BlackRock Reports First Quarter Diluted EPS of $1.06 up 51% over First Quarter 2005; Assets under Management Rise to $463.1 Billion at March 31, 2006.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- BlackRock BlackRock Inc. (NYSE: BLK) is a major American investment management firm. As of September 30, 2007, BlackRock’s assets under management totaled $1.3 trillion[2] across fixed income, liquidity, equity, alternative investment and real estate strategies. , Inc. (NYSE NYSE See: New York Stock Exchange :BLK BLK Black BLK Blank BLK Block BLK Bulk BLK Blocked Shot (basketball) BLK Blocked Kick (football) BLK Blackpool, England, United Kingdom - Blackpool (Airport Code) ) today reported net income for the quarter ended March 31, 2006 of $70.9 million, or $1.06 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. That compares with net income of $46.5 million, or $0.70 per diluted share, and $72.9 million, or $1.09 per diluted share, in the first and fourth quarters of 2005, respectively. First quarter 2006 revenues totaled $395.7 million, an increase of 58% compared to first quarter 2005, and an increase of 7% over fourth quarter 2005. The increase includes performance fees of $114.6 million for the quarter ended March 31, 2006. Those performance fees were offset, in part, by a related one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. estimated expense associated with the acquisition of SSRM SSRM Scanning Spreading Resistance Microscopy SSRM State-Specific and Regional Migration (Australia) SSRM Strap-On Solid Rocket Motor (additional solid rocket motors to increase mass liftoff capacity) Holdings, Inc. (SSR (Scalable Sampling Rate) See AAC. SSR - Scalable Sampling Rate ) in January January: see month. 2005. Adjusted earnings per share(1) increased to $1.23 for the first quarter 2006 from $0.89 for the first quarter of 2005 and $1.21 for fourth quarter 2005. Effective with the second quarter of 2006, BlackRock will no longer disclose adjusted earnings, but will continue to provide information related to acquisition-related costs and BlackRock's Long-Term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Retention and Incentive Plan (LTIP LTIP Long Term Incentive Plan LTIP Laughing Till I Puke LTIP Local Transportation Improvement Program LTIP Long Term Instrument Plan LTIP Long Term Infrastructure Program LTIP Long Term Independent Project ). First quarter 2006 earnings include approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $6.6 million ($0.06 per diluted share) of expense associated with the pending Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. Investment Managers (MLIM MLIM Merrill Lynch Investment Managers (UK) ) transaction and approximately $11.7 million ($0.11 per diluted share) of LTIP expense that will be funded through a contribution of BlackRock stock currently held by PNC PNC Purdue University North Central (Westville, Indiana) PnC Point 'n Click PNC Police National Computer PNC People's National Congress (Guyana) PNC People's National Congress . Assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. (AUM Aum (ä·ōōmˑ), n.pr 1. in Ayurveda, the subtle, noiseless cosmic vibration in which consciousness existed in the beginning, before the elements appeared. ) increased by $10.4 billion in the first quarter and by $71.7 billion year-over-year to $463.1 billion. Net new business in the first quarter was $7.7 billion. Net inflows in long-dated adj. 1. (Finance) of a gilt-edged security: having more than 15 years to run before redemption. Adj. 1. long-dated - of a gilt-edged security; having more than 15 years to run before redemption Britain, Great Britain, U.K. products totaled $7.4 billion during the quarter, including $1.3 billion from U.S. investors and $6.1 billion from non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. clients. Net new business for the twelve months ended March 31, 2006 totaled $57.8 billion, including $29.7 billion from U.S. investors and $28.1 billion from international investors. Net flows were positive in all product categories and in all client channels for both the quarter and the trailing twelve months In commerce, the trailing twelve months (TTM) is a moving measurement (for example, an average or a sum) over the 12 previous months, using the most recent data available. Also sometimes known as last twelve months (LTM). . In addition, BlackRock Solutions(R) continued to achieve strong growth, winning four net new assignments during the quarter and 32 net new assignments over the past 12 months. "Investment performance and new business momentum remained strong throughout the quarter, and the pipeline of unfunded wins and searches in process is robust," commented Laurence D. Fink Laurence D. Fink is the Chairman & Chief Executive Officer of BlackRock, Inc. Popularly known as Larry, he started his career at First Boston upon graduating from the University of California Los Angeles. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of BlackRock. "Our first quarter results are particularly significant given that we are in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of planning our integration with Merrill Lynch Investment Managers. "When we announced our transaction in mid-February n. 1. the middle part of February. Noun 1. mid-February - the middle part of February period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue , we indicated that pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma , combined assets under management as of year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005 were $992 billion. As of March 31, 2006, that figure stands at $1.039 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. , up $47.4 billion on strong business momentum at both firms. I believe the continued growth in assets, which includes combined net new business of $23.1 billion, is a testament to the commitment and focus of our respective employees. "As planning for bringing our firms together has proceeded, we have become even more enthusiastic about the deep talent pool and the organic growth potential of the combined business. We have started to announce organizational decisions for the 'new' BlackRock, including the Executive Committee for the firm and the managerial structure of the U.S. Private Client Group. We expect to announce the business model by the end of this week, roll out the prospective investment teams by early May, and complete the talent review process in June June: see month. . "I am pleased with the progress made to date preparing to combine BlackRock and MLIM. The transaction is on target to close at the end of the third quarter, and I look forward to the addition of our new partners to help build a more diverse, more global firm and ensure a vibrant, unified culture and vision for the future." First Quarter Financial Highlights First quarter 2006 revenues were $395.7 million, an increase of 58.2% from $250.1 million reported in the first quarter 2005 and an increase of 7.2% from $369.1 million reported in fourth quarter 2005. First quarter 2006 investment advisory and administration fees rose to $349.7 million, an increase of 64.8% from $212.3 million reported in first quarter 2005. The increase was a result of higher average AUM, as AUM rose to $463.1 billion at March 31, 2006 from $391.3 billion at March 31, 2005, and higher performance fees. Performance fees were $114.6 million in first quarter 2006, versus $26.7 million reported in first quarter 2005 and $87.2 million in fourth quarter 2005. Other income, which includes BlackRock Solutions and property management fees, was $46.0 million for first quarter 2006, an increase of 21.5% from $37.8 million reported in first quarter 2005. First quarter 2006 BlackRock Solutions revenues rose to $29.3 million, an increase of 10.1% from $26.6 million in first quarter 2005. Property management fees, which commenced with the acquisition of SSR in January 2005, increased to $7.7 million, an increase of 37.5% from $5.6 million in the first quarter 2005. First quarter 2006 operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased 61.1% to $295.6 million, from $183.5 million in the first quarter 2005. The $112.1 million increase was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk primarily to an increase in compensation and benefits, which rose 51.1% to $191.8 million from $126.9 million. This increase was due to higher incentive compensation associated with performance fees, higher accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. for year-end bonuses based on operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and an increase in the number of employees to 1,832 (excluding 400 Metric Property employees) at first quarter-end 2006 from 1,562 at first quarter-end 2005. First quarter 2006 general and administration costs were $91.4 million, an increase of 98.1% from $46.2 million in first quarter 2005, primarily as a result of a one-time estimated expense of $34.5 million related to the SSR acquisition in January 2005, incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. marketing and promotion costs of $3.7 million and incremental occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy expense of $2.6 million related to expanded domestic and international marketing efforts and expansion of corporate facilities related to business growth, respectively. First quarter 2005 and first quarter 2006 results reflect two months and three months, respectively, of operations from the SSR acquisition. Pursuant to the terms of the SSR acquisition, the Company will record an additional $50 million purchase price for SSR related to retained AUM. The Company's adjusted operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (1) was 41.4%, 35.5% and 37.7% for first quarter 2006, fourth quarter 2005 and first quarter 2005, respectively. The increase from the first and fourth quarters of 2005 was attributable principally to higher performance fees in 2006. First quarter 2006 non-operating income increased 68.5% to $13.1 million from $7.8 million in first quarter 2005, principally as a result of market appreciation and returns on investments. The Company recorded a charge of approximately $14.3 million in the first quarters of 2006 and 2005, related to LTIP. Approximately $11.7 million of this expense will be funded by PNC through a contribution of BlackRock common stock currently owned by PNC. In addition, in the first quarter of 2006, the Company incurred approximately $3.1 million and $3.5 million of compensation and general and administration expense, respectively, associated with the pending MLIM transaction. First Quarter Business Highlights --The Firm's new business efforts generated net inflows of $7.7 billion during the quarter, with positive flows in all client channels. Net inflows during the quarter included $3.5 billion from pension and other tax-exempt tax-ex·empt adj. 1. Not subject to taxation, as the capital or income of a philanthropic organization. 2. Producing interest that is exempt from income tax: tax-exempt bonds. n. clients, $3.7 billion from insurance companies and other taxable institutions, $105 million from institutional cash management clients and $417 million in new private client and mutual fund assets Fund assets The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. . --Fixed income AUM rose to $308.9 billion at March 31, 2006, driven by net new business of $6.0 billion in the quarter. The firm continued to see demand across fixed income mandates mandates, system of trusteeships established by Article 22 of the Covenant of the League of Nations for the administration of former Turkish territories and of former German colonies. , with $2.2 billion of new funds in global bond portfolios, $1.7 billion in targeted duration mandates, $1.1 billion in sector specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. accounts and $1.0 billion in core bond products. Performance remained strong with 85% or more of taxable bond Taxable Bond A debt security whose return to the investor is subject to taxes at the local, state or federal level, or some combination thereof. Notes: The majority of bonds issued are taxable bonds. funds in the top two Lipper Business Description Lipper, Inc., a subsidiary of Reuters provides mutual and hedge fund information, analytical tools, data and commentary. Lipper's benchmarking provides a guidepost to asset managers, fund companies, financial intermediaries, traditional media, quartiles for the one, three and five-year periods ending March 31, 2006. --AUM in cash management products totaled $86.5 billion on March 31, 2006, up slightly from year-end. Average assets were $86.2 billion, 8% above the prior quarter's average, and 14% higher than the same period in 2005. Net inflows totaled $293 million for the quarter, with several large flows dominating dom·i·nate v. dom·i·nat·ed, dom·i·nat·ing, dom·i·nates v.tr. 1. To control, govern, or rule by superior authority or power: results. We experienced net outflows of $4.8 billion in money market funds, partially reversing, as expected, the $10.9 billion of net inflows we had in the fourth quarter of 2005. Net inflows of $5.1 billion in separate accounts included a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. portfolio for a non-U.S. client with which the firm has a longstanding Adj. 1. longstanding - having existed for a long time; "a longstanding friendship"; "the longstanding conflict"long - primarily temporal sense; being or indicating a relatively great or greater than average duration or passage of time or a duration as specified; relationship, as well as inflows in securities lending Securities Lending When a brokerage lends securities owned by its clients to short sellers. Notes: This allows brokers to create additional revenue (commissions) on the short sale transaction. portfolios. --Equity AUM rose to $40.8 billion at March 31, 2006, 9% above the prior quarter end, including $604 million of net inflows across products. In particular, we continued to benefit from strong demand for international equities, including our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. equity, global energy and global opportunities products. Investment performance was competitive with 60% or more of equity mutual funds ranked in the top two Lipper quartiles for the one and three-year periods ending March 31, 2006. --AUM in alternative investments rose 6% to $26.9 billion, up $1.6 billion since year-end 2005. During the quarter, we raised $1.4 billion in two new collateralized debt obligations Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, and added $684 million in our real estate, fund of funds Fund of Funds A mutual fund that invests in other mutual funds. Notes: For example, an investor would select a general risk profile and the fund-of-funds manager would pick underlying investments from a range of products managed by external managers. and private debt and equity products. Assets in our hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" strategies declined by $474 million due to rebalancing Rebalancing The process of realigning the weightings of one's portfolio of assets. Notes: For example, if your portfolio's proportion of stock has grown too large for your intended assets weightings and risk tolerance, you might rebalance by selling some stock and putting out of fixed income and into equity alternatives. Robust performance fees during the quarter principally reflected the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of a multi-year fee in a single real estate equity account due as of March 31, 2006. --BlackRock Solutions added four net new assignments during the quarter. These included one new Aladdin Aladdin Hero of a well-known story in The Thousand and One Nights. The son of a poor widow, Aladdin is a lazy, careless boy who meets an African magician claiming to be his uncle. (R) contract, two net new risk management and advisory assignments, and one new outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. relationship. At quarter-end, three system implementations were in process, not including the work being done to plan the BlackRock/MLIM integration. During the quarter, the Company also completed five and are currently working on three new one-time (non-recurring) assignments. BlackRock Solutions continues to have an active pipeline of opportunities in various stages of development. --Our new business pipeline continues to be robust with $6.3 billion of wins funded or to be funded in long-dated products since March 31, and over 390 debt and equity searches in progress. Interest in BlackRock Solutions offerings continues to be very strong and we are pursuing a variety of new assignments internationally. We believe the combination of the firm's product breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is , increasing global reach, competitive investment performance and focus on exceptional client service will foster continued new business momentum. Performance Notes Past performance is no guarantee of future results. Mutual fund performance data is net of fees and expenses, assumes the reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. 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 are neither insured The person who obtains or is otherwise covered by insurance on his or her health, life, or property. The insured in a policy is not limited to the insured named in the policy but applies to anyone who is insured under the policy. insured n. 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 Sales Charge A commission or fee paid by an investor at the time of purchasing mutual fund shares. The charge is paid to a mutual fund salesperson or financial advisor and is intended to provide compensation for the financial salesperson's efforts in assisting their client select . Funds with returns among the top 25% of a peer group of funds group of funds See family of funds. with comparable objectives are in the first quartile Quartile A statistical term describing a division of observations into four defined intervals based upon the values of the data and how they compare to the entire set of observations. Notes: Each quartile contains 25% of the total observations. and funds with returns in the next 25% of a peer group are in the second quartile. Some funds have less than three years of performance. Fixed Income Portfolios (taxable) 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 and Government Income Portfolios are in the High Current Yield and General U.S. Government Lipper peer groups, respectively. The Intermediate Government Bond and GNMA GNMA abbr. Government National Mortgage Association Portfolios are in the Intermediate U.S. Government and GNMA Lipper peer groups, respectively. The International Bond and Inflation Protected Bond Portfolios are in the International Income Lipper peer group and the Treasury Inflation Protected Securities Lipper peer group, respectively. Equity Portfolios of BlackRock Funds: The Mid-Cap Mid-cap Short for "Middle Cap," mid cap refers to stocks with a market capitalization of between $2 billion to $10 billion. Notes: As the name implies, a mid-cap is in the middle of the pack. A mid-cap isn't too big, but at the same time has a relatively decent market cap. Growth Equity and Asset Allocation Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. Portfolios are in the Mid-Cap Growth and Flexible Portfolio Lipper peer groups, respectively. The Investment Trust and Index Equity Portfolios are in the Large Cap Core and S&P 500 Index Objective Lipper peer groups, respectively. 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 Equity Portfolio is in the Small Cap Core Lipper peer group. The Small-Cap Small-cap A stock with a small capitalization, meaning a total equity value of less than $500 million. small-cap 1. Of or relating to the common stock of a relatively small firm having little equity and few shares of common stock Growth Equity Portfolio is in the Small-Cap Growth 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 Opportunities Portfolios are in the Mid-Cap Core and Science & Technology Lipper peer groups, respectively. The Aurora Aurora, cities, United States Aurora (ərôr`ə, ô–). 1 City (1990 pop. 222,103), Adams and Arapahoe counties, N central Colo., a growing suburb on the east side of Denver; inc. 1903. and Dividend Achievers Portfolios are in the Small-Cap Core and Multi-Cap Value Lipper peer groups, respectively. About BlackRock BlackRock is one of the largest publicly traded investment management firms in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. with approximately $463.1 billion of assets under management at March 31, 2006. BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of equity, fixed income, cash management and alternative investment products. In addition, BlackRock provides risk management, investment system outsourcing and financial advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal to a growing number of institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , the firm serves clients from offices in the U.S., Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia.
BlackRock is majority owned by The PNC Financial Services PNC Financial Services (NYSE: PNC) is a U.S.-based financial services corporation, with assets of $92.0 billion. PNC operations include a regional banking franchise operating primarily in eight states and the District of Columbia, specialized financial businesses serving Group, Inc.
(NYSE: PNC) and by BlackRock employees. For additional information,
please visit the Company's website at www.blackrock.com.Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This communication, and other statements that BlackRock may make, including statements about the benefits of the transaction with Merrill Lynch, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and , 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 Subject to change; dependent upon or granted based on the occurrence of a future, uncertain event. A conditional payment is the payment of a debt or obligation contingent upon the performance of a certain specified act. verbs such as "will," "would," "should," "could," "may" or similar expressions. BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. In addition to factors previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in BlackRock's SEC reports and those identified elsewhere in this communication, 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 investment products, including its separately managed accounts and the former MLIM business; (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 All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. ; (8) the extent and timing of any share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. ; (9) the impact, extent and timing of technological changes and the adequacy of intellectual property protection; (10) the impact of legislative and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. actions and reforms and regulatory, supervisory su·per·vi·sor n. 1. One who supervises. 2. One who is in charge of a particular department or unit, as in a governmental agency or school system. 3. One who is an elected administrative officer in certain U.S. or enforcement actions of government agencies relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc BlackRock or PNC; (11) terrorist activities and international hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. , which may adversely affect the general economy, domestic and global financial and capital markets, specific industries, and BlackRock; (12) the ability to attract and retain highly talented professionals; (13) fluctuations in foreign currency exchange rates, which may adversely affect the value of advisory fees earned by BlackRock; (14) the impact of changes to tax legislation and, generally, the tax position of the Company; (15) BlackRock's ability to successfully integrate the MLIM business with its existing business; (16) the ability of BlackRock to effectively manage the former MLIM assets along with its historical assets under management; (17) BlackRock's success in maintaining the distribution of its products; and (18) the ability of BlackRock to complete the transaction with Merrill Lynch. BlackRock's Annual Reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and BlackRock's subsequent reports filed with the SEC, accessible on the SEC's website at http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. 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. The information contained on our website is not a part of this press release. ADDITIONAL INFORMATION AND WHERE TO FIND IT BlackRock intends to file with the Securities and Exchange Commission a Registration Statement on Form S-4, which will contain a proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. statement/prospectus, in connection with the proposed transaction. The proxy statement/prospectus will be mailed to the stockholders of BlackRock. STOCKHOLDERS OF BLACKROCK ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Such proxy statement/prospectus (when available) and other relevant documents may also be obtained, free of charge, on the Securities and Exchange Commission's website (http://www.sec.gov) or by contacting our Secretary, BlackRock, Inc., 40 East 52nd Street, New York, New York 10022. PARTICIPANTS IN THE SOLICITATION solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual BlackRock and certain persons may be deemed to be participants in the solicitation of proxies relating to the proposed transaction. The participants in such solicitation may include BlackRock's executive officers and directors. Further information regarding persons who may be deemed participants will be available in BlackRock's proxy statement/prospectus to be filed with the Securities and Exchange Commission in connection with the transaction. (1) See notes (a) and (b) to condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of income and supplemental information in Attachment See attach a file. I.
Attachment I
BlackRock, Inc.
Condensed Consolidated Statements of Income and Supplemental
Information
(Dollar amounts in thousands, except share data)
(unaudited)
Three months ended
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March 31, December 31,
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2006 2005 2005
---- ---- ----
Revenue
Investment advisory and
administration fees
Separate accounts $262,208 $141,885 $236,376
Mutual funds 87,500 70,371 83,626
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Total investment advisory and
administration fees 349,708 212,256 320,002
Other income 45,952 37,827 49,105
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Total revenue 395,660 250,083 369,107
----------------------------------
Expense
Employee compensation and
benefits 191,796 126,944 182,581
Fund administration and servicing
costs 10,374 9,109 11,340
General and administration 91,434 46,167 60,763
Amortization of intangible assets 2,029 1,281 2,029
----------------------------------
Total expense 295,633 183,501 256,713
----------------------------------
Operating income 100,027 66,582 112,394
----------------------------------
Non-operating income
Investment income 15,064 9,786 5,888
Interest expense (1,969) (2,014) (1,840)
----------------------------------
Total non-operating income 13,095 7,772 4,048
----------------------------------
Income before income taxes and
minority interest 113,122 74,354 116,442
Income taxes 41,618 27,331 42,825
----------------------------------
Income before minority interest 71,504 47,023 73,617
Minority interest 642 487 698
----------------------------------
Net income $70,862 $46,536 $72,919
==================================
Weighted-average shares outstanding
Basic 64,074,888 64,290,510 64,002,818
Diluted 66,731,560 66,880,713 66,914,279
Earnings per share
Basic $1.11 $0.72 $1.14
Diluted $1.06 $0.70 $1.09
Dividends paid per share $0.42 $0.30 $0.30
Supplemental information:
Operating income, as adjusted (a) $157,274 $89,289 $124,667
Operating margin, GAAP 25.3% 26.6% 30.5%
Operating margin, as adjusted (a) 41.4% 37.7% 35.5%
Net income, as adjusted (b) $82,363 $59,520 $80,663
Diluted earnings per share, as
adjusted (b) $1.23 $0.70 $1.21
Variance
--------
March 31, 2005 December 31, 2005
-------------- -----------------
Amount Percent Amount Percent
------ ------- ------ -------
Revenue
Investment advisory and
administration fees
Separate accounts $120,323 84.8% $25,832 10.9%
Mutual funds 17,129 24.3% 3,874 4.6%
-------------- ---------
Total investment advisory
and administration fees 137,452 64.8% 29,706 9.3%
Other income 8,125 21.5% (3,153) (6.4%)
-------------- ---------
Total revenue 145,577 58.2% 26,553 7.2%
-------------- ---------
Expense
Employee compensation and
benefits 64,852 51.1% 9,215 5.0%
Fund administration and
servicing costs 1,265 13.9% (966) (8.5%)
General and administration 45,267 98.1% 30,671 50.5%
Amortization of intangible
assets 748 58.4% - 0.0%
-------------- ---------
Total expense 112,132 61.1% 38,920 15.2%
-------------- ---------
Operating income 33,445 50.2% (12,367) (11.0%)
-------------- ---------
Non-operating income
Investment income 5,278 53.9% 9,176 155.8%
Interest expense 45 (2.2%) (129) 7.0%
-------------- ---------
Total non-operating income 5,323 68.5% 9,047 223.5%
-------------- ---------
Income before income taxes
and minority interest 38,768 52.1% (3,320) (2.9%)
Income taxes 14,287 52.3% (1,207) (2.8%)
-------------- ---------
Income before minority
interest 24,481 52.1% (2,113) (2.9%)
Minority interest 155 31.8% (56) (8.0%)
-------------- ---------
Net income $24,326 52.3% ($2,057) (2.8%)
============== =========
Weighted-average shares
outstanding
Basic (215,622) (0.3%) 72,070 0.1%
Diluted (149,153) (0.2%)(182,719) (0.3%)
Earnings per share
Basic $0.39 54.2% ($0.03) (2.6%)
Diluted $0.36 51.4% ($0.03) (2.8%)
Dividends paid per share $0.12 40.0% $0.12 40.0%
Supplemental information:
Operating income, as
adjusted (a) $67,985 76.1% $32,607 26.2%
Operating margin, GAAP -1.3% (4.9%) -5.2% (17.0%)
Operating margin, as
adjusted (a) 3.7% 9.8% 5.9% 16.6%
Net income, as adjusted
(b) $22,843 38.4% $1,700 2.1%
Diluted earnings per
share, as adjusted (b) $0.53 75.7% $0.02 1.7%
BlackRock, Inc.
Notes to Condensed Consolidated Statements of Income and Supplemental
Information
(a) While BlackRock reports its financial results using 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 ongoing operations, and for the reasons described below,
considers them to be effective indicators, for both management and
investors, of BlackRock's 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.
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 unaffiliated 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
------------------------------
March 31, December 31,
-----------------
2006 2005 2005
----------------- ------------
Operating income, GAAP basis 100,027 66,582 112,394
Non-GAAP adjustments
SSR payment 34,450 - -
PNC LTIP funding obligation 11,676 11,736 12,292
MLIM transaction costs 6,579 - -
Appreciation on deferred
compensation plans 4,542 2,098 (19)
SSR acquisition costs - 8,873 -
-------- -------- ------------
Operating income, as adjusted 157,274 89,289 124,667
Revenue, GAAP basis 395,660 250,083 369,107
Non-GAAP adjustments
Fund administration and
servicing costs (10,374) (9,109) (11,340)
Reimbursable property
management compensation (5,598) (4,059) (6,595)
-------- -------- ------------
Revenue used for operating margin
measurement, as adjusted 379,688 236,915 351,172
-------- -------- ------------
Operating margin, GAAP basis 25.3% 26.6% 30.5%
======== ======== ============
Operating margin, as adjusted 41.4% 37.7% 35.5%
======== ======== ============
Management believes 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. The 2006 SSR expense was excluded because it
represents a non-recurring payment (based upon a performance fee)
pursuant to the SSR acquisition agreement. The portion of LTIP expense
associated with awards to be met by the distribution to participants
of shares of BlackRock stock currently held by PNC has been excluded
from operating income, as adjusted, and operating margin, as adjusted,
because, exclusive of the potential impact related to LTIP
participants' put options, these charges will not impact BlackRock's
book value. 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, net of the related impact on compensation
expense, results in a nominal impact on net income. MLIM transaction
costs consist of certain professional fees incurred in 2006. SSR
acquisition costs consist of certain compensation costs and
professional fees incurred in 2005.
Fund administration and servicing costs have been excluded from
revenue used for operating margin measurement, as adjusted, because
the Company receives offsetting revenue and expense for these
services. 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 measurement,
as adjusted, because they bear no economic cost to BlackRock.
(b) While BlackRock reports its financial results using 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 ongoing 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.
Three months ended
------------------------------------
March 31, December 31,
-----------------------
2006 2005 2005
----------------------- ------------
Net income, GAAP basis $70,862 $46,536 $72,919
Non-GAAP adjustments, net of
tax
PNC's LTIP funding
requirement 7,356 7,394 7,744
MLIM transaction costs 4,145 - -
SSR acquisition costs - 5,590 -
----------- ----------- ------------
Net income, as adjusted 82,363 59,520 80,663
----------- ----------- ------------
Diluted weighted average shares
outstanding 66,731,560 66,880,713 66,914,279
----------- ----------- ------------
Diluted earnings per share, GAAP
basis $1.06 $0.70 $1.09
=========== =========== ============
Diluted earnings per share, as
adjusted $1.23 $0.89 $1.21
=========== =========== ============
Management believes that net income, as adjusted, and diluted earnings
per share, as adjusted, are effective measurements of BlackRock's
profitability and financial performance. The portion of 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, exclusive of the potential 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 in 2005. Compensation
reflected in this amount represents direct performance incentives paid
to 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.
MLIM transaction costs consist of certain professional fees incurred
in conjunction with the pending MLIM transaction. Professional fees
related to the SSR acquisition and the MLIM transaction reflected in
GAAP net income have been deemed non-recurring by management and have
been excluded from net income, as adjusted, and diluted earnings per
share, as adjusted, to help ensure comparability to prior reporting
periods.
Attachment II
BlackRock, Inc.
Summary of Revenues
(Dollar amounts in thousands, except share data)
(unaudited)
Three months ended
------------------
March 31, December 31,
--------- ------------
2006 2005 2005
---- ---- ----
Separate Account Revenue
Separate account base fees $147,601 $115,229 $149,146
Separate account performance fees 114,607 26,656 87,230
------------------------------
Total separate account revenue 262,208 141,885 236,376
------------------------------
Mutual Fund Revenue
BlackRock Funds 36,235 29,040 34,785
Closed-end Funds 25,729 19,898 25,752
BlackRock Liquidity Funds 24,486 21,021 22,124
Other commingled funds 1,050 412 965
------------------------------
Total mutual fund revenue 87,500 70,371 83,626
------------------------------
Total investment advisory and
administration fees 349,708 212,256 320,002
Other income 45,952 37,827 49,105
------------------------------
Total revenue $395,660 $250,083 $369,107
==============================
Variance
--------
March 31, 2005 December 31, 2005
-------------- -----------------
Amount Percent Amount Percent
------ ------- ------ -------
Separate Account Revenue
Separate account base fees $32,372 28.1% ($1,545) (1.0%)
Separate account performance
fees 87,951 329.9% 27,377 31.4%
--------- --------
Total separate account revenue 120,323 84.8% 25,832 10.9%
--------- --------
Mutual Fund Revenue
BlackRock Funds 7,195 24.8% 1,450 4.2%
Closed-end Funds 5,831 29.3% (23) (0.1%)
BlackRock Liquidity Funds 3,465 16.5% 2,362 10.7%
Other commingled funds 638 154.9% 85 8.8%
--------- --------
Total mutual fund revenue 17,129 24.3% 3,874 4.6%
--------- --------
Total investment advisory and
administration fees 137,452 64.8% 29,706 9.3%
Other income 8,125 21.5% (3,153) (6.4%)
--------- --------
Total revenue $145,577 58.2% $26,553 7.2%
========= ========
Attachment III
BlackRock, Inc.
Condensed Consolidated Statements of Financial Condition
(Dollar amounts in thousands)
(unaudited)
March 31, December 31,
2006 2005
---- ----
Assets
Cash and cash equivalents $368,098 $484,223
Accounts receivable 387,279 339,578
Investments 338,361 298,668
Intangible assets, net 492,491 483,982
Other assets 254,823 241,549
------------ ------------
Total assets $1,841,052 $1,848,000
============ ============
Liabilities, minority interest and
stockholders' equity
Accrued compensation $384,974 $522,637
Long term borrowings 253,791 253,791
Other liabilities 196,977 139,715
------------ ------------
Total liabilities 835,742 916,143
Minority interest 16,368 9,614
Stockholders' equity 988,942 922,243
------------ ------------
Total liabilities, minority interest and
stockholders' equity $1,841,052 $1,848,000
============ ============
Attachment IV
BlackRock, Inc.
Assets Under Management
(Dollar amounts in millions)
(unaudited)
March 31, March 31, December 31,
2006 2005 2005
------------ ------------ ------------
All Accounts
Fixed income $308,945 $265,291 $303,928
Cash Management 86,484 74,083 86,128
Equity 40,751 32,388 37,303
Alternative investment
products 26,880 19,566 25,323
------------ ------------ ------------
Total $463,060 $391,328 $452,682
============ ============ ============
Separate Accounts
Fixed income $284,418 $239,912 $279,368
Cash Management 9,654 7,307 7,275
Cash Management-Securities
lending 8,073 6,791 5,294
Equity 23,082 18,610 20,832
Alternative investment
products 26,880 19,566 25,323
------------------------- ------------
Subtotal 352,107 292,186 338,092
------------------------- ------------
Mutual Funds
Fixed income 24,527 25,379 24,560
Cash Management 68,757 59,985 73,559
Equity 17,669 13,778 16,471
------------ ------------ ------------
Subtotal 110,953 99,142 114,590
------------ ------------ ------------
Total $463,060 $391,328 $452,682
============ ============ ============
Component Changes in Assets Under Management
(Dollar amounts in millions)
(unaudited)
Three Months Three Months
ended ended
March 31, March 31,
2006 2005
------------ ------------
All Accounts
Beginning assets under
management $452,682 $341,760
Net subscriptions * 7,719 105
Acquisitions - 49,877
Market appreciation
(depreciation) 2,659 (414)
------------ ------------
Ending assets under management $463,060 $391,328
============ ============
Separate Accounts
Beginning assets under
management 338,092 $247,927
Net subscriptions * 12,286 4,522
Acquisitions - 40,181
Market appreciation
(depreciation) 1,729 (444)
------------ ------------
Ending assets under management 352,107 $292,186
------------ ------------
Mutual Funds
Beginning assets under
management 114,590 93,833
Net (depreciation) * (4,567) (4,417)
Acquisitions - 9,696
Market appreciation
(depreciation) 930 30
------------ ------------
Ending assets under management 110,953 99,142
------------ ------------
Total $463,060 $391,328
============ ============
* Includes dividend reinvestment
Attachment IV
BlackRock, Inc.
Assets Under Management
(Dollar amounts in millions)
(unaudited)
December 31, March 31,
2005 2006
------------ ---------------------------- ------------
Net Market
Beginning subscriptions appreciation Ending
Assets (redemptions) (depreciation) Assets
------------ ---------------------------- ------------
Separate Accounts
Fixed Income $279,368 $5,892 ($842) $284,418
Alternative
Investment
Products 25,323 861 696 $26,880
Equity 20,832 438 1,812 $23,082
Cash
Management 7,275 4,194 63 $11,532
Cash Management-
Securities
lending 5,294 901 - $6,195
------------ ---------------------------- ------------
Total Separate
Accounts 338,092 12,286 1,729 352,107
------------ ---------------------------- ------------
Mutual Funds
Cash Management 73,559 (4,802) - $68,757
Fixed Income 24,560 69 (103) $24,526
Equity 16,471 166 1,033 $17,670
------------ ---------------------------- ------------
Total Mutual
Funds 114,590 (4,567) 930 110,953
------------ ---------------------------- ------------
Total $452,682 $7,719 $2,659 $463,060
============ ============================ ============
December 31, March 31,
2005 2006
------------ ---------------------------- ------------
Net Market
Beginning subscriptions appreciation Ending
Assets (redemptions) (depreciation) Assets
------------ ---------------------------- ------------
Mutual Funds
BlackRock
Liquidity
Funds $66,386 ($5,133) - $61,253
BlackRock
Funds 25,670 378 755 $26,803
Closed-End
Funds 17,599 39 162 $17,800
Other
Commingled
Funds 3,993 96 - $4,089
BlackRock
Global
Series 942 53 13 1,008
------------ ---------------------------- ------------
Total Mutual
Funds $114,590 ($4,567) $930 $110,953
============ ============================ ============
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