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Item 1. Financial Statements

2022-07-28 compared with 2022-05-03 · 174 added, 130 removed, 602 unchanged (34% of the section changed)

3 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions, except per share data) 2022 2021 2022 2021

17 unchanged sentences

Interest expense ( 28.9 ) ( 25.7 ) ( 71.1 ) ( 71.3 )

Investment and other income of consolidated investment products, net 3.0 111.2 107.7 202.3

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, net 3.2 157.2 141.4 285.4

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

13 unchanged sentences

(in millions) Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2022 2021 2022 2021

2 unchanged sentences

Currency translation adjustments, net of tax ( 100.6 ) 22.6 ( 123.8 ) 81.3

Net unrealized gains on defined benefit plans, net of tax 5.3 1.0 0.2 0.4

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

8 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data) March 31,

(in millions, except share and per share data) June 30,

2022 September 30,

1 unchanged sentence

Receivables 1,414.8 1,428.2

Investments (including $ 589.3 and $ 588.3 at fair value at March 31, 2022 and September 30, 2021)

Investments (including $ 660.8 and $ 588.3 at fair value at June 30, 2022 and September 30, 2021)

1,658.5 1,510.3

25 unchanged sentences

Common stock, $ 0.10 par value, 1,000,000,000 shares authorized;

500,374,393 and 501,807,677 shares issued and outstanding at March 31, 2022 and September 30, 2021

498,356,132 and 501,807,677 shares issued and outstanding at June 30, 2022 and September 30, 2021

Retained earnings 11,997.5 11,550.8

16 unchanged sentences

(in millions)

for the six months ended

March 31, 2022 Shares Amount

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

22 unchanged sentences

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.

9 unchanged sentences

(in millions)

for the six months ended

March 31, 2021 Shares Amount

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

22 unchanged sentences

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.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(in millions) 2022 2021

5 unchanged sentences

Amortization of intangible assets 200.5 174.1

Net gains on investments ( 2.7 ) ( 51.5 )

Net losses (gains) on investments 32.9 ( 67.7 )

Income from investments in equity method investees ( 51.6 ) ( 123.8 )

Net gains on investments of consolidated investment products ( 62.6 ) ( 140.5 )

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 )

4 unchanged sentences

Decrease (increase) in investments, net ( 33.2 ) 15.6

Decrease in accrued compensation and benefits ( 162.2 ) ( 12.5 )

Increase (decrease) in accrued compensation and benefits 45.1 ( 88.9 )

Increase (decrease) in commissions payable ( 50.0 ) 14.2

10 unchanged sentences

Acquisitions, net of cash acquired

( 1,354.7 ) —

Payments of contingent consideration asset 20.9 15.6

6 unchanged sentences

[Table continued from previous page]

Six Months Ended

Nine Months Ended

(in millions) 2022 2021

11 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 68.1 ) 25.1

Increase in cash and cash equivalents 367.5 614.1

Increase (decrease) in cash and cash equivalents ( 168.5 ) 371.3

Cash and cash equivalents, beginning of period 4,647.2 3,989.8

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Note 1 – Basis of Presentation

2 unchanged sentences

Securities and Exchange Commission.

Under these rules and regulations, some information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America (“U.S.

GAAP”) have been shortened or omitted.

Management believes that all adjustments necessary for a fair statement of the financial position and the results of operations for the periods shown have been made.

3 unchanged sentences

These financial statements should be read together with the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (“fiscal year 2021”).

Certain comparative amounts for the prior fiscal year period have been reclassified to conform to the financial statement presentation as of and for the period ended March 31, 2022.

During the quarter ended June 30, 2021, the Company identified an error related to the accounting of its indirect interests in certain collateralized loan obligations (“CLOs”) held through a limited partnership and the Company’s conclusion to consolidate that limited partnership.

In accordance with U.S.

GAAP, the Company should have consolidated the CLOs as the Company is the primary beneficiary of these entities and should not have consolidated the limited partnership.

The error had no impact to net income attributable to the Company, earnings per share, retained earnings, or total Franklin Resources, Inc.

stockholders’ equity.

The Company determined that the error did not result in a material misstatement to its previously issued consolidated financial statements.

Nonetheless, for comparability, the Company has revised the comparative prior period amounts included in the consolidated statements of cash flows and related footnote disclosures.

The impact of the error on the consolidated statement of cash flows for the six months ended March 31, 2021 is as follows:

(in millions) As Reported Adjustments As Revised

Net cash provided by operating activities $ 505.4 $ 40.9 $ 546.3

Net cash used in investing activities ( 773.0 ) ( 504.9 ) ( 1,277.9 )

Net cash provided by financing activities 659.9 670.9 1,330.8

Certain comparative amounts for the prior fiscal year period have been reclassified to conform to the financial statement presentation as of and for the period ended June 30, 2022.

Note 2 – Acquisitions

Lexington Partners L.P.

On April 1, 2022, the Company acquired all of the outstanding ownership interests in Lexington Partners L.P.

(“Lexington”), a leading global manager of secondary private equity and co-investment funds, for cash consideration of $ 984.7 million paid at the time of close and deferred consideration of $ 750.0 million that has an acquisition-date fair value of $ 706.4 million.

The consideration paid at close was funded from existing cash.

In connection with the acquisition, the Company granted a 25 % profits interest in Lexington and performance-based cash retention awards that both vest over approximately five years.

The acquisition bolsters the Company’s alternative asset capabilities, complementing its existing strengths in real estate, private credit, and hedge fund strategies.

The preliminary allocation of estimated fair values of the assets acquired and liabilities and noncontrolling interests assumed was as follows:

(in millions) Estimated Fair Value

as of April 1, 2022

Goodwill $ 1,105.3

Definite-lived intangible assets 552.0

Investments 163.0

Operating lease right-of-use assets 84.4

Other assets and liabilities, net 28.1

Operating lease liabilities ( 91.8 )

Nonredeemable noncontrolling interests ( 149.9 )

Total Identifiable Net Assets $ 1,691.1

The goodwill is primarily attributable to expected growth opportunities from the combined operations and is deductible for tax purposes.

The definite-lived intangible assets relate to acquired investment management contracts and trade names, which are amortized over their estimated useful lives ranging from 6.0 years to 20.0 years.

Amortization expense related to the definite-lived intangible assets was $ 21.3 million for the period ended June 30, 2022.

These assets had a weighted-average remaining useful life of 7.3 years at June 30, 2022, with estimated remaining amortization expense as follows:

(in millions)

for the fiscal years ending September 30, Amount

2022 (remainder of year) $ 21.3

Thereafter 168.2

Total $ 530.7

Costs incurred in connection with the acquisition were $ 16.3 million for the nine months ended June 30, 2022.

Lexington contributed $ 90.7 million of revenue and did not have a material impact to net income attributable to Franklin Resources, Inc.

for the period ended June 30, 2022.

Consequently, the Company has not presented pro forma combined results of operations for this acquisition.

O’Shaughnessy Asset Management, LLC

On December 31, 2021, the Company acquired all of the outstanding ownership interests in O’Shaughnessy Asset Management, LLC (“OSAM”), a leading quantitative asset management firm, for cash consideration paid of approximately $ 300.0 million, excluding future payments to be made subject to the attainment of certain performance measures.

The acquisition resulted in $ 262.3 million of goodwill attributable to expected growth opportunities and synergies from the combined operations and is deductible for tax purposes.

Note 3 – Earnings per Share

1 unchanged sentence

(in millions, except per share data) Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2022 2021 2022 2021

11 unchanged sentences

Diluted 0.50 0.86 2.07 2.27

Nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive were insignificant for the three and six months ended March 31, 2022 and 2021.

Note 4 – Revenues

3 unchanged sentences

Luxembourg Total

for the three months ended March 31, 2022

for the three months ended June 30, 2022

Investment management fees

9 unchanged sentences

Luxembourg Total

for the six months ended March 31, 2022

for the nine months ended June 30, 2022

Investment management fees

9 unchanged sentences

Luxembourg Total

for the three months ended March 31, 2021

for the three months ended June 30, 2021

Investment management fees

9 unchanged sentences

Luxembourg Total

for the six months ended March 31, 2021

for the nine months ended June 30, 2021

Investment management fees

7 unchanged sentences

Operating revenues are attributed to geographic areas based on the locations of the subsidiaries that provide the services, which may differ from the regions in which the related investment products are sold.

Revenues earned from sponsored funds were 79 % and 80 % of the Company’s total operating revenues for the three and six months ended March 31, 2022 and 82 % and 81 % for the three and six months ended March 31, 2021.

Revenues earned from sponsored funds were 83 % and 81 % of the Company’s total operating revenues for the three and nine months ended June 30, 2022 and 78 % and 80 % for the three and nine months ended June 30, 2021.

Note 5 – Investments

2 unchanged sentences

Investments consisted of the following:

(in millions) March 31,

(in millions) June 30,

2022 September 30,

7 unchanged sentences

Total $ 1,658.5 $ 1,510.3

The Company recognized other-than-temporary impairment of $ 21.2 million in earnings during the six months ended March 31, 2022.

The Company recognized other-than-temporary impairment of $ 8.7 million and $ 29.9 million in earnings during the three and nine months ended June 30, 2022.

Note 6 – Fair Value Measurements

4 unchanged sentences

Expedient Total

as of March 31, 2022

as of June 30, 2022

Investments, at fair value

17 unchanged sentences

These investments were as follows:

(in millions) March 31,

(in millions) June 30,

2022 September 30,

6 unchanged sentences

1 The investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets.

Investments with known liquidation periods have an expected weighted-average life of 4.2 years and 4.0 years at March 31, 2022 and September 30, 2021.

Investments with known liquidation periods have an expected weighted-average life of 3.6 years and 4.0 years at June 30, 2022 and September 30, 2021.

2 Investments are redeemable on a monthly and quarterly basis.

1 unchanged sentence

(in millions) Investments Contingent Consideration Asset Contingent Consideration Liabilities Investments Contingent Consideration Asset Contingent Consideration Liabilities

for the three months ended March 31,

for the three months ended June 30,

Balance at beginning of period $ 21.9 $ 17.1 $ ( 56.5 ) $ 19.5 $ 29.1 $ ( 25.3 )

5 unchanged sentences

Settlements ( 1.1 ) ( 8.3 ) — — ( 5.0 ) —

Consolidation of investment product

( 5.0 ) — — — — —

Foreign exchange revaluation — — 0.1 — — —

2 unchanged sentences

(in millions) Investments Contingent Consideration Asset Contingent Consideration Liabilities Investments Contingent Consideration Asset Contingent Consideration Liabilities

for the six months ended March 31,

for the nine months ended June 30,

Balance at beginning of period $ 24.6 $ 19.4 $ ( 42.4 ) $ 17.4 $ 39.7 $ ( 25.3 )

6 unchanged sentences

Settlements ( 4.3 ) ( 20.9 ) 9.1 ( 0.5 ) ( 15.6 ) —

Consolidation of investment product

( 5.0 ) — — — — —

Transfers out of Level 3

5 unchanged sentences

(in millions) Fair Value

Level March 31, 2022 September 30, 2021

Level June 30, 2022 September 30, 2021

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

9 unchanged sentences

to establish a 364 day revolving credit facility with an aggregate commitment of $ 500.0 million.

As of March 31, 2022 , there were no amounts outstanding.

There were no other material changes to the Company’s debt during the six months ended March 31, 2022.

As of June 30, 2022, there were no amounts outstanding.

There were no other material changes to the Company’s debt during the nine months ended June 30, 2022.

Note 8 – Consolidated Investment Products

CIPs consist of mutual and other investment funds, limited partnerships and similar structures and CLOs, all of which are sponsored by the Company, and include both voting interest entities and variable interest entities (“VIEs”).

The Company had 64 CIPs, including 13 CLOs, as of March 31, 2022 and 60 CIPs, including 10 CLOs, as of September 30, 2021.

The Company had 58 CIPs, including 14 CLOs, as of June 30, 2022 and 60 CIPs, including 10 CLOs, as of September 30, 2021.

The balances related to CIPs included in the Company’s consolidated balance sheets were as follows:

(in millions) March 31,

(in millions) June 30,

2022 September 30,

14 unchanged sentences

$ 8,326.5 $ 6,237.3

The CIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2022 and 2021.

The CIPs did not have a significant impact on net income attributable to the Company during the three and nine months ended June 30, 2022 and 2021.

The Company has no right to the CIPs’ assets, other than its direct equity investments in them and investment management and other fees earned from them.

4 unchanged sentences

Expedient Total

as of March 31, 2022

as of June 30, 2022

Cash and cash equivalents of CLOs $ 299.5 $ — $ — $ — $ 299.5

13 unchanged sentences

Total Assets Measured at Fair Value $ 456.2 $ 4,686.6 $ 563.2 $ 343.5 $ 6,049.5

Investments for which fair value was estimated using reported NAV as a practical expedient consist of a redeemable global hedge fund, a redeemable U.S.

equity fund and nonredeemable private equity funds.

Investments for which fair value was estimated using reported NAV as a practical expedient consist of a redeemable global hedge fund, nonredeemable private equity funds and a redeemable U.S.

These investments were as follows:

(in millions) March 31,

(in millions) June 30,

2022 September 30,

6 unchanged sentences

1 The investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets.

Investments with known liquidation periods have an expected weighted-average life of 0.8 year at March 31, 2022 and 1.3 years at September 30, 2021.

Investments with known liquidation periods have an expected weighted-average life of 0.5 year at June 30, 2022 and 1.3 years at September 30, 2021.

2 Investments are redeemable on a monthly basis and liquidation periods are unknown.

3 Of the total unfunded commitments, the Company was contractually obligated to fund $ 0.2 million based on its ownership percentage in the CIPs, at March 31, 2022 and September 30, 2021.

3 Of the total unfunded commitments, the Company was contractually obligated to fund $ 0.1 million and $ 0.2 million based on its ownership percentage in the CIPs, at June 30, 2022 and September 30, 2021.

Changes in Level 3 assets were as follows:

1 unchanged sentence

Securities Real Estate Loans Total

for the three months ended March 31, 2022

Balance at January 1, 2022 $ 539.0 $ 98.9 $ 34.2 $ 672.1

Realized and unrealized gains (losses) included in investment and other income of consolidated investment products, net 78.0 5.7 ( 0.3 ) 83.4

for the three months ended June 30, 2022

Balance at April 1, 2022 $ 595.4 $ 175.4 $ 33.6 $ 804.4

Realized and unrealized gains (losses) included in investment and other income (losses) of consolidated investment products, net ( 31.7 ) 4.1 0.2 ( 27.4 )

Purchases 6.5 61.0 ( 0.1 ) 67.4

1 unchanged sentence

Deconsolidations — — ( 1.7 ) ( 1.7 )

Balance at March 31, 2022 $ 595.4 $ 175.4 $ 33.6 $ 804.4

Change in unrealized gains (losses) included in net income relating to assets held at March 31, 2022 $ 73.6 $ 5.7 $ ( 0.3 ) $ 79.0

Transfers into Level 3 — — 5.7 5.7

Transfers out of Level 3 ( 0.1 ) — — ( 0.1 )

Balance at June 30, 2022 $ 557.0 $ 240.5 $ 37.6 $ 835.1

Change in unrealized gains (losses) included in net income relating to assets held at June 30, 2022 $ ( 32.2 ) $ 4.1 $ 0.2 $ ( 27.9 )

(in millions) Equity and Debt

Securities Real Estate Loans Total

for the six months ended March 31, 2022

for the nine months ended June 30, 2022

Balance at October 1, 2021 $ 453.3 $ 89.4 $ 20.5 $ 563.2

Realized and unrealized gains (losses) included in investment and other income of consolidated investment products, net 170.3 14.3 — 184.6

Realized and unrealized gains (losses) included in investment and other income (losses) of consolidated investment products, net 138.6 18.4 0.2 157.2

Purchases 140.0 132.7 14.0 286.7

3 unchanged sentences

Transfers out of Level 3 ( 1.1 ) — — ( 1.1 )

Balance at March 31, 2022 $ 595.4 $ 175.4 $ 33.6 $ 804.4

Change in unrealized gains included in net income relating to assets held at March 31, 2022 $ 166.1 $ 14.3 $ — $ 180.4

Balance at June 30, 2022 $ 557.0 $ 240.5 $ 37.6 $ 835.1

Change in unrealized gains included in net income relating to assets held at June 30, 2022 $ 126.6 $ 18.4 $ — $ 145.0

(in millions) Equity and Debt

Securities Real Estate Loans Total

for the three months ended March 31, 2021

Balance at January 1, 2021 $ 356.0 $ 407.8 $ 23.5 $ 787.3

Realized and unrealized gains included in investment and other income of consolidated investment products, net 1.0 1.2 — 2.2

for the three months ended June 30, 2021

Balance at April 1, 2021 $ 271.2 $ 423.5 $ 22.4 $ 717.1

Realized and unrealized gains included in investment and other income (losses) of consolidated investment products, net 6.2 2.4 0.2 8.8

Purchases 14.0 44.2 — 58.2

2 unchanged sentences

Transfers into Level 3 0.9 — — 0.9

Transfers out of Level 3 ( 1.0 ) — — ( 1.0 )

Foreign exchange revaluation — 1.2 — 1.2

Balance at March 31, 2021 $ 271.2 $ 423.5 $ 22.4 $ 717.1

Change in unrealized gains (losses) included in net income relating to assets held at March 31, 2021 $ 1.2 $ 1.2 $ ( 0.1 ) $ 2.3

Balance at June 30, 2021 $ 288.9 $ 22.5 $ 21.4 $ 332.8

Change in unrealized gains (losses) included in net income relating to assets held at June 30, 2021 $ 6.2 $ ( 0.5 ) $ 0.2 $ 5.9

(in millions) Equity and Debt

Securities Real Estate Loans Total

for the six months ended March 31, 2021

for the nine months ended June 30, 2021

Balance at October 1, 2020 $ 322.3 $ 339.2 $ 24.9 $ 686.4

Realized and unrealized gains included in investment and other income of consolidated investment products, net 20.1 2.7 — 22.8

Realized and unrealized gains included in investment and other income (losses) of consolidated investment products, net 26.3 5.1 0.2 31.6

Purchases 34.1 116.5 — 150.6

2 unchanged sentences

Transfers into Level 3 2.1 — — 2.1

Transfers out of Level 3 ( 1.0 ) — — ( 1.0 )

Foreign exchange revaluation 0.7 10.5 — 11.2

Balance at March 31, 2021 $ 271.2 $ 423.5 $ 22.4 $ 717.1

Change in unrealized gains included in net income relating to assets held at March 31, 2021 $ 19.7 $ 2.7 $ 0.1 $ 22.5

Balance at June 30, 2021 $ 288.9 $ 22.5 $ 21.4 $ 332.8

Change in unrealized gains included in net income relating to assets held at June 30, 2021 $ 25.9 $ 2.2 $ 0.3 $ 28.4

Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:

(in millions)

as of March 31, 2022 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

as of June 30, 2022 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

Equity and debt securities $ 492.7 Market pricing Private sale pricing $ 0.39 –$ 789.78 ($ 45.27 ) per share

21 unchanged sentences

1 Based on the relative fair value of the instruments.

If the relevant significant inputs used in the market-based valuations, other than discount for lack of marketability, were independently higher (lower) as of March 31, 2022, the resulting fair value of the assets would be higher (lower).

If the relevant significant inputs used in the discounted cash flow valuations, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of March 31, 2022, the resulting fair value of the assets would be lower (higher).

If the relevant significant inputs used in the market-based valuations, other than discount for lack of marketability, were independently higher (lower) as of June 30, 2022, the resulting fair value of the assets would be higher (lower).

If the relevant significant inputs used in the discounted cash flow valuations, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of June 30, 2022, the resulting fair value of the assets would be lower (higher).

Financial instruments of CIPs that were not measured at fair value were as follows:

(in millions) Fair Value

Level March 31, 2022 September 30, 2021

Level June 30, 2022 September 30, 2021

Value Estimated

3 unchanged sentences

Cash and cash equivalents 1 $ 372.9 $ 372.9 $ 144.0 $ 144.0

Receivables of CLOs 2 16.7 16.7 — —

Financial Liabilities

5 unchanged sentences

Debt of CIPs consisted of the following:

March 31, 2022 September 30, 2021

June 30, 2022 September 30, 2021

(in millions) Amount Weighted-

4 unchanged sentences

$ 5,496.5 $ 3,671.0

The debt of CLOs had fixed and floating interest rates ranging from 0.88 % to 7.30 % at March 31, 2022, and from 1.00 % to 8.22 % at September 30, 2021.

The other debt had fixed and floating interest rates ranging from 1.72 % to 6.00 % at March 31, 2022, and from 1.63 % to 2.42 % at September 30, 2021.

The debt of CLOs had fixed and floating interest rates ranging from 1.00 % to 8.27 % at June 30, 2022, and from 1.00 % to 8.22 % at September 30, 2021.

The other debt had fixed and floating interest rates ranging from 3.31 % to 6.00 % at June 30, 2022, and from 1.63 % to 2.42 % at September 30, 2021.

The floating rates were primarily based on LIBOR.

The contractual maturities for the debt of CIPs at March 31, 2022 were as follows:

The contractual maturities for the debt of CIPs at June 30, 2022 were as follows:

(in millions)

5 unchanged sentences

The unpaid principal balance and fair value of the investments of CLOs were as follows:

(in millions) March 31,

(in millions) June 30,

2022 September 30,

2 unchanged sentences

Fair Value $ 5,502.6 $ 3,972.0

Investments 90 days or more past due were immaterial at March 31, 2022.

There were no investments 90 days or more past due at September 30, 2021.

The Company recognized $ 7.6 million and $ 12.9 million of net gains during the three and six months ended March 31, 2022 and $ 6.5 million and $ 7.4 million of net gains during the three and six months ended March 31, 2021, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 5,039.8 million and $ 3,629.9 million at March 31, 2022 and September 30, 2021.

There were no investments 90 days or more past due at June 30, 2022 and September 30, 2021.

The Company recognized $ 4.9 million and $ 17.8 million of net gains during the three and nine months ended June 30, 2022 and $ 1.1 million and $ 8.5 million of net gains during the three and nine months ended June 30, 2021, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 5,463.1 million and $ 3,629.9 million at June 30, 2022 and September 30, 2021.

Note 9 – Redeemable Noncontrolling Interests

2 unchanged sentences

CIPs Minority Interests Total CIPs Minority Interests Total

for the three months ended March 31,

for the three months ended June 30,

Balance at beginning of period $ 625.3 $ 512.8 $ 1,138.1 $ 609.9 $ 205.8 $ 815.7

1 unchanged sentence

Net subscriptions (distributions) and other 5.4 ( 29.6 ) ( 24.2 ) 190.1 ( 18.1 ) 172.0

Net consolidations (deconsolidations) ( 115.9 ) — ( 115.9 ) 28.4 — 28.4

Adjustment to fair value — 188.5 188.5 — 52.3 52.3

Net consolidations 380.3 — 380.3 31.3 — 31.3

Balance at End of Period $ 994.5 $ 499.2 $ 1,493.7 $ 854.8 $ 197.9 $ 1,052.7

1 unchanged sentence

CIPs Minority Interests Total CIPs Minority Interests Total

for the six months ended March 31,

for the nine months ended June 30,

Balance at beginning of period $ 622.5 $ 310.5 $ 933.0 $ 397.3 $ 144.6 $ 541.9

1 unchanged sentence

Net subscriptions (distributions) and other 320.0 ( 40.5 ) 279.5 270.0 ( 20.5 ) 249.5

Net consolidations (deconsolidations) ( 237.4 ) — ( 237.4 ) 113.3 — 113.3

Net consolidations 142.9 — 142.9 144.6 — 144.6

Adjustment to fair value — 188.5 188.5 — 52.3 52.3

3 unchanged sentences

The Company’s maximum exposure to loss from these VIEs consists of equity investments, investment management and other fee receivables as follows:

(in millions) March 31,

(in millions) June 30,

2022 September 30,

4 unchanged sentences

As it has done in the past, the Company also may voluntarily elect to provide its sponsored funds with additional direct or indirect financial support based on its business objectives.

The Company did not provide financial or other support to its sponsored funds during the six months ended March 31, 2022.

The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the nine months ended June 30, 2022.

During the fiscal year ended September 30, 2020, the Company authorized loans to certain sponsored funds in India that experienced increased liquidity risks and redemptions.

4 unchanged sentences

India Credit Fund Closure Matters .

During the six months ended March 31, 2022, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2021.

As of March 31, 2022, the amount reported as distributed to Fund unitholders is approximately $ 3.5 billion.

During the nine months ended June 30, 2022, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2021.

As of June 30, 2022, the amount reported as distributed to Fund unitholders is approximately $ 3.5 billion.

Other Litigation Matters.

1 unchanged sentence

Management is of the opinion that the ultimate resolution of such claims will not materially affect the Company’s business, financial position, results of operations or liquidity.

In management’s opinion, an adequate accrual has been made as of March 31, 2022 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

In management’s opinion, an adequate accrual has been made as of June 30, 2022 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

Indemnifications and Guarantees

4 unchanged sentences

Future payments for claims against the Company under these indemnities or guarantees could negatively impact the Company’s financial condition.

In management’s opinion, no material loss was deemed probable or reasonably possible pursuant to such indemnification agreements and/or guarantees as of March 31, 2022.

In management’s opinion, no material loss was deemed probable or reasonably possible pursuant to such indemnification agreements and/or guarantees as of June 30, 2022.

Other Commitments and Contingencies

At March 31, 2022, there were no material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2021.

At June 30, 2022, there were no material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2021.

Note 12 – Stock-Based Compensation

4 unchanged sentences

Shares Weighted-

for the six months ended March 31, 2022

for the nine months ended June 30, 2022

Nonvested balance at October 1, 2021 14,176 3,658 17,834 $ 22.27

2 unchanged sentences

Forfeited/canceled ( 435 ) ( 188 ) ( 623 ) 26.20

Nonvested Balance at March 31, 2022 16,506 3,621 20,127 $ 24.54

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 331.8 million at March 31, 2022.

Nonvested Balance at June 30, 2022 16,563 3,599 20,162 $ 24.48

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 286.4 million at June 30, 2022.

This expense is expected to be recognized over a remaining weighted-average vesting period of 2.0 years.

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions) 2022 2021 2022 2021

1 unchanged sentence

Gains (losses) on investments, net ( 35.6 ) 17.3 ( 32.9 ) 76.2

Income from investments in equity method investees 27.0 45.9 51.7 84.4

Income (losses) from investments in equity method investees ( 0.1 ) 39.4 51.6 123.8

Gains (losses) on derivatives, net 17.5 ( 9.1 ) 15.2 ( 25.2 )

3 unchanged sentences

Investment and other income, net $ 13.0 $ 52.9 $ 97.7 $ 197.2

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company at March 31, 2022 and 2021 were $( 29.2 ) million and $( 34.5 ) million for the three and six months ended March 31, 2022, and $( 2.6 ) million and $ 51.2 million for the three and six months ended March 31, 2021.

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company at June 30, 2022 and 2021 were $( 50.3 ) million and $( 79.1 ) million for the three and nine months ended June 30, 2022, and $( 0.2 ) million and $ 27.2 million for the three and nine months ended June 30, 2021.

Note 14 – Accumulated Other Comprehensive Income (Loss)

3 unchanged sentences

Defined Benefit

for the three months ended March 31, 2022

Balance at January 1, 2022 $ ( 377.4 ) $ ( 12.2 ) $ ( 389.6 )

Other comprehensive income (loss)

Other comprehensive income (loss) before reclassifications, net of tax ( 17.4 ) 5.4 ( 12.0 )

Reclassifications to compensation and benefits expense, net of tax — ( 0.1 ) ( 0.1 )

for the three months ended June 30, 2022

Balance at April 1, 2022 $ ( 393.7 ) $ ( 6.9 ) $ ( 400.6 )

Other comprehensive loss

Other comprehensive loss before reclassifications, net of tax ( 101.5 ) ( 2.4 ) ( 103.9 )

Reclassifications to net investment and other income, net of tax 0.9 — 0.9

Total other comprehensive income (loss) ( 16.3 ) 5.3 ( 11.0 )

Balance at March 31, 2022 $ ( 393.7 ) $ ( 6.9 ) $ ( 400.6 )

Total other comprehensive loss ( 100.6 ) ( 2.4 ) ( 103.0 )

Balance at June 30, 2022 $ ( 494.3 ) $ ( 9.3 ) $ ( 503.6 )

(in millions) Currency

1 unchanged sentence

Defined Benefit

for the six months ended March 31, 2022

for the nine months ended June 30, 2022

Balance at October 1, 2021 $ ( 370.5 ) $ ( 7.1 ) $ ( 377.6 )

Other comprehensive income (loss)

Other comprehensive income (loss) before reclassifications, net of tax ( 24.3 ) 0.8 ( 23.5 )

Other comprehensive loss

Other comprehensive loss before reclassifications, net of tax ( 125.8 ) ( 1.6 ) ( 127.4 )

Reclassifications to compensation and benefits expense, net of tax — ( 0.6 ) ( 0.6 )

Reclassifications to net investment and other income, net of tax 2.0 — 2.0

Total other comprehensive income (loss) ( 23.2 ) 0.2 ( 23.0 )

Balance at March 31, 2022 $ ( 393.7 ) $ ( 6.9 ) $ ( 400.6 )

Total other comprehensive loss ( 123.8 ) ( 2.2 ) ( 126.0 )

Balance at June 30, 2022 $ ( 494.3 ) $ ( 9.3 ) $ ( 503.6 )

(in millions) Currency

1 unchanged sentence

Defined Benefit

for the three months ended March 31, 2021

Balance at January 1, 2021 $ ( 306.1 ) $ ( 8.6 ) $ ( 314.7 )

for the three months ended June 30, 2021

Balance at April 1, 2021 $ ( 340.9 ) $ ( 7.6 ) $ ( 348.5 )

Other comprehensive income (loss)

2 unchanged sentences

Total other comprehensive income (loss) 22.6 ( 0.2 ) 22.4

Balance at March 31, 2021 $ ( 340.9 ) $ ( 7.6 ) $ ( 348.5 )

Balance at June 30, 2021 $ ( 318.3 ) $ ( 7.8 ) $ ( 326.1 )

(in millions) Currency

1 unchanged sentence

Defined Benefit

for the six months ended March 31, 2021

for the nine months ended June 30, 2021

Balance at October 1, 2020 $ ( 399.6 ) $ ( 8.0 ) $ ( 407.6 )

3 unchanged sentences

Total other comprehensive income 81.3 0.2 81.5

Balance at March 31, 2021 $ ( 340.9 ) $ ( 7.6 ) $ ( 348.5 )

Note 14 – Subsequent Event

On April 1, 2022, the Company acquired all of the outstanding ownership interests in Lexington Partners L.P.

(“Lexington”) for cash consideration of $ 1.0 billion and additional payments totaling $ 750.0 million to be paid in cash over the next three years.

In connection with the acquisition, the Company is granting a 25 % ownership stake in Lexington and performance-based cash retention awards that both vest over approximately five years.

Balance at June 30, 2021 $ ( 318.3 ) $ ( 7.8 ) $ ( 326.1 )

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements