This summary is based on the fourth quarter fiscal 2006 earnings call conducted by BlackRock Corp. (BLK: chart) on January 17, 2007.

Chairman and Chief Executive Officer: Laurence D. Fink
Chief Financial Officer: Paul L. Audet
General Counsel: Robert P. Connolly

Key Investors Issues

- Earnings per share were $1.28 as against $1.09 in the prior year quarter.
- Revenue totaled $1.019 billion for fourth quarter 2006.
- Fixed income assets increased $4.4 billion during the fourth quarter to $455.9 billion.

Fourth Quarter Fiscal 2006 Financial Highlights

BlackRock net income for the fourth quarter and full year ended December 31, 2006 of $169.4 million and $322.6 million, respectively.

Fourth quarter results reflect the impact of the Merrill Lynch Investment Managers (MLIM) transaction, which closed on September 29, 2006. Diluted earnings per share for the fourth quarter and full year were $1.28 and $3.87, including the impact of one-time MLIM integration charges of 25 cents and $1.07 per share, respectively. Before the effect of these charges, fourth quarter and full year 2006 diluted earnings per share increased approximately 40% compared to results reported for the fourth quarter and full year 2005 of $1.09 and $3.50, respectively.

Fourth quarter 2006 earnings were positively impacted by solid organic growth, favorable market conditions and the realization of synergies from the MLIM transaction. Fourth quarter 2006 diluted earnings per share growth compared to 2005 was negatively impacted by approximately 23 cents per share due to higher intangible amortization expense (14 cents per share) associated with the MLIM transaction and lower performance fees (9 cents per share).

Adjusted earnings per share increased by approximately 33% to $1.61 and $5.33 for the fourth quarter and full year compared to $1.21 and $4.03 for the fourth quarter and full year 2005.

Fourth quarter 2006 adjusted earnings per share reflected 25 cents per diluted share of onetime costs associated with the integration of MLIM and 8 cents per diluted share of expenses associated with BlackRock’s long-term retention and incentive plans (including the BlackRock 2002 Long-Term Retention and Incentive Plan and the 1999 Stock Award and Incentive Plan, collectively LTIP) that will be partially funded through a contribution of BlackRock stock currently held by The PNC Financial Services Group (PNC) and an expected future payment from Merrill Lynch & Co (Merrill Lynch) related to compensation expense.

Revenue totaled $1.019 billion for fourth quarter 2006.

Performance fees totaled $39.9 million, which represented approximately 4% of reported revenue and adjusted diluted earnings per share. Fourth quarter 2005 performance fees were $87.2 million, which represented approximately 24% of $369.1 million in reported revenue and approximately 27% of adjusted earnings per share.

- Other income, which includes BlackRock Solutions (BRS), 12b-1 fees and property management fees, was $115.6 million for fourth quarter 2006, versus $49.1 million reported in fourth quarter 2005, and $48.6 million in the third quarter 2006.
- Fourth quarter 2006 BlackRock Solutions revenues rose to $37.7 million, an increase of $5.6 million or 17% from fourth quarter 2005.

Fourth quarter 2006 operating expenses were $772.4 million, compared to $256.7 million in fourth quarter 2005 and $294.1 million in third quarter 2006.

Compensation and benefits reflects an increase in the number of employees to approximately 4,700 at December 31, 2006 from approximately 1,750 at December 31, 2005. Portfolio administration and servicing costs includes payments to third parties, including Merrill Lynch, primarily associated with administration and servicing client investments in certain BlackRock products. Fourth quarter 2006 also reflects approximately $7.6 million of expense from launching a new closed-end fund that is expected to produce annual net revenue of approximately $5.6 million.

Fourth quarter 2006 non-operating income was $26.1 million, compared to $4 million in fourth quarter 2005 and $1.9 million in third quarter 2006.

This was principally related to investments acquired in the MLIM transaction and subsequent additional investments. Fourth quarter 2006 non-operating income is offset by approximately $3.3 million of minority interest.

The Company recorded a deferred tax liability related to the MLIM transaction of approximately $1.8 billion, of which approximately $375 million will be amortized over the life of the intangible assets. The net effect of this amortization and U.S. federal, state and local taxes and taxes paid in non-U.S. jurisdictions results in an effective tax rate of approximately 37% for the quarter and year ended December 31, 2006.

One-time MLIM integration charges for the fourth quarter and full year ended December 31, 2006 were $51.3 million and $141.9 million, respectively.

Fourth quarter charges included $45.3 million of general and administrative expenses and $6 million in compensation and benefit costs.