The quarterly non-operating income, net of non-controlling interest, was $17 million compared with $65 million in the year ago quarter.

- The decrease in net non-operating income of $48 million reflects a $31 million decline in net investment gains from core-investments in private equity products and $12 million related to valuations on co-investments in real estate products.
- The net interest expense increased $6 million versus Q2 of 2007 due to the issuance of long-term debt in September 2007.

- The second quarter income taxes were $148 million representing an effective tax rate of 35%.

Sequential Comparisons:

- Q2 operating income rose 2% to $405 million from $396 million in Q1 of 2008.

- Q2 revenues of $1.387 million firmed $87 million or 7% versus $1.300 million in Q1 of 2008.
- The Q2 investment advisory and administration base fees of $1.161 million rose $28 million or 3% compared with $1.133 million in Q1 of 2008.
- The rise reflects increases in fixed income fees, cash management fees and alternative investment products of $13 million, $9 million and $8 million respectively.
- The increase in base fees is attributable to strong second quarter UAM growth in fixed income and alternative products as well as higher average UAM in cash management products.

- The performance fees were $57 million compared with $42 million in Q1 of 2008.
- The increase reflects higher performance fees earned on alternative investment products.

- Other revenue was $135 million versus 490 million in first quarter of 2008.
- Q2 BlackRock Solutions revenues increased 67% to $100 million from $60 million in Q1 of 2008.
- The increase in Q2 BlackRock Solutions revenue reflects net new business growth, including the addition of substantial advisory AUM.

- The second quarter operating expenses of $982 million rose $78 million or 9% compared with $904 million in Q1 of 2008.
- The employee compensation and benefits firmed $83 million due to increases in operating income, performance fees and other revenue.
- The general and administration expenses eased $7 million due to a $7 million decrease in expense related foreign currency re-measurement and a $4 million decrease in professional services, partially offset by a $5 million increase in portfolio services.

- Q2 non-operating income, net of non-controlling interest, was $17 million versus $24 million in Q1 of 2008.
- The increase reflects higher valuations from co-investments in hedge funds/funds of hedge funds and other investments of $27 million and $19 million respectively.
- The interest and dividend income declined $ million versus Q1 of 2008.

The net new business for the quarter totaled $63.2 billion.

- The flows were strong across both regions and client businesses.
- The company had $47.4 billion of net inflows from U.S. clients and $15.8 billion from international investors including $11.3 billion from investors in Europe, the Middle East, Africa and Australia.
- An estimated $3.1 billion was from investors in Asia.
- The quarter’s efforts yielded net new business from a wide variety of investors, including $50.4 billion and $9.3 billion of net new business in long-dated products from U.S. and international institutions respectively.
- The management also reported $3.6 billion of net inflows in U.S. retail products and $2.6 billion of net subscriptions from international retail investors, which were partially offset by $1 billion of new outflows from high net worth investors.

The second quarter fundings were positive in all long-dated asset classes.

- Investors awarded the company $16.7 billion in fixed income mandates, led by net inflows in long duration and global bond portfolios.
- Additionally, the company had $6 billion of net new business in equity accounts, with strong flows in asset allocation funds and enhanced index mandates.
- The alternative investments generated net inflows of $1.5 billion, spread across real estate, fund of funds and hedge fund products.
- The cash management products recorded net outflows of $4.6 billion whilst the average assets increased 5% versus the prior quarter. The company has had $7.3 billion of net inflows subsequent to quarter-end.

According to the management BlackRock solutions added seven new assignments during the quarter.

- The additions are inclusive of five new Aladdin assignments and four additional investment accounting outsourcing relationships.
- Four advisory assignments ended and two new relationships commenced during the quarter.
- The company reported that four risk management advisory assignments ended and one new relationship commenced during the quarter.
- As of June 30, 2008, BlackRock Solutions had $43.6 billion of advisory AUM in multiple financial markets advisory assignments.
- The company also had ten Aladdin implementations in process, four of which are forecast to ‘go live’ during Q3.

The management reported that as of July 15, 2008, the pipeline of wins funded or to be funded was $64 billion.

- This is inclusive of $23 billion in fixed income, equity and alternative investments, $8.5 billion in cash management products and $32.5 billion in advisory assignments.
- The pipeline includes mandates from a diverse U.S. and international clients.

Key questions and answers from the second quarter fiscal 2008 earnings call conducted by BlackRock Inc. on July 17, 2008.

William R. Katz (Buckingham Research): Where are we in terms of the new business pipeline in light of the fact that the markets have been so volatile particularly in the last 6 weeks to 8 weeks?