FRANKLIN TEMPLETON INC 10-Q

Item 1. Financial Statements. FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF INCOME Unaudited Three Months Ended March 31, Six Months Ended March 31, (in millions, except per share data) 2025 2024 2025 2024 Operating Revenues Investment management fees $ 1,673.6 $ 1,713.9 $ 3,472.9 $ 3,366.1 Sales and distribution fees 364.9 358.3 740.4 654.7 Shareholder servicing fees 61.9 68.0 125.4 100.5 Other 11.0 12.6 24.3 22.6 Total operating revenues 2,111.4 2,152.8 4,363.0 4,143.9 Operating Expenses Compensation and benefits 920.0 1,028.2 1,911.4 1,996.5 Sales, distribution and marketing 498.1 484.3 1,010.4 885.1 Information systems and technology 158.7 155.1 314.7 286.1 Occupancy 69.3 76.2 144.4 142.9 Amortization of intangible assets 112.5 84.6 225.1 170.4 Impairment of intangible assets 24.4 — 24.4 — General, administrative and other 182.8 195.1 368.0 327.1 Total operating expenses 1,965.8 2,023.5 3,998.4 3,808.1 Operating Income 145.6 129.3 364.6 335.8 Other Income (Expenses) Investment and other income, net 94.1 52.5 104.6 225.7 Interest expense ( 20.8 ) ( 27.7 ) ( 43.9 ) ( 46.5 ) Investment and other income (losses) of consolidated investment products, net ( 164.7 ) 89.9 ( 50.6 ) 66.1 Expenses of consolidated investment products ( 11.5 ) ( 5.9 ) ( 18.8 ) ( 11.8 ) Other income (expenses), net ( 102.9 ) 108.8 ( 8.7 ) 233.5 Income before taxes 42.7 238.1 355.9 569.3 Taxes on income 31.1 62.8 112.2 137.7 Net income 11.6 175.3 243.7 431.6 Less: net income (loss) attributable to Redeemable noncontrolling interests ( 158.4 ) 42.8 ( 108.8 ) 52.3 Nonredeemable noncontrolling interests 18.6 8.3 37.5 3.8 Net Income Attributable to Franklin Resources, Inc. $ 151.4 $ 124.2 $ 315.0 $ 375.5 Earnings per Share Basic $ 0.26 $ 0.23 $ 0.55 $ 0.71 Diluted 0.26 0.23 0.55 0.71 See Notes to Consolidated Financial Statements. 3 Table of Contents FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited (in millions) Three Months Ended March 31, Six Months Ended March 31, 2025 2024 2025 2024 Net Income $ 11.6 $ 175.3 $ 243.7 $ 431.6 Other Comprehensive Income (Loss) Currency translation adjustments, net of tax 28.5 ( 29.5 ) ( 76.6 ) 29.6 Net unrealized gains (losses) on defined benefit plans, net of tax ( 3.1 ) 0.5 ( 2.8 ) 0.4 Net unrealized gains on investments, net of tax — 0.1 — 0.1 Total other comprehensive income (loss) 25.4 ( 28.9 ) ( 79.4 ) 30.1 Total comprehensive income 37.0 146.4 164.3 461.7 Less: comprehensive income (loss) attributable to Redeemable noncontrolling interests ( 158.4 ) 42.8 ( 108.8 ) 52.3 Nonredeemable noncontrolling interests 18.6 8.3 37.5 3.8 Comprehensive Income Attributable to Franklin Resources, Inc. $ 176.8 $ 95.3 $ 235.6 $ 405.6 See Notes to Consolidated Financial Statements. 4 Table of Contents FRANKLIN RESOURCES, INC. CONSOLIDATED BALANCE SHEETS Unaudited (in millions, except share and per share data) March 31, 2025 September 30, 2024 Assets Cash and cash equivalents $ 2,754.0 $ 3,309.5 Receivables 1,453.2 1,479.1 Investments (including $ 636.4 and $ 838.0 at fair value at March 31, 2025 and September 30, 2024) 2,229.4 2,338.4 Assets of consolidated investment products Cash and cash equivalents 785.1 1,099.4 Investments, at fair value 11,859.6 11,034.9 Property and equipment, net 987.7 946.4 Goodwill 6,197.9 6,211.4 Intangible assets, net 4,544.0 4,802.1 Operating lease right-of-use assets 780.1 823.3 Other 398.8 420.0 Total Assets $ 31,989.8 $ 32,464.5 Liabilities Compensation and benefits $ 1,301.9 $ 1,801.3 Accounts payable and accrued expenses 585.4 551.5 Income taxes 140.1 406.4 Debt 2,671.3 2,780.3 Liabilities of consolidated investment products Accounts payable and accrued expenses 535.2 861.3 Debt 9,532.3 9,341.5 Deferred tax liabilities 210.8 284.9 Operating lease liabilities 989.2 965.1 Other 845.6 907.4 Total liabilities 16,811.8 17,899.7 Commitments and Contingencies (Note 10) Redeemable Noncontrolling Interests 2,016.9 1,321.8 Stockholders’ Equity Preferred stock, $ 1.00 par value, 1,000,000 shares authorized; none issued — — Common stock, $ 0.10 par value, 1,000,000,000 shares authorized; 525,404,160 and 523,596,548 shares issued and outstanding at March 31, 2025 and September 30, 2024 52.5 52.4 Capital in excess of par 1,062.4 947.6 Retained earnings 11,730.0 11,927.6 Accumulated other comprehensive loss ( 498.9 ) ( 419.5 ) Total Franklin Resources, Inc. stockholders’ equity 12,346.0 12,508.1 Nonredeemable noncontrolling interests 815.1 734.9 Total stockholders’ equity 13,161.1 13,243.0 Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity $ 31,989.8 $ 32,464.5 See Notes to Consolidated Financial Statements. 5 Table of Contents FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY Unaudited Franklin Resources, Inc. Non- redeemable Non- controlling Interests Total Stockholders’ Equity Common Stock Capital in Excess of Par Value Retained Earnings Accum- ulated Other Compre- hensive Loss Stockholders’ Equity (in millions) for the six months ended March 31, 2025 Shares Amount Balance at October 1, 2024 523.6 $ 52.4 $ 947.6 $ 11,927.6 $ ( 419.5 ) $ 12,508.1 $ 734.9 $ 13,243.0 Net income 163.6 163.6 18.9 182.5 Other comprehensive loss ( 104.8 ) ( 104.8 ) ( 104.8 ) Dividends declared on common stock ($ 0.32 per share) ( 173.6 ) ( 173.6 ) ( 173.6 ) Repurchase of common stock ( 0.3 ) — ( 5.8 ) — ( 5.8 ) ( 5.8 ) Issuance of common stock 0.7 — 21.5 21.5 21.5 Stock-based compensation 51.6 51.6 51.6 Net subscriptions and other 13.1 13.1 Net consolidation of investment products 4.7 4.7 Adjustment to fair value of redeemable noncontrolling interests 1.5 1.5 1.5 Balance at December 31, 2024 524.0 $ 52.4 $ 1,014.9 $ 11,919.1 $ ( 524.3 ) $ 12,462.1 $ 771.6 $ 13,233.7 Net income 151.4 151.4 18.6 170.0 Other comprehensive income 25.4 25.4 25.4 Dividends declared on common stock ($ 0.32 per share) ( 173.5 ) ( 173.5 ) ( 173.5 ) Repurchase of common stock ( 0.5 ) ( 0.1 ) ( 9.9 ) — ( 10.0 ) ( 10.0 ) Issuance of common stock 1.9 0.2 44.7 44.9 44.9 Stock-based compensation 12.7 12.7 12.7 Net subscriptions and other 38.4 38.4 Net deconsolidation of investment products ( 13.5 ) ( 13.5 ) Adjustment to fair value of redeemable noncontrolling interests ( 167.0 ) ( 167.0 ) ( 167.0 ) Balance at March 31, 2025 525.4 $ 52.5 $ 1,062.4 $ 11,730.0 $ ( 498.9 ) $ 12,346.0 $ 815.1 $ 13,161.1 See Notes to Consolidated Financial Statements. 6 Table of Contents Franklin Resources, Inc. Non- redeemable Non- controlling Interests Total Stockholders’ Equity Common Stock Capital in Excess of Par Value Retained Earnings Accum- ulated Other Compre- hensive Loss Stockholders’ Equity (in millions) for the six months ended March 31, 2024 Shares Amount Balance at October 1, 2023 495.9 $ 49.6 $ — $ 12,376.6 $ ( 509.3 ) $ 11,916.9 $ 630.9 $ 12,547.8 Net income (loss) 251.3 251.3 ( 4.5 ) 246.8 Other comprehensive income 59.0 59.0 59.0 Dividends declared on common stock ($ 0.31 per share) ( 167.6 ) ( 167.6 ) ( 167.6 ) Repurchase of common stock ( 2.4 ) ( 0.2 ) ( 66.6 ) 8.0 ( 58.8 ) ( 58.8 ) Issuance of common stock 1.2 0.1 26.7 26.8 26.8 Stock-based compensation 39.9 39.9 39.9 Net subscriptions and other 9.6 9.6 Adjustment to fair value of redeemable noncontrolling interests ( 65.9 ) ( 65.9 ) ( 65.9 ) Balance at December 31, 2023 494.7 $ 49.5 $ — $ 12,402.4 $ ( 450.3 ) $ 12,001.6 $ 636.0 $ 12,637.6 Net income 124.2 124.2 8.3 132.5 Other comprehensive loss ( 28.9 ) ( 28.9 ) ( 28.9 ) Dividends declared on common stock ($ 0.31 per share) ( 169.3 ) ( 169.3 ) ( 169.3 ) Repurchase of common stock ( 0.4 ) ( 0.1 ) ( 11.6 ) — ( 11.7 ) ( 11.7 ) Issuance of common stock 0.3 — 10.7 10.7 10.7 Stock-based compensation 86.3 86.3 86.3 Acquisition 31.6 3.2 936.9 940.1 25.8 965.9 Net subscriptions and other 63.1 63.1 Net deconsolidation of investment products ( 12.6 ) ( 12.6 ) Adjustment to fair value of redeemable noncontrolling interests ( 91.9 ) ( 91.9 ) ( 91.9 ) Balance at March 31, 2024 526.2 $ 52.6 $ 1,022.3 $ 12,265.4 $ ( 479.2 ) $ 12,861.1 $ 720.6 $ 13,581.7 See Notes to Consolidated Financial Statements. 7 Table of Contents FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited Six Months Ended March 31, (in millions) 2025 2024 Net Income $ 243.7 $ 431.6 Adjustments to reconcile net income to net cash used in operating activities: Stock-based compensation 119.9 132.0 Amortization of deferred sales commissions 39.0 28.3 Depreciation and other amortization 60.7 57.5 Amortization of intangible assets 225.1 170.4 Impairment of intangible assets 24.4 — Net losses (gains) on investments 10.3 ( 41.6 ) Income from investments in equity method investees ( 15.5 ) ( 81.3 ) Net losses (gains) on investments of consolidated investment products 101.8 ( 3.0 ) Net purchase of investments by consolidated investment products ( 230.7 ) ( 232.2 ) Deferred income taxes ( 39.9 ) ( 15.0 ) Other 139.2 57.4 Changes in operating assets and liabilities: Increase in receivables and other assets ( 48.2 ) ( 55.1 ) Decrease in investments, net 3.3 10.0 Decrease in accrued compensation and benefits ( 488.0 ) ( 316.0 ) Decrease in income taxes payable ( 266.3 ) ( 177.2 ) Increase (decrease) in accounts payable, accrued expenses and other liabilities ( 33.8 ) 22.6 Decrease in accounts payable and accrued expenses of consolidated investment products ( 40.3 ) ( 103.7 ) Net cash used in operating activities ( 195.3 ) ( 115.3 ) Purchase of investments ( 545.1 ) ( 501.0 ) Liquidation of investments 480.2 543.6 Purchase of investments by consolidated collateralized loan obligations ( 3,199.4 ) ( 2,294.3 ) Liquidation of investments by consolidated collateralized loan obligations 2,357.1 1,769.9 Additions of property and equipment, net ( 109.3 ) ( 61.2 ) Acquisitions, net of cash acquired (including $ 281.4 in cash and cash equivalents of consolidated investment products in fiscal year 2024) — 177.9 Payments of deferred consideration liability — ( 60.8 ) Net (deconsolidation) consolidation of investment products ( 4.1 ) 15.1 Net cash used in investing activities ( 1,020.6 ) ( 410.8 ) [Table continued on next page] See Notes to Consolidated Financial Statements. 8 Table of Contents FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited [Table continued from previous page] Six Months Ended March 31, (in millions) 2025 2024 Issuance of common stock $ 10.2 $ 7.3 Dividends paid on common stock ( 339.4 ) ( 321.4 ) Repurchase of common stock ( 15.8 ) ( 70.5 ) Proceeds from debt 300.0 — Payment on debt ( 400.0 ) — Proceeds from repurchase agreement 41.2 — Payments on repurchase agreement ( 32.4 ) — Proceeds from debt of consolidated investment products 3,266.5 587.4 Payments on debt of consolidated investment products ( 2,596.9 ) ( 35.5 ) Payments on contingent consideration liabilities ( 0.7 ) ( 2.9 ) Noncontrolling interests 147.6 67.7 Net cash provided by financing activities 380.3 232.1 Effect of exchange rate changes on cash and cash equivalents ( 34.2 ) 15.9 Decrease in cash and cash equivalents ( 869.8 ) ( 278.1 ) Cash and cash equivalents, beginning of period 4,408.9 4,402.4 Cash and Cash Equivalents, End of Period $ 3,539.1 $ 4,124.3 Supplemental Disclosure of Cash Flow Information Cash paid for income taxes $ 217.1 $ 318.4 Cash paid for interest 49.2 51.3 Cash paid for interest by consolidated investment products 403.7 345.6 See Notes to Consolidated Financial Statements. 9 Table of Contents FRANKLIN RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2025 (Unaudited) Note 1 – Basis of Presentation The unaudited interim financial statements of Franklin Resources, Inc. (“Franklin”) and its consolidated subsidiaries (collectively, the “Company”) included herein have been prepared in accordance with the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Under these rules and regulations, some information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America have been shortened or omitted. Management believes that all adjustments necessary for a fair statement of the financial position and the results of operations for the periods shown have been made. All adjustments are normal and recurring. Management also believes that the accounting estimates are appropriate, and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates. These financial statements should be read together with the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (“fiscal year 2024”). 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 Company will adopt the annual disclosures in its Annual Report on Form 10-K for the fiscal year ending September 30, 2025 and interim disclosure in its Quarterly report on Form 10-Q for the quarter ending December 31, 2025. There were no other significant updates to the new accounting guidance that the Company has not yet adopted as disclosed in its Form 10-K for fiscal year 2024. Note 3 – Earnings per Share The components of basic and diluted earnings per share were as follows: (in millions, except per share data) Three Months Ended March 31, Six Months Ended March 31, 2025 2024 2025 2024 Net income attributable to Franklin Resources, Inc. $ 151.4 $ 124.2 $ 315.0 $ 375.5 Less: allocation of earnings to participating nonvested stock and stock unit awards 14.3 7.2 29.7 16.3 Net Income Available to Common Stockholders $ 137.1 $ 117.0 $ 285.3 $ 359.2 Weighted-average shares outstanding – basic 519.1 518.4 518.3 502.6 Dilutive effect of nonparticipating nonvested stock unit awards 0.8 0.8 0.7 0.8 Weighted-Average Shares Outstanding – Diluted 519.9 519.2 519.0 503.4 Earnings per Share Basic $ 0.26 $ 0.23 $ 0.55 $ 0.71 Diluted 0.26 0.23 0.55 0.71 There were no nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive for the three and six months ended March 31, 2025 and such awards were insignificant for the three and six months ended March 31, 2024. 10 Table of Contents Note 4 – Revenues Operating revenues by geographic area were as follows: (in millions) United States Luxembourg Asia-Pacific Americas Excluding United States Europe, Middle East and Africa, Excluding Luxembourg Total for the three months ended March 31, 2025 Investment management fees $ 1,272.4 $ 215.9 $ 71.5 $ 49.2 $ 64.6 $ 1,673.6 Sales and distribution fees 259.2 89.6 6.4 9.6 0.1 364.9 Shareholder servicing fees 53.7 7.7 0.4 0.1 — 61.9 Other 10.8 — 0.2 — — 11.0 Total $ 1,596.1 $ 313.2 $ 78.5 $ 58.9 $ 64.7 $ 2,111.4 (in millions) United States Luxembourg Asia-Pacific Americas Excluding United States Europe, Middle East and Africa, Excluding Luxembourg Total for the six months ended March 31, 2025 Investment management fees $ 2,633.8 $ 439.8 $ 147.3 $ 102.8 $ 149.2 $ 3,472.9 Sales and distribution fees 526.3 183.0 11.3 19.6 0.2 740.4 Shareholder servicing fees 108.8 15.7 0.8 0.1 — 125.4 Other 23.9 — 0.4 — — 24.3 Total $ 3,292.8 $ 638.5 $ 159.8 $ 122.5 $ 149.4 $ 4,363.0 (in millions) United States Luxembourg Asia-Pacific Americas Excluding United States Europe, Middle East and Africa, Excluding Luxembourg Total for the three months ended March 31, 2024 Investment management fees $ 1,285.5 $ 222.2 $ 69.9 $ 63.2 $ 73.1 $ 1,713.9 Sales and distribution fees 256.3 87.1 5.0 9.9 — 358.3 Shareholder servicing fees 59.4 7.9 0.7 — — 68.0 Other 9.4 0.2 3.0 — — 12.6 Total $ 1,610.6 $ 317.4 $ 78.6 $ 73.1 $ 73.1 $ 2,152.8 (in millions) United States Luxembourg Asia-Pacific Americas Excluding United States Europe, Middle East and Africa, Excluding Luxembourg Total for the six months ended March 31, 2024 Investment management fees $ 2,546.1 $ 413.9 $ 138.4 $ 114.7 $ 153.0 $ 3,366.1 Sales and distribution fees 462.0 163.6 9.6 19.5 — 654.7 Shareholder servicing fees 83.6 15.5 1.3 0.1 — 100.5 Other 18.4 0.7 3.2 — 0.3 22.6 Total $ 3,110.1 $ 593.7 $ 152.5 $ 134.3 $ 153.3 $ 4,143.9 Operating revenues are attributed to geographic areas based on the locations of the subsidiaries that provide the services, which may differ from the regions in which the related investment products are sold. Revenues earned from sponsored funds were 83 % of the Company’s total operating revenues for the three and six months ended March 31, 2025 and March 31, 2024. 11 Table of Contents Note 5 – Investments The disclosures below include details of the Company’s investments, excluding those of consolidated investment products (“CIPs”). See Note 7 – Consolidated Investment Products for information related to the investments held by these entities. Investments consisted of the following: (in millions) March 31, 2025 September 30, 2024 Investments, at fair value Sponsored funds and separate accounts $ 278.0 $ 509.1 Investments related to long-term incentive plans 258.2 271.6 Other equity and debt investments 100.2 57.3 Total investments, at fair value 636.4 838.0 Investments in equity method investees 1,178.7 1,219.7 Other investments 414.3 280.7 Total $ 2,229.4 $ 2,338.4 The Company has entered into repurchase agreements with a third-party financing company for certain investments held by the Company. As of March 31, 2025 and September 30, 2024, other liabilities includes repurchase agreements of $ 119.9 million and $ 111.4 million with investments of $ 124.1 million and $ 121.7 million in carrying value pledged as collateral. The repurchase agreements have contractual maturity dates ranging between 2030 to 2038. Note 6 – Fair Value Measurements The disclosures below include details of the Company’s fair value measurements, excluding those of CIPs. See Note 7 – Consolidated Investment Products for information related to fair value measurements of the assets and liabilities of these entities. The assets and liabilities measured at fair value on a recurring basis were as follows: (in millions) Level 1 Level 2 Level 3 NAV as a Practical Expedient Total as of March 31, 2025 Assets Investments, at fair value Sponsored funds and separate accounts $ 54.7 $ 178.0 $ 9.0 $ 36.3 $ 278.0 Investments related to long-term incentive plans 226.2 2.8 — 29.2 258.2 Other equity and debt investments 13.2 11.5 1.6 34.2 60.5 Total Assets Measured at Fair Value $ 294.1 $ 192.3 $ 10.6 $ 99.7 $ 596.7 Liabilities Securities sold short $ 116.6 $ — $ — $ — $ 116.6 Contingent consideration liabilities — — 27.5 — 27.5 Total Liabilities Measured at Fair Value $ 116.6 $ — $ 27.5 $ — $ 144.1 As of March 31, 2025, there were $ 39.7 million of other investments which were adjusted to fair value on a nonrecurring basis and excluded from the table above. 12 Table of Contents (in millions) Level 1 Level 2 Level 3 NAV as a Practical Expedient Total as of September 30, 2024 Assets Investments, at fair value Sponsored funds and separate accounts $ 306.3 $ 157.4 $ 5.2 $ 40.2 $ 509.1 Investments related to long-term incentive plans 242.5 — — 29.1 271.6 Other equity and debt investments 4.1 11.1 2.6 39.5 57.3 Total Assets Measured at Fair Value $ 552.9 $ 168.5 $ 7.8 $ 108.8 $ 838.0 Liabilities Securities sold short $ 178.1 $ — $ — $ — $ 178.1 Contingent consideration liabilities — — 28.2 — 28.2 Total Liabilities Measured at Fair Value $ 178.1 $ — $ 28.2 $ — $ 206.3 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: (in millions) March 31, 2025 September 30, 2024 Nonredeemable investments 1 Investments with known liquidation periods $ 25.8 $ 32.4 Investments with unknown liquidation periods 15.4 16.1 Redeemable investments 2 58.5 60.3 Unfunded commitments 11.0 14.0 _______________ 1 The investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets. Investments with known liquidation periods have an expected weighted-average life of 2.1 years and 1.9 years at March 31, 2025 and September 30, 2024. 2 Investments are redeemable on a semi-monthly, monthly and quarterly basis. Financial instruments that were not measured at fair value were as follows: (in millions) Fair Value Level March 31, 2025 September 30, 2024 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Financial Assets Cash and cash equivalents 1 $ 2,754.0 $ 2,754.0 $ 3,309.5 $ 3,309.5 Other investments Time deposits 2 12.8 12.8 9.8 9.8 Equity securities 3 401.5 401.5 270.9 270.9 Financial Liability Debt 2 $ 2,671.3 $ 2,234.4 $ 2,780.3 $ 2,387.0 13 Table of Contents Note 7 – Consolidated Investment Products CIPs consist of mutual and other investment funds, limited partnerships and similar structures and collateralized loan obligations (“CLOs”), all of which are sponsored by the Company, and include both voting interest entities and variable interest entities (“VIEs”). The Company had 73 CIPs, including 21 CLOs, as of March 31, 2025 and 77 CIPs, including 22 CLOs, as of September 30, 2024. The balances related to CIPs included in the Company’s consolidated balance sheets were as follows: (in millions) March 31, 2025 September 30, 2024 Assets Cash and cash equivalents $ 785.1 $ 1,099.4 Receivables 165.3 217.5 Investments, at fair value 11,859.6 11,034.9 Total Assets $ 12,810.0 $ 12,351.8 Liabilities Accounts payable and accrued expenses $ 535.2 $ 861.3 Debt 9,532.3 9,341.5 Other liabilities 11.0 39.9 Total liabilities 10,078.5 10,242.7 Redeemable Noncontrolling Interests 1,196.1 687.8 Stockholders ’ Equity Franklin Resources, Inc.’s interests 1,110.9 1,080.9 Nonredeemable noncontrolling interests 424.5 340.4 Total stockholders’ equity 1,535.4 1,421.3 Total Liabilities, Redeemable Noncontrolling Interests and Stockholders ’ Equity $ 12,810.0 $ 12,351.8 The consolidation of CIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2025 and 2024. The Company has no right to the CIPs’ assets, other than its direct equity investments in them and investment management and other fees earned from them. The debt holders of the CIPs have no recourse to the Company’s assets beyond the level of its direct investment; therefore the Company bears no other risks associated with the CIPs’ liabilities. Fair Value Measurements Assets of CIPs measured at fair value on a recurring basis were as follows: (in millions) Level 1 Level 2 Level 3 NAV as a Practical Expedient Total as of March 31, 2025 Assets Cash and cash equivalents of CLOs $ 537.9 $ — $ — $ — $ 537.9 Receivables of CLOs — 122.3 — — 122.3 Investments Equity and debt securities 511.6 1,331.3 545.0 155.4 2,543.3 Loans — 9,307.8 8.5 — 9,316.3 Total Assets Measured at Fair Value $ 1,049.5 $ 10,761.4 $ 553.5 $ 155.4 $ 12,519.8 14 Table of Contents (in millions) Level 1 Level 2 Level 3 NAV as a Practical Expedient Total as of September 30, 2024 Assets Cash and cash equivalents of CLOs $ 764.3 $ — $ — $ — $ 764.3 Receivables of CLOs — 149.6 — — 149.6 Investments Equity and debt securities 229.7 889.4 550.1 187.1 1,856.3 Loans — 9,178.1 0.5 — 9,178.6 Total Assets Measured at Fair Value $ 994.0 $ 10,217.1 $ 550.6 $ 187.1 $ 11,948.8 Investments for which fair value was estimated using reported NAV as a practical expedient consist of nonredeemable private debt and equity funds, a redeemable global hedge fund and a redeemable U.S. equity fund. These investments were as follows: (in millions) March 31, 2025 September 30, 2024 Nonredeemable investments 1 Investments with unknown liquidation periods $ 97.1 $ 49.0 Redeemable investments 2 58.3 138.1 Unfunded commitments 3 — 42.8 _______________ 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. 2 Investments are redeemable on a monthly basis and liquidation periods are unknown. 3 As of March 31, 2025, there were no investments with unfunded commitments. 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. Changes in Level 3 assets were as follows: (in millions) Equity and Debt Securities for the three months ended March 31, 2025 Balance at January 1, 2025 $ 573.5 Gains included in investment and other income (losses) of consolidated investment products, net 2.3 Purchases 10.9 Sales ( 2.7 ) Transfers into Level 3 0.2 Transfers out of Level 3 ( 39.2 ) Balance at March 31, 2025 $ 545.0 Change in unrealized losses included in net income relating to assets held at March 31, 2025 $ ( 17.1 ) 15 Table of Contents (in millions) Equity and Debt Securities for the six months ended March 31, 2025 Balance at October 1, 2024 $ 550.1 Gains included in investment and other income (losses) of consolidated investment products, net 24.3 Purchases 20.1 Sales ( 14.3 ) Net consolidations 3.8 Transfers into Level 3 0.2 Transfers out of Level 3 ( 39.2 ) Balance at March 31, 2025 $ 545.0 Change in unrealized gains included in net income relating to assets held at March 31, 2025 $ 2.8 (in millions) Equity and Debt Securities for the three months ended March 31, 2024 Balance at January 1, 2024 $ 551.5 Acquisition 29.6 Losses included in investment and other income of consolidated investment products, net ( 0.1 ) Purchases 22.8 Sales ( 0.3 ) Net deconsolidations ( 12.5 ) Balance at March 31, 2024 $ 591.0 Change in unrealized gains included in net income relating to assets held at March 31, 2024 $ — (in millions) Equity and Debt Securities for the six months ended March 31, 2024 Balance at October 1, 2023 $ 584.9 Acquisition 29.6 Losses included in investment and other income of consolidated investment products, net ( 38.2 ) Purchases 26.6 Sales ( 0.5 ) Net deconsolidations ( 12.5 ) Transfers into Level 3 1.1 Balance at March 31, 2024 $ 591.0 Change in unrealized losses included in net income relating to assets held at March 31, 2024 $ ( 37.6 ) 16 Table of Contents Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows: (in millions) as of March 31, 2025 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 ) Equity and debt securities $ 260.5 Market pricing Private sale pricing $ 0.37 –$ 1,850.00 ($ 162.84 ) per share Discount for lack of marketability 10.0 %– 50.0 % ( 22.2 %) 234.5 Market comparable companies Enterprise value/ Revenue multiple 1.3 – 27.3 ( 10.4 ) Discount for lack of marketability 8.2 %– 11.6 % ( 10.9 %) 39.9 Discounted cash flow Discount rate 6.8 %– 7.1 % ( 6.9 %) 10.1 Option pricing model Volatility 40.8 %– 101.7 % ( 46.6 %) Discount for lack of marketability 10.3 %– 21.1 % ( 11.3 %) (in millions) as of September 30, 2024 Fair Value Valuation Technique Significant Unobservable Inputs Range (Weighted Average 1 ) Equity and debt securities $ 291.6 Market comparable companies Enterprise value/ Revenue multiple 1.2 – 22.8 ( 10.9 ) Discount for lack of marketability 0.1 %– 10.4 % ( 8.1 %) 214.5 Market pricing Private sale pricing $ 0.01 –$ 1,000.00 ($ 73.04 ) per share Discount for lack of marketability 9.8 %– 17.5 % ( 11.5 %) 44.0 Discounted cash flow Discount rate 6.8 % __________________ 1 Based on the relative fair value of the instruments. If the relevant significant inputs used in the market-based valuations, other than discount for lack of marketability, were independently higher (lower) as of March 31, 2025, the resulting fair value of the assets would be higher (lower). If the relevant significant inputs used in the discounted cash flow, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of March 31, 2025, the resulting fair value of the assets would be lower (higher). 17 Table of Contents Financial instruments of CIPs that were not measured at fair value were as follows: (in millions) Fair Value Level March 31, 2025 September 30, 2024 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Financial Asset Cash and cash equivalents 1 $ 247.2 $ 247.2 $ 335.1 $ 335.1 Financial Liabilities Debt of CLOs 1 2 or 3 $ 9,532.3 $ 9,343.8 $ 9,341.5 $ 9,167.3 __________________ 1 Substantially all was Level 2. Debt Debt of CLOs totaled $ 9,532.3 million and $ 9,341.5 million at March 31, 2025 and September 30, 2024. The debt had fixed and floating interest rates ranging from 2.39 % to 13.04 % with a weighted-average effective interest rate of 6.58 % at March 31, 2025, and from 2.39 % to 13.73 % with a weighted-average effective interest rate of 7.36 % at September 30, 2024. The floating rates were based on the Secured Overnight Financing Rate. The contractual maturities for the debt of CLOs at March 31, 2025 were as follows: (in millions) for the fiscal years ending September 30, Amount 2025 (remainder of year) $ — 2026 — 2027 12.0 2028 — 2029 — Thereafter 9,520.3 Total $ 9,532.3 Collateralized Loan Obligations The unpaid principal balance and fair value of the investments of CLOs were as follows: (in millions) March 31, 2025 September 30, 2024 Unpaid principal balance $ 9,481.8 $ 9,371.9 Difference between unpaid principal balance and fair value 8.9 ( 19.8 ) Fair Value $ 9,490.7 $ 9,352.1 Investments 90 days or more past due were immaterial at March 31, 2025 and September 30, 2024. The Company recognized $ 15.6 million and $ 27.3 million of net gains during the three and six months ended March 31, 2025 and $ 9.7 million and $ 30.5 million of net gains during the three and six months ended March 31, 2024, related to its own economic interests in the CLOs. The aggregate principal related to the debt of CLOs was $ 9,481.7 million and $ 9,282.8 million at March 31, 2025 and September 30, 2024. 18 Table of Contents Note 8 – Redeemable Noncontrolling Interests Changes in redeemable noncontrolling interests were as follows: (in millions) 2025 2024 CIPs Minority Interests Total CIPs Minority Interests Total for the three months ended March 31, Balance at beginning of period $ 1,466.5 $ 639.5 $ 2,106.0 $ 555.3 $ 523.2 $ 1,078.5 Net income (loss) ( 167.4 ) 9.0 ( 158.4 ) 32.7 10.1 42.8 Net subscriptions (distributions) and other ( 50.5 ) 5.3 ( 45.2 ) ( 8.5 ) ( 14.8 ) ( 23.3 ) Net consolidations (deconsolidations) ( 52.5 ) — ( 52.5 ) 43.8 — 43.8 Acquisition — — — 20.2 — 20.2 Adjustment to fair value — 167.0 167.0 — 91.9 91.9 Balance at End of Period $ 1,196.1 $ 820.8 $ 2,016.9 $ 643.5 $ 610.4 $ 1,253.9 (in millions) 2025 2024 CIPs Minority Interests Total CIPs Minority Interests Total for the six months ended March 31, Balance at beginning of period $ 687.8 $ 634.0 $ 1,321.8 $ 580.1 $ 446.0 $ 1,026.1 Net income (loss) ( 128.5 ) 19.7 ( 108.8 ) 29.8 22.5 52.3 Net subscriptions (distributions) and other 125.1 1.6 126.7 29.6 ( 15.9 ) 13.7 Net consolidations (deconsolidations) 511.7 — 511.7 ( 16.2 ) — ( 16.2 ) Acquisition — — — 20.2 — 20.2 Adjustment to fair value — 165.5 165.5 — 157.8 157.8 Balance at End of Period $ 1,196.1 $ 820.8 $ 2,016.9 $ 643.5 $ 610.4 $ 1,253.9 Note 9 – Nonconsolidated Variable Interest Entities VIEs for which the Company is not the primary beneficiary consist of sponsored funds and other investment products in which the Company has an equity ownership interest. The Company’s maximum exposure to loss from these VIEs consists of equity investments, investment management and other fee receivables as follows: (in millions) March 31, 2025 September 30, 2024 Investments $ 1,123.3 $ 1,074.4 Receivables 211.5 226.0 Total $ 1,334.8 $ 1,300.4 While the Company has no legal or contractual obligation to do so, it routinely makes cash investments in the course of launching sponsored funds. As it has done in the past, the Company also may voluntarily elect to provide its sponsored funds with additional direct or indirect financial support based on its business objectives. The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the six months ended March 31, 2025 or fiscal year 2024. Note 10 – Commitments and Contingencies Legal Proceedings India Credit Fund Closure Matters . During the six months ended March 31, 2025, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2024. 19 Table of Contents Western Asset Management Investigations. As previously disclosed, the Company launched an internal investigation into 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 U.S. Department of Justice (“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. On November 25, 2024, the SEC filed a complaint in the United States District Court for the Southern District of New York against Mr. Leech alleging violations of certain laws related to trade allocations. Concurrently, the DOJ filed an indictment with the United States District Court for the Southern District of New York against Mr. Leech for similar allegations and for false statements made to the SEC. The Company and WAM have fully cooperated, and will continue to fully cooperate with these investigations. Blockchain Litigation. The Company, two of its subsidiaries, the Company’s CEO, and an individual employee were named as defendants in litigation filed by Blockchain Innovation, LLC. The parties reached an agreement to resolve this previously-disclosed matter, pursuant to which the action is expected to be dismissed. The resolution of this matter did not have a material impact on the consolidated financial statements. 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. Management is of the opinion that the ultimate resolution of such claims will not materially affect the Company’s business, financial position, results of operations or liquidity. In management’s opinion, an adequate accrual has been made as of March 31, 2025 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount. Indemnifications and Guarantees In the ordinary course of business or in connection with certain acquisition agreements, the Company enters into contracts that provide for indemnifications by the Company in certain circumstances. In addition, certain Company entities guarantee certain financial and performance-related obligations of various Franklin subsidiaries. The Company is also subject to certain legal requirements and agreements providing for indemnifications of directors, officers and personnel against liabilities and expenses they may incur under certain circumstances in connection with their service. The terms of these indemnities and guarantees vary pursuant to applicable facts and circumstances, and from agreement to agreement. Future payments for claims against the Company under these indemnities or guarantees could negatively impact the Company’s financial condition. In management’s opinion, no material loss was deemed probable or reasonably possible pursuant to such indemnification agreements and/or guarantees as of March 31, 2025. Other Commitments and Contingencies At March 31, 2025, there were no other material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2024. Note 11 – Stock-Based Compensation Stock and stock unit award activity was as follows: (shares in thousands) Time-Based Shares Performance- Based Shares Total Shares Weighted- Average Grant-Date Fair Value for the six months ended March 31, 2025 Nonvested balance at October 1, 2024 16,594 3,314 19,908 $ 24.03 Granted 7,901 169 8,070 20.73 Vested ( 2,011 ) ( 166 ) ( 2,177 ) 27.87 Forfeited/canceled ( 315 ) ( 189 ) ( 504 ) 24.01 Nonvested Balance at March 31, 2025 22,169 3,128 25,297 $ 22.65 Total unrecognized compensation expense related to nonvested stock and stock unit awards was $ 259.1 million at March 31, 2025. This expense is expected to be recognized over a remaining weighted-average vesting period of 1.9 years. 20 Table of Contents Note 12 – Investment and Other Income, Net Investment and other income, net consisted of the following: Three Months Ended March 31, Six Months Ended March 31, (in millions) 2025 2024 2025 2024 Dividend and interest income $ 19.4 $ 38.0 $ 62.5 $ 92.8 Gains (losses) on investments, net 46.8 ( 18.5 ) ( 10.3 ) 41.6 Income from investments in equity method investees 23.1 24.4 15.5 81.3 Gains (losses) on derivatives, net ( 1.1 ) ( 6.4 ) 5.5 ( 14.6 ) Rental income 10.9 10.9 22.1 21.7 Foreign currency exchange (losses) gains, net ( 7.5 ) ( 1.3 ) 7.0 ( 8.7 ) Other, net 2.5 5.4 2.3 11.6 Investment and other income, net $ 94.1 $ 52.5 $ 104.6 $ 225.7 Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $ 82.7 million and $( 1.0 ) million for the three and six months ended March 31, 2025 and $ 9.5 million and $ 86.1 million for the three and six months ended March 31, 2024. Note 13 - Subsequent Event On April 30, 2025, the Company entered into an Amended and Restated Revolving Credit Agreement (the “Amended and Restated Credit Agreement”) with a five year term and $ 1.1 billion of aggregate available borrowings. As of April 30, 2025, the $ 300.0 million of borrowings outstanding under the Company’s prior credit facility were transferred to the Amended and Restated Credit Agreement. For additional information please see Part II. Item 5. Other Information - Entry into Amended and Restated Revolving Credit Agreement. 21 Table of Contents