4 unchanged sentences
Forward-looking statements include all statements that do not relate solely to historical or current facts and generally can be identified by words or phrases written in the future tense and/or preceded by words such as “anticipate,” “believe,” “could,” “depends,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “potential,” “seek,” “should,” “will,” “would,” or other similar words or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements.
−Removed: Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that may cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements, including pandemic-related risks, market and volatility risks, investment performance and reputational risks, global operational risks, competition and distribution risks, third-party risks, technology and security risks, human capital risks, cash management risks, and legal and regulatory risks.
+Added: Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that may cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements, including market and volatility risks, investment performance and reputational risks, global operational risks, competition and distribution risks, third-party risks, technology and security risks, human capital risks, cash management risks, and legal and regulatory risks.
The forward-looking statements contained in this Form 10-Q or that are incorporated by reference herein are qualified in their entirety by reference to the risks and uncertainties disclosed in this Form 10-Q and/or discussed under the headings “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (“fiscal year 2024”).
4 unchanged sentences
Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them.
+Added: The initiation or unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or inquiries, including the Western Asset Management (“WAM”) investigations described under the heading “Risk Factors” and in “Note 16 - Commitments and Contingencies” to our audited financial statements contained in our Annual Report on Form 10-K for fiscal year 2024, and in “Note 10 - Commitments and Contingencies” to our unaudited interim financial statements contained in this Form 10-Q, may result in additional costs, monetary judgments, settlements or other remedies, including fines, penalties, restitution and/or alterations in our business practices or those of our specialist investment managers.
+Added: In addition, these matters may cause reputational harm to us or our specialist investment managers and could result in additional expenses and collateral costs, outflows of assets under management or other financial impacts that could materially affect our results of operations and the price of our common stock.
If a circumstance occurs after the date of this Form 10-Q that causes any of our forward-looking statements to be inaccurate, whether as a result of new information, future developments or otherwise, we undertake no obligation to announce publicly the change to our expectations, or to make any revision to our forward-looking statements, to reflect any change in assumptions, beliefs or expectations, or any change in events, conditions or circumstances upon which any forward-looking statement is based, unless required by law.
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The following discussion should be read in conjunction with our Annual Report on Form 10-K for fiscal year 2024 filed with the U.S.
−Removed: Securities and Exchange Commission (the “SEC”), and the consolidated financial statements and notes thereto included in subsequent filings on Form 10-Q and elsewhere in this Form 10-Q.
+Added: Securities and Exchange Commission (the “SEC”), and the consolidated financial statements and notes thereto included elsewhere in this Form 10-Q.
+Added: Words such as “we,” “us,” “our” and similar terms refer to the Company.
Franklin is a holding company with subsidiaries operating under our Franklin Templeton ® and/or subsidiary brand names.
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We may perform services directly or through third parties.
−Removed: We offer our services and products under our various distinct brand names, including, but not limited to, Franklin ® , Templeton ® , Legg Mason ® , Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin Bissett ® , Franklin Mutual Series ® , K2 ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® Asset Management, Putnam ® , Royce ® Investment Partners and Western Asset Management Company ® .
−Removed: We offer a broad product mix of fixed income, equity, alternative, multi-asset and cash management asset classes and solutions that meet a wide variety of specific investment goals and needs for individual and institutional investors.
+Added: We offer our services and products under our various distinct brand names, including, but not limited to, Franklin ® , Templeton ® , Legg Mason ® , Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin Mutual Series ® , K2 ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® , Putnam ® , Royce ® and Western Asset Management Company ® .
+Added: We offer a broad product mix of equity, fixed income, alternative, multi-asset and cash management asset classes and solutions that meet a wide variety of specific investment goals and needs for individual and institutional investors.
We also provide sub-advisory services to certain investment products sponsored by other companies which may be sold to investors under the brand names of those other companies or on a co-branded basis.
The level of our revenues depends largely on the level and relative mix of assets under management (“AUM”).
−Removed: As noted in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year 2023, the amount and mix of our AUM are subject to significant fluctuations that can negatively impact our revenues and income.
+Added: As noted in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year 2024, the amount and mix of our AUM are subject to significant fluctuations, including as a result of reputational harm, that can negatively impact our revenues and income.
The level of our revenues also depends on the fees charged for our services, which are based on contracts with our funds and customers, fund sales, and the number of shareholder transactions and accounts.
These arrangements could change in the future.
−Removed: During our third fiscal quarter, global equity markets provided positive returns, reflecting strong corporate earnings in certain sectors due to ongoing enthusiasm around artificial intelligence and expectations of an economic soft landing, although inflation remained a concern and expectations of interest rate reductions eased.
−Removed: The S&P 500 Index and MSCI World Index increased 4.3% and 2.8% for the quarter and 28.8% and 25.0% for the fiscal year to date.
−Removed: The Bloomberg Global Aggregate Index decreased 1.1% during the quarter, reflecting the shift in interest rate expectations, but increased 4.7% for the fiscal year to date, reflecting strong positive returns, in our first fiscal quarter.
−Removed: Our total AUM at June 30, 2024 was $1,646.6 billion, 20% higher than at September 30, 2023 and 15% higher than at June 30, 2023.
−Removed: Monthly average AUM (“average AUM”) for the three and nine months ended June 30, 2024 increased 15% and 10% from the same periods in the prior fiscal year.
−Removed: On January 1, 2024, we acquired Putnam Investments (“Putnam”), a global asset management firm, from Great-West Lifeco Inc.
−Removed: (“Great-West”).
+Added: During our first fiscal quarter, global equity markets provided mixed results.
+Added: equity markets provided positive returns, supported by the result of the presidential election and expectations of policies to improve economic growth and reduce taxes and regulation, while most international markets declined amid fears of economic contraction, increasing inflation and political instability.
+Added: The S&P 500 Index increased 2.4%, while the MSCI World Index decreased by 0.1% for the quarter.
+Added: The Bloomberg Global Aggregate Index decreased 5.1% during the quarter, reflecting geopolitical tensions and fluctuating inflation rates.
+Added: Our total AUM at December 31, 2024 was $1,575.7 billion, 6% lower than at September 30, 2024 and 8% higher than at December 31, 2023.
+Added: Monthly average AUM (“average AUM”) for the three months ended December 31, 2024 increased 17% from the same period in the prior fiscal year.
The business and regulatory environments in which we operate globally remain complex, uncertain and subject to change.
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Three Months Ended
−Removed: Change Nine Months Ended
(in millions, except per share data) 2024 2023
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Operating margin 1
−Removed: 10.5 % 16.0 % 8.9 % 13.0 %
Net income attributable to Franklin Resources, Inc.
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AUM by asset class was as follows:
−Removed: (in billions) June 30,
−Removed: 2024 June 30,
+Added: (in billions) December 31,
+Added: 2024 December 31,
$ 620.0 $ 467.5 33 %
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Average AUM and the mix of average AUM by asset class are shown below.
−Removed: (in billions) Average AUM Percent
+Added: (in billions) Average AUM 1
Change Mix of Average AUM
−Removed: for the three months ended June 30, 2024 2023 2024 2023
+Added: for the three months ended December 31, 2024 2023 2024 2023
$ 629.1 $ 439.2 43 % 38 % 32 %
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Total $ 1,634.5 $ 1,394.2 17 % 100 % 100 %
−Removed: (in billions) Average AUM Percent
−Removed: Change Mix of Average AUM
−Removed: for the nine months ended June 30, 2024 2023 2024 2023
_______________
−Removed: Fixed Income 534.8 500.4 7 % 35 % 36 %
−Removed: Alternative 255.7 250.6 2 % 17 % 18 %
−Removed: Multi-Asset 157.3 143.1 10 % 10 % 10 %
−Removed: Cash Management 63.7 70.2 (9 %) 4 % 5 %
−Removed: Total $ 1,533.1 $ 1,396.1 10 % 100 % 100 %
+Added: 1 Average AUM is calculated as the average of the month-end AUM for the trailing four months.
Components of the change in AUM are shown below.
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(in billions) Three Months Ended
−Removed: Change Nine Months Ended
−Removed: 2024 2023 2024 2023
Beginning AUM $ 1,678.6 $ 1,374.2 22 %
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Long-term outflows (147.8) (73.9) 100 %
−Removed: Long-term net flows (3.2) 0.2 NM (1.3) (14.4) (91 %)
−Removed: Cash management net flows 3.0 (7.3) NM 2.9 5.9 (51 %)
+Added: Long-term net flows (50.0) (5.0) 900%
+Added: Cash management net flows — 4.7 (100 %)
Total net flows (50.0) (0.3) NM
−Removed: — — NM 148.3 34.9 NM
−Removed: Net market change, distributions and other 2.1 16.5 (87 %) 122.5 107.7 14 %
+Added: Net market change, distributions and other (52.9) 81.6 NM
Ending AUM $ 1,575.7 $ 1,455.5 8 %
Components of the change in AUM by asset class were as follows:
−Removed: (in billions) Equity Fixed Income Alternative Multi-Asset Cash
−Removed: Management Total
−Removed: for the three months ended
−Removed: June 30, 2024
−Removed: AUM at April 1, 2024 $ 592.7 $ 571.4 $ 255.5 $ 163.4 $ 61.7 $ 1,644.7
−Removed: Long-term inflows 32.0 37.4 3.4 9.9 — 82.7
−Removed: Long-term outflows (33.6) (42.2) (2.0) (8.1) — (85.9)
−Removed: Long-term net flows (1.6) (4.8) 1.4 1.8 — (3.2)
−Removed: Cash management net flows — — — — 3.0 3.0
−Removed: Total net flows (1.6) (4.8) 1.4 1.8 3.0 (0.2)
−Removed: Net market change, distributions and other
−Removed: 3.9 (2.1) (2.4) 2.9 (0.2) 2.1
−Removed: AUM at June 30, 2024 $ 595.0 $ 564.5 $ 254.5 $ 168.1 $ 64.5 $ 1,646.6
−Removed: AUM increased $1.9 billion during the three months ended June 30, 2024 due to $3.0 billion of cash management net inflows and the positive impact of $2.1 billion of net market change, distributions and other, partially offset by $3.2 billion of long-term net outflows, which include $3.6 billion of long-term reinvested distributions.
−Removed: Net market change, distributions and other primarily consists of $14.5 billion of market appreciation, partially offset by $9.7 billion of long-term distributions and a $2.7 billion decrease from foreign exchange revaluation.
−Removed: The market appreciation occurred in all asset classes, most significantly in the multi-asset and equity asset classes and reflected positive returns in the global equity markets.
−Removed: Foreign exchange revaluation from AUM in products that are not U.S.
−Removed: dollar denominated was primarily due to a stronger U.S.
−Removed: dollar compared to the Japanese Yen, Brazilian Real, Euro and Canadian dollar, partially offset by a weaker U.S.
−Removed: dollar compared to the Australian dollar.
−Removed: AUM increased $215.1 billion or 15%, as compared to the prior year period, primarily due to the acquisition of Putnam.
−Removed: Long-term inflows increased 23% to $82.7 billion, driven by higher inflows in fixed income institutional separate accounts and equity fund vehicles and institutional and retail separate accounts, partially offset by lower inflows in alternative private fund vehicles.
−Removed: Long-term outflows increased 28% to $85.9 billion driven by higher redemptions in fixed income and equity open end funds and institutional and retail separate accounts.
(in billions) Equity
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for the three months ended
−Removed: June 30, 2023
−Removed: AUM at April 1, 2023 $ 437.1 $ 510.1 $ 258.2 $ 146.1 $ 70.6 $ 1,422.1
−Removed: Long-term inflows 23.0 26.5 7.3 10.6 — 67.4
−Removed: Long-term outflows (26.0) (29.6) (3.3) (8.3) — (67.2)
−Removed: Long-term net flows (3.0) (3.1) 4.0 2.3 — 0.2
−Removed: Cash management net flows — — — — (7.3) (7.3)
−Removed: Total net flows (3.0) (3.1) 4.0 2.3 (7.3) (7.1)
−Removed: Net market change, distributions and other
−Removed: 23.9 (1.9) (5.0) (0.1) (0.4) 16.5
−Removed: AUM at June 30, 2023 $ 458.0 $ 505.1 $ 257.2 $ 148.3 $ 62.9 $ 1,431.5
−Removed: AUM increased $9.4 billion or 1% during the three months ended June 30, 2023 due to the positive impact of $16.5 billion of net market change, distributions and other and $0.2 billion of long-term net inflows (which includes $3.5 billion of long-term reinvested distributions), partially offset by $7.3 billion of cash management net outflows.
−Removed: Long-term net inflows included $3.2 billion from a low-fee equity mandate.
−Removed: Net market change, distributions and other primarily consists of $24.4 billion of market appreciation and a $0.1 billion increase from foreign exchange revaluation, partially offset by $8.0 billion of long-term distributions.
−Removed: The market appreciation occurred in all asset classes with the exception of the alternative asset class, most significantly in the equity asset class, reflecting positive returns in the global equity markets.
−Removed: AUM increased $51.7 billion or 4%, as compared to the fiscal year 2022 period.
−Removed: Long-term inflows decreased 13% to $67.4 billion, driven by lower inflows in fixed income, equity, and multi-asset open end funds, fixed income institutional separate accounts, multi-asset sub-advised mutual funds, and equity retail separate accounts, partially offset by higher inflows for multi-asset institutional separate accounts, alternative private funds, and equity sub-advised mutual funds.
−Removed: Long-term outflows decreased 31% to $67.2 billion driven by lower redemptions in fixed income and equity open end funds, fixed income and equity institutional separate accounts, multi-asset sub-advised mutual funds, and equity and fixed income retail separate accounts, partially offset by higher redemptions for multi-asset institutional separate accounts.
−Removed: (in billions) Equity
−Removed: Fixed Income Alternative Multi-Asset Cash
−Removed: Management Total
−Removed: for the nine months ended
−Removed: June 30, 2024
+Added: December 31, 2024
AUM at October 1, 2024 $ 632.1 $ 556.4 $ 249.9 $ 176.2 $ 64.0 $ 1,678.6
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Total net flows 12.5 (66.7) 0.8 3.4 — (50.0)
−Removed: 81.3 59.3 0.7 5.8 1.2 148.3
Net market change, distributions and other
(24.6) (20.2) (1.9) (5.6) (0.6) (52.9)
−Removed: AUM at June 30, 2024 $ 595.0 $ 564.5 $ 254.5 $ 168.1 $ 64.5 $ 1,646.6
−Removed: AUM increased $272.4 billion, or 20%, during the nine months ended June 30, 2024 due to $148.3 billion from the acquisition of Putnam, the positive impact of $122.5 billion of net market change, distributions and other and $2.9 billion of cash management net inflows, partially offset by $1.3 billion of long-term net outflows, which include $17.5 billion of long-term reinvested distributions.
−Removed: Net market change, distributions and other primarily consists of $160.7 billion of market appreciation, partially offset by $36.9 billion of long-term distributions and a $1.3 billion decrease from foreign exchange revaluation.
−Removed: The market appreciation occurred in all asset classes, most significantly in the equity and fixed income asset classes and reflected positive returns in the global equity and fixed income markets.
−Removed: Long-term inflows increased 18% to $236.5 billion, as compared to the prior year period, driven by higher inflows in equity and multi-asset open end funds and separately managed accounts, fixed income institutional separate accounts, investment trusts, and subadvised mutual funds, partially offset by lower inflows in alternative private fund vehicles.
−Removed: Long-term outflows increased 11% to $237.8 billion due to higher outflows in equity open end funds and fixed income institutional separate accounts and investment trusts.
+Added: AUM at December 31, 2024 $ 620.0 $ 469.5 $ 248.8 $ 174.0 $ 63.4 $ 1,575.7
+Added: AUM decreased $102.9 billion, or 6%, during the three months ended December 31, 2024 due to the negative impact of $52.9 billion of net market change, distributions and other and $50.0 billion of long-term net outflows, inclusive of $67.9 billion of long-term net outflows at WAM and $20.1 billion of long-term reinvested distributions.
+Added: Net market change, distributions and other primarily consists of $30.1 billion of distributions, primarily from the equity asset class, a $14.3 billion decrease from foreign exchange revaluation and $8.5 billion of market depreciation.
+Added: The market depreciation occurred primarily in the fixed income and multi-asset classes.
+Added: Foreign exchange revaluation from AUM in products that are not U.S.
+Added: dollar denominated was primarily due to a stronger U.S.
+Added: dollar compared to the Euro, Australian dollar, Japanese Yen and Canadian dollar.
+Added: Long-term inflows increased 42% to $97.8 billion, as compared to the prior year period, driven by higher inflows in equity and multi-asset open end funds, equity sub-advised mutual funds, and equity retail separately managed accounts.
+Added: Long-term outflows increased 100% to $147.8 billion, substantially due to higher outflows across multiple fixed income vehicles at WAM, and to a lesser extent, higher outflows from equity open end funds and retail separately managed accounts.
+Added: WAM outflows have increased significantly following the investment performance issues and the announcement of ongoing regulatory investigations.
(in billions) Equity
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Management Total
−Removed: for the nine months ended
−Removed: June 30, 2023
+Added: for the three months ended
+Added: December 31, 2023
AUM at October 1, 2023 $ 430.4 $ 483.1 $ 254.9 $ 145.0 $ 60.8 $ 1,374.2
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Total net flows 0.2 (8.4) 2.7 0.5 4.7 (0.3)
−Removed: — — 34.9 — — 34.9
Net market change, distributions and other
36.9 37.0 (1.4) 9.1 — 81.6
−Removed: AUM at June 30, 2023 $ 458.0 $ 505.1 $ 257.2 $ 148.3 $ 62.9 $ 1,431.5
−Removed: AUM increased $134.1 billion, or 10%, during the nine months ended June 30, 2023 due to the positive impact of $107.7 billion of net market change, distributions and other, $34.9 billion from an acquisition, and $5.9 billion of cash management net inflows, partially offset by $14.4 billion of long-term net outflows.
−Removed: Net market change, distributions and other primarily consists of $131.0 billion of market appreciation, a $9.8 billion increase from foreign exchange revaluation, partially offset by $33.1 billion of long-term distributions.
−Removed: The market appreciation occurred in all asset classes with the exception of the alternative asset class, most significantly in the equity and fixed income asset classes and reflected positive returns in the global equity and fixed income markets.
−Removed: Foreign exchange revaluation from AUM in products that are not U.S.
−Removed: dollar denominated was primarily due to a weaker U.S.
−Removed: dollar compared to the Euro, Pound Sterling, Brazilian Real and Australian dollar.
−Removed: Long-term inflows decreased 23% to $199.7 billion, as compared to the fiscal year 2022 period, driven by lower inflows in equity and fixed income open end funds, fixed income institutional separate accounts, and equity retail separate accounts.
−Removed: Decreased inflows for open end mutual funds include the impact of lower reinvested distributions, which were $18.0 billion in the current year period, as compared to $29.5 billion in the prior year period.
−Removed: Long-term outflows decreased 20% to $214.1 billion due to lower outflows in fixed income and equity open end funds, multi-asset sub-advised mutual funds, fixed income and equity institutional separate accounts, and equity retail separate accounts.
+Added: AUM at December 31, 2023 $ 467.5 $ 511.7 $ 256.2 $ 154.6 $ 65.5 $ 1,455.5
AUM by sales region was as follows:
−Removed: (in billions) June 30,
−Removed: 2024 June 30,
+Added: (in billions) December 31,
+Added: 2024 December 31,
United States $ 1,102.5 $ 1,019.4 8 %
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Total $ 1,575.7 $ 1,455.5 8 %
−Removed: __________________
−Removed: 1 Effective October 1, 2023, India region is included in Europe, Middle East and Africa.
Investment Performance Overview
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Exceeding Benchmark
−Removed: as of June 30, 2024 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year
+Added: as of December 31, 2024 1-Year 3-Year 5-Year 10-Year 1-Year 3-Year 5-Year 10-Year
Equity 53 % 60 % 46 % 60 % 35 % 43 % 41 % 46 %
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1 Mutual fund performance is sourced from Morningstar and measures the percent of ranked AUM in the top two quartiles versus peers.
−Removed: Total mutual fund AUM measured for the 1-, 3-, 5- and 10-year periods represents 38%, 37%, 37% and 35% of our total AUM as of June 30, 2024.
+Added: Total mutual fund AUM measured for the 1-, 3-, 5- and 10-year periods represents 38%, 38%, 38% and 36% of our total AUM as of December 31, 2024.
2 Strategy composite performance measures the percent of composite AUM beating its benchmark.
The benchmark comparisons are based on each account’s/composite’s (strategy composites may include retail separately managed accounts and mutual fund assets managed as part of the same strategy) return as compared to a market index that has been selected to be generally consistent with the asset class of the account/composite.
−Removed: Total strategy composite AUM measured for the 1-, 3-, 5- and 10-year periods represents 54%, 54%, 53% and 49% of our total AUM as of June 30, 2024.
+Added: Total strategy composite AUM measured for the 1-, 3-, 5- and 10-year periods represents 54%, 54%, 54% and 48% of our total AUM as of December 31, 2024.
3 Total mutual fund AUM includes performance of our alternative and multi-asset funds, and total strategy composite AUM includes performance of our alternative composites.
−Removed: Alternative and multi-asset AUM represent 16% and 10% of our total AUM at June 30, 2024.
+Added: Alternative and multi-asset AUM represent 16% and 11% of our total AUM at December 31, 2024.
Mutual fund performance data includes U.S.
9 unchanged sentences
(in millions) Three Months Ended
−Removed: Change Nine Months Ended
−Removed: 2024 2023 2024 2023
Investment management fees $ 1,799.3 $ 1,652.2 9 %
4 unchanged sentences
Investment Management Fees
−Removed: Investment management fees increased $76.5 million and $237.5 million for the three and nine months ended June 30, 2024 primarily due to a 15% and 10% increase in average AUM, partially offset by a decrease in performance fees and lower catch-up fees recognized at the closing of fundraising rounds in a secondary private equity fund, which ended in January 2024.
−Removed: The increases in average AUM primarily occurred in the equity, fixed income and multi-asset asset classes, driven by the acquisition of Putnam.
−Removed: Our effective investment management fee rate excluding performance fees (annualized investment management fees excluding performance fees divided by average AUM) was 40.2 and 41.4 basis points for the three and nine months ended June 30, 2024, as compared to 42.0 and 41.9 basis points for the same periods in the prior fiscal year.
−Removed: The rate decreases were primarily due to lower catch-up fees recognized at the closing of fundraising rounds in a secondary private equity fund, which ended in January 2024, and increased AUM in lower fee products, including those from the acquisition of Putnam.
−Removed: Performance fees were $56.6 million and $308.2 million for the three and nine months ended June 30, 2024, and $125.9 million and $446.1 million for the same periods in the prior fiscal year.
−Removed: The decrease for both periods was primarily due to lower performance fees earned by certain of our alternative specialist investment managers, and decreases of $11.6 million and $77.1 million in performance fees earned by Lexington Partners L.P.
−Removed: (“Lexington”), which were passed through as compensation expense per the terms of the acquisition agreement.
+Added: Investment management fees increased $147.1 million for the three months ended December 31, 2024 primarily due to a 17% increase in average AUM, partially offset by a decrease in performance fees and catch-up fees recognized in the prior year at the closing of fundraising rounds in a secondary private equity fund, which ended in January 2024.
+Added: The increases in average AUM primarily occurred in the equity and multi-asset asset classes, driven by the acquisition of Putnam on January 1, 2024 and net market appreciation, partially offset by a decrease in the alternative asset class.
+Added: Our effective investment management fee rate excluding performance fees (annualized investment management fees excluding performance fees divided by average AUM) decreased to 40.2 basis points for the three months ended December 31, 2024, from 42.4 basis points for the same period in the prior fiscal year.
+Added: The rate decrease was primarily due to increased AUM in lower fee products, including those from the acquisition of Putnam, and catch-up fees recognized in the prior year at the closing of fundraising rounds in a secondary private equity fund.
+Added: Performance fees were $141.6 million and $166.4 million for the three months ended December 31, 2024 and 2023.
+Added: The decrease was primarily due to lower performance fees earned by certain of our alternative specialist investment managers, and a decrease of $3.5 million in performance fees which were passed through as compensation expense per the terms of acquisition agreements.
Sales and Distribution Fees
1 unchanged sentence
(in millions) Three Months Ended
−Removed: Change Nine Months Ended
−Removed: 2024 2023 2024 2023
Asset-based fees $ 309.1 $ 246.0 26 %
1 unchanged sentence
Sales and Distribution Fees $ 375.5 $ 296.4 27 %
−Removed: Asset-based distribution fees increased $43.6 million and $88.4 million for the three and nine months ended June 30, 2024 primarily due to revenue earned by Putnam subsequent to the acquisition and increases of 4% and 3% in the related average AUM, excluding the impact of Putnam.
−Removed: Sales-based fees increased $10.7 million and $27.3 million for the three and nine months ended June 30, 2024 primarily due to increases of 6% and 10% in commissionable sales and sales-based revenue earned by Putnam subsequent to the acquisition.
+Added: Asset-based distribution fees increased $63.1 million for the three months ended December 31, 2024 primarily due to revenue earned from Putnam products subsequent to the acquisition and an increase of 10% in the related average AUM, excluding the impact of the Putnam products.
+Added: Sales-based fees increased $16.0 million for the three months ended December 31, 2024 primarily due to an increase of 25% in commissionable sales and sales-based revenue earned from Putnam products subsequent to the acquisition.
Shareholder Servicing Fees
−Removed: Shareholder servicing fees increased $23.0 million and $46.8 million for the three and nine months ended June 30, 2024 primarily due to fees earned by Putnam subsequent to the acquisition, partially offset by the impact of a change in fee structure for certain U.S.
−Removed: sponsored funds.
+Added: Shareholder servicing fees increased $31.0 million for the three months ended December 31, 2024 primarily due to fees earned by Putnam subsequent to the acquisition.
OPERATING EXPENSES
1 unchanged sentence
Three Months Ended
−Removed: Change Nine Months Ended
(in millions) 2024 2023
6 unchanged sentences
Total Operating Expenses $ 2,032.6 $ 1,784.6 14 %
−Removed: The Putnam acquisition had a significant impact on operating expenses in the three and nine months ended June 30, 2024;
−Removed: however, due to the ongoing integration of the combined businesses, it is not practicable to separately quantify the impact of the legacy Putnam business.
+Added: The Putnam acquisition had a significant impact on operating expenses in the three months ended December 31, 2024, however, due to the ongoing integration of the combined businesses, it is not practicable to separately quantify the impact of the legacy Putnam business.
Compensation and Benefits
1 unchanged sentence
Three Months Ended
−Removed: Change Nine Months Ended
(in millions) 2024 2023
12 unchanged sentences
and special termination benefits.
−Removed: Salaries, wages and benefits increased $51.1 million and $118.1 million for the three and nine months ended June 30, 2024, primarily due to higher headcount as a result of the acquisition of Putnam and annual salary increases, partially offset by the impact of other headcount reductions.
−Removed: Incentive compensation remained flat for the three months ended June 30, 2024 and increased $55.0 million for the nine months ended June 30, 2024 primarily due to the acquisition of Putnam, an increase in expense for deferred compensation awards, and higher bonus expense based on expectations of our annual performance, partially offset by lower incentive compensation at specialist investment managers.
−Removed: Acquisition-related retention expenses increased $22.4 million and $109.2 million for the three and nine months ended June 30, 2024 primarily due to higher costs associated with recent acquisitions.
−Removed: Acquisition-related performance fee pass through expenses decreased $11.6 million and $77.1 million for the three and nine months ended June 30, 2024, due to lower performance fees earned by Lexington.
−Removed: Other compensation and benefits decreased $5.6 million for the three months ended June 30, 2024, primarily due to lower net market gains of deferred compensation plans, partially offset by an increase in special termination benefits;
−Removed: and increased $17.4 million for the nine months ended June 30, 2024, primarily due to an increase in special termination benefits and higher net market gains on investments related to our deferred compensation plans.
−Removed: Special termination benefits increased $4.5 million and $8.9 million for the three and nine months ended June 30, 2024 primarily due to the acquisition of Putnam, partially offset by costs associated with workforce optimization initiatives in the prior year.
−Removed: Compensation expense related to minority interests decreased $1.8 million for the three months ended June 30, 2024 and remained flat for the nine months ended June 30, 2024.
−Removed: We expect to incur additional acquisition-related retention expenses of approximately $60 million during the remainder of the current fiscal year, and annual amounts beginning at approximately $190 million in the fiscal year ending September 30, 2025 and decreasing over the following two fiscal years by approximately $20 million and $80 million.
−Removed: At June 30, 2024, our global workforce increased to approximately 10,300 employees from approximately 9,300 at June 30, 2023, primarily due to the acquisition of Putnam.
+Added: Salaries, wages and benefits increased $52.7 million for the three months ended December 31, 2024, primarily due to higher headcount as a result of the acquisition of Putnam and annual salary increases, partially offset by the impact of headcount reductions.
+Added: Incentive compensation increased $21.1 million for the three months ended December 31, 2024, primarily due to the acquisition of Putnam and an increase in expense for deferred compensation awards, due in part to higher annual acceleration of expense related to retirement-eligible employees, partially offset by lower incentive compensation at certain specialist investment managers.
+Added: Acquisition-related retention expenses decreased $23.3 million for the three months ended December 31, 2024, primarily due to lower compensation associated with performance-based and time-based awards, partially offset by an increase due to the acquisition of Putnam.
+Added: Acquisition-related performance fee pass through expenses decreased $3.5 million for the three months ended December 31, 2024, due to lower pass through performance fees.
+Added: Other compensation and benefits decreased $23.9 million for the three months ended December 31, 2024, primarily due to lower net market gains on investments related to our deferred compensation plans and a decrease in special termination benefits.
+Added: Special termination benefits decreased $6.3 million for the three months ended December 31, 2024 primarily due to the costs associated with workforce optimization initiatives in the prior year.
+Added: At December 31, 2024, our global workforce increased to approximately 10,100 employees from approximately 9,100 at December 31, 2023, primarily due to the acquisition of Putnam.
Sales, Distribution and Marketing
1 unchanged sentence
Three Months Ended
−Removed: Change Nine Months Ended
(in millions) 2024 2023
3 unchanged sentences
Sales, Distribution and Marketing $ 512.3 $ 400.8 28 %
−Removed: Asset-based expenses increased $61.9 million and $133.2 million for the three and nine months ended June 30, 2024 primarily due to expenses incurred by Putnam subsequent to the acquisition, increases of 4% and 3% in the related average AUM, excluding the impact of Putnam, and higher marketing support fees.
+Added: Asset-based expenses increased $87.7 million for the three months ended December 31, 2024 primarily due to expenses related to Putnam products subsequent to the acquisition, an increase of 10% in the related average AUM, excluding the impact of the Putnam products, and higher marketing support fees.
Distribution expenses are generally not directly correlated with distribution fee revenues due to certain fee structures that do not provide full recovery of distribution costs.
−Removed: Sales-based expenses increased $9.6 million and $24.9 million for the three and nine months ended June 30, 2024 primarily due to increases of 6% and 10% in commissionable sales and sales-based expenses incurred by Putnam subsequent to the acquisition.
−Removed: Occupancy expenses increased $47.9 million and $76.6 million for the three and nine months ended June 30, 2024, driven by impairment of the right of use asset related to vacated office space and new leased office space located at One Madison Avenue, primarily associated with an initiative to consolidate our office space in New York City, and expenses incurred by Putnam subsequent to the acquisition.
+Added: Sales-based expenses increased $17.0 million for the three months ended December 31, 2024 primarily due to an increase of 25% in commissionable sales and sales-based expenses related to Putnam products subsequent to the acquisition.
+Added: Occupancy expenses increased $8.4 million for the three months ended December 31, 2024, primarily due to expenses incurred by Putnam subsequent to the acquisition and leased office space located at One Madison Avenue, associated with an initiative to consolidate our office space in New York City.
Information Systems and Technology
−Removed: Information systems and technology expenses increased $29.3 million and $66.0 million for the three and nine months ended June 30, 2024, primarily due to expenses incurred by Putnam subsequent to the acquisition, higher outsourced data services and software costs.
+Added: Information systems and technology expenses increased $25.0 million for the three months ended December 31, 2024, primarily due to expenses incurred by Putnam subsequent to the acquisition, and higher technology consulting, software, and market data costs.
Amortization of Intangible Assets
−Removed: Amortization of intangible assets decreased $1.4 million and $0.2 million for the three and nine months ended June 30, 2024, primarily due to the net effect of intangible assets which became fully amortized during the period, partially offset by the amortization of intangible assets recognized as part of the acquisition of Putnam and, for the nine month period, Alcentra.
+Added: Amortization of intangible assets increased $26.8 million for the three months ended December 31, 2024, primarily due to a reduction in the remaining useful life of definite-lived intangible assets related to WAM.
General, Administrative and Other
−Removed: General, administrative and other operating expenses increased $43.6 million and $80.0 million for the three and nine months ended June 30, 2024, primarily due to the acquisition of Putnam, increases of $14.6 million and $31.3 million in professional fees, and increases of $5.7 million and $15.0 million in travel and entertainment expenses due to higher activity levels.
−Removed: These increases were partially offset by decreases of $4.4 million and $14.1 million in fund-related expenses.
+Added: General, administrative and other operating expenses increased $53.2 million for the three months ended December 31, 2024, primarily due to the acquisition of Putnam, an increase of $18.5 million in legal and other professional fees, net of a $10.0 million insurance recovery, an increase of $3.7 million in advertising expenses and an increase of $2.4 million in travel and entertainment due to higher activity levels.
OTHER INCOME (EXPENSES)
1 unchanged sentence
Three Months Ended
−Removed: Change Nine Months Ended
(in millions) 2024 2023
Investment and other income, net:
+Added: Dividend and interest income
+Added: $ 43.1 $ 54.8 (21 %)
+Added: Gains (losses) on investments, net (57.1) 60.1 NM
+Added: Income (losses) from investments in equity method investees (7.6) 56.9 NM
+Added: Gains (losses) on derivatives, net 6.6 (8.2) NM
+Added: Rental income
+Added: 11.2 10.8 4 %
+Added: Foreign currency exchange gains (losses), net 14.5 (7.4) NM
+Added: Investment and other income, net 10.5 173.2 (94 %)
Interest expense (23.1) (18.8) 23 %
−Removed: Investment and other income of consolidated investment products, net 37.6 1.7 NM 103.7 75.3 38 %
−Removed: Expenses of consolidated investment products (8.8) (0.8) NM (20.6) (15.7) 31 %
+Added: Investment and other income (losses) of consolidated investment products, net 114.1 (23.8) NM
+Added: Expenses of consolidated investment products (7.3) (5.9) 24 %
Other Income, Net $ 94.2 $ 124.7 (24 %)
−Removed: Investment and other income, net increased $24.7 million for the three months ended June 30, 2024, primarily due to income from equity method investees and net foreign currency gains as compared to losses in the prior year quarter, partially offset by losses on investments, as compared to gains in the prior year quarter.
−Removed: Investment and other income, net increased $99.9 million for the nine months ended June 30, 2024, primarily due to higher net income from equity method investees, lower net foreign currency exchange losses, and higher dividend and interest income, partially offset by lower gains on investments.
−Removed: Investments held by the Company generated net losses of $24.3 million and net gains of $17.3 million in the three and nine months ended June 30, 2024, as compared to net gains of $13.8 million and $62.3 million for the three and nine months ended June 30, 2023.
−Removed: The net losses in the three months ended June 30, 2024 were primarily from investments in nonconsolidated funds and separate accounts, and investments measured at cost adjusted for observable price changes, while the net gains in the prior year period were primarily from investments in nonconsolidated funds and separate accounts, and assets invested for deferred compensation plans.
−Removed: The net gains in the nine months ended June 30, 2024 were primarily from assets invested for deferred compensation plans, partially offset by losses on investments measured at cost adjusted for observable price changes, while the net gains in the prior year were primarily from investments in nonconsolidated funds and separate accounts, and assets invested for deferred compensation plans.
−Removed: Equity method investees generated income of $41.0 million and $122.3 million for the three and nine months ended June 30, 2024, as compared to losses of $9.1 million and income of $43.5 million in the prior year.
−Removed: The income for the three months ended June 30, 2024 was largely related to various global alternative funds, while the losses in the prior year period were primarily due to a $7.5 million other-than-temporary impairment of an equity method investment.
−Removed: The income in the nine months ended June 30, 2024 was largely related to various global alternative and equity funds, while the income in the prior year was largely related to various global alternative, equity and fixed income funds.
−Removed: Net foreign currency exchange gains (losses), net were gains of $1.2 million for the three months ended June 30, 2024 and losses of $7.5 million for the nine months ended June 30, 2024, as compared to net losses of $6.6 million and $40.2 million for the three and nine months ended June 30, 2023.
−Removed: dollar strengthened against the Euro and weakened less against the British Pound in the three months ended June 30, 2024, which resulted in net foreign exchange gains on cash and cash equivalents denominated in U.S.
−Removed: dollars held by our European subsidiaries, as compared to losses in the prior year period.
−Removed: dollar weakened less in the nine month period against the Euro and British Pound, which resulted in lower foreign exchange losses on cash and cash equivalents denominated in U.S.
−Removed: dollars held by our European subsidiaries.
−Removed: Dividend and interest income decreased $2.9 million for the three months ended June 30, 2024, primarily due to lower average balances, partially offset by higher yields.
−Removed: Dividend and interest income increased $21.1 million for the nine months ended June 30, 2024, primarily due to higher yields.
−Removed: Interest expense decreased $9.2 million and $27.1 million for the three and nine months ended June 30, 2024 primarily due to interest expense recognized in the prior year periods on our term loan that was terminated on July 25, 2023 and a decrease in interest recognized on tax reserves.
−Removed: Investments held by consolidated investment products (“CIPs”) generated investment gains and other income of $37.6 million and $103.7 million in the three and nine months ended June 30, 2024, largely related to gains on holdings of various funds.
−Removed: Investments held by CIPs generated investment gains and other income of $1.7 million and $75.3 million in the three and nine months ended June 30, 2023, largely related to gains on holdings of various equity and fixed income funds, substantially offset by losses on holdings of various alternative funds.
−Removed: Expenses of CIPs increased $8.0 million and $4.9 million for the three and nine months ended June 30, 2024, due to activity of the funds.
−Removed: Our cash, cash equivalents and investments portfolio by asset class and accounting classification at June 30, 2024, excluding third-party assets of CIPs, was as follows:
+Added: Dividend and interest income decreased $11.7 million for the three months ended December 31, 2024, primarily due to lower average balances and lower yields.
+Added: Investments held by the Company generated net losses of $57.1 million in the three months ended December 31, 2024, as compared to net gains of $60.1 million for the three months ended December 31, 2023.
+Added: The net losses in the current year and net gains in the prior year were primarily from investments in nonconsolidated funds and separate accounts and assets invested for deferred compensation plans.
+Added: Equity method investees generated losses of $7.6 million for the three months ended December 31, 2024, as compared to income of $56.9 million in the prior year, largely related to various global alternative and equity funds.
+Added: Net foreign currency exchange gains were $14.5 million for the three months ended December 31, 2024, as compared to net losses of $7.4 million for the three months ended December 31, 2023.
+Added: dollar strengthened in the current year against the Euro and British Pound, which resulted in foreign exchange gains on cash and cash equivalents denominated in U.S.
+Added: dollars held by our European subsidiaries, as compared to weakening against the same currencies, which resulted in foreign exchange losses, in the prior year.
+Added: Interest expense increased $4.3 million for the three months ended December 31, 2024 primarily due to an increase in interest recognized on tax reserves, partially offset by lower accretion on Lexington deferred purchase consideration and interest recognized in the prior year on the $250 million senior notes which were repaid in July 2024.
+Added: Investments held by consolidated investment products (“CIPs”) generated investment gains and other income of $114.1 million in the three months ended December 31, 2024, largely related to gains on holdings of various alternative, equity, fixed income, and multi-asset funds.
+Added: Investments held by CIPs generated losses of $23.8 million in the three months ended December 31, 2023, largely related to losses on holdings of various alternative and equity funds.
+Added: Expenses of CIPs increased $1.4 million for the three months ended December 31, 2024, due to activity of the funds.
+Added: Our cash, cash equivalents and investments portfolio by asset class and accounting classification at December 31, 2024, excluding third-party assets of CIPs, was as follows:
Accounting Classification 1
14 unchanged sentences
2 Total cash and cash equivalents and investments includes $4,508.2 million maintained for operational activities, including investments in sponsored funds and other products, and $434.3 million necessary to comply with regulatory requirements.
−Removed: 3 Total cash and cash equivalents and investments includes approximately $370 million attributable to employee-owned and other third-party investments made through partnerships which are offset in nonredeemable noncontrolling interests, $286.1 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and $440.3 million of cash and investments related to deferred compensation plans.
+Added: 3 Total cash and cash equivalents and investments includes approximately $356 million attributable to employee-owned and other third-party investments made through partnerships which are offset in noncontrolling interests, approximately $361 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and approximately $437 million of cash and investments related to deferred compensation plans.
TAXES ON INCOME
−Removed: Our effective income tax rate was 22.7% and 23.7% for the three and nine months ended June 30, 2024, as compared to 25.4% and 25.7% for the three and nine months ended June 30, 2023.
−Removed: The rate decrease for the three month period was primarily due to state tax provision to return adjustments in the prior year period and activity of CIPs for which there is no related tax impact, partially offset by benefits in the prior year from the release of valuation allowances for capital losses.
−Removed: The rate decrease for the nine month period was primarily due to state tax provision to return adjustments and tax benefits from stock-based compensation.
+Added: Our effective income tax rate was 25.9% and 22.6% for the three months ended December 31, 2024 and 2023.
+Added: The rate increase was primarily due to tax expenses from stock-based compensation, as compared to a tax benefit in the prior year.
Our effective income tax rate reflects the relative contributions of earnings in the jurisdictions in which we operate, which have varying tax rates.
17 unchanged sentences
◦ Impairment of intangible assets and goodwill, if any.
−Removed: • Special termination benefits related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
+Added: • Special termination benefits and other expenses related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
• Impact on compensation and benefits expense from gains and losses on investments related to deferred compensation plans, which is offset in investment and other income (losses), net.
15 unchanged sentences
◦ Impairment of intangible assets and goodwill, if any.
−Removed: ◦ Write off of noncontrolling interests related to the wind down of an acquired business.
−Removed: ◦ Interest expense for amortization of Legg Mason debt premium from acquisition-date fair value adjustment.
−Removed: • Special termination benefits related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
+Added: ◦ Interest expense for amortization of debt premium from acquisition-date fair value adjustment.
+Added: • Special termination benefits and other expenses related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
• Net gains or losses on investments related to deferred compensation plans which are not offset by compensation and benefits expense.
11 unchanged sentences
(in millions) Three Months Ended
−Removed: Nine Months Ended
−Removed: 2024 2023 2024 2023
Operating income $ 219.0 $ 206.5
2 unchanged sentences
Acquisition-related retention
−Removed: 43.7 21.3 217.3 108.1
Compensation and benefits expense from gains on deferred compensation, net 0.9 19.0
1 unchanged sentence
Amortization of intangible assets
−Removed: 84.0 85.4 254.4 254.6
Special termination benefits
−Removed: 16.7 12.2 63.8 54.9
Compensation and benefits expense related to minority interests in certain subsidiaries 12.2 11.7
13 unchanged sentences
(in millions, except per share data) Three Months Ended
−Removed: Nine Months Ended
−Removed: 2024 2023 2024 2023
Net income attributable to Franklin Resources, Inc.
3 unchanged sentences
Acquisition-related retention
−Removed: 43.7 21.3 217.3 108.1
Other acquisition-related expenses 12.7 10.8
Amortization of intangible assets
−Removed: 84.0 85.4 254.4 254.6
Special termination benefits
−Removed: 16.7 12.2 63.8 54.9
−Removed: Net gains on deferred compensation plan investments not offset by compensation and benefits expense (1.1) (0.5) (11.0) (14.1)
+Added: Net (gains) losses on deferred compensation plan investments not offset by compensation and benefits expense 1.3 (6.0)
Unrealized investment (gains) losses 31.5 (49.0)
8 unchanged sentences
(in millions) Three Months Ended
−Removed: Nine Months Ended
−Removed: 2024 2023 2024 2023
Elimination of operating revenues upon consolidation $ (12.5) $ (11.4)
−Removed: Other income, net 42.0 7.3 72.0 67.4
+Added: Other income (expense), net 61.5 (8.6)
income (loss) attributable to noncontrolling interests 53.2 (22.2)
2 unchanged sentences
Cash flows were as follows:
−Removed: Nine Months Ended
+Added: Three Months Ended
(in millions) 2024 2023
2 unchanged sentences
Financing cash flows 87.9 (159.0)
−Removed: Net cash provided by operating activities increased during the nine months ended June 30, 2024 primarily due to lower net purchases of investments by CIPs, partially offset by decreases in accounts payable and accrued expenses and income taxes payable.
−Removed: Net cash used in investing activities decreased primarily due to lower net purchases of investments by collateralized loan obligations (“CLOs”), lower cash paid for acquisitions in the current year as compared to the prior year and net liquidations of investments as compared to purchases in the prior year.
−Removed: Net cash provided by financing activities decreased primarily due to lower net proceeds on debt of CIPs, lower net subscriptions in CIPs by noncontrolling interests, and proceeds from repurchase agreements in the prior year.
+Added: Net cash used by operating activities decreased during the three months ended December 31, 2024 primarily due higher net income adjusted for non-cash items and an increase in accounts payable and accrued expenses, partially offset by a larger decrease in accrued compensation and benefits.
+Added: Net cash used in investing activities increased primarily due to net purchases of investments as compared to liquidations in the prior year and higher net purchases of investments by collateralized loan obligations (“CLOs”).
+Added: Net cash provided by financing activities, as compared to net cash used in financing activities in the prior year, was primarily due to higher net proceeds on debt of CIPs and higher net subscriptions in CIPs by noncontrolling interests.
The assets and liabilities of CIPs attributable to third-party investors do not impact our liquidity and capital resources.
3 unchanged sentences
Our liquid assets and debt consisted of the following:
−Removed: (in millions) June 30,
+Added: (in millions) December 31,
2024 September 30,
5 unchanged sentences
Liquid assets consist of cash and cash equivalents, receivables and certain investments.
−Removed: Cash and cash equivalents at June 30, 2024 primarily consist of money market funds and deposits with financial institutions.
+Added: Cash and cash equivalents at December 31, 2024 primarily consist of money market funds and deposits with financial institutions.
Liquid investments consist of investments in sponsored and other funds, direct investments in redeemable CIPs, other equity and debt securities, and time deposits with maturities greater than three months.
6 unchanged sentences
In prior fiscal years, we issued senior unsecured unsubordinated notes for general corporate purposes and to redeem outstanding notes.
−Removed: At June 30, 2024, Franklin’s outstanding senior notes had an aggregate principal amount due of $1,600.0 million.
+Added: At December 31, 2024, Franklin’s outstanding senior notes had an aggregate principal amount due of $1,600.0 million.
The notes have fixed interest rates from 1.600% to 2.950% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized discounts and debt issuance costs, of $1,587.4 million.
−Removed: At June 30, 2024, Legg Mason’s outstanding senior notes had an aggregate principal amount due of $1,250.0 million.
−Removed: The notes have fixed interest rates from 3.950% to 5.625% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized premium, of $1,448.5 million at June 30, 2024.
+Added: At December 31, 2024, Legg Mason’s outstanding senior notes had an aggregate principal amount due of $1,000.0 million.
+Added: The notes have fixed interest rates from 4.750% to 5.625% with interest paid semi-annually and have an aggregate carrying value, inclusive of unamortized premium, of $1,188.4 million at December 31, 2024.
Franklin unconditionally and irrevocably guarantees all of the outstanding notes issued by Legg Mason.
−Removed: On July 15, 2024, we 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.
+Added: We intend to repay the $400 million 2.850% senior notes due March 2025 from existing cash or other sources of liquidity.
The senior notes contain an optional redemption feature that allows us to redeem each series of notes prior to maturity in whole or in part at any time, at a make-whole redemption price.
3 unchanged sentences
This facility remains undrawn as of the time of this filing.
−Removed: We were in compliance with all debt covenants at June 30, 2024.
−Removed: At June 30, 2024, we had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since 2012 and is unrated.
+Added: We were in compliance with all debt covenants at December 31, 2024.
+Added: At December 31, 2024, we had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since 2012 and is unrated.
Our ability to access the capital markets in a timely manner depends on a number of factors, including our credit rating, the condition of the global economy, investors’ willingness to purchase our securities, interest rates, credit spreads and the valuation levels of equity markets.
1 unchanged sentence
Uses of Capital
−Removed: We expect that our main uses of cash will be to invest in and grow our business including through acquisitions, pay stockholder dividends, invest in our products, pay income taxes and operating expenses of the business, enhance technology infrastructure and business processes, repurchase shares of our common stock, and repay and service debt.
+Added: We expect that our main uses of cash will be to invest in and grow our business including through acquisitions, pay stockholder dividends, invest in our products, pay income taxes and expenses of the business, enhance technology infrastructure and business processes, repurchase shares of our common stock, and repay and service debt.
While we expect to continue to repurchase shares to offset dilution from stock-based compensation, and expect to continue to repurchase shares opportunistically from time to time, we will likely spend more of our post-dividend free cash flow investing in our business, including seed capital and acquiring resources to help grow our investment teams and operations.
We typically declare cash dividends on a quarterly basis, subject to approval by our Board of Directors.
−Removed: We declared regular dividends of $0.93 per share during the nine months ended June 30, 2024 and $0.90 per share during the nine months ended June 30, 2023.
+Added: We declared regular dividends of $0.32 per share during the three months ended December 31, 2024 and $0.31 per share during the three months ended December 31, 2023.
We currently expect to continue paying comparable regular dividends on a quarterly basis to holders of our common stock depending upon earnings and other relevant factors.
2 unchanged sentences
The size and timing of these purchases will depend on business conditions, price, market and other factors, including the terms of any 10b5-1 stock purchase plan that may be in effect at any given time.
−Removed: During the three and nine months ended June 30, 2024, we repurchased 4.3 million and 7.1 million shares of our common stock at a cost of $101.5 million and $172.0 million.
+Added: During the three months ended December 31, 2024, we repurchased 0.3 million shares of our common stock at a cost of $5.8 million and we repurchased 2.4 million shares of our common stock at a cost of $58.8 million in the prior year period.
In December 2023, our Board of Directors authorized the repurchase of up to an additional 27.2 million shares of our common stock in either open market or private transactions, for a total of up to 40.0 million shares available for repurchase under the stock repurchase program.
−Removed: At June 30, 2024, 34.8 million shares remained available for repurchase under the authorization approved by our Board of Directors.
−Removed: On January 1, 2024, we acquired Putnam from Great-West for 31.6 million shares of our 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 paid on July 1, 2024.
−Removed: The cash consideration paid at close and the deferred consideration payment was funded from existing cash.
−Removed: 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.
−Removed: On November 1, 2023, we paid $60.8 million in deferred cash consideration related to our acquisition of Alcentra from existing cash.
−Removed: On April 1, 2024, we paid $400.0 million in deferred cash consideration related to our acquisition of Lexington from existing cash.
+Added: At December 31, 2024, 29.7 million shares remained available for repurchase under the authorization approved by our Board of Directors.
+Added: We will pay up to $375.0 million related to our acquisition of Putnam 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.
We expect to make an additional deferred cash payment related to our acquisition of Lexington of $100.0 million during the third quarter of fiscal year 2025 from existing cash and sources of liquidity.
2 unchanged sentences
While we have no legal or contractual obligation to do so, we have in certain instances voluntarily elected to provide the funds with direct or indirect financial support based on our business objectives.
−Removed: We did not provide financial or other support to our sponsored funds during the nine months ended June 30, 2024.
+Added: We did not provide financial or other support to our sponsored funds during the three months ended December 31, 2024.
CRITICAL ACCOUNTING POLICIES
8 unchanged sentences
Our VIEs are primarily investment products and our variable interests consist of our equity ownership interests in and investment management fees earned from these products.
−Removed: As of June 30, 2024, we were the primary beneficiary of 75 investment product VIEs.
+Added: As of December 31, 2024, we were the primary beneficiary of 66 investment product VIEs.
Business Combinations
5 unchanged sentences
We also monitored fluctuations of our common stock per share price to evaluate our market capitalization relative to the reporting unit as a whole.
−Removed: During the nine months ended June 30, 2024, there were no events or circumstances which would indicate that goodwill, indefinite-lived intangible assets or definite-lived intangible assets might be impaired.
+Added: During the three months ended December 31, 2024, there were no events or circumstances which would indicate that goodwill, indefinite-lived intangible assets or definite-lived intangible assets were more likely than not impaired.
While we believe that the assumptions used to estimate fair value in our impairment tests are reasonable and appropriate, future changes in the assumptions could result in recognition of impairment.
2 unchanged sentences
We use a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable.
−Removed: As of June 30, 2024, Level 3 assets represented 4% of total assets measured at fair value, which primarily related to CIPs’ investments in equity and debt securities.
−Removed: There were insignificant transfers into and out of Level 3 during the nine months ended June 30, 2024.
+Added: As of December 31, 2024, Level 3 assets represented 4% of total assets measured at fair value, which primarily related to CIPs’ investments in equity and debt securities.
+Added: There were insignificant transfers into and no transfers out of Level 3 during the three months ended December 31, 2024.
Quantitative and Qualitative Disclosures About Market Risk.
−Removed: During the nine months ended June 30, 2024, there were no material changes from the market risk disclosures in our Form 10‑K for the fiscal year ended September 30, 2023.
+Added: During the three months ended December 31, 2024, there were no material changes from the market risk disclosures in our Form 10‑K for the fiscal year ended September 30, 2024.
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.