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Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2003

OR

For the transition period from            to            .

(Commission file number 001-15305)

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

40 East 52^nd Street, New York, NY 10022

(Address of principal executive offices)

(Zip Code)

(212) 754-5300

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, 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  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)     Yes  x    No  ¨

As of April 30, 2003, there were 18,696,872 shares of the registrant’s class A common stock outstanding and 46,359,649 shares of the registrant’s class B common stock outstanding.

Table of Contents

BlackRock Inc.

Index to Form 10-Q

PART I

FINANCIAL INFORMATION

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Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

BlackRock, Inc.

Consolidated Statements of Financial Condition

(Dollar amounts in thousands)

See accompanying notes to consolidated financial statements.

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

BlackRock, Inc.

Consolidated Statements of Income

(Dollar amounts in thousands, except share data)

(unaudited)

See accompanying notes to consolidated financial statements.

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

BlackRock, Inc.

Consolidated Statements of Cash Flow

(Dollar amounts in thousands)

(unaudited)

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

BlackRock, Inc.

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2003 and 2002

(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 accounting principles generally accepted in the United States of America 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, 2002. 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.

Investments

The Company’s investments are classified as trading and available for sale. Investments, trading, primarily represent investments made by the Company and held in a Rabbi trust with respect to senior employee elections under the BlackRock Voluntary and Involuntary Deferred Compensation Plans and are recorded at fair market value with unrealized gains and losses included in the accompanying consolidated statements of income as investment income (expense). Investments, available for sale, consist primarily of investments in BlackRock funds, municipal bonds and certain alternative investment products and are stated at market values. Securities which are not readily marketable (alternative investment products) are stated at their estimated fair market value as determined by the Company’s management.

The resulting unrealized gains and losses on investments, available for sale, are included in the accumulated other comprehensive income or loss component of stockholders’ equity, net of tax. Realized gains and losses on trading and available for sale investments are calculated on a specific identification basis and, along with interest and dividend income, are included in investment income (expense) in the accompanying consolidated statements of income. The Company’s management periodically assesses impairment on investments to determine if it is other than temporary. Several of the Company’s available for sale investments represent equity interests in collateralized debt obligations in which the Company acts in the capacity of collateral manager. The Company reviews cash flow estimates throughout the life of each collateralized debt obligation to determine if an impairment charge is required to be taken through current earnings. If the updated estimate of future cash flows (taking into account both timing and amounts) is less than the last revised estimate and the reduction in estimated future cash flows is deemed to be other than temporary, an impairment is recognized based on the excess of the carrying amount of the

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Investments (continued)

investment over its fair value. In evaluating impairments on all other available for sale securities, the Company considers the length of time and the extent to which the security’s market value has been less than its cost, the financial condition and near-term prospects of the security’s issuer and the Company’s intended holding period for the security. Any impairment on investments which is deemed other than temporary is recorded in non-operating income (expense) on the consolidated statements of income.

Stock-Based Compensation

Prior to 2003, the Company accounted for stock-based employee compensation plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Stock compensation recorded prior to 2003 primarily represents the grant of restricted common stock to employees. Effective January 1, 2003, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” prospectively to all employee awards granted, modified or settled after January 1, 2003. Awards under the Company’s plans vest over periods ranging from two to four years. Therefore, the cost related to stock-based employee compensation included in net income for the three month period ended March 31, 2003 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS No. 123. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Consolidation of Variable Interest Entities

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities.” FIN No. 46 addresses the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to variable interest entities (“VIE”) and generally would require that the assets, liabilities and results of operations of a VIE be consolidated into the financial statements of the enterprise that has a controlling financial interest in it. The interpretation provides a framework for determining whether an entity should be evaluated for consolidation based on voting interests or significant financial support provided to the entity (“variable interests”).

An entity is classified as a VIE if total equity is not sufficient to permit the entity to finance its activities without additional subordinated financial support or its equity investors lack the direct or indirect ability to make decisions about an entity’s activities through voting rights, absorb the expected losses of the entity if they occur or receive the expected residual returns of the entity if they occur. Once an entity is determined to be a VIE, its assets, liabilities and results of operations should be consolidated with those of its primary beneficiary. The primary beneficiary of a VIE is the entity which either will absorb a majority of the VIE’s expected losses or has the right to receive a majority of the VIE’s expected residual returns. The expected losses and residual returns of a VIE include expected variability in its net income or loss, fees to decision makers and fees to guarantors of substantially all VIE assets or liabilities, and are calculated in accordance with Statement of Financial Accounting Concept No. 7, “Using Cash Flow Information and Present Value in Accounting Measurements.”

A public enterprise with a variable interest in a VIE created before January 31, 2003 must apply FIN No. 46 to that VIE as of the beginning of the first interim or annual reporting period beginning after June 15, 2003. Additionally, if it is reasonably possible that an enterprise will consolidate or disclose information about a VIE when the guidance becomes effective, there are several disclosure requirements effective for all financial statements issued after January 31, 2003.

Management is in the process of finalizing changes to the equity ownership and/or control structure of certain hedge funds previously identified in the Company’s 2002 Form 10-K that management believes will remove them from the scope of FIN No. 46. As a result these entities will not be required to be consolidated in the third quarter of 2003.

Pursuant to the conceptual framework set forth in FIN No. 46, the Company’s management has concluded that the consolidation of the assets, liabilities and results of operations of four collateralized bond obligation funds (“CBOs”) and one collateralized loan obligation fund (“CLO”) organized as corporations or limited liability companies in its consolidated financial statements as of and for the period ended September 30, 2003 is reasonably possible. The funds invest in high yield securities and offer opportunity for high return and are subject to greater risk than traditional investment products. These funds are structured to take advantage of the yield differential between their assets and liabilities and have terms to maturity from eight to twelve years. At March 31, 2003, aggregate assets and debt in the CBOs and CLO was approximately $2.2 billion and $2.1 billion, respectively. BlackRock’s equity ownership in these funds was approximately $11.3 million at March 31, 2003. BlackRock’s maximum potential loss related to these VIEs is limited to the amount of its respective equity ownership in each of these investment vehicles and consequently BlackRock has no risk of loss with respect to the debt of these investment vehicles. Additionally, the Company has neither guaranteed nor is contractually liable for any of the VIEs’ obligations.

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

Consolidation of Variable Interest Entities (continued)

Assuming the consolidation of the CBOs’ and CLO’s assets, liabilities and results of operations effective July 1, 2003, the Company will record a cumulative effect of change in accounting principle estimated to range from $6 million to $10 million. This charge represents the difference between the carrying amounts of BlackRock’s investments in these entities accounted for under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” the Company’s current accounting treatment, and FIN No. 46.

Commencing in 2003, BlackRock acts as trading adviser and special member to an entity which has created a series of municipal securities trusts in which it has retained interests. These trusts purchase fixed-rate, long-term, highly rated, insured or escrowed municipal bonds financed by the issuance of trust certificates. The trust certificates entitle the holder to receive future payments of principal and variable interest and to tender such certificates at the option of the holder on a periodic basis. A third party acts as placement agent for the entity and the trusts and as liquidity provider to the trusts. The aggregate assets and debt in this entity (including the trusts) was approximately $96 million and $63 million, respectively. BlackRock’s equity ownership was approximately $5.0 million at March 31, 2003. Based on its preliminary assessment, the Company’s management has concluded that BlackRock is not the primary beneficiary of this entity and therefore will not consolidate the entity upon the Company’s adoption of FIN No. 46.

Management will continue to assess this interpretation’s final impact on its consolidated financial statements. Therefore, additional entities may be subject to consolidation upon BlackRock’s final adoption of FIN No. 46.

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

1. Significant Accounting Policies

Reclassification of Prior Period’s Statements

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

2. Investments, Trading and Available for Sale

A summary of the cost and fair market value of investments is as follows:

All municipal debt securities have a maturity date in excess of ten years and an investment rating (provided by major rating agencies) of “AAA” or its equivalent.

BlackRock acts as investment advisor to all these investments.

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

3. Other Income

Other income consists of the following:

4. Common Stock

BlackRock’s class A, $0.01 par value, common stock authorized was 250,000,000 shares as of March 31, 2003 and December 31, 2002, respectively. BlackRock’s class B, $0.01 par value, common stock authorized was 100,000,000 shares as of March 31, 2003 and December 31, 2002, respectively.

The Company’s common stock issued and outstanding and related activity during the three month period ended March 31, 2003 consists of the following:

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

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

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PART I—FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

7. Supplemental Statements of Cash Flow Information

Supplemental disclosure of cash flow information:

Supplemental schedule of noncash transactions:

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PART I—FINANCIAL INFORMATION (continued)

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 largest publicly traded investment management firms in the United States with approximately $273.6 billion of assets under management at March 31, 2003. BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of equity, fixed income, liquidity and alternative investment separate accounts and mutual funds, including BlackRock Funds and BlackRock Provident Institutional Funds (“BPIF”). In addition, BlackRock provides risk management and investment system services and products to institutional investors under the BlackRock Solutions name. 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 March 31, 2003, PNC indirectly owned approximately 69% of BlackRock.

The following table summarizes BlackRock’s operating performance for the three months ended March 31, 2003, March 31, 2002 and December 31, 2002:

BlackRock, Inc.

Financial Highlights

(Dollar amounts in thousands, except share data or otherwise stated)

(unaudited)

We believe that operating margin, as reported, is an effective indicator of management’s ability to effectively employ the Company’s resources. Fund administration and servicing costs have been excluded from operating margin because these costs are a fixed, asset-based expense which can fluctuate based on the discretion of a third party.

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PART I—FINANCIAL INFORMATION (continued)

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 investment system services to insurance companies, finance companies, pension funds, foundations, consultants, mutual fund sponsors, 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. Fees earned for BlackRock Solutions services are either based on predetermined percentages of the market value of assets subject to the services or on fixed monthly or quarterly payments. The fees earned on risk management advisory and investment system assignments are recorded as other income.

Operating expense primarily consists of employee compensation and benefits, fund administration and servicing costs, and general and administration expense. Employee compensation and benefits expense reflects salaries, deferred and incentive compensation and related benefit costs. Fund administration and servicing costs expense reflects payments made to PNC affiliated entities and third parties, primarily associated with the administration and servicing of client investments in the BlackRock Funds and BlackRock Closed-end Funds. Intangible assets at March 31, 2003 and December 31, 2002 were approximately $182.9 million and approximately $182.8 million, respectively, with amortization expense of approximately $0.2 million for the three months ended March 31, 2003 and 2002, respectively. Intangible assets reflect PNC’s acquisition of BlackRock Financial Management, L.P. (“BFM”) on February 28, 1995, 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 and the acquisition of certain assets and liabilities of Cyllenius Capital Management on November 4, 2002.

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PART I – FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Assets Under Management

Assets under management (“AUM”) increased approximately $35.4 billion, or 15%, to $273.6 billion at March 31, 2003, compared with $238.1 billion at March 31, 2002. The growth in assets under management was attributable to an increase of $40.6 billion or 26% in separate accounts, partially offset by a decrease of $5.1 billion or 6% in mutual fund assets.

The increase in separate accounts at March 31, 2003, as compared with March 31, 2002, was the result of net subscriptions of $29.0 billion and market appreciation of $11.6 billion. Net subscriptions largely reflected fixed income and equity sales which were $29.0 billion (despite significant rebalancing by institutional investors out of bonds) and $2.5 billion, respectively, and were partially offset by $3.2 billion in liquidity-securities lending accounts net redemptions during the period. The rise in fixed income separate account assets was attributable to new client sales and increased fundings from existing clients as the Company continued to deliver solid relative investment performance. Net subscriptions in equity accounts primarily represented new international equity business concentrated in the European Equity product. The decrease in liquidity-securities lending separate accounts represents lower levels of cash collateral managed by BlackRock for PFPC Worldwide, Inc., a PNC affiliate. Market appreciation of $11.6 billion in separate accounts largely reflected appreciation in fixed income assets of $14.9 billion due to declining interest rates, partially offset by market depreciation in equity assets of $3.0 billion.

The $5.1 billion decrease in mutual fund assets since March 31, 2002 reflected net redemptions of $4.1 billion and market depreciation of $1.0 billion. Net redemptions in BPIF and the BlackRock Funds since March 31, 2002 were $4.0 billion and $2.7 billion, respectively, and were partially offset by $2.3 billion in net subscriptions in the closed-end funds. The decrease in BPIF assets primarily reflects stable short-term rates and lower absolute yields versus a year ago. These factors may result in additional declines in BPIF assets for 2003 compared to 2002. Net redemptions in the BlackRock Funds since March 31, 2002 were primarily due to PNC-related net redemptions of approximately $3.5 billion, which were partially offset by $0.8 billion in sales to third party customers. The increase in closed-end funds was the result of the Company’s offering of new closed-end fund assets totaling $2.9 billion, partially offset by a term trust maturity of $0.6 billion.

BlackRock experienced $0.8 billion in net redemptions for the first quarter of 2003 reflecting separate account net subscriptions of $9.5 billion offset by $10.3 billion of mutual fund redemptions. Net subscriptions in separate accounts primarily consisted of fundings in fixed income and liquidity accounts totaling $8.9 billion and $0.5 billion, respectively. Mutual fund net redemptions for the first quarter of 2003 were primarily attributable to $11.1 billion in net redemptions in BPIF. As previously discussed, net redemptions in BPIF reflect stable short-term rates and lower absolute yields versus investment alternatives.

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PART I—FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

BlackRock, Inc.

Assets Under Management

(Dollar amounts in millions)

(unaudited)