What changed in this filing

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Item 1. Financial Statements

2024-04-29 compared with 2024-01-29 · 257 added, 79 removed, 459 unchanged (42% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

(in millions, except per share data) 2024 2023 2024 2023

17 unchanged sentences

Interest expense ( 27.7 ) ( 33.5 ) ( 46.5 ) ( 64.4 )

Investment and other losses of consolidated investment products, net ( 23.8 ) ( 13.6 )

Investment and other income of consolidated investment products, net 89.9 87.2 66.1 73.6

Expenses of consolidated investment products ( 5.9 ) ( 3.4 ) ( 11.8 ) ( 14.9 )

15 unchanged sentences

(in millions) Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Net Income $ 175.3 $ 273.1 $ 431.6 $ 440.7

Other Comprehensive Income

Other Comprehensive Income (Loss)

Currency translation adjustments, net of tax ( 29.5 ) 15.9 29.6 143.2

Net unrealized losses on defined benefit plans, net of tax ( 0.1 ) ( 2.6 )

Total other comprehensive income 59.0 124.7

Net unrealized gains (losses) on defined benefit plans, net of tax 0.5 1.8 0.4 ( 0.8 )

Net unrealized gains on investments, net of tax 0.1 0.2 0.1 0.2

Total other comprehensive income (loss) ( 28.9 ) 17.9 30.1 142.6

Total comprehensive income 146.4 291.0 461.7 583.3

7 unchanged sentences

CONSOLIDATED BALANCE SHEETS

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

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

2024 September 30,

1 unchanged sentence

Receivables 1,449.6 1,348.4

Investments (including $ 894.2 and $ 872.8 at fair value at December 31, 2023 and September 30, 2023)

Investments (including $ 899.7 and $ 872.8 at fair value at March 31, 2024 and September 30, 2023)

2,377.7 2,222.0

24 unchanged sentences

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

494,734,214 and 495,937,891 shares issued and outstanding at December 31, 2023 and September 30, 2023

526,185,104 and 495,937,891 shares issued and outstanding at March 31, 2024 and September 30, 2023

Capital in excess of par

Retained earnings 12,265.4 12,376.6

16 unchanged sentences

(in millions)

for the three months ended

December 31, 2023 Shares Amount

for the six months ended

March 31, 2024 Shares Amount

Balance at October 1, 2023 495.9 $ 49.6 $ — $ 12,376.6 $ ( 509.3 ) $ 11,916.9 $ 630.9 $ 12,547.8

12 unchanged sentences

Balance at December 31, 2023 494.7 $ 49.5 $ — $ 12,402.4 $ ( 450.3 ) $ 12,001.6 $ 636.0 $ 12,637.6

Net income 124.2 124.2 8.3 132.5

Other comprehensive loss ( 28.9 ) ( 28.9 ) ( 28.9 )

Dividends declared on common stock ($ 0.31 per share)

( 169.3 ) ( 169.3 ) ( 169.3 )

Repurchase of common stock ( 0.4 ) ( 0.1 ) ( 11.6 ) — ( 11.7 ) ( 11.7 )

Issuance of common stock 0.3 — 10.7 10.7 10.7

Stock-based compensation 86.3 86.3 86.3

31.6 3.2 936.9 940.1 25.8 965.9

Net subscriptions and other 63.1 63.1

Net deconsolidation of investment products ( 12.6 ) ( 12.6 )

Adjustment to fair value of redeemable noncontrolling interests ( 91.9 ) ( 91.9 ) ( 91.9 )

Balance at March 31, 2024 526.2 $ 52.6 $ 1,022.3 $ 12,265.4 $ ( 479.2 ) $ 12,861.1 $ 720.6 $ 13,581.7

See Notes to Consolidated Financial Statements.

Franklin Resources, Inc.

6 unchanged sentences

(in millions)

for the three months ended

December 31, 2022 Shares Amount

for the six months ended

March 31, 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

9 unchanged sentences

Balance at December 31, 2022 500.3 $ 50.0 $ — $ 12,112.6 $ ( 496.3 ) $ 11,666.3 $ 889.2 $ 12,555.5

Net income (loss) 194.2 194.2 ( 4.3 ) 189.9

Other comprehensive income 17.9 17.9 17.9

Dividends declared on common stock ($ 0.30 per share)

( 153.8 ) ( 153.8 ) ( 153.8 )

Repurchase of common stock ( 0.1 ) — ( 66.0 ) 62.4 ( 3.6 ) ( 3.6 )

Issuance of common stock 0.7 0.1 25.2 25.3 25.3

Stock-based compensation 40.8 40.8 40.8

Net subscriptions and other 50.1 50.1

Net deconsolidation of investment products ( 324.2 ) ( 324.2 )

Adjustment to fair value of redeemable noncontrolling interests

44.7 44.7 44.7

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

See Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in millions) 2024 2023

7 unchanged sentences

Income from investments in equity method investees ( 81.3 ) ( 52.6 )

Net losses on investments of consolidated investment products 66.0 72.3

Net (gains) losses on investments of consolidated investment products ( 3.0 ) 57.5

Net purchase of investments by consolidated investment products ( 232.2 ) ( 613.0 )

2 unchanged sentences

Changes in operating assets and liabilities:

Decrease (increase) in receivables and other assets ( 36.7 ) 14.6

Increase in receivables and other assets ( 55.1 ) ( 144.4 )

Decrease (increase) in investments, net 10.0 ( 36.0 )

Decrease in accrued compensation and benefits ( 316.0 ) ( 336.1 )

Increase in income taxes payable 107.9 158.8

Increase (decrease) in accounts payable, accrued expenses and other liabilities ( 39.7 ) 59.8

Increase in accounts payable and accrued expenses of consolidated investment products 1.0 17.0

Decrease in income taxes payable ( 177.2 ) ( 28.5 )

Increase in accounts payable, accrued expenses and other liabilities 22.6 85.4

Increase (decrease) in accounts payable and accrued expenses of consolidated investment products ( 103.7 ) 3.7

Net cash used in operating activities ( 115.3 ) ( 329.6 )

4 unchanged sentences

Additions of property and equipment, net ( 61.2 ) ( 42.8 )

Acquisitions, net of cash acquired — ( 493.7 )

Acquisitions, net of cash acquired (including $ 281.4 in cash and cash equivalents of consolidated investment products in fiscal year 2024)

177.9 ( 500.5 )

Payments of contingent consideration asset — 5.5

Payments of deferred consideration liability ( 60.8 ) —

Net deconsolidation of investment products ( 10.5 ) ( 13.8 )

Net consolidation (deconsolidation) of investment products 15.1 ( 85.4 )

Net cash used in investing activities ( 410.8 ) ( 2,221.3 )

4 unchanged sentences

[Table continued from previous page]

Three Months Ended

Six Months Ended

(in millions) 2024 2023

Issuance of common stock $ 7.3 $ 13.4

Dividends paid on common stock ( 321.4 ) ( 301.8 )

5 unchanged sentences

Noncontrolling interests 67.7 552.0

Net cash (used in) provided by financing activities ( 159.0 ) 958.9

Net cash provided by financing activities 232.1 1,986.8

Effect of exchange rate changes on cash and cash equivalents 15.9 60.2

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

March 31, 2024

Note 1 – Basis of Presentation

8 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, 2023 (“fiscal year 2023”).

During the quarter ended March 31, 2024, the Company identified that it did not eliminate the investment income from certain consolidated limited partnerships for the fiscal year ended September 30, 2023, resulting in offsetting adjustments to investment and other income, net and net income attributable to nonredeemable noncontrolling interest.

The Company is not entitled to the economic returns associated with the underlying investments held by these limited partnerships.

There is no impact on operating income, net income attributable to Franklin Resources, Inc., earnings per share, total assets, total liabilities, retained earnings or total shareholders’ equity.

There is no impact on the financial results attributable to the Company’s shareholders.

The Company has determined this did not result in a material misstatement to its previously issued consolidated financial statements.

For comparability, the Company has revised the comparative prior period amounts included in the consolidated statements of income, consolidated statements of stockholders’ equity, consolidated statements of cash flows, and related footnote disclosures.

The impacts on the consolidated statements of income for the three and six months ended March 31, 2023 are as follows:

(in millions) Three Months Ended

March 31, 2023 Six Months Ended

March 31, 2023

Operating Income $ 255.1 $ — $ 255.1 $ 449.1 $ — $ 449.1

Other income, net

Investment and other income, net

125.6 ( 65.0 ) 60.6 216.7 ( 66.2 ) 150.5

Other income, net

175.9 ( 65.0 ) 110.9 211.0 ( 66.2 ) 144.8

Income before taxes

431.0 ( 65.0 ) 366.0 660.1 ( 66.2 ) 593.9

338.1 ( 65.0 ) 273.1 506.9 ( 66.2 ) 440.7

net income (loss) attributable to nonredeemable noncontrolling interest

60.7 ( 65.0 ) ( 4.3 ) 65.4 ( 66.2 ) ( 0.8 )

Net Income Attributable to Franklin Resources, Inc.

194.2 — 194.2 359.8 — 359.8

The impact on the consolidated statement of cash flows for the six months ended March 31, 2023 are as follows:

(in millions) Six Months Ended

March 31, 2023

Net cash used in operating activities

$ ( 289.7 ) $ ( 39.9 ) $ ( 329.6 )

Net cash used in investing activities

( 2,195.0 ) ( 26.3 ) ( 2,221.3 )

Net cash provided by financing activities 1,920.6 66.2 1,986.8

Decrease to cash and cash equivalents

( 503.9 ) — ( 503.9 )

Note 2 – New Accounting Guidance

9 unchanged sentences

The Company is currently evaluating the impact that the adoption will have on its consolidated financial statements and has not yet determined its transition approach.

Note 3 – Acquisition

Putnam Investments

On January 1, 2024, the Company acquired Putnam Investments (“Putnam”) from Great-West Lifeco Inc.

(“Great-West”) for 31.6 1 million shares of its common stock, cash consideration paid at close of $ 221.7 million for investments and other purchase-related amounts, and deferred cash consideration of $ 100.0 million to be paid during the third quarter of fiscal year 2024.

The cash consideration paid at close was funded from existing cash and we expect to fund the deferred cash consideration from existing cash and sources of liquidity.

See below for a summary of the total purchase consideration transferred at closing:

(in millions)

Equity consideration 1, 2

Cash consideration

Deferred cash consideration

Other adjustments 3

Total Purchase Consideration

1 Excludes shares to be granted under a deferred compensation program.

2 Market price on closing date of $ 29.79 .

3 Primarily relates to payments treated as future compensation expense.

Great-West became a long-term shareholder of the Company with an approximate 6.0 % stake in the common stock of the Company as of the acquisition date.

Shares representing 4.9 % of the Company’s outstanding Common Stock at closing are subject to a five -year lock-up, and the remaining shares are subject to a 180-day lock-up following the date of closing.

The acquisition of Putnam accelerates the Company’s growth in the retirement sector by increasing the amount of the Company’s defined contribution AUM and expanding insurance assets, further strengthening the Company’s presence in these key market segments to better serve clients.

The following table summarizes the estimated fair value amounts recognized for the assets acquired and liabilities assumed and resulting goodwill as of the acquisition date.

The issuance of common stock consideration represents a non-cash financing activity related to the statement of cash flows.

(in millions) Estimated Fair Value

as of January 1, 2024

Cash and cash equivalents $ 101.1

Receivables 118.9

Investments 111.2

Assets of consolidated investment products

Cash and cash equivalents 281.4

Investments, at fair value 849.5

Property and equipment

Indefinite-lived intangible assets

Definite-lived intangible asset

Operating lease right-of-use assets

Other assets 20.4

Compensation and benefits

Accounts payable and accrued expenses

Liabilities of consolidated investment products

Accounts payable and accrued expenses ( 259.6 )

Debt ( 706.8 )

Operating lease liabilities

Other liabilities

Redeemable noncontrolling interests

Nonredeemable noncontrolling interests

Total Identifiable Net Assets $ 1,231.6

The purchase price allocation is preliminary and subject to change during the measurement period, which is not to exceed one year from the acquisition date.

At this time, the Company does not expect material changes to the assets acquired or liabilities assumed.

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

The definite-lived intangible asset relates to trade name, which is amortized over its estimated useful life of 10.0 years.

Amortization expense related to the trade name was $ 1.3 million for the period ended March 31, 2024.

The estimated remaining amortization expense is $ 5.3 million per year.

Transaction costs incurred in connection with the acquisition were $ 17.8 million for the six months ended March 31, 2024.

These costs are primarily comprised of professional fees, recorded in general, administrative and other expenses.

The Company also incurred $ 103.0 million of acquisition-related compensation and benefits expense during the period, primarily related to the acceleration of expense for historical Putnam compensation arrangements, retention bonuses and termination benefits.

In addition, the Company will pay up to $ 375.0 million between the third and seventh anniversaries of the closing date related to revenue growth targets from the strategic partnership with Great-West and its affiliates which will be recognized in operating income.

Operating revenues of the acquired business from January 1, 2024 through March 31, 2024 were approximately $ 210 million.

Net Income is not available to be separately reported due to the ongoing integration of the combined businesses.

Note 4 – Earnings per Share

1 unchanged sentence

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

Six Months Ended

2024 2023 2024 2023

Net income attributable to Franklin Resources, Inc.

1 unchanged sentence

allocation of earnings to participating nonvested stock and stock unit awards

7.2 9.0 16.3 16.7

Net Income Available to Common Stockholders $ 117.0 $ 185.2 $ 359.2 $ 343.1

1 unchanged sentence

Dilutive effect of nonparticipating nonvested stock unit awards

0.8 0.7 0.8 0.7

Weighted-Average Shares Outstanding – Diluted 519.2 491.4 503.4 490.8

2 unchanged sentences

Diluted 0.23 0.38 0.71 0.70

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 months ended December 31, 2023 and 2022.

Note 5 – Revenues

3 unchanged sentences

Luxembourg Total

for the three months ended December 31, 2023

for the three months ended March 31, 2024

Investment management fees

9 unchanged sentences

Luxembourg Total

for the three months ended December 31, 2022

for the six months ended March 31, 2024

Investment management fees

6 unchanged sentences

$ 3,110.1 $ 593.7 $ 152.5 $ 134.3 $ 153.3 $ 4,143.9

(in millions) United States Luxembourg Asia-Pacific Americas

States Europe,

Luxembourg Total

for the three months ended March 31, 2023

Investment management fees

$ 1,165.8 $ 196.6 $ 82.5 $ 56.3 $ 72.1 $ 1,573.3

Sales and distribution fees

212.4 73.6 5.0 10.4 — 301.4

Shareholder servicing fees

34.6 7.8 0.7 0.2 — 43.3

8.5 0.3 0.1 — 0.3 9.2

$ 1,421.3 $ 278.3 $ 88.3 $ 66.9 $ 72.4 $ 1,927.2

(in millions) United States Luxembourg Asia-Pacific Americas

States Europe,

Luxembourg Total

for the six months ended March 31, 2023

Investment management fees

$ 2,440.6 $ 378.4 $ 150.1 $ 108.1 $ 127.9 $ 3,205.1

Sales and distribution fees

420.6 142.0 10.0 20.7 — 593.3

Shareholder servicing fees

59.9 15.5 1.1 0.2 — 76.7

18.2 0.3 0.4 — 0.3 19.2

$ 2,939.3 $ 536.2 $ 161.6 $ 129.0 $ 128.2 $ 3,894.3

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 months ended December 31, 2023 and 2022.

Revenues earned from sponsored funds were 83 % of the Company’s total operating revenues for the three and six months ended March 31, 2024 and March 31, 2023.

Note 6 – Investments

2 unchanged sentences

Investments consisted of the following:

(in millions) December 31,

(in millions) March 31,

2024 September 30,

8 unchanged sentences

The Company has entered into repurchase agreements with a third-party financing company for certain investments held by the Company.

As of December 31, 2023, other liabilities includes repurchase agreements of $ 167.9 million with investments of $ 176.0 million in carrying value pledged as collateral.

As of March 31, 2024, other liabilities includes repurchase agreements of $ 150.6 million with investments of $ 158.2 million in carrying value pledged as collateral.

The repurchase agreements have contractual maturity dates ranging between 2029 to 2035.

5 unchanged sentences

Expedient Total

as of December 31, 2023

as of March 31, 2024

Investments, at fair value

19 unchanged sentences

These investments were as follows:

(in millions) December 31,

(in millions) March 31,

2024 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 3.1 years and 2.9 years at December 31, 2023 and September 30, 2023.

Investments with known liquidation periods have an expected weighted-average life of 2.6 years and 2.9 years at March 31, 2024 and September 30, 2023.

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

1 unchanged sentence

(in millions) Fair Value

Level December 31, 2023 September 30, 2023

Level March 31, 2024 September 30, 2023

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 69 CIPs, including 19 CLOs, as of December 31, 2023 and 70 CIPs, including 20 CLOs, as of September 30, 2023.

The Company had 81 CIPs, including 22 CLOs, as of March 31, 2024 and 70 CIPs, including 20 CLOs, as of September 30, 2023.

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

(in millions) December 31,

(in millions) March 31,

2024 September 30,

14 unchanged sentences

$ 12,158.8 $ 10,519.9

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

The CIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2024 and 2023.

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.

5 unchanged sentences

Expedient Total

as of December 31, 2023

as of March 31, 2024

Cash and cash equivalents of CLOs $ 548.3 $ — $ — $ — $ 548.3

11 unchanged sentences

Total Assets Measured at Fair Value $ 563.2 $ 8,804.1 $ 584.9 $ 154.0 $ 10,106.2

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 U.S.

equity fund, a redeemable global hedge fund and nonredeemable private debt funds.

These investments were as follows:

(in millions) December 31,

(in millions) March 31,

2024 September 30,

7 unchanged sentences

(in millions) Equity and Debt

Securities Loans Total

for the three months ended December 31, 2023

for the three months ended March 31, 2024

Balance at January 1, 2024 $ 551.5

Losses included in investment and other income of consolidated investment products, net ( 0.1 )

Purchases 22.8

Net deconsolidations ( 12.5 )

Balance at March 31, 2024 $ 591.0

Change in unrealized gains included in net income relating to assets held at March 31, 2024 $ —

(in millions) Equity and Debt

for the six months ended March 31, 2024

Balance at October 1, 2023 $ 584.9

Losses included in investment and other losses of consolidated investment products, net ( 38.1 ) — ( 38.1 )

Losses included in investment and other income of consolidated investment products, net ( 38.2 )

Purchases 26.6

Net deconsolidations ( 12.5 )

Transfers into Level 3 1.1

Balance at March 31, 2024 $ 591.0

Change in unrealized losses included in net income relating to assets held at March 31, 2024 $ ( 37.6 )

(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 )

Purchases 13.5 0.4 31.1 45.0

( 19.4 ) — — ( 19.4 )

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

Transfers into Level 3 — — 3.1 3.1

Balance at December 31, 2023 $ 551.5 $ 0.6 $ 552.1

Change in unrealized losses included in net income relating to assets held at December 31, 2023 $ ( 37.8 ) $ — $ ( 37.8 )

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

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 )

(in millions) Equity and Debt

Securities Real Estate Loans Total

for the three months ended December 31, 2022

for the six months ended March 31, 2023

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

Gains (losses) included in investment and other losses of consolidated investment products, net ( 6.3 ) 3.7 0.1 ( 2.5 )

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

Purchases 22.5 86.1 58.6 167.2

( 25.0 ) — ( 0.2 ) ( 25.2 )

Net (deconsolidations) and consolidations 2.9 — ( 202.1 ) ( 199.2 )

Balance at December 31, 2022 $ 555.8 $ 358.0 $ 64.7 $ 978.5

Change in unrealized gains included in net income relating to assets held at December 31, 2022 $ 2.0 $ 3.7 $ 0.1 $ 5.8

Net (deconsolidations) consolidations 10.4 ( 345.7 ) ( 292.6 ) ( 627.9 )

Transfers into Level 3 — — 3.1 3.1

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

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 $ ( 22.3 ) $ — $ — $ ( 22.3 )

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

(in millions)

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

as of March 31, 2024 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

Equity and debt securities $ 298.3 Market pricing Private sale pricing $ 0.37 –$ 1,000.00 ($ 60.33 ) per share

2 unchanged sentences

Discount for lack of marketability 7.4 %– 9.9 % ( 8.8 %)

44.0 Discounted cash flow Discount rate 6.4 %

(in millions)

6 unchanged sentences

1 Based on the relative fair value of the instruments.

If the relevant significant inputs used in the valuations, other than discount for lack of marketability, were independently higher (lower) as of December 31, 2023, the resulting fair value of the assets would be higher (lower).

If the relevant significant inputs used in the discount for lack of marketability were independently higher (lower) as of December 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 marketability, were independently higher (lower) as of March 31, 2024, the resulting fair value of the assets would be higher (lower).

If the relevant significant inputs used in the discounted cash flow, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of March 31, 2024, 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 December 31, 2023 September 30, 2023

Level March 31, 2024 September 30, 2023

Value Estimated

6 unchanged sentences

2 or 3 $ 9,116.0 $ 8,867.4 $ 8,210.0 $ 8,013.2

Other debt 3 — — 21.8 8.6

Other debt 2 or 3 15.0 15.0 21.8 8.6

__________________

1 unchanged sentence

Debt of CIPs consisted of the following:

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

(in millions) Amount Weighted-

2 unchanged sentences

$ 9,116.0 7.54 % $ 8,210.0 7.12 %

— N/A 21.8 6.00 %

15.0 5.57 % 21.8 6.00 %

The debt of CIPs had fixed and floating interest rates ranging from 2.39 % to 15.77 % at December 31, 2023, and from 2.39 % to 15.49 % at September 30, 2023.

$ 9,131.0 $ 8,231.8

The debt of CIPs had fixed and floating interest rates ranging from 0.25 % to 15.86 % at March 31, 2024, and from 2.39 % to 15.49 % at September 30, 2023.

The floating rates were based on the Secured Overnight Financing Rate.

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

The contractual maturities for the debt of CIPs at March 31, 2024 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) December 31,

(in millions) March 31,

2024 September 30,

2 unchanged sentences

Fair Value $ 9,388.3 $ 8,196.8

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

The Company recognized $ 20.8 million of net gains and $ 2.3 million of net losses during the three months ended December 31, 2023 and 2022, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 7,811.1 million and $ 8,281.5 million at December 31, 2023 and September 30, 2023.

Investments 90 days or more past due were immaterial at March 31, 2024 and September 30, 2023.

The Company recognized $ 9.7 million and $ 30.5 million of net gains during the three and six months ended March 31, 2024 and $ 4.8 million and $ 2.5 million of net gains during the three and six months ended March 31, 2023, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 9,037.2 million and $ 8,281.5 million at March 31, 2024 and September 30, 2023.

Note 9 – Redeemable Noncontrolling Interests

2 unchanged sentences

CIPs Minority Interests Total CIPs Minority Interests Total

for the three months ended December 31,

for the three months ended March 31,

Balance at beginning of period $ 555.3 $ 523.2 $ 1,078.5 $ 1,379.7 $ 599.5 $ 1,979.2

Net income (loss) ( 2.9 ) 12.4 9.5 ( 12.2 ) 10.7 ( 1.5 )

Net income 32.7 10.1 42.8 70.2 13.0 83.2

Net subscriptions (distributions) and other ( 8.5 ) ( 14.8 ) ( 23.3 ) 289.6 ( 52.9 ) 236.7

Net consolidations (deconsolidations) 43.8 — 43.8 ( 1,293.9 ) — ( 1,293.9 )

20.2 — 20.2 — — —

Adjustment to fair value — 91.9 91.9 — ( 44.7 ) ( 44.7 )

Balance at End of Period $ 643.5 $ 610.4 $ 1,253.9 $ 445.6 $ 514.9 $ 960.5

(in millions) 2024 2023

CIPs Minority Interests Total CIPs Minority Interests Total

for the six months ended March 31,

Balance at beginning of period $ 580.1 $ 446.0 $ 1,026.1 $ 942.2 $ 583.6 $ 1,525.8

Net income 29.8 22.5 52.3 58.0 23.7 81.7

Net subscriptions (distributions) and other 29.6 ( 15.9 ) 13.7 468.0 ( 47.7 ) 420.3

Net deconsolidations ( 16.2 ) — ( 16.2 ) ( 1,022.6 ) — ( 1,022.6 )

20.2 — 20.2 — — —

Adjustment to fair value — 157.8 157.8 — ( 44.7 ) ( 44.7 )

Balance at End of Period $ 643.5 $ 610.4 $ 1,253.9 $ 445.6 $ 514.9 $ 960.5

Note 10 – Nonconsolidated Variable Interest Entities

1 unchanged sentence

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

(in millions) December 31,

(in millions) March 31,

2024 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 three months ended December 31, 2023 or fiscal year 2023.

The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the six months ended March 31, 2024 or fiscal year 2023.

Note 11 – Commitments and Contingencies

1 unchanged sentence

India Credit Fund Closure Matters .

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

During the six months ended March 31, 2024, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2023.

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 December 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 March 31, 2024 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 December 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 March 31, 2024.

Other Commitments and Contingencies

2 unchanged sentences

The lease agreement is over sixteen years with an aggregate expected commitment of $ 707.3 million and is part of a corporate initiative to consolidate existing office space in New York City.

At December 31, 2023, there were no other material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2023.

At March 31, 2024, there were no other material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2023.

Note 12 – Stock-Based Compensation

4 unchanged sentences

Shares Weighted-

for the three months ended December 31, 2023

for the six months ended March 31, 2024

Nonvested balance at October 1, 2023 12,782 3,099 15,881 $ 23.09

2 unchanged sentences

Forfeited/canceled ( 270 ) ( 303 ) ( 573 ) 21.87

Nonvested Balance at December 31, 2023 18,663 3,231 21,894 $ 23.29

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 280.0 million at December 31, 2023.

Nonvested Balance at March 31, 2024 23,224 3,076 26,300 $ 24.40

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 314.3 million at March 31, 2024.

This expense is expected to be recognized over a remaining weighted-average vesting period of 2.1 years.

Note 13 - Subsequent Event

On January 1, 2024, the Company acquired Putnam Investments (“Putnam”) from Great-West Lifeco Inc.

(“Great-West”) for 31.6 million shares of its common stock (excludes shares to be granted under deferred compensation program), cash consideration paid at close of approximately $ 220 million for investments and other purchase-related amounts, and deferred cash consideration of $ 100.0 million to be paid during the third quarter of fiscal year 2024.

Note 13 – Investment and Other Income, Net

1 unchanged sentence

Three Months Ended

Six Months Ended

(in millions) 2024 2023 2024 2023

Dividend and interest income $ 38.0 $ 32.3 $ 92.8 $ 68.8

Gains on investments, net 60.1 45.5

Gains (losses) on investments, net ( 18.5 ) 3.0 41.6 48.5

Income from investments in equity method investees 24.4 20.6 81.3 52.6

3 unchanged sentences

Investment and other income, net $ 52.5 $ 60.6 $ 225.7 $ 150.5

Net gains recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $ 68.5 million for the three months ended December 31, 2023 and $ 68.3 million for the three months ended December 31, 2022.

Net gains recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $ 9.5 million and $ 86.1 million for the three and six months ended March 31, 2024 and $ 13.1 million and $ 78.2 million for the three and six months ended March 31, 2023.

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