What changed in this filing

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Item 1. Financial Statements

2024-07-26 compared with 2024-04-29 · 142 added, 102 removed, 614 unchanged (28% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

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

35 unchanged sentences

(in millions) Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

3 unchanged sentences

Net unrealized gains (losses) on defined benefit plans, net of tax ( 0.1 ) ( 0.6 ) 0.3 ( 1.4 )

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

Net unrealized gains (losses) on investments, net of tax ( 0.1 ) — — 0.2

Total other comprehensive income (loss) ( 8.7 ) 15.9 21.4 158.5

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,

2024 September 30,

1 unchanged sentence

Receivables 1,570.5 1,348.4

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

Investments (including $ 720.4 and $ 872.8 at fair value at June 30, 2024 and September 30, 2023)

2,224.5 2,222.0

24 unchanged sentences

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

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

522,059,992 and 495,937,891 shares issued and outstanding at June 30, 2024 and September 30, 2023

Capital in excess of par

17 unchanged sentences

(in millions)

for the six months ended

March 31, 2024 Shares Amount

for the nine months ended

June 30, 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

24 unchanged sentences

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

Net income 174.0 174.0 15.0 189.0

Other comprehensive loss ( 8.7 ) ( 8.7 ) ( 8.7 )

Dividends declared on common stock ($ 0.31 per share)

( 167.0 ) ( 167.0 ) ( 167.0 )

Repurchase of common stock ( 4.3 ) ( 0.4 ) ( 101.1 ) — ( 101.5 ) ( 101.5 )

Issuance of common stock 0.2 — 4.5 4.5 4.5

Stock-based compensation 58.9 58.9 58.9

Net subscriptions and other 29.4 29.4

Adjustment to fair value of redeemable noncontrolling interests 48.9 48.9 48.9

Balance at June 30, 2024 522.1 $ 52.2 $ 984.6 $ 12,321.3 $ ( 487.9 ) $ 12,870.2 $ 765.0 $ 13,635.2

See Notes to Consolidated Financial Statements.

7 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

21 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 ( 7.7 ) 219.8

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 ( 11.3 ) ( 11.3 )

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.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(in millions) 2024 2023

Net Income $ 663.6 $ 687.3

Adjustments to reconcile net income to net cash used in operating activities:

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

Stock-based compensation 194.6 137.9

4 unchanged sentences

Income from investments in equity method investees ( 122.3 ) ( 43.5 )

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

Net losses on investments of consolidated investment products 19.4 116.0

Net purchase of investments by consolidated investment products ( 459.5 ) ( 833.2 )

3 unchanged sentences

Increase in receivables and other assets ( 61.4 ) ( 69.8 )

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

Decrease in investments, net 23.8 6.4

Decrease in accrued compensation and benefits ( 35.0 ) ( 84.3 )

Decrease in income taxes payable ( 127.8 ) ( 58.9 )

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

Increase (decrease) in accounts payable, accrued expenses and other liabilities ( 55.8 ) 48.3

Increase (decrease) in accounts payable and accrued expenses of consolidated investment products ( 93.7 ) 1.3

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

Net cash provided by operating activities 413.1 324.7

Purchase of investments ( 952.0 ) ( 665.1 )

14 unchanged sentences

[Table continued from previous page]

Six Months Ended

Nine Months Ended

(in millions) 2024 2023

3 unchanged sentences

Proceeds from repurchase agreement — 174.8

Payments on repurchase agreement

Proceeds from debt of consolidated investment products 1,617.6 3,213.6

14 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

Note 1 – Basis of Presentation

1 unchanged sentence

(“Franklin”) and its consolidated subsidiaries (collectively, the “Company”) included herein have been prepared in accordance with the instructions to Form 10-Q and the rules and regulations of the U.S.

Securities and Exchange Commission.

Securities and Exchange Commission (“SEC”).

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 have been shortened or omitted.

10 unchanged sentences

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:

The impacts on the consolidated statements of income for the three and nine months ended June 30, 2023 are as follows:

(in millions) Three Months Ended

March 31, 2023 Six Months Ended

March 31, 2023

June 30, 2023 Nine Months Ended

June 30, 2023

Operating Income $ 314.9 $ — $ 314.9 $ 764.0 $ — $ 764.0

11 unchanged sentences

227.5 — 227.5 587.3 — 587.3

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

The impact on the consolidated statement of cash flows for the nine months ended June 30, 2023 are as follows:

(in millions) Nine Months Ended

June 30, 2023

Net cash provided by (used in) operating activities

$ 365.3 $ ( 40.6 ) $ 324.7

2 unchanged sentences

Net cash provided by financing activities 2,425.0 67.6 2,492.6

Decrease to cash and cash equivalents

Decrease in cash and cash equivalents

( 394.9 ) — ( 394.9 )

13 unchanged sentences

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.

The cash consideration paid at close and the deferred cash consideration were funded from existing cash.

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

5 unchanged sentences

Total Purchase Consideration

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

1 Excludes shares granted under a deferred compensation program.

2 Market price on closing date of $ 29.79 .

1 unchanged sentence

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.

Shares representing 4.9 % of the Company’s outstanding Common Stock at closing are subject to a five -year lock-up.

The remaining shares were subject to a 180-day lock-up following the date of closing which has expired.

The acquisition of Putnam accelerates the Company’s growth in the retirement sector by increasing the amount of the Company’s defined contribution AUM.

Additionally, the acquisition expands the Company’s insurance assets, further strengthening its presence in these key market segments to better serve clients.

The following table summarizes the initial and revised 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

(in millions) Initial Estimated Fair Value

Revised Estimated Fair Value

as of January 1, 2024

6 unchanged sentences

Property and equipment

87.1 ( 5.7 ) 81.4

189.8 0.4 190.2

Indefinite-lived intangible assets

542.5 14.7 557.2

Definite-lived intangible asset

52.9 4.8 57.7

Operating lease right-of-use assets

109.2 — 109.2

Other assets 20.4 — 20.4

Compensation and benefits

( 57.8 ) — ( 57.8 )

Accounts payable and accrued expenses

( 40.9 ) ( 11.4 ) ( 52.3 )

Liabilities of consolidated investment products

2 unchanged sentences

Operating lease liabilities

( 109.2 ) — ( 109.2 )

Other liabilities

( 12.1 ) — ( 12.1 )

Redeemable noncontrolling interests

( 20.2 ) — ( 20.2 )

Nonredeemable noncontrolling interests

( 25.8 ) — ( 25.8 )

Total Identifiable Net Assets $ 1,231.6 $ 2.8 $ 1,234.4

The adjustments to the initial estimated fair values are primarily a result of new information obtained about facts that existed as of the acquisition date.

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.

2 unchanged sentences

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.

Amortization expense related to the trade name was $ 1.6 million and $ 2.9 million for the three and nine months ended June 30, 2024.

The estimated remaining amortization expense is $ 1.4 million for the year and $ 5.8 million per year thereafter.

Transaction costs incurred in connection with the acquisition were $ 18.3 million for the nine months ended June 30, 2024.

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

1 unchanged sentence

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.

Operating revenues of the acquired business from January 1, 2024 through June 30, 2024 were approximately $ 430 million.

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

2 unchanged sentences

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

Six Months Ended

Nine Months Ended

2024 2023 2024 2023

11 unchanged sentences

Diluted 0.32 0.44 1.03 1.14

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, 2024 and 2023.

There were no nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive for the three and nine months ended June 30, 2024 and such awards were insignificant for the three and nine months ended June 30, 2023.

Note 5 – Revenues

3 unchanged sentences

Luxembourg Total

for the three months ended March 31, 2024

for the three months ended June 30, 2024

Investment management fees

9 unchanged sentences

Luxembourg Total

for the six months ended March 31, 2024

for the nine months ended June 30, 2024

Investment management fees

9 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

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, 2024 and March 31, 2023.

Revenues earned from sponsored funds were 82 % of the Company’s total operating revenues for the three and nine months ended June 30, 2024 and 83 % for the three and nine months ended June 30, 2023.

Note 6 – Investments

2 unchanged sentences

Investments consisted of the following:

(in millions) March 31,

(in millions) June 30,

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

As of June 30, 2024, other liabilities includes repurchase agreements of $ 135.9 million with investments of $ 148.6 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 March 31, 2024

as of June 30, 2024

Investments, at fair value

19 unchanged sentences

These investments were as follows:

(in millions) March 31,

(in millions) June 30,

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 2.6 years and 2.9 years at March 31, 2024 and September 30, 2023.

Investments with known liquidation periods have an expected weighted-average life of 2.3 years and 2.9 years at June 30, 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 March 31, 2024 September 30, 2023

Level June 30, 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 81 CIPs, including 22 CLOs, as of March 31, 2024 and 70 CIPs, including 20 CLOs, as of September 30, 2023.

The Company had 85 CIPs, including 25 CLOs, as of June 30, 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) March 31,

(in millions) June 30,

2024 September 30,

14 unchanged sentences

$ 12,710.7 $ 10,519.9

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 CIPs did not have a significant impact on net income attributable to the Company during the three and nine months ended June 30, 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 March 31, 2024

as of June 30, 2024

Cash and cash equivalents of CLOs $ 514.0 $ — $ — $ — $ 514.0

14 unchanged sentences

These investments were as follows:

(in millions) March 31,

(in millions) June 30,

2024 September 30,

7 unchanged sentences

(in millions) Equity and Debt

for the three months ended March 31, 2024

Balance at January 1, 2024 $ 551.5

for the three months ended June 30, 2024

Balance at April 1, 2024 $ 591.0

Losses included in investment and other income of consolidated investment products, net ( 29.8 )

Purchases 17.5

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 $ —

Balance at June 30, 2024 $ 578.0

Change in unrealized losses included in net income relating to assets held at June 30, 2024 $ ( 29.8 )

(in millions) Equity and Debt

for the six months ended March 31, 2024

for the nine months ended June 30, 2024

Balance at October 1, 2023 $ 584.9

3 unchanged sentences

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 )

Balance at June 30, 2024 $ 578.0

Change in unrealized losses included in net income relating to assets held at June 30, 2024 $ ( 67.4 )

(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 of consolidated investment products, net ( 31.6 ) 0.1 ( 31.5 )

Purchases 61.2 ( 0.2 ) 61.0

( 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

5 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 )

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

(in millions)

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

as of June 30, 2024 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 )

Equity and debt securities $ 253.0 Market pricing Private sale pricing $ 0.01 –$ 1,000.00 ($ 76.55 ) per share

11 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, 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).

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, 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 June 30, 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 March 31, 2024 September 30, 2023

Level June 30, 2024 September 30, 2023

Value Estimated

10 unchanged sentences

Debt of CIPs consisted of the following:

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

(in millions) Amount Weighted-

4 unchanged sentences

$ 9,637.7 $ 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 debt of CIPs had fixed and floating interest rates ranging from 0.25 % to 15.76 % at June 30, 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 March 31, 2024 were as follows:

The contractual maturities for the debt of CIPs at June 30, 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) March 31,

(in millions) June 30,

2024 September 30,

2 unchanged sentences

Fair Value $ 9,741.6 $ 8,196.8

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.

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

The Company recognized $ 9.4 million and $ 39.9 million of net gains during the three and nine months ended June 30, 2024 and $ 6.5 million and $ 9.0 million of net gains during the three and nine months ended June 30, 2023, related to its own economic interests in the CLOs.

The aggregate principal amount due of the debt of CLOs was $ 9,488.5 million and $ 8,281.5 million at June 30, 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 March 31,

for the three months ended June 30,

Balance at beginning of period $ 643.5 $ 610.4 $ 1,253.9 $ 445.6 $ 514.9 $ 960.5

2 unchanged sentences

Net consolidations (deconsolidations) ( 97.3 ) — ( 97.3 ) 104.6 — 104.6

20.2 — 20.2 — — —

Adjustment to fair value — ( 48.9 ) ( 48.9 ) — ( 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 $ 580.1 $ 446.0 $ 1,026.1 $ 942.2 $ 583.6 $ 1,525.8

8 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,

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 six months ended March 31, 2024 or fiscal year 2023.

The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the nine months ended June 30, 2024 or fiscal year 2023.

Note 11 – Commitments and Contingencies

1 unchanged sentence

India Credit Fund Closure Matters .

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.

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

Other Litigation and Regulatory Matters.

Following the launch of an internal investigation focusing on certain past trade allocations of treasury derivatives in select Western Asset Management (“WAM”) managed accounts, WAM received notification of parallel investigations by the SEC and U.S.

Department of Justice.

The Company is cooperating with the investigations.

The Company is from time to time involved in other litigation relating to claims arising in the normal course of business.

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, 2024 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, 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 March 31, 2024.

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, 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 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.

At June 30, 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 six months ended March 31, 2024

for the nine months ended June 30, 2024

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

2 unchanged sentences

Forfeited/canceled ( 305 ) ( 500 ) ( 805 ) 22.11

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.

Nonvested Balance at June 30, 2024 23,131 3,064 26,195 $ 24.40

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 254.6 million at June 30, 2024.

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

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in millions) 2024 2023 2024 2023

1 unchanged sentence

Gains (losses) on investments, net ( 24.3 ) 13.8 17.3 62.3

Income from investments in equity method investees 24.4 20.6 81.3 52.6

Income (losses) from investments in equity method investees 41.0 ( 9.1 ) 122.3 43.5

Gains (losses) on derivatives, net 3.1 ( 5.1 ) ( 11.5 ) ( 19.4 )

Rental income 11.1 11.1 32.8 35.1

Foreign currency exchange losses, net ( 1.3 ) ( 6.5 ) ( 8.7 ) ( 33.6 )

Foreign currency exchange gains (losses), net 1.2 ( 6.6 ) ( 7.5 ) ( 40.2 )

Other, net 2.6 3.0 14.2 7.5

Investment and other income, net $ 74.5 $ 49.8 $ 300.2 $ 200.3

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.

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $( 6.9 ) million and $ 76.0 million for the three and nine months ended June 30, 2024 and $ 17.0 million and $ 95.7 million for the three and nine months ended June 30, 2023.

Note 14 - Subsequent Event

On July 15, 2024, the Company repaid all of the outstanding $ 250.0 million 3.950 % senior notes due July 2024 issued by Legg Mason at the principal amount plus accrued and unpaid interest of $ 4.9 million.

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