BlackRock, Inc. (NYSE: BLK) today reported record net income of $26.2 million for the second quarter ended June 30, 2001, a 26% increase compared with $20.9 million earned in the second quarter of 2000 and a 3% increase compared with $25.5 million earned in the first quarter of 2001. Diluted earnings per share for the second quarter of 2001 were $0.40 compared with $0.32 and $0.39 for the second quarter of 2000 and the first quarter of 2001, respectively. Operating income of $42.7 million increased 24% compared with $34.3 million earned in the second quarter of 2000. (See Table 1.)
Net income for the six months ended June 30, 2001 was $51.7 million, a 29% increase compared with $40.1 million earned in the six months ended June 30, 2000. Diluted earnings per share for the six months ended June 30, 2001 were $0.80, a 29% increase compared with $0.62 reported for the six months ended June 30, 2000. Operating income for the six months ended June 30, 2001 was $84.6 million, an $18.2 million or 27% increase compared with $66.4 million earned in the six months ended June 30, 2000.
Assets under management at June 30, 2001 were $212.7 billion, up 5% from March 31, 2001 balances of $201.6 billion and 20% from June 30, 2000 balances of $177.3 billion. Net new business for the second quarter exceeded $10 billion and represented 92% of the increase in assets under management. Significantly, second quarter new business results are net of $1.4 billion of closed-end fund assets that matured on June 29, 2001 and the termination of a $3.6 billion account for an insurance client that was recently acquired by another firm.
"I am pleased with our second quarter financial results and our continued ability to realize asset growth in adverse markets," said Laurence D. Fink, Chairman and Chief Executive Officer of BlackRock. "In particular, momentum has increased in a number of areas, including liquidity management, international equities, BlackRock Solutions, Nomura BlackRock Asset Management and real estate products. Based on our performance to date, I remain comfortable with consensus estimates for the third quarter and full year 2001."
Second Quarter Highlights
* Institutional new business efforts drove second quarter asset growth,
including $6.9 billion in net new separate account assets from 22 new
and 90 existing clients and $4.9 billion in net subscriptions in
BlackRock Provident Institutional Funds (BPIF).
* Net new business in Nomura BlackRock Asset Management exceeded
$400 million (JPY 55 billion) of assets from ten clients in a variety of
separate accounts and funds.
* Our international equity business continued to grow, with net new
business of more than $470 million of assets funded during the quarter.
* Real estate assets under management increased by over $100 million
following a secondary stock offering by Anthracite Capital (NYSE: AHR),
a real estate investment trust managed by BlackRock, and additional
fundings in real estate mezzanine accounts.
* BlackRock Solutions completed a nine-month implementation of its
enterprise investment system for its second major client and added four
new risk management clients during the quarter.
* The BlackRock 2001 Term Trust (formerly NYSE: BTM) matured on schedule
at its targeted level of $10 per share, extending our record for
successful management of these unique closed-end bond funds.
* During the quarter, we completed consolidation of our Wilmington and
Philadelphia operations into the new BlackRock building in Wilmington,
Delaware.
* We closed the quarter with a strong pipeline of potential new business
totaling $30 billion in fixed income and $7 billion in equities.
Total revenue for the quarter ended June 30, 2001 increased $22.7 million or 20% to $135.3 million compared with the second quarter of 2000 largely due to a 40% increase in separate account revenue, which more than offset a 2.6% decline in mutual fund revenue. The substantial growth in separate account revenue resulted from strong growth in institutional fixed income and equity assets and included a $7.7 million increase in alternative product performance fees. Other income increased $3.7 million or 72% largely due to increased sales of BlackRock Solutions products. Total revenue for the first half of 2001 increased to $269.0 million, a $48.3 million or 22% increase from the prior year. The year-to-year increase was largely driven by a $48.0 million or 51% increase in separate account revenue due to higher institutional fixed income and equity assets and continued superior investment performance in the firm's alternative investment products, which generated $33.9 million in performance fees.
BlackRock's operating margin for the second quarter of 2001 was 35.7% compared with 35.8% and 35.7% for the first quarter of 2001 and full year 2000, respectively. General and Administration expense growth was attributable to higher occupancy costs associated with the new Delaware facility and leasehold expansion in New York, increased technology costs related to the completion of a second computer facility in Delaware and additional depreciation from hardware purchases for new BlackRock Solutions clients, and higher marketing and professional service costs for new products.
About BlackRock. BlackRock is one of the largest publicly traded investment management firms in the United States with $213 billion of assets under management as of June 30, 2001. BlackRock manages assets on behalf of more than 3,300 institutions and 200,000 individuals worldwide through a variety of equity, fixed income, liquidity and alternative investment separate accounts and mutual funds, including BlackRock Funds and BlackRock Provident Institutional Funds. In addition, BlackRock provides risk management and investment system services to institutional investors under the BlackRock Solutions name. Clients are served from the Company's headquarters in New York City, as well as offices in Wilmington, DE, Edinburgh, Scotland, Tokyo, Japan and Hong Kong. BlackRock is a member of The PNC Financial Services Group (NYSE: PNC), one of the largest diversified financial services organizations in the United States, and is majority-owned by PNC and by BlackRock employees.
Forward Looking Statements. The fourth paragraph of this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements with respect to the Company's future financial or business performance, conditions, strategies, expectations and goals may also be included in other portions of this press release and in other statements the Company makes. Forward-looking statements are typically identified by words or phrases such as "remain," "potential," "believe," "expect" "anticipate," "intend," "assume," "target," "estimate," "continue," "position," "prospects," "strategy," "outlook," "trend," "goal," "achievable," "objective," "plan" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. BlackRock cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These forward-looking statements speak only as of the date of this press release, and BlackRock assumes no duty to update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.
The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the introduction, withdrawal, success and timing of business initiatives and strategies; economic conditions; changes in interest rates and financial and capital markets; the investment performance of BlackRock's advised or sponsored investment products and separately managed accounts; competitive conditions; capital improvement projects; future acquisitions; and the impact, extent and timing of technological changes and legislative and regulatory actions and reforms.
Please refer to BlackRock's Annual Report on Form 10-K for the year ended December 31, 2000 and subsequent reports filed with the Securities and Exchange Commission for a more detailed discussion of these and other factors.
BlackRock, Inc.
Financial Highlights
($ in thousands, except share data)
(unaudited)
Three months ended
June 30, March 31,
2001 2000 2001
Total revenue $135,262 $112,571 $133,709
Total expense $92,554 $78,249 $91,789
Operating income $42,708 $34,322 $41,920
Net income $26,230 $20,857 $25,496
Diluted earnings per share $0.40 $0.32 $0.39
Diluted cash earnings per share (a) $0.44 $0.37 $0.43
Average diluted shares outstanding 64,877,389 64,492,447 64,897,486
EBITDA (b) $51,722 $40,641 $49,531
Operating margin (c) 35.7% 36.5% 35.8%
Assets under management ($ in millions) $212,694 $177,337 $201,636
BlackRock, Inc.
Financial Highlights
($ in thousands, except share data)
(unaudited)
Variance vs.
June 30, 2000 March 31, 2001
Amount % Amount %
Total revenue $22,691 20% $1,553 1%
Total expense $14,305 18% $765 1%
Operating income $8,386 24% $788 2%
Net income $5,373 26% $734 3%
Diluted earnings per share $0.08 25% $0.01 3%
Diluted cash earnings per share (a) $0.07 19% $0.01 2%
Average diluted shares outstanding 384,942 1% (20,097) 0%
EBITDA (b) $11,081 27% $2,191 4%
Operating margin (c)
Assets under management ($ in millions) $35,357 20% $11,058 5%
Six months ended
June 30, Variance
2001 2000 Amount %
Total revenue $268,971 $220,631 $48,340 22%
Total expense $184,343 $154,191 $30,152 20%
Operating income $84,628 $66,440 $18,188 27%
Net income $51,726 $40,054 $11,672 29%
Diluted earnings per share $0.80 $0.62 $0.18 29%
Diluted cash earnings per share (a) $0.88 $0.70 $0.18 26%
Average diluted shares outstanding 64,867,348 64,423,376 443,972 1%
EBITDA (b) $101,253 $78,442 $22,811 29%
Operating margin (c) 35.8% 36.4%
Assets under management
($ in millions) $212,694 $177,337 $35,357 20%
(a) Net income plus amortization expense for the period divided by average
diluted shares outstanding.
(b) Earnings before interest, taxes, depreciation and amortization.
(c) Operating income divided by total revenue less fund administration and
servicing costs - affiliates.
BlackRock, Inc.
Condensed Consolidated Statements of Income
(Dollar amounts in thousands, except share data)
(unaudited)
Three months ended
June 30, June 30, % Change
2001 2000
Revenue
Investment advisory and administration fees
Mutual funds $54,791 $56,228 (2.6%)
Separate accounts 71,624 51,204 39.9
Total investment advisory
and administration fees 126,415 107,432 17.7
Other income 8,847 5,139 72.2
Total revenue 135,262 112,571 20.2
Expense
Employee compensation and benefits 55,534 42,680 30.1
Fund administration
and servicing costs - affiliates 15,722 18,450 (14.8)
General and administration 18,684 14,605 27.9
Amortization of intangible assets 2,614 2,514 4.0
Total expense 92,554 78,249 18.3
Operating income 42,708 34,322 24.4
Non-operating income (expense)
Investment income 2,632 1,417 85.7
Interest expense (201) (86) (133.7)
2,431 1,331 82.6
Income before income taxes 45,139 35,653 26.6
Income taxes 18,909 14,796 27.8
Net income $26,230 $20,857 25.8
Weighted-average shares outstanding
Basic 64,248,630 63,865,770 0.6%
Diluted 64,877,389 64,492,447 0.6%
Earnings per share
Basic $0.41 $0.33 24.2%
Diluted $0.40 $0.32 25.0%
BlackRock, Inc.
Condensed Consolidated Statements of Income
(Dollar amounts in thousands, except share data)
(unaudited)
Six months ended
June 30, June 30, % Change
2001 2000
Revenue
Investment advisory and administration fees
Mutual funds $109,707 $115,328 (4.9%)
Separate accounts 142,009 93,974 51.1
Total investment advisory
and administration fees 251,716 209,302 20.3
Other income 17,255 11,329 52.3
Total revenue 268,971 220,631 21.9
Expense
Employee compensation and benefits 110,964 83,350 33.1
Fund administration
and servicing costs - affiliates 32,412 38,209 (15.2)
General and administration 35,739 27,705 29.0
Amortization of intangible assets 5,228 4,927 6.1
Total expense 184,343 154,191 19.6
Operating income 84,628 66,440 27.4
Non-operating income (expense)
Investment income 4,494 2,467 82.2
Interest expense (402) (439) 8.4
4,092 2,028 101.8
Income before income taxes 88,720 68,468 29.6
Income taxes 36,994 28,414 30.2
Net income $51,726 $40,054 29.1
Weighted-average shares outstanding
Basic 64,204,186 63,865,076 0.5%
Diluted 64,867,348 64,423,376 0.7%
Earnings per share
Basic $0.81 $0.63 28.6%
Diluted $0.80 $0.62 29.0%
BlackRock, Inc.
Condensed Consolidated Statements of Financial Condition
(Dollar amounts in thousands)
(unaudited)
June 30, December 31,
2001 2000
Assets
Cash and cash equivalents $99,231 $192,590
Accounts receivable 78,216 83,284
Investments 142,444 13,316
Property and equipment, net 56,728 45,598
Intangible assets, net 186,914 192,142
Other assets 7,701 10,073
Total assets $571,234 $537,003
Liabilities and stockholders' equity
Accrued compensation $87,090 $130,101
Accounts payable and accrued liabilities 43,426 27,014
Acquired management contract obligation 6,540 8,040
Other liabilities 5,306 3,607
Total liabilities 142,362 168,762
Stockholders' equity 428,872 368,241
Total liabilities and stockholders' equity $571,234 $537,003
BlackRock, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
(unaudited)
Six months ended
June 30,
2001 2000
Cash flows from operating activities
Net income $51,726 $40,054
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 12,131 9,535
Stock-based compensation 2,911 328
Tax benefit from stock-based compensation 5,140 --
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 5,014 (7,298)
Decrease in receivable from affiliate 54 886
Decrease (increase) in other assets 2,372 (3,385)
Decrease in accrued compensation (36,987) (26,400)
Increase (decrease) in accounts
payable and accrued liabilities 16,412 (4,189)
Decrease in accrued interest
payable to affiliates -- (705)
Increase (decrease) in other liabilities 1,699 (3,060)
Cash provided by operating activities 60,472 5,766
Cash flows from investing activities
Purchase of property and equipment (18,033) (10,592)
Purchase of investments (127,731) (7,575)
Cash used in investing activities (145,764) (18,167)
Cash flows from financing activities
Repayment of note and loan payable to affiliates -- (28,200)
Issuance of class A common stock 203 131
Purchase of treasury stock (6,472) --
Reissuance of treasury stock 212 --
Acquired management contract obligation payment (1,500) --
Cash used in financing activities (7,557) (28,069)
Effect of exchange rate changes
on cash and cash equivalents (510) (26)
Net decrease in cash and cash equivalents (93,359) (40,496)
Cash and cash equivalents, beginning of period 192,590 157,129
Cash and cash equivalents, end of period $99,231 $116,633
BlackRock, Inc.
Assets Under Management
(Dollar amounts in millions)
(unaudited)
June 30, December 31,
2001 2000 2000
Separate Accounts
Fixed income $110,483 $83,950 $103,561
Liquidity 6,782 7,052 6,495
Liquidity-Securities lending 10,004 10,655 11,501
Equity 8,257 7,621 8,716
Alternative investment products 4,479 2,394 3,470
Subtotal 140,005 111,672 133,743
Mutual Funds
Fixed income 12,326 13,919 13,317
Liquidity 48,829 35,944 43,190
Equity 11,534 15,802 13,519
Subtotal 72,689 65,665 70,026
Total $212,694 $177,337 $203,769
Component Changes in Assets Under Management
Three months ended Six months ended
June 30, June 30,
(Dollar amounts in millions) 2001 2000 2001 2000
Separate Accounts
Beginning assets under management $132,711 $105,349 $133,743 $99,220
Net subscriptions 6,871 5,815 3,897 9,622
Market appreciation 423 508 2,365 2,830
Ending assets under management 140,005 111,672 140,005 111,672
Mutual Funds
Beginning assets under management 68,925 67,224 70,026 65,297
Net subscriptions (redemptions) 3,301 (762) 4,177 (2)
Market appreciation (depreciation) 463 (797) (1,514) 370
Ending assets under management 72,689 65,665 72,689 65,665
Total $212,694 $177,337 $212,694 $177,337
Net subscriptions 10,172 $5,053 $8,074 $9,620
% of Change in AUM
from net subscriptions 92.0% 106.1% 90.5% 75.0%
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
Quarter Ended
June 30 September 30 December 31
2000 2000 2000
Separate Accounts
Fixed Income
Beginning assets under management $77,595 $83,950 $96,791
Net subscriptions 5,756 10,606 2,776
Market appreciation 599 2,235 3,994
Ending assets under management 83,950 96,791 103,561
Liquidity
Beginning assets under management 7,811 7,052 5,147
Net subscriptions (redemptions) (779) (1,925) 1,321
Market appreciation 20 20 27
Ending assets under management 7,052 5,147 6,495
Liquidity-Securities lending
Beginning assets under management 11,299 10,655 10,843
Net subscriptions (redemptions) (644) 188 658
Market appreciation -- -- --
Ending assets under management 10,655 10,843 11,501
Equity
Beginning assets under management 6,414 7,621 7,500
Net subscriptions 1,387 442 1,282
Market depreciation (180) (563) (66)
Ending assets under management 7,621 7,500 8,716
Alternative investment products
Beginning assets under management 2,230 2,394 2,818
Net subscriptions 95 336 584
Market appreciation (depreciation) 69 88 68
Ending assets under management 2,394 2,818 3,470
Total Separate Accounts
Beginning assets under management 105,349 111,672 123,099
Net subscriptions (redemptions) 5,815 9,647 6,621
Market appreciation 508 1,780 4,023
Ending assets under management $111,672 $123,099 $133,743
Mutual Funds
BlackRock Funds
Beginning assets under management $29,280 $28,262 $27,819
Net subscriptions (redemptions) (168) (455) 1,463
Market appreciation (depreciation) (850) 12 (2,923)
Ending assets under management 28,262 27,819 26,359
BlackRock Global Series
Beginning assets under management -- -- 54
Net subscriptions -- 54 18
Market appreciation (depreciation) -- -- 3
Ending assets under management -- 54 75
BPIF*
Beginning assets under management 25,755 25,615 27,580
Net subscriptions (redemptions) (140) 1,965 4,662
Exchanges -- -- 4,096
Ending assets under management 25,615 27,580 36,338
Closed End
Beginning assets under management 7,560 7,583 7,634
Net redemptions (30) -- (954)
Market appreciation 53 51 84
Ending assets under management 7,583 7,634 6,764
Short Term Investment Funds (STIF)*
Beginning assets under management 4,629 4,205 4,622
Net subscriptions (redemptions) (424) 417 (36)
Exchanges -- -- (4,096)
Ending assets under management 4,205 4,622 490
Total Mutual Funds
Beginning assets under management 67,224 65,665 67,709
Net subscriptions (redemptions) (762) 1,981 5,153
Market appreciation (depreciation) (797) 63 (2,836)
Ending assets under management $65,665 $67,709 $70,026
* During the fourth quarter of 2000, $4.1 billion of STIF assets under
management were exchanged into the BPIF product.
BlackRock, Inc.
Assets Under Management
Quarterly Trend
(Dollar amounts in millions)
(unaudited)
Quarter Six Months
ended ended
March 31 June 30 June 30,
2001 2001 2001
Separate Accounts
Fixed Income
Beginning assets under management $103,561 $107,371 $103,561
Net subscriptions 699 2,682 3,381
Market appreciation 3,111 430 3,541
Ending assets under management 107,371 110,483 110,483
Liquidity
Beginning assets under management 6,495 5,713 6,495
Net subscriptions (redemptions) (813) 1,042 229
Market appreciation 31 27 58
Ending assets under management 5,713 6,782 6,782
Liquidity-Securities lending
Beginning assets under management 11,501 7,514 11,501
Net subscriptions (redemptions) (3,987) 2,490 (1,497)
Market appreciation -- -- --
Ending assets under management 7,514 10,004 10,004
Equity
Beginning assets under management 8,716 7,796 8,716
Net subscriptions 445 488 933
Market depreciation (1,365) (27) (1,392)
Ending assets under management 7,796 8,257 8,257
Alternative investment products
Beginning assets under management 3,470 4,317 3,470
Net subscriptions 682 169 851
Market appreciation (depreciation) 165 (7) 158
Ending assets under management 4,317 4,479 4,479
Total Separate Accounts
Beginning assets under management 133,743 132,711 133,743
Net subscriptions (redemptions) (2,974) 6,871 3,897
Market appreciation 1,942 423 2,365
Ending assets under management $132,711 $140,005 $140,005
Mutual Funds
BlackRock Funds
Beginning assets under management $26,359 $24,383 $26,359
Net subscriptions (redemptions) 65 (253) (188)
Market appreciation (depreciation) (2,041) 459 (1,582)
Ending assets under management 24,383 24,589 24,589
BlackRock Global Series
Beginning assets under management 75 105 75
Net subscriptions 43 33 76
Market appreciation (depreciation) (13) (4) (17)
Ending assets under management 105 134 134
BPIF*
Beginning assets under management 36,338 37,047 36,338
Net subscriptions (redemptions) 709 4,907 5,616
Exchanges -- -- --
Ending assets under management 37,047 41,954 41,954
Closed End
Beginning assets under management 6,764 6,841 6,764
Net redemptions -- (1,409) (1,409)
Market appreciation 77 8 85
Ending assets under management 6,841 5,440 5,440
Short Term Investment Funds (STIF)*
Beginning assets under management 490 549 490
Net subscriptions (redemptions) 59 23 82
Exchanges -- -- --
Ending assets under management 549 572 572
Total Mutual Funds
Beginning assets under management 70,026 68,925 70,026
Net subscriptions (redemptions) 876 3,301 4,177
Market appreciation (depreciation) (1,977) 463 (1,514)
Ending assets under management $68,925 $72,689 $72,689
* During the fourth quarter of 2000, $4.1 billion of STIF assets under
management were exchanged into the BPIF product.
SOURCE: BlackRock, Inc.
Contact: Paul L. Audet of BlackRock, Inc., 212-409-3555, or
invrel@blackrock.com
Website: http://www.blackrock.com/
