<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- -------------------------
Commission file number 001-15305
BlackRock, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-038-0803
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
345 Park Avenue, New York, NY 10154
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(212) 754-5560
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------- --------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of November 8, 1999, there were 9,000,000 shares of the registrant's
class A common stock issued and outstanding and 54,864,382 shares of the
registrant's class B common stock issued and outstanding.
1
<PAGE>
BlackRock, Inc.
Index to Form 10-Q
Part I
FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Statements of Financial Condition 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 23
List of Exhibits
2
<PAGE>
BlackRock, Inc.
Consolidated Statements of Financial Condition
(Dollar amounts in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
------------------ ----------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 158,519 $ 113,450
Accounts receivable
Advisory and administration fees 59,514 47,611
BlackRock Asset Investors (BAI) -- 58,599
Investments (cost: $2,686 and $2,349, respectively) 2,494 2,515
Property and equipment, net 18,684 12,252
Goodwill (net of accumulated amortization
of $44,201 and $36,962, respectively) 196,671 203,910
Receivable from affiliate 1,434 446
Other assets 6,100 2,001
----------------- ----------------
Total assets $ 443,416 $ 440,784
================== ================
Liabilities and stockholders' equity
Note and loan to affiliates $ 153,200 $ 197,000
Accrued compensation
Employees 67,261 65,523
BAI incentive compensation 36,916 44,806
Accounts payable and accrued liabilities
Affiliates 27,865 16,478
Other 7,039 7,627
Accrued interest payable to affiliates 176 1,175
Other liabilities 2,552 1,984
------------------ ----------------
Total liabilities 295,009 334,593
================== ================
Stockholders' equity
Class B common stock, $0.01par value - authorized 100,000,000
and 110,000,000 shares; outstanding 54,864,382 and 54,807,482,
respectively 549 549
Additional paid-in capital 54,795 52,556
Retained earnings 95,494 53,286
Unearned compensation (2,239) --
Accumulated other comprehensive loss, net (192) --
Treasury stock, at cost, 0 shares and 56,900 shares, respectively -- (200)
------------------ ----------------
Total stockholders' equity 148,407 106,191
------------------ ----------------
Total liabilities and stockholders' equity $ 443,416 $ 440,784
================== ================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BlackRock,Inc.
Consolidated Statements of Income
(Dollar amounts in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------------------- ----------------------------
1999 1998 1999 1998
----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Revenue
Investment advisory and administration fees
Mutual funds $61,665 $47,671 $161,302 $115,073
Separate accounts 39,141 25,720 110,475 68,096
BAI (5,018) 1,037 (7,072) 16,798
Other income
Affiliate 1,250 750 3,750 2,250
Other 3,069 3,393 11,744 7,606
----------- ------------ ----------- ---------------
Total revenue 100,107 78,571 280,199 209,823
----------- ------------ ----------- ---------------
Expense
Employee compensation and benefits 35,172 26,452 101,135 77,296
BAI incentive compensation (3,894) 432 (5,387) 10,764
Fund administration and servicing costs -
affiliates 23,723 19,715 60,058 35,370
General and administration
Affiliate 1,234 1,155 3,965 3,493
Other 10,801 8,827 31,904 23,123
Amortization of goodwill 2,413 2,413 7,240 7,240
----------- ------------ ----------- ---------------
Total expense 69,449 58,994 198,915 157,286
----------- ------------ ----------- ---------------
Operating income 30,658 19,577 81,284 52,537
Non-operating income (expense)
Interest and dividend income 918 416 2,211 1,481
Interest expense - affiliates (3,116) (3,208) (10,237) (10,789)
----------- ------------ ----------- ---------------
Total non-operating income (expense) (2,198) (2,792) (8,026) (9,308)
----------- ------------ ----------- ---------------
Income before income taxes 28,460 16,785 73,258 43,229
Income taxes 12,237 7,995 31,050 20,591
----------- ------------ ----------- ---------------
Net income $16,223 $8,790 $42,208 $22,638
=========== ============ =========== ===============
Earnings per share
Basic $0.30 $0.16 $0.77 $0.43
Diluted $0.30 $0.16 $0.77 $0.43
Weighted-average shares outstanding
Basic 54,675,353 54,807,482 54,762,955 53,068,810
Diluted 54,850,506 54,982,635 54,938,108 53,243,963
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BlackRock, Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30
----------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net income $42,208 $22,638
Adjustments to reconcile net income to net cash provided from (used in)
operating activities:
Depreciation and amortization 13,745 9,438
Discount on issuance of restricted stock - 1,737
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 46,696 (17,236)
Decrease (increase) in receivable from affiliate (988) 1,632
(Increase) in other assets (4,099) (334)
Increase (decrease) in accrued compensation (6,152) 8,060
Increase in accounts payable and accrued liabilities 10,799 8,787
(Decrease) in accrued interest payable to affiliates (999) (1,364)
Increase (decrease) in other liabilities 568 (150)
---------------- ---------------
Cash provided from operating activities 101,778 33,208
Cash flows from investing activities
Purchase of property and equipment (12,938) (5,133)
(Purchase) sale of investments (171) 1,907
---------------- ---------------
Cash used by investing activities (13,109) (3,226)
Cash flows from financing activities
Net repayment of note and loan to affiliates (43,800) (95,504)
Issuance of restricted stock - 34,214
Capital contribution from PNC Bank, N.A. - 2,063
Purchase of treasury stock (550) (200)
Reissuance of treasury stock 750 -
Dividend of intercompany allocations - (1,634)
Dividends to PNC Bank, N.A. - (12,300)
---------------- ---------------
Cash used in financing activities (43,600) (73,361)
---------------- ---------------
Net increase (decrease) in cash and cash equivalents 45,069 (43,379)
Cash and cash equivalents, beginning of period 113,450 69,085
---------------- ---------------
Cash and cash equivalents, end of period $158,519 $25,706
================ ===============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
BlackRock, Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except share data)
(unaudited)
1. Significant Accounting Policies
Basis of Presentation
The consolidated interim financial statements of BlackRock, Inc. and
subsidiaries ("BlackRock" or the "Company") included herein have been prepared
in accordance with generally accepted accounting principles for interim
financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. These consolidated
financial statements are unaudited and should be read in conjunction with the
audited consolidated financial statements included in the prospectus, dated
October 1, 1999, for the offering of class A common stock of BlackRock, filed
with the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act of 1933 (the "Prospectus"). In the opinion of management, the
consolidated financial statements reflect all adjustments, which are of a normal
recurring nature, necessary for a fair presentation of financial position,
results of operations and cash flows of BlackRock for the interim periods
presented and are not necessarily indicative of a full year's results.
In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the amounts reported in the
financial statements. Actual results could differ from those estimates.
Investments
Investments consist principally of shares of affiliated registered
investment companies and are stated at quoted market values. These securities
are classified as available for sale. The securities are carried at fair value
with net unrealized gains and losses reflected in accumulated other
comprehensive loss, net in the consolidated statements of financial condition.
Property and Equipment
Property and equipment is recorded at cost less accumulated depreciation.
Depreciation generally is provided on the straight-line method over an estimated
useful life ranging from three to seven years. Leasehold improvements are
amortized using the straight-line method over their estimated useful lives or
lease terms, whichever is shorter.
Software Costs
In 1999, the Company adopted Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP 98-1 requires the capitalization of certain costs incurred in
connection with developing or obtaining software for internal use. Qualifying
software costs of approximately $3.8 million have been capitalized through
September 30, 1999 and are being amortized over an estimated useful life of
three years.
6
<PAGE>
1. Significant Accounting Policies (continued)
Recent Accounting Pronouncements
Derivative Instruments and Hedging Activities
In 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes standards for
recognizing and establishing fair value for derivative financial instruments.
SFAS No. 133, as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No. 133," is required to be adopted for fiscal years beginning after
June 15, 2000. The Company did not enter into any derivative instruments or
hedging activities for the periods covered under the consolidated financial
statements. The adoption of SFAS No. 133, as amended by SFAS No. 137, is not
expected to have a material impact on the Company's results of operations or
financial position.
2. BlackRock Asset Investors
BlackRock Financial Management, Inc., a wholly owned subsidiary of
BlackRock, is an investment advisor to BlackRock Asset Investors ("BAI"), a
closed-end investment company. In 1997, BAI's Board of Trustees and shareholders
adopted a plan of liquidation which was completed on September 27, 1999.
3. Stock Reclassification
On September 30, 1999, the Company effected a 275:1 stock split by
reclassifying each share of common stock issued into 275 shares of class B
common stock (the "Stock Reclassification"). The Stock Reclassification has been
retroactively restated in the consolidated financial statements.
4. Treasury Stock Sale
On September 30, 1999, BlackRock reissued 213,474 shares of class B common
stock, held in treasury, to key employees in the form of restricted stock. These
shares were sold at a discount to fair market value of $2.2 million which will
be expensed on a straight-line basis over the five-year vesting period. The
discount was recorded as additional paid-in capital and unearned compensation in
the consolidated statements of financial condition. The proceeds from the sale
of treasury stock approximated $750 thousand.
7
<PAGE>
5. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
--------------------------------------------------------------
1999 1998 1999 1998
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Net Income $ 16,223 $ 8,790 $ 42,208 $ 22,638
--------------- ------------ -------------- ------------
Basic weighted-average shares
outstanding 54,675,353 54,807,482 54,762,955 53,068,810
Diluted shares from forward sales 175,153 175,153 175,153 175,153
--------------- ------------ -------------- ------------
Diluted weighted-average shares
outstanding 54,850,506 54,982,635 54,938,108 53,243,963
=============== ============ ============== ============
Basic earnings per share $ 0.30 $ 0.16 $ 0.77 $ 0.43
=============== ============ ============== ============
Diluted earnings per share $ 0.30 $ 0.16 $ 0.77 $ 0.43
=============== ============ ============== ============
</TABLE>
Net income per common share for 1999 and 1998 was computed using the
weighted-average number of common and common equivalent shares outstanding after
reflecting the Stock Reclassification. Common equivalent shares from stock
options are excluded from the computation if their effect is antidilutive,
except that, pursuant to the Securities and Exchange Commission Staff Accounting
Bulletins 98, "Earnings per share," common and common equivalent shares issued
at prices below the public offering price during the twelve months immediately
preceding the initial filing date have been included in the calculation as if
they were outstanding for all periods presented using the treasury stock method
and the initial public offering price of $14 per share.
6. Comprehensive Income
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
-------------------------------------------------
1999 1998 1999 1998
------------ -------- ----------- ----------
<S> <C> <C> <C> <C>
Net Income $16,223 $8,790 $42,208 $22,638
Accumulated other comprehensive loss:
Unrealized loss from investments, net (94) - (192) -
------------ ---------- ------------- -----------
Comprehensive income $16,129 $8,790 $42,016 $22,638
============ ========== ============= ===========
</TABLE>
8
<PAGE>
7. Subsequent Events
Initial Public Offering
On October 1, 1999, BlackRock issued 9 million shares of class A common
stock to the public at an initial price of $14 per share (the "Offering"). The
proceeds from the Offering, net of underwriters' discount and estimated offering
expenses, totaled approximately $115 million. These proceeds were used to
retire a portion of BlackRock's revolving line of credit with PNC Bank, N.A.
("PNC Bank") on October 7, 1999.
Stock Award and Incentive Plans
Effective October 1, 1999, the Board of Directors of BlackRock adopted the
1999 Stock Award and Incentive Plan (the "Award Plan"). A maximum of six
percent of the total shares of common stock outstanding have been reserved for
issuance under the Award Plan. On October 1, 1999, options to purchase
approximately 1.1 million shares of class A common stock at $14 per share were
issued to eligible employees. These options vest ratably over three years.
On October 1, 1999, approximately $19.8 million of deferred incentive
compensation was converted into approximately 1.5 million shares of class A
common stock in connection with the BlackRock, Inc. Long-Term Deferred
Compensation Plan. The excess of the fair market value over the $13.06
conversion price of each share resulted in additional compensation expense of
$1.4 million. The compensation expense will be recorded over the applicable
vesting periods through 2004.
Tax Disaffiliation Agreement
Effective October 1, 1999, PNC Bank Corp. ("PNC") and BlackRock entered
into a tax disaffiliation agreement (the "Tax Disaffiliation Agreement") that
sets forth each party's rights and obligations with respect to income tax
payments and refunds for periods before and after the completion of the Offering
and addresses related matters such as the filing of tax returns and the conduct
of audits or other proceedings involving claims made by taxing authorities.
Prior to October 1, 1999, BlackRock was included in the consolidated,
combined, or unitary income tax returns with PNC and/or certain of its
subsidiaries, including PNC Asset Management Inc. Under the Tax Disaffiliation
Agreement, PNC or PNC Asset Management Inc. will be responsible for preparing
and filing all consolidated, combined and unitary income tax returns.
For periods beginning on October 1, 1999 and thereafter, BlackRock will
file its own consolidated federal income tax return. BlackRock may file
separate state and municipal income tax returns or may be included in state
and/or municipal income tax returns with one or more PNC subsidiaries on a
combined or unitary basis. If BlackRock is included in a group's combined or
unitary state or municipal income tax filing with PNC subsidiaries, BlackRock's
share of the liability generally will be based upon an allocation to BlackRock
of a percentage of the total tax liability based upon BlackRock's level of
activity in such state or municipality.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
BlackRock, Inc. and subsidiaries ("BlackRock" or the "Company") was formed in
1998 as a result of PNC Bank Corp.'s ("PNC") decision to substantially
consolidate its asset management businesses under the BlackRock brand name and
management team. Prior to this consolidation, PNC provided the fixed income,
liquidity and equity advisory services now under BlackRock through various legal
entities utilizing separate brand names.
The consolidated financial statements of BlackRock reflect the "carved out"
historical operating results of the asset management businesses of PNC that were
consolidated under BlackRock in 1998 as if the combined operations had been a
separate entity prior to the formation of BlackRock. The following table
summarizes BlackRock's operating performance for the three and nine month
periods ended September 30, 1999 and 1998.
BlackRock, Inc.
Financial Highlights
(Dollar amounts in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30
----------------------------------------
1999 1998 Change
--------------------- ---------------- ---------
<S> <C> <C> <C>
Operating revenue $100,107 $78,571 27.4%
Operating expense 69,449 58,994 17.7
Operating income 30,658 19,577 56.6
Net income 16,223 8,790 84.6
Diluted earnings per share 0.30 0.16 87.5
Pro-forma diluted earnings per share (a) 0.27 0.15 80.0
Diluted cash earnings per share (b) 0.34 0.20 70.0
Pro-forma diluted cash earnings per share (a) (b) $0.31 $0.19 63.2
Diluted weighted-average shares outstanding 54,850,506 54,982,635 (0.2)
EBITDA (c) $35,867 $23,213 54.5
Operating margin (d) 39.0% 32.8%
</TABLE>
<TABLE>
<CAPTION>
Nine months ended
September 30
----------------------------------------
1999 1998 Change
--------------------- ---------------- ---------
<S> <C> <C> <C>
Operating revenue $280,199 $209,823 33.5%
Operating expense 198,915 157,286 26.5
Operating income 81,284 52,537 54.7
Net income 42,208 22,638 86.4
Diluted earnings per share 0.77 0.43 79.1
Pro-forma diluted earnings per share (a) 0.71 0.42 69.0
Diluted cash earnings per share (b) 0.90 0.56 60.7
Pro-forma diluted cash earnings per share (a) (b) $0.83 $0.54 53.7
Diluted weighted-average shares outstanding 54,938,108 53,243,963 3.2
EBITDA (c) $97,240 $63,456 53.2
Operating margin (d) 36.5% 29.5%
</TABLE>
(a) Based on adjusting net income to reflect the after-tax interest expense
benefit of retiring $115 million of debt (net offering proceeds) with
weighted-average common shares increased by 9 million.
(b) Net income plus goodwill amortization for the period divided by
weighted-average shares outstanding.
(footnotes continued on next page)
10
<PAGE>
(footnotes continued from previous page)
(c) "EBITDA" represents earnings before interest expense, income taxes,
depreciation, amortization and extraordinary items. BlackRock believes
EBITDA may be useful to investors as an indicator of its ability to service
debt and to meet working capital requirements. EBITDA, as calculated by the
Company, may not be consistent with computations of EBITDA by other
companies. EBITDA is not a measure of financial performance under generally
accepted accounting principles and should not be considered as an
alternative to net income as a measure of operating performance or to cash
flows from operating activities as a measure of liquidity.
(d) Operating income, excluding BAI, divided by operating revenue, excluding
BAI revenue and fund administration and servicing costs-affiliates.
11
<PAGE>
General
BlackRock derives a substantial portion of its revenue from investment
advisory and administration fees, which are recognized as the services are
performed. Such fees are primarily based on predetermined percentages of the
market value of assets under management and are affected by changes in assets
under management, including market appreciation or depreciation and net
subscriptions or redemptions. Net subscriptions or redemptions represent the sum
of new client assets, additional fundings from existing clients, withdrawals of
assets from and termination of client accounts and purchases and redemptions of
mutual fund shares.
Investment advisory agreements for certain separate accounts and
BlackRock's alternative investment products provide for performance fees in
addition to fees based on assets under management. Performance fees are earned
when investment performance exceeds a contractual threshold and, accordingly,
may increase the volatility of BlackRock's revenue and earnings. Other income
primarily reflects fees earned on risk management advisory engagements.
BlackRock Asset Investors ("BAI"), one of our alternative investment
products, was created in 1994 in response to the opportunity that the Company
perceived in commercial real estate debt arising from the dislocation of
traditional lenders that had occurred and the resulting lack of capital in the
sector. BlackRock believed that BAI would capture equity-like returns as an
early market participant able to invest in these types of assets. As the
commercial real estate markets recovered and capital market participation in
commercial mortgage securities expanded, further opportunities to generate
equity-like returns diminished. As a result, BAI's Board of Trustees and
shareholders approved management's recommendation in 1997 to liquidate the fund.
For the nine months ended September 30, 1998, BAI generated operating income
(advisory and performance fees, net of expense) of $6.0 million. As a result of
the liquidation, which involved the sale of BAI's assets, BlackRock realized an
operating loss of $1.7 million for the nine months ended September 30, 1999. The
liquidation of BAI was completed on September 27, 1999.
Operating expense primarily consists of employee compensation and benefits,
BAI incentive compensation, fund administration and servicing costs-affiliates,
general and administration, and goodwill amortization. Employee compensation and
benefit expense reflects salaries, deferred and incentive compensation, and
related benefit costs. BAI incentive compensation expense reflects compensation
payable in accordance with various agreements to investment advisory and other
employees of BlackRock. Fund administration and servicing costs-affiliates
expense reflects payments made to PNC affiliated entities primarily associated
with the administration and servicing of PNC client investments in the BlackRock
Funds. Goodwill at September 30, 1999 was $196.7 million with annual
amortization expense of approximately $9.7 million. Substantially all of the
goodwill resulted from PNC's acquisition of BlackRock Financial Management, L.P.
("BFM") on February 28, 1995.
12
<PAGE>
Assets Under Management
Assets under management ("AUM") increased $28.6 billion, or 24.0%, to
$148.1 billion at September 30, 1999, compared with $119.5 billion for the
period ended September 30, 1998. The increase was attributable to a $26.0
billion rise in separate account assets and a $2.7 billion increase in mutual
fund assets.
<TABLE>
<CAPTION>
For the period ended
September 30 Change
------------------------------ -----------------------
1999 1998 Amount Percent
------------- ------------- ----------- ----------
($ in millions) ($ in millions)
<S> <C> <C> <C> <C>
Separate Accounts
Fixed income * $ 69,266 $ 48,157 $21,109 43.8%
Liquidity 17,310 12,902 4,408 34.2
Equity 2,454 1,996 458 22.9
------------- ------------- ----------
Subtotal 89,030 63,055 25,975 41.2
------------- ------------- ----------
Mutual Funds
Fixed income 13,579 14,402 (823) (5.7)
Liquidity 32,717 31,693 1,024 3.2
Equity 12,776 10,325 2,451 23.7
------------- ------------- ----------
Subtotal 59,072 56,420 2,652 4.7
Total $148,102 $119,475 $28,627 24.0
------------- ------------- ----------
</TABLE>
* Includes alternative investment products.
The following tables present the component changes in BlackRock's assets
under management for the three month and nine month periods ended September 30,
1999 and 1998, as well as the first three quarters of 1999. The data reflects
certain reclassifications between net subscriptions (redemptions) and market
appreciation (depreciation) from amounts previously reported.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
----------------------------------- --------------------------------
1999 1998 1999 1998
----------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
($ in millions)
Separate Accounts
Beginning assets under management $ 83,001 $ 61,497 $ 69,112 $ 51,043
Net subscriptions 5,913 451 20,440 9,459
Market appreciation (depreciation) 116 1,107 (522) 2,553
----------------- ---------------- ---------------- --------------
Ending assets under management 89,030 63,055 89,030 63,055
----------------- ---------------- ---------------- --------------
Mutual Funds
Beginning assets under management 58,800 55,185 61,530 54,370
Net subscriptions (redemptions) 951 2,639 (2,501) 1,877
Market appreciation (depreciation) (679) (1,404) 43 173
----------------- ---------------- ---------------- --------------
Ending assets under management 59,072 56,420 59,072 56,420
----------------- ---------------- ---------------- --------------
Total $148,102 $119,475 $148,102 $119,475
----------------- ---------------- ---------------- --------------
Net subscriptions $ 6,864 $ 3,090 $ 17,939 $ 11,336
% change in AUM from net subscriptions 108.9% 110.6% 102.7% 80.6%
</TABLE>
13
<PAGE>
Assets Under Management (continued)
<TABLE>
<CAPTION>
Three months ended
--------------------------------------
1999
--------------------------------------
September 30 June 30 March 31
-------------- ---------- ----------
Separate Accounts ($ in millions)
<S> <C> <C> <C>
Fixed Income
Beginning assets under management $68,286 $64,381 $52,869
Net subscriptions 886 4,509 11,816
Market appreciation (depreciation) 94 (604) (304)
-------------- ---------- ----------
Ending assets under management 69,266 68,286 64,381
-------------- ---------- ----------
Liquidity
Beginning assets under management 12,362 13,975 13,826
Net subscriptions (redemptions) 4,933 (1,626) 152
Market appreciation (depreciation) 15 13 (3)
-------------- ---------- ----------
Ending assets under management 17,310 12,362 13,975
-------------- ---------- ----------
Equity
Beginning assets under management 2,353 2,121 2,417
Net subscriptions (redemptions) 94 20 (344)
Market appreciation 7 212 48
-------------- ---------- ----------
Ending assets under management 2,454 2,353 2,121
-------------- ---------- ----------
Total Separate Accounts
Beginning assets under management 83,001 80,477 69,112
Net subscriptions 5,913 2,903 11,624
Market appreciation (depreciation) 116 (379) (259)
-------------- ---------- ----------
Ending assets under management $89,030 $83,001 $80,477
-------------- ---------- ----------
Mutual Funds
Beginning assets under management $58,800 $59,749 $61,530
Net subscriptions (redemptions) 951 (1,546) (1,906)
Market appreciation (depreciation) (679) 597 125
-------------- ---------- ----------
Ending assets under management $59,072 $58,800 $59,749
-------------- ---------- ----------
</TABLE>
Net subscriptions for the three month and nine month periods ended
September 30, 1999 were $6.9 billion and $17.9 billion, respectively. Third
quarter 1999 new business inflows included $4.9 billion associated with
liquidity separate accounts, $1.0 billion from mutual funds and $0.9 billion
from fixed income separate accounts despite a $5.0 billion outflow by a large
institutional client due to its business restructuring.
New business inflows for the nine months ended September 30, 1999 included
$17.2 billion in fixed income separate accounts and $3.5 billion in liquidity
separate accounts that were offset by $2.5 billion in mutual fund redemptions
associated with the Provident Institutional Funds.
14
<PAGE>
Operating Results for Three months ended September 30, 1999 compared with Three
months ended September 30, 1998.
Revenue
Investment advisory and administration fees increased $21.4 million to
$95.8 million for the three months ended September 30, 1999, compared with $74.4
million for the three months ended September 30, 1998. The growth in investment
advisory and administration fees was primarily due to the increase in assets
under management, to $148.1 billion at September 30, 1999, compared with $119.5
billion at September 30, 1998.
<TABLE>
<CAPTION>
Three months ended
September 30 Change
---------------------------- ---------------------------
1999 1998 Amount Percent
---------------------------- ---------------------------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Investment advisory and administration fees:
Mutual funds $ 61,665 $47,671 $13,994 29.4%
Separate accounts 39,141 25,720 13,421 52.2
BAI (5,018) 1,037 (6,055) NM
------------- -------------- ------------
Total investment advisory and administration
fees 95,788 74,428 21,360 28.7
Other income 4,319 4,143 176 4.2
------------- -------------- ------------
Total revenue $100,107 $78,571 $21,536 27.4
------------- -------------- ------------
</TABLE>
NM-Not meaningful
Mutual fund advisory and administration fees were $61.7 million for the
three months ended September 30, 1999, compared with $47.7 million for the three
months ended September 30, 1998. The increase was due to a $2.7 billion increase
in mutual fund assets under management and higher advisory fees from PNC client
assets invested in the BlackRock Funds. Separate account advisory fees were
$39.1 million for the three months ended September 30, 1999, a 52.2% increase
compared with $25.7 million for the three months ended September 30, 1998. The
increase in separate account advisory fees was attributable to a $26.0 billion
increase in separate account assets under management and higher base and
performance fees earned on BlackRock's alternative investment products.
BlackRock's alternative investment products include the Obsidian Funds, a family
of fixed income hedge funds, Magnetite Asset Investors, LLC, a collateralized
bond obligation and Anthracite Capital, Inc., a real estate investment trust
(REIT). BAI advisory fees decreased $6.1 million due to reversals of previously
accrued performance fees associated with the fund's liquidation.
15
<PAGE>
Expense
Operating expense increased $10.5 million to $69.5 million for the three
months ended September 30, 1999, compared with $59.0 million for the three
months ended September 30, 1998. The change was primarily the result of
increases in employee compensation and benefits, fund administration and
servicing costs-affiliates and general and administration expenses. The
increases were partially offset by reversals of previously accrued BAI incentive
compensation associated with the fund's liquidation.
<TABLE>
<CAPTION>
Three months ended
September 30 Change
--------------------------------------------------------
1999 1998 Amount Percent
-------------- -------------- ----------- --------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Employee compensation and benefits $35,172 $26,452 $ 8,720 33.0%
BAI incentive compensation (3,894) 432 (4,326) NM
Fund administration and servicing
costs-affiliates 23,723 19,715 4,008 20.3
General and administration 12,035 9,982 2,053 20.6
Amortization of goodwill 2,413 2,413
------------- -------------- -------------
Total operating expense $69,449 $58,994 $10,455 17.7
------------- -------------- -------------
</TABLE>
NM-Not meaningful
Employee compensation and benefits increased $8.7 million due to additional
expenses of $4.2 million related to salary and benefits and $4.5 million for
incentive compensation primarily based on operating profit growth. Salary and
benefit cost increases were the result of a 9.6% increase in full-time employees
to support business growth partially offset by the adoption of SOP 98-1
(Accounting for the Cost of Computer Software Developed or Obtained for Internal
Use) in 1999 which approximated $1.3 million. Fund administration and servicing
costs-affiliates increased $4.0 million reflecting payments to PNC based on the
level of assets under management and advisory revenue received on PNC client
investments in the BlackRock Funds. The $2.1 million increase in general and
administration expenses was due to additional expenditures of $1.3 million
related to systems and communications and $1.1 million related to marketing and
promotional costs.
Operating Income and Net Income
Operating income was $30.7 million for the three months ended September 30,
1999, representing an $11.1 million or 56.6% increase compared with the three
months ended September 30, 1998. Non-operating expense (interest and dividend
income, net of interest expense) decreased $0.6 million or 21.3% to $2.2 million
for the three months ended September 30, 1999 compared with $2.8 million for the
three months ended September 30, 1998, due to the repayment of debt. Income tax
expense was $12.2 million and $8.0 million representing effective tax rates of
43.0% and 47.6% for the three months ended September 30, 1999 and 1998,
respectively. The difference in the effective tax rates resulted from various
permanent differences and variations caused by state and local income tax
accruals pursuant to the PNC tax sharing policy that BlackRock was subject to
prior to the Tax Disaffiliation Agreement that took effect on October 1, 1999.
Net income totaled $16.2 million for the three months ended September 30, 1999
compared with $8.8 million for the three months ended September 30, 1998,
representing an increase of 84.6%.
16
<PAGE>
Operating Results for Nine months ended September 30, 1999 as compared with Nine
months ended September 30, 1998.
Revenue
Investment advisory and administration fees increased $64.7 million to $264.7
million for the nine months ended September 30, 1999, compared with $200.0
million for the nine months ended September 30, 1998. The growth in investment
advisory and administration fees was primarily due to increases in assets under
management and higher mutual fund advisory fees on PNC client assets invested in
the BlackRock Funds that were partially offset by reductions in BAI-related
performance fees associated with the fund's liquidation.
<TABLE>
<CAPTION>
Nine months ended
September 30 Change
------------------------------ -------------------------
1999 1998 Amount Percent
------------- ------------- ------------- ----------
($ in thousands) ($ in
<S> <C> <C> <C> <C>
Investment advisory and administration fees:
Mutual funds $161,302 $115,073 $ 46,229 40.2%
Separate accounts 110,475 68,096 42,379 62.2
BAI (7,072) 16,798 (23,870) NM
----------- ---------- ----------
Total investment advisory and administration fees
264,705 199,967 64,738 32.4
Other income 15,494 9,856 5,638 57.2
----------- ---------- ----------
Total revenue $280,199 $209,823 $ 70,376 33.5
=========== ========== ==========
</TABLE>
NM-Not meaningful
Mutual fund advisory and administration fees increased $46.2 million for
the nine months ended September 30, 1999 primarily due to higher advisory fees
earned on PNC client assets invested in the BlackRock Funds associated with the
May 1998 conversion of $8.2 billion of PNC common trust funds into the BlackRock
Funds. Prior to the formation, BlackRock received subadvisory fees from PNC's
private bank for investment management services on these assets. For 1999,
advisory fees on these assets are recorded gross, with amounts due to PNC, in
accordance with memoranda of understanding with PNC's private bank, reflected as
fund administration and servicing costs-affiliates. Separate account advisory
fees increased $42.4 million largely as a result of a $26.0 billion growth in
separate account assets under management as well as increased base and
performance fees earned on BlackRock's alternative investment products. BAI
advisory fees decreased $23.9 million due to the discontinuance of any further
business activity together with reversals of previously accrued performance fees
associated with the fund's liquidation. Other income increased $5.6 million due
to new risk management advisory engagements, which included a $1.5 million
increase for additional services provided to PNC.
17
<PAGE>
Expense
Operating expense increased $41.6 million to $198.9 million for the nine
months ended September 30, 1999, compared with $157.3 million for the nine
months ended September 30, 1998. The change was primarily the result of
increases in employee compensation and benefits, fund administration and
servicing costs-affiliates and general and administration expenses. The
increases were partially offset by lower incentive compensation in 1999 related
to the liquidation of BAI.
<TABLE>
<CAPTION>
Nine months ended
September 30 Change
-------------------------------- --------------------------
1999 1998 Amount Percent
---------------- -------------- ------------ ------------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Employee compensation and benefits $101,135 $ 77,296 $ 23,839 30.8%
BAI incentive compensation (5,387) 10,764 (16,151) NM
Fund administration and servicing costs-
affiliates 60,058 35,370 24,688 69.8
General and administration 35,869 26,616 9,253 34.8
Amortization of goodwill 7,240 7,240
-------------- ----------- -----------
Total operating expense $198,915 $157,286 $ 41,629 26.5
============== =========== ===========
</TABLE>
NM-Not meaningful
Employee compensation and benefits increased $23.8 million due to
additional expenses of $7.9 million related to salary and benefits and $15.9
million for incentive compensation primarily based on operating profit growth.
Salary and benefit cost increases were the result of a 17.7% increase in full-
time employees to support business growth and enhancements to the Company's
401(k) plan that were partially offset by the adoption of SOP 98-1 (Accounting
for the Cost of Computer Software Developed or Obtained for Internal Use) in
1999 which approximated $3.8 million. BAI incentive compensation decreased by
$16.2 million due to the discontinuance of any further business activity
together with reversals of previously accrued incentive compensation associated
with the fund's liquidation. Fund administration and servicing costs-affiliates
increased $24.7 million due to higher advisory fees earned on PNC client assets
invested in the BlackRock Funds associated with the May 1998 conversion of $8.2
billion of PNC common trust funds into the BlackRock Funds. General and
administration expenses increased $9.3 million primarily due to additional
expenditures of $3.4 million related to systems and communications, $3.0 million
related to marketing and promotional costs and $2.0 million related to occupancy
and office services. These increases reflected the substantial business and
personnel growth experienced during the period, and a change in depreciable life
on equipment from five years to three years, which resulted in a one-time charge
to depreciation expense of $1.6 million.
Operating Income and Net Income
Operating income was $81.3 million for the nine months ended September 30,
1999, representing a $28.7 million or 54.7% increase compared with the nine
months ended September 30, 1998. Non-operating expense decreased $1.3 million
or 13.8% to $8.0 million for the nine months ended September 30, 1999 compared
with $9.3 million for the nine months ended September 30, 1998, due to the
repayment of debt. Income tax expense was $31.1 million and $20.6 million
representing effective tax rates of 42.4% and 47.6% for the nine months ended
September 30, 1999 and 1998, respectively. The difference in the effective tax
rates resulted from various permanent differences and variations caused by state
and local income tax accruals pursuant to the PNC tax sharing policy that
BlackRock was subject to prior to the Tax Disaffiliation Agreement that took
effect on October 1, 1999. Net income totaled $42.2 million for the nine months
ended September 30, 1999 compared with $22.6 million for the nine months ended
September 30, 1998, an increase of 86.4%.
18
<PAGE>
Liquidity and Capital Resources
BlackRock has historically met its working capital requirements through
cash generated by its operating activities and borrowings with PNC Bank, N.A.
("PNC Bank") under a $175.0 million revolving credit facility. Cash provided by
operating activities totaled $101.8 million and $33.2 million for the nine
months ended September 30, 1999 and 1998, respectively. The increase in cash
provided by operating activities was due to a $19.6 million increase in net
income and cash received in connection with the liquidation of BAI on September
27, 1999. Incentive payments related to the BAI liquidation will be paid during
the fourth quarter. BlackRock expects that cash flows generated by its operating
activities will continue to serve as the principal source of working capital in
the near future.
Net cash flow used in investing activities was $13.1 million and $3.2
million for the nine months ended September 30, 1999 and 1998, respectively.
Capital expenditures for computer hardware, furniture and equipment and
leasehold improvements were $12.9 million and $5.1 million for the nine months
ended September 30, 1999 and 1998, respectively. This increase in capital
expenditures reflects higher technology investments associated with risk
management activities, increased occupancy and related costs to support
personnel growth and higher software costs associated with the implementation of
a new financial accounting system.
Total capital at September 30, 1999 was $301.6 million and was comprised of
$148.4 million of stockholders' equity and $153.2 million of debt. Debt at
September 30, 1999 included $125.0 million outstanding on a $175.0 million
revolving credit facility with PNC Bank due December 31, 2002, and a $28.2
million unsecured note due February 28, 2000 with B.P. Partners, L.P., an entity
comprised of former partners of BFM, who received deferred notes on February 28,
1995 as part of the purchase price for BFM. The $153.2 million debt as of
September 30, 1999 represents amounts remaining from PNC's $240.0 million
acquisition of BFM on February 28, 1995, which was recorded on BFM's books. The
revolving credit facility with PNC Bank, dated February 28, 1996, as amended,
bears interest at PNC Bank's "prime rate" and is not terminable by the bank
except in the event of a default. The unsecured note bears interest at a fixed
rate of 7.5% and is unconditionally guaranteed by PNC. BlackRock repaid $18.8
million on February 28, 1999, and $28.2 million is due on February 28, 2000.
Net cash flow used in financing activities was $43.6 million and $73.4
million for the nine months ended September 30, 1999 and 1998, respectively.
During 1998, BlackRock received $34.2 million in net proceeds from the sale of
restricted stock to employees. On March 31, 1998, BlackRock's formation date,
$12.3 million in dividends were paid to PNC Bank in order to establish an
appropriate exchange ratio for PNC Bank and employee ownership interests based
on the fair market value of the combined businesses. Debt payments totaled $43.8
million and $95.5 million for the nine months ended September 30, 1999 and 1998,
respectively.
In connection with the prospectus dated October 1, 1999, of BlackRock,
filed with the Securities and Exchange Commission pursuant to Rule 424(b) under
the Securities Act of 1933, the Company issued 9 million shares of class A
common stock to the public at an offering price of $14 per share (the
"Offering"). The proceeds from the Offering, net of underwriters' discount and
estimated offering expenses, totaled approximately $115.0 million. These
proceeds were used to retire a portion of BlackRock's revolving credit facility
with PNC Bank on October 7, 1999.
Seasonality
BlackRock does not believe its operations are subject to significant
seasonal fluctuations.
19
<PAGE>
Interest Rates
The value of assets under management is affected by changes in interest
rates. Since BlackRock derives the majority of its revenue from investment
advisory and administration fees based on assets under management, BlackRock's
revenue may be adversely affected by changing interest rates. In a period of
rapidly rising interest rates, BlackRock's assets under management would likely
be negatively affected by reduced asset values and increased redemptions.
Inflation
The majority of BlackRock's revenue is based on the value of assets under
management. There is no predictable relationship between the rate of inflation
and the value of assets under management, except that inflation may affect
interest rates. BlackRock does not believe inflation will significantly affect
its compensation costs, as they are substantially variable in nature. However,
the rate of inflation may affect BlackRock's expenses such as information
technology and occupancy costs. To the extent inflation results in rising
interest rates and has other effects upon the securities markets, it may
adversely affect BlackRock's results of operations by reducing BlackRock's
assets under management, revenue or otherwise.
Year 2000 Readiness
BlackRock has been working since 1997 to prepare its computer systems to
meet the Year 2000 challenge. This process involves reviewing, modifying and
replacing existing software, hardware and other equipment, as necessary, and
communicating with counterparties, external service providers and customers
regarding their responses to Year 2000 issues.
As of December 31, 1998, substantially all of BlackRock's internally
developed software had been tested and remediated where necessary. The Company
has substantially completed an organization-wide assessment of Year 2000 issues
relating to its critical system equipment as well as an assessment of the Year
2000 preparedness of its identified critical service providers.
The Year 2000 issue may have an adverse impact on the operations and
financial condition of the issuers of the securities in which the Company
invests. Before purchasing securities, BlackRock considers the Year 2000
readiness of issuers. The depth of the review depends on the issuers' industry.
BlackRock will continue to review and assess the Year 2000 preparedness of
issuers throughout 1999.
During the third quarter of 1999, BlackRock conducted tests of its
networking and telecommunications systems in an attempt to verify vendor
representations of Year 2000 readiness. The Company currently estimates that the
total cost of implementing its Year 2000 programs will not have a material
impact on its results of operations, liquidity or capital resources. No
significant expenditures have been made to replace existing systems solely for
Year 2000 readiness reasons. The costs and timetable in which BlackRock plans to
complete its Year 2000 readiness activities are based on management's best
estimates, which were derived using numerous assumptions of future events
including the continued availability of certain resources, third party
preparedness and other factors. BlackRock has incurred approximately $875
thousand in Year 2000 readiness expenses through September 30, 1999 and the
Company expects to spend an additional $125 thousand to fully implement its
program. BlackRock can make no guarantee that these estimates will prove
correct, and actual results could differ from such plans.
BlackRock has reviewed and strengthened its business continuity plans to
address Year 2000 implications. The Company has written business continuity
plans in place for each of its four offices, including recovery strategies for
data, communications and personnel, designed to achieve the goal of resuming
critical business functions at an alternate site within twenty-four hours of an
emergency. BlackRock updates and tests these plans at least once a year to
reflect changes in its business and its systems. The Company has also written
contingency plans for all of its critical business systems at each office site
which outline alternative business procedures in the event of minor disruptions.
BlackRock is working with its critical service providers to provide alternate
service to its disaster recovery sites.
20
<PAGE>
BlackRock's Year 2000 readiness efforts and contingency plans are also
subject to oversight and regulation by the Securities and Exchange Commission,
the Office of the Comptroller of the Currency ("OCC"), the Federal Reserve Board
and other regulatory bodies. As a registered investment adviser, BlackRock is
required to file disclosure documents with the Securities and Exchange
Commission regarding its preparation for Year 2000 complications. BlackRock has
also responded to specific inquiries from, and provided information to, the
Securities and Exchange Commission, the OCC and the Federal Reserve regarding
the potential adverse implications to its business from Year 2000 consequences
and its plans for addressing them.
It is not possible to predict with certainty all of the adverse effects
that could result from a failure of BlackRock or of third parties to become
fully Year 2000 ready or whether such effects could have a material adverse
impact on BlackRock. However, if BlackRock were to fail to correct internal Year
2000 problems, or if BlackRock's contingency plans failed to mitigate any such
problems, or if one or more third parties is unable, due to Year 2000 issues, to
provide services required by BlackRock, a disruption of operations could occur
resulting in increased operating costs, loss of revenue and other temporary
inability to process transactions and delays in providing services. In addition,
to the extent that the issuers of securities are weakened due to Year 2000
issues, the value and liquidity of client portfolios could be adversely
affected. Disruption or suspension of activity in the world's financial markets
is also possible as a result of Year 2000 issues.
Forward-Looking Statements
Certain statements in this report contain forward-looking statements with
respect to financial performance and other financial and business matters within
the meaning of the Private Securities Litigation Reform Act. Forward-looking
statements are typically identified by words or phrases such as "believe,"
"expect," "anticipate," "intend," "estimate," "may increase," "may fluctuate,"
and variations of such words and similar expressions, or future or conditional
verbs such as "will," "should," "would," and "could." The Company cautions that
these forward-looking statements are subject to numerous assumptions, risks and
uncertainties, all of which change over time, and the Company assumes no duty to
update forward-looking statements. In addition to factors previously disclosed
by the Company and those identified elsewhere herein, the following factors,
among others, could cause actual results to differ materially from forward-
looking statements: the performance of financial markets, the investment
performance of BlackRock's sponsored investment products and separately managed
accounts, government regulations including securities and tax law changes,
competitive conditions, future acquisitions, the impact, extent and timing of
technological changes, the ability of the Company and others to remediate Year
2000 concerns, and the general economic environment. Changes in these
assumptions or other factors could cause actual results to differ materially
from those anticipated in these forward-looking statements.
21
<PAGE>
Part II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities
On September 30, 1999, BlackRock, Inc. reissued 213,474 shares of class B
common stock, held in treasury, for a total purchase price of $750 thousand to
key employees. The shares were not registered under the Securities Act of 1933
because the offering and sale were made in reliance on the exemption provided by
Section 4(2) of the Securities Act of 1933 for transactions by an issuer not
involving a public offering. These shares, which include significant transfer
restrictions, were sold at a discount to fair market value of $2.2 million,
which will be expensed on a straight-line basis over the restriction periods.
The discount was recorded as additional paid-in capital and unearned
compensation in BlackRock, Inc's consolidated statement of financial condition
at September 30, 1999.
Use of Proceeds
The Company's registration statement on Form S-1 relating to the initial
public offering of class A common stock (File No. 333-78367) was declared
effective by the Securities and Exchange Commission on October 1, 1999. Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Lehman
Brothers, Inc., Prudential Securities Incorporated and Salomon Smith Barney,
Inc. were the managing underwriters of the U.S. offering and affiliates of those
firms managed the international offering. On October 1, 1999, the Company sold 9
million shares of class A common stock that were registered to the public at an
offering price of $14 per share. The offering was completed on October 6, 1999.
Total proceeds received were $126.0 million.
The Company incurred the following estimated expenses with respect to the
offering: underwriters' discounts and commissions, $8.5 million; other expenses,
$2.5 million; total expenses, $11.0 million. The net proceeds from the offering
to the Company after deducting the foregoing discounts, commissions, fees and
expenses were approximately $115.0 million. None of the foregoing expenses
constituted direct or indirect payments to our directors, officers, or their
associates or to persons owning 10% or more of any class of our equity
securities or to our affiliates.
The Company used the net proceeds to retire a portion of the Company's line
of credit with PNC Bank, N.A. on October 7, 1999.
Item 4. Submission of Matters to a Vote of Security Holders
Pursuant to a written consent of stockholders dated September 29, 1999, the
stockholders of the Company unanimously approved and adopted the following:
(i) the Amended and Restated Certificate of Incorporation of the Company
dated September 30, 1999,
(ii) the Amended and Restated By-laws of the Company,
(iii) the BlackRock, Inc. 1999 Annual Incentive Performance Plan,
(iv) the 1999 Stock Award and Incentive Plan, and
(v) the Non-Employee Director Stock Compensation Plan.
22
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Since June 30, 1999, the Company filed the following Current Reports
on Form 8-K:
Form 8-K dated as of October 20, 1999, reporting the Company's
consolidated financial results for the three month and nine month
periods ended September 30, 1999.
23
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLACKROCK, INC.
(Registrant)
Date: November 12, 1999 By: /s/ Paul L. Audet
-----------------
Paul L. Audet
Managing Director &
Chief Financial Officer
24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 158,519
<SECURITIES> 2,494
<RECEIVABLES> 59,514
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 18,684
<DEPRECIATION> 20,053
<TOTAL-ASSETS> 443,416
<CURRENT-LIABILITIES> 0
<BONDS> 153,200
0
0
<COMMON> 55,344
<OTHER-SE> 93,063
<TOTAL-LIABILITY-AND-EQUITY> 443,416
<SALES> 280,199
<TOTAL-REVENUES> 280,199
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 198,915
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,026
<INCOME-PRETAX> 73,258
<INCOME-TAX> 31,050
<INCOME-CONTINUING> 42,208
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,208
<EPS-BASIC> 0.77
<EPS-DILUTED> 0.77
</TABLE>
