And with that I will turn it over to Ann Marie, our Chief Financial Officer.Ann Marie Petach Thanks Bob. Good morning everyone. As we report second quarter earnings, we're pleased with the progress of the integration and the additional capabilities of the combined firm. Since the BGI transaction we've delivered consistently strong results despite market volatility while continuing to re-invest in the business for future growth. Our results have produced strong positive cash flow allowing us to reduce our commercial paper balances to about 180 billion. Robert Connolly Million. Ann Marie Petach Million. This is down from three billion, where two billion was replaced with long-term debt and remaining reductions funded out of operating cash flow. We are announcing that the Board has approved repurchase of up to 5.1 million share. The purpose is to neutralize the dilutive effect of restricted stocks and options that have been granted to employees. 5.1 million represents the share which becomes dilutive over the next few years. The timing of the repurchases will be at management’s discretion. We’re pleased to reinstate this practice after a pause during the financial crisis and for the BGI acquisition. As I discussed results I’ll primarily we’d be talking about as adjusted results. Second quarter net income was $463 million, or $2.37 per share. This includes $2.46 per share of operating earnings, and $0.09 per share of non-operating expense. Net income was about equal to the first quarter and was almost double second quarter 2009. EPS was down $0.03 or only 1% from the first quarter despite a quarter in which market declined about 10%. While the swing in the Dow from the March 31st level of 10,856 to June 30th level of 9,774 was not uplifting the point to point measure maps the volatility in the first half of this year. That resulted in an average Dow in both the first and second quarter being almost equal at about the 10,500 level.
At the same time, we’re seeing over 25% improvement in markets compared to a year ago when the June 30th 2009 closed at 8331. The 35% increase in EPS from second quarter 2009 was driven by 59 billion in long-dated organic growth, the BGI transaction, and the market improvements I just talked about. The second quarter tax rate remained at 35% and reflected the geographic mix of the combined company in a period of no unusual items.As adjusted results exclude pre-tax BGI integration cost of 32 million in the second quarter that’s primarily G&A. Total integration cost to-date have been 267 million and at this point the bulk of this spending is behind us. We’ve provided an estimated range of integration expenditures of 300 million to 350 million at the time we announced the BGI transaction. We presently estimate that aggregate expenditures will come in at about 300 million or less. As adjusted operating income of 741 million improved 14 million or 2% compared to the first quarter and 439 million or about 2.5 times a year ago. The second quarter operating margin as adjusted of 38.8% reflects early synergy realization and the initial investment to fund future top line growth. Our margin is on track to align with our 2008 and 2009 margins and to exceed our 2007 margins. We remain committed to achieving synergies as we integrate the business recognizing really full integration is going to extend into and perhaps beyond 2011. At the same time, we are investing in future growth opportunity, including our iShares business, the defined contribution platform, BlackRock Solutions, Asia, multi-asset plus strategies, and our global trading platform. Our commitment to these and other opportunities gives us confidence in BlackRock’s long term organic growth prospect. As I discuss revenues and cost, I'll be talking really about comparisons to the first quarter as the comparisons to a year ago get dominated by BGI transaction. Second quarter revenues of two billion are up 2% from the first quarter, reflecting a 2% improvement in base fees, including the effects of average loan balances on secured dealing and one extra day in the quarter.
The improvement in base fees reflects higher index equity revenues of 32 million and stable active equity revenues. Basis points in a single quarter particularly on indexed products are affected by markets to mix of indexed and ETFs and loan balances, which are not even across the euro within the period.Read the rest of this transcript for free on seekingalpha.com