Exhibit 99.1
Contact:
Brian Beades
212-754-5596
invrel@blackrock.com
BlackRock, Inc. Reports Third Quarter Earnings
Including a $30 Billion Year-over-Year Increase in
Assets Under Management to $323.5 Billion
New York, October 18, 2004 - BlackRock, Inc. (NYSE:BLK) today reported, as previously announced, a net loss for the quarter ended September 30, 2004 of $9.8 million, or $0.15 per diluted share, compared to net income of $40.1 million, or $0.61 per diluted share earned in the third quarter of 2003. Third quarter 2004 earnings included the impact of a charge of $57.1 million, or $0.87 per diluted share, associated with the BlackRock, Inc. 2002 Long Term Retention and Incentive Plan (LTIP or the Plan). Excluding this charge, earnings for the third quarter of 2004 would have increased 18% to $47.3 million, or $0.72 per diluted share. Net income and diluted earnings per share for the nine months ended September 30, 2004 were $93.4 million and $1.42, respectively. Exclusive of the LTIP charge, earnings and diluted earnings per share for the nine month period ended September 30, 2004 would have been $150.5 million and $2.28, respectively, which includes a net income benefit of $8.7 million, or $0.13 per diluted share, recognized in the first quarter of 2004 associated with the resolution of an audit performed by New York State on the Company’s previously filed tax returns.
The Company’s decision to commence expense recognition in the third quarter of 2004 for approximately $207 million of awards granted under the LTIP is the result of continued strength in the Company’s stock price. Aggregate maximum awards under the Plan are $240 million, of which BlackRock is obligated to fund $40 million in cash and The PNC Financial Services Group, Inc. (NYSE: PNC) is obligated to contribute 4 million shares of BlackRock, Inc. common stock to the Company to fund $200 million of Plan awards, with the excess value of the stock contributed, if any, available to support future long term retention and incentive programs. Shares distributed to Plan participants will include an option to put such shares back to BlackRock at fair market value. PNC’s contribution of stock, if triggered, will increase BlackRock’s book value, exclusive of the impact of Plan participants’ put options. The funding obligation is triggered upon satisfaction of the Plan’s performance hurdle, which requires that BlackRock’s average common stock price exceed $62 for any 3-month period beginning on or after January 1, 2005 and ending on or prior to March 30, 2007. In general, Plan participants must be employed by BlackRock on the payment date in early 2007 to receive their awards. Since PNC will fund $200 million of Plan awards in the event the Plan fully vests, BlackRock also announced that the Company will report earnings on an adjusted basis to reflect the impact of PNC’s LTIP funding obligation.
BlackRock had adjusted earnings (see Table 1) of approximately $36.9 million, or $0.56 per diluted share, during the quarter ended September 30, 2004. PNC’s LTIP funding obligation amounted to $0.71 of the LTIP’s dilutive impact of $0.87 per share on third quarter results. The Company’s adjusted earnings (see Table 1) for the nine months ended September 30, 2004 were approximately $140.1 million, or $2.13 per diluted share, a $26.0 million, or 23%, increase compared to the prior year.
During the quarter and nine months ended September 30, 2004, the Company realized operating margins of 41.9% and 39.2%, prior to the recognition of expenses related to LTIP awards (see Table 1). BlackRock’s LTIP funding obligation is expected to reduce operating margins by approximately 1.5% through the end of the LTIP’s service period, December 31, 2006, based on recent historical results.
BlackRock, Inc.
Third Quarter Earnings Release
Assets under management (“AUM”) closed the third quarter at $323.5 billion, up $13.8 billion since June 30, 2004 and $30.0 billion versus September 30, 2003. Net new business during the quarter totaled $7.3 billion, including $4.2 billion from U.S. clients and $3.1 billion from international investors. Market appreciation contributed an additional $6.5 billion in asset growth, largely as a result of the rebound in the bond market since second quarter-end. Year-over-year, net new business totaled $18.6 billion, including $8.3 billion from domestic investors and $10.3 billion from non-U.S. clients. In addition, BlackRock Solutions® continued its record of growth, adding three net new assignments during the quarter and thirteen year-to-date.
“As our third quarter results suggest, BlackRock continues to benefit from the diversification of our business and momentum remains strong throughout the firm,” remarked Laurence D. Fink, Chairman and CEO of BlackRock. “During the quarter, our client base continued to expand globally, with strong new business results across client channels and in BlackRock Solutions. In addition, although market conditions remain challenging in the face of sharply rising commodity prices, Federal Reserve tightening, continued instability in Iraq and the impending U.S. elections, performance remained competitive in most products.
“Two notable developments during the quarter merit comment. First, we announced BlackRock’s agreement to acquire State Street Research (SSR) from MetLife in late August. Since then, tremendous progress has been made in transition planning, including receiving unanimous approval from the Board of Directors of the SSR Funds to merge into our fund family, subject to approval of SSR fund shareholders. As progress has been made, we have become even more enthusiastic about the capabilities we will gain post-merger and the relationship we will have with MetLife as a result of this transaction.
“The second development was the announcement that we would commence expense recognition of our 2002 Long-Term Retention and Incentive Plan. This action was dictated by the continued strength of our stock, although the Plan cannot satisfy its performance hurdle until March 31, 2005 at the earliest and, thereafter, individual awards generally do not vest until they are paid in 2007. While I am very gratified that BlackRock’s business has continued to thrive, I am even more gratified that our employees continue to devote their utmost efforts to conducting our business and serving our clients. Their enthusiasm and dedication are the foundation that supports our ongoing efforts to build BlackRock’s platform.”
Third Quarter Highlights
• | Net new business was exceptionally well balanced across institutional channels, with insurance companies, liquidity investors and other taxable clients each funding more than $2.0 billion, and domestic tax-exempt investors adding $1.4 billion during the quarter. Inflows of $433 million in new closed-end funds were almost entirely overshadowed by $391 million of outflows in theBlackRock Funds. |
• | Fixed income assets ended the quarter at $235.5 billion, up $12.0 billion during the quarter. Net new business totaled $5.5 billion, fueled by net inflows in every client channel. New business efforts were strong in a number of products, including targeted duration, global bond and core bond mandates. Investment performance remained competitive, with 80% or more of our taxable bond funds ranked in the top two Lipper quartiles for 1-, 3- and 5-year periods ended September 30, 2004. |
• | Liquidity assets increased $1.9 billion to close the quarter at $67.8 billion, including inflows of $1.2 billion in money market funds and $652 million in separate accounts. Average assets for the quarter were $71.0 billion, down slightly from the second quarter average of $71.6 billion. As indicated in our second quarter earnings release, liquidity assets have been, and are expected to continue to be, volatile in response to Federal Reserve policy. Market share has remained relatively stable throughout this cycle, and we are implementing strategies to enhance our competitive position in the cash management business. |
- 2 -
BlackRock, Inc.
Third Quarter 2004 Earnings Release
• | Total equity assets were $12.7 billion at September 30, 2004. In international equities, a single client’s investment strategy shift accounted for 35% of the $637 million decline during the quarter. The pace of outflows has slowed, however, with improved investment performance. In the third quarter, all of our international equity funds ranked in the top Lipper quartile and 86% of our international equity composites outperformed their benchmarks. In domestic equities, mutual fund redemptions outpaced separate account fundings, resulting in $108 million of net outflows. Performance, however, has remained strong, with 75% of U.S. equity fund assets ranked in the top two Lipper quartiles for the quarter, year-to-date and 1-year periods ended September 30, 2004. |
• | Alternative investment AUM ended the quarter at $7.4 billion, fueled by $851 million in net new business. Our new product effort is more robust than at any time in our history. These efforts led to $775 million of fundings in a new absolute return fixed income product during the third quarter. Already this month, we have raised $400 million in a new collateralized loan obligation and received $150 million of commitments in the first closing of our new real estate mezzanine fund. Additional offerings are in various stages of development, and we believe that these initiatives will contribute to sustained momentum in alternative investments. |
• | During the third quarter, BlackRock Solutions and our Advisory Services effort continued to expand, adding two risk management assignments, one system outsourcing client and two advisory engagements. One investment accounting relationship was terminated during the quarter following merger activity affecting the client. In the coming months, completion of several current assignments will create additional capacity to capitalize on the continued high level of interest in these products and services. |
• | Our momentum remains strong as we head toward year-end. Our new business pipeline remains robust, with $3.6 billion of wins funded or to be funded since quarter-end and a continued high level of search activity across products. Investment performance remains paramount to sustained momentum and we remain focused, as always, on our mission to provide the highest quality products and services to our clients. |
• | On August 26, 2004, we announced that BlackRock had agreed to acquire State Street Research from MetLife. Integration planning commenced shortly thereafter and is proceeding as expected. On October 1, 2004, proxies were filed with the SEC regarding proposed mutual fund mergers. Our management teams are jointly developing strategies to bring together the best of both organizations, while maintaining uninterrupted focus on portfolio management and client service for our respective investors. Based on progress to date, we continue to anticipate closing the transaction in early 2005. |
- 3 -
BlackRock, Inc.
Third Quarter 2004 Earnings Release
Total revenue for the quarter ended September 30, 2004 increased $20.7 million, or 14%, to $171.0 million compared to $150.3 million for the quarter ended September 30, 2003. Separate account revenue increased by $12.9 million, or 16%, mutual funds revenue increased by $1.6 million, or 3%, and other income increased by $6.1 million, or 36%, compared with the quarter ended September 30, 2003. The increase in separate account revenue represents a $14.8 million, or 19%, increase in separate account base fees driven by a $33.0 billion, or 16%, increase in AUM, primarily in fixed income, partially offset by a $1.8 million decrease in performance fees. Mutual fund revenue increased primarily due to new closed-end fund launches since September 30, 2003, which generated $1.9 billion of additional AUM, partially offset by decreases in average assets in theBlackRock Fundsand theBlackRock Liquidity Funds. Other income increased primarily due to strong sales inBlackRock Solutionsproducts and services.
Three months ended | June 30, 2004 | Variance vs. | ||||||||||||||||||||
September 30, | September 30, 2003 | June 30, 2004 | ||||||||||||||||||||
(Dollar amounts in thousands) | 2004 | 2003 | Amount | % | Amount | % | ||||||||||||||||
Mutual funds revenue | ||||||||||||||||||||||
BlackRock Funds | $ | 16,289 | $ | 17,255 | $ | 18,058 | ($966 | ) | (5.6 | %) | ($1,769 | ) | (9.8 | %) | ||||||||
Closed-end Funds | 17,978 | 13,267 | 17,484 | 4,711 | 35.5 | 494 | 2.8 | |||||||||||||||
BlackRock Liquidity Funds | 19,508 | 21,694 | 19,160 | (2,186 | ) | (10.1 | ) | 348 | 1.8 | |||||||||||||
Other commingled funds | 298 | 266 | 279 | 32 | 12.0 | 19 | 6.8 | |||||||||||||||
Total mutual funds revenue | 54,073 | 52,482 | 54,981 | 1,591 | 3.0 | (908 | ) | (1.7 | ) | |||||||||||||
Separate accounts revenue | ||||||||||||||||||||||
Separate accounts base fees | 92,943 | 78,152 | 89,436 | 14,791 | 18.9 | 3,507 | 3.9 | |||||||||||||||
Separate accounts performance fees | 539 | 2,403 | 17,596 | (1,864 | ) | NM | (17,057 | ) | (96.9 | ) | ||||||||||||
Total separate accounts revenue | 93,482 | 80,555 | 107,032 | 12,927 | 16.0 | (13,550 | ) | (12.7 | ) | |||||||||||||
Total investment advisory and administration fees | 147,555 | 133,037 | 162,013 | 14,518 | 10.9 | (14,458 | ) | (8.9 | ) | |||||||||||||
Other income | 23,444 | 17,307 | 21,799 | 6,137 | 35.5 | 1,645 | 7.5 | |||||||||||||||
�� | ||||||||||||||||||||||
Total revenue | $ | 170,999 | $ | 150,344 | $ | 183,812 | $ | 20,655 | 13.7 | % | ($12,813 | ) | (7.0 | %) | ||||||||
NM = Not meaningful
During the third quarter of 2004, revenue declined approximately $12.8 million, or 7%, as compared to the second quarter of 2004 primarily due to lower performance fees of $17.1 million primarily associated with the Company’s fixed income hedge fund, partially offset by a $3.5 million increase in separate account base fees. The increase in base fees was due to a $12.1 billion, or 5%, increase in AUM.
- 4 -
BlackRock, Inc.
Third Quarter 2004 Earnings Release
Total revenue for the nine months ended September 30, 2004 increased $99.6 million, or 23%, to $536.6 million compared to $437.0 million during the nine months ended September 30, 2003. Separate account revenue increased by $66.7 million, or 28%, mutual funds revenue increased by $15.8 million, or 11%, and other income increased by $17.2 million, or 35%, compared with the nine months ended September 30, 2003. The growth in separate account fees primarily consisted of an increase in base fees of $39.8 million, or 17%, resulting from a $33.0 billion, or 16%, increase in assets under management and an increase in performance fees of $26.9 million largely attributable to results of the Company’s alternative investment products. The increase in mutual funds revenue consisted of increases in closed-end fund revenue andBlackRock Fundsrevenue of $15.4 million and $2.6 million, respectively, partially offset by a decrease in fees earned from theBlackRock Liquidity Funds of $2.3 million. Closed-end fund revenue increased during the period due to several closed-end fund launches since September 30, 2003, resulting in a $1.9 billion increase in assets under management. Growth inBlackRock Fundsfees reflects a shift in average assets from retail liquidity portfolios to higher-fee bearing fixed income portfolios while the reduction inBlackRock Liquidity Fundsrevenue was the result of a decrease of approximately $2.1 billion in average AUM. Other income increased primarily due to strong sales ofBlackRock Solutionsproducts and services.
Nine months ended September 30, | Variance | ||||||||||||
(Dollar amounts in thousands) | 2004 | 2003 | Amount | % | |||||||||
Mutual funds revenue | |||||||||||||
BlackRock Funds | $ | 53,128 | $ | 50,497 | $ | 2,631 | 5.2 | % | |||||
Closed-end Funds | 52,252 | 36,881 | 15,371 | 41.7 | |||||||||
BlackRock Liquidity Funds | 59,281 | 61,547 | (2,266 | ) | (3.7 | ) | |||||||
Other commingled funds | 839 | 793 | 46 | 5.8 | |||||||||
Total mutual funds revenue | 165,500 | 149,718 | 15,782 | 10.5 | |||||||||
Separate accounts revenue | |||||||||||||
Separate accounts base fees | 270,427 | 230,622 | 39,805 | 17.3 | |||||||||
Separate accounts performance fees | 33,959 | 7,075 | 26,884 | NM | |||||||||
Total separate accounts revenue | 304,386 | 237,697 | 66,689 | 28.1 | |||||||||
Total investment advisory and administration fees | 469,886 | 387,415 | 82,471 | 21.3 | |||||||||
Other income | 66,748 | 49,586 | 17,162 | 34.6 | |||||||||
Total revenue | $ | 536,634 | $ | 437,001 | $ | 99,633 | 22.8 | % | |||||
NM = Not meaningful
- 5 -
BlackRock, Inc.
Third Quarter 2004 Earnings Release
Total expense for the quarter ended September 30, 2004 increased $100.7 million to $193.4 million compared to $92.7 million during the quarter ended September 30, 2003. The increase in expense for the quarter primarily reflects $90.6 million in LTIP-related charges recognized during the third quarter of 2004 as well as increases of $6.0 million in employee compensation and benefits and $3.6 million in general and administration expense. Exclusive of LTIP related charges, total expense for the 2004 third quarter would have increased $10.1 million or 11% from 2003. The rise in employee compensation and benefits is primarily attributable to increased salary and benefits expense of $6.3 million reflecting staffing increases and the grant of restricted stock to employees during the fourth quarter of 2003. The rise in general and administration expense primarily reflects increased professional fees of $1.9 million for legal and accounting services primarily related to mutual fund regulatory inquiries and Sarbanes-Oxley Act compliance activities, increased marketing and promotional costs of $0.5 million, a $0.5 million increase in occupancy primarily due to lease escalations and a $0.3 million rise in foreign currency charges related to the decline of the U.S. dollar.
Three months ended | Variance vs. | |||||||||||||||||||||
September 30, | June 30, 2004 | September 30, 2003 | June 30, 2004 | |||||||||||||||||||
(Dollar amounts in thousands) | 2004 | 2003 | Amount | % | Amount | % | ||||||||||||||||
General and administration expense: | ||||||||||||||||||||||
Marketing and promotional | $ | 7,823 | $ | 7,303 | $ | 9,637 | $ | 520 | 7.1 | % | ($ | 1,814 | ) | (18.8 | %) | |||||||
Occupancy | 6,066 | 5,598 | 5,914 | 468 | 8.4 | 152 | 2.6 | |||||||||||||||
Technology | 4,771 | 4,436 | 4,604 | 335 | 7.6 | 167 | 3.6 | |||||||||||||||
Other general and administration | 10,599 | 8,332 | 11,208 | 2,267 | 27.2 | (609 | ) | (5.4 | ) | |||||||||||||
Total general and administration expense | $ | 29,259 | $ | 25,669 | $ | 31,363 | $ | 3,590 | 14.0 | % | ($ | 2,104 | ) | (6.7 | %) | |||||||
The $72.1 million increase in expense from second quarter of 2004 is primarily due to $90.6 million in LTIP-related charges recognized during the third quarter of 2004. During the three months ended September 30, 2004, LTIP-related charges were partially offset by a decrease in incentive compensation primarily associated with lower alternative investment product performance fees and the recognition of incentive compensation related to the sale of the Company’s interest in Trepp LLC during the second quarter of 2004. In addition, a decline in marketing and promotional costs of $1.8 million was primarily attributable to a closed-end fund launch during the second quarter of 2004.
Total expenses for the nine months ended September 30, 2004 increased $156.2 million to $426.7 million compared to $270.5 million during the nine months ended September 30, 2003. The increase was primarily attributable to $90.6 million in LTIP-related charges recognized during the third quarter of 2004 as well as an increase of $42.5 million, or 25%, in employee compensation and benefits, an increase of $15.7 million, or 21%, in general and administration expense and the recognition of a $6.1 million impairment of an acquired management contract during 2004. Exclusive of LTIP related charges, total expense for the first nine months of 2004 would have increased $65.6 million or 24% from 2003. The rise in employee compensation expense is primarily due to increased incentive compensation of $25.4 million related to alternative investment product performance fees, operating income growth and the gain on the sale of the Company’s interest in Trepp LLC and a $17.5 million rise in salaries and benefits reflecting increased headcount and the grant of restricted stock to employees during the fourth quarter of 2003. General and administration expense rose during the period due to increased professional fees of $5.8 million for legal and accounting services primarily related to mutual fund regulatory inquiries and Sarbanes-Oxley Act compliance activities, a $5.0 million, or 24%, increase in marketing and promotional expense related to the support of closed-end fund launches and to
- 6 -
BlackRock, Inc.
Third Quarter 2004 Earnings Release
support the growth in the Company’s institutional business, a $2.1 million increase in subadvisory fees related to performance fees earned on a collaterized debt obligation during 2004, lease escalations resulting in a $1.0 million increase in occupancy expense and a $0.8 million rise in foreign currency charges related to the decline of the U.S. dollar.
Nine months ended September 30, | Variance | |||||||||||
(Dollar amounts in thousands) | 2004 | 2003 | Amount | % | ||||||||
General and administration expense: | ||||||||||||
Marketing and promotional | $ | 25,663 | $ | 20,679 | $ | 4,984 | 24.1 | % | ||||
Occupancy | 17,633 | 16,611 | 1,022 | 6.2 | ||||||||
Technology | 13,933 | 13,540 | 393 | 2.9 | ||||||||
Other general and administration | 34,692 | 25,414 | 9,278 | 36.5 | ||||||||
Total general and administration expense | $ | 91,921 | $ | 76,244 | $ | 15,677 | 20.6 | % | ||||
Non-operating income for the quarter ended September 30, 2004 decreased $0.3 million as compared to the third quarter of 2003 primarily due to decreased investment income of $1.4 million related to decreased investment balances during the quarter, partially offset by the reversal of interest expense associated with the Company’s obligation to acquire a subsidiary’s minority interest.
During the nine months ended September 30, 2004, non-operating income increased $9.6 million compared to prior year primarily due to the recognition of a $12.9 million gain on the sale of the Company’s interest in Trepp LLC during 2004 partially offset by decreased securities gains and investment income, related to lower investment balances, during 2004.
Outlook
Based on current conditions, which assume no significant changes in economic activity, interest rates or new business momentum, management expects full year 2004 and 2005 diluted earnings per share, as adjusted for PNC LTIP funding requirement, to be in a range of $2.80 to $2.84 and $3.12 to $3.32, respectively. The following table reconciles adjusted diluted earnings per share to the Company’s guidance prior to the decision to commence expensing LTIP and to reported diluted earnings per share.
Outlook | ||||
2004 | 2005 | |||
Diluted earnings per share, excluding LTIP | $2.98 to $3.02 | $3.20 to $3.40 | ||
LTIP charge per diluted share | ($1.00) | ($0.52) | ||
Diluted earnings per share, GAAP basis | $1.98 to $2.02 | $2.68 to $2.88 | ||
PNC LTIP funding obligation per diluted share | $0.82 | $0.44 | ||
Diluted earnings per share, as adjusted for PNC | ||||
LTIP funding requirement | $2.80 to $2.84 | $3.12 to $3.32 | ||
- 7 -
BlackRock, Inc.
Third Quarter 2004 Earnings Release
Please note that guidance is based on current market conditions and is prior to giving effect to the acquisition of SSR, which BlackRock estimated would add $0.16 per diluted share in 2005 before one-time charges of $0.10 per diluted share. We believe we are on schedule to close the transaction in early 2005 and, at this time, remain comfortable with our preliminary guidance on accretion and one-time expenses.
Performance Notes
Past performance is no guarantee of future results.
Mutual fund performance data assumes the reinvestment of dividends and capital gains distributions and reflects the performance of the Institutional Class, with the exception of the BlackRock Funds, Government Income Portfolio, which reflects the performance of the Investor B Shares class. BlackRock waives fees, without which performance would be lower. Investments in BlackRock Funds are neither insured nor guaranteed by the U.S. government. Relative peer group performance is based on quartiles from Lipper Inc. Lipper rankings are based on total returns with dividends and distributions reinvested and do not reflect sales charges. Funds with returns among the top 25% of a peer group of funds with comparable objectives are in the first quartile and funds with returns in the next 25% of a peer group are in the second quartile. Some funds have less than one year of performance.
Fixed Income Portfolios of BlackRock Funds: The Core Bond Total Return and the Managed Income Portfolios are in the Intermediate Investment Grade Debt Lipper peer group. The Intermediate Bond Portfolio is in the Short-Intermediate Investment Grade Debt Lipper peer group. The High Yield Bond Portfolio is in the High Current Yield Lipper peer group and the GNMA Portfolio is in the GNMA Lipper peer group. The Intermediate Government Portfolio is in the Intermediate U.S. Government Lipper peer group and the Government Income Portfolio is in the General U.S. Government Lipper peer group.
Equity Portfolios of BlackRock Funds: The Select Equity and Large Cap Value Equity Portfolios are in the Large Cap Core and Multi-Cap Value Lipper peer groups, respectively. The Index Equity Portfolio is in the S&P 500 Index Objective Lipper peer group. The Mid-Cap Growth Equity and Mid-Cap Value Equity Portfolios are in the Mid Cap Growth and Mid Cap Value Lipper peer groups, respectively. The Balanced Portfolio is in the Balanced Lipper peer group. The U.S. Opportunities Portfolio is in the Mid Cap Core Lipper peer group. The International Equity Portfolio is in the International Multi-Cap Core Lipper peer group. The International Opportunities and Global Science & Technology Opportunities Portfolios are in the International Small/Mid Cap Growth and Science & Technology Lipper peer groups, respectively.
Composites Performance: Results do not reflect the deduction of management/advisory fees and other expenses, which will reduce a client’s return. For example, assuming an annual gross return of 8% and an annual management/advisory fee of 0.25%, the net annualized total return of a composite would be 7.74% over a 5-year period. BlackRock is the source of benchmark data for equity composites.
About BlackRock.BlackRock is one of the largest publicly traded investment management firms in the United States with approximately $323 billion of assets under management at September 30, 2004. BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of equity, fixed income, liquidity and alternative investment products. In addition, BlackRock provides risk management, investment system outsourcing and financial advisory services to a growing number of institutional investors. Clients are served from the Company’s headquarters in New York City, as well as offices in Boston, Edinburgh, Hong Kong, San Francisco, Singapore, Sydney, Tokyo and Wilmington. BlackRock is majority owned by The PNC Financial Services Group, Inc. (NYSE: PNC) and by BlackRock employees. For additional information, please visit the Company’s website at www.blackrock.com.
Forward-Looking Statements. This press release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,”
- 8 -
BlackRock, Inc.
Third Quarter 2004 Earnings Release
“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” or similar expressions.
BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to factors previously disclosed in BlackRock’s Securities and Exchange Commission (the “SEC”) reports and those identified elsewhere in this press release, 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 or divestitures; (7) the unfavorable resolution of legal proceedings; (8) the extent and timing of any share repurchases; (9) the impact, extent and timing of technological changes and the adequacy of intellectual property protection; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or PNC; (11) terrorist activities and international hostilities, which may adversely affect the general economy, financial and capital markets, specific industries, and BlackRock; (12) the ability to attract and retain highly talented professionals; (13) fluctuations in foreign currency exchange rates, which may adversely affect the value of advisory fees earned by BlackRock; (14) the impact of changes to tax legislation and, generally, the tax position of the Company; (15) changes in circumstances affecting the expense recognition of BlackRock’s 2002 Long Term Retention and Incentive Plan; and (16) the closing of the Company’s acquisition of SSRM Holdings, Inc.
BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2003 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.
# # #
- 9 -
TABLE 1
BlackRock, Inc.
Financial Highlights
(Dollar amounts in thousands, except share data)
(unaudited)
Three months ended | Variance vs. | |||||||||||||||||||||||||
September 30, | June 30, | September 30, 2003 | June 30, 2004 | |||||||||||||||||||||||
2004 | 2003 | 2004 | Amount | % | Amount | % | ||||||||||||||||||||
Total revenue | $ | 170,999 | $ | 150,344 | $ | 183,812 | $ | 20,655 | 14 | % | ($12,813 | ) | -7 | % | ||||||||||||
Total expense | $ | 193,375 | $ | 92,700 | $ | 121,231 | $ | 100,675 | 109 | % | $ | 72,144 | 60 | % | ||||||||||||
Operating income (loss) | ($22,376 | ) | $ | 57,644 | $ | 62,581 | ($80,020 | ) | -139 | % | ($84,957 | ) | -136 | % | ||||||||||||
Net income (loss) | ($9,814 | ) | $ | 40,053 | $ | 47,996 | ($49,867 | ) | -125 | % | ($57,810 | ) | -120 | % | ||||||||||||
Diluted earnings (loss) per share | ($0.15 | ) | $ | 0.61 | $ | 0.73 | ($0.76 | ) | -125 | % | ($0.88 | ) | -121 | % | ||||||||||||
Diluted earnings per share, excluding LTIP(a) | $ | 0.72 | $ | 0.61 | $ | 0.73 | $ | 0.11 | 18 | % | ($0.01 | ) | -1 | % | ||||||||||||
Diluted earnings per share, as adjusted(a) | $ | 0.56 | $ | 0.61 | $ | 0.73 | ($0.05 | ) | -8 | % | ($0.17 | ) | -23 | % | ||||||||||||
Average diluted shares outstanding | 63,676,776 | 65,692,272 | 65,766,979 | (2,015,497 | ) | -3 | % | (2,090,203 | ) | -3 | % | |||||||||||||||
Operating margin(b) | 31.8 | % | 40.5 | % | 35.6 | % | ||||||||||||||||||||
Assets under management ($ in millions) | $ | 323,465 | $ | 293,501 | $ | 309,654 | $ | 29,964 | 10 | % | $ | 13,811 | 4 | % | ||||||||||||
Nine months ended | ||||||||||||||||||||||||||
September 30, | Variance | |||||||||||||||||||||||||
2004 | 2003 | Amount | % | |||||||||||||||||||||||
Total revenue | $ | 536,634 | $ | 437,001 | $ | 99,633 | 23 | % | ||||||||||||||||||
Total expense | $ | 426,662 | $ | 270,479 | $ | 156,183 | 58 | % | ||||||||||||||||||
Operating income | $ | 109,972 | $ | 166,522 | ($56,550 | ) | -34 | % | ||||||||||||||||||
Net income | $ | 93,389 | $ | 114,047 | ($20,658 | ) | -18 | % | ||||||||||||||||||
Diluted earnings per share | $ | 1.42 | $ | 1.73 | ($0.31 | ) | -18 | % | ||||||||||||||||||
Diluted earnings per share, excluding LTIP(a) | $ | 2.28 | $ | 1.73 | $ | 0.55 | 32 | % | ||||||||||||||||||
Diluted earnings per share, as adjusted(a) | $ | 2.13 | $ | 1.73 | $ | 0.40 | 23 | % | ||||||||||||||||||
Average diluted shares outstanding | 65,858,552 | 65,918,485 | (59,934 | ) | 0 | % | ||||||||||||||||||||
Operating margin(b) | 36.0 | % | 40.3 | % | ||||||||||||||||||||||
Assets under management ($ in millions) | $ | 323,465 | $ | 293,501 | $ | 29,964 | 10 | % |
10
BlackRock, Inc.
Financial Highlights (continued)
(a) | Diluted earnings per share adjusted to exclude the portion of expenses related to the BlackRock, Inc. 2002 Long-Term Retention and Incentive Plan (“LTIP”) to be funded by The PNC Financial Services Group, Inc. (“PNC”) with a capital contribution of up to 4 million shares of BlackRock common stock. |
This measure is derived from the Company’s consolidated financial statements, as follows:
Three and nine months ended September 30, 2004 | ||||||||
Net income (loss), GAAP basis | ($9,814 | ) | $ | 93,389 | ||||
LTIP expense, net of tax | 57,082 | 57,082 | ||||||
Net income, excluding LTIP | 47,268 | 150,471 | ||||||
BlackRock’s LTIP funding requirement | (10,383 | ) | (10,383 | ) | ||||
Net income, as adjusted for PNC LTIP funding requirement | 36,885 | 140,088 | ||||||
Diluted weighted average shares outstanding, GAAP basis | 63,676,776 | 65,858,552 | ||||||
Antidilutive common stock equivalents by virtue of the Company’s net loss | 2,303,856 | — | ||||||
Diluted weighted average shares outstanding, as adjusted | 65,980,632 | 65,858,552 | ||||||
Diluted earnings (loss) per share, GAAP basis | ($0.15 | ) | $ | 1.42 | ||||
Diluted earnings per share, excluding LTIP | $ | 0.72 | $ | 2.28 | ||||
Diluted earnings per share, as adjusted for PNC LTIP funding requirement | $ | 0.56 | $ | 2.13 | ||||
We have presented diluted earnings per share, excluding LTIP, to provide shareholders with a comparison to the Company’s previous diluted earnings per share estimate of $0.69 to $0.73 for the third quarter of 2004. This measure is comparable to the estimate made by the Company’s management prior to its determination to commence expense recognition for LTIP awards.
We believe that diluted earnings per share, as adjusted for PNC LTIP funding requirement, is an effective indicator of the Company’s profitability. The LTIP expense associated with awards to be met by PNC’s funding requirement have been excluded from diluted earnings per share, as adjusted, because, exclusive of the impact related to Plan participants’ put options, these non-cash charges will not impact BlackRock’s book value.
(b) | Operating income, adjusted for LTIP expense, divided by total revenue less fund administration and servicing costs. Computations for all periods presented include affiliated and non-affiliated 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 | Nine months ended September 30, | |||||||||||||||||||
September 30, | June 30, 2004 | |||||||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||||||
Operating income (loss), GAAP basis | ($22,376 | ) | $ | 57,644 | $ | 62,581 | $ | 109,972 | $ | 166,522 | ||||||||||
Add back: LTIP expense | 90,606 | — | — | 90,606 | — | |||||||||||||||
Less: BlackRock’s LTIP funding requirement | (16,481 | ) | — | — | (16,481 | ) | — | |||||||||||||
Operating income, as adjusted | $ | 51,749 | $ | 57,644 | $ | 62,581 | $ | 184,097 | $ | 166,522 | ||||||||||
Revenue, GAAP basis | 170,999 | 150,344 | 183,812 | 536,634 | 437,001 | |||||||||||||||
Less: fund administration and servicing costs | (8,277 | ) | (7,844 | ) | (8,018 | ) | (24,655 | ) | (23,380 | ) | ||||||||||
Revenue used for operating margin measurement | 162,722 | 142,500 | 175,794 | 511,979 | 413,621 | |||||||||||||||
Operating margin, GAAP basis | -13.1 | % | 38.3 | % | 34.0 | % | 20.5 | % | 38.1 | % | ||||||||||
Operating margin, as reported | 31.8 | % | 40.5 | % | 35.6 | % | 36.0 | % | 40.3 | % | ||||||||||
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.
11
TABLE 2
BlackRock, Inc.
Condensed Consolidated Statements of Income
(Dollar amounts in thousands, except share data)
(unaudited)
Three months ended | % | Nine months ended | % | |||||||||||||||||||
September 30, 2004 | September 30, 2003 | September 30, 2004 | September 30, 2003 | |||||||||||||||||||
Revenue | ||||||||||||||||||||||
Investment advisory and administration fees | ||||||||||||||||||||||
Mutual funds | $ | 54,073 | $ | 52,482 | 3.0 | % | $ | 165,500 | $ | 149,718 | 10.5 | % | ||||||||||
Separate accounts | 93,482 | 80,555 | 16.0 | 304,386 | 237,697 | 28.1 | ||||||||||||||||
Total investment advisory and administration fees | 147,555 | 133,037 | 10.9 | 469,886 | 387,415 | 21.3 | ||||||||||||||||
Other income | 23,444 | 17,307 | 35.5 | 66,748 | 49,586 | 34.6 | ||||||||||||||||
Total revenue | 170,999 | 150,344 | 13.7 | 536,634 | 437,001 | 22.8 | ||||||||||||||||
Expense | ||||||||||||||||||||||
Employee compensation and benefits | 64,950 | 58,956 | 10.2 | 212,637 | 170,161 | 25.0 | ||||||||||||||||
Long-Term Retention and Incentive Plan | 90,606 | — | NM | 90,606 | — | NM | ||||||||||||||||
Fund administration and servicing costs | ||||||||||||||||||||||
Affiliates | 4,227 | 6,621 | (36.2 | ) | 14,243 | 20,250 | (29.7 | ) | ||||||||||||||
Other | 4,050 | 1,223 | 231.2 | 10,412 | 3,130 | 232.7 | ||||||||||||||||
General and administration | 29,259 | 25,669 | 14.0 | 91,921 | 76,244 | 20.6 | ||||||||||||||||
Amortization of intangible assets | 283 | 231 | 22.5 | 746 | 694 | 7.5 | ||||||||||||||||
Impairment of intangible assets | — | — | 0.0 | 6,097 | — | NM | ||||||||||||||||
Total expense | 193,375 | 92,700 | 108.6 | 426,662 | 270,479 | 57.7 | ||||||||||||||||
Operating income (loss) | (22,376 | ) | 57,644 | (138.8 | ) | 109,972 | 166,522 | (34.0 | ) | |||||||||||||
Non-operating income (expense) | ||||||||||||||||||||||
Investment income | 4,717 | 6,086 | (22.5 | ) | 27,652 | 17,848 | 54.9 | |||||||||||||||
Interest expense | 965 | (152 | ) | (734.9 | ) | (669 | ) | (467 | ) | 43.3 | ||||||||||||
5,682 | 5,934 | (4.2 | ) | 26,983 | 17,381 | 55.2 | ||||||||||||||||
Income (loss) before income taxes and minority interest | (16,694 | ) | 63,578 | (126.3 | ) | 136,955 | 183,903 | (25.5 | ) | |||||||||||||
Income taxes | (7,265 | ) | 23,579 | (130.8 | ) | 39,345 | 69,900 | (43.7 | ) | |||||||||||||
Income (loss) before minority interest | (9,429 | ) | 39,999 | (123.6 | ) | 97,610 | 114,003 | (14.4 | ) | |||||||||||||
Minority interest | 385 | (54 | ) | NM | 4,221 | (44 | ) | NM | ||||||||||||||
Net income (loss) | ($9,814 | ) | $ | 40,053 | (124.5 | ) | $ | 93,389 | $ | 114,047 | (18.1 | ) | ||||||||||
Weighted-average shares outstanding | ||||||||||||||||||||||
Basic | 63,676,776 | 64,497,117 | (1.3 | %) | 63,693,281 | 64,858,615 | (1.8 | %) | ||||||||||||||
Diluted | 63,676,776 | 65,692,272 | -3.1 | % | 65,858,552 | 65,918,485 | (0.1 | %) | ||||||||||||||
Earnings (loss) per share | ||||||||||||||||||||||
Basic | ($0.15 | ) | $ | 0.62 | (124.2 | %) | $ | 1.47 | $ | 1.76 | (16.5 | %) | ||||||||||
Diluted | ($0.15 | ) | $ | 0.61 | (124.6 | %) | $ | 1.42 | $ | 1.73 | (17.9 | %) |
NM - Not meaningful
12
TABLE 3
BlackRock, Inc.
Condensed Consolidated Statements of Financial Condition
(Dollar amounts in thousands)
(unaudited)
September 30, 2004 | December 31, 2003 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 379,431 | $ | 315,941 | ||
Accounts receivable | 170,707 | 127,316 | ||||
Investments | 240,513 | 234,923 | ||||
Property and equipment, net | 88,377 | 87,006 | ||||
Intangible assets, net | 184,288 | 192,079 | ||||
Other assets | 13,685 | 9,958 | ||||
Total assets | $ | 1,077,001 | $ | 967,223 | ||
Liabilities, minority interest and stockholders’ equity | ||||||
Accrued compensation | $ | 167,461 | $ | 172,447 | ||
Long-Term Retention and Incentive Plan | 90,606 | — | ||||
Accounts payable and accrued liabilities | 55,959 | 60,098 | ||||
Acquired management contract obligation | 4,810 | 5,736 | ||||
Other liabilities | 14,492 | 14,395 | ||||
Total liabilities | 333,328 | 252,676 | ||||
Minority interest | 8,724 | 1,239 | ||||
Stockholders’ equity | 734,949 | 713,308 | ||||
Total liabilities, minority interest and stockholders’ equity | $ | 1,077,001 | $ | 967,223 | ||
13
TABLE 4
BlackRock, Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
(unaudited)
Nine months ended September 30, | ||||||||
2004 | 2003 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 93,389 | $ | 114,047 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 15,462 | 15,886 | ||||||
Impairment of intangible assets | 6,097 | — | ||||||
Minority interest | 4,221 | (97 | ) | |||||
Stock-based compensation | 9,518 | 5,051 | ||||||
Deferred income taxes | (20,908 | ) | (467 | ) | ||||
Tax benefit from stock-based compensation | 1,690 | 5,146 | ||||||
Net gain on investments | (13,142 | ) | (1,970 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Increase in accounts receivable | (22,998 | ) | (12,619 | ) | ||||
Increase in investments, trading | (10,600 | ) | (21,414 | ) | ||||
Increase in receivable from affiliates | (608 | ) | (2,051 | ) | ||||
Increase in other assets | (952 | ) | (3,992 | ) | ||||
Decrease in accrued compensation | (4,986 | ) | (19,374 | ) | ||||
Increase in Long-Term Retention and Incentive Plan | 90,606 | — | ||||||
(Decrease) increase in accounts payable and accrued liabilities | (4,387 | ) | 15,702 | |||||
Increase in other liabilities | 1,060 | 719 | ||||||
Cash provided by operating activities | 143,462 | 94,567 | ||||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (15,245 | ) | (9,653 | ) | ||||
Purchase of investments | (90,121 | ) | (155,295 | ) | ||||
Sale of investments | 145,737 | 135,806 | ||||||
Deemed cash contribution upon consolidation of VIE | 6,412 | — | ||||||
Consolidation of sponsored investment funds | (43,169 | ) | — | |||||
Acquisitions, net of cash acquired | (74 | ) | (8,918 | ) | ||||
Cash provided by (used in) investing activities | 3,540 | (38,060 | ) | |||||
Cash flows from financing activities | ||||||||
Issuance of class A common stock | — | 623 | ||||||
Dividends paid | (47,685 | ) | (12,834 | ) | ||||
Distributions paid to minority interest holders | (5,794 | ) | — | |||||
Subscriptions to consolidated sponsored investment funds | 5,152 | — | ||||||
Purchase of treasury stock | (48,539 | ) | (62,773 | ) | ||||
Reissuance of treasury stock | 13,325 | 4,421 | ||||||
Acquired management contract obligation payment | (926 | ) | (842 | ) | ||||
Cash used in financing activities | (84,467 | ) | (71,405 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 955 | 1,231 | ||||||
Net increase (decrease) in cash and cash equivalents | 63,490 | (13,667 | ) | |||||
Cash and cash equivalents, beginning of period | 315,941 | 255,234 | ||||||
Cash and cash equivalents, end of period | $ | 379,431 | $ | 241,567 | ||||
14
TABLE 5
BlackRock, Inc.
Assets Under Management
(Dollar amounts in millions)
(unaudited)
September 30, | December 31, 2003 | ||||||||
2004 | 2003 | ||||||||
All Accounts | |||||||||
Fixed income | $ | 235,535 | $ | 201,364 | $ | 214,356 | |||
Liquidity | 67,837 | 73,037 | 74,345 | ||||||
Equity | 12,675 | 12,424 | 13,721 | ||||||
Alternative investment products | 7,418 | 6,676 | 6,934 | ||||||
Total | $ | 323,465 | $ | 293,501 | $ | 309,356 | |||
Separate Accounts | |||||||||
Fixed income | $ | 211,075 | $ | 178,390 | $ | 190,432 | |||
Liquidity | 7,703 | 5,707 | 5,855 | ||||||
Liquidity-Securities lending | 8,636 | 9,996 | 9,925 | ||||||
Equity | 8,129 | 9,143 | 9,443 | ||||||
Alternative investment products | 7,418 | 6,676 | 6,934 | ||||||
Subtotal | 242,961 | 209,912 | 222,589 | ||||||
Mutual Funds | |||||||||
Fixed income | 24,460 | 22,974 | 23,924 | ||||||
Liquidity | 51,498 | 57,334 | 58,565 | ||||||
Equity | 4,546 | 3,281 | 4,278 | ||||||
Subtotal | 80,504 | 83,589 | 86,767 | ||||||
Total | $ | 323,465 | $ | 293,501 | $ | 309,356 | |||
Component Changes in Assets Under Management
(Dollar amounts in millions)
(unaudited)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||
All Accounts | ||||||||||||||
Beginning assets under management | $ | 309,654 | $ | 286,309 | $ | 309,356 | $ | 272,841 | ||||||
Net subscriptions | 7,302 | 6,468 | 6,945 | 10,778 | ||||||||||
Market appreciation | 6,509 | 724 | 7,164 | 9,882 | ||||||||||
Ending assets under management | $ | 323,465 | $ | 293,501 | $ | 323,465 | $ | 293,501 | ||||||
Separate Accounts | ||||||||||||||
Beginning assets under management | $ | 230,845 | $ | 203,677 | $ | 222,589 | $ | 183,513 | ||||||
Net subscriptions | 5,956 | 5,701 | 13,200 | 17,631 | ||||||||||
Market appreciation | 6,160 | 534 | 7,172 | 8,768 | ||||||||||
Ending assets under management | 242,961 | 209,912 | 242,961 | 209,912 | ||||||||||
Mutual Funds | ||||||||||||||
Beginning assets under management | 78,809 | 82,632 | 86,767 | 89,328 | ||||||||||
Net subscriptions (redemptions) | 1,346 | 767 | (6,255 | ) | (6,853 | ) | ||||||||
Market appreciation (depreciation) | 349 | 190 | (8 | ) | 1,114 | |||||||||
Ending assets under management | 80,504 | 83,589 | 80,504 | 83,589 | ||||||||||
Total | $ | 323,465 | $ | 293,501 | $ | 323,465 | $ | 293,501 | ||||||
15
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
2003 | 2004 | Nine months ended September 30, 2004 | ||||||||||||||||||||||
September 30 | December 31 | March 31 | June 30 | September 30 | ||||||||||||||||||||
Separate Accounts | ||||||||||||||||||||||||
Fixed Income | ||||||||||||||||||||||||
Beginning assets under management | $ | 174,480 | $ | 178,390 | $ | 190,432 | $ | 202,055 | $ | 199,762 | $ | 190,432 | ||||||||||||
Net subscriptions | 3,700 | 9,842 | 7,141 | 1,365 | 5,201 | 13,707 | ||||||||||||||||||
Market appreciation (depreciation) | 210 | 2,200 | 4,482 | (3,658 | ) | 6,112 | 6,936 | |||||||||||||||||
Ending assets under management | 178,390 | 190,432 | 202,055 | 199,762 | 211,075 | 211,075 | ||||||||||||||||||
Liquidity | ||||||||||||||||||||||||
Beginning assets under management | 5,366 | 5,707 | 5,855 | 6,304 | 6,896 | 5,855 | ||||||||||||||||||
Net subscriptions | 328 | 135 | 446 | 591 | 787 | 1,824 | ||||||||||||||||||
Market appreciation | 13 | 13 | 3 | 1 | 20 | 24 | ||||||||||||||||||
Ending assets under management | 5,707 | 5,855 | 6,304 | 6,896 | 7,703 | 7,703 | ||||||||||||||||||
Liquidity-Securities lending | ||||||||||||||||||||||||
Beginning assets under management | 8,374 | 9,996 | 9,925 | 8,479 | 8,771 | 9,925 | ||||||||||||||||||
Net subscriptions (redemptions) | 1,622 | (71 | ) | (1,446 | ) | 292 | (135 | ) | (1,289 | ) | ||||||||||||||
Ending assets under management | 9,996 | 9,925 | 8,479 | 8,771 | 8,636 | 8,636 | ||||||||||||||||||
Equity | ||||||||||||||||||||||||
Beginning assets under management | 9,105 | 9,143 | 9,443 | 9,003 | 8,790 | 9,443 | ||||||||||||||||||
Net redemptions | (334 | ) | (1,234 | ) | (684 | ) | (195 | ) | (748 | ) | (1,627 | ) | ||||||||||||
Market appreciation (depreciation) | 372 | 1,534 | 244 | (18 | ) | 87 | 313 | |||||||||||||||||
Ending assets under management | 9,143 | 9,443 | 9,003 | 8,790 | 8,129 | 8,129 | ||||||||||||||||||
Alternative investment products | ||||||||||||||||||||||||
Beginning assets under management | 6,352 | 6,676 | 6,934 | 6,342 | 6,626 | 6,934 | ||||||||||||||||||
Net subscriptions (redemptions) | 385 | 237 | (486 | ) | 220 | 851 | 585 | |||||||||||||||||
Market appreciation (depreciation) | (61 | ) | 21 | (106 | ) | 64 | (59 | ) | (101 | ) | ||||||||||||||
Ending assets under management | 6,676 | 6,934 | 6,342 | 6,626 | 7,418 | 7,418 | ||||||||||||||||||
Total Separate Accounts | ||||||||||||||||||||||||
Beginning assets under management | 203,677 | 209,912 | 222,589 | 232,183 | 230,845 | 222,589 | ||||||||||||||||||
Net subscriptions | 5,701 | 8,909 | 4,971 | 2,273 | 5,956 | 13,200 | ||||||||||||||||||
Market appreciation (depreciation) | 534 | 3,768 | 4,623 | (3,611 | ) | 6,160 | 7,172 | |||||||||||||||||
Ending assets under management | $ | 209,912 | $ | 222,589 | $ | 232,183 | $ | 230,845 | $ | 242,961 | $ | 242,961 | ||||||||||||
Mutual Funds | ||||||||||||||||||||||||
Fixed Income | ||||||||||||||||||||||||
Beginning assets under management | $ | 21,480 | $ | 22,974 | $ | 23,924 | $ | 24,742 | $ | 23,780 | $ | 23,924 | ||||||||||||
Net subscriptions (redemptions) | 1,426 | 977 | 598 | (264 | ) | 270 | 604 | |||||||||||||||||
Market appreciation (depreciation) | 68 | (27 | ) | 220 | (698 | ) | 410 | (68 | ) | |||||||||||||||
Ending assets under management | 22,974 | 23,924 | 24,742 | 23,780 | 24,460 | 24,460 | ||||||||||||||||||
Liquidity | ||||||||||||||||||||||||
Beginning assets under management | 57,845 | 57,334 | 58,565 | 58,986 | 50,276 | 58,565 | ||||||||||||||||||
Net subscriptions (redemptions) | (512 | ) | 1,225 | 420 | (8,710 | ) | 1,222 | (7,068 | ) | |||||||||||||||
Market appreciation | 1 | 6 | 1 | — | — | 1 | ||||||||||||||||||
Ending assets under management | 57,334 | 58,565 | 58,986 | 50,276 | 51,498 | 51,498 | ||||||||||||||||||
Equity | ||||||||||||||||||||||||
Beginning assets under management | 3,307 | 3,281 | 4,278 | 4,761 | 4,753 | 4,278 | ||||||||||||||||||
Net subscriptions (redemptions) | (147 | ) | 579 | 351 | 4 | (146 | ) | 209 | ||||||||||||||||
Market appreciation (depreciation) | 121 | 418 | 132 | (12 | ) | (61 | ) | 59 | ||||||||||||||||
Ending assets under management | 3,281 | 4,278 | 4,761 | 4,753 | 4,546 | 4,546 | ||||||||||||||||||
Total Mutual Funds | ||||||||||||||||||||||||
Beginning assets under management | 82,632 | 83,589 | 86,767 | 88,489 | 78,809 | 86,767 | ||||||||||||||||||
Net subscriptions (redemptions) | 767 | 2,781 | 1,369 | (8,970 | ) | 1,346 | (6,255 | ) | ||||||||||||||||
Market appreciation (depreciation) | 190 | 397 | 353 | (710 | ) | 349 | (8 | ) | ||||||||||||||||
Ending assets under management | $ | 83,589 | $ | 86,767 | $ | 88,489 | $ | 78,809 | $ | 80,504 | $ | 80,504 | ||||||||||||
16
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
2003 | 2004 | Nine months ended September 30, 2004 | |||||||||||||||||||||
September 30 | December 31 | March 31 | June 30 | September 30 | |||||||||||||||||||
Mutual Funds | |||||||||||||||||||||||
BlackRock Funds | |||||||||||||||||||||||
Beginning assets under management | $ | 18,410 | $ | 18,044 | $ | 18,354 | $ | 18,985 | $ | 16,603 | $ | 18,354 | |||||||||||
Net subscriptions (redemptions) | (385 | ) | 57 | 427 | (2,110 | ) | (391 | ) | (2,074 | ) | |||||||||||||
Market appreciation (depreciation) | 19 | 253 | 204 | (272 | ) | 93 | 25 | ||||||||||||||||
Ending assets under management | 18,044 | 18,354 | 18,985 | 16,603 | 16,305 | 16,305 | |||||||||||||||||
BlackRock Global Series | |||||||||||||||||||||||
Beginning assets under management | 589 | 794 | 838 | 1,026 | 1,293 | 838 | |||||||||||||||||
Net subscriptions (redemptions) | 193 | (3 | ) | 181 | 275 | (21 | ) | 435 | |||||||||||||||
Market appreciation (depreciation) | 12 | 47 | 7 | (8 | ) | 27 | 26 | ||||||||||||||||
Ending assets under management | 794 | 838 | 1,026 | 1,293 | 1,299 | 1,299 | |||||||||||||||||
BlackRock Liquidity Funds | |||||||||||||||||||||||
Beginning assets under management | 51,163 | 51,078 | 52,870 | 53,159 | 45,854 | 52,870 | |||||||||||||||||
Net subscriptions (redemptions) | (85 | ) | 1,792 | 289 | (7,305 | ) | 1,233 | (5,783 | ) | ||||||||||||||
Ending assets under management | 51,078 | 52,870 | 53,159 | 45,854 | 47,087 | 47,087 | |||||||||||||||||
Closed End | |||||||||||||||||||||||
Beginning assets under management | 11,723 | 12,920 | 13,961 | 14,552 | 14,233 | 13,961 | |||||||||||||||||
Net subscriptions | 1,038 | 944 | 449 | 111 | 433 | 993 | |||||||||||||||||
Market appreciation (depreciation) | 159 | 97 | 142 | (430 | ) | 229 | (59 | ) | |||||||||||||||
Ending assets under management | 12,920 | 13,961 | 14,552 | 14,233 | 14,895 | 14,895 | |||||||||||||||||
Other Commingled Funds | |||||||||||||||||||||||
Beginning assets under management | 747 | 753 | 744 | 767 | 826 | 744 | |||||||||||||||||
Net subscriptions (redemptions) | 6 | (9 | ) | 23 | 59 | 92 | 174 | ||||||||||||||||
Ending assets under management | 753 | 744 | 767 | 826 | 918 | 918 | |||||||||||||||||
Total Mutual Funds | |||||||||||||||||||||||
Beginning assets under management | 82,632 | 83,589 | 86,767 | 88,489 | 78,809 | 86,767 | |||||||||||||||||
Net subscriptions (redemptions) | 767 | 2,781 | 1,369 | (8,970 | ) | 1,346 | (6,255 | ) | |||||||||||||||
Market appreciation (depreciation) | 190 | 397 | 353 | (710 | ) | 349 | (8 | ) | |||||||||||||||
Ending assets under management | $ | 83,589 | $ | 86,767 | $ | 88,489 | $ | 78,809 | $ | 80,504 | $ | 80,504 | |||||||||||
17