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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OCTOBER 20, 1999
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
BLACKROCK, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 001-15305
DELAWARE 51-0380803
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 Park Avenue
New York, NY 10154
(212) 754-5560
ITEM 5. OTHER EVENTS
Third Quarter 1999 Financial Results
On October 20, 1999, BlackRock, Inc. ("Corporation") reported results
of operations for the three and nine months ended September 30, 1999.
A copy of the earnings press release issued by the Corporation is
attached as Exhibit 99.1 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The Exhibits listed on the Exhibit Index on page 3 of this Form 8-K
are filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PNC BANK CORP.
(Registrant)
Date: October 26, 1999 By: /s/ Paul L. Audet
---------------------
Paul L. Audet
Managing Director
Chief Financial Officer
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EXHIBIT INDEX
99.1 Earnings press release issued by the Corporation on October 20, 1999, with
respect to results of operations for the three and nine months ended
September 30, 1999, filed herewith.
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EXHIBIT 99.1
[LOGO] BLACKROCK
CONTACTS:
Paul L. Audet: (212) 409-3555
[email protected]
BlackRock, Inc. Announces Third Quarter Results
New York, New York - October 20, 1999, BlackRock, Inc. (NYSE: BLK) today
reported earnings for the third quarter ended September 30, 1999 of $16.2
million or $.30 per diluted share. Net income for the quarter was benefited by
approximately $1 million from non-recurring advisory and performance fees net of
related expenses, including liquidation of the BlackRock Asset Investors
("BAI") fund. Reported earnings for the third quarter of 1998 were $8.8 million
or $.16 per diluted share.
On October 1, 1999 BlackRock completed an initial public offering of 9 million
shares of Class A common stock at $14 per share. Pro-forma diluted earnings per
share, after giving effect to the 9 million shares and the use of net proceeds
to pay down debt, was $.27 as compared to $.15 for the third quarter of 1998.
"I'm very pleased with our third quarter performance, as the Company continued
to generate superior year-to-year growth in operating income and earnings
combined with solid investment performance for our clients," said Laurence D.
Fink, Chairman and Chief Executive Officer. "With our initial public offering
behind us, we look forward to building shareholder value by increasing
BlackRock's institutional fixed income business, expanding our institutional
equity products and broadening the marketing of our risk management products."
Third Quarter Highlights
* Operating revenues were $100.1 million, a 27.4% increase from the $78.6
million earned in the third quarter of 1998.
* Separate account advisory fees, including alternative products, were $39.1
million compared to $25.7 million for the third quarter of 1998, a 52.1%
increase.
* Operating income was $30.7 million, a 56.6% increase from third quarter 1998
results of $19.6 million.
* BlackRock's operating margin, excluding BAI and after deducting fund
administration and servicing costs paid to PNC affiliates from operating
revenues, was 39.0% compared to 32.8% for the third quarter of 1998.
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* Assets under management rose to a record $148.1 billion as compared to $141.8
billion at June 30, 1999 and $130.6 billion at December 31, 1998.
* BlackRock continued to attract new clients and new assets, with net new
business for the third quarter and first nine months of 1999 of $6.4 billion
and $18.1 billion, respectively.
Year To Date Results
Net income was $42.2 million or $.77 per diluted share for the nine months ended
September 30, 1999 as compared to $22.6 million or $.43 per diluted share for
the comparable period of 1998. Revenue growth for 1999 was strong across all
product categories, particularly separate accounts, which rose 62.2% from $68.1
million for the first nine months of 1998 to $110.5 million for 1999. Other
income, which largely reflects BlackRock's risk management revenues, increased
57.2% from $9.9 million for the first nine months of 1998 to $15.5 million for
1999. Operating income for the nine months ended September 30, 1999 of $81.3
million reflected a $28.8 million, or 54.7%, increase from the $52.5 million
earned in the first nine months of 1998. Operating margin, exclusive of BAI
operating results, for the first nine months of 1999 was 36.5% as compared to
29.5% for the first nine months of 1998.
About BlackRock BlackRock is one of the largest publicly traded investment
management firms in the United States with $148.1 billion of assets under
management as of September 30, 1999. BlackRock manages assets on behalf of more
the 3,000 institutions and 150,000 individuals through a variety of equity,
fixed income, liquidity and alternative investment separate accounts and mutual
funds, including the Company's flagship fund families, BlackRock Funds and
Provident Institutional Funds. In addition, risk management and advisory
services are provided to a growing number of large institutional fixed income
investors. BlackRock is a majority-owned subsidiary of PNC Bank Corp. (NYSE:
PNC).
About PNC PNC Bank Corp. is one of the largest diversified financial services
organizations in the United States. Its major businesses include PNC Regional
Bank, PNC Institutional Bank, PNC Advisors, PNC Mortgage, PNC Secured Finance,
PFPC Worldwide and BlackRock.
This press release contains forward-looking statements with respect to financial
performance and other financial and business matters within the meaning of the
Private Securities Litigation Reform Act of 1995. 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. Assumptions or factors underlying these
forward-looking statements include, but are not limited to, the performance of
financial markets, the investment performance of BlackRock's sponsored
investment products and separately managed accounts, government regulations
including 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 contained in these forward-looking
statements.
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BlackRock, Inc.
Financial Highlights
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998 %
--------------- --------------- ----------
<S> <C> <C> <C>
Operating Revenues $ 100,107 $ 78,571 27.4%
Operating Expenses 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%
Average Diluted 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%
Nine Months Ended September 30,
1999 1998 %
----------- ----------- ----------
Operating Revenues $ 280,199 $ 209,823 33.5%
Operating Expenses 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%
Average Diluted 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 IPO 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.
(c) Earnings before interest, taxes, depreciation and amortization
(d) Operating income adjusted for BAI results divided by operating revenues
less BAI revenue and fund administration and servicing costs - affiliates.
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<TABLE>
<CAPTION>
BLACKROCK,INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except share data)
(unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 % Change 1999 1998 % Change
------------ ------------ -------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Investment advisory and administration
fees
Mutual funds $ 61,665 $ 47,671 29.4% $ 161,302 $ 115,073 40.2%
Separate accounts 39,141 25,720 52.2% 110,475 68,096 62.2%
BAI -5,018 1,037 NM -7,072 16,798 NM
Other income 4,319 4,143 4.2% 15,494 9,856 57.2%
---------------------------- ---------------------------
Total revenues 100,107 78,571 27.4% 280,199 209,823 33.5%
---------------------------- ---------------------------
Expenses
Employee compensation and benefits 35,172 26,452 33.0% 101,135 77,296 30.8%
BAI incentive compensation -3,894 432 NM -5,387 10,764 NM
Fund administration and servicing costs
- affiliates 23,723 19,715 20.3% 60,058 35,370 69.8%
General and administration 12,035 9,982 20.6% 35,869 26,616 34.8%
Amortization of goodwill 2,413 2,413 0.0% 7,240 7,240 0.0%
---------------------------- ---------------------------
Total Expenses 69,449 58,994 17.7% 198,915 157,286 26.5%
---------------------------- ---------------------------
Operating Income 30,658 19,577 56.6% 81,284 52,537 54.7%
Non-operating income (expense)
Interest and dividend income 918 416 120.7% 2,211 1,481 49.3%
Interest expense - affiliates -3,116 -3,208 -2.9% -10,237 -10,789 -5.1%
---------------------------- ---------------------------
-2,198 -2,792 -21.3% -8,026 -9,308 -13.8%
Income before income taxes 28,460 16,785 69.6% 73,258 43,229 69.5%
Income Taxes 12,237 7,995 53.1% 31,050 20,591 50.8%
---------------------------- ---------------------------
Net Income $ 16,223 $ 8,790 84.6% $ 42,208 $ 22,638 86.4%
============================ ===========================
Earnings per share
Basic 0.30 0.16 87.5% 0.77 0.43 79.1%
Diluted 0.30 0.16 87.5% 0.77 0.43 79.1%
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
NM - Not Meaningful
</TABLE>
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BLACKROCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cash and cash equivalents $158,519 $113,450
Accounts Receivable 59,514 106,210
Investments 2,494 2,515
Property and equipment, net 18,684 12,252
Goodwill 196,671 203,910
Other assets 7,534 2,447
------------------- ------------------
Total assets $443,416 $440,784
=================== ==================
Liabilities and stockholders' equity
Note and loan to affiliates 153,200 197,000
Accrued compensation 104,177 110,329
Accounts payable and accrued liabilities 35,080 25,280
Other liabilities 2,552 1,984
------------------- ------------------
Total liabilities 295,009 334,593
Stockholders' equity 148,407 106,191
------------------- ------------------
Total liabilities and stockholders' equity $443,416 $440,784
=================== ==================
</TABLE>
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BLACKROCK, INC.
CONDENSED 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 0 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 payable to affiliates (43,800) (95,504)
Issuance of restricted stock 0 34,214
Capital contribution from PNC 0 2,063
Purchase of treasury stock (550) (200)
Reissuance of treasury stock 750 0
Dividend of intercompany allocations 0 (1,634)
Dividends to PNC 0 (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
==================================
Supplemental disclosures
Cash paid for interest $11,236 $ 12,006
Cash paid for income taxes $26,570 $ 13,420
</TABLE>
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BlackRock, Inc.
Assets Under Management
($ in millions)
Three Months Ended September 30, 1999
<TABLE>
<CAPTION>
Separate Mutual
Accounts Funds Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Beginning of period $83,001 $58,800 $141,801
Net subscriptions (redemptions) 5,865 549 6,414
Market appreciation (depreciation) 164 -277 -113
---------------------------------------------------
Ending assets under management $89,030 $59,072 $148,102
===================================================
<CAPTION>
Nine Months Ended September 30, 1999
Separate Mutual
Accounts Funds Total
--------------- --------------- ---------------
Beginning of period $69,112 $61,530 $130,642
Net subscriptions (redemptions) 21,370 -3,293 18,077
Market appreciation (depreciation) -1,452 835 -617
---------------------------------------------------
Ending assets under management $89,030 $59,072 $148,102
===================================================
</TABLE>
