-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gy9T4BfQhlbdxbCVmCuuSnCeXY9pCC+h2TaWoWAMhsgVTYwurw++gtKR7IrIiIf3 +PUgPMM5+900//st7b57AA== /in/edgar/work/0000950130-00-005968/0000950130-00-005968.txt : 20001114 0000950130-00-005968.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950130-00-005968 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACKROCK INC /NY CENTRAL INDEX KEY: 0001060021 STANDARD INDUSTRIAL CLASSIFICATION: [8744 ] IRS NUMBER: 510380803 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 812-11626 FILM NUMBER: 760046 BUSINESS ADDRESS: STREET 1: 345 PARK AVENUE 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2127545560 MAIL ADDRESS: STREET 1: 345 PARK AVENUE 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10154 10-Q 1 0001.txt QUARTERLY REPORT FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (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, 2000 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 51-0380803 ------------------------------ ---------- (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) _________________________ (Former name or former address, if changed since last report) 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 _________ -------- As of October 31, 2000, there were 9,047,086 shares of the registrant's class A common stock issued and outstanding and 54,886,382 shares of the registrant's class B common stock issued and outstanding. BlackRock, Inc. Index to Form 10-Q PART I FINANCIAL INFORMATION
Page Item 1. Financial Statements Consolidated Statements of Financial Condition 1 Consolidated Statements of Income 2 Consolidated Statements of Cash Flows 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II OTHER INFORMATION Item 1. Legal Proceedings 20 Item 2. Changes in Securities and Use of Proceeds 20 Item 6. Exhibits and Reports on Form 8-K 20
i PART I - FINANCIAL INFORMATION Item 1. Financial Statements BlackRock, Inc. Consolidated Statements of Financial Condition (Dollar amounts in thousands)
September 30, December 31, 2000 1999 ----------------- ----------------- (unaudited) Assets Cash and cash equivalents $158,928 $157,129 Accounts receivable 76,535 63,726 Investments, available for sale (cost: $14,122 and $2,486, respectively) 14,207 2,255 Property and equipment, net 37,678 22,677 Intangible assets, net 194,757 194,257 Receivable from affiliates 1,106 2,111 Other assets 9,284 5,427 ----------------- ----------------- Total assets $492,495 $447,582 ================= ================= Liabilities and stockholders' equity Note payable to affiliate $ - $28,200 Accrued compensation 96,498 90,350 Accounts payable and accrued liabilities Affiliate 30,288 33,476 Other 10,852 10,474 Accrued interest payable to affiliate - 705 Acquired management contract obligation 8,040 - Other liabilities 3,269 3,851 ----------------- ----------------- Total liabilities 148,947 167,056 ----------------- ----------------- Stockholders' equity Common stock, class A, $0.01 par value, 250,000,000 shares authorized and 9,002,841 and 9,000,000 shares outstanding, respectively 90 90 Common stock, class B, $0.01 par value, 100,000,000 shares authorized and 54,886,382 shares outstanding 549 549 Additional paid-in capital 170,558 169,554 Retained earnings 175,518 112,703 Unearned compensation (2,355) (2,139) Accumulated other comprehensive loss (812) (231) ----------------- ----------------- Total stockholders' equity 343,548 280,526 ----------------- ----------------- Total liabilities and stockholders' equity $492,495 $447,582 ================= =================
See accompanying notes to consolidated financial statements. 1 BlackRock, Inc. Consolidated Statements of Income (Dollar amounts in thousands, except share data) (unaudited)
Three months ended Nine months ended September 30, September 30, --------------------------------- --------------------------------- 2000 1999 2000 1999 --------------- --------------- --------------- --------------- Revenue Investment advisory and administration fees Mutual funds $57,745 $61,665 $173,073 $161,302 Separate accounts 63,539 39,141 157,513 110,475 BAI - (5,018) - (7,072) Other income Affiliate 1,250 1,250 3,750 3,750 Other 5,167 3,069 13,996 11,744 --------------- --------------- --------------- --------------- Total revenue 127,701 100,107 348,332 280,199 --------------- --------------- --------------- --------------- Expense Employee compensation and benefits 53,272 35,172 136,622 101,135 BAI incentive compensation - (3,894) - (5,387) Fund administration and servicing costs - affiliate 19,313 23,723 57,522 60,058 General and administration Affiliate 960 1,234 3,462 3,965 Other 14,617 10,801 39,820 31,904 Amortization of intangible assets 2,613 2,413 7,540 7,240 --------------- --------------- --------------- --------------- Total expense 90,775 69,449 244,966 198,915 --------------- --------------- --------------- --------------- Operating income 36,926 30,658 103,366 81,284 Non-operating income (expense) Interest and dividend income 2,197 918 4,664 2,211 Interest expense (215) (3,116) (654) (10,237) --------------- --------------- --------------- --------------- Total non-operating income (expense) 1,982 (2,198) 4,010 (8,026) --------------- --------------- --------------- --------------- Income before income taxes 38,908 28,460 107,376 73,258 Income taxes 16,147 12,237 44,561 31,050 --------------- --------------- --------------- --------------- Net income $22,761 $16,223 $ 62,815 $42,208 =============== =============== =============== =============== Earnings per share Basic $0.36 $0.30 $0.98 $0.77 Diluted $0.35 $0.30 $0.97 $0.77 Weighted-average shares outstanding Basic 63,884,410 54,675,353 63,871,568 54,762,955 Diluted 64,651,300 54,850,506 64,524,607 54,938,108
See accompanying notes to consolidated financial statements. 2 BlackRock, Inc. Consolidated Statements of Cash Flows (Dollar amounts in thousands) (unaudited)
Nine months ended September 30, ------------------------------ 2000 1999 -------------- ------------ Cash flows from operating activities Net income $ 62,815 $ 42,208 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,992 13,745 Amortization of discount on issuance of class B common stock 528 - Shares issued under the Nonemployee Directors Stock Compensation Plan 70 - Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (12,809) 46,696 Decrease (increase) in receivable from affiliates 1,005 (988) Increase in other assets (3,857) (4,099) Increase (decrease) in accrued compensation 6,148 (6,152) (Decrease) increase in accounts payable and accrued liabilities (2,810) 10,799 Decrease in accrued interest payable to affiliates (705) (999) (Decrease) increase in other liabilities (523) 568 ------------ ------------ Cash provided by operating activities 64,854 101,778 Cash flows from investing activities Purchase of property and equipment (22,453) (12,938) Purchase of investments (11,671) (171) ------------ ------------ Cash used in investing activities (34,124) (13,109) Cash flows from financing activities Repayment of note and loan payable to affiliates (28,200) (43,800) Purchase of treasury stock - (550) Reissuance of treasury stock - 750 Proceeds received from issuance of class A common stock 222 - Expenses related to issuance of class A common stock (91) - ------------ ------------ Cash used in financing activities (28,069) (43,600) Effect of exchange rate changes on cash and cash equivalents (862) - Net increase in cash and cash equivalents 1,799 45,069 Cash and cash equivalents, beginning of period 157,129 113,450 ------------ ------------ Cash and cash equivalents, end of period $ 158,928 $ 158,519 ============ ============
See accompanying notes to consolidated financial statements. 3 BlackRock, Inc. Notes to Consolidated Financial Statements Quarter Ended September 30, 2000 and 1999 (Dollar amounts in thousands, except share data) (unaudited) 1. Significant Accounting Policies Basis of Presentation The consolidated interim financial statements of BlackRock, Inc. and its 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 and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The Company follows the same accounting policies in the preparation of interim reports. 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 the 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. Intangible Assets Intangible assets are comprised of goodwill and management contract acquired. Goodwill is amortized on a straight-line basis over 25 years. Management contract acquired is amortized in proportion to and over the period of contract revenue, which is ten years. The Company continually evaluates the carrying value of intangible assets. Any impairment would be recognized when the future operating cash flows expected to be derived from such intangible assets are less than their carrying value. In such instances, impairment, if any, is measured on a discounted future cash flow basis. Reclassification of Prior Period's Statements Certain items previously reported have been reclassified to conform with the current year's presentation. Recent Accounting Pronouncement In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements". SAB No. 101 provides guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. The Company has adopted SAB No. 101 as required in the first quarter of 2000. The adoption of SAB No. 101 has not had a material effect on the Company's consolidated results of operations and financial position. 4 2. Property and Equipment Property and equipment consist of the following:
September 30, December 31, ------------------------------- 2000 1999 ------------- --------------- Equipment and Computer Software $34,035 $26,778 Leasehold improvements 7,505 7,454 Furniture and fixtures 7,105 6,893 Land 3,564 3,564 Construction in progress 14,895 - ----------- ------------ 67,104 44,689 ----------- ------------ Less accumulated depreciation 29,426 22,012 ----------- ------------ Property and equipment, net $37,678 $22,677 =========== ============
Depreciation expense was approximately $2,844 and $1,878 for the three months ended September 30, 2000 and 1999, respectively and $7,452 and $6,507 for the nine months ended September 30, 2000 and 1999, respectively. During the fourth quarter of 1999, the Company purchased land in Wilmington, Delaware for $3,564 and is presently constructing an 84,000 square foot office building at an estimated cost of approximately $20,000. Construction in progress reflects expenditures on capital projects located in Wilmington, Delaware and New York, New York. 3. Intangible Assets a) Goodwill The consolidated financial statements reflect the results of operations of the former BlackRock Financial Management, LP ("BFM") and BFM Advisory LP, which were acquired by The PNC Financial Services Group, Inc. (then known as PNC Bank Corp.) on February 28, 1995. Goodwill recognized at acquisition approximated $240,000 and is being amortized on a straight-line basis over 25 years. b) Management Contract Acquired On May 15, 2000, BlackRock entered into a contract in connection with the agreement and plan of merger of CORE Cap, Inc. with Anthracite Capital, Inc., a BlackRock managed REIT. This agreement assigns the managerial rights and duties of CORE Cap, Inc.'s former manager to BlackRock for consideration in the amount of $12,500 to be paid by BlackRock over a ten-year period. As of September 30, 2000, the present value of the acquired contract using an imputed interest rate of 10 percent is $8,040. This amount is recorded as an intangible asset and is being amortized over ten years. 4. Note and Loan Payable to Affiliates On February 29, 2000, the Company paid the remaining balance of $28,200 on an unsecured note 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. 5 5. Commitments a) Lease Commitments The Company leases its primary office space under agreements which expire in 2017. Future minimum commitments under these operating leases, net of rental reimbursements of $1,831 through 2005 from a sublease arrangement, are as follows: 2000 $2,639 2001 5,351 2002 9,211 2003 9,977 2004 9,977 Thereafter 119,859 ---------- $157,014 ==========
In connection with certain lease agreements, the Company is responsible for escalation payments. Occupancy expense amounted to $3,038 and $2,074 for the three months ended September 30, 2000 and 1999, respectively and $7,453 and $5,917 for the nine months ended September 30, 2000 and 1999, respectively. On May 3, 2000, BlackRock signed a lease with 40 East 52nd Street L.P. for approximately 171,000 square feet of office space at 40 East 52nd Street, New York, New York. This location will house BlackRock's corporate headquarters and will accommodate all of BlackRock's current New York City-based operations. Under the lease, BlackRock occupied approximately 19,000 square feet in July 2000 with the remaining 152,000 square feet to commence on or about September 1, 2001. The lease will terminate on February 28, 2017. Total rent payments over the lease term will approximate $138,000. The 152,000 square feet of new space will be placed in service in early 2002 consistent with the termination of all other BlackRock New York City leaseholds on February 28, 2002. b) Acquired Management Contract Obligation In connection with the management contract acquired associated with the agreement and plan of merger of CORE Cap, Inc. with Anthracite Capital, Inc., a BlackRock managed REIT, the Company recorded an $8,040 liability using an imputed interest rate of 10 percent. At September 30, 2000, the future minimum commitment under the agreement is as follows: 2001 $ 1,500 2002 1,500 2003 1,500 2004 1,500 2005 1,500 Thereafter 5,000 --------- $12,500 --------- less: Imputed interest 4,460 --------- Present value of Management Contract $ 8,040 =========
6 6. Comprehensive Income
Three months ended Nine months ended September 30, September 30, --------------------- ---------------------- 2000 1999 2000 1999 -------- ------- --------- ------- Net income $22,761 $16,223 $62,815 $42,208 Accumulated other comprehensive gain (loss): Net unrealized gain (loss) from investments, available for sale 107 (94) 281 (193) Foreign currency translation loss (836) - (862) - ------- ------- ------- ------- Comprehensive income $22,032 $16,129 $62,234 $42,015 ======= ======= ======= =======
7. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share:
Three months ended Nine months ended September 30, September 30, ------------------------------ ------------------------------- 2000 1999 2000 1999 ------------ ------------ -------------- ---------- Net income $22,761 $16,223 $62,815 $42,208 ------------ ----------- ----------- ----------- Basic weighted-average shares outstanding 63,884,410 54,675,353 63,871,568 54,762,955 Dilutive potential shares from forward sales 175,153 175,153 175,153 175,153 Dilutive potential shares from stock options 591,737 - 477,886 - ------------ ----------- ----------- ----------- Dilutive weighted-average shares outstanding 64,651,300 54,850,506 64,524,607 54,938,108 ============ =========== =========== =========== Basic earnings per share $0.36 $0.30 $0.98 $0.77 ============ =========== =========== =========== Diluted earnings per share $0.35 $0.30 $0.97 $0.77 ============ =========== =========== ===========
Net income per common share is computed using the weighted-average number of common and common equivalent shares outstanding. Common and 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 Bulletin 98, "Earnings per share," common and common equivalent shares issued at prices below the public offering price during the twelve months immediately preceding BlackRock's initial public offering on October 1, 1999 have been included in the calculation as if they were outstanding for all periods presented using the treasury stock method and the options' exercise price of $14.00 per share. 7 8. Supplemental Statements of Cash Flow Information Supplemental disclosure of cash flow information:
Nine months ended September 30, 2000 1999 ----------------------- Cash paid for interest $1,058 $8,486 ========= ========= Cash paid for income taxes $42,514 $25,864 ========= =========
Supplemental schedule of noncash transactions:
Nine months ended September 30, 2000 1999 ----------------- Acquired management contract $8,040 - ======= =======
8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations BlackRock, Inc., a Delaware corporation (together with its subsidiaries "BlackRock" or the "Company"), is one of the 30 largest investment management firms in the United States with approximately $190.8 billion of assets under management at September 30, 2000. BlackRock is a majority owned indirect subsidiary of The PNC Financial Services Group, Inc. ("PNC"), one of the largest diversified financial service companies in the United States operating regional banking, corporate banking, real estate finance, asset-based lending, private banking, asset management and global fund processing services. PNC acquired BlackRock in 1995 and consolidated a substantial part of PNC's asset management businesses under the BlackRock name in 1998. On October 1, 1999, BlackRock offered 9 million shares of class A common stock in an initial public offering ("IPO"). As of September 30, 2000, PNC indirectly owns approximately 70%, the public owns approximately 14% and BlackRock employees own approximately 16% of BlackRock. The following table summarizes BlackRock's operating performance for the three and nine months ended September 30, 2000 and September 30, 1999: BlackRock, Inc. Financial Highlights Reported Results ($ in thousands, except share data) (unaudited)
Three months ended Variance vs. --------------------------------- ---------------------------------- September 30, June 30, September 30, 1999 June 30, 2000 -------------------- ---------- ------------------- --------------- 2000 1999 2000 Amount % Amount % -------- -------- ---------- ---------- ---- -------- ---- Total revenue $127,701 $100,107 $112,571 $27,594 28% $15,130 13% Total expense $90,775 $69,449 $78,249 $21,326 31% $12,526 16% Operating income $36,926 $30,658 $34,322 $6,268 20% $2,604 8% Net income $22,761 $16,223 $20,857 $6,538 40% $1,904 9% Diluted earnings per share $0.35 $0.30 $0.32 $0.05 17% $0.03 9% Pro-forma diluted earnings per share (a) $0.35 $0.27 $0.32 $0.08 30% $0.03 9% Diluted cash earnings per share (b) $0.39 $0.34 $0.37 $0.05 15% $0.02 5% Pro-forma diluted cash earnings per share (a) (b) $0.39 $0.31 $0.37 $0.08 26% $0.02 5% Average diluted shares outstanding 64,651,300 54,850,506 64,492,447 9,800,794 18% 158,853 0% EBITDA (c) $44,580 $35,867 $40,641 $8,713 24% $3,939 10% Operating margin (d) 34.1% 40.1% 36.5% Assets under management ($ in millions) $190,808 $148,102 $177,337 $42,706 29% $13,471 8% Nine months ended September 30, Variance --------------------------- ------------------------ 2000 1999 Amount % ---------- ----------- ------------ ------- Total revenue $ 348,332 $ 280,199 $ 68,133 24% Total expense $ 244,966 $ 198,915 $ 46,051 23% Operating income $ 103,366 $ 81,284 $ 22,082 27% Net income $ 62,815 $ 42,208 $ 20,607 49% Diluted earnings per share $ 0.97 $ 0.77 $ 0.20 26% Pro-forma diluted earnings per share (a) $ 0.97 $ 0.72 $ 0.25 35% Diluted cash earnings per share (b) $ 1.09 $ 0.90 $ 0.19 21% Pro-forma diluted cash earnings per share (a) (b) $ 1.09 $ 0.83 $ 0.26 31% Average diluted shares outstanding 64,524,607 54,938,108 9,586,499 17% EBITDA (c) $ 123,022 $ 97,242 $ 25,780 27% Operating margin (d) 35.5% 36.9% Assets under management ($ in millions) $ 190,808 $ 148,102 $ 42,706 29%
(a) Based on adjusting 1999 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 amortization expense for the period divided by average diluted shares outstanding. (c) Earnings before interest, taxes, depreciation and amortization. (d) Operating income divided by total revenue less fund administration and servicing costs - affiliates. 9 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. BlackRock provides a variety of risk management services to insurance companies, finance companies, pension funds, REITs, commercial and mortgage banks, savings institutions and government agencies. These services are provided under the brand name BlackRock Solutions and include a wide array of risk management services and enterprise investment system outsourcing to clients. The fees earned on risk management advisory assignments are recorded as other income. BlackRock Asset Investors ("BAI") was an alternative investment product created in 1994 in response to the opportunity that the Company perceived in the commercial real estate sector. Due to reduced opportunities to generate appropriate returns, BAI's Board of Trustees and shareholders approved management's recommendation in 1997 to liquidate the fund, which was completed on September 27, 1999. The net impact to BlackRock's operating income as a result of the liquidation, which involved the sale of BAI's assets was a loss of $1.1 million and $1.7 million for the three and nine months ended September 30, 1999, respectively. Operating revenue primarily consists of investment advisory and administration fees earned on separate account and mutual fund assets under management and other income. Revenue associated with BAI, which was liquidated in 1999, is reported separately and is included in 1999 total revenue. Operating expense primarily consists of employee compensation and benefits, fund administration and servicing costs-affiliates, general and administration, and amortization of intangible assets. Employee compensation and benefit expense reflects salaries, deferred and incentive compensation, and related benefit costs. 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. BAI incentive compensation expense, which is reported separately and included in total expense, reflects compensation earned by investment advisory and other employees of BlackRock in accordance with various contractual and other arrangements with PNC and the fund. Intangible assets at September 30, 2000 and December 31, 1999, were $194.8 million and $194.3 million, respectively, with amortization expense of approximately $2.6 million and $2.4 million for the three months ended September 30, 2000 and 1999, respectively and $7.5 million and $7.2 million for the nine months ended September 30, 2000 and 1999, respectively. Intangible assets reflect PNC's acquisition of BlackRock Financial Management, L.P. ("BFM") on February 28, 1995 and a management contract acquired in connection with the agreement and plan of merger of CORE Cap, Inc. with Anthracite Capital, Inc., a BlackRock managed REIT, using a 10 percent imputed interest rate on May 15, 2000. This agreement assigns the managerial rights and duties of CORE Cap, Inc.'s external manager to BlackRock for consideration in the amount of $12.5 million to be paid by BlackRock over a ten-year period. The present value of the acquired contract is approximately $8.0 million. This amount is recorded as an intangible asset and is being amortized over ten years. 10 Assets Under Management Assets under management ("AUM") increased $42.7 billion, or 29%, to $190.8 billion at September 30, 2000, compared with $148.1 billion at September 30, 1999. The growth in assets under management was attributable to increases of $34.1 billion in separate accounts and $8.6 billion in mutual fund assets. The increase in separate accounts was due to net subscriptions of $29.0 billion and market appreciation of $5.1 billion. Net subscriptions in fixed income and equity accounts were $25.4 billion and $5.0 billion, respectively, with net redemptions in liquidity accounts of $1.4 billion. Market appreciation was primarily attributable to fixed income accounts. The growth in equity separate account assets was primarily the result of new business in the international sector, generated by the European equity team that joined BlackRock in January 2000. The $8.6 billion increase in mutual fund assets reflected net subscriptions totaling $7.0 billion and market appreciation of $1.6 billion. The rise in mutual fund assets was largely due to net subscriptions and market appreciation in the BlackRock Funds and Provident Institutional Funds, which increased $3.4 billion or 14% and $5.2 billion or 23%, respectively.
September 30, Change --------------- ---------------- 2000 1999 Amount Percent ---- ---- ------ ------- ($ in millions) ($ in millions) Separate Accounts* Fixed income $ 99,600 $ 69,266 $30,334 43.8% Liquidity 15,990 17,310 (1,320) (7.6) Equity 7,509 2,454 5,055 206.0 -------- -------- ------- ------- Subtotal 123,099 89,030 34,069 38.3 -------- -------- ------- ------- Mutual Funds Fixed income 13,983 13,579 404 3.0 Liquidity 37,896 32,717 5,179 15.8 Equity 15,830 12,776 3,054 23.9 -------- -------- ------- ------- Subtotal 67,709 59,072 8,637 14.6 -------- -------- ------- ------- Total $190,808 $148,102 $42,706 28.8% ======== ======== ======= =======
* includes alternative investment products. 11 BlackRock, Inc Component Changes in Assets Under Management (unaudited) The following tables present the component changes in BlackRock's assets under management for the three and nine months ended September 30, 2000 and 1999. The data reflects certain reclassifications between net subscriptions (redemptions) and market appreciation (depreciation) from amounts previously reported. For the three and nine months ended September 30, 2000, net subscriptions represented 86% and 81%, respectively, of the total increase in assets under management. Net subscriptions were $11.6 billion and $21.2 billion for the three and nine months ended September 30, 2000, respectively.
Three months ended Nine months ended September 30 September 30 ------------------------ ------------------------- 2000 1999 2000 1999 -------- --------- --------- -------- Separate Accounts * Beginning assets under management $111,672 $ 83,001 $ 99,220 $ 69,112 Net subscriptions 9,647 5,913 19,269 20,440 Market appreciation (depreciation) 1,780 116 4,610 (522) -------- -------- -------- -------- Ending assets under management 123,099 89,030 123,099 89,030 Mutual Funds Beginning assets under management 65,665 58,800 65,297 61,530 Net subscriptions (redemptions) 1,981 951 1,979 (2,501) Market appreciation (depreciation) 63 (679) 433 43 -------- -------- -------- -------- Ending assets under management 67,709 59,072 67,709 59,072 -------- -------- -------- -------- Total $190,808 $148,102 $190,808 $148,102 ======== ======== ======== ======== Net subscriptions $ 11,628 $ 6,864 $ 21,248 $ 17,939 % of Change in AUM from net subscriptions 86.3% 108.9% 80.8% 102.7%
* includes alternative investment products. 12 BlackRock, Inc. Assets Under Management Quarterly Trend (Dollar amounts in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- 1999 2000 Nine months ended ---------------------------------------------------------------------- September 30 December 31 March 31 June 30 September 30 September 30, 2000 ---------------------------------------------------------------------- --------------------- Separate Accounts * Fixed Income Beginning assets under management $68,286 $69,266 $ 75,206 $ 79,825 $ 86,344 $ 75,206 Net subscriptions 886 6,106 2,541 5,851 10,933 19,325 Market appreciation (depreciation) 94 (166) 2,078 668 2,323 5,069 ---------------------------------------------------------------------- --------------------- Ending assets under management 69,266 75,206 79,825 86,344 99,600 99,600 ---------------------------------------------------------------------- --------------------- Liquidity Beginning assets under management 12,362 17,310 20,934 19,110 17,707 20,934 Net subscriptions (redemptions) 4,933 3,602 (1,847) (1,423) (1,737) (5,007) Market appreciation 15 22 23 20 20 63 ---------------------------------------------------------------------- --------------------- Ending assets under management 17,310 20,934 19,110 17,707 15,990 15,990 ---------------------------------------------------------------------- --------------------- Equity Beginning assets under management 2,353 2,454 3,080 6,414 7,621 3,080 Net subscriptions 94 35 3,113 1,387 451 4,951 Market appreciation (depreciation) 7 591 221 (180) (563) (522) ---------------------------------------------------------------------- --------------------- Ending assets under management 2,454 3,080 6,414 7,621 7,509 7,509 ---------------------------------------------------------------------- --------------------- Total Separate Accounts Beginning assets under management 83,001 89,030 99,220 105,349 111,672 99,220 Net subscriptions 5,913 9,743 3,807 5,815 9,647 19,269 Market appreciation 116 447 2,322 508 1,780 4,610 ---------------------------------------------------------------------- --------------------- Ending assets under management $89,030 $99,220 $105,349 111,672 $123,099 $123,099 ====================================================================== ===================== Mutual Funds BlackRock Funds Beginning assets under management $25,255 $24,453 $ 27,339 $ 29,280 $ 28,262 $ 27,339 Net subscriptions (redemptions) (172) 1,577 994 (168) (455) 371 Market appreciation (depreciation) (630) 1,309 947 (850) 12 109 ---------------------------------------------------------------------- --------------------- Ending assets under management 24,453 27,339 29,280 28,262 27,819 27,819 ---------------------------------------------------------------------- --------------------- BlackRock Global Series Beginning assets under management - - - - - - Net subscriptions - - - - 54 54 Market appreciation - - - - - - ---------------------------------------------------------------------- --------------------- Ending assets under management - - - - 54 54 ---------------------------------------------------------------------- --------------------- Provident Institutional Funds (PIF) Beginning assets under management 21,578 22,387 25,554 25,755 25,615 25,554 Net subscriptions (redemptions) 809 3,167 201 (140) 1,965 2,026 Market appreciation - - - - - - ---------------------------------------------------------------------- --------------------- Ending assets under management 22,387 25,554 25,755 25,615 27,580 27,580 ---------------------------------------------------------------------- --------------------- Closed End Beginning assets under management 7,507 7,579 7,340 7,560 7,583 7,340 Net subscriptions (redemptions) 121 (130) - (30) - (30) Market appreciation (depreciation) (49) (109) 220 53 51 324 ---------------------------------------------------------------------- --------------------- Ending assets under management 7,579 7,340 7,560 7,583 7,634 7,634 ---------------------------------------------------------------------- --------------------- Short Term Investment Funds (STIF) Beginning assets under management 4,460 4,653 5,064 4,629 4,205 5,064 Net subscriptions (redemptions) 193 411 (435) (424) 417 (442) Market appreciation - - - - - - ---------------------------------------------------------------------- --------------------- Ending assets under management 4,653 5,064 4,629 4,205 4,622 4,622 ---------------------------------------------------------------------- --------------------- Total Mutual Funds Beginning assets under management 58,800 59,072 65,297 67,224 65,665 65,297 Net subscriptions (redemptions) 951 5,025 760 (762) 1,981 1,979 Market appreciation (depreciation) (679) 1,200 1,167 (797) 63 433 ---------------------------------------------------------------------- --------------------- Ending assets under management $59,072 $65,297 $ 67,224 $ 65,665 $ 67,709 $ 67,709 ====================================================================== =====================
* includes alternative investment products. 13 Operating Results For The Three Months Ended September 30, 2000 Compared With The Three Months Ended September 30, 1999. Revenue Total revenue for the three months ended September 30, 2000 increased $27.6 million or 28% to $127.7 million compared with the three months ended September 30, 1999. Investment advisory and administration fees increased $25.5 million or 27% to $121.3 million for the three months ended September 30, 2000, compared with the three months ended September 30, 1999. The growth in investment advisory and administration fees was primarily due to increases in assets under management, which totaled $190.8 billion at September 30, 2000, a 29% increase compared with September 30, 1999.
Three months ended September 30, Change ----------------------- -------------------- 2000 1999 Amount Percent -------- -------- -------- ------- ($ in thousands) ($ in thousands) Investment advisory and administration fees: Mutual funds $57,745 $61,665 ($3,920) -6.4% Separate accounts 63,539 39,141 24,398 62.3 BAI revenue - (5,018) 5,018 NM -------- -------- -------- ------ Total investment advisory and administration fees: 121,284 95,788 25,496 26.6 Other income 6,417 4,319 2,098 48.6 -------- -------- -------- ------ Total revenue $127,701 $100,107 $ 27,594 27.6% ======== ======== ======== =====
NM-Not meaningful Mutual Fund revenue for the three months ended September 30, 2000 of $57.7 million declined $3.9 million compared with the three months ended September 30, 1999 primarily due to higher advisory fees earned in 1999 on PNC client assets invested in the BlackRock Funds. Excluding the increase in PNC mutual fund related revenue for 1999, revenue increased $6.3 million or 12%. The $6.3 million increase was primarily due to an increase in assets under management in the Provident Institutional Funds and BlackRock Funds of $5.2 billion and $3.4 billion, respectively. Separate account advisory fees increased $24.4 million or 62%, primarily due to a $34.1 billion or 38% increase in assets under management and higher performance fee revenues on alternative investment products. The increase in separate account assets since September 30, 1999 was driven by continued strong growth in fixed income assets of $30.3 billion or 44% and a $5.1 billion or 206% increase in equity assets. The increase in equity assets primarily reflects mandates won by the new European equity team. The $5.0 million change in BAI advisory fees was due to the fund's liquidation in 1999. Other income increased $2.1 million or 49%, primarily due to a $1.2 million increase in risk management service fees and $.5 million in client portfolio accounting services. 14 Expense Total expense increased $21.3 million to approximately $90.8 million for the three months ended September 30, 2000, compared with $69.5 million for the three months ended September 30, 1999. The change was primarily the result of increases in employee compensation and benefits and general and administration expenses, partially offset by a decrease in fund administration and servicing costs-affiliates.
Three months ended September 30, Change ----------------------- -------------------- 2000 1999 Amount Percent -------- -------- -------- ------- ($ in thousands) ($ in thousands) Employee compensation and benefits $ 53,272 $ 35,172 $ 18,100 51.5% BAI incentive compensation - (3,894) 3,894 NM Fund administration and servicing costs-affiliates 19,313 23,723 (4,410) (18.6) General and administration 15,577 12,035 3,542 29.4 Amortization of intangible assets 2,613 2,413 200 8.3 -------- -------- -------- ------- Total expense $ 90,775 $ 69,449 $ 21,326 30.7% ======== ======== ======== =======
NM-Not meaningful Employee compensation and benefits increased $18.1 million or 52% due to additional expenses of $14.3 million for incentive compensation primarily based on operating profit growth and $3.8 million related to salary and benefits. Salary and benefit cost increases were the result of a 13% increase in full-time employees to support business growth and $3.3 million of additional accruals reflecting a determination by the Company's Compensation Committee to increase incentive compensation and related benefits due to the Company's strong operating performance. The change in BAI incentive compensation was due to the fund's liquidation in 1999. Fund administration and servicing costs-affiliates declined $4.4 million or 19% due to lower costs on PNC client assets invested in the BlackRock Funds. General and administration expenses increased $3.5 million or 29% due to: a $1.4 million increase in marketing and promotional costs associated with the BlackRock Funds and international business expansion; a $1.2 million increase in office and related services; a $.7 million increase in technology and related services; and a $.2 million increase in portfolio and related services. Amortization of intangible assets increased $.2 million or 8% primarily due to the management contract acquired on May 15, 2000 in connection with the agreement and plan of merger of CORE Cap, Inc. with Anthracite Capital, Inc., a BlackRock managed REIT. Operating Income and Net Income Operating income was $36.9 million for the three months ended September 30, 2000 representing a $6.3 million or 20.4% increase compared with the three months ended September 30, 1999. The operating margin exclusive of additional compensation and benefits expense accruals in 2000 and certain non-recurring adjustments in 1999, including BAI, was 37.4% and 37.6%, respectively. Non- operating income increased $4.2 million to $2.0 million for the three months ended September 30, 2000 as compared with $2.2 million of non-operating expense for the three months ended September 30, 1999. The significant improvement largely reflects reduced interest expense due to the repayment of $153.2 million in debt since September 30, 1999 of which approximately $115 million was from net proceeds from the IPO. Income tax expense was $16.1 million and $12.2 million representing effective tax rates of 41.5% and 43.0% for the three months ended September 30, 2000 and 1999, respectively. Net income totaled $22.8 million for the three months ended September 30, 2000 compared with $16.2 million for the three months ended September 30, 1999, representing an increase of 40%. 15 Operating Results For The Nine Months Ended September 30, 2000 Compared With The Nine Months Ended September 30, 1999. Revenue Total revenue for the nine months ended September 30, 2000 increased $68.1 million or 24% to $348.3 million compared with the nine months ended September 30, 1999. Investment advisory and administration fees increased $65.9 million or 25% to $330.6 million for the nine months ended September 30, 2000, compared with the nine months ended September 30, 1999. The growth in investment advisory and administration fees was primarily due to increases in assets under management, which totaled $190.8 billion at September 30, 2000, a 29% increase compared with September 30, 1999.
Nine months ended September 30, Change ------------------------ ---------------------- 2000 1999 Amount Percent -------- -------- -------- ------- ($ in thousands) ($ in thousands) Investment advisory and administration fees: Mutual funds $173,073 $161,302 $11,771 7.3% Separate accounts 157,513 110,475 47,038 42.6 BAI revenue - (7,072) 7,072 NM -------- -------- -------- ------ Total investment advisory and administration fees: 330,586 264,705 65,881 24.9 Other income 17,746 15,494 2,252 14.5 -------- -------- -------- ------ Total revenue $348,332 $280,199 $ 68,133 24.3% ======== ======== ======== ======
NM-Not meaningful Mutual fund advisory and administration fees increased $11.8 million or 7.3% to $173.1 million for the nine months ended September 30, 2000 compared with the nine months ended September 30, 1999, primarily due to a $5.2 billion and a $3.4 billion increase in assets under management in the Provident Institutional Funds and BlackRock Funds, respectively. Separate account advisory fees increased $47.0 million or 43%, primarily due to a $34.1 billion or 38% increase in assets under management and higher performance fees associated with alternative investment products. The $7.1 million change in BAI advisory fees was due to the fund's liquidation in 1999. Other income increased $2.3 million or 14.5%, primarily due to increases in risk management fees earned and client portfolio accounting services. 16 Expense Total expense increased $46.1 million or 23% to $245.0 million for the nine months ended September 30, 2000, compared with $198.9 million for the nine months ended September 30, 1999. The change was primarily the result of increases in employee compensation and benefits and general and administration expenses, partially offset by a decrease in fund administration and servicing costs-affiliates.
Nine months ended September 30, Change ------------------------ ---------------------- 2000 1999 Amount Percent -------- -------- -------- ------- ($ in thousands) ($ in thousands) Employee compensation and benefits $136,622 $101,135 $ 35,487 35.1% BAI incentive compensation - (5,387) 5,387 NM Fund administration and servicing costs-affiliates 57,522 60,058 (2,536) (4.2) General and administration 43,282 35,869 7,413 20.7 Amortization of goodwill 7,540 7,240 300 4.1 -------- -------- -------- ------- Total expense $244,966 $198,915 $ 46,051 23.2% ======== ======== ======== =======
NM-Not meaningful Employee compensation and benefits increased $35.4 million due to additional expenses of $21.3 million for incentive compensation primarily based on operating profit growth and $14.1 million related to salary and benefits. Salary and benefit cost increases were the result of a 13% increase in full-time employees to support business growth and $3.3 million of additional accruals reflecting a determination by the Company's Compensation Committee to increase incentive compensation and related benefits due to the Company's strong operating performance. The change in BAI incentive compensation was due to the fund's liquidation in 1999. Fund administration and servicing costs-affiliates declined $2.5 million or 4.2% due to lower costs on PNC client assets invested in the BlackRock Funds. General and administration expenses increased $7.4 million or 21% primarily due to: a $3.8 million increase in marketing and promotional costs; a $1.9 million increase in office and related services; and a $1.5 million increase in portfolio and related services. Operating Income and Net Income Operating income was $103.4 million for the nine months ended September 30, 2000, representing a $22.1 million or 27% increase compared with the nine months ended September 30 1999. The operating margin exclusive of additional compensation and benefits expense accruals in 2000 and certain non-recurring adjustments in 1999, including BAI, was 36.8% and 36.0%, respectively. Non- operating income increased $12.0 million to $4.0 million for the nine months ended September 30, 2000 as compared with $8.0 million of non-operating expense for the nine months ended September 30, 1999. The significant improvement largely reflects reduced interest expense due to the repayment of $153.2 million in debt as of September 30, 1999 of which approximately $115 million represented net proceeds from the IPO. In addition, interest income increased $2.5 million due to additional investments made in the Provident Institutional Funds (Temp Funds) during the year. Income tax expense was $44.6 million and $31.1 million, representing effective tax rates of 41.5% and 42.4% for the nine months ended September 30, 2000 and 1999, respectively. Net income totaled $62.8 million for the nine months ended September 30, 2000 compared with $42.2 million for the nine months ended September 30, 1999, representing an increase of $20.6 million or 49%. 17 Liquidity and Capital Resources BlackRock has historically met its working capital requirements through cash generated by its operating activities and borrowings from PNC Bank, N.A., an indirect, wholly-owned subsidiary of PNC, under a $175.0 million revolving credit facility. Cash provided by operating activities totaled $64.9 million for the nine months ended September 30, 2000. Net cash flow used in investing activities was $34.1 million for the nine months ended September 30, 2000. Capital expenditures in 2000 includes $14.9 million in construction costs incurred through September 30, 2000 on the 84,000 square foot office building in Wilmington, Delaware as well as higher technology investments associated with risk management activities and increased office and related costs to support personnel growth. Capital expenditures for property and equipment were $22.4 million for the nine months ended September 30, 2000. Net purchases of investments were $11.7 million for the nine months ended September 30, 2000 and represented investments made in the new BlackRock Funds and alternative investment products. Net cash used in financing activities was $28.1 million for the nine months ended September 30, 2000. Debt repayments totaled $28.2 million for the nine months ended September 30, 2000. Total capital at September 30, 2000 was $343.5 million and was comprised solely of stockholders' equity. Seasonality BlackRock does not believe its operations are subject to significant seasonal fluctuations. 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. 18 Forward-Looking Statements This report and other documents filed by BlackRock with the Securities and Exchange Commission (the "SEC") include forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to BlackRock's future financial or business performance or conditions. In addition, BlackRock may make other oral and written forward-looking statements. Forward- looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "position," "target," "assume," "achievable," "potential," "strategy," "goal," "plan," "aspiration," "outlook," "continue," "remain," "maintain," "trend," 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 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 update forward- looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historic performance. In addition to those factors mentioned elsewhere in this report, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historic 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 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. Reference is made to BlackRock's Annual Report on Form 10-K for the year ended December 31, 1999 and subsequent reports filed with the Securities and Exchange Commission which identify additional factors that can affect forward- looking statements. 19 PART II - OTHER INFORMATION Item 1. Legal Proceedings By Notice and Order entered August 28, 2000, Ervin & Associates voluntarily dismissed without prejudice BlackRock Capital Finance, L.P. from the civil lawsuit brought under the False Claims Act by Ervin against BlackRock Capital Finance and certain other entities. This lawsuit was previously reported in the Company's Form 10-Q for the quarter ended March 31, 2000 and Form 10-K for the year ended December 31, 1999. BlackRock cannot predict with certainty at this time whether Ervin will rejoin BlackRock Capital Finance as a defendant in the lawsuit. Except as set forth above, no material developments have occurred during the third quarter regarding BlackRock's other previously reported legal proceedings. Item 2. Changes in Securities and Use of Proceeds Recent Sales of Unregistered Securities On July 21, 2000, BlackRock issued an aggregate of 22,000 restricted shares of class B common stock to three new employees as incentive compensation. The shares were not registered under the Securities Act of 1933, as amended, and to the extent that the issuance involved an offer and sale, were issued 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 and a substantial risk of forfeiture, were granted at a fair market value of $0.7 million, which will be expensed on a straight-line basis over the restriction periods. The fair market value of these shares was recorded as unearned compensation in BlackRock's consolidated statement of financial condition at September 30, 2000. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description ----------- ----------- 10.1 Amendment No. 1 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan 10.2 Amendment No. 1 to the BlackRock, Inc. Amended and Restated Long-Term Deferred Compensation Plan 10.3 Amendment No. 1 to the BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan 27.1 Financial data schedule (b) Reports on Form 8-K Since June 30, 2000, the Company has filed the following Current Reports on Form 8-K: Form 8-K dated as of July 12, 2000, reporting the Company's results of operations for the three and six months ended June 30, 2000, filed pursuant to Item 5. Form 8-K dated as of October 12, 2000, reporting the Company's results of operations for the three and nine months ended September 30, 2000, filed pursuant to Item 5. 20 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. BLACKROCK, INC. (Registrant) /s/ Paul L. Audet ___________________________________ Date: November 13, 2000 By: Paul L. Audet Managing Director & Chief Financial Officer 21 EX-10.1 2 0002.txt AMEND. #1 TO THE BLACKROCK, INC. 1999 STOCK AWARD EXHIBIT 10.1 AMENDMENT NO. 1 TO THE BLACKROCK, INC. 1999 STOCK AWARD AND INCENTIVE PLAN ----------------------------------- (Effective July 21, 2000) This Amendment No. 1 is made to the BlackRock, Inc. 1999 Stock Award and Incentive Plan (the "Plan"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. In accordance with Section 7(d) of the Plan, BlackRock, Inc.'s Board of Directors at a meeting held on July 21, 2000 unanimously approved the following amendments to the Plan: 1. Section 6(b)(i)(B) of the Plan is hereby amended in its entirety to read as follows: "(B) Exercise Price. The exercise price per share of Stock -------------- purchasable under an Option shall be determined by the Committee; provided that, -------- such exercise price of an ISO shall be not less than the Fair Market Value of a share of Stock on the date of grant of such ISO. The exercise price for Stock subject to an Option may be paid in cash or by an exchange of Stock previously owned by the Grantee (provided, that such Stock shall have been owned without any restrictions by the Grantee for at least six months prior to the date of exercise of the Option), or a combination of both, in an amount having a combined value equal to such exercise price. An Award Agreement may provide that a Grantee may elect to pay all or a portion of the aggregate exercise price by having shares of Stock with a Fair Market Value on the date of exercise equal to the aggregate exercise price or sold by a broker-dealer." 2. Section 7(c) of the Plan is hereby amended in its entirety to read as follows: "(c) Withholding and Other Taxes. The Company or any applicable --------------------------- Affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan (including from a distribution of Stock) or any other payment to a Grantee, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Grantees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Grantee's tax obligations. If Stock is withheld to satisfy withholding and other taxes due in connection with an exercise of an Option, the Company shall not withhold more Stock than is necessary to satisfy the minimum withholding obligation in respect of such exercise." 3. Except as amended herein, the Plan shall remain in full force and effect. 2 EX-10.2 3 0003.txt AMEND. #1 TO THE BLACKROCK, INC. AMENDED & RESTATE EXHIBIT 10.2 AMENDMENT NO. 1 TO THE BLACKROCK, INC. AMENDED AND RESTATED LONG-TERM DEFERRED COMPENSATION PLAN ------------------------------------ (Effective July 21, 2000) This Amendment No. 1 is made to the BlackRock, Inc. Amended and Restated Long-Term Deferred Compensation Plan (the "Plan"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. In accordance with Section 10 of the Plan, BlackRock, Inc.'s Board of Directors at a meeting held on July 21, 2000 unanimously approved the following amendments to the Plan: 1. Section 3(a) of the Plan is hereby amended in its entirety to read as follows: "(a) In General. The total amount available for payment to Participants ---------- under the Plan shall not exceed such amount as has been specified by the Board of Directors of the Company by resolution (such amount being hereinafter referred to as the "Deferred Compensation Pool"). At the time the Committee selects an employee to be a Participant, the Committee shall determine the amount of the Deferred Compensation Pool to be credited to an account (the "Deferred Compensation Account") to be maintained for the benefit of such Participant hereunder and shall determine the portion of the Deferred Compensation Account to be credited in cash and the portion to be credited in shares of class A common stock, par value $0.01 per share, of the Company ("Class A Common Stock"). In the case of any Participant who is an officer within the meaning of Rule 16a-1 of the Securities Exchange Act of 1934, as amended (an "Officer"), the crediting of Class A Common Stock to such Participant's account hereunder, whether under this Section 3(a) or under Section 4(b)(iv) hereof, shall be treated as an "Other Stock-Based Award" under the BlackRock, Inc. 1999 Stock Award and Incentive Plan (or such successor plan thereto which has been approved by shareholders of the Company) (the "Stock Plan"), and the crediting of such shares shall be subject to approval by the committee that administers such plan. Each Participant shall be entitled to receive all or a portion of the amount credited to his or her Deferred Compensation Account in accordance with the terms and conditions of this Plan." 2. Section 4(b)(ii) of the Plan is hereby amended in its entirety to read as follows: "(ii) The Company shall pay to each Participant the vested portion of the cash portion of his or her Deferred Compensation Account in a lump sum cash payment as soon as practicable following the date on which such portion has become vested. The Company shall pay to each Participant the vested portion of the Class A Common Stock portion of his or her Deferred Compensation Account in shares of Class A Common Stock as soon as practicable following the date on which such portion has become vested; provided, however, that in the case of any Participant who is an Officer, the shares of Class A Common Stock delivered to such Participant shall be issued from shares authorized for issuance under the Stock Plan. Shares of Class A Common Stock issuable under the Plan may be issued, in whole or in part, from the Company's treasury or from authorized but previously unissued shares of Class A Common Stock." 3. Except as amended herein, the Plan shall remain in full force and effect. EX-10.3 4 0004.txt AMEND. #1 TO THE BLACKROCK INT'L, LTD. AMENDED EXHIBIT 10.3 AMENDMENT NO. 1 TO THE BLACKROCK INTERNATIONAL, LTD. AMENDED AND RESTATED LONG-TERM DEFERRED COMPENSATION PLAN ------------------------------------ (Effective July 6, 2000) This Amendment No. 1 is made to the BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan (the "Plan"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. In accordance with Section 10 of the Plan, the BlackRock International, Ltd.'s Board of Directors at a meeting held on July 6, 2000 unanimously approved the following amendments to the Plan: 1. Section 3(a) of the Plan is hereby amended in its entirety to read as follows: "(a) In General. The total amount available for payment to Participants ---------- under the Plan shall be equal to such amount as has been specified by the Board of Directors of the Company by resolution or otherwise (such amount being hereinafter referred to as the "Deferred Compensation Pool"). At the time the Committee selects an employee to be a Participant, the Committee shall determine the amount of the Deferred Compensation Pool to be credited to an account (the "Deferred Compensation Account") to be maintained for the benefit of such Participant hereunder and shall determine the portion of the Deferred Compensation Account to be credited in cash and the portion to be credited in shares of class A common stock, par value $0.01 per share, of BlackRock ("Class A Common Stock"). In the case of any Participant who is an officer of the Company or any of its affiliates within the meaning of Rule 16a-1 of the Securities Exchange Act of 1934, as amended (an "Officer"), the crediting of Class A Common Stock to such Participant's account hereunder, whether under this Section 3(a) or under Section 4(b)(iv) hereof, shall be treated as an "Other Stock-Based Award" under the BlackRock, Inc. 1999 Stock Award and Incentive Plan (or such successor plan thereto which has been approved by shareholders of BlackRock) (the "Stock Plan"), and the crediting of such shares shall be subject to approval by the committee that administers such plan. Each Participant shall be entitled to receive all or a portion of the amount credited to his or her Deferred Compensation Account in accordance with the terms and conditions of this Plan." 2. Section 4(b)(ii) of the Plan is hereby amended in its entirety to read as follows: "(ii) The Company shall pay to each Participant the vested portion of the cash portion of his or her Deferred Compensation Account in a lump sum cash payment as soon as practicable following the date on which such portion has become vested. The Company shall pay to each Participant the vested portion of the Class A Common Stock portion of his or her Deferred Compensation Account in shares of Class A Common Stock as soon as practicable following the date on which such portion has become vested; provided, however, that in the case of any Participant who is an Officer, the shares of Class A Common Stock delivered to such Participant shall be issued from shares authorized for issuance under the Stock Plan. Shares of Class A Common Stock issuable under the Plan may be issued, in whole or in part, from BlackRock's treasury or from authorized but previously unissued shares of Class A Common Stock." 3. Except as amended herein, the Plan shall remain in full force and effect. EX-27 5 0005.txt FINANCIAL DATA SCHEDULE
5 9-MOS SEP-30-2000 JAN-01-2000 SEP-30-2000 158,928 14,207 76,535 0 0 0 37,678 29,426 492,495 0 0 0 0 171,197 172,351 492,495 348,332 348,332 0 0 244,966 0 654 107,376 44,561 62,815 0 0 0 62,815 0.98 0.97
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