FRANKLIN RESOURCES INC [BEN] Filings

10-Q 1 ben-20220630.htm 10-Q ben-20220630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			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: 001-09318

FRANKLIN RESOURCES, INC.

(Exact name of registrant as specified in its charter)


Delaware			13-2670991
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

One Franklin Parkway, San Mateo, CA 94403

(Address of principal executive offices) (Zip code)

(650) 312-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	BEN	New York Stock Exchange

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 preceding 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 ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Number of shares of the registrant’s common stock outstanding at July 21, 2022: 498,357,111.

Table of Contents

INDEX TO FORM 10-Q


			Page
PART I		Financial Information
	Item 1.	Financial Statements (unaudited)
		Consolidated Statements of Income	3
		Consolidated Statements of Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Stockholders’ Equity	6
		Consolidated Statements of Cash Flows	8
		Notes to Consolidated Financial Statements	10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
	Item 4.	Controls and Procedures	44

PART II		Other Information
	Item 1.	Legal Proceedings	45
	Item 1A.	Risk Factors	45
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
	Item 6.	Exhibits	46

Exhibit Index			47
Signatures			48

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited


	Three Months Ended June 30,				Nine Months Ended June 30,
(in millions, except per share data)	2022		2021		2022		2021
Operating Revenues
Investment management fees	$	1,636.1	$	1,697.3	$	5,045.8	$	4,836.1
Sales and distribution fees	335.6		416.9		1,104.0		1,227.4
Shareholder servicing fees	46.9		50.5		146.8		155.6
Other	12.7		8.2		39.7		25.4
Total operating revenues	2,031.3		2,172.9		6,336.3		6,244.5
Operating Expenses
Compensation and benefits	766.7		771.4		2,321.8		2,229.2
Sales, distribution and marketing	440.3		531.0		1,432.8		1,579.3
Information systems and technology	125.9		121.8		376.6		355.8
Occupancy	53.8		54.6		163.1		164.1
Amortization of intangible assets	81.8		58.0		200.5		174.1
General, administrative and other	158.1		158.0		416.1		398.5
Total operating expenses	1,626.6		1,694.8		4,910.9		4,901.0
Operating Income	404.7		478.1		1,425.4		1,343.5
Other Income (Expenses)
Investment and other income, net	13.0		52.9		97.7		197.2
Interest expense	(28.9)		(25.7)		(71.1)		(71.3)
Investment and other income (losses) of consolidated investment products, net	(74.4)		61.0		33.3		263.3
Expenses of consolidated investment products	(1.3)		(10.9)		(10.1)		(26.5)
Other income (expenses), net	(91.6)		77.3		49.8		362.7
Income before taxes	313.1		555.4		1,475.2		1,706.2
Taxes on income	89.5		83.8		347.7		354.4
Net income	223.6		471.6		1,127.5		1,351.8
Less: net income (loss) attributable to
Redeemable noncontrolling interests	(0.5)		33.7		(50.2)		64.4
Nonredeemable noncontrolling interests	(32.3)		(0.5)		118.5		121.9
Net Income Attributable to Franklin Resources, Inc.	$	256.4	$	438.4	$	1,059.2	$	1,165.5

Earnings per Share
Basic	$	0.50	$	0.86	$	2.07	$	2.27
Diluted	0.50		0.86		2.07		2.27

See Notes to Consolidated Financial Statements.

Table of Contents

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited


(in millions)	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Net Income	$	223.6	$	471.6	$	1,127.5	$	1,351.8
Other Comprehensive Income (Loss)
Currency translation adjustments, net of tax	(100.6)		22.6		(123.8)		81.3
Net unrealized gains (losses) on defined benefit plans, net of tax	(2.4)		(0.2)		(2.2)		0.2

Total other comprehensive income (loss)	(103.0)		22.4		(126.0)		81.5
Total comprehensive income	120.6		494.0		1,001.5		1,433.3
Less: comprehensive income (loss) attributable to
Redeemable noncontrolling interests	(0.5)		33.7		(50.2)		64.4
Nonredeemable noncontrolling interests	(32.3)		(0.5)		118.5		121.9
Comprehensive Income Attributable to Franklin Resources, Inc.	$	153.4	$	460.8	$	933.2	$	1,247.0

See Notes to Consolidated Financial Statements.

Table of Contents

FRANKLIN RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

Unaudited


(in millions, except share and per share data)	June 30, 2022		September 30, 2021
Assets
Cash and cash equivalents	$	3,806.3	$	4,357.8
Receivables	1,414.8		1,428.2
Investments (including $660.8 and $588.3 at fair value at June 30, 2022 and September 30, 2021)	1,658.5		1,510.3
Assets of consolidated investment products
Cash and cash equivalents	672.4		289.4
Investments, at fair value	7,475.3		5,820.1
Property and equipment, net	759.1		770.0
Goodwill	5,807.1		4,457.7
Intangible assets, net	5,177.4		4,710.2
Operating lease right-of-use assets	486.8		448.4
Other	338.3		376.3
Total Assets	$	27,596.0	$	24,168.4

Liabilities
Compensation and benefits	$	1,234.3	$	1,179.3
Accounts payable and accrued expenses	541.7		479.3
Commissions	209.8		259.8
Income taxes	521.2		693.6
Debt	3,382.2		3,399.4
Liabilities of consolidated investment products
Accounts payable and accrued expenses	451.4		558.0
Debt	5,496.5		3,671.0
Deferred tax liabilities	290.9		311.7
Operating lease liabilities	555.3		518.4
Other	1,133.9		354.3
Total liabilities	13,817.2		11,424.8
Commitments and Contingencies (Note 11)
Redeemable Noncontrolling Interests	1,493.7		933.0
Stockholders’ Equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued	—		—
Common stock, $0.10 par value, 1,000,000,000 shares authorized; 498,356,132 and 501,807,677 shares issued and outstanding at June 30, 2022 and September 30, 2021	49.8		50.2
Retained earnings	11,997.5		11,550.8
Accumulated other comprehensive loss	(503.6)		(377.6)
Total Franklin Resources, Inc. stockholders’ equity	11,543.7		11,223.4
Nonredeemable noncontrolling interests	741.4		587.2
Total stockholders’ equity	12,285.1		11,810.6
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	27,596.0	$	24,168.4

See Notes to Consolidated Financial Statements.

Table of Contents

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Unaudited


	Franklin Resources, Inc.											Non- redeemable Non- controlling Interests		Total Stockholders’ Equity
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Stockholders’ Equity
(in millions)
for the nine months ended June 30, 2022	Shares	Amount
Balance at October 1, 2021	501.8	$	50.2	$	—	$	11,550.8	$	(377.6)	$	11,223.4	$	587.2	$	11,810.6
Net income						453.2				453.2		84.1		537.3
Other comprehensive loss								(12.0)		(12.0)				(12.0)
Dividends declared on common stock ($0.29 per share)						(148.9)				(148.9)				(148.9)
Repurchase of common stock	(0.7)	—		(58.8)		37.1				(21.7)				(21.7)
Issuance of common stock	1.4	0.1		47.6						47.7				47.7
Stock-based compensation				11.2						11.2				11.2
Net distributions and other												(27.8)		(27.8)
Balance at December 31, 2021	502.5	$	50.3	$	—	$	11,892.2	$	(389.6)	$	11,552.9	$	643.5	$	12,196.4
Net income						349.6				349.6		66.7		416.3
Other comprehensive loss								(11.0)		(11.0)				(11.0)
Dividends declared on common stock ($0.29 per share)						(148.3)				(148.3)				(148.3)
Repurchase of common stock	(2.7)	(0.4)		(66.7)		(13.7)				(80.8)				(80.8)
Issuance of common stock	0.6	0.1		18.5						18.6				18.6
Stock-based compensation				48.2						48.2				48.2
Net distributions and other												(21.7)		(21.7)
Net deconsolidation of investment products												(39.6)		(39.6)
Adjustment to fair value of redeemable noncontrolling interests						(188.5)				(188.5)				(188.5)
Balance at March 31, 2022	500.4	$	50.0	$	—	$	11,891.3	$	(400.6)	$	11,540.7	$	648.9	$	12,189.6
Net income (loss)						256.4				256.4		(32.3)		224.1
Other comprehensive loss								(103.0)		(103.0)				(103.0)
Dividends declared on common stock ($0.29 per share)						(147.7)				(147.7)				(147.7)
Repurchase of common stock	(2.0)	(0.2)		(48.3)		(2.5)				(51.0)				(51.0)
Issuance of common stock	—	—		1.8						1.8				1.8
Stock-based compensation				46.5						46.5				46.5
Net distributions and other												(24.8)		(24.8)
Net deconsolidation of investment products												(0.3)		(0.3)
Acquisition												149.9		149.9
Balance at June 30, 2022	498.4	$	49.8	$	—	$	11,997.5	$	(503.6)	$	11,543.7	$	741.4	$	12,285.1

See Notes to Consolidated Financial Statements.

Table of Contents

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Unaudited


	Franklin Resources, Inc.											Non- redeemable Non- controlling Interests		Total Stockholders’ Equity
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Stockholders’ Equity
(in millions)
for the nine months ended June 30, 2021	Shares	Amount
Balance at October 1, 2020	495.1	$	49.5	$	—	$	10,472.6	$	(407.6)	$	10,114.5	$	754.6	$	10,869.1
Adoption of new accounting guidance						(3.3)				(3.3)				(3.3)
Net income						345.3				345.3		30.8		376.1
Other comprehensive income								92.9		92.9				92.9
Dividends declared on common stock ($0.28 per share)						(144.0)				(144.0)				(144.0)
Repurchase of common stock	(2.1)	(0.2)		(39.9)		(5.5)				(45.6)				(45.6)
Issuance of common stock	12.5	1.2		32.5						33.7				33.7
Stock-based compensation				7.4						7.4				7.4
Net subscriptions and other												93.3		93.3
Balance at December 31, 2020	505.5	$	50.5	$	—	$	10,665.1	$	(314.7)	$	10,400.9	$	878.7	$	11,279.6
Net income						381.8				381.8		91.6		473.4
Other comprehensive loss								(33.8)		(33.8)				(33.8)
Dividends declared on common stock ($0.28 per share)						(143.7)				(143.7)				(143.7)
Repurchase of common stock	(1.7)	(0.2)		(56.2)		10.6				(45.8)				(45.8)
Issuance of common stock	0.5	0.1		14.1						14.2				14.2
Stock-based compensation				42.1						42.1				42.1
Net subscriptions and other												16.5		16.5
Net deconsolidation of investment products												(31.6)		(31.6)
Adjustment to fair value of redeemable noncontrolling interests						(52.3)				(52.3)				(52.3)
Balance at March 31, 2021	504.3	$	50.4	$	—	$	10,861.5	$	(348.5)	$	10,563.4	$	955.2	$	11,518.6
Net income (loss)						438.4				438.4		(0.5)		437.9
Other comprehensive income								22.4		22.4				22.4
Dividends declared on common stock ($0.28 per share)						(143.3)				(143.3)				(143.3)
Repurchase of common stock	(1.4)	(0.1)		(40.7)		(5.6)				(46.4)				(46.4)
Issuance of common stock	—	—		0.2						0.2				0.2
Stock-based compensation				40.5						40.5				40.5
Net subscriptions and other												87.9		87.9
Net deconsolidation of investment products												(487.0)		(487.0)
Balance at June 30, 2021	502.9	$	50.3	$	—	$	11,151.0	$	(326.1)	$	10,875.2	$	555.6	$	11,430.8

See Notes to Consolidated Financial Statements.

Table of Contents

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited


	Nine Months Ended June 30,
(in millions)	2022		2021

Net Income	$	1,127.5	$	1,351.8
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	160.9		126.6
Amortization of deferred sales commissions	49.6		58.8
Depreciation and other amortization	68.8		70.9
Amortization of intangible assets	200.5		174.1
Net losses (gains) on investments	32.9		(67.7)
Income from investments in equity method investees	(51.6)		(123.8)
Net losses (gains) on investments of consolidated investment products	22.0		(176.1)
Net purchase of investments by consolidated investment products	(312.2)		(434.4)
Deferred income taxes	55.9		(42.3)
Other	33.0		12.3
Changes in operating assets and liabilities:
Increase in receivables and other assets	(97.3)		(115.2)
Decrease (increase) in investments, net	(

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10-Q	[2021-02-02]
10-K	[2020-11-23]
10-Q	[2020-07-28]
10-Q	[2020-04-30]
10-Q	[2020-01-30]
10-K	[2019-11-12]
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10-Q	[2019-01-30]
10-K	[2018-11-09]
10-Q	[2018-07-27]
10-Q	[2018-04-26]
10-Q	[2018-01-30]
10-K	[2017-11-13]
10-Q	[2017-07-28]
10-Q	[2017-04-28]
10-Q	[2017-01-27]
10-K	[2016-11-14]
10-Q	[2016-07-28]
10-Q	[2016-04-27]
10-Q	[2016-02-03]
10-K	[2015-11-12]
10-Q	[2015-07-29]
10-Q	[2015-04-29]
10-Q	[2015-01-30]
10-K	[2014-11-12]
10-Q	[2014-07-30]
10-Q	[2014-04-28]
10-Q	[2014-01-30]
10-K	[2013-11-12]
10-Q	[2013-07-29]
10-Q	[2013-04-30]
10-Q	[2013-02-01]
10-K	[2012-11-15]
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