What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-12 compared with 2023-11-14 · 242 added, 141 removed, 1106 unchanged (26% of the section changed)

23 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

On January 1, 2024, Franklin Resources, Inc.

completed the acquisition of Putnam Investments (“Putnam”).

Consistent with guidance issued by the SEC that an assessment of a recently acquired business may be omitted from management’s report on internal control over financial reporting for one year following the acquisition, management excluded an assessment of the effectiveness of the Company’s internal control over financial reporting related to Putnam.

Putnam represents approximately 8% of the Company’s consolidated total operating revenues for the fiscal year ended September 30, 2024.

Putnam assets, excluding associated goodwill and intangible assets, represent approximately 4% of the Company’s consolidated total assets, as of September 30, 2024.

The recognition of goodwill and intangible assets is covered by our internal controls over business combinations, which were included in management's assessment of the effectiveness of the Company's internal control over financial reporting as of September 30, 2024.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013).

15 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

5 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Putnam Investments from its assessment of internal control over financial reporting as of September 30, 2024 because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded Putnam Investments from our audit of internal control over financial reporting.

Putnam Investments total operating revenues and total assets excluded from management’s assessment and our audit of internal control over financial reporting represent 8 percent and 4 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended September 2024.

Definition and Limitations of Internal Control over Financial Reporting

1 unchanged sentence

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of

management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

2 unchanged sentences

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Realizability of Deferred Tax Assets

As described in Note 13 to the consolidated financial statements, the Company had gross deferred tax assets of $982.4 million as of September 30, 2023, reduced by a $292.9 million valuation allowance.

Management records a valuation allowance to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized.

As described in Notes 1 and 14 to the consolidated financial statements, the Company had gross deferred tax assets of $1,131.6 million as of September 30, 2024, reduced by a $ 290.5 million valuation allowance.

Management recorded a valuation allowance to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized.

In assessing whether a valuation allowance should be established against a deferred income tax asset, management considers all positive and negative evidence, which includes timing of expiration, projected sources of taxable income, limitations on utilization under the statute, and effectiveness of prudent and feasible tax planning strategies.

The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets is a critical audit matter are the significant judgment by management when assessing the realizability of deferred tax assets, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s assessment of the realizability of deferred tax assets and significant assumptions relating to the timing of expiration, projected sources of taxable income, limitations on utilization under the statute, and effectiveness of prudent and feasible tax planning strategies.

The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets is a critical audit matter are (i) the significant judgment by management when assessing the realizability of deferred tax assets and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to management’s assessment of the realizability of deferred tax assets and management’s significant assumptions relating to the timing of expiration, projected sources of taxable income, limitations on utilization under the statute, and effectiveness of prudent and feasible tax planning strategies.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the realizability of deferred tax assets, including controls over the completeness and accuracy of data relevant to the analysis, determination of projected sources of taxable income and expected utilization of deferred tax assets.

These procedures also included, among others:

(i) evaluating management’s assessment of the realizability of deferred tax assets and the need for a valuation allowance, (ii) evaluating the reasonableness of management’s significant assumptions related to timing of expiration, projected sources of taxable income, limitations on utilization under the statute and effectiveness of prudent and feasible tax planning strategies, (iii) evaluating the prudence and feasibility of the implementation of available tax planning strategies, and (iv) testing the completeness and accuracy of the data utilized in the assessment of the realizability of deferred tax assets.

These procedures also included, among others (i) evaluating management’s assessment of the realizability of deferred tax assets and the need for a valuation allowance, (ii) evaluating the reasonableness of management’s significant assumptions related to timing of expiration, projected sources of taxable income, limitations on utilization under the statute and effectiveness of prudent and feasible tax planning strategies, (iii) evaluating the prudence and feasibility of the implementation of available tax planning strategies, and (iv) testing the completeness and accuracy of the underlying data used in management’s assessment of the realizability of deferred tax assets.

Valuation of the Investment Management Contracts Classified as Indefinite-Lived Intangible Assets in the Putnam Acquisition

As described in Notes 1 and 3 to the consolidated financial statements, on January 1, 2024, the Company acquired Putnam Investments.

The estimated fair value amounts recognized for the indefinite-lived intangible assets acquired amounted to $557.2 million.

Intangible assets acquired in business combinations consist primarily of investment management contracts and trade names.

Fair value of the acquired management contracts are based on the net present value (NPV) of estimated future cash flows attributable to the contracts, which includes significant assumptions about the assets under management (AUM) growth rate, pre-tax profit margin, discount rate, average effective fee rate and effective tax rate.

The principal considerations for our determination that performing procedures relating to the valuation of the investment management contracts classified as indefinite-lived intangible assets in the Putnam acquisition is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the indefinite-lived intangible assets acquired;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the AUM growth rate and discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the valuation of the investment management contracts classified as indefinite-lived intangible assets in the Putnam acquisition, including controls over development of the AUM growth rate and discount rate assumptions.

These procedures also included, among others, (i) reading the purchase agreement and evaluating management’s identification of the indefinite-lived intangible assets, (ii) testing management’s process for identifying and developing the fair value estimate of the indefinite-lived intangible assets acquired;

(iii) evaluating the appropriateness of the NPV method, (iv) testing the completeness, accuracy, relevance and reliability of underlying data used in the NPV method, (v) evaluating the reasonableness of management’s significant assumption related to the AUM growth rate, which involved considering industry knowledge and data, current and past performance of the contracts, and consistency with evidence obtained in other areas of the audit, and;

(vi) involving professionals with specialized skill and knowledge to assist in evaluating the reasonableness of the discount rate assumption.

Valuation of the Indefinite-Lived Intangible Asset Associated with the Mutual Fund Contracts Managed by Western Asset Management

As described in Notes 1 and 9 to the consolidated financial statements, the carrying value of the indefinite-lived intangible related to the mutual fund contracts managed by Western Asset Management (WAM) was $650.0 million as of September 30, 2024, net of an impairment of $ 389.2 million recognized during 2024.

These indefinite-lived intangible assets are tested for impairment annually and when an event occurs or circumstances change that more likely than not reduce the fair value of the indefinite-lived intangible asset below its carrying value.

The fair value of the indefinite-lived intangible asset was based on the NPV of estimated future cash flows attributable to the contracts, which include significant assumptions about the AUM growth rate, pre-tax profit margin, discount rate, average effective fee rate and effective tax rate.

The principal considerations for our determination that performing procedures relating to the valuation of the indefinite-lived intangible asset associated with the mutual fund contracts managed by WAM is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the mutual fund contracts managed by WAM;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the AUM growth rate and discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the valuation of the indefinite-lived intangible asset associated with the mutual fund contracts managed by WAM, including controls over development of the AUM growth rate and discount rate assumptions.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the mutual fund contracts managed by WAM, (ii) evaluating the appropriateness of the NPV method, (iii) testing the completeness, accuracy, relevance and reliability of underlying data used in the NPV method, and (iv) evaluating the reasonableness of management’s significant assumption related to the AUM growth rate by considering industry knowledge and data, current and past performance of the mutual fund contracts managed by WAM, and consistency with evidence obtained in other areas of the audit;

and (v) involving professionals with specialized skill and knowledge to assist in evaluating the reasonableness of the discount rate assumption.

/s/ PricewaterhouseCoopers LLP

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Amortization of intangible assets 338.2 341.1 282.0

Impairment of intangible assets

General, administrative and other 703.3 565.0 564.9

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Net unrealized gains (losses) on defined benefit plans, net of tax 0.1 ( 1.3 ) 0.8

Net unrealized gains on investments, net of tax 0.2 0.4 —

Net unrealized gains (losses) on investments, net of tax ( 0.1 ) 0.2 0.4

Total other comprehensive income (loss) 89.8 111.7 ( 243.4 )

40 unchanged sentences

523,596,548 and 495,937,891 shares issued and outstanding at September 30, 2024 and 2023

Capital in excess of par

Retained earnings 11,927.6 12,376.6

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Balance at October 1, 2021 501.8 $ 50.2 $ — $ 11,550.8 $ ( 377.6 ) $ 11,223.4 $ 587.2 $ 11,810.6

Adoption of new accounting guidance ( 3.3 ) ( 3.3 ) ( 3.3 )

Net income 1,291.9 1,291.9 88.2 1,380.1

Other comprehensive income 30.0 30.0 30.0

Other comprehensive loss ( 243.4 ) ( 243.4 ) ( 243.4 )

Dividends declared on common stock ($ 1.16 per share)

8 unchanged sentences

Net deconsolidation of investment products ( 25.7 ) ( 25.7 )

Acquisitions 149.9 149.9

Adjustment to fair value of redeemable noncontrolling interests ( 263.1 ) ( 263.1 ) ( 263.1 )

1 unchanged sentence

Net income 882.8 882.8 7.4 890.2

Other comprehensive loss ( 243.4 ) ( 243.4 ) ( 243.4 )

Other comprehensive income 111.7 111.7 111.7

Dividends declared on common stock ($ 1.20 per share)

8 unchanged sentences

Net deconsolidation of investment products ( 360.6 ) ( 360.6 )

Acquisition 149.9 149.9

Adjustment to fair value of redeemable noncontrolling interests 109.4 109.4 109.4

10 unchanged sentences

61.1 61.1 61.1

Acquisition 31.6 3.2 936.9 940.1 25.8 965.9

Net subscriptions and other — — 108.7 108.7

13 unchanged sentences

Amortization of intangible assets 338.2 341.1 282.0

Impairment of intangible asset

Net (gains) losses on investments ( 57.6 ) ( 39.5 ) 75.4

Income from investments in equity method investees ( 137.5 ) ( 45.4 ) ( 36.2 )

Net losses (gains) on investments of consolidated investment products 120.4 95.1 ( 316.4 )

Net losses on investments of consolidated investment products 24.9 120.4 95.1

Net purchase of investments by consolidated investment products ( 520.2 ) ( 829.4 ) ( 355.9 )

16 unchanged sentences

4,250.7 1,834.1 1,948.8

Decrease in loan receivables, net — — 42.7

Additions of property and equipment, net

( 177.1 ) ( 148.8 ) ( 90.3 )

Acquisitions, net of cash acquired

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

175.1 ( 500.5 ) ( 1,354.7 )

16 unchanged sentences

Proceeds from repurchase agreement 5.3 174.8 —

Proceeds from issuance of debt — — 1,193.9

Payment of debt issuance costs — — ( 11.8 )

Payments on repurchase agreement

Payments on debt

34 unchanged sentences

however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates.

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 (“fiscal year 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 impact on the consolidated statements of income for the fiscal year ended September 30, 2023 is as follows:

(in millions)

Operating Income $ 1,102.3 $ — $ 1,102.3

Other income, net

Investment and other income, net

340.0 ( 77.7 ) 262.3

Other income, net

313.4 ( 77.7 ) 235.7

Income before taxes

1,415.7 ( 77.7 ) 1,338.0

1,103.4 ( 77.7 ) 1,025.7

net income (loss) attributable to nonredeemable noncontrolling interest

85.1 ( 77.7 ) 7.4

Net Income Attributable to Franklin Resources, Inc.

882.8 — 882.8

The impact on the consolidated statement of cash flows for the fiscal year ended September 30, 2023 is as follows:

(in millions)

Net cash provided by (used in) operating activities

$ 1,138.7 $ ( 49.5 ) $ 1,089.2

Net cash used in investing activities

( 3,582.1 ) ( 28.2 ) ( 3,610.3 )

Net cash provided by financing activities 2,029.0 77.7 2,106.7

Decrease in cash and cash equivalents

( 380.1 ) — ( 380.1 )

Consolidation.

21 unchanged sentences

The management contract intangible assets are amortized over their estimated useful lives, which range from three to 16 years, using the straight-line method, unless the asset is determined to have an indefinite useful life.

Indefinite-lived intangible assets represent contracts

to manage investment assets for which there is no foreseeable limit on the contract period.

Indefinite-lived intangible assets represent contracts to manage investment assets for which there is no foreseeable limit on the contract period.

Trade names intangible assets are amortized over their estimated useful lives which range from five to twenty years using the straight-line method.

5 unchanged sentences

A quantitative impairment test is performed if the results of the qualitative assessment indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying value or an indefinite-lived intangible asset is impaired, or if a qualitative assessment is not performed.

The fair values of the reporting unit and indefinite-lived intangible assets are based on the net present value of estimated future cash flows, which include assumptions about the AUM growth rate, pre-tax profit margin, discount rate, average effective fee rate and effective tax rate.

average effective fee rate and effective tax rate.

If a quantitative goodwill impairment test indicates that the carrying value of the reporting unit exceeds its fair value, impairment is recognized in the amount of the difference in values not to exceed the total amount of goodwill allocated to the reporting unit.

2 unchanged sentences

Impairment is indicated when the carrying value of an asset is not recoverable and exceeds its fair value.

Recoverability is evaluated based on estimated undiscounted future cash flows using assumptions about the AUM growth rate, pre-tax profit margin, average effective fee rate and expected useful lives as well as royalty rate for trade name intangible assets.

If the carrying value of an asset is not recoverable through undiscounted cash flows, impairment is recognized in the amount by which the carrying value exceeds the asset’s fair value, as determined by discounted cash flows or other methods as appropriate for the asset type.

7 unchanged sentences

These inputs require significant management judgment and reflect the Company’s estimation of assumptions that market participants would use in pricing the asset or liability.

Quoted market prices may be adjusted if events occur, such as significant price changes in proxies traded in relevant markets after the close of corresponding markets, trade halts or suspensions, or unscheduled market closures.

These proxies consist of correlated country-specific exchange-traded securities, such as futures, American Depositary Receipts indices or exchange-traded funds.

Quoted market prices may be adjusted if events occur, such as global market fluctuations, issuer specific news, economic and geopolitical events, natural disasters, and governmental actions.

A pricing vendor is engaged to provide a valuation factor, which represents an estimate as to how much a specific investment value would have changed between the time that the investment stopped trading in its local market and the time that the fund’s NAV was determined.

The price adjustments are primarily determined based on third-party factors derived from model-based valuation techniques for which the significant assumptions are observable in the market.

The Company’s investments are primarily recorded at fair value or amounts that approximate fair value on a recurring basis.

Investments in fund products for which fair value is estimated using NAV as a practical expedient (when

the NAV is available to the Company as an investor but is not publicly available) are not classified in the fair value hierarchy.

Investments in fund products for which fair value is estimated using NAV as a practical expedient (when the NAV is available to the Company as an investor but is not publicly available) are not classified in the fair value hierarchy.

Fair values are estimated for disclosure purposes for financial instruments that are not measured at fair value.

17 unchanged sentences

Investments in Equity Method Investees consist of equity investments in entities, including sponsored funds, over which the Company is able to exercise significant influence, but not control.

Significant influence is generally considered to exist when the Company ’ s ownership interest in the investee is between 20% and 50%, although other factors, such as representation on the investee ’ s board of directors and the impact of commercial arrangements, also are considered in determining whether the equity method of accounting is appropriate.

Significant influence is generally considered to exist when the Company ’ s ownership interest in the investee is between 20% and 50%, although other factors, such as representation on the investee ’ s board of directors and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate.

Investments in limited partnerships and limited liability companies are accounted for using the equity method when the Company ’ s investment is more than minor or when the Company is the general partner.

18 unchanged sentences

Property and Equipment, net are recorded at cost and depreciated using the straight-line method over their estimated useful lives which range from three to 35 years.

Expenditures for repairs and maintenance are charged to expense when incurred.

Expenditures for repairs and maintenance are charged to expense when

Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the lease term, whichever is shorter.

18 unchanged sentences

The fair value is estimated using a discounted cash flow model that considers current interest rate levels, the quality of the underlying collateral and current economic conditions.

Debt of CIPs also included debt of consolidated collateralized loan obligations (“CLOs”) which was measured primarily based on the fair value of the assets of the CLOs less the fair value of the Company’s own economic interests in the CLOs.

Debt of CIPs also included debt of consolidated collateralized loan obligations (“CLOs”) which is measured primarily based on the fair value of the assets of the CLOs less the fair value of the Company’s own economic interests in the CLOs.

Noncontrolling Interests consist of third-party equity interests in CIPs and minority interests in certain subsidiaries.

3 unchanged sentences

Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable and redeemable noncontrolling interests in the consolidated statements of income.

Sales and redemptions of shares of CIPs by third-party investors are a component of the change in noncontrolling interests included in financing activities in the consolidated statements of cash flows.

Subscriptions and redemptions of shares of CIPs by third-party investors are a component of the change in noncontrolling interests included in financing activities in the consolidated statements of cash flows.

The fair values of third-party equity interests in CIPs are determined based on the published NAV or estimated using NAV a practical expedient.

3 unchanged sentences

Revenues are recognized when the Company’s obligations related to the services are satisfied and it is probable that a significant reversal of the revenue amount would not occur in future periods.

The obligations are satisfied over time as the services are rendered, except for the sales and distribution obligations for the sale of shares of sponsored funds which are satisfied on trade date.

The obligations are satisfied over time as the services are rendered, except for the sales and distribution

obligations for the sale of shares of sponsored funds which are satisfied on trade date.

Multiple services included in customer contracts are accounted for separately when the obligations are determined to be distinct.

6 unchanged sentences

As the fee amounts are uncertain on trade date, they are recognized over time as the amounts become known and may relate to sales and distribution services provided in prior periods.

Shareholder servicing fees are primarily determined based on a percentage of AUM on a monthly basis using daily average AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts, while fees from certain investment products are based only on AUM.

Shareholder servicing fees are primarily determined based on a contractual margin, or a percentage of AUM on a monthly basis using daily average AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts, while fees from certain investment products are based only on AUM.

The fees are recognized as the services are performed over time.

1 unchanged sentence

The fair values of securities for which market prices are not readily available are valued internally using various methodologies which incorporate significant unobservable inputs as appropriate for each security type and represent an insignificant percentage of total AUM.

Revenue is recorded gross of payments made to third-party service providers in the Company’s role as principal as it controls the delegated services provided to customers.

Revenue is recorded gross of payments made to third-party providers in the Company’s role as principal as it controls the delegated services provided to customers.

Stock-Based Compensation.

3 unchanged sentences

Forfeitures are accounted for as they occur.

The fair value of cash-settled phantom stock

awards is amortized to compensation expense on a straight-line basis over the related vesting period, which is generally four years, and the related liability is carried at fair value.

The fair value of cash-settled phantom stock awards is amortized to compensation expense on a straight-line basis over the related vesting period, which is generally four years, and the related liability is carried at fair value.

Postretirement Benefits .

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Assets and liabilities of non-U.S.

subsidiaries for which the local currency is the functional currency are translated at current exchange rates as of the end of the accounting period.

subsidiaries for which the local currency is the functional currency are translated at current exchange rates as of the end of the reporting period.

The related revenues and expenses are translated at average exchange rates in effect during the period.

1 unchanged sentence

Transactions denominated in a foreign currency are revalued at the current exchange rate at the transaction date and any related gains and losses are recognized in earnings.

Note 2 – New Accounting Guidance

Accounting Guidance Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued an amendment to the existing segment reporting guidance.

The amendment requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker by reportable segment and clarifies that single reportable segment entities are required to apply all existing segment disclosures in the guidance.

The amendment is effective for the Company on October 1, 2024, and is retrospectively applicable to all prior periods presented in its consolidated financial statements.

The Company does not expect the additional disclosure requirements will have a material impact on its consolidated financial statements.

In December 2023, the FASB issued an amendment to the existing income taxes guidance.

The amendment requires the disclosure of additional information with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes and requires greater detail about significant reconciling items in the reconciliation.

Additionally, the amendment requires disaggregated information pertaining to taxes paid, net of refunds received, for federal, state, and foreign income taxes.

The amendment allows for either a prospective or retrospective approach on adoption and is effective for the Company on October 1, 2025.

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.

In November 2024, the FASB issued new guidance requiring disclosures of additional information and disaggregation of certain expenses included in the income statement.

The guidance is effective for the Company on October 1, 2027, and allows for either a prospective or retrospective approach on adoption.

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

Note 3 – Acquisition

BNY Alcentra Group Holdings, Inc.

On November 1, 2022, the Company acquired all of the outstanding ownership interests in BNY Alcentra Group Holdings, Inc.

(together with its subsidiaries “Alcentra”) from The Bank of New York Mellon Corporation.

Total purchase price consisted of cash consideration of $ 594.1 million, which includes $ 188.3 million for certain securities held in Alcentra’s collateralized loan obligations (“CLOs”);

deferred consideration of $ 62.0 million which was paid on November 1, 2023;

and contingent consideration to be paid upon the achievement of certain performance thresholds over the next four years of up to $ 350.0 million that has an acquisition-date fair value of $ 24.6 million.

The consideration paid was funded from existing cash.

During the quarter ended March 31, 2023, cash consideration increased by $ 6.8 million due to a net working capital adjustment and deferred consideration increased by $ 1.6 million.

Putnam Investments

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

(“Great-West”) for 31.6 million 1 shares of its common stock, cash consideration paid at closing of $ 221.7 million for investments and other purchase-related amounts, and deferred cash consideration of $ 100.0 million paid on July 1, 2024.

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

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

(in millions) Total

Equity consideration 1, 2

Cash consideration 221.7

Deferred cash consideration 100.0

Other adjustments 3

Total Purchase Consideration $ 1,234.4

1 Excludes shares 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.

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.

(in millions) Initial Estimated Fair Value Adjustments Revised Estimated Fair Value

as of November 1, 2022

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

(in millions) Initial Estimated Fair Value

Revised Estimated Fair Value

as of January 1, 2024

Cash and cash equivalents

$ 101.1 $ — $ 101.1

Receivables 118.9 — 118.9

Investments 111.2 ( 4.3 ) 106.9

Goodwill 152.6 52.7 205.3

Assets of consolidated investment products

Cash and cash equivalents 281.4 — 281.4

Investments, at fair value 849.5 — 849.5

Property and equipment

87.1 ( 5.7 ) 81.4

189.8 4.7 194.5

Indefinite-lived intangible assets

Definite-lived intangible assets 55.7 — 55.7

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

Deferred tax liabilities — ( 36.7 ) ( 36.7 )

Compensation and benefits and other liabilities ( 71.0 ) ( 3.5 ) ( 74.5 )

Compensation and benefits

( 57.8 ) — ( 57.8 )

Accounts payable and accrued expenses

( 40.9 ) ( 11.4 ) ( 52.3 )

Liabilities of consolidated investment products

Accounts payable and accrued expenses ( 259.6 ) — ( 259.6 )

Debt ( 706.8 ) — ( 706.8 )

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 a result of new information obtained about the facts that existed as of the acquisition date.

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.

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 not deductible for tax purposes.

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

Amortization expense related to the definite-lived intangible assets was $ 12.8 million for the fiscal year ended September 30, 2023 (“fiscal year 2023”).

Costs incurred in connection with the acquisition were $ 14.1 million for the fiscal year ended September 30, 2023.

Alcentra contributed $ 158.0 million of operating revenue and did not have a material impact to net income attributable to Franklin Resources, Inc.

for the fiscal year ended September 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 September 30, 2023, other liabilities includes repurchase agreements of $ 164.2 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 $ 171.3 million as collateral as of September 30, 2023.

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

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 a trade name, which is amortized over its estimated useful life of 10.0 years.

Amortization expense related to the trade name was $ 4.3 million for the fiscal year ended September 30, 2024 (“fiscal year 2024”).

Transaction costs incurred in connection with the acquisition were $ 19.3 million for fiscal year 2024.

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

The Company also incurred $ 152.9 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 September 30, 2024 were approximately $ 640 million.

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

Note 4 – Earnings per Share

14 unchanged sentences

Diluted 0.85 1.72 2.53

Nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive were insignificant for fiscal year 2023 and the fiscal year ended September 30, 2022 (“fiscal year 2022”).

No nonparticipating nonvested stock unit awards were excluded for the fiscal year ended September 30, 2021 (“fiscal year 2021”).

Nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive were insignificant for fiscal year 2024, fiscal year 2023 and the fiscal year ended September 30, 2022 (“fiscal year 2022”).

Note 5 – Revenues

58 unchanged sentences

Total $ 2,338.4 $ 2,222.0

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

As of September 30, 2024, other liabilities includes repurchase agreements of $ 111.4 million with investments of $ 121.7 million in carrying value pledged as collateral.

The repurchase agreements have contractual maturity dates ranging between 2030 to 2037.

Note 7 – Fair Value Measurements

25 unchanged sentences

3.4 11.3 3.3 32.7 50.7

Contingent consideration asset — — 9.8 — 9.8

Total Assets Measured at Fair Value $ 528.1 $ 223.2 $ 21.8 $ 99.7 $ 872.8

Securities sold short

$ 158.3 $ — $ — $ — $ 158.3

Contingent consideration liabilities — — 55.0 — 55.0

Investments for which fair value was estimated using reported NAV as a practical expedient primarily consist of nonredeemable private debt, equity and infrastructure funds, and redeemable alternative credit, global equity and private real estate funds.

Total Liabilities Measured at Fair Value $ 158.3 $ — $ 55.0 $ — $ 213.3

Investments for which fair value was estimated using reported NAV as a practical expedient primarily consist of nonredeemable private equity, debt and infrastructure funds, and redeemable alternative credit, global equity, private real estate funds and alternatives.

These investments were as follows:

36 unchanged sentences

Depreciation and amortization expense related to property and equipment was $ 129.9 million, $ 108.2 million and $ 108.1 million in fiscal years 2024, 2023 and 2022.

The Company recognized no impairment of property and equipment in

fiscal years 2023, 2022 and 2021.

The Company recognized no impairment of property and equipment in fiscal years 2024, 2023 and 2022.

Note 9 – Goodwill and Other Intangible Assets

15 unchanged sentences

During fiscal years 2024 and 2023, no impairment of goodwill was recognized.

The Company recognized insignificant impairments of indefinite-lived intangible assets during fiscal years 2023 and 2022 due to declines in market prices of crypto assets.

The Company recognized an impairment of an indefinite-lived intangible asset of $ 389.2 million during fiscal year 2024 related to Western Asset Management Company (“WAM”) management contracts primarily due to accelerated net outflows from WAM managed funds.

The impairment reduced the carrying value of these assets to $ 650.0 million as of September 30, 2024.

The Company recognized insignificant impairments of indefinite-lived intangible assets during fiscal year 2024 and 2023 due to declines in market prices of crypto assets.

Definite-lived intangible assets were as follows:

30 unchanged sentences

348.0 3.00 % 347.9 3.00 %

$ 300 million term loan due September 2025

— N/A 300.0 3.50 %

Total debt of Franklin Resources, Inc.

2 unchanged sentences

$ 250 million 3.950 % senior notes due July 2024

254.7 1.53 % 260.6 1.53 %

— N/A 254.7 1.53 %

$ 450 million 4.750 % senior notes due March 2026

5 unchanged sentences

Total $ 2,780.3 $ 3,052.8

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.

Concurrently, 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.

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.

At September 30, 2024, the Company had $ 800.0 million revolving credit available under a 5-year credit facility scheduled to mature on July 25, 2028.

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

At September 30, 2024, the Company had $ 500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since 2012.

7 unchanged sentences

In addition, the indentures include requirements that must be met if the Company consolidates or merges with, or sells all or substantially all of its assets to another entity.

The new revolving credit facility contains a financial performance covenant requiring that the Company maintain a consolidated net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 3.25 to 1.00.

The revolving credit facility contains a financial performance covenant requiring that the Company maintain a consolidated net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 3.25 to 1.00.

The Company was in compliance with all covenants at September 30, 2024.

39 unchanged sentences

Loans — 8,044.8 — — 8,044.8

Real estate — — 268.6 — 268.6

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:

2 unchanged sentences

Nonredeemable investments 1

Investments with known liquidation periods $ — $ 19.5

Investments with unknown liquidation periods $ 49.0 $ 21.8

3 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 September 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 September 30, 2023, there were no investments with unfunded commitments.

3 Of the total unfunded commitments, the Company was contractually obligated to fund $ 9.9 million based on its ownership percentage in the CIPs, at September 30, 2024.

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

Changes in Level 3 assets were as follows:

(in millions) Equity and Debt

Securities Real Estate Loans Total

for the fiscal year ended September 30, 2024

Balance at beginning of year $ 584.9

Gains (losses) included in investment and other income (losses) of consolidated investment products, net ( 47.6 ) ( 9.0 ) 0.2 ( 56.4 )

Acquisition 29.6

Losses included in investment and other income (losses) of consolidated investment products, net ( 80.4 )

Purchases 57.2

Sales ( 29.8 )

Net consolidations (deconsolidations) 10.4 ( 345.7 ) ( 293.0 ) ( 628.3 )

Net deconsolidations ( 12.5 )

Transfers into Level 3 1.1

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

Balance at End of Year

$ 584.9 $ — $ — $ 584.9

Change in unrealized losses included in net income relating to assets held at end of year $ ( 46.3 ) $ — $ — $ ( 46.3 )

Change in unrealized gains (losses) included in net income relating to assets held at end of year $ ( 50.9 )

(in millions) Equity and Debt

2 unchanged sentences

Balance at beginning of year $ 555.8 $ 268.6 $ 239.4 $ 1,063.8

Gains included in investment and other income (losses) of consolidated investment products, net 106.0 29.2 0.1 135.3

Gains (losses) included in investment and other income (losses) of consolidated investment products, net ( 47.6 ) ( 9.0 ) 0.2 ( 56.4 )

Purchases 91.9 86.1 58.4 236.4

5 unchanged sentences

$ 584.9 $ — $ — $ 584.9

Change in unrealized gains included in net income relating to assets held at end of year $ 101.1 $ 29.2 $ — $ 130.3

Change in unrealized losses included in net income relating to assets held at end of year $ ( 46.3 ) $ — $ — $ ( 46.3 )

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

5 unchanged sentences

Discount for lack of marketability 9.8 %– 17.5 % ( 11.5 %)

44.0 Discounted cash flow Discount rate 6.8 %

(in millions)

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

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

Equity and debt securities

$ 346.0 Market pricing Private sale pricing $ 0.01 –$ 1,000.00 ($ 23.88 ) per share

Discount for lack of marketability 21.9 %

23.5 %– 25.1 % ( 24.9 %)

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

Exit capitalization rate 5.5 %– 6.8 % ( 6.0 %)

Loans 147.2 Market pricing Price $ 0.97 –$ 0.98 ($ 0.98 )

60.4 Discounted cash flow Discount rate 9.9 %

31.9 Yield capitalization Credit spread 6.3 %

Loan-to-value ratio 79.1 %– 88.1 % ( 83.1 %)

238.9 Market comparable companies Enterprise value/ Revenue multiple 11.4 – 13.5 ( 12.1 )

Discount for lack of marketability 11.2 %– 13.6 % ( 12.2 %)

__________________

1 unchanged sentence

If the relevant significant inputs used in the market-based valuations, other than discount for lack of marketability, were independently higher (lower) as of September 30, 2024, the resulting fair value of the assets would be higher (lower).

If the relevant significant inputs used in the discounted cash flow or yield capitalization valuations, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of September 30, 2023, the resulting fair value of the assets would be lower (higher).

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 September 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:

19 unchanged sentences

$ 9,341.5 7.36 % $ 8,210.0 7.12 %

21.8 6.00 % 49.7 5.19 %

— N/A 21.8 6.00 %

$ 9,341.5 $ 8,231.8

The debt of CIPs had fixed and floating interest rates ranging from 2.39 % to 13.73 % at September 30, 2024, and from 2.39 % to 15.49 % at September 30, 2023.

The floating rates were based on the London Interbank Offered Rate (“LIBOR”) and Secured Overnight Financing Rate (“SOFR”).

As a result of the phase-out of LIBOR, effective July 1, 2023, our reference rates are transitioning to SOFR.

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

The contractual maturities for debt of CIPs at September 30, 2024 were as follows:

19 unchanged sentences

Balance at October 1, 2021 $ 622.5 $ 310.5 $ 933.0

Net income 63.8 30.3 94.1

Net income (loss) ( 106.1 ) 59.2 ( 46.9 )

Net subscriptions (distributions) and other 244.5 ( 49.2 ) 195.3

Net deconsolidations ( 370.0 ) — ( 370.0 )

Net consolidations 181.3 — 181.3

Adjustment to fair value — 263.1 263.1

Balance at September 30, 2022 $ 942.2 $ 583.6 $ 1,525.8

Net income (loss) ( 106.1 ) 59.2 ( 46.9 )

Net income 77.4 58.1 135.5

Net subscriptions (distributions) and other 605.5 ( 86.3 ) 519.2

Net consolidations 181.3 — 181.3

Net deconsolidations ( 1,045.0 ) — ( 1,045.0 )

Adjustment to fair value — ( 109.4 ) ( 109.4 )

15 unchanged sentences

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

The Company did not provide financial or other support to its sponsored funds during fiscal years 2023 and 2022.

The Company did not provide financial or other support to its sponsored funds assessed as VIEs during fiscal years 2024 and 2023.

Note 14 – Taxes on Income

6 unchanged sentences

73.9 67.1 78.6

Deferred expense 41.5 98.0 3.7

Deferred (benefit) expense ( 124.6 ) 41.5 98.0

Total $ 215.3 $ 312.3 $ 396.2

13 unchanged sentences

Foreign tax credit carry-forwards 81.6 99.0

Operating lease liability

Debt premium 48.6 54.6

5 unchanged sentences

Goodwill and other purchased intangibles 800.8 918.0

Right of use asset

Other 88.8 90.0

14 unchanged sentences

At September 30, 2024, there were $ 119.1 million of non-U.S.

tax effected net operating loss carry-forwards which expire between fiscal years 2024 and 2042.

tax effected net operating loss and capital loss carry-forwards which expire between fiscal years 2025 and 2043.

In addition, there were $ 135.8 million in tax effected state net operating loss carry-forwards that expire between fiscal years 2025 and 2044, with some having an indefinite carry-forward period.

The Company also has federal net operating losses of $ 9.4 million, the majority of which will carry-forward indefinitely and $ 81.6 million of foreign tax credit carry-forwards that expire between fiscal years 2025 and 2029.

The valuation allowance increased $ 34.6 million in fiscal year 2023, primarily related to non-US net operating loss utilization.

The valuation allowance decreased $ 61.0 million in fiscal year 2022 primarily related to state and non-US net operating loss utilization and US foreign tax credit utilization.

At September 30, 2023, the valuation allowance of $ 292.9 million was related to $ 177.6 million for federal, state, and foreign net operating loss carry-forwards, $ 70.8 million due to uncertainty of realizing the benefit of foreign tax credits, $ 24.3 million for capital losses, $ 11.2 million for other state deferred taxes and $ 9.0 million for other foreign deferred taxes.

The valuation allowance decreased $ 2.4 million in fiscal year 2024 and increased $ 34.6 million in fiscal year 2023, primarily related to non-US net operating loss utilization.

At September 30, 2024, the valuation allowance of $ 290.5 million was related to $ 170.3 million for federal, state, and foreign net operating loss carry-forwards, $ 65.8 million due to uncertainty of realizing the benefit of foreign tax credits, $ 32.6 million for capital losses, and $ 21.8 million for other state deferred taxes.

A reconciliation of the amount of tax expense at the federal statutory rate and taxes on income as reflected in the consolidated statements of income is as follows:

4 unchanged sentences

42.8 5.2 % 71.3 5.3 % 45.6 2.6 %

Tax reserve release on audit settlement, net of valuation allowance 1

Tax reserve (release) for audit settlements, net of valuation allowance

0.5 0.1 % ( 11.4 ) ( 0.9 %) ( 5.3 ) ( 0.3 %)

10 unchanged sentences

______________

1 The Company released a tax reserve in fiscal year 2021 following the close of an IRS audit of the transition tax for fiscal year 2018.

2 The Company recognized a tax benefit in fiscal year 2021 for capital losses that were realized from sales of investments.

These capital losses can be carried forward, for which the Company has assessed for realizability.

1 The Company released a valuation allowance on foreign tax credit in fiscal year 2022 due to additional foreign source income from foreign investments.

20 unchanged sentences

India 2003 to 2024;

Brazil 2008 to 2023, Canada 2018 to 2023;

Australia 2019 to 2023, Hong Kong 2017 to 2023;

Singapore 2018 to 2023;

Brazil 2008 to 2024;

Luxembourg 2019 to 2024;

2 unchanged sentences

the City of New York 2019 to 2024;

the State of New York 2018 to 2023;

the State of New Jersey 2019 to 2023;

and the States of California and Florida 2020 to 2023.

The Company has ongoing litigation and examinations in various stages, U.S.

federal for the fiscal year ended September 30, 2020, in the States of California and New York, and City of New York, and in Brazil, Canada and India.

and States of California, Florida, Massachusetts and New York 2020 to 2024.

The Company has ongoing litigation and examinations in various stages, including U.S.

federal for the fiscal year ended September 30, 2020, and in the States of California and City of New York, and in Brazil and India.

Examination outcomes and the timing of settlements are subject to significant uncertainty.

Such settlements may involve some or all of the following:

the payment of additional taxes, the adjustment of deferred taxes and/or the recognition of unrecognized tax benefits.

the payment of additional taxes, the adjustment of deferred taxes and/or the recognition of unrecognized tax

The Company has recognized a tax benefit only for those positions that meet the more-likely-than-not recognition threshold.

51 unchanged sentences

2028 8.8 27.9

2029 8.8 28.6

Thereafter 19.1 58.2

8 unchanged sentences

The petitioners alleged that the Company Respondents violated various SEBI regulations, mismanaged the Funds, misrepresented or omitted certain information relating to the Funds, and/or engaged in other alleged misconduct.

The petitioners requested a wide range of relief, including, among other items, an order quashing the winding up notices and blocking the unitholder votes, initiating investigations into the Company Respondents, and allowing the unitholder petitioners to redeem their investments with interest.

investments with interest.

An interim injunction order staying the operation and implementation of the unitholder voting process was issued and the petitions were transferred to the High Court of Karnataka for further consolidated proceedings.

3 unchanged sentences

The additional issues on appeal remain pending.

As of September 2023, all performing securities across the Funds have been liquidated and an aggregate of INR 27,508.1 crore (approximately $ 3.3 billion) has been distributed to Fund unitholders, exceeding the aggregate value of the Funds’ AUM at the date of the wind-up announcement, reported above.

By September 2023, all performing securities across the Funds were liquidated and an aggregate of INR 27,508.1 crore (approximately $ 3.3 billion) was distributed to Fund unitholders, exceeding the aggregate value of the Funds’ AUM at the date of the wind-up announcement, reported above.

Separately, following the completion of a forensic audit/inspection, in late November and early December 2020, SEBI initiated regulatory proceedings by issuing show cause notices against FTAMI, FTTS and certain FTAMI employees (including in their officer or director capacities), alleging certain deficiencies and areas of non-compliance in the management of the Funds.

2 unchanged sentences

disgorgement of investment management and advisory fees, together with interest through the date of SEBI’s order, totaling INR 512.5 crore (approximately $ 61.7 million), with continuing accrual of 12 % interest until paid;

and a prohibition on FTAMI from launching new fixed income funds in India for a two-year period, which has since concluded.

The respondents filed appeals, as well as applications to stay

enforcement of SEBI’s orders pending resolution of the appeals, with the Securities Appellate Tribunal (the “SAT”) in India, which stay applications were granted in June and July 2021, subject to respondents’ deposit in escrow of a portion of the ordered penalties for an aggregate deposit made of INR 257.5 crore (approximately $ 34.7 million).

The SAT appeals remain pending.

and a prohibition on FTAMI from launching new fixed income funds in India for a two-year period.

The respondents filed appeals, as well as applications to stay enforcement of SEBI’s orders pending resolution of the appeals, with the Securities Appellate Tribunal (the “SAT”) in India, which stay applications were granted in June and July 2021, subject to respondents’ deposit in escrow of a portion of the ordered penalties for an aggregate deposit made of INR 257.5 crore (approximately $ 34.7 million).

The SAT appeals remain pending and in the interim, SEBI has approved FTAMI’s launch of certain new fixed income funds.

The Company has also responded to related inquiries and investigations commenced by certain governmental agencies in India that remain pending, including a “first information report” (the preliminary step in an investigation) registered by the Economic Offences Wing of the Chennai police department in or around September 2020 against certain of the Company Respondents in connection with a complaint by certain Fund unitholders, as well as a related investigation by India’s Enforcement Directorate commenced in or around April 2021.

2 unchanged sentences

The Company cannot at this time predict the eventual outcome of the matters described above or reasonably estimate the possible loss or range of loss that may arise from any final outcome of such matters, including due to the complexities and uncertainty involved in the appeals and the various questions of law and fact at issue.

Other Litigation Matters.

Western Asset Management Investigations.

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

WAM also received notice of an investigation into these trading activities by the CFTC.

As previously disclosed, Ken Leech, the former co-Chief Investment Officer of WAM, received a “Wells Notice” from the staff of the SEC in August 2024 and is now on administrative leave.

The Company and WAM are cooperating fully with the government investigations.

Other Litigation and Regulatory Matters.

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

26 unchanged sentences

The USIP and EIP provide for the issuance of the Company’s common stock for various stock-related awards to officers, directors and employees.

There are 140.0 million and 23.0 million shares authorized under the USIP and EIP.

In February 2024, the Company’s stockholders approved an amendment and restatement of the USIP increasing the number of shares authorized by 25.0 million shares to a total of 165.0 million shares.

There are 23.0 million shares authorized under the EIP.

At September 30, 2024, 25.6 million shares and 13.9 million shares were available for grant under the USIP and EIP.

69 unchanged sentences

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

Other comprehensive income

Other comprehensive income before reclassifications, net of tax 27.1 1.6 — 28.7

Other comprehensive income (loss)

Other comprehensive income (loss) before reclassifications, net of tax ( 246.8 ) 2.3 0.4 ( 244.1 )

Reclassifications to compensation and benefits expense, net of tax — ( 1.5 ) — ( 1.5 )

Reclassifications to net investment and other income, net of tax 2.2 — — 2.2

Total other comprehensive income 29.1 0.9 — 30.0

Total other comprehensive income (loss) ( 244.6 ) 0.8 0.4 ( 243.4 )

Balance at September 30, 2022 $ ( 615.1 ) $ ( 6.3 ) $ 0.4 $ ( 621.0 )

8 unchanged sentences

Reclassifications to compensation and benefits expense, net of tax — 0.4 — 0.4

Reclassifications to net investment and other income, net of tax 4.3 — — 4.3

Total other comprehensive income (loss) 89.8 0.1 ( 0.1 ) 89.8

3 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data