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Item 1. Financial Statements

2023-07-28 compared with 2023-05-01 · 130 added, 99 removed, 559 unchanged (29% 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) 2023 2022 2023 2022

17 unchanged sentences

Interest expense ( 34.9 ) ( 28.9 ) ( 99.3 ) ( 71.1 )

Investment and other income of consolidated investment products, net 87.2 3.0 73.6 107.7

Investment and other income (losses) of consolidated investment products, net 1.7 ( 74.4 ) 75.3 33.3

Expenses of consolidated investment products ( 0.8 ) ( 1.3 ) ( 15.7 ) ( 10.1 )

Other income, net 175.9 3.2 211.0 141.4

Other income (expenses), net 17.2 ( 91.6 ) 228.2 49.8

Income before taxes 332.1 313.1 992.2 1,475.2

13 unchanged sentences

(in millions) Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

2 unchanged sentences

Currency translation adjustments, net of tax 16.5 ( 100.6 ) 159.7 ( 123.8 )

Net unrealized gains (losses) on defined benefit plans, net of tax 1.8 5.3 ( 0.8 ) 0.2

Net unrealized losses on defined benefit plans, net of tax ( 0.6 ) ( 2.4 ) ( 1.4 ) ( 2.2 )

Net unrealized gains on investments, net of tax — — 0.2 —

9 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,

2023 September 30,

1 unchanged sentence

Receivables 1,341.9 1,264.8

Investments (including $ 987.1 and $ 613.5 at fair value at March 31, 2023 and September 30, 2022)

Investments (including $ 867.3 and $ 613.5 at fair value at June 30, 2023 and September 30, 2022)

2,249.1 1,651.3

24 unchanged sentences

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

500,912,066 and 499,575,175 shares issued and outstanding at March 31, 2023 and September 30, 2022

499,012,841 and 499,575,175 shares issued and outstanding at June 30, 2023 and September 30, 2022

Retained earnings 12,360.7 12,045.6

16 unchanged sentences

(in millions)

for the six months ended

March 31, 2023 Shares Amount

for the nine months ended

June 30, 2023 Shares Amount

Balance at October 1, 2022 499.6 $ 50.0 $ — $ 12,045.6 $ ( 621.0 ) $ 11,474.6 $ 824.3 $ 12,298.9

23 unchanged sentences

Balance at March 31, 2023 500.9 $ 50.1 $ — $ 12,260.1 $ ( 478.4 ) $ 11,831.8 $ 610.8 $ 12,442.6

Net income (loss) 227.5 227.5 ( 6.3 ) 221.2

Other comprehensive income 15.9 15.9 15.9

Dividends declared on common stock ($ 0.30 per share)

( 152.9 ) ( 152.9 ) ( 152.9 )

Repurchase of common stock ( 2.0 ) ( 0.2 ) ( 15.9 ) ( 34.8 ) ( 50.9 ) ( 50.9 )

Issuance of common stock 0.1 — 3.6 3.6 3.6

Stock-based compensation 12.3 12.3 12.3

Net distributions and other ( 12.7 ) ( 12.7 )

Net deconsolidation of investment products ( 0.7 ) ( 0.7 )

Adjustment to fair value of redeemable noncontrolling interests 60.8 60.8 60.8

Balance at June 30, 2023 499.0 $ 49.9 $ — $ 12,360.7 $ ( 462.5 ) $ 11,948.1 $ 591.1 $ 12,539.2

See Notes to Consolidated Financial Statements.

7 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

20 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.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(in millions) 2023 2022

Net Income $ 754.9 $ 1,127.5

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation 137.9 160.9

2 unchanged sentences

Amortization of intangible assets 254.6 200.5

Net gains on investments ( 48.5 ) ( 2.7 )

Net (gains) losses on investments ( 62.3 ) 32.9

Income from investments in equity method investees ( 111.1 ) ( 51.6 )

Net losses (gains) on investments of consolidated investment products 57.5 ( 62.6 )

Net losses on investments of consolidated investment products 116.0 22.0

Net purchase of investments by consolidated investment products ( 833.2 ) ( 312.2 )

3 unchanged sentences

Increase in receivables and other assets ( 69.8 ) ( 97.3 )

Increase in investments, net ( 36.0 ) ( 21.3 )

Decrease in accrued compensation and benefits ( 336.1 ) ( 162.2 )

Decrease (increase) in investments, net 6.4 ( 33.2 )

Increase (decrease) in accrued compensation and benefits ( 84.3 ) 45.1

Decrease in income taxes payable ( 58.9 ) ( 176.3 )

1 unchanged sentence

Increase (decrease) in accounts payable and accrued expenses of consolidated investment products 1.3 ( 26.2 )

Net cash (used in) provided by operating activities ( 289.7 ) 270.5

Net cash provided by operating activities 365.3 1,090.3

Purchase of investments ( 665.1 ) ( 676.5 )

5 unchanged sentences

Payments of contingent consideration asset 5.5 20.9

Payments of deferred consideration liability ( 241.8 ) —

Net (deconsolidation) consolidation of investment products ( 43.8 ) 211.0

5 unchanged sentences

[Table continued from previous page]

Six Months Ended

Nine Months Ended

(in millions) 2023 2022

9 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 66.0 ( 68.1 )

Increase (decrease) in cash and cash equivalents ( 503.9 ) 367.5

Decrease in cash and cash equivalents ( 394.9 ) ( 168.5 )

Cash and cash equivalents, beginning of period 4,782.5 4,647.2

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

Note 1 – Basis of Presentation

35 unchanged sentences

The definite-lived intangible assets relate to acquired investment management contracts and trade names, which are amortized over their estimated useful lives ranging from 3.0 years to 10.0 years.

Amortization expense related to the definite-lived intangible assets was $ 3.5 million and $ 5.8 million for the three and six months ended March 31, 2023.

These assets had a weighted-average remaining useful life of 4.9 years at March 31, 2023, with estimated remaining amortization expense as follows:

Amortization expense related to the definite-lived intangible assets was $ 3.5 million and $ 9.3 million for the three and nine months ended June 30, 2023.

These assets had a weighted-average remaining useful life of 4.8 years at June 30, 2023, with estimated remaining amortization expense as follows:

(in millions)

2 unchanged sentences

Thereafter 8.1

Costs incurred in connection with the acquisition were $ 14.1 million for the six months ended March 31, 2023.

Alcentra contributed $ 71.4 million of revenue and did not have a material impact to net income attributable to Franklin Resources, Inc.

for the six months ended March 31, 2023.

Costs incurred in connection with the acquisition were $ 14.1 million for the nine months ended June 30, 2023.

Alcentra contributed $ 116.7 million of operating revenue and did not have a material impact to net income attributable to Franklin Resources, Inc.

for the nine months ended June 30, 2023.

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

In connection with the acquisition, the Company on December 15, 2022 entered into repurchase agreements with a third-party financing company for certain securities held by the Company in Alcentra’s CLOs.

As of March 31, 2023, other liabilities includes repurchase agreements of €125.5 million (equivalent to $ 136.1 million at March 31, 2023) and $ 40.8 million with maturity values of € 132.3 million and $ 42.4 million, respectively.

The Company has pledged Alcentra investments with a carrying value of $ 201.4 million as collateral as of March 31, 2023.

As of June 30, 2023, other liabilities includes repurchase agreements of $ 172.9 million with maturity values of € 132.3 million and $ 42.4 million in local currency.

The Company has pledged Alcentra investments with a carrying value of $ 179.3 million as collateral as of June 30, 2023.

The repurchase agreements have contractual maturity dates ranging between 2029 to 2034.

2 unchanged sentences

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

March 31, Six Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

11 unchanged sentences

Diluted 0.44 0.50 1.14 2.07

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, 2023 and 2022.

Note 4 – Revenues

3 unchanged sentences

Luxembourg Total

for the three months ended March 31, 2023

for the three months ended June 30, 2023

Investment management fees

9 unchanged sentences

Luxembourg Total

for the six months ended March 31, 2023

for the nine months ended June 30, 2023

Investment management fees

9 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

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 83 % of the Company’s total operating revenues for the three and six months ended March 31, 2023 and 79 % and 80 % for the three and six months ended March 31, 2022.

Revenues earned from sponsored funds were 83 % of the Company’s total operating revenues for the three and nine months ended June 30, 2023 and 83 % and 81 % for the three and nine months ended June 30, 2022.

Note 5 – Investments

2 unchanged sentences

Investments consisted of the following:

(in millions) March 31,

(in millions) June 30,

2023 September 30,

13 unchanged sentences

Expedient Total

as of March 31, 2023

as of June 30, 2023

Investments, at fair value

19 unchanged sentences

These investments were as follows:

(in millions) March 31,

(in millions) June 30,

2023 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 3.3 years and 3.4 years at March 31, 2023 and September 30, 2022.

Investments with known liquidation periods have an expected weighted-average life of 3.2 years and 3.4 years at June 30, 2023 and September 30, 2022.

2 Investments are redeemable on a semi-monthly, monthly and quarterly basis.

1 unchanged sentence

(in millions) Fair Value

Level March 31, 2023 September 30, 2022

Level June 30, 2023 September 30, 2022

Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

8 unchanged sentences

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 18 CLOs, as of March 31, 2023 and 59 CIPs, including 15 CLOs, as of September 30, 2022.

The Company had 69 CIPs, including 19 CLOs, as of June 30, 2023 and 59 CIPs, including 15 CLOs, as of September 30, 2022.

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

(in millions) March 31,

(in millions) June 30,

2023 September 30,

14 unchanged sentences

$ 10,416.3 $ 8,679.7

The CIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2023 and 2022.

The CIPs did not have a significant impact on net income attributable to the Company during the three and nine months ended June 30, 2023 and 2022.

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.

The debt holders of the CIPs have no recourse to the Company’s assets beyond the level of its direct investment, therefore the Company bears no other risks associated with the CIPs’ liabilities.

The debt holders of the CIPs have no recourse to the Company’s assets beyond the level of its direct investment;

therefore the Company bears no other risks associated with the CIPs’ liabilities.

Fair Value Measurements

2 unchanged sentences

Expedient Total

as of March 31, 2023

as of June 30, 2023

Cash and cash equivalents of CLOs $ 457.5 $ — $ — $ — $ 457.5

15 unchanged sentences

These investments were as follows:

(in millions) March 31,

(in millions) June 30,

2023 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.

As of March 31, 2023, there were no investments with known liquidation periods.

As of June 30, 2023, there were no investments with known liquidation periods.

Investments with known liquidation periods have an expected weighted-average life of 0.3 years at September 30, 2022.

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

3 As of March 31, 2023, there were no investments with unfunded commitments.

3 As of June 30, 2023, there were no investments with unfunded commitments.

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

1 unchanged sentence

(in millions) Equity and Debt

Securities Real Estate Loans Total

for the three months ended March 31, 2023

Balance at January 1, 2023 $ 555.8 $ 358.0 $ 64.7 $ 978.5

Losses included in investment and other income of consolidated investment products, net ( 18.4 ) ( 12.7 ) — ( 31.1 )

Securities Loans Total

for the three months ended June 30, 2023

Balance at April 1, 2023 $ 539.0 $ 3.1 $ 542.1

Gains (losses) included in investment and other income (losses) of consolidated investment products, net ( 31.6 ) 0.1 ( 31.5 )

Purchases 61.2 ( 0.2 ) 61.0

Sales and settlements ( 0.1 ) 0.2 0.1

Net (deconsolidations) consolidations 7.5 ( 345.7 ) ( 90.5 ) ( 428.7 )

Transfers into Level 3 — 0.5 0.5

Transfers out of Level 3 ( 0.3 ) — ( 0.3 )

Balance at March 31, 2023 $ 539.0 $ — $ 3.1 $ 542.1

Change in unrealized losses included in net income relating to assets held at March 31, 2023 $ ( 25.0 ) $ — $ — $ ( 25.0 )

Balance at June 30, 2023 $ 568.2 $ 3.7 $ 571.9

Change in unrealized gains (losses) included in net income relating to assets held at June 30, 2023 $ ( 32.0 ) $ 0.1 $ ( 31.9 )

(in millions) Equity and Debt

Securities Real Estate Loans Total

for the six months ended March 31, 2023

for the nine months ended June 30, 2023

Balance at October 1, 2022 $ 555.8 $ 268.6 $ 239.4 $ 1,063.8

Gains (losses) included in investment and other income of consolidated investment products, net ( 24.7 ) ( 9.0 ) 0.1 ( 33.6 )

Gains (losses) included in investment and other income (losses) of consolidated investment products, net ( 56.3 ) ( 9.0 ) 0.2 ( 65.1 )

Purchases 83.7 86.1 58.4 228.2

3 unchanged sentences

Transfers out of Level 3 ( 0.3 ) — ( 5.3 ) ( 5.6 )

Balance at March 31, 2023 $ 539.0 $ — $ 3.1 $ 542.1

Change in unrealized losses included in net income relating to assets held at March 31, 2023 $ ( 22.3 ) $ — $ — $ ( 22.3 )

Balance at June 30, 2023 $ 568.2 $ — $ 3.7 $ 571.9

Change in unrealized gains (losses) included in net income relating to assets held at June 30, 2023 $ ( 55.0 ) $ — $ 0.1 $ ( 54.9 )

(in millions) Equity and Debt

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

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

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

Net 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

Gains included in investment and other income of consolidated investment products, net 170.3 14.3 — 184.6

Gains 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

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

(in millions)

as of March 31, 2023 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

as of June 30, 2023 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

Equity and debt securities $ 568.2 Market pricing Private sale pricing $ 0.01 –$ 1,000.00 ($ 43.23 ) per share

Discount for lack of liquidity 13.0 %– 25.1 % ( 23.2 %)

Discount for lack of marketability 12.0 %– 21.8 % ( 16.4 %)

(in millions)

1 unchanged sentence

Equity and debt securities $ 555.8 Market pricing Private sale pricing $ 0.01 –$ 558.45 ($ 33.31 ) per share

Discount for lack of liquidity 23.5 %– 25.1 % ( 24.9 %)

Discount for lack of marketability 23.5 %– 25.1 % ( 24.9 %)

Real estate 268.6 Discounted cash flow Discount rate 4.5 %– 6.3 % ( 5.1 %)

6 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 liquidity, were independently higher (lower) as of March 31, 2023, 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 liquidity used in the market-based valuations, were independently higher (lower) as of March 31, 2023, 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 liquidity, were independently higher (lower) as of June 30, 2023, 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 liquidity used in the market-based valuations, were independently higher (lower) as of June 30, 2023, 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, 2023 September 30, 2022

Level June 30, 2023 September 30, 2022

Value Estimated

10 unchanged sentences

Debt of CIPs consisted of the following:

March 31, 2023 September 30, 2022

June 30, 2023 September 30, 2022

(in millions) Amount Weighted-

4 unchanged sentences

$ 7,988.7 $ 5,457.7

The debt of CIPs had fixed and floating interest rates ranging from 2.39 % to 13.73 % at March 31, 2023, and from 1.42 % to 8.51 % at September 30, 2022.

The debt of CIPs had fixed and floating interest rates ranging from 2.39 % to 15.08 % at June 30, 2023, and from 1.42 % to 8.51 % at September 30, 2022.

The floating rates were based on the London Interbank Offered Rate and Secured Overnight Financing Rate.

The contractual maturities for the debt of CIPs at March 31, 2023 were as follows:

The contractual maturities for the debt of CIPs at June 30, 2023 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,

2023 September 30,

2 unchanged sentences

Fair Value $ 8,099.8 $ 5,762.3

Investments 90 days or more past due were immaterial at March 31, 2023 and September 30, 2022.

The Company recognized $ 4.8 million and $ 2.5 million of net gains during the three and six months ended March 31, 2023 and $ 7.6 million and $ 12.9 million of net gains during the three and six months ended March 31, 2022, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 7,401.4 million and $ 5,781.3 million at March 31, 2023 and September 30, 2022.

Investments 90 days or more past due were immaterial at June 30, 2023 and September 30, 2022.

The Company recognized $ 6.5 million and $ 9.0 million of net gains during the three and nine months ended June 30, 2023 and $ 4.9 million and $ 17.8 million of net gains during the three and nine months ended June 30, 2022, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 8,125.7 million and $ 5,781.3 million at June 30, 2023 and September 30, 2022.

Note 8 – 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 $ 445.6 $ 514.9 $ 960.5 $ 625.3 $ 512.8 $ 1,138.1

1 unchanged sentence

Net subscriptions (distributions) and other 30.2 ( 11.2 ) 19.0 5.4 ( 29.6 ) ( 24.2 )

Net deconsolidations ( 1,293.9 ) — ( 1,293.9 ) ( 115.9 ) — ( 115.9 )

Net consolidations 104.6 — 104.6 380.3 — 380.3

Adjustment to fair value — ( 60.8 ) ( 60.8 ) — — —

2 unchanged sentences

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 $ 942.2 $ 583.6 $ 1,525.8 $ 622.5 $ 310.5 $ 933.0

1 unchanged sentence

Net subscriptions (distributions) and other 498.2 ( 58.9 ) 439.3 320.0 ( 40.5 ) 279.5

Net deconsolidations ( 1,022.6 ) — ( 1,022.6 ) ( 237.4 ) — ( 237.4 )

Net consolidations (deconsolidations) ( 918.0 ) — ( 918.0 ) 142.9 — 142.9

Adjustment to fair value — ( 105.5 ) ( 105.5 ) — 188.5 188.5

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,

2023 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 assessed as VIEs during the six months ended March 31, 2023 or fiscal year 2022.

The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the nine months ended June 30, 2023 or fiscal year 2022.

Note 10 – Commitments and Contingencies

1 unchanged sentence

India Credit Fund Closure Matters .

During the six months ended March 31, 2023, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2022.

As of March 31, 2023, the amount reported as distributed to fund unitholders in the aggregate is INR 26,931.3 crore (approximately $ 3.3 billion).

During the nine months ended June 30, 2023, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2022.

As of June 30, 2023, the amount reported as distributed to fund unitholders in the aggregate is INR 27,109.3 crore (approximately $ 3.3 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, 2023 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, 2023 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, 2023.

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, 2023.

Other Commitments and Contingencies

At March 31, 2023, 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 2022.

At June 30, 2023, 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 2022.

Note 11 – Stock-Based Compensation

4 unchanged sentences

Shares Weighted-

for the six months ended March 31, 2023

for the nine months ended June 30, 2023

Nonvested balance at October 1, 2022 13,492 3,401 16,893 $ 24.04

2 unchanged sentences

Forfeited/canceled ( 357 ) ( 177 ) ( 534 ) 24.79

Nonvested Balance at March 31, 2023 18,487 3,444 21,931 $ 23.53

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 281.9 million at March 31, 2023.

Nonvested Balance at June 30, 2023 18,274 3,357 21,631 $ 23.51

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 202.3 million at June 30, 2023.

This expense is expected to be recognized over a remaining weighted-average vesting period of 1.6 years.

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in millions) 2023 2022 2023 2022

1 unchanged sentence

Gains (losses) on investments, net 13.8 ( 35.6 ) 62.3 ( 32.9 )

Income from investments in equity method investees 85.6 27.0 118.8 51.7

Income (losses) from investments in equity method investees ( 7.7 ) ( 0.1 ) 111.1 51.6

Gains (losses) on derivatives, net ( 5.1 ) 17.5 ( 19.4 ) 15.2

Rental income 11.1 9.6 35.1 27.9

2 unchanged sentences

Investment and other income, net $ 51.2 $ 13.0 $ 267.9 $ 97.7

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $ 13.1 million and $ 78.2 million for the three and six months ended March 31, 2023 and $( 29.2 ) million and $( 34.5 ) million for the three and six months ended March 31, 2022.

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $ 17.0 million and $ 95.7 million for the three and nine months ended June 30, 2023 and $( 50.3 ) million and $( 79.1 ) million for the three and nine months ended June 30, 2022.

Note 13 - Subsequent Event

On July 25, 2023, the Company terminated its 364-day $ 500.0 million revolving credit facility and its 3-year $ 300.0 million term loan.

On the date of termination, the 364-day revolving credit facility had no amounts outstanding and all amounts outstanding under the term loan were repaid with existing cash.

Concurrent with the actions above, the Company entered into a 5-year $ 800.0 million revolving credit facility.

As of the time of this filing, there were no borrowings outstanding under the 5-year credit facility.

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