---

FORM 10-Q





United States


Securities and Exchange Commission


Washington, DC 20549





| | (Mark One)
| | ----------




xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF


THE SECURITIES EXCHANGE ACT OF 1934.


For the quarterly period ended September 30, 2001





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 incorporation or organization)

(I.R.S. Employer Identification No.)


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 proceeding 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, 2001, there were 10,784,510 shares of the registrants class A common stock outstanding and 53,606,862 shares of the registrants class
B common stock outstanding.




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BlackRock Inc.


Index to Form 10-Q





PART I





FINANCIAL INFORMATION





PageItem 1. Financial StatementsConsolidated Statements of Financial Condition


1Consolidated Statements of Income


2Consolidated Statements of Cash Flows


3Notes to Consolidated Financial Statements


4Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations


11Item 3.
Quantitative and Qualitative Disclosures About Market Risk


24PART II  OTHER INFORMATIONItem 1.
Legal Proceedings


25Item 6.
Exhibits and Reports on Form 8-K


25


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PART I  FINANCIAL INFORMATION





Item 1. Financial Statements





BlackRock, Inc.


Consolidated Statements of Financial Condition


(Dollar
amounts in thousands)





September 30, 2001


December 31, 2000(unaudited)AssetsCash and cash equivalents

$152,832


$192,590Accounts receivable

94,984


81,800Investments, available for sale (cost: $142,054 and $16,854, respectively)

140,708


13,316Property and equipment, net

61,142


45,598Intangible assets, net

184,301


192,142Receivable from affiliates

2,282


1,484Other assets

7,521


10,073Total assets

$643,770


$537,003Liabilities and stockholders equityAccrued compensation

$115,785


$130,101Accounts payable and accrued liabilitiesAffiliate

41,899


14,750Other

16,746


12,264Acquired management contract obligation

7,344


8,040Other liabilities

4,474


3,607Total liabilities

186,248


168,762Stockholders equityCommon stock, class A, 10,638,163 and        9,487,297 shares issued,
respectively

106


95Common stock, class B, 53,785,961 and        54,509,875 shares issued,
respectively

538


545Additional paid-in capital

182,080


172,156Retained earnings

279,166


200,064Unearned compensation

(2,212
)

(2,126
)Accumulated other comprehensive loss

(1,391
)

(2,477
)Treasury stock, class A, at cost




(16
)Treasury stock, class B, at cost

(765
)

Total stockholders equity

457,522


368,241Total liabilities and stockholders equity

$643,770


$537,003




See accompanying notes to consolidated financial statements.




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BlackRock, Inc.


Consolidated Statements of Income


(Dollar amounts in
thousands, except share data)


(unaudited)





Three months ended September 30,

Nine months ended September 30,2001

2000

2001

2000RevenueInvestment advisory and administration feesMutual funds

$  52,751


$  57,745


$162,458


$173,073Separate accounts

71,430


63,539


213,439


157,513Other incomeAffiliate

1,250


1,250


3,750


3,750Other

9,351


5,167


24,106


13,996Total revenue

134,782


127,701


403,753


348,332ExpenseEmployee compensation and benefits

53,932


53,272


164,896


136,622Fund administration and servicing costsaffiliates

15,016


19,313


47,428


57,522General and administrationAffiliate

829


960


2,705


3,462Other

19,860


14,617


53,723


39,820Amortization of intangible assets

2,613


2,613


7,841


7,540Total expense

92,250


90,775


276,593


244,966Operating income

42,532


36,926


127,160


103,366Non-operating income (expense)Investment income

2,890


2,197


7,384


4,664Interest expense

(172
)

(215
)

(574
)

(654
)Total non-operating income

2,718


1,982


6,810


4,010Income before income taxes

45,250


38,908


133,970


107,376Income taxes

17,874


16,147


54,868


44,561Netincome

$  27,376


$  22,761


$  79,102


$  62,815Earnings per shareBasic

$     0.43


$      0.36


$      1.23


$      0.98Diluted

$     0.42


$      0.35


$      1.22


$      0.97Weighted-average shares outstandingBasic

64,284,768


63,884,410


64,231,342


63,871,568Diluted

64,947,840


64,651,300


64,897,087


64,524,607




See accompanying notes to consolidated financial statements.




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BlackRock, Inc.


Consolidated Statements of Cash Flow


(Dollar amounts in
thousands)


(unaudited)





Nine months ended September 30,2001

2000Cash flows from operating activitiesNetincome

$   79,102


$  62,815Adjustments to reconcile net income to net cash provided by        operating
activities:Depreciation and amortization

18,899


14,992Stock-based compensation

3,784


528Deferred income taxes

2,619


1,425Tax benefit from stock-based compensation

5,230


70Changes in operating assets and liabilities:Increase in accounts receivable

(13,184
)

(12,809
)(Increase) decrease in receivable from affiliate

(798
)

1,005Decrease (increase) in other assets

2,552


(3,857
)(Decrease) increase in accrued compensation

(8,292
)

6,148Increase (decrease) in accounts payable and accrued liabilities

29,012


(4,235
)Decrease in accrued interest payable to affiliates




(705
)Increase (decrease) in other liabilities

867


(523
)Cash provided by operating activities

119,791


64,854Cash flows from investing activitiesPurchase of property and equipment

(26,602
)

(22,453
)Purchase of investments

(126,305
)

(11,671
)Cash used in investing activities

(152,907
)

(34,124
)Cash flows from financing activitiesRepayment of note and loan payable to affiliates




(28,200
)Issuance of class A common stock

281


131Purchase of treasury stock

(6,472
)

Reissuance of treasury stock

246


Acquired management contract obligation payment

(696
)

Cash used in financing activities

(6,641
)

(28,069
)Effect of exchange rate changes on cash and cash equivalents

(1
)

(862
)Net(decrease) increase in cash and cash equivalents

(39,758
)

1,799Cash and cash equivalents, beginning of period

192,590


157,129Cash and cash equivalents, end of period

$ 152,832


$158,928




See accompanying notes to consolidated financial statements.




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BlackRock, Inc.


Notes to Consolidated Financial Statements


Nine
Months Ended September 30, 2001 and 2000


(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, 2000. The Company follows the same accounting
policies in the preparation of interim reports as set forth in the annual report. 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.





Derivative Instruments and Hedging Activities





In 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133 Accounting
for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and No. 138. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivatives embedded in other contracts and
for hedging activities. SFAS No. 133 generally requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those investments at fair value. SFAS No. 133 was required to be
adopted for fiscal years beginning after June 15, 2000. The Company adopted the new statement as of January 1, 2001. The adoption of SFAS No. 133 has not had a material impact on the Companys results of operations, financial position, or cash
flows.





Reclassification of Prior Periods Statements





Certain items previously reported have been reclassified to conform with the current period presentation.




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Recent Accounting Pronouncements





On July 20, 2001, the FASB issued SFAS No. 141, Business Combinations. SFAS No. 141 requires the purchase method of accounting be used for all business
combinations initiated or completed after June 30, 2001 and eliminates the pooling-of-interests method of accounting. The statement also addresses disclosure requirements for business combinations and initial recognition and measurement criteria for
goodwill and other intangible assets as a result of purchase business combinations.





On July 20, 2001, the FASB issued SFAS No.
142, Goodwill and Other Intangible Assets, which changes the accounting for goodwill from an amortization method to an impairment-only approach. The amortization of goodwill, including goodwill recognized relating to past business
combinations, will cease upon adoption of the new standard. Impairment testing for goodwill at a reporting unit level will be required on at least an annual basis. The new standard also addresses other accounting matters, disclosure requirements and
financial statement presentation issues relating to goodwill and other intangible assets. The Company will adopt SFAS No. 142 effective January 1, 2002, as required. Assuming no impairment adjustments are necessary, no future business combinations,
and no other changes to goodwill, the Company expects diluted earnings per share to increase by approximately $.08 per share in 2002 resulting from the cessation of goodwill amortization.





In August 2001, the FASB issued SFAS No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets, which requires that the
fair value of a liability be recognized when incurred for the retirement of a long-lived asset and the value of the asset be increased by that amount. The statement also requires that the liability be maintained at its present value in subsequent
periods and outlines certain disclosures for such obligations. The adoption of this statement, which is effective January 1, 2003, is not expected to have a material impact on the Companys financial statements.





In October 2001, the FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which replaces
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Assets to Be Disposed Of. This statement primarily defines one accounting model for long-lived assets to be disposed of by sale, including discontinued operations
and addresses implementation issues. The adoption of this statement, which is effective January 1, 2002, is not expected to have a material impact on the Companys financial statements.




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2.    Investments, Available for Sale





A summary of the cost and fair market value of investments, available for sale, is as follows:





Gross Unrealized

Fair Market ValueSeptember 30, 2001

Cost

Gains

LossesMutual funds

$128,712

$1,700





$130,412Collateralized bond obligations

12,689




3,074


9,615Other

653

28





681$142,054

$1,728


$3,074


$140,708December 31, 2000Mutual funds

$     8,823




$    633


$     8,190Collateralized bond obligations

5,956




2,857


3,099Other

2,075




48


2,027$   16,854




$3,538


$   13,316





Net realized gains on the sale of investments, available for sale totaled $77
and $11 for the nine months ended September 30, 2001 and September 30, 2000, respectively, and $71 and $11 for the three months ended September 30, 2001 and 2000, respectively.





3.    Property and Equipment





Property and
equipment consists of the following:





September 30, 2001

December 31, 2000Land


$     3,564



$   3,564Building


16,946



Building improvements


5,264



Equipment and computer software


49,312



37,157Leasehold improvements


8,681



9,361Furniture and fixtures


10,091



7,262Construction in progress


9,440



19,826103,298



77,170Less accumulated depreciation


42,156



31,572Property and equipment, net


$   61,142



$45,598




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3.    Property and Equipment (continued)





Building and building improvements reflect the new building located in Wilmington, Delaware. The remaining balance in the construction in
progress account primarily represents expenditures associated with occupying a new headquarters site in New York City located at 40 East 52 nd Street.





Depreciation expense was approximately $4,155, and $2,844 for the three months ended
September 30, 2001 and 2000, respectively and $11,058 and $7,452 for the nine months ended September 30, 2001 and 2000, respectively.





4.    Commitments





a) Lease Commitments





The Company leases its primary office space under agreements which expire through 2017. Future minimum commitments under these operating leases, net of rental
reimbursements of $5,884 through 2005 from a sublease arrangement, are as follows:








2001

$     2,0972002

10,3722003

10,4492004

10,3622005

10,283Thereafter

130,070$173,633








In connection with certain
lease agreements, the Company is responsible for escalation payments.





On September 4, 2001, the Company entered into a lease
agreement for additional space at 40 East 52 nd Street, New York, New York. Under the lease, BlackRock will occupy this
space on or about January 2002. The lease will terminate on February 28, 2017. Total rent payments over the lease term will approximate $24,198.





Occupancy expense amounted to $3,682 and $3,038 for the three months ended September 30, 2001 and 2000, respectively and $9,088 and $7,453 for the nine months ended September 30, 2001 and 2000, respectively.




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5.    Common Stock





BlackRocks class A, $0.01 par value, common shares authorized was 250,000,000 shares as of September 30, 2001 and December 31, 2000, respectively.
BlackRocks class B, $0.01 par value, common shares authorized was 100,000,000 shares as of September 30, 2001 and December 31, 2000, respectively.





The Companys common shares issued and outstanding and related activity consists of the following:





---

Shares issued

Shares outstandingCommon shares Class

Treasury shares Class

ClassA

B

A

B

A

BDecember 31, 2000

9,487,297

54,509,875


(353
)




9,486,944


54,509,875Conversion of class B stock to        class A stock

680,992

(728,914
)

47,922





728,914


(728,914
)Issuance of shares to Nonemployee        Directors

980




2,346





3,326


Issuance of class A common stock

468,894










468,894


Issuance of class B common stock



5,000











5,000Treasury stock transactions






(49,915
)

(129,437
)

(49,915
)

(129,437
)September 30, 2001

10,638,163

53,785,961





(129,437
)

10,638,163


53,656,524





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6.    Comprehensive Income





---

Three months ended September 30,

Nine months ended September 30,2001

2000

2001

2000Netincome

$27,376


$22,761


$79,102


$62,815Other comprehensive income gain (loss):Unrealized gain (loss) from investments,
               available for sale, net

(310
)

107


1,087


281Foreign currency translation gain (loss)

509


(836
)

(1
)

(862
)Comprehensive income

$27,575


$22,032


$80,188


$62,234





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7.    Earnings Per Share





The following table sets forth the computation of basic and diluted earnings per share:





---




Three months ended September 30,

Nine months ended September 30,2001

2000

2001

2000Netincome

$27,376

$22,761

$79,102

$62,815Basic weighted-average shares outstanding

64,284,768

63,884,410

64,231,342

63,871,568Dilutive potential shares from forward sales

107,277

175,153

107,277

175,153Dilutive potential shares from stock options

555,795

591,737

558,468

477,886Dilutive weighted-average shares outstanding

64,947,840

64,651,300

64,897,087

64,524,607Basic earnings per share

$     0.43

$     0.36

$     1.23

$     0.98Diluted earnings per share

$     0.42

$     0.35

$     1.22

$     0.97





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8.    Supplemental Statements of Cash Flow Information





Supplemental disclosure of cash
flow information:





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Nine months ended September 30,2001

2000Cash paid for interest

$    804

$  1,058Cash paid for income taxes

$23,085

$42,514





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Supplemental schedule of noncash transactions:





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Nine months ended September 30,2001

2000Stock-based compensation

$6,831







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9.    Stock Option Plan





On May 2, 2001, BlackRocks shareholders approved an amendment to the BlackRock, Inc. 1999 Stock Award and Incentive Plan to increase the number of shares of class A common stock available under such plan to
9,000,000 shares. BlackRocks shareholders previously authorized the issuance under the plan of up to 5.93% of the total shares of common stock outstanding.





10.    Employee Stock Purchase Plan





On May 2,
2001, BlackRocks shareholders approved the adoption of the BlackRock, Inc. 2001 Employee Stock Purchase Plan (ESPP), the terms of which allow eligible employees to purchase shares of the Companys class A common stock at 85%
of the lesser of fair market value on the first or last day of each six-month offering period. No charge to earnings will be recorded with respect to the ESPP. The first offering period began on August 1, 2001. A total of 1,250,000 shares of class A
common stock are available for issuance under the ESPP.





11.    Share Repurchase Program





On May 2, 2001, BlackRocks Board of Directors authorized BlackRock to repurchase up to 500,000 of its outstanding
shares of class A common stock from time to time as market and business conditions warrant in open market or privately negotiated transactions. To date, BlackRock has not purchased any shares of its outstanding class A common stock under this
repurchase program.




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I
tem 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 25 largest investment management firms in the United States with approximately
$225.6 billion of assets under management at September 30, 2001. BlackRock is a majority-owned indirect subsidiary of The PNC Financial Services Group, Inc. (PNC), one of the largest diversified financial services companies in the United
States, operating businesses engaged in regional community banking, corporate banking, real estate finance, asset-based lending, wealth management, asset management and global fund services. As of September 30, 2001, PNC indirectly owns
approximately 70%, the public owns approximately 15% and BlackRock employees own approximately 15% of BlackRock.





The following
table summarizes BlackRocks operating performance for the three months ended September 30, 2001, September 30, 2000 and June 30, 2001 and the nine months ended September 30, 2001 and September 30, 2000:





BlackRock, Inc.


Financial Highlights


(Dollar amounts in thousands, except share data)


(unaudited)





Three months ended

Variance vs.September 30,

June 30,

September 30, 2000

June 30, 20012001

2000

2001

Amount

%

Amount

%Total revenue

$134,782


$127,701


$135,262



$  7,081


6
%


$    (480
)


0
%Total expense

$  92,250


$  90,775


$  92,554



$  1,475


2
%


$    (304
)


0
%Operating income

$  42,532


$  36,926


$  42,708



$  5,606


15
%


$    (176
)


0
%Netincome

$  27,376


$  22,761


$  26,230



$  4,615


20
%


$  1,146



4
%Diluted earnings per share

$      0.42


$      0.35


$      0.40



$    0.07


20
%


$    0.02



5
%Diluted cash earnings per share (a)

$      0.46


$      0.39


$      0.44



$    0.07


18
%


$    0.02



5
%Average diluted shares outstanding

64,947,840


64,651,300


64,877,389



296,540


0
%


70,451



0
%EBITDA (b)

$  52,190


$  44,580


$  51,722



$  7,610


17
%


$     468



1
%Operating margin (c)

35.5
%

34.1
%

35.7
%Assets under management        ($ in millions)

$225,596


$190,808


$212,694



$34,788


18
%


$12,902



6
%Nine months ended September 30,

Variance2001

2000

Amount

%Total revenue

$403,753


$348,332


$55,421



16%Total expense

$276,593


$244,966


$31,627



13%Operating income

$127,160


$103,366


$23,794



23%Netincome

$  79,102


$  62,815


$16,287



26%Diluted earnings per share

$      1.22


$      0.97


$    0.25



26%Diluted cash earnings per share (a)

$      1.34


$      1.09


$    0.25



23%Average diluted shares outstanding

64,897,087


64,524,607


372,480



1%EBITDA (b)

$153,443


$123,022


$30,421



25%Operating margin (c)

35.7
%

35.5
%Assets under management        ($ in millions)

$225,596


$190,808


$34,788



18%





|(a) |  | Net income plus amortization expense for the period divided by average diluted shares outstanding.
|--- |  | --------------------------------------------------------------------------------------------------

|(b) |  | Earnings before interest expense, taxes, depreciation and amortization.
|--- |  | -----------------------------------------------------------------------

|(c) |  | Operating income divided by total revenue less fund administration and servicing costs  affiliates.
|--- |  | ----------------------------------------------------------------------------------------------------



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11


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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 and technology services to insurance companies, finance companies, pension funds, foundations, REITs, commercial and
mortgage banks, savings institutions and government agencies. These services are provided under the brand name BlackRock Solutions TM 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.





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 benefits 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 TM . Intangible assets at September 30, 2001 and December 31, 2000 were $184.3 million and $192.1 million, respectively, with
amortization expense of approximately $2.6 million for the three months ended September 30, 2001 and September 30, 2000, respectively, and $7.8 million and $7.5 million for the nine months ended September 30, 2001 and September 30, 2000,
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, on May 15, 2000.





Assets Under Management





Assets under management (AUM) increased $34.8 billion, or 18%, to $225.6 billion at September 30, 2001, compared with $190.8 billion
at September 30, 2000. The growth in assets under management was attributable to increases of $23.4 billion or 19% in separate accounts and $11.4 billion or 17% in mutual fund assets.




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12


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Assets Under Management (continued)





The increase in separate accounts at September 30, 2001, as compared with September 30, 2000, was the result of net subscriptions of $13.3 billion and market
appreciation of $10.1 billion. Net subscriptions in fixed income, alternative investment products, equity and liquidity accounts were $9.1 billion, $1.9 billion, $3.4 billion and $1.7 billion, respectively, while liquidity-securities lending
separate account assets experienced net redemptions of $2.8 billion. The rise in fixed income, liquidity and alternative investment products separate accounts was primarily attributable to strong relative investment performance resulting in higher
levels of funding from existing clients as well as increased sales to new clients. Net subscriptions of fixed income accounts included a redemption of approximately $1.4 billion resulting from a merger related termination. The growth in equity
separate account assets primarily reflected new business generated by the European equity team. The $2.8 billion decline in liquidity-securities lending separate accounts was primarily attributable to lower levels of cash collateral managed by
BlackRock for PFPC Worldwide, Inc., a PNC affiliate, as a result of the decline in the equity markets. Market appreciation of $10.1 billion in separate accounts was due to appreciation in fixed income assets of $12.4 billion, partially offset by
market depreciation of $2.7 billion in equity assets.





The $11.4 billion year over year increase in mutual fund assets
reflected net subscriptions of $17.6 billion, which was partially offset by market depreciation of $6.1 billion in the BlackRock Funds largely associated with a decline in the equity markets. Net subscriptions in BlackRock Provident
Institutional Funds TM (BPIF) and BlackRock Fundswere $17.2 billion
and $1.3 billion, respectively, while the closed end funds experienced net redemptions of $1.2 billion. The increase in BPIF assets was the result of strong sales driven in part by the decline in short-term interest rates and investors flight
to quality. Although economic and market uncertainty persist, management does not assume that the current level of BPIF assets will be sustained long-term. The decline in closed end funds was the result of approximately $2.4 billion in term trust
maturities partially offset by the Companys offering of five perpetual closed end municipal bond funds, which resulted in incremental assets of approximately $1.2 billion exclusive of subsequent issuances of preferred stock.





BlackRock, Inc.


Assets Under Management


(Dollar amounts in millions)


(unaudited)





---




September 30,

Variance2001

2000

Amount

%Separate AccountsFixed income

$118,336

$  96,791


$21,545



22.3
%Liquidity

6,987

5,147


1,840



35.7Liquidity-Securities lending

8,069

10,843


(2,774
)


(25.6
)Equity

8,185

7,500


685



9.1Alternative investment products

4,879

2,818


2,061



73.1Subtotal

146,456

123,099


23,357



19.0Mutual FundsFixed income

13,985

13,983


2



Liquidity

56,221

37,896


18,325



48.4Equity

8,934

15,830


(6,896
)


(43.6
)Subtotal

79,140

67,709


11,431



16.9Total

$225,596

$190,808


$34,788



18.2
%




TABLE OF CONTENTS




13


---

Assets Under Management (continued)





The following tables present the component changes in BlackRocks assets under management for the three months and nine months ended September 30, 2001 and September 30, 2000, respectively. The data reflects
certain reclassifications between net subscriptions (redemptions) and market appreciation (depreciation) from amounts previously reported.





For the three months and nine months ended September 30, 2001, net subscriptions represented 85% and 87%, respectively, of the total increase in assets under management. Net subscriptions were $11.0 billion and $19.1
billion for the three months and nine months ended September 30, 2001 and $11.6 billion and $21.2 billion for the three months and nine months ended September 30, 2000, respectively.





BlackRock, Inc.


Component Changes in Assets Under Management


(Dollar amounts in millions)


(unaudited)





Three months ended September 30,

Nine months ended September 30,2001

2000

2001

2000Separate AccountsBeginning assets under management

$140,005


$111,672


$133,743


$   99,220Netsubscriptions

2,775


9,647


6,672


19,269Market appreciation

3,676


1,780


6,041


4,610Ending assets under management

146,456


123,099


146,456


123,099Mutual FundsBeginning assets under management

72,689


65,665


70,026


65,297Netsubscriptions

8,231


1,981


12,408


1,979Market appreciation (depreciation)

(1,780
)

63


(3,294
)

433Ending assets under management

79,140


67,709


79,140


67,709Total

$225,596


$190,808


$225,596


$190,808Netsubscriptions

$   11,006


$   11,628


$   19,080


$   21,248% of Change in AUM from net subscriptions

85.3
%

86.3
%

87.4
%

80.8
%


---



TABLE OF CONTENTS




14


---




BlackRock, Inc.


Assets Under Management


Quarterly Trend


(Dollar amounts in millions)


(unaudited)





Quarter Ended2000

2001

Nine months ended September 30, 2001September 30

December 31

March 31

June 30

September 30Separate AccountsFixed IncomeBeginning assets under management


$   83,950




$   96,791



$103,561


$107,371



$110,483




$103,561Net subscriptions


10,606




2,776



699


2,682



2,959




6,340Market appreciation


2,235




3,994



3,111


430



4,894




8,435Ending assets under management


96,791




103,561



107,371


110,483



118,336




118,336LiquidityBeginning assets under management


7,052




5,147



6,495


5,713



6,782




6,495Net subscriptions (redemptions)


(1,925
)



1,321



(813
)

1,042



181




410Market appreciation


20




27



31


27



24




82Ending assets under management


5,147




6,495



5,713


6,782



6,987




6,987Liquidity-Securities lendingBeginning assets under management


10,655




10,843



11,501


7,514



10,004




11,501Net subscriptions (redemptions)


188




658



(3,987
)

2,490



(1,935
)



(3,432
)Market appreciation























Ending assets under management


10,843




11,501



7,514


10,004



8,069




8,069EquityBeginning assets under management


7,621




7,500



8,716


7,796



8,257




8,716Net subscriptions


442




1,282



445


488



1,144




2,077Market depreciation


(563
)



(66
)


(1,365
)

(27
)


(1,216
)



(2,608
)Ending assets under management


7,500




8,716



7,796


8,257



8,185




8,185Alternative investment productsBeginning assets under management


2,394




2,818



3,470


4,317



4,479




3,470Net subscriptions


336




584



682


169



426




1,277Market appreciation (depreciation)


88




68



165


(7
)


(26
)



132Ending assets under management


2,818




3,470



4,317


4,479



4,879




4,879Total Separate AccountsBeginning assets under management


111,672




123,099



133,743


132,711



140,005




133,743Net subscriptions (redemptions)


9,647




6,621



(2,974
)

6,871



2,775




6,672Market appreciation


1,780




4,023



1,942


423



3,676




6,041Ending assets under management


$123,099




$133,743



$132,711


$140,005



$146,456




$146,456Mutual FundsBlackRock FundsBeginning assets under management


$   28,262




$   27,819



$   26,359


$   24,383



$   24,589




$   26,359Net subscriptions (redemptions)


(455
)



1,463



65


(253
)


49




(139
)Market appreciation (depreciation)


12




(2,923
)


(2,041
)

459



(1,848
)



(3,430
)Ending assets under management


27,819




26,359



24,383


24,589



22,790




22,790BlackRock Global SeriesBeginning assets under management







54



75


105



134




75Net subscriptions


54




18



43


33



1




77Market appreciation (depreciation)







3



(13
)

(4
)


(8
)



(25
)Ending assets under management


54




75



105


134



127




127BPIF*Beginning assets under management


25,615




27,580



36,338


37,047



41,954




36,338Net subscriptions


1,965




4,662



709


4,907



6,935




12,551Exchanges







4,096















Ending assets under management


27,580




36,338



37,047


41,954



48,889




48,889Closed EndBeginning assets under management


7,583




7,634



6,764


6,841



5,440




6,764Net subscriptions (redemptions)







(954
)





(1,409
)


1,212




(197
)Market appreciation


51




84



77


8



76




161Ending assets under management


7,634




6,764



6,841


5,440



6,728




6,728Short Term Investment Funds (STIF)*Beginning assets under management


4,205




4,622



490


549



572




490Net subscriptions (redemptions)


417




(36
)


59


23



34




116Exchanges







(4,096
)














Ending assets under management


4,622




490



549


572



606




606Total Mutual FundsBeginning assets under management


65,665




67,709



70,026


68,925



72,689




70,026Net subscriptions


1,981




5,153



876


3,301



8,231




12,408Market appreciation (depreciation)


63




(2,836
)


(1,977
)

463



(1,780
)



(3,294
)Ending assets under management


$   67,709




$   70,026



$   68,925


$   72,689



$   79,140




$   79,140





|* |  | During the fourth quarter of 2000, $4.1 billion of STIF assets under management were exchanged into the BPIF product.
|- |  | ---------------------------------------------------------------------------------------------------------------------



TABLE OF CONTENTS




15


---




Operating results for the three months ended September 30, 2001 as compared with the three
months ended September 30, 2000.





Revenue





Total revenue for the three months ended September 30, 2001 increased $7.1 million or 6% to $134.8 million compared with $127.7 million for the three months ended September 30, 2000. Investment
advisory and administration fees increased $2.9 million or 2% to $124.2 million for the three months ended September 30, 2001, compared with $121.3 million for the three months ended September 30, 2000. The growth in investment advisory and
administration fees was primarily due to an 18% increase in assets under management to $225.6 billion at September 30, 2001 partially offset by a decrease in performance fees. Other income of $10.6 million for the three months ended September 30,
2001 increased $4.2 million or 65% compared with $6.4 million for the three months ended September 30, 2000 primarily due to increased sales of BlackRock Solutionsproducts.





Three months endedSeptember 30,

Variance2001

2000

Amount

%Dollar amounts in thousands

(unaudited)Investment advisory and administration fees:Mutual funds

$52,751

$57,745


$(4,994
)


(8.6
%)Separate accounts

71,430

63,539


7,891



12.4Total investment advisory and administration fees

124,181

121,284


2,897



2.4Other income

10,601

6,417


4,184



65.2Total revenue

$134,782

$127,701


$  7,081



5.5
%





---




Mutual fund advisory and administration fees decreased $5.0 million or 9% to $52.7 million for the three months ended September 30, 2001, compared with $57.7 million for the three months ended September 30, 2000. The decrease in mutual fund
revenue was primarily due to a $5.0 billion or 18% decline in assets in the BlackRock Fundsassociated with declining equity markets partially offset by strong revenue growth in the BPIF funds as assets rose $17.2 billion or 54% adjusted for
exchanges.





Separate account advisory fees increased $7.9 million or 12% to $71.4 million for the three months ended September
30, 2001, compared with $63.5 million for the three months ended September 30, 2000. The increase in separate account revenue resulted from a $23.4 billion or 19% increase in assets under management and included a $4.5 million decrease in
performance fees, which totaled $14.0 million for the three months ended September 30, 2001 compared with $18.5 million for the three months ended September 30, 2000. Base advisory fees on separate accounts increased $12.4 million or 28% to $57.4
million for the three months ended September 30, 2001 compared with $45.0 million for the three months ended September 30, 2000 primarily due to strong growth in institutional assets, which increased $23.4 billion or 19%.




TABLE OF CONTENTS




16


---

Expense





Total
expense increased $1.5 million or 2% to $92.3 million for the three months ended September 30, 2001, compared with $90.8 million for the three months ended September 30, 2000. 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,

Variance2001

2000

Amount

%Dollar amounts in thousands

(unaudited)Employee compensation and benefits

$53,932

$53,272


$    660



1.2
%Fund administration and servicing costs-affiliates

15,016

19,313


(4,297
)


(22.2
)General and administration

20,689

15,577


5,112



32.8Amortization of intangible assets

2,613

2,613






Total expense

$92,250

$90,775


$1,475



1.6
%





---




Employee compensation and benefits increased $.7 million due to increases in salary and benefits and incentive compensation offset by a decrease in direct incentives associated with alternative product performance fees. Salaries and
benefits increased $3.4 million primarily due to a 15% increase in full-time employees and incentive compensation increased $2.2 million reflecting accruals based on the growth of operating income. Incentives directly associated with alternative
product performance fees decreased $4.9 million as a result of lower third quarter fees. For the three months ended September 30, 2001, fund administration and servicing costs-affiliates of $15.0 million declined $4.3 million or 22% due to lower
levels of PNC client assets invested in the BlackRock Funds. General and administration expenses increased $5.1 million or 33% to $20.7 million for the three months ended September 30, 2001 compared with $15.6 million for the three months
ended September 30, 2000 largely due to new business activity, increased headcount and corporate space and technology investments.





---

Three months ended September 30,

Variance2001

2000

Amount

%Dollar amounts in thousands

(unaudited)General and administration expense:Marketing and promotional

$5,227

$4,810


$417


8.7
%Occupancy expense

3,682

3,038


644


21.2Technology

3,632

2,447


1,185


48.4Other general and administration expense

8,148

5,282


2,866


54.3Total general and administration expense

$20,689

$15,577


$5,112


32.8
%


---



TABLE OF CONTENTS




17


---




Expense (continued)





Marketing and promotional expenses of $5.2 million for the three months ended September 30, 2001 increased $.4 million or 9% primarily due to higher expenditures on new products as well as
increased travel and entertainment costs associated with the Companys institutional marketing efforts. Occupancy expense of $3.7 million for the three months ended September 30, 2001 increased $.6 million due to increased rent and related
costs associated with corporate facility expansion, particularly BlackRocks new offices in Wilmington, Delaware, Edinburgh, Scotland, 40 East 52 nd Street, New York, and Hong Kong. Technology expense increased approximately $1.2 million or 48% to $3.6 million for the three months ended September 30, 2001 due to the completion of a second computer facility in
Delaware and additional depreciation on capitalized investments to support the growth of BlackRock Solutions. Other expense increased $2.9 million or 54% to $8.1 million for the three months ended September 30, 2001 primarily due to increased
professional service costs and sub-advisory fees associated with new products and higher office furniture and equipment expenses related to the expansion of office space and increased headcount.





Operating Income and Net Income





Operating income was $42.5 million for the three months ended September 30, 2001, representing a $5.6 million or 15% increase compared with the three months ended September 30, 2000. Non-operating income increased $.7 million to $2.7
million for the three months ended September 30, 2001 compared with the three months ended September 30, 2000. The rise was primarily the result of an increase in investment income reflecting investment of the Companys excess operating cash.
Income tax expense was $17.9 million and $16.1 million, representing effective tax rates of 39.5% and 41.5% for the three months ended September 30, 2001 and September 30, 2000. The lower effective income tax rate was primarily a result of the
consolidation of mutual fund activities in Delaware. Net income totaled $27.4 million for the three months ended September 30, 2001 compared with $22.8 million for the three months ended September 30, 2000, representing an increase of $4.6 million
or 20%.




TABLE OF CONTENTS




18


---




Operating results for the nine months ended September 30, 2001 as compared with the nine
months ended September 30, 2000.





Revenue





Total revenue for the nine months ended September 30, 2001 increased $55.4 million or 16% to $403.7 million compared with $348.3 million for the nine months ended September 30, 2000. Investment
advisory and administration fees increased $45.3 million or 14% to $375.9 million for the nine months ended September 30, 2001, compared with $330.6 million for the nine months ended September 30, 2000. The growth in investment advisory and
administration fees was primarily due to an 18% increase in assets under management to $225.6 billion at September 30, 2001 and increased performance fees. Other income of $27.9 million increased $10.1 million or 57% for the nine months ended
September 30, 2001 compared with $17.8 million for the nine months ended September 30, 2000 primarily due to increased sales of BlackRock Solutionsproducts.





---




Nine months ended September 30,

Variance2001

2000

Amount

%Dollar amounts in thousands

(unaudited)Investment advisory and administration fees:Mutual funds

$162,458

$173,073

$  (10,615
)

(6.1
%)Separate accounts

213,439

157,513

55,926


35.5Total investment advisory and administration fees

375,897

330,586

45,311


13.7Other income

27,856

17,746

10,110


57.0Total revenue

$403,753

$348,332

$   55,421


15.9
%








---

Mutual fund advisory and administration fees decreased $10.6 million or 6% to $162.5 million for the nine months ended September 30, 2001, compared with $173.1 million for the nine months ended September 30, 2000. The decrease in
mutual fund revenue was due to declines in BlackRock Funds fees and closed end fund fees of $21.5 million and $3.5 million respectively, partially offset by a $13.8 million increase in BPIF and short-term investment fund revenue resulting
from strong sales. The decrease in BlackRock Funds revenue was largely due to market depreciation of equity assets. Closed end fund revenue declined due to $2.4 billion in term trust maturities and was partially offset by the Companys
offering of five perpetual closed end municipal bond funds during the third quarter.





Separate account advisory fees increased
$55.9 million or 36% to $213.4 million for the nine months ended September 30, 2001, compared with $157.5 million for the nine months ended September 30, 2000. Excluding performance fees, advisory fees on separate accounts increased $39.3 million or
32% to $162.8 million for the nine months ended September 30, 2001 compared with $123.5 million for the nine months ended September 30, 2000 primarily due to a $23.4 billion or 19% increase in assets under management. Performance fees of $50.6
million for the nine months ended September 30, 2001 increased $16.7 million or 49% compared with $33.9 million for the nine months ended September 30, 2000 due to strong investment performance.




TABLE OF CONTENTS




19


---




Expense





Total expense increased $31.6 million or 13% to $276.6 million for the nine months ended September 30, 2001, compared with $245.0 million for the nine months ended September 30, 2000. The change
primarily reflects 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,

Variance2001

2000

Amount

%Dollar amounts in thousands

(unaudited)Employee compensation and benefits

$164,896

$136,622


$28,274



20.7
%Fund administration and servicing costs-affiliates

47,428

57,522


(10,094
)


(17.5
)General and administration

56,428

43,282


13,146



30.4Amortization of intangible assets

7,841

7,540


301



4.0Total expense

$276,593

$244,966


$31,627



12.9
%





---




Employee compensation and benefits increased $28.3 million due to increased incentive compensation of $12.0 million reflecting accruals based on the growth of operating income, $6.8 million reflecting direct incentives on alternative
product performance fees and $9.5 million related to salary and benefits. Salary and benefit cost increases were the result of a 15% increase in full-time employees. For the nine months ended September 30, 2001, fund administration and servicing
costs-affiliates declined $10.1 million or 18% due to lower levels of PNC client assets invested in the BlackRock Funds. General and administration expenses increased $13.1 million or 30% to $56.4 million for the nine months ended September
30, 2001 compared with $43.3 million for the nine months ended September 30, 2000 largely due to new business activity, increased headcount and corporate space and technology investments.





---




Nine months ended September 30,

Variance2001

2000

Amount

%Dollar amounts in thousands

(unaudited)General and administration expense:Marketing and promotional

$15,473

$13,169


$   2,304


17.5
%Occupancy expense

9,089

7,452


1,637


22.0Technology

10,286

6,644


3,642


54.8Other general and administration expense

21,580

16,017


5,563


34.7Total general and administration expense

$56,428

$43,282


$13,146


30.4
%





---



TABLE OF CONTENTS




20


---




Expense (continued)





Marketing and promotional expenses of $15.5 million for the nine months ended September 30, 2001 increased $2.3 million or 18% primarily due to higher expenditures on new products as well as
increased travel and entertainment costs for institutional marketing activities. Occupancy expense of $9.1 million for the nine months ended September 30, 2001 increased $1.6 million due to higher expenses associated with corporate facility
expansion, particularly in Wilmington, Delaware, Edinburgh, Scotland, 40 East 52 nd Street, New York and Hong Kong.
Technology expenses increased approximately $3.6 million or 55% to $10.3 million for the nine months ended September 30, 2001 as a result of higher depreciation charges associated with the completion of a second computer facility in Delaware and
capitalized investments to support the growth of BlackRock Solutions. Other expense increased $5.6 million or 35% for the nine months ended September 30, 2001 primarily due to higher professional service costs and sub-advisory fees associated
with new products, and increased office furniture and equipment related expenses due to office space expansion and increased headcount.





Operating Income and Net Income





Operating income was $127.2 million for the nine months ended September 30,
2001, representing an $23.8 million or 23% increase compared with the nine months ended September 30, 2000. Non-operating income increased $2.8 million to $6.8 million for the nine months ended September 30, 2001 as compared with the nine months
ended September 30, 2000. The rise was primarily the result of an increase in interest and dividend income reflecting investment of the Companys excess operating cash. Income tax expense was $54.9 million and $44.6 million, representing
effective tax rates of 41.0% and 41.5% for the nine months ended September 30, 2001 and September 30, 2000, respectively. The lower effective income tax rate was primarily a result of the consolidation of mutual fund activities in Delaware. Net
income totaled $79.1 million for the nine months ended September 30, 2001 compared with $62.8 million for the nine months ended September 30, 2000, representing an increase of $16.3 million or 26%.





Liquidity and Capital Resources





BlackRock meets its working capital requirements through cash generated by its operating activities. Cash provided by the Companys operating activities totaled $119.8 million for the nine months ended September 30, 2001. BlackRock
expects that cash flows provided by operating activities will continue to serve as the principal source of working capital for the near future.





Net cash flow used in investing activities was $152.9 million for the nine months ended September 30, 2001. Capital expenditures for property and equipment was $26.6 million for the nine months ended September 30,
2001 and primarily reflected construction costs for the new building in Wilmington, Delaware, including a second computer facility as well as 40 East 52 nd Street and the purchase of equipment to support the growth of BlackRock Solutions. Net investments were $126.3 million for the nine months ended September 30, 2001, which included a $120.0 million
investment in the BlackRock Funds Intermediate Bond Portfolio, and seed investments made in certain new alternative investment products.




TABLE OF CONTENTS




21


---




Liquidity and Capital Resources (continued)





Net cash flow used in financing activities was $6.6 million for the nine months ended September 30, 2001. Financing activities primarily represented treasury stock
activity for the nine months ended September 30, 2001. On January 31, 2001, in connection with the BlackRock, Inc. Long-Term Deferred Compensation Plan, BlackRock repurchased approximately 142,000 shares of class A common stock at a fair market
value of $40.33 per share from certain employees to facilitate required employee income tax payments. On May 2, 2001, BlackRocks Board of Directors authorized BlackRock to repurchase up to 500,000 of its outstanding shares of class A common
stock from time to time as market and business conditions warrant in open market or privately negotiated transactions. To date, BlackRock has not purchased any shares of its outstanding class A common stock under this repurchase program.





On January 8, 2001, the Company entered into a commitment to invest $8.4 million in Magnetite Asset Investors III, L.L.C., an
alternative investment fund sponsored by BlackRock of which $1.7 million remained unfunded as of September 30, 2001.





On July
20, 2001, the Company entered into a commitment to invest $5.4 million in Carbon Capital, Inc., an alternative investment fund sponsored by BlackRock, which remained unfunded at September 30, 2001.





Total capital at September 30, 2001 was $457.5 million and was comprised entirely of stockholders equity.





Interest Rates





The value of assets
under management is affected by changes in interest rates. Since BlackRock derives the majority of its revenues from investment advisory fees based on the value of assets under management, BlackRocks revenues 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 revenues are 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 by BlackRock, except as 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, revenues or
otherwise.




TABLE OF CONTENTS




22


---




Forward Looking Statements





This report and other statements made by BlackRock include forward-looking statements within the meaning of the Private Securities Litigation Reform Act with
respect to the outlook for earnings and revenues and other future financial or business performance, strategies and expectations. Forward-looking statements are typically identified by words or phrases such as believe,
expect, anticipate, intend, estimate, position, target, mission, assume, achievable, potential, strategy,
goal, objective, plan, aspiration, outlook, outcome, continue, remain, maintain, strive, 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
historical performance.





In addition to factors previously disclosed in BlackRocks Securities and Exchange Commission
(the SEC) reports and those identified elsewhere in this report, 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 reduced demand for products or
services or reduced value of assets under management; (3) the investment performance of BlackRocks advised or sponsored investment products and separately managed accounts; (4) the impact of increased competition; (5) the impact of capital
improvement projects; (6) the impact of future acquisitions; (7) the unfavorable resolution of legal proceedings; (8) the extent and timing of any share repurchases; (9) the impact, extent and timing of technological changes; and (10) the impact of
legislative and regulatory actions and reforms. Terrorist activities, including the September 11 terrorist attacks, may adversely affect the general economy, financial and capital markets, specific industries, and PNC. PNC cannot predict the
severity or duration of effects stemming from such activities or any actions taken in connection with them.





Exhibit 99.1 to
BlackRocks Annual Report on Form 10-K for the year ended December 31, 2000 and BlackRocks subsequent reports filed with the Securities and Exchange Commission, accessible on the SECs website at http://www.sec.gov, discuss these
factors in more detail and identify additional factors that can affect forward-looking statements.




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Item 3.    Quantitative and Qualitative Disclosures About Market Risk





In the
normal course of its business, BlackRock is exposed to the risk of interest rate, securities market and general economic fluctuations.





BlackRocks investments, available for sale, consist primarily of BlackRock Funds and certain institutional and private placement portfolios (alternative investment products). Occasionally, BlackRock invests in new
mutual funds or advisory accounts (seed investments) sponsored by BlackRock in order to provide investable cash to the new mutual fund or account to establish a performance history. As of September 30, 2001, the fair market value of seed investments
was $17.0 million. The fair market value of BlackRocks other investments was $123.7 million as of September 30, 2001 and is comprised entirely of an investment in the Intermediate Bond Portfolio of the BlackRock Funds. The Intermediate
Bond Portfolios assets are invested primarily in investment grade intermediate bonds with maturities from 2 to 10 years.





BlackRock does not hold any derivative securities to hedge its investments. These investments expose BlackRock to credit and interest rate risk. However, the Company does not believe that the effect of reasonably possible near-term changes
in default rates or interest rates on its financial position, results of operations or cash flow would be material.




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PART II  OTHER INFORMATION





Item 1.    
Legal Proceedings





BlackRock and its subsidiaries, in the normal course of business, are subject to
various pending and threatened lawsuits in which claims for monetary damages are asserted. Management, after consultation with legal counsel, does not at the present time anticipate that the ultimate aggregate liability, if any, arising out of such
lawsuits will have a material adverse effect on BlackRocks financial position. At the present time, management is not in a position to determine whether any such pending or threatened litigation will have a material adverse effect on
BlackRocks results of operations in any future reporting period.





Item 6.    

Exhibits and Reports on Form 8-K





(a)  Exhibits





In addition to the exhibits listed in the Companys Annual Report on Form 10-K for the year ended December 31, 2000, the following exhibits are being filed for
the quarter ended September 30, 2001.





Exhibit No.

Description10.1

Agreementof Lease, dated September 4, 2001, between 40 East 52ndStreet L.P. and the Registrant.





(b)  Reports on Form 8-K




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SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





BLACKROCK, INC.(Registrant)By: /s/ Paul L. AudetDate: November 9, 2001

Paul L. AudetManaging Director & Chief Financial Officer







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