Contact:
Kathleen Baum
212-810-5429
Brian Beades
212-810-5596
invrel@blackrock.com
BlackRock Reports Third Quarter Diluted EPS of $0.92 per Share;
Assets Under Management Rise to $427.8 Billion.
New York, October 19, 2005 - BlackRock, Inc. (NYSE:BLK) today reported net income for the quarter ended September 30, 2005 of $61.1 million, or $0.92 per diluted share. That compares to a net loss of $9.8 million, or $0.15 per diluted share, for the third quarter of 2004, which included an after-tax charge of $57.1 million or $0.87 per diluted share associated with initial expense recognition for the BlackRock, Inc. 2002 Long-Term Retention and Incentive Plan (LTIP). Net income and diluted earnings per share in the third quarter were approximately 15% higher than in the second quarter of 2005 when the firm reported net income of $53.3 million and diluted earnings per share of $0.80. Third quarter earnings were impacted by a number of business factors, including higher performance fees on alternative products, increased non-operating income from investment appreciation (of which $8.2 million was offset by higher compensation costs), and the recognition of over $5 million of expense associated with the launch of a $1 billion closed-end fund.
On an adjusted basis (See Table 1), diluted earnings per share in the third quarter 2005 were $1.03, as compared to $0.56 in the same quarter of 2004, and were 13% above the $0.91 in the second quarter 2005. Diluted earnings per share, as adjusted, exclude the portion of the firm’s LTIP expense to be funded through a capital contribution of BlackRock, Inc. common stock by The PNC Financial Services Group, Inc.
“BlackRock’s third quarter results reflected continued strong new business momentum globally and our ability to capitalize on the increased diversification of our platform. Importantly, investment performance remained competitive in the face of challenging markets, which is a testament to our investment professionals and disciplined processes,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “We are fortunate to have a deep base of talented and dedicated employees, and delivering their capabilities to our clients is ultimately what most differentiates BlackRock. During the quarter, we announced several organizational changes to streamline coordination of our alternatives efforts, strengthen our focus on clients and opportunities outside of the U.S., and better support the growth and evolution of our business. I believe that these enhancements will enable our team to more fully serve our clients, to most effectively capitalize on our substantial opportunities, and to expand our franchise worldwide.”
For the nine months ended September 30, 2005, net income and diluted earnings per share were $161.0 million and $2.41, respectively, compared to $93.4 million and $1.42 earned in the nine months ended September 30, 2004. Net income and diluted earnings per share for the nine months ended September 30, 2005, as adjusted, were $189.0 million and $2.83, respectively, compared to $130.0 million and $1.98 for the nine months ended September 30, 2004 (See Table 1).
Assets under management (AUM) increased by $13.4 billion, or 3%, during the quarter to $427.8 billion at September 30, 2005. Net new business in the third quarter was $10.7 billion, as the firm benefited from inflows in all asset classes and in all client channels. BlackRock Solutions and advisory services continued to achieve strong growth with eight net new assignments added during the quarter. For the twelve months ended September 30, 2005, AUM increased $104.4 billion, or 32%, driven principally by $39.1 billion of net new business and $50.0 billion of assets acquired with SSR Holdings, Inc. (SSR).
BlackRock, Inc.
Third Quarter 2005 Earnings Release
Third Quarter Business Highlights
| | • | | Net new business totaled $10.7 billion in the third quarter, with net inflows across products and client channels globally. Continued strong demand worldwide resulted in net new fundings of $7.1 billion from U.S. investors and $3.6 billion from non-U.S. clients. Flows were favorable in all client channels, including $5.4 billion from pension plans and other tax-exempt investors, $3.0 billion from insurance companies and taxable institutions, $1.4 billion from institutional cash management investors and $871 million from private clients and mutual fund investors. |
| | • | | Fixed income assets increased to $290 billion at September 30, 2005, supported by $6.8 billion in net new business. We benefited from net inflows across products including $2.1 billion in core, $1.9 billion in global and $1.4 billion in targeted duration mandates. New business from U.S. and non-U.S. clients was $4.1 billion and $2.7 billion, respectively, including strong net inflows in all institutional client channels. Investment performance remained competitive, with 94% or more of composites outperforming their benchmarks and two-thirds or more of taxable bond fund assets ranked in the top two Lipper quartiles for the quarter, year-to-date, 1, 3 and 5-year periods ended September 30, 2005. |
| | • | | Cash management (liquidity) AUM increased $1.5 billion to $76.7 billion at September 30, 2005. Net inflows in institutional money market funds and separate accounts were $3.2 billion during the quarter, while securities lending portfolios experienced $1.7 billion of net outflows. Investment performance benefited from portfolio positioning that anticipated continued tightening by the Federal Reserve. For the quarter, year-to-date, 1, 3, and 5-year periods ended September 30, 2005, 98% or more of BlackRock’s institutional money market fund assets were ranked in the top quartile of their Lipper peer groups. |
| | • | | Equity assets ended the quarter at $35.6 billion, up $3.2 billion since second quarter-end. During the quarter, we added $993 million in new closed-end fund assets and had $248 million of net inflows in products other than SSR-related portfolios. We continue to see increased institutional interest in our equity capabilities, including several wins that had not funded by quarter-end. Investment performance remained strong, with over 75% of our institutional composites outperforming their benchmarks and 60% or more of our equity mutual funds ranked in the top two Lipper quartiles for the quarter, year-to-date and 1-year periods ended September 30, 2005. |
| | • | | Alternative investment AUM rose 12% to $25.5 billion at September 30, 2005, with net new business of $1.7 billion across our increasingly diversified product platform. Specifically, we added $925 million in structured products, including the issuance of two new collateralized debt obligations. We also added $460 million in real estate portfolios, driven principally by strong interest in our core real estate equity fund and a new growth and income product. Lastly, we had net inflows of $307 million across our hedge funds and other alternative products. Investment performance was favorable across products, and we continue to benefit from our product development efforts and strong client demand for alternative investments. |
2
BlackRock, Inc.
Third Quarter 2005 Earnings Release
| | • | | We continued to achieve strong growth in ourBlackRock Solutions and related products, adding six new clients and eight net new assignments during the third quarter. These included three net new mandates in investment accounting, which is offered in conjunction with investment management services, and five net new risk management and advisory assignments. In addition, we began implementation on the two system outsourcing mandates added in the second quarter. Strong interest from institutions in the U.S., Europe and Asia is supporting a robust pipeline of opportunities forBlackRock Solutionsglobally. |
| | • | | Since quarter end, $15.7 billion of wins have funded or are to be funded, including $8.4 billion of additional assets to be managed for an existing client. Of the $7.3 billion balance, $5.3 billion was for long-dated portfolios and $2.0 billion was in cash management products. We continue to see significant opportunities to achieve organic growth with competitive performance across a broad array of products supporting a substantial pipeline of searches in process and sustained strong interest in ourBlackRock Solutions and advisory capabilities. |
Total revenue for the quarter ended September 30, 2005 increased $129.8 million, or 76%, to $300.8 million, compared to $171.0 million for the quarter ended September 30, 2004. Separate account revenue, mutual fund revenue and other income increased by $79.3 million, or 85%, $27.8 million, or 51%, and $22.7 million, or 97%, respectively.
The increase in separate account revenue was driven by a $47.2 million, or 51%, increase in separate account base fees from $92.9 million for the quarter ended September 30, 2004 to $140.1 million for the quarter ended September 30, 2005 and a $32.1 million increase in separate account performance fees to $32.7 million for the quarter ended September 30, 2005. Separate account base fees rose as a result of a $40.2 billion increase in AUM related to the January 2005 closing of the SSR acquisition and an increase in AUM, exclusive of the acquisition, of $40.8 billion since September 30, 2004. The increase in separate account performance fees reflected fees on the Company’s equity and fixed income hedge funds and real estate alternative investment products. The increase in mutual fund revenue primarily reflects the merger of SSR’s mutual funds into theBlackRock Funds contributing to a $9.6 billion, or 59%, increase in average AUM for the third quarter of 2005 as well as $2.4 billion of new closed-end funds launched since September 30, 2004. Other income increased $22.7 million, or 97%, to $46.2 million during the quarter ended September 30, 2005 compared to the quarter ended September 30, 2004 primarily due to $8.9 million in property management fees earned on real estate equity accounts assumed in the SSR acquisition, a $7.4 million increase inBlackRock Solutionsproducts and services and $4.4 million of higher distribution fees earned on theBlackRock Funds.
3
BlackRock, Inc.
Third Quarter 2005 Earnings Release
During the third quarter of 2005, total revenue increased approximately $29.4 million, or 11%, as compared to the second quarter of 2005 primarily due to strong organic growth in AUM, increased equity and real estate alternative investment product performance fees and higherBlackRock Solutions revenues.
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| | | Three months ended
| | Variance vs.
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| | | September 30,
| | June 30, 2005
| | September 30, 2004
| | | June 30, 2005
| |
| | | 2005
| | 2004
| | | Amount
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| (Dollar amounts in thousands) | | | | | | | | | | | | | | | | | |
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Mutual fund revenue | | | | | | | | | | | | | | | | | | | | | | |
BlackRock Funds | | $ | 36,784 | | $ | 16,289 | | $ | 34,856 | | $ | 20,495 | | 125.8 | % | | $ | 1,928 | | | 5.5 | % |
Closed-end Funds | | | 23,128 | | | 17,978 | | | 21,095 | | | 5,150 | | 28.6 | | | | 2,033 | | | 9.6 | |
BlackRock Liquidity Funds | | | 21,171 | | | 19,508 | | | 20,310 | | | 1,663 | | 8.5 | | | | 861 | | | 4.2 | |
Other commingled funds | | | 740 | | | 298 | | | 986 | | | 442 | | 148.3 | | | | (246 | ) | | (24.9 | ) |
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Total mutual fund revenue | | | 81,823 | | | 54,073 | | | 77,247 | | | 27,750 | | 51.3 | | | | 4,576 | | | 5.9 | |
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Separate account revenue | | | | | | | | | | | | | | | | | | | | | | |
Separate account base fees | | | 140,148 | | | 92,943 | | | 132,786 | | | 47,205 | | 50.8 | | | | 7,362 | | | 5.5 | |
Separate account performance fees | | | 32,670 | | | 539 | | | 21,438 | | | 32,131 | | NM | | | | 11,232 | | | 52.4 | |
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Total separate account revenue | | | 172,818 | | | 93,482 | | | 154,224 | | | 79,336 | | 84.9 | | | | 18,594 | | | 12.1 | |
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Total investment advisory and administration fees | | | 254,641 | | | 147,555 | | | 231,471 | | | 107,086 | | 72.6 | | | | 23,170 | | | 10.0 | |
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Other income | | | 46,166 | | | 23,444 | | | 39,918 | | | 22,722 | | 96.9 | | | | 6,248 | | | 15.7 | |
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Total revenue | | $ | 300,807 | | $ | 170,999 | | $ | 271,389 | | $ | 129,808 | | 75.9 | % | | $ | 29,418 | | | 10.8 | % |
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4
BlackRock, Inc.
Third Quarter 2005 Earnings Release
Total revenue for the nine months ended September 30, 2005 increased $285.6 million, or 53%, to $822.3 million compared to $536.6 million during the nine months ended September 30, 2004. Separate account revenue increased by $164.5 million, or 54%, mutual fund revenue increased by $63.9 million, or 39%, and other income increased by $57.2 million, or 86%, compared with the nine months ended September 30, 2004. The increase in separate account revenue was driven by a $117.7 million increase in separate account base fees from $270.4 million for the nine months ended September 30, 2004 to $388.2 million for the nine months ended September 30, 2005 and a $46.8 million increase in separate account performance fees to $80.8 million as compared to $34.0 million earned for the same period in 2004. The growth in separate account base fees was due to an $81.0 billion increase in AUM, approximately half of which related to the SSR acquisition. The increase in separate account performance fees primarily reflects positive performance in equity and fixed income hedge funds. The increase in mutual fund revenue primarily includes increases inBlackRock Fundsrevenue and closed-end fund revenue of $47.6 million and $11.9 million, respectively. The rise inBlackRock Fundsrevenue largely reflects the merger of SSR’s mutual funds into theBlackRock Funds contributing to a $7.2 billion, or 40%, increase in average AUM in theBlackRock Fundsduring the period. Closed-end fund revenue increased during the period due to several closed-end fund launches, resulting in a $2.4 billion increase in AUM since September 30, 2004. Other income increased primarily due to $23.3 million in property management fees earned on real estate equity accounts assumed in the SSR acquisition, a $20.3 million increase inBlackRock Solutionsproducts and services and a $9.7 million rise in distribution fees earned on theBlackRock Funds.
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| | | Nine months ended September 30,
| | Variance
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| | | 2005
| | 2004
| | Amount
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| (Dollar amounts in thousands) | | | | | | | | | | | | |
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Mutual funds revenue | | | | | | | | | | | | |
BlackRock Funds | | $ | 100,680 | | $ | 53,128 | | $ | 47,552 | | 89.5 | % |
Closed-end Funds | | | 64,120 | | | 52,252 | | | 11,868 | | 22.7 | |
BlackRock Liquidity Funds | | | 62,707 | | | 59,281 | | | 3,426 | | 5.8 | |
Other commingled funds | | | 1,934 | | | 839 | | | 1,095 | | 130.5 | |
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Total mutual funds revenue | | | 229,441 | | | 165,500 | | | 63,941 | | 38.6 | |
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Separate accounts revenue | | | | | | | | | | | | |
Separate accounts base fees | | | 388,163 | | | 270,427 | | | 117,736 | | 43.5 | |
Separate accounts performance fees | | | 80,764 | | | 33,959 | | | 46,805 | | 137.8 | |
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Total separate accounts revenue | | | 468,927 | | | 304,386 | | | 164,541 | | 54.1 | |
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Total investment advisory and administration fees | | | 698,368 | | | 469,886 | | | 228,482 | | 48.6 | |
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Other income | | | 123,910 | | | 66,748 | | | 57,162 | | 85.6 | |
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Total revenue | | $ | 822,278 | | $ | 536,634 | | $ | 285,644 | | 53.2 | % |
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5
BlackRock, Inc.
Third Quarter 2005 Earnings Release
Total expense for the quarter ended September 30, 2005 increased $27.8 million, or 14%, to $221.1 million, compared to $193.4 million for the quarter ended September 30, 2004. The increase in total expense for the quarter primarily reflects a $22.3 million increase in general and administration expense to $51.5 million and a $3.7 million rise in fund administration and servicing costs to $12.0 million. Compensation and benefits expense decreased by $0.5 million for the quarter ended September 30, 2005 including a $75.6 million decline in LTIP expense. During the third quarter of 2004, management determined that full vesting of LTIP awards was probable and recorded a charge of $90.6 million reflecting LTIP expense from the beginning of the LTIP’s service period, January 1, 2002 through September 30, 2004, including related payroll taxes. Offsetting the decreased LTIP expense was higher base compensation and benefit costs of $33.1 million due to increased staffing levels resulting from the SSR acquisition and business growth and increased incentive compensation expense of $34.4 million associated with higher performance fees and increased operating profits. General and administration expense rose during the period primarily due to a $12.3 million increase in marketing and promotional expenses related to the Company’s mutual fund businesses and expanded institutional marketing efforts, particularly overseas, a rise in occupancy expense of $3.6 million reflecting the Company’s January 2005 occupancy of an additional 88,500 square feet in New York, costs assumed with the SSR acquisition as well as an increase in market data services of $2.4 million to support higher AUM levels and increased trading activities. Fund administration and servicing costs increased by $3.7 million, or 45%, in the third quarter of 2005 primarily as a result of increased networking and servicing fees onBlackRock Funds.
The $31.6 million, or 17%, increase in total expense compared to the second quarter of 2005 is primarily due to increased compensation and benefit costs of $24.1 million, increased marketing and promotional expense of $4.3 million largely due to a new closed-end fund launch and higher shareholder servicing expenses of $1.6 million for theBlackRock Fundsand closed-end funds. The rise in compensation and benefit costs was primarily attributable to a $12.4 million increase in incentive compensation expense due to higher alternative product performance fees and an $8.2 million increase in deferred compensation expense associated with market appreciation on employee investments in the Company’s deferred compensation plans.
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| | | September 30,
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| | September 30, 2004
| | | June 30, 2005
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| | | 2005
| | 2004
| | 2005
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General and administration expense: | | | | | | | | | | | | | | | | | | | | | |
Marketing and promotional | | $ | 20,097 | | $ | 7,823 | | $ | 15,756 | | $ | 12,274 | | 156.9 | % | | $ | 4,341 | | 27.6 | % |
Occupancy | | | 9,631 | | | 6,066 | | | 9,094 | | | 3,565 | | 58.8 | | | | 537 | | 5.9 | |
Technology | | | 5,591 | | | 4,771 | | | 5,393 | | | 820 | | 17.2 | | | | 198 | | 3.7 | |
Other general and administration | | | 16,205 | | | 10,599 | | | 16,154 | | | 5,606 | | 52.9 | | | | 51 | | 0.3 | |
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Total general and administration expense | | $ | 51,524 | | $ | 29,259 | | $ | 46,397 | | $ | 22,265 | | 76.1 | % | | $ | 5,127 | | 11.1 | % |
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6
BlackRock, Inc.
Third Quarter 2005 Earnings Release
Total expenses for the nine months ended September 30, 2005 increased $167.5 million, or 39%, to $594.1 million compared to $426.7 million for the nine months ended September 30, 2004. The increase was primarily attributable to an increase of $109.8 million, or 36%, in employee compensation and benefits, an increase of $52.2 million, or 57%, in general and administration expense and a $6.9 million, or 28%, increase in fund administration and servicing costs. The rise in employee compensation and benefits was primarily attributable to a $90.0 million increase in base compensation and benefits as a result of higher staffing levels associated with the SSR acquisition and business growth, a $59.0 million increase in incentive compensation expense attributable to operating income growth and higher performance fees earned on the Company’s alternative investment products, partially offset by a $46.3 million decrease in LTIP costs. General and administration expense rose during the period primarily due to a $24.3 million increase in marketing and promotional costs, a rise in occupancy expense of $8.7 million, and an increase of $5.4 million in market data services resulting from higher trading volumes. The rise in marketing and promotion costs was largely attributable to a $13.3 million increase in mutual fund distribution expenses and a $6.2 million increase in travel and entertainment costs due to the SSR acquisition and expanded international marketing activity. Fund administration and servicing costs increased by $6.9 million largely as a result of increased networking and servicing fees onBlackRock Funds.
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| | | Nine months ended September 30,
| | Variance
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| | 2004
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| (Dollar amounts in thousands) | | | | | | | | | | | | |
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General and administration expense: | | | | | | | | | | | | |
Marketing and promotional | | $ | 49,978 | | $ | 25,663 | | $ | 24,315 | | 94.7 | % |
Occupancy | | | 26,312 | | | 17,633 | | | 8,679 | | 49.2 | |
Technology | | | 16,874 | | | 13,933 | | | 2,941 | | 21.1 | |
Other general and administration | | | 50,925 | | | 34,692 | | | 16,233 | | 46.8 | |
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Total general and administration expense | | $ | 144,089 | | $ | 91,921 | | $ | 52,168 | | 56.8 | % |
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Non-operating income for the quarter and nine months ended September 30, 2005 increased $13.7 million and $4.2 million, respectively, versus the comparative periods in 2004 due to market appreciation on Company investments and employee investments in the firm’s deferred compensation plans and increased security gains in 2005, partially offset by interest expense associated with borrowings used to finance the SSR acquisition in 2005. Included in non-operating income for the nine months ended September 30, 2004 was a $13.0 million gain realized on the Company’s sale of its interest in Trepp LLC. During the third quarter of 2005, non-operating income increased $15.5 million compared to the second quarter of 2005, primarily due to higher investment appreciation on employee investments in the Company’s deferred compensation plans.
During the third quarter of 2005, the Company continued to make open market acquisitions of its common stock under a two million share repurchase program. The Company purchased approximately 472,000 shares during the quarter for a total of $40.2 million and is authorized to purchase an additional 181,000 shares as market conditions permit.
As a result of the SSR acquisition, BlackRock significantly increased both the number and the diversity of products on which performance fees can be earned. Currently, a number of products, particularly in the energy and real estate sectors, have the potential to generate substantial performance fees in the fourth quarter of 2005. The ultimate amount and timing of the realization of such fees will be affected
7
BlackRock, Inc.
Third Quarter 2005 Earnings Release
by investment performance in these products during the remainder of 2005. In addition, the Company is currently marketing a new closed-end fund which could result in the recognition of substantial launch costs in the fourth quarter.
Performance Notes
Past performance is no guarantee of future results.
Mutual fund performance data is net of fees and expenses, 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 A Shares class. BlackRock waives fees, without which performance would be lower. Investments in BlackRock Funds and BlackRock Liquidity 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, Core PLUS Total Return, Intermediate PLUS Bond and the Managed Income Portfolios are in the Intermediate Investment Grade Debt Lipper peer group. The Low Duration Bond and Enhanced Income Portfolios are in the Short 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 Government Income Portfolio is in the General U.S. Government Lipper peer group. The Intermediate Government Bond Portfolio is in the Intermediate U.S. Government Lipper peer group. The Inflation Protected Bond Portfolio is in the Treasury Inflation Protected Securities Lipper peer group and the GNMA Portfolio is in the GNMA Lipper peer group.
Equity Portfolios of BlackRock Funds: The Investment Trust Portfolio is in the Large Cap Core Lipper peer group. The Index Equity Portfolio is in the S&P 500 Index Objective Lipper peer group. The Asset Allocation Portfolio is in the Flexible Portfolio Lipper peer group. The Small/Mid-Cap Growth and Mid-Cap Value Equity Portfolios are in the Small Cap Growth and Mid-Cap Value Lipper peer groups, respectively. The Large Cap Value and Small Cap Value Equity Portfolios are in the Multi-Cap Value and Small Cap Value Lipper peer groups, respectively. The Small Cap Core and Small Cap Growth Equity Portfolios are in the Small Cap Core Lipper peer group. The Health Sciences Portfolio is in the Health/Biotechnology Lipper peer group. The International Opportunities and Legacy Portfolios are in the International Small/Mid-Cap Growth and Large Cap Growth Lipper peer groups, respectively. The Global Resources and All-Cap Global Resources Portfolios are in the Natural Resources Lipper peer group. The U.S. Opportunities and Global Science and Technology Portfolios are in the Mid-Cap Core and Science and Technology Lipper peer groups, respectively.
BlackRock Liquidity Funds: TempFund and TempCash are in the Institutional Money Market Lipper peer group, and Federal Trust Fund and FedFund are in the Institutional U.S. Government Money Market Lipper peer group. T-Fund and Treasury Trust Fund are in the Institutional U.S. Treasury Lipper peer group. MuniCash and MuniFund are in the Institutional Tax-Exempt Money Market Lipper peer group. California Money Fund and New York Money Fund are in the California Tax-Exempt and New York Tax-Exempt Money Market Lipper peer groups, respectively.
Composites Performance: Investment performance does not reflect the deduction of advisory fees and other expenses, which will reduce performance results and the return to investors. All performance results assume reinvestment of dividends, interest and/or capital gains. BlackRock is the source of benchmark data for composites. Some BlackRock composites have less than one year of performance.
8
BlackRock, Inc.
Third Quarter 2005 Earnings Release
About BlackRock
BlackRock is one of the largest publicly traded investment management firms in the United States with approximately $427.8 billion of assets under management at September 30, 2005. 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, Chicago, 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,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions. The information contained on our website is not a part of this press release.
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 (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; and (14) the impact of changes to tax legislation and, generally, the tax position of the Company.
BlackRock’s Annual Report on Form 10-K for the year ended December 31, 2004 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, 2004
| | | June 30, 2005
| |
| | | 2005
| | | 2004
| | | 2005
| | | Amount
| | %
| | | Amount
| | | %
| |
Total revenue | | $ | 300,807 | | | $ | 170,999 | | | $ | 271,389 | | | $ | 129,808 | | 76 | % | | $ | 29,418 | | | 11 | % |
Total expense | | $ | 221,138 | | | $ | 193,375 | | | $ | 189,494 | | | $ | 27,763 | | 14 | % | | $ | 31,644 | | | 17 | % |
Operating income (loss) | | $ | 79,669 | | | | ($22,376 | ) | | $ | 81,895 | | | $ | 102,045 | | NM | | | | ($2,226 | ) | | -3 | % |
Operating income, as adjusted(b) | | $ | 100,160 | | | $ | 52,016 | | | $ | 94,333 | | | $ | 48,144 | | 93 | % | | $ | 5,827 | | | 6 | % |
Net income (loss) | | $ | 61,119 | | | | ($9,814 | ) | | $ | 53,335 | | | $ | 70,933 | | NM | | | $ | 7,784 | | | 15 | % |
Net income, as adjusted(a) | | $ | 68,876 | | | $ | 36,885 | | | $ | 60,565 | | | $ | 31,991 | | 87 | % | | $ | 8,311 | | | 14 | % |
Diluted earnings (loss) per share | | $ | 0.92 | | | | ($0.15 | ) | | $ | 0.80 | | | $ | 1.07 | | NM | | | $ | 0.12 | | | 15 | % |
Diluted earnings per share, as adjusted(a) | | $ | 1.03 | | | $ | 0.56 | | | $ | 0.91 | | | $ | 0.47 | | 84 | % | | $ | 0.12 | | | 13 | % |
Average diluted shares outstanding | | | 66,714,797 | | | | 63,676,776 | | | | 66,796,087 | | | | 3,038,021 | | 5 | % | | | (81,290 | ) | | 0 | % |
Operating margin | | | 26.5 | % | | | -13.1 | % | | | 30.2 | % | | | | | | | | | | | | | |
Operating margin, as adjusted (b) | | | 35.5 | % | | | 32.0 | % | | | 37.0 | % | | | | | | | | | | | | | |
Assets under management ($ in millions) | | $ | 427,837 | | | $ | 323,465 | | | $ | 414,411 | | | $ | 104,372 | | 32 | % | | $ | 13,426 | | | 3 | % |
| | | | | | | | | | | | | | |
| | | Nine months ended
| | | | | | |
| | | September 30,
| | | Variance
| |
| | | 2005
| | | 2004
| | | Amount
| | %
| |
Total revenue | | $ | 822,278 | | | $ | 536,634 | | | $ | 285,644 | | 53 | % |
Total expense | | $ | 594,133 | | | $ | 426,662 | | | $ | 167,471 | | 39 | % |
Operating income | | $ | 228,145 | | | $ | 109,972 | | | $ | 118,173 | | 107 | % |
Operating income, as adjusted(b) | | $ | 283,781 | | | $ | 193,500 | | | $ | 90,281 | | 47 | % |
Net income | | $ | 160,990 | | | $ | 93,389 | | | $ | 67,601 | | 72 | % |
Net income, as adjusted(a) | | $ | 188,960 | | | $ | 129,997 | | | $ | 58,963 | | 45 | % |
Diluted earnings per share | | $ | 2.41 | | | $ | 1.42 | | | $ | 0.99 | | 70 | % |
Diluted earnings per share, as adjusted(a) | | $ | 2.83 | | | $ | 1.98 | | | $ | 0.85 | | 43 | % |
Average diluted shares outstanding | | | 66,809,706 | | | | 65,858,552 | | | | 951,154 | | 1 | % |
Operating margin | | | 27.7 | % | | | 20.5 | % | | | | | | |
Operating margin, as adjusted(b) | | | 36.7 | % | | | 37.8 | % | | | | | | |
Assets under management ($ in millions) | | $ | 427,837 | | | $ | 323,465 | | | $ | 104,372 | | 32 | % |
10
BlackRock, Inc.
Financial Highlights (continued)
| (a) | While BlackRock reports its financial results using accounting principles generally accepted in the United States of America (GAAP), management believes that evaluating its ongoing operating results may not be as useful if investors are limited to reviewing only GAAP financial measures. Management reviews non-GAAP financial measures to assess on-going operations, and for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock's profitability and financial performance over time. Nevertheless, BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. |
Net income, as adjusted, and diluted earnings per share, as adjusted have been derived from BlackRock's consolidated financial statements, as follows:
| | | | | | | | | | | | | | | | | | | |
| | | Three months ended
| | | Nine months ended | |
| | | September 30,
| | | June 30, 2005
| | | September 30,
| |
| | | 2005
| | 2004
| | | | 2005
| | | 2004
| |
Net income, GAAP basis | | $ | 61,119 | | | ($9,814 | ) | | $ | 53,335 | | | $ | 160,990 | | | $ | 93,389 | |
Add back: PNC’s LTIP funding requirement | | | 7,757 | | | 46,699 | | | | 7,716 | | | | 22,866 | | | | 46,699 | |
SSR acquisition costs | | | — | | | — | | | | — | | | | 5,590 | | | | — | |
Release of reserves related to the New York State tax audit | | | — | | | — | | | | — | | | | — | | | | (8,519 | ) |
Impact of Trepp sale | | | — | | | — | | | | (486 | ) | | | (486 | ) | | | (1,572 | ) |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net income, as adjusted | | | 68,876 | | | 36,885 | | | | 60,565 | | | | 188,960 | | | | 129,997 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Diluted earnings per share, GAAP basis | | $ | 0.92 | | | ($0.15 | ) | | $ | 0.80 | | | $ | 2.41 | | | $ | 1.42 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Diluted earnings per share, as adjusted | | $ | 1.03 | | $ | 0.56 | | | $ | 0.91 | | | $ | 2.83 | | | $ | 1.98 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
We believe that net income, as adjusted, and diluted earnings per share, as adjusted, are effective measurements of BlackRock’s historical profitability and financial performance. The LTIP expense associated with awards to be met by PNC’s funding requirement has been excluded from net income, as adjusted, and diluted earnings per share, as adjusted, because these changes do not result in an economic cost to the Company and, exclusive of the impact related to LTIP participants’ put options, these charges will not impact BlackRock’s book value. SSR acquisition costs consist of certain compensation costs and professional fees. Compensation reflected in this amount represents direct incentives related to alternative product performance fees generated in 2004 by SSR employees, assumed in conjunction with the acquisition and settled by BlackRock with no future service requirement. Net income, as adjusted, and diluted earnings per share, as adjusted, exclude this amount because it does not relate to the current period’s operations. Professional fees reflected in this amount, which have been deemed non-recurring by management, have been excluded from net income, as adjusted, and diluted earnings per share, as adjusted, to help ensure the comparability of this information to prior reporting periods.
| (b) | Operating margin, as adjusted, equals operating income, as adjusted, divided by revenue used for operating margin measurement, as indicated in the table below. 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,
| | | June 30, 2005
| | | September 30,
| |
| | | 2005
| | | 2004
| | | | 2005
| | | 2004
| |
Operating income, GAAP basis | | $ | 79,669 | | | ($22,376 | ) | | $ | 81,895 | | | $ | 228,145 | | | $ | 109,972 | |
Add back: PNC LTIP funding obligation | | | 12,313 | | | 74,125 | | | | 12,247 | | | | 36,296 | | | | 74,125 | |
Appreciation on assets related to deferred compensation plans | | | 8,178 | | | 267 | | | | 191 | | | | 10,467 | | | | 2,399 | |
Trepp bonus | | | — | | | — | | | | — | | | | — | | | | 7,004 | |
SSR acquisition costs | | | — | | | — | | | | — | | | | 8,873 | | | | — | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
|
Operating income, as adjusted | | | 100,160 | | | 52,016 | | | | 94,333 | | | | 283,781 | | | | 193,500 | |
Revenue, as reported | | | 300,807 | | | 170,999 | | | | 271,389 | | | | 822,278 | | | | 536,634 | |
Less: fund administration and servicing costs | | | (11,997 | ) | | (8,277 | ) | | | (10,426 | ) | | | (31,531 | ) | | | (24,655 | ) |
Reimbursable property management compensation | | | (6,485 | ) | | — | | | | (6,239 | ) | | | (16,783 | ) | | | — | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
|
Revenue used for operating margin measurement | | | 282,325 | | | 162,722 | | | | 254,724 | | | | 773,964 | | | | 511,979 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
|
Operating margin, GAAP basis | | | 26.5 | % | | -13.1 | % | | | 30.2 | % | | | 27.7 | % | | | 20.5 | % |
| | |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
|
Operating margin, as adjusted | | | 35.5 | % | | 32.0 | % | | | 37.0 | % | | | 36.7 | % | | | 37.8 | % |
| | |
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|
We believe that operating income, as adjusted, and operating margin, as adjusted, are effective indicators of management’s ability to, and useful to management in deciding how to, effectively employ BlackRock’s resources. As such, management believes that operating income, as adjusted, and operating margin, as adjusted, provide useful disclosure to investors. Compensation expense associated with appreciation on assets related to BlackRock’s deferred compensation plans has been excluded because investment returns on these assets reported in non-operating income results in a nominal impact on net income. Reimbursable property management compensation represents compensation and benefits paid to certain BlackRock Realty Advisors, Inc. (“Realty”) personnel. These employees are retained on Realty’s payroll when properties are acquired by Realty's clients. The related compensation and benefits are fully reimbursed by Realty’s clients and have been excluded from revenue used for operating margin meaurement, as adjusted, because they bear no economic cost to BlackRock. Fund administration and servicing costs have been excluded from revenue used for operating margin measurement, as adjusted, because these costs 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,
2005
| | | September 30,
2004
| | | %
Change
| | | September 30,
2005
| | | September 30,
2004
| | | %
Change
| |
| Revenue | | | | | | | | | | | | | | | | | | | | | | |
Investment advisory and administration fees | | | | | | | | | | | | | | | | | | | | | | |
Mutual funds | | $ | 81,823 | | | $ | 54,073 | | | 51.3 | % | | $ | 229,441 | | | $ | 165,500 | | | 38.6 | % |
Separate accounts | | | 172,818 | | | | 93,482 | | | 84.9 | | | | 468,927 | | | | 304,386 | | | 54.1 | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
Total investment advisory and administration fees | | | 254,641 | | | | 147,555 | | | 72.6 | | | | 698,368 | | | | 469,886 | | | 48.6 | |
Other income | | | 46,166 | | | | 23,444 | | | 96.9 | | | | 123,910 | | | | 66,748 | | | 85.6 | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
Total revenue | | | 300,807 | | | | 170,999 | | | 75.9 | | | | 822,278 | | | | 536,634 | | | 53.2 | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
| Expense | | | | | | | | | | | | | | | | | | | | | | |
Employee compensation and benefits | | | 155,077 | | | | 155,556 | | | (0.3 | ) | | | 413,036 | | | | 303,243 | | | 36.2 | |
Fund administration and servicing costs | | | | | | | | | | | | | | | | | | | | | | |
Affiliates | | | 4,250 | | | | 4,227 | | | 0.5 | | | | 12,362 | | | | 14,243 | | | (13.2 | ) |
Other | | | 7,747 | | | | 4,050 | | | 91.3 | | | | 19,169 | | | | 10,412 | | | 84.1 | |
General and administration | | | 51,524 | | | | 29,259 | | | 76.1 | | | | 144,089 | | | | 91,921 | | | 56.8 | |
Amortization of intangible assets | | | 2,540 | | | | 283 | | | NM | | | | 5,477 | | | | 746 | | | NM | |
Impairment of intangible assets | | | — | | | | — | | | NM | | | | — | | | | 6,097 | | | (100.0 | ) |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
Total expense | | | 221,138 | | | | 193,375 | | | 14.4 | | | | 594,133 | | | | 426,662 | | | 39.3 | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
Operating income (loss) | | | 79,669 | | | | (22,376 | ) | | NM | | | | 228,145 | | | | 109,972 | | | 107.5 | |
| Non-operating income (expense) | | | | | | | | | | | | | | | | | | | | | | |
Investment income | | | 21,439 | | | | 4,717 | | | 354.5 | | | | 37,252 | | | | 27,652 | | | 34.7 | |
Interest (expense) income | | | (2,008 | ) | | | 965 | | | (308.1 | ) | | | (6,084 | ) | | | (669 | ) | | NM | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
| | | | 19,431 | | | | 5,682 | | | 242.0 | | | | 31,168 | | | | 26,983 | | | 15.5 | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
Income (loss) before income taxes and minority interest | | | 99,100 | | | | (16,694 | ) | | NM | | | | 259,313 | | | | 136,955 | | | 89.3 | |
Income taxes | | | 37,077 | | | | (7,265 | ) | | NM | | | | 95,732 | | | | 39,345 | | | 143.3 | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
Income (loss) before minority interest | | | 62,023 | | | | (9,429 | ) | | NM | | | | 163,581 | | | | 97,610 | | | 67.6 | |
Minority interest | | | 904 | | | | 385 | | | 134.8 | | | | 2,591 | | | | 4,221 | | | (38.6 | ) |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
Net income (loss) | | $ | 61,119 | | | | ($9,814 | ) | | NM | | | $ | 160,990 | | | $ | 93,389 | | | 72.4 | |
| | |
|
|
| |
|
|
| | | | |
|
|
| |
|
|
| | | |
| Weighted-average shares outstanding | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 64,087,871 | | | | 63,676,776 | | | 0.6 | % | | | 64,243,408 | | | | 63,693,281 | | | 0.9 | % |
Diluted | | | 66,714,797 | | | | 63,676,776 | | | 4.8 | % | | | 66,809,706 | | | | 65,858,552 | | | 1.4 | % |
| Earnings (loss) per share | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.95 | | | | ($0.15 | ) | | NM | | | $ | 2.51 | | | $ | 1.47 | | | 70.7 | % |
Diluted | | $ | 0.92 | | | | ($0.15 | ) | | NM | | | $ | 2.41 | | | $ | 1.42 | | | 69.7 | % |
NM - Not meaningful
12
TABLE 3
BlackRock, Inc.
Condensed Consolidated Statements of Financial Condition
(Dollar amounts in thousands)
(unaudited)
| | | | | | |
| | | September 30,
2005
| | December 31,
2004
|
| Assets | | | | | | |
Cash and cash equivalents | | $ | 396,514 | | $ | 457,673 |
Accounts receivable | | | 307,598 | | | 165,342 |
Investments | | | 277,632 | | | 227,497 |
Property and equipment, net | | | 123,687 | | | 93,701 |
Intangible assets, net | | | 491,710 | | | 184,110 |
Deferred mutual fund commissions | | | 12,555 | | | — |
Other assets | | | 63,408 | | | 16,912 |
| | |
|
| |
|
|
Total assets | | $ | 1,673,104 | | $ | 1,145,235 |
| | |
|
| |
|
|
| | |
| Liabilities, minority interest and stockholders’ equity | | | | | | |
Accounts payable and accrued liabilities | | $ | 80,478 | | $ | 30,817 |
Accrued compensation | | | 409,992 | | | 311,351 |
Purchase price contingencies | | | 29,775 | | | — |
Acquired management contract obligation | | | 3,791 | | | 4,810 |
Long term borrowings | | | 250,000 | | | — |
Other liabilities | | | 22,292 | | | 12,736 |
| | |
|
| |
|
|
Total liabilities | | | 796,328 | | | 359,714 |
| Minority interest | | | 9,586 | | | 17,169 |
| Stockholders’ equity | | | 867,190 | | | 768,352 |
| | |
|
| |
|
|
| Total liabilities, minority interest and stockholders’ equity | | $ | 1,673,104 | | $ | 1,145,235 |
| | |
|
| |
|
|
13
TABLE 4
BlackRock, Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
(unaudited)
| | | | | | | | |
| | | Nine months ended
September 30,
| |
| | | 2005
| | | 2004
| |
| Cash flows from operating activities | | | | | | | | |
Net income | | $ | 160,990 | | | $ | 93,389 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 22,414 | | | | 15,462 | |
Impairment of intangible assets | | | — | | | | 6,097 | |
Minority interest | | | 2,591 | | | | 4,221 | |
Stock-based compensation | | | 52,963 | | | | 9,518 | |
Deferred income taxes | | | (2,609 | ) | | | (20,908 | ) |
Tax benefit from stock-based compensation | | | 4,040 | | | | 1,690 | |
Net gain on investments | | | (15,580 | ) | | | (13,142 | ) |
Amortization of bond issuance costs | | | 700 | | | | — | |
Amortization of deferred mutual fund commissions | | | 8,269 | | | | — | |
Changes in operating assets and liabilities: | | | | | | | | |
Increase in accounts receivable | | | (101,340 | ) | | | (22,998 | ) |
Increase in investments, trading | | | (7,927 | ) | | | (10,600 | ) |
Increase in receivable from affiliates | | | (23,391 | ) | | | (608 | ) |
Increase in other assets | | | (8,478 | ) | | | (952 | ) |
Increase in accrued compensation | | | 4,105 | | | | 85,620 | |
Decrease in accounts payable and accrued liabilities | | | (34,318 | ) | | | (4,387 | ) |
Increase in other liabilities | | | 7,756 | | | | 1,060 | |
| | |
|
|
| |
|
|
|
Cash provided by operating activities | | | 70,185 | | | | 143,462 | |
| | |
|
|
| |
|
|
|
| Cash flows from investing activities | | | | | | | | |
Purchase of property and equipment | | | (42,930 | ) | | | (15,245 | ) |
Purchase of investments | | | (12,799 | ) | | | (90,121 | ) |
Sale of investments | | | 44,168 | | | | 145,737 | |
Sale of real estate held for sale | | | 112,184 | | | | — | |
Deemed cash contribution upon consolidation of VIE | | | — | | | | 6,412 | |
Consolidation of sponsored investment funds | | | — | | | | (43,169 | ) |
Acquisitions, net of cash acquired | | | (247,220 | ) | | | (74 | ) |
| | |
|
|
| |
|
|
|
Cash (used in) provided by investing activities | | | (146,597 | ) | | | 3,540 | |
| | |
|
|
| |
|
|
|
| Cash flows from financing activities | | | | | | | | |
Borrowings, received, net of issuance costs | | | 395,000 | | | | — | |
Principal repayment of borrowings | | | (150,000 | ) | | | — | |
Repayment of short term borrowings | | | (111,840 | ) | | | — | |
Subscriptions to consolidated sponsored investment funds | | | 7,996 | | | | 5,152 | |
Decrease in cash due to deconsolidated sponsored investment fund | | | (5,509 | ) | | | — | |
Distributions paid to minority interest holders | | | — | | | | (5,794 | ) |
Dividends paid | | | (57,507 | ) | | | (47,685 | ) |
Reissuance of treasury stock | | | 13,268 | | | | 13,325 | |
Purchase of treasury stock | | | (72,775 | ) | | | (48,539 | ) |
Issuance of class A common stock | | | 706 | | | | — | |
Acquired management contract obligation payment | | | (1,019 | ) | | | (926 | ) |
| | |
|
|
| |
|
|
|
Cash provided by (used in) financing activities | | | 18,320 | | | | (84,467 | ) |
| | |
|
|
| |
|
|
|
Effect of exchange rate changes on cash and cash equivalents | | | (3,067 | ) | | | 955 | |
Net (decrease) increase in cash and cash equivalents | | | (61,159 | ) | | | 63,490 | |
Cash and cash equivalents, beginning of period | | | 457,673 | | | | 315,941 | |
| | |
|
|
| |
|
|
|
Cash and cash equivalents, end of period | | $ | 396,514 | | | $ | 379,431 | |
| | |
|
|
| |
|
|
|
14
TABLE 5
BlackRock, Inc.
Assets Under Management
(Dollar amounts in millions)
(unaudited)
| | | | | | | | | |
| | | September 30,
| | December 31, 2004
|
| | | 2005
| | 2004
| |
| All Accounts | | | | | | | | | |
Fixed income | | $ | 290,041 | | $ | 235,535 | | $ | 240,709 |
Cash Management | | | 76,713 | | | 67,837 | | | 78,057 |
Equity | | | 35,600 | | | 12,675 | | | 14,792 |
Alternative investment products | | | 25,483 | | | 7,418 | | | 8,202 |
| | |
|
| |
|
| |
|
|
| Total | | $ | 427,837 | | $ | 323,465 | | $ | 341,760 |
| | |
|
| |
|
| |
|
|
| Separate Accounts | | | | | | | | | |
Fixed income | | $ | 264,704 | | $ | 211,075 | | $ | 216,070 |
Cash Management | | | 8,357 | | | 7,703 | | | 7,360 |
Cash Management-Securities lending | | | 5,653 | | | 8,636 | | | 6,898 |
Equity | | | 19,789 | | | 8,129 | | | 9,397 |
Alternative investment products | | | 25,483 | | | 7,418 | | | 8,202 |
| | |
|
| |
|
| |
|
|
Subtotal | | | 323,986 | | | 242,961 | | | 247,927 |
| | |
|
| |
|
| |
|
|
| Mutual Funds | | | | | | | | | |
Fixed income | | | 25,337 | | | 24,460 | | | 24,639 |
Cash Management | | | 62,703 | | | 51,498 | | | 63,799 |
Equity | | | 15,811 | | | 4,546 | | | 5,395 |
| | |
|
| |
|
| |
|
|
Subtotal | | | 103,851 | | | 80,504 | | | 93,833 |
| | |
|
| |
|
| |
|
|
| Total | | $ | 427,837 | | $ | 323,465 | | $ | 341,760 |
| | |
|
| |
|
| |
|
|
Component Changes in Assets Under Management
(Dollar amounts in millions)
(unaudited)
| | | | | | | | | | | | | | |
| | | Three months ended
September 30,
| | Nine months ended
September 30,
| |
| | | 2005
| | 2004
| | 2005
| | | 2004
| |
| All Accounts | | | | | | | | | | | | | | |
Beginning assets under management | | $ | 414,411 | | $ | 309,654 | | $ | 341,760 | | | $ | 309,356 | |
Net subscriptions | | | 10,747 | | | 7,302 | | | 26,411 | | | | 6,945 | |
Acquisitions | | | — | | | — | | | 49,966 | | | | — | |
Market appreciation | | | 2,679 | | | 6,509 | | | 9,700 | | | | 7,164 | |
| | |
|
| |
|
| |
|
|
| |
|
|
|
Ending assets under management | | $ | 427,837 | | $ | 323,465 | | $ | 427,837 | | | $ | 323,465 | |
| | |
|
| |
|
| |
|
|
| |
|
|
|
| Separate Accounts | | | | | | | | | | | | | | |
Beginning assets under management | | $ | 315,236 | | $ | 230,845 | | $ | 247,927 | | | $ | 222,589 | |
Net subscriptions | | | 6,818 | | | 5,956 | | | 27,409 | | | | 13,200 | |
Acquisitions | | | — | | | — | | | 40,181 | | | | — | |
Market appreciation | | | 1,932 | | | 6,160 | | | 8,469 | | | | 7,172 | |
| | |
|
| |
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 323,986 | | | 242,961 | | | 323,986 | | | | 242,961 | |
| | |
|
| |
|
| |
|
|
| |
|
|
|
| Mutual Funds | | | | | | | | | | | | | | |
Beginning assets under management | | | 99,175 | | | 78,809 | | | 93,833 | | | | 86,767 | |
Net subscriptions (redemptions) | | | 3,929 | | | 1,346 | | | (998 | ) | | | (6,255 | ) |
Acquisitions | | | — | | | — | | | 9,785 | | | | — | |
Market appreciation (depreciation) | | | 747 | | | 349 | | | 1,231 | | | | (8 | ) |
| | |
|
| |
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 103,851 | | | 80,504 | | | 103,851 | | | | 80,504 | |
| | |
|
| |
|
| |
|
|
| |
|
|
|
| Total | | $ | 427,837 | | $ | 323,465 | | $ | 427,837 | | | $ | 323,465 | |
| | |
|
| |
|
| |
|
|
| |
|
|
|
15
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
| | | | |
| | | 2004
| | | 2005
| | | Nine months ended | |
| | | September 30
| | | December 31
| | | March 31
| | | June 30
| | | September 30
| | | September 30, 2005
| |
| Separate Accounts | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed Income | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | $ | 199,762 | | | $ | 211,075 | | | $ | 216,070 | | | $ | 239,912 | | | $ | 258,411 | | | $ | 216,070 | |
Net subscriptions | | | 5,201 | | | | 1,121 | | | | 4,906 | | | | 12,855 | | | | 6,891 | | | | 24,652 | |
Acquisitions | | | — | | | | — | | | | 20,005 | | | | — | | | | — | | | | 20,005 | |
Market appreciation (depreciation) | | | 6,112 | | | | 3,874 | | | | (1,069 | ) | | | 5,644 | | | | (598 | ) | | | 3,977 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 211,075 | | | | 216,070 | | | | 239,912 | | | | 258,411 | | | | 264,704 | | | | 264,704 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Cash Management | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 6,896 | | | | 7,703 | | | | 7,360 | | | | 7,307 | | | | 8,164 | | | | 7,360 | |
Net subscriptions (redemptions) | | | 787 | | | | (362 | ) | | | (632 | ) | | | 809 | | | | 153 | | | | 330 | |
Acquisitions | | | — | | | | — | | | | 558 | | | | — | | | | — | | | | 558 | |
Market appreciation | | | 20 | | | | 19 | | | | 21 | | | | 48 | | | | 40 | | | | 109 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 7,703 | | | | 7,360 | | | | 7,307 | | | | 8,164 | | | | 8,357 | | | | 8,357 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Cash Management-Securities lending | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 8,771 | | | | 8,636 | | | | 6,898 | | | | 6,791 | | | | 7,368 | | | | 6,898 | |
Net subscriptions (redemptions) | | | (135 | ) | | | (1,738 | ) | | | (107 | ) | | | 577 | | | | (1,715 | ) | | | (1,245 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 8,636 | | | | 6,898 | | | | 6,791 | | | | 7,368 | | | | 5,653 | | | | 5,653 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Equity | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 8,790 | | | | 8,129 | | | | 9,397 | | | | 18,610 | | | | 18,525 | | | | 9,397 | |
Net subscriptions (redemptions) | | | (748 | ) | | | 31 | | | | (107 | ) | | | (376 | ) | | | (203 | ) | | | (686 | ) |
Acquisitions | | | — | | | | — | | | | 9,061 | | | | — | | | | — | | | | 9,061 | |
Market appreciation | | | 87 | | | | 1,237 | | | | 259 | | | | 291 | | | | 1,467 | | | �� | 2,017 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 8,129 | | | | 9,397 | | | | 18,610 | | | | 18,525 | | | | 19,789 | | | | 19,789 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Alternative investment products | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 6,626 | | | | 7,418 | | | | 8,202 | | | | 19,566 | | | | 22,768 | | | | 8,202 | |
Net subscriptions | | | 851 | | | | 666 | | | | 462 | | | | 2,204 | | | | 1,692 | | | | 4,358 | |
Acquisitions | | | — | | | | — | | | | 10,557 | | | | — | | | | — | | | | 10,557 | |
Market appreciation (depreciation) | | | (59 | ) | | | 118 | | | | 345 | | | | 998 | | | | 1,023 | | | | 2,366 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 7,418 | | | | 8,202 | | | | 19,566 | | | | 22,768 | | | | 25,483 | | | | 25,483 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Total Separate Accounts | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 230,845 | | | | 242,961 | | | | 247,927 | | | | 292,186 | | | | 315,236 | | | | 247,927 | |
Net subscriptions (redemptions) | | | 5,956 | | | | (282 | ) | | | 4,522 | | | | 16,069 | | | | 6,818 | | | | 27,409 | |
Acquisitions | | | — | | | | — | | | | 40,181 | | | | — | | | | — | | | | 40,181 | |
Market appreciation (depreciation) | | | 6,160 | | | | 5,248 | | | | (444 | ) | | | 6,981 | | | | 1,932 | | | | 8,469 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | $ | 242,961 | | | $ | 247,927 | | | $ | 292,186 | | | $ | 315,236 | | | $ | 323,986 | | | $ | 323,986 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | | | |
| Mutual Funds | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed Income | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | $ | 23,780 | | | $ | 24,460 | | | $ | 24,639 | | | $ | 25,379 | | | $ | 25,671 | | | $ | 24,639 | |
Net subscriptions (redemptions) | | | 270 | | | | 197 | | | | (139 | ) | | | 68 | | | | (82 | ) | | | (153 | ) |
Acquisitions | | | — | | | | — | | | | 989 | | | | 89 | | | | — | | | | 1,078 | |
Market appreciation (depreciation) | | | 410 | | | | (18 | ) | | | (110 | ) | | | 135 | | | | (252 | ) | | | (227 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 24,460 | | | | 24,639 | | | | 25,379 | | | | 25,671 | | | | 25,337 | | | | 25,337 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Cash Management | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 50,276 | | | | 51,498 | | | | 63,799 | | | | 59,985 | | | | 59,651 | | | | 63,799 | |
Net subscriptions (redemptions) | | | 1,222 | | | | 12,309 | | | | (4,023 | ) | | | (334 | ) | | | 3,052 | | | | (1,305 | ) |
Acquisitions | | | — | | | | — | | | | 210 | | | | — | | | | — | | | | 210 | |
Market depreciation | | | — | | | | (8 | ) | | | (1 | ) | | | — | | | | — | | | | (1 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 51,498 | | | | 63,799 | | | | 59,985 | | | | 59,651 | | | | 62,703 | | | | 62,703 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Equity | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 4,753 | | | | 4,546 | | | | 5,395 | | | | 13,778 | | | | 13,853 | | | | 5,395 | |
Net subscriptions (redemptions) | | | (146 | ) | | | 455 | | | | (255 | ) | | | (244 | ) | | | 959 | | | | 460 | |
Acquisitions | | | — | | | | — | | | | 8,497 | | | | — | | | | — | | | | 8,497 | |
Market appreciation (depreciation) | | | (61 | ) | | | 394 | | | | 141 | | | | 319 | | | | 999 | | | | 1,459 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 4,546 | | | | 5,395 | | | | 13,778 | | | | 13,853 | | | | 15,811 | | | | 15,811 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Total Mutual Funds | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 78,809 | | | | 80,504 | | | | 93,833 | | | | 99,142 | | | | 99,175 | | | | 93,833 | |
Net subscriptions (redemptions) | | | 1,346 | | | | 12,961 | | | | (4,417 | ) | | | (510 | ) | | | 3,929 | | | | (998 | ) |
Acquisitions | | | — | | | | — | | | | 9,696 | | | | 89 | | | | — | | | | 9,785 | |
Market appreciation | | | 349 | | | | 368 | | | | 30 | | | | 454 | | | | 747 | | | | 1,231 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | $ | 80,504 | | | $ | 93,833 | | | $ | 99,142 | | | $ | 99,175 | | | $ | 103,851 | | | $ | 103,851 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
16
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2004
| | | 2005
| | | Nine months ended | |
| | | September 30
| | | December 31
| | | March 31
| | | June 30
| | | September 30
| | | September 30, 2005
| |
| Mutual Funds | | | | | | | | | | | | | | | | | | | | | | | | |
| BlackRock Funds | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | $ | 16,603 | | | $ | 16,305 | | | $ | 16,705 | | | $ | 25,755 | | | $ | 25,598 | | | $ | 16,705 | |
Net subscriptions (redemptions) | | | (391 | ) | | | 60 | | | | (430 | ) | | | (549 | ) | | | (122 | ) | | | (1,101 | ) |
Acquisitions | | | — | | | | — | | | | 9,476 | | | | 89 | | | | — | | | | 9,565 | |
Market appreciation | | | 93 | | | | 340 | | | | 4 | | | | 303 | | | | 728 | | | | 1,035 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 16,305 | | | | 16,705 | | | | 25,755 | | | | 25,598 | | | | 26,204 | | | | 26,204 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| BlackRock Global Series | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 1,293 | | | | 1,299 | | | | 1,223 | | | | 1,115 | | | | 1,023 | | | | 1,223 | |
Net subscriptions (redemptions) | | | (21 | ) | | | (117 | ) | | | (104 | ) | | | (92 | ) | | | 69 | | | | (127 | ) |
Market appreciation (depreciation) | | | 27 | | | | 41 | | | | (4 | ) | | | — | | | | 1 | | | | (3 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 1,299 | | | | 1,223 | | | | 1,115 | | | | 1,023 | | | | 1,093 | | | | 1,093 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| BlackRock Liquidity Funds | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 45,854 | | | | 47,087 | | | | 58,453 | | | | 53,864 | | | | 53,229 | | | | 58,453 | |
Net subscriptions (redemptions) | | | 1,233 | | | | 11,374 | | | | (4,589 | ) | | | (635 | ) | | | 2,921 | | | | (2,303 | ) |
Market depreciation | | | — | | | | (8 | ) | | | — | | | | — | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 47,087 | | | | 58,453 | | | | 53,864 | | | | 53,229 | | | | 56,150 | | | | 56,150 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Closed End | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 14,233 | | | | 14,895 | | | | 15,410 | | | | 15,835 | | | | 16,270 | | | | 15,410 | |
Net subscriptions | | | 433 | | | | 520 | | | | 175 | | | | 284 | | | | 993 | | | | 1,452 | |
Acquisitions | | | — | | | | — | | | | 220 | | | | — | | | | — | | | | 220 | |
Market appreciation (depreciation) | | | 229 | | | | (5 | ) | | | 30 | | | | 151 | | | | 18 | | | | 199 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 14,895 | | | | 15,410 | | | | 15,835 | | | | 16,270 | | | | 17,281 | | | | 17,281 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Other Commingled Funds | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 826 | | | | 918 | | | | 2,042 | | | | 2,573 | | | | 3,055 | | | | 2,042 | |
Net subscriptions | | | 92 | | | | 1,124 | | | | 531 | | | | 482 | | | | 68 | | | | 1,081 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Ending assets under management | | | 918 | | | | 2,042 | | | | 2,573 | | | | 3,055 | | | | 3,123 | | | | 3,123 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Total Mutual Funds | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning assets under management | | | 78,809 | | | | 80,504 | | | | 93,833 | | | | 99,142 | | | | 99,175 | | | | 93,833 | |
Net subscriptions (redemptions) | | | 1,346 | | | | 12,961 | | | | (4,417 | ) | | | (510 | ) | | | 3,929 | | | | (998 | ) |
Acquisitions | | | — | | | | — | | | | 9,696 | | | | 89 | | | | — | | | | 9,785 | |
Market appreciation | | | 349 | | | | 368 | | | | 30 | | | | 454 | | | | 747 | | | | 1,231 | |
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Ending assets under management | | $ | 80,504 | | | $ | 93,833 | | | $ | 99,142 | | | $ | 99,175 | | | $ | 103,851 | | | $ | 103,851 | |
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