllenius Acquisition		4,009		4,009		—		—		—		—		—
Investment Commitments		4,983		4,983		—		—		—		—		—
Total Commitments	$	184,139	$	14,793	$	13,107	$	12,371	$	11,915	$	11,915	$	120,038

On April 30, 2003, the Company entered into a binding agreement with HPB, an investment manager of a fund of hedge funds, to purchase 80% of its outstanding equity for approximately $4.1 million in cash.  Additionally, the Company has committed to purchase the remaining equity of HPB on March 31, 2008.  The purchase price of this remaining interest is performance-based and is not subject to a maximum or the continued employment of former HPB employees with the Company.  The Company is unable to estimate its potential obligation at this time.  Therefore, it is not included in the table above.

- 32 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Critical Accounting Policies

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.  Management considers the following accounting policies critical to an informed review of BlackRock’s consolidated financial statements.  A summary of additional accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Investments

The Company’s investments are classified as trading and available for sale.  Investments, trading, represent investments made by the Company and held in a Rabbi trust with respect to senior employee elections under the BlackRock Voluntary and Involuntary Deferred Compensation Plans and certain seed investments which are recorded at fair market value with unrealized gains and losses included in the accompanying consolidated statements of income as investment income (expense).  Investments, available for sale, consist primarily of investments in BlackRock funds, municipal bonds and certain alternative investment products and are stated at market values.  Securities that are not readily marketable (alternative investment products) are stated at their estimated fair market value as determined by the Company’s management. 

The resulting unrealized gains and losses on investments, available for sale, are included in the accumulated other comprehensive income or loss component of stockholders’ equity, net of tax.  Realized gains and losses on trading and available for sale investments are calculated on a specific identification basis and, along with interest and dividend income, are included in investment income (expense) on the accompanying consolidated statements of income.  The Company’s management periodically assesses impairment on investments to determine if it is other than temporary.  Several of the Company’s available for sale investments represent equity interests in collateralized debt obligations in which the Company acts in the capacity of collateral manager.  The Company reviews cash flow estimates throughout the life of each collateralized debt obligation to determine if an impairment charge is required to be taken through current earnings. If the updated estimate of future cash flows (taking into account both timing and amounts) is less than the last revised estimate and the reduction in estimated future cash flows is deemed to be other than temporary, an impairment is recognized based on the excess of the carrying amount of the investment over its fair value.  In evaluating impairments on all other available for sale securities, the Company considers the length of time and the extent to which the security’s market value has been less than its cost, the financial condition and near-term prospects of the security’s issuer and the Company’s intended holding period for the security.  Any impairment on investments which is deemed other than temporary is recorded in non-operating income (expense) on the consolidated statements of income.

Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation.  Depreciation generally is provided on the straight-line method over the estimated useful lives of the various classes of property and equipment.  Accelerated methods are used for income tax purposes.  Leasehold improvements are amortized using the straight-line method over their estimated useful lives or lease terms, whichever is shorter.

Income Taxes

The Company accounts for income taxes under the liability method prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.”  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis.

- 33 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Critical Accounting Policies  (continued)

Stock-Based Compensation

Prior to 2003, the Company accounted for stock-based employee compensation plans under the recognition and measurement provisions of Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations.  Stock compensation recorded prior to 2003 primarily represents the grant of restricted common stock to employees.  Effective January 1, 2003, the Company adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” prospectively to all employee awards granted, modified or settled after January 1, 2003.  Awards under the Company’s plans vest over periods ranging from two to four years.  Therefore, the cost related to stock-based employee compensation included in net income for the three and six month periods ended June 30, 2003 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS No. 123.  The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.

	Three months ended June 30,						Six months ended June 30,
(Dollar amounts in thousands, except per share data)	2003			2002			2003			2002
	(unaudited)
Net income, as reported	$	38,674		$	34,836		$	73,994		$	66,235
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		297			75			538			239
Deduct:  Total stock-based employee compensation expense determined under fair value method of all awards, net of related tax effects		(3,659	)		(1,809	)		(7,319	)		(3,708	)
Pro forma net income	$	35,312		$	33,102		$	67,213		$	62,766
Earnings per share:
Basic - as reported	$	0.59		$	0.54		$	1.14		$	1.02
Basic - pro forma	$	0.54		$	0.51		$	1.03		$	0.97
Diluted - as reported	$	0.58		$	0.53		$	1.12		$	1.01
Diluted - pro forma	$	0.53		$	0.51		$	1.02		$	0.96

- 34 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations   (continued)

Related Party Transactions

The Company provides investment advisory and administration services to the BlackRock Funds, BPIF, the BlackRock Closed-end Funds and other commingled funds.

Revenues for services provided to these mutual funds are as follows:

	Three months ended June 30,				Six months ended June 30,
(Dollar amounts in thousands)	2003		2002		2003		2002
	(unaudited)
Investment advisory and administration fees:
BlackRock Open-end Funds:
PNC	$	9,999	$	16,114	$	20,116	$	34,396
Other		7,057		6,778		13,126		14,191
BlackRock Closed-end Funds - Other		12,301		9,873		23,614		19,361
BlackRock Provident Institutional Funds
PNC		3,131		3,457		6,420		6,880
Other*		15,723		18,306		33,433		34,757
STIF - PNC		285		208		527		410
	$	48,496	$	54,736	$	97,236	$	109,995

*  Includes the International Dollar Reserve Fund I, Ltd., a Cayman Islands open-ended limited liability company.

The Company provides investment advisory and administration services to certain PNC subsidiaries, Nomura Asset Management Co., Ltd. (“Nomura”), a strategic joint venture partner, and affiliates of Nomura for a fee, based on assets under management.  In addition, the Company provides risk management and private client services to PNC.

Revenues for such services are as follows:

	Three months ended June 30,					Six months ended June 30,
(Dollar amounts in thousands)	2003		2002		2003		2002
	(unaudited)
Separate accounts - Nomura	$	3,162	$	2,562	$	6,421	$	4,679
Separate accounts - PNC		1,904		1,379		3,568		2,722
Private client services - PNC		1,382		1,383		2,764		2,765
Other income-risk management - PNC		1,250		1,250		2,500		2,500
	$	7,698	$	6,574	$	15,253	$	12,666

Total revenue earned by BlackRock for providing asset management and other services to PNC subsidiaries or PNC-related accounts for the three month periods ended June 30, 2003 and 2002 totaled approximately $18.0 million and $23.8 million, respectively, and for the six month periods ended June 30, 2003 and 2002, totaled approximately $35.9 million and $49.7 million, respectively.

- 35 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Related Party Transactions  (continued)

PNC subsidiaries and PNC related accounts had the following investments in BlackRock sponsored mutual funds or separate accounts.

	June 30,
(Dollar amounts in millions)	2003		2002
	(unaudited)
BlackRock Open-end Funds	$	10,595	$	13,888
BlackRock Provident Institutional Funds		8,442		8,710
STIF		747		610
Separate accounts		11,592		11,865
	$	31,376	$	35,073

The Company has entered into various memoranda of understanding and co-administration agreements with affiliates of PNC pursuant to which the Company pays administration fees for BPIF and certain other commingled funds and service fees for PNC Advisors’ (PNC’s wealth management business) clients invested in the BlackRock Funds.

PNC also provides general and administration services to the Company.  Charges for such services were based on actual usage or on defined formulas which, in management’s view, resulted in reasonable allocations. 

Aggregate expenses included in the consolidated financial statements for transactions with related parties are as follows:

	Three months ended June 30,				Six months ended June 30,
(Dollar amounts in thousands)	2003		2002		2003		2002
	(unaudited)
Fund administration and servicing costs-affiliates	$	6,686	$	11,916	$	13,629	$	25,094
General and administration		1,534		1,587		3,144		3,187
General and administration-consulting		450		300		901		600
	$	8,670	$	13,803	$	17,674	$	28,881

Additionally, an indirect wholly owned subsidiary of PNC acts as a financial intermediary associated with the sale of back-end loaded shares of certain BlackRock funds.  This entity finances broker sales commissions and receives all associated sales charges.

Included in accounts receivable is approximately $7.6 million and $5.4 million at June 30, 2003 and December 31, 2002, respectively, which primarily represents investment and administration services provided to Nomura, PNC subsidiaries and affiliates.

Receivable from affiliates was approximately $0.1 million and $0.3 million at June 30, 2003 and December 31, 2002, respectively.  These amounts primarily represent reimbursed expenses due from the BlackRock Funds and affiliates.

- 36 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Related Party Transactions  (continued)

Payable to affiliates was approximately $35.2 million and approximately $24.0 million at June 30, 2003 and December 31, 2002, respectively.  These amounts primarily represent income taxes payable and fund administration and servicing costs-affiliates payable.  These amounts do not bear interest.

Consolidation of Variable Interest Entities

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities.”  FIN No. 46 addresses the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to variable interest entities (“VIE”) and generally would require that the assets, liabilities and results of operations of a VIE be consolidated into the financial statements of the enterprise that has a controlling financial interest in it.  The interpretation provides a framework for determining whether an entity should be evaluated for consolidation based on voting interests or significant financial support provided to the entity (“variable interests”).

An entity is classified as a VIE if total equity is not sufficient to permit the entity to finance its activities without additional subordinated financial support or its equity investors lack the direct or indirect ability to make decisions about an entity’s activities through voting rights, absorb the expected losses of the entity if they occur or receive the expected residual returns of the entity if they occur.  Once an entity is determined to be a VIE, its assets, liabilities and results of operations should be consolidated with those of its primary beneficiary.  The primary beneficiary of a VIE is the entity which either will absorb a majority of the VIE’s expected losses or has the right to receive a majority of the VIE’s expected residual returns.  The expected losses and residual returns of a VIE include expected variability in its net income or loss, fees to decision makers and fees to guarantors of substantially all VIE assets or liabilities and are calculated in accordance with Statement of Financial Accounting Concept No. 7, “Using Cash Flow Information and Present Value in Accounting Measurements.”

A public enterprise with a variable interest in a VIE created before January 31, 2003 must apply FIN No. 46 to that VIE as of the beginning of the first interim or annual reporting period beginning after June 15, 2003.  Additionally, if it is reasonably possible that an enterprise will consolidate or disclose information about a VIE when the guidance becomes effective, there are several disclosure requirements effective for all financial statements issued after January 31, 2003.

During the six months ended June 30, 2003, management made changes to the equity ownership and/or control structure of certain hedge funds previously identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 which has removed them from the scope of FIN No. 46.  As a result these entities will not be required to be consolidated in the third quarter of 2003.

- 37 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Consolidation of Variable Interest Entities  (continued)

Pursuant to the conceptual framework set forth in FIN No. 46, the Company’s management has concluded that the consolidation of the assets, liabilities and results of operations of four collateralized bond obligation funds (“CBOs”) and one collateralized loan obligation fund (“CLO”) organized as corporations or limited liability companies in its consolidated financial statements as of and for the period ended September 30, 2003 is reasonably possible.  The funds invest in high yield securities and offer opportunity for high return and are subject to greater risk than traditional investment products.  These funds are structured to take advantage of the yield differential between their assets and liabilities and have terms to maturity from eight to twelve years.  At June 30, 2003, aggregate assets and debt in the CBOs and CLO was approximately $2.3 billion and $2.0 billion, respectively.  If such assets and debt are required to be recorded, the Company would disclose that it claims no title to the assets and such liabilities are without recourse to BlackRock.  In its role as collateral manager for the CBOs, BlackRock is not exposed to risk of loss with respect to the CBOs debts. BlackRock’s equity ownership in these funds was approximately $14.4 million at June 30, 2003.  BlackRock’s maximum potential loss related to these VIEs is limited to the amount of its respective equity ownership in each of these investment vehicles.  Additionally, the Company has neither guaranteed nor is contractually liable for any of the VIEs’ obligations. 

Assuming the consolidation of the CBOs’ and CLO’s assets, liabilities and results of operations effective July 1, 2003, the Company will record a cumulative effect of change in accounting principle not expected to exceed $1 million, after tax.  This charge primarily represents the difference between the carrying amounts of BlackRock’s investments in these entities accounted for under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” the Company’s current accounting treatment, and FIN No. 46.

Commencing in 2003, BlackRock acts as trading adviser and special member to an entity which has created a series of municipal securities trusts in which it has retained interests.  These trusts purchase fixed-rate, long-term, highly rated, insured or escrowed municipal bonds financed by the issuance of trust certificates.  The trust certificates entitle the holder to receive future payments of principal and variable interest and to tender such certificates at the option of the holder on a periodic basis.  A third party acts as placement agent for the entity and the trusts and as liquidity provider to the trusts.  The aggregate assets and debt in this entity (including the trusts) was approximately $153 million and $103 million, respectively.  BlackRock’s equity ownership was approximately $5.4 million at June 30, 2003.  The Company’s management has concluded that BlackRock is not the primary beneficiary of this entity and therefore will not consolidate the entity upon the Company’s adoption of FIN No. 46.

On July 17, 2003, BlackRock made a formal submission to the Securities and Exchange Commission’s (“SEC”) Office of the Chief Accountant requesting pre-clearance of our interpretation of certain issues associated with the implementation of FIN No. 46 which would result in a non-consolidation determination with respect to the previously noted CBOs and CLO.  There can be no assurance that the SEC’s review of our submission will result in non-consolidation of the CBOs and the CLO.

Interest Rates

The value of assets under management is affected by, among other things, changes in interest rates.  Since BlackRock derives the majority of its revenues from investment advisory fees based on the value of assets under management, BlackRock’s revenues may be adversely affected by changing interest rates.  In a period of rapidly rising interest rates, BlackRock’s assets under management would likely be negatively affected by reduced asset values and increased redemptions.

- 38 - -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations  (continued)

Inflation

The majority of BlackRock’s revenues are based on the value of assets under management.  There is no predictable relationship between the rate of inflation and the value of assets under management by BlackRock, except as inflation may affect interest rates.  BlackRock does not believe inflation will significantly affect its compensation costs, as they are substantially variable in nature.  However, the rate of inflation may affect BlackRock’s expenses such as information technology and occupancy costs.  To the extent inflation results in rising interest rates and has other effects upon the securities markets, it may adversely affect BlackRock’s results of operations by reducing BlackRock’s assets under management, revenues or otherwise.

Forward Looking Statements

This report, and other documents filed by BlackRock, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to: BlackRock’s fixed income hedge fund investment performance; anticipated impact of FIN No. 46 on BlackRock’s financial statements; anticipated offering proceeds, annualized fees and annualized fund administration and servicing costs for the BlackRock Limited Duration Income Trust; 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 “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “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” and 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 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 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 relative and absolute 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 agencies relating to BlackRock or PNC; (11) terrorist activities and international hostilities, 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, 2002 and BlackRock’s subsequent reports filed with the SEC, accessible on the SEC’s website at http://www.sec.gov and on BlackRock’s website at http://www.blackrock.com, discuss these factors in more detail and identify additional factors that can affect forward-looking statements.

- 39 -

PART I  – FINANCIAL INFORMATION  (continued)
Item 3.       Quantitative and Qualitative Disclosures About Market Risk

In the normal course of its business, BlackRock is exposed to the risk of interest rate, securities market and general economic fluctuations. 

BlackRock’s investments, available for sale, consist primarily of BlackRock Funds, municipal debt securities and certain alternative investment products.  Occasionally, BlackRock invests in new mutual funds or advisory accounts (“seed investments”) sponsored by BlackRock in order to provide investable cash to the new mutual fund or advisory account to establish a performance history.  As of June 30, 2003 and December 31, 2002, the fair market value of seed investments was $38.2 million and $27.5 million, respectively.  The fair market value of BlackRock’s other investments included in the mutual funds total, as stated below, was $152.3 million and $151.1 million as of June 30, 2003 and December 31, 2002, respectively, and is comprised of fixed income portfolios of the BlackRock Funds.  These investments expose BlackRock to equity price risk.  BlackRock does not hold any derivative securities to hedge its investments.  The following table summarizes the fair market values of the investments and provides a sensitivity analysis of the estimated fair market values of all financial instruments subject to equity price risk, assuming a 10% increase or decrease in equity prices:

	Fair Market Value		Fair market value assuming 10 % increase in market price		Fair market value assuming 10% decrease in market price
June 30, 2003
Mutual funds	$	11,120	$	12,232	$	10,008
Equity securities		6,972		7,669		6,275
Other		18,041		19,845		16,237
Total investments, trading		36,133		39,746		32,520
Mutual funds		160,135		176,149		144,122
Collateralized bond obligations		14,363		15,799		12,927
Other		16,055		17,661		14,450
Total investments, available for sale		190,553		209,609		171,499
Total investments, trading and available for sale	$	226,686	$	249,355	$	204,019
December 31, 2002
Mutual funds	$	5,131	$	5,644	$	4,618
Other		10,766		11,843		9,689
Total investments, trading		15,897		17,487		14,307
Mutual funds		158,418		174,260		142,576
Collateralized bond obligations		10,375		11,413		9,338
Other		9,782		10,760		8,804
Total investments, available for sale		178,575		196,433		160,718
Total investments, trading and available for sale	$	194,472	$	213,920	$	175,025

- 40 -

PART I  –  FINANCIAL INFORMATION  (continued)
Item 3.        Quantitative and Qualitative Disclosures About Market Risk  (continued)

As discussed previously, total investments, trading, primarily reflects investments by BlackRock with respect to senior employee elections under BlackRock’s Voluntary and Involuntary Deferred Compensation Plans.  Therefore, any change in the fair market value of these investments is offset by a corresponding change in the related deferred compensation liability.  At June 30, 2003, equity securities represent a seed investment made by the Company during 2003 in two quantitative equity products. 

The following table summarizes the fair market value of the Company’s investments in municipal debt securities, which expose BlackRock to interest rate risk, at June 30, 2003 and December 31, 2002.  The table also provides a sensitivity analysis of the estimated fair market value of these financial instruments, assuming 100 basis point upward and downward parallel shifts in the yield curve:

	Fair Market Value		Fair market value assuming + 100 basis point shift		Fair market value assuming - 100 basis point shift
June 30, 2003
Municipal debt securities	$	78,031	$	70,911	$	85,743
December 31, 2002
Municipal debt securities	$	14,271	$	10,921	$	18,535

Item 4.     Controls and Procedures

(a)

Disclosure Controls and Procedures.  The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report.  Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are affective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

(b)

Internal Control Over Financial Reporting.  There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 41 -

PART II  – OTHER INFORMATION
Item 4.        Submission of Matters to a Vote of Security Holders

The annual meeting of stockholders of BlackRock was held on May 8, 2003, for the purpose of considering and acting upon the following:

(1) Election of Directors.  Three Class I directors were elected and the votes cast for or against/withheld were as follows:

	Aggregate Votes
	For		Against/Withheld
Nominees
William O. Albertini		244,750,181		365,112
William S. Demchack		244,565,212		550,081
Laurence D. Fink		242,230,116		2,885,177
William C. Mutterperl		244,878,935		236,358
Frank T. Nickell		242,456,966		2,658,327
Thomas H. O’Brien		242,588,867		2,526,426

(2) Compensation Plans.  Two matters were approved and the votes cast for or against and the abstentions were as follows:

	Aggregate Votes
	For		Against		Abstained
Approval of the Adoption of the BlackRock, Inc. 2002 Long Term Retention and Incentive Plan		240,645,949		3,133,052		43,820
Approval of the Amendment and Restatement of the BlackRock, Inc. 1999 Annual Incentive Performance Plan		243,533,124		246,352		43,345

There were no broker non-votes.  The continuing directors of BlackRock are Murray S. Gerber, James Grosfeld, James E. Rohr, Ralph L. Schlosstein and Laurence M. Wagner.  Effective May 1, 2003, David H. Komansky was appointed to the Company’s Board of Directors and shall be a nominee for election at the 2004 Annual Meeting of Stockholders.

With respect to the preceding matters, holders of BlackRock’s class A common stock, and class B common stock voted together as a single class.  Holders of BlackRock’s class A common stock are entitled to one vote per share.  Holders of BlackRock’s class B common stock are entitled to five votes per share.

- 42-

PART II  – OTHER INFORMATION
Item 6.        Exhibits and Reports on Form 8-K

       (a)     Exhibits

Exhibit No.	Description
3.1 (1)	Amended and Restated Certificate of Incorporation of the Registrant.
3.2 (8)	Amended and Restated Bylaws of the Registrant.
3.3 (8)	Amendment No. 1 to the Amended and Restated Bylaws of the Registrant.
3.4 (8)	Amendment No. 2 to the Amended and Restated Bylaws of the Registrant.
4.1 (1)	Specimen of Common Stock Certificate (per class).
4.2 (1)	Amended and Restated Stockholders Agreement, dated September 30, 1999, by and among the Registrant, PNC Asset Management, Inc. and certain employees of the Registrant and its affiliates.
4.3 (9)	Amendment No. 1 to the Amended and Restated Stockholders Agreement, dated October 10, 2002, by and among the Registrant, PNC Asset Management, Inc. and certain employees of the Registrant and its affiliates.
10.1 (1)	Tax Disaffiliation Agreement, dated October 6, 1999, among BlackRock, Inc., PNC Asset Management, Inc. and The PNC Financial Services Group, Inc., formerly PNC Bank Corp.
10.2 (1)	1999 Stock Award and Incentive Plan. +
10.3 (1)	1999 Annual Incentive Performance Plan. +
10.4 (1)	Nonemployee Directors Stock Compensation Plan. +
10.5 (1)	Initial Public Offering Agreement, dated September 30, 1999, among the Registrant, The PNC Financial Services Group, Inc., formerly PNC Bank Corp. and PNC Asset Management, Inc.
10.6 (1)	Registration Rights Agreement, dated October 6, 1999, among the Registrant, PNC Asset Management, Inc. and certain holders of class B common stock of the Registrant.
10.7 (1)	Services Agreement, dated October 6, 1999, between the Registrant and The PNC Financial Services Group, Inc., formerly PNC Bank Corp.
10.8 (2)	BlackRock, Inc. Amended and Restated Long-Term Deferred Compensation Plan. +
10.9 (2)	BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan. +
10.10 (3)	Agreement of Lease, dated May 3, 2000, between 40 East 52nd Street L.P. and the Registrant.
10.11 (4)	Amendment No. 1 to the 1999 Stock Award and Incentive Plan. +
10.12 (4)	Amendment No. 1 to the BlackRock, Inc. Amended and Restated Long-Term Deferred Compensation Plan. +
10.13 (4)	Amendment No. 1 to the BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan. +
10.14 (5)	Agreement of Lease, dated September 4, 2001, between 40 East 52nd Street L.P. and the Registrant.
10.15 (6)	BlackRock, Inc. 2001 Employee Stock Purchase Plan. +
10.16 (11)	Amended and Restated BlackRock, Inc. Voluntary Deferred Compensation Plan. +
10.17 (11)	Amended and Restated BlackRock, Inc. Involuntary Deferred Compensation Plan. +
10.18 (7)	Amendment No. 2 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan. +
10.19 (9)	BlackRock, Inc. 2002 Long Term Retention and Incentive Plan. +
10.20 (9)	Share Surrender Agreement, dated October 10, 2002, among the Registrant, PNC Asset Management, Inc., and The PNC Financial Services Group, Inc.
10.21 (9)	Employment Agreement, between the Registrant and Laurence Fink, dated October 10, 2002 +
10.22 (9)	Amendment No. 1 to the Initial Public Offering Agreement, dated October 10, 2002, among The PNC Financial Services Group, Inc., PNC Asset Management, Inc. and the Registrant.
10.23 (9)	Amendment No. 1 to the Registration Rights Agreement, dated October 10, 2002, among the Registrant, PNC Asset Management, Inc. and certain holders of class B common stock of the Registrant.
10.24 (11)	Amended and Restated 1999 Annual Incentive Performance Plan. +
10.25 (10)	The PNC Financial Services Group, Inc.’s Incentive Savings Plan, as amended as of January 1, 2001. +
10.26 (10)	First Amendment to The PNC Financial Services Group, Inc.’s Incentive Savings Plan. +
10.27 (10)	Second Amendment to The PNC Financial Services Group, Inc.’s Incentive Savings Plan. +
31.1	Section 302 Certification of Chief Executive Officer.
31.2	Section 302 Certification of Chief Financial Officer.
32.1	Section 906 Certification of Chief Executive Officer and Chief Financial Officer.

(1)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-78367), as amended, originally filed with the Securities and Exchange Commission on May 13, 1999.
(2)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-32406), originally filed with the Securities and Exchange Commission on March 14, 2000.
(3)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended March 31, 2000.

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PART II – OTHER INFORMATION
Item 6.      Exhibits and Reports on Form 8-K

        (a)     Exhibits  (continued)

(4)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2000.
(5)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended September 30, 2001.
(6)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-68670), originally filed with the Securities and Exchange Commission on August 30, 2001.
(7)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-68666), originally filed with the Securities and Exchange Commission on August 30, 2001.
(8)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended June 30, 2002.
(9)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended September 30, 2002.
(10)	Incorporated by reference to The PNC Financial Services Group, Inc.’s Annual Report on Form 10-K (Commission File No. 001-9718) for the year ended December 31, 2002.
(11)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K (Commission File No. 001-15305) for the year ended December 31, 2002.

       +        Denotes compensatory plan.

       (b)      Reports on Form 8-K

Since December 31, 2002, the Company has filed the following Current Reports on Form 8-K:

Form 8-K dated as of April 15, 2003, reporting the Company’s Results of Operations and Financial Condition, filed pursuant to Item 12 of Form 8-K.

Form 8-K dated as of July 15, 2003, reporting the Company’s Results of Operations and Financial Condition, filed pursuant to Item 12 of Form 8-K.

- 44 -

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BLACKROCK, INC.
	(Registrant)
	By:	/s/ PAUL L. AUDET
Date: August 12, 2003		Paul L. Audet Managing Director & Chief Financial Officer

- 45 - -

EXHIBIT INDEX

Exhibit No.	Description
3.1 (1)	Amended and Restated Certificate of Incorporation of the Registrant.
3.2 (8)	Amended and Restated Bylaws of the Registrant.
3.3 (8)	Amendment No. 1 to the Amended and Restated Bylaws of the Registrant.
3.4 (8)	Amendment No. 2 to the Amended and Restated Bylaws of the Registrant.
4.1 (1)	Specimen of Common Stock Certificate (per class).
4.2 (1)	Amended and Restated Stockholders Agreement, dated September 30, 1999, by and among the Registrant, PNC Asset Management, Inc. and certain employees of the Registrant and its affiliates.
4.3 (9)	Amendment No. 1 to the Amended and Restated Stockholders Agreement, dated October 10, 2002, by and among the Registrant, PNC Asset Management, Inc. and certain employees of the Registrant and its affiliates.
10.1 (1)	Tax Disaffiliation Agreement, dated October 6, 1999, among BlackRock, Inc., PNC Asset Management, Inc. and The PNC Financial Services Group, Inc., formerly PNC Bank Corp.
10.2 (1)	1999 Stock Award and Incentive Plan. +
10.3 (1)	1999 Annual Incentive Performance Plan. +
10.4 (1)	Nonemployee Directors Stock Compensation Plan. +
10.5 (1)	Initial Public Offering Agreement, dated September 30, 1999, among the Registrant, The PNC Financial Services Group, Inc., formerly PNC Bank Corp. and PNC Asset Management, Inc.
10.6 (1)	Registration Rights Agreement, dated October 6, 1999, among the Registrant, PNC Asset Management, Inc. and certain holders of class B common stock of the Registrant.
10.7 (1)	Services Agreement, dated October 6, 1999, between the Registrant and The PNC Financial Services Group, Inc., formerly PNC Bank Corp.
10.8 (2)	BlackRock, Inc. Amended and Restated Long-Term Deferred Compensation Plan. +
10.9 (2)	BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan. +
10.10 (3)	Agreement of Lease, dated May 3, 2000, between 40 East 52nd Street L.P. and the Registrant.
10.11 (4)	Amendment No. 1 to the 1999 Stock Award and Incentive Plan. +
10.12 (4)	Amendment No. 1 to the BlackRock, Inc. Amended and Restated Long-Term Deferred Compensation Plan. +
10.13 (4)	Amendment No. 1 to the BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan. +
10.14 (5)	Agreement of Lease, dated September 4, 2001, between 40 East 52nd Street L.P. and the Registrant.
10.15 (6)	BlackRock, Inc. 2001 Employee Stock Purchase Plan. +
10.16 (11)	Amended and Restated BlackRock, Inc. Voluntary Deferred Compensation Plan. +
10.17 (11)	Amended and Restated BlackRock, Inc. Involuntary Deferred Compensation Plan. +
10.18 (7)	Amendment No. 2 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan. +
10.19 (9)	BlackRock, Inc. 2002 Long Term Retention and Incentive Plan. +
10.20 (9)	Share Surrender Agreement, dated October 10, 2002, among the Registrant, PNC Asset Management, Inc., and The PNC Financial Services Group, Inc.
10.21 (9)	Employment Agreement, between the Registrant and Laurence Fink, dated October 10, 2002 +
10.22 (9)	Amendment No. 1 to the Initial Public Offering Agreement, dated October 10, 2002, among The PNC Financial Services Group, Inc., PNC Asset Management, Inc. and the Registrant.
10.23 (9)	Amendment No. 1 to the Registration Rights Agreement, dated October 10, 2002, among the Registrant, PNC Asset Management, Inc. and certain holders of class B common stock of the Registrant.
10.24 (11)	Amended and Restated 1999 Annual Incentive Performance Plan. +
10.25 (10)	The PNC Financial Services Group, Inc.’s Incentive Savings Plan, as amended as of January 1, 2001. +
10.26 (10)	First Amendment to The PNC Financial Services Group, Inc.’s Incentive Savings Plan. +
10.27 (10)	Second Amendment to The PNC Financial Services Group, Inc.’s Incentive Savings Plan. +
31.1	Section 302 Certification of Chief Executive Officer.
31.2	Section 302 Certification of Chief Financial Officer.
32.1	Section 906 Certification of Chief Executive Officer and Chief Financial Officer.

(1)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-78367), as amended, originally filed with the Securities and Exchange Commission on May 13, 1999.
(2)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-32406), originally filed with the Securities and Exchange Commission on March 14, 2000.
(3)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended March 31, 2000.
(4)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2000.
(5)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended September 30, 2001.
(6)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-68670), originally filed with the Securities and Exchange Commission on August 30, 2001.

EXHIBIT INDEX  (continued)

(7)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-68666), originally filed with the Securities and Exchange Commission on August 30, 2001.
(8)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended June 30, 2002.
(9)	Incorporated by Reference to the Registrant’s Quarterly Report on Form 10-Q  (Commission File No. 001-15305), for the quarter ended September 30, 2002.
(10)	Incorporated by reference to The PNC Financial Services Group, Inc.’s Annual Report on Form 10-K (Commission File No. 001-9718) for the year ended December 31, 2002.
(11)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K (Commission File No. 001-15305) for the year ended December 31, 2002.

         +        Denotes compensatory plan.