FRANKLIN RESOURCES INC - FORM 8-K - EX-99.1 - PRESS RELEASE - July 30, 2012

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EXHIBIT 99.1
 
Contact:
Franklin Resources, Inc.
 
Investor Relations: Brian Sevilla (650) 312-4091
 
Corporate Communications: Matt Walsh (650) 312-2245
 
franklinresources.com
FOR IMMEDIATE RELEASE

Franklin Resources, Inc. Announces Third Quarter Results

San Mateo, CA, July 30, 2012 - Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income1 of $455.3 million or $2.12 per diluted share for the quarter ended June 30, 2012, as compared to $503.2 million or $2.32 per diluted share for the previous quarter and $503.3 million or $2.26 per diluted share for the quarter ended June 30, 2011.

 
Quarter Ended
 
% Change
 
Quarter Ended
 
% Change
 
30-Jun-12
 
31-Mar-12
 
Qtr. vs. Qtr.
 
30-Jun-11
 
Year vs. Year
Financial Results
 
 
 
 
 
 
 
 
 
($ in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
Operating revenues
$
1,783.6

 
$
1,799.3

 
(1
)%
 
$
1,853.0

 
(4
)%
Operating income
643.0

 
617.1

 
4
 %
 
682.7

 
(6
)%
Operating margin
36.0
%
 
34.3
%
 
 
 
36.8
%
 
 
 
 
 
 
 
 
 
 
 
 
Net income1
$
455.3

 
$
503.2

 
(10
)%
 
$
503.3

 
(10
)%
Diluted earnings per share
$
2.12

 
$
2.32

 
(9
)%
 
$
2.26

 
(6
)%
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
 
 
 
 
 
 
 
 
(in billions)
 
 
 
 
 
 
 
 
 
Ending
$
707.1

 
$
725.7

 
(3
)%
 
$
734.2

 
(4
)%
Average2
710.7

 
706.9

 
1
 %
 
726.7

 
(2
)%
Net new flows
4.8

 
5.6

 
(14
)%
 
21.7

 
(78
)%

Non-operating income for the quarter ended June 30, 2012 included $(18.0) million of investment and other income (losses), net, as compared to $82.4 million for the prior quarter and $14.5 million for the quarter ended June 30, 2011.

Total assets under management (“AUM”) were $707.1 billion at June 30, 2012, down $18.6 billion or 3% during the quarter. The decrease was primarily due to $22.5 billion in market depreciation, partially offset by net new flows of $4.8 billion. AUM decreased $27.1 billion or 4% year over year, primarily due to $32.0 billion in market depreciation.

Cash and cash equivalents and investments were $9.5 billion at June 30, 2012, as compared to $9.4 billion at September 30, 2011. Total stockholders' equity was $9.3 billion at June 30, 2012, as compared to $9.1 billion at September 30, 2011. The Company had 212.6 million shares of common stock outstanding at June 30, 2012, as compared to 217.7 million shares outstanding at September 30, 2011. During the quarter ended June 30, 2012, the Company repurchased approximately 2.7 million shares of its common stock for a total cost of $282.0 million.


1


Conference Call Information

Pre-recorded audio commentary on the results from Franklin Resources, Inc.'s President and Chief Executive Officer Greg Johnson and Executive Vice President and Chief Financial Officer Ken Lewis will be available today at approximately 8:30 a.m. Eastern Time. They will also lead a live teleconference today at 4:30 p.m. Eastern Time to answer questions of a material nature. Analysts and investors are encouraged to review the Company's recent filings with the U.S. Securities and Exchange Commission and to contact Investor Relations before the live teleconference for any clarifications or questions related to the earnings release or pre-recorded audio commentary.

Access to the pre-recorded audio commentary and accompanying slides are available at franklinresources.com. The pre-recorded audio commentary can also be accessed by dialing (888) 843-7419 in the U.S. and Canada or (630) 652-3042 internationally using access code 32845775, any time through August 29, 2012.

Access to the live teleconference will be available at franklinresources.com or by dialing (888) 895-5271 in the U.S. and Canada or (847) 619-6547 internationally. A replay of the call can also be accessed by calling (888) 843-7419 in the U.S. and Canada or (630) 652-3042 internationally using access code 32845773, after 7:00 p.m. Eastern Time today through August 29, 2012.

Questions regarding the pre-recorded audio commentary or live teleconference should be directed to Franklin Resources, Inc., Investor Relations at (650) 312-4091 or Corporate Communications at (650) 312-2245.

Lipper Performance Rankings of Franklin Templeton's U.S.-Registered Long-Term Mutual Funds3,4:

 
Period Ended June 30, 2012
 
Percent of Assets in Top Two Quartiles5
 
1-Year
 
3-Year
 
5-Year
 
10-Year
Franklin Templeton6
57
%
 
69
%
 
77
%
 
86
%
Franklin Templeton Equity7
58
%
 
69
%
 
67
%
 
80
%
Franklin Templeton Fixed-Income8
55
%
 
69
%
 
87
%
 
92
%
Franklin Equity9
75
%
 
81
%
 
82
%
 
82
%
Templeton Equity10
3
%
 
71
%
 
21
%
 
67
%
Mutual Series Equity11
69
%
 
12
%
 
68
%
 
92
%
Franklin Templeton Taxable Fixed-Income12
27
%
 
66
%
 
80
%
 
81
%
Franklin Templeton Tax-Free Fixed-Income13
77
%
 
71
%
 
92
%
 
100
%

Performance quoted above represents past performance, which cannot predict or guarantee future results.

Investors should carefully consider a fund's investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, for any U.S.-registered Franklin Templeton fund, investors should talk to their financial advisors or call Franklin/Templeton Distributors, Inc. at 1-800/DIAL BEN® (1-800/342-5236). Please read a prospectus carefully before investing.



2


Franklin Resources, Inc.
Condensed Consolidated Statements of Income
Unaudited
(in thousands, except per share data and AUM)
 
Three Months Ended
June 30,
 
% Change
 
Nine Months Ended
June 30,
 
% Change
 
2012
 
2011
 
 
2012
 
2011
 
Operating Revenues14
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees
 
$
1,114,404

 
$
1,168,920

 
(5
)%
 
$
3,315,861

 
$
3,338,159

 
(1
)%
Sales and distribution fees
 
569,138

 
594,187

 
(4
)%
 
1,679,387

 
1,707,517

 
(2
)%
Shareholder servicing fees
 
77,221

 
77,520

 
0
 %
 
229,365

 
225,325

 
2
 %
Other, net
 
22,821

 
12,406

 
84
 %
 
60,196

 
31,908

 
89
 %
Total operating revenues
 
1,783,584

 
1,853,033

 
(4
)%
 
5,284,809

 
5,302,909

 
0
 %
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Sales, distribution and marketing
 
692,038

 
719,311

 
(4
)%
 
2,038,099

 
2,043,399

 
0
 %
Compensation and benefits
 
314,563

 
313,592

 
0
 %
 
938,006

 
921,796

 
2
 %
Information systems and technology
 
44,079

 
41,266

 
7
 %
 
128,805

 
123,110

 
5
 %
Occupancy
 
31,444

 
32,112

 
(2
)%
 
95,180

 
95,683

 
(1
)%
General, administrative and other
 
58,538

 
64,055

 
(9
)%
 
192,260

 
147,508

 
30
 %
Total operating expenses
 
1,140,662

 
1,170,336

 
(3
)%
 
3,392,350

 
3,331,496

 
2
 %
Operating Income
 
642,922

 
682,697

 
(6
)%
 
1,892,459

 
1,971,413

 
(4
)%
Other Income (Expenses)
 
 
 
 
 
 
 
 
 
 
 
 
Investment and other income (losses), net
 
(17,975
)
 
14,503

 
NM

 
135,612

 
118,282

 
15
 %
Interest expense
 
(10,089
)
 
(10,056
)
 
0
 %
 
(28,287
)
 
(26,315
)
 
7
 %
Other income (expenses), net
 
(28,064
)
 
4,447

 
NM

 
107,325

 
91,967

 
17
 %
Income before taxes
 
614,858

 
687,144

 
(11
)%
 
1,999,784

 
2,063,380

 
(3
)%
Taxes on income
 
184,906

 
208,944

 
(12
)%
 
588,322

 
599,498

 
(2
)%
Net income
 
429,952

 
478,200

 
(10
)%
 
1,411,462

 
1,463,882

 
(4
)%
Less: net income (loss) attributable to
 
 
 
 
 
 
 
 
 
 
 
 
Nonredeemable noncontrolling interests
 
(24,209
)
 
(24,575
)
 
(1
)%
 
(30,027
)
 
(44,029
)
 
(32
)%
Redeemable noncontrolling interests
 
(1,106
)
 
(572
)
 
93
 %
 
2,218

 
307

 
622
 %
Net Income Attributable to Franklin Resources, Inc.
 
$
455,267

 
$
503,347

 
(10
)%
 
$
1,439,271

 
$
1,507,604

 
(5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
2.12

 
$
2.27

 
(7
)%
 
$
6.66

 
$
6.76

 
(1
)%
Diluted
 
2.12

 
2.26

 
(6
)%
 
6.65

 
6.73

 
(1
)%
Dividends per Share
 
$
0.27

 
$
0.25

 
8
 %
 
$
2.81

 
$
0.75

 
275
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding (in thousands)
 
 
 
 
 
 
 
 
 
 
Basic
 
213,097

 
220,313

 
(3
)%
 
214,592

 
221,731

 
(3
)%
Diluted
 
213,641

 
221,284

 
(3
)%
 
215,214

 
222,808

 
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Margin
 
36.0
%
 
36.8
%
 
 
 
35.8
%
 
37.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AUM (in billions)
 
 
 
 
 
 
 
 
 
 
 
 
Ending
 
$
707.1

 
$
734.2

 
(4
)%
 
$
707.1

 
$
734.2

 
(4
)%
Average
 
710.7

 
726.7

 
(2
)%
 
697.5

 
690.4

 
1
 %
Net new flows
 
4.8

 
21.7

 
(78
)%
 
(5.2
)
 
33.3

 
NM



3


Franklin Resources, Inc.
Condensed Consolidated Statements of Income
Unaudited
(in thousands, except per share data, employees and billable shareholder accounts)
 
Three Months Ended
 
% Change
 
Three Months Ended
 
30-Jun-12
 
31-Mar-12
 
 
31-Dec-11
 
30-Sep-11
 
30-Jun-11
Operating Revenues14
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees
 
$
1,114,404

 
$
1,126,320

 
(1
)%
 
$
1,075,137

 
$
1,193,232

 
$
1,168,920

Sales and distribution fees
 
569,138

 
585,945

 
(3
)%
 
524,304

 
555,974

 
594,187

Shareholder servicing fees
 
77,221

 
76,739

 
1
 %
 
75,405

 
75,469

 
77,520

Other, net
 
22,821

 
10,345

 
121
 %
 
27,030

 
12,455

 
12,406

Total operating revenues
 
1,783,584

 
1,799,349

 
(1
)%
 
1,701,876

 
1,837,130

 
1,853,033

Operating Expenses
 
 
 

 
 
 
 
 
 
 
 
Sales, distribution and marketing
 
692,038

 
715,443

 
(3
)%
 
630,618

 
669,415

 
719,311

Compensation and benefits
 
314,563

 
323,031

 
(3
)%
 
300,412

 
309,418

 
313,592

Information systems and technology
 
44,079

 
43,292

 
2
 %
 
41,434

 
50,028

 
41,266

Occupancy
 
31,444

 
31,894

 
(1
)%
 
31,842

 
35,335

 
32,112

General, administrative and other
 
58,538

 
68,532

 
(15
)%
 
65,190

 
84,520

 
64,055

Total operating expenses
 
1,140,662

 
1,182,192

 
(4
)%
 
1,069,496

 
1,148,716

 
1,170,336

Operating Income
 
642,922

 
617,157

 
4
 %
 
632,380

 
688,414

 
682,697

Other Income (Expenses)
 
 
 

 
 
 
 
 
 
 
 
Investment and other income (losses), net
 
(17,975
)
 
82,411

 
NM

 
71,176

 
(116,473
)
 
14,503

Interest expense
 
(10,089
)
 
(9,633
)
 
5
 %
 
(8,565
)
 
(11,121
)
 
(10,056
)
Other income (expenses), net
 
(28,064
)
 
72,778

 
NM

 
62,611

 
(127,594
)
 
4,447

Income before taxes
 
614,858

 
689,935

 
(11
)%
 
694,991

 
560,820

 
687,144

Taxes on income
 
184,906

 
202,151

 
(9
)%
 
201,265

 
203,926

 
208,944

Net income
 
429,952

 
487,784

 
(12
)%
 
493,726

 
356,894

 
478,200

Less: net income (loss) attributable to
 
 
 
 
 
 
 
 
 
 
 
 
Nonredeemable noncontrolling interests
 
(24,209
)
 
(15,965
)
 
52
 %
 
10,147

 
(57,558
)
 
(24,575
)
Redeemable noncontrolling interests
 
(1,106
)
 
530

 
NM

 
2,794

 
(1,524
)
 
(572
)
Net Income Attributable to Franklin Resources, Inc.
 
$
455,267

 
$
503,219

 
(10
)%
 
$
480,785

 
$
415,976

 
$
503,347

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
2.12

 
$
2.33

 
(9
)%
 
$
2.21

 
$
1.89

 
$
2.27

Diluted
 
2.12

 
2.32

 
(9
)%
 
2.20

 
1.88

 
2.26

Dividends per Share
 
$
0.27

 
$
0.27

 
0
 %
 
$
2.27

 
$
0.25

 
$
0.25

 
 
 
 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding (in thousands)
 
 
 
 
 
 
 
 
 
 
Basic
 
213,097

 
214,520

 
(1
)%
 
216,143

 
218,989

 
220,313

Diluted
 
213,641

 
215,111

 
(1
)%
 
216,727

 
219,840

 
221,284

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Margin
 
36.0
%
 
34.3
%
 
 
 
37.2
%
 
37.5
%
 
36.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Employees
 
8,563

 
8,451

 
1
 %
 
8,484

 
8,453

 
8,458

Billable Shareholder Accounts (in millions)
26.6

 
26.1

 
2
 %
 
25.6

 
24.8

 
26.3



4


AUM AND FLOWS
(in billions)
 
Three Months Ended
June 30,
 
% 
Change
 
Nine Months Ended
June 30,
 
% 
Change
 
2012
 
2011
 
 
2012
 
2011
 
Beginning AUM
 
$
725.7

 
$
703.5

 
3
 %
 
$
659.9

 
$
644.9

 
2
 %
Long-term sales
 
41.6

 
57.4

 
(28
)%
 
128.3

 
167.9

 
(24
)%
Long-term redemptions
 
(36.8
)
 
(35.9
)
 
3
 %
 
(132.5
)
 
(135.1
)
 
(2
)%
Net cash management
 
—

 
0.2

 
(100
)%
 
(1.0
)
 
0.5

 
NM

Net new flows
 
4.8

 
21.7

 
(78
)%
 
(5.2
)
 
33.3

 
NM

Reinvested distributions
 
4.2

 
3.8

 
11
 %
 
14.7

 
12.3

 
20
 %
Net flows
 
9.0

 
25.5

 
(65
)%
 
9.5

 
45.6

 
(79
)%
Distributions
 
(5.1
)
 
(4.4
)
 
16
 %
 
(17.9
)
 
(15.0
)
 
19
 %
Acquisitions
 
—

 
—

 
—

 
—

 
1.6

 
(100
)%
Appreciation (depreciation) and other
 
(22.5
)
 
9.6

 
NM

 
55.6

 
57.1

 
(3
)%
Ending AUM
 
$
707.1

 
$
734.2

 
(4
)%
 
$
707.1

 
$
734.2

 
(4
)%

AUM BY INVESTMENT OBJECTIVE
(in billions)
 
30-Jun-12
 
31-Mar-12
 
% Change
 
31-Dec-11
 
30-Sep-11
 
30-Jun-11
Equity
 
 
 
 
 
 
 
 
 
 
 
 
Global/international
 
$
198.9

 
$
216.2

 
(8
)%
 
$
194.5

 
$
185.8

 
$
226.2

United States
 
79.7

 
83.7

 
(5
)%
 
75.7

 
68.4

 
83.6

Total equity
 
278.6

 
299.9

 
(7
)%
 
270.2

 
254.2

 
309.8

Hybrid
 
103.2

 
103.5

 
0
 %
 
96.4

 
101.3

 
115.1

Fixed-Income
 
 
 
 
 
 
 
 
 
 
 
 
Tax-free
 
80.1

 
77.3

 
4
 %
 
74.1

 
72.0

 
69.6

Taxable
 
 
 
 
 
 
 
 
 
 
 
 
Global/international
 
185.9

 
187.8

 
(1
)%
 
174.7

 
178.8

 
185.4

United States
 
53.5

 
51.5

 
4
 %
 
48.9

 
46.9

 
48.1

Total fixed-income
 
319.5

 
316.6

 
1
 %
 
297.7

 
297.7

 
303.1

Cash Management
 
5.8

 
5.7

 
2
 %
 
6.0

 
6.7

 
6.2

Total AUM
 
$
707.1

 
$
725.7

 
(3
)%
 
$
670.3

 
$
659.9

 
$
734.2

Average AUM for the Three-Month Period
 
$
710.7

 
$
706.9

 
1
 %
 
$
675.0

 
$
714.4

 
$
726.7


AUM AND FLOWS - UNITED STATES AND INTERNATIONAL15 
 
 
As of and for the Three Months Ended
(in billions)
 
30-Jun-12
 
% of Total
 
31-Mar-12
 
% of Total
 
30-Jun-11
 
% of Total
Long-Term Sales
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
23.4

 
56
%
 
$
25.2

 
52
%
 
$
25.8

 
45
%
International
 
18.2

 
44
%
 
23.3

 
48
%
 
31.6

 
55
%
Total long-term sales
 
$
41.6

 
100
%
 
$
48.5

 
100
%
 
$
57.4

 
100
%
Long-Term Redemptions
 
 
 
 
 
 
 
 
 

 
 
United States
 
$
(20.4
)
 
55
%
 
$
(20.7
)
 
48
%
 
$
(18.6
)
 
52
%
International
 
(16.4
)
 
45
%
 
(22.0
)
 
52
%
 
(17.3
)
 
48
%
Total long-term redemptions
 
$
(36.8
)
 
100
%
 
$
(42.7
)
 
100
%
 
$
(35.9
)
 
100
%
AUM
 
 
 
 
 
 
 
 
 


 
 
United States
 
$
465.7

 
66
%
 
$
472.3

 
65
%
 
$
480.5

 
65
%
International
 
241.4

 
34
%
 
253.4

 
35
%
 
253.7

 
35
%
Total AUM
 
$
707.1

 
100
%
 
$
725.7

 
100
%
 
$
734.2

 
100
%

5


AUM AND FLOWS BY INVESTMENT OBJECTIVE
(in billions)
 
Equity
 
 
 
Fixed-Income
 
 
 
 
for the three months ended
June 30, 2012
 
Global/
International
 
United
States
 
Hybrid
 
Tax-Free
 
Taxable
Global/
International
 
Taxable
United
States
 
Cash
Management
 
Total
AUM at April 1, 2012
 
$
216.2

 
$
83.7

 
$
103.5

 
$
77.3

 
$
187.8

 
$
51.5

 
$
5.7

 
$
725.7

Long-term sales
 
9.4

 
4.1

 
4.5

 
3.5

 
15.9

 
4.2

 
—

 
41.6

Long-term redemptions
 
(9.7
)
 
(4.5
)
 
(4.3
)
 
(2.2
)
 
(13.3
)
 
(2.8
)
 
—

 
(36.8
)
Net exchanges
 
(0.3
)
 
(0.1
)
 
0.1

 
0.1

 
(0.2
)
 
0.3

 
0.1

 
—

Net new flows
 
(0.6
)
 
(0.5
)
 
0.3

 
1.4

 
2.4

 
1.7

 
0.1

 
4.8

Reinvested distributions
 
0.2

 
0.1

 
1.7

 
0.5

 
1.2

 
0.5

 
—

 
4.2

Net flows
 
(0.4
)
 
(0.4
)
 
2.0

 
1.9

 
3.6

 
2.2

 
0.1

 
9.0

Distributions
 
(0.2
)
 
(0.1
)
 
(1.9
)
 
(0.6
)
 
(1.7
)
 
(0.6
)
 
—

 
(5.1
)
Appreciation (depreciation) and other
 
(16.7
)
 
(3.5
)
 
(0.4
)
 
1.5

 
(3.8
)
 
0.4

 
—

 
(22.5
)
AUM at June 30, 2012
 
$
198.9

 
$
79.7

 
$
103.2

 
$
80.1

 
$
185.9

 
$
53.5

 
$
5.8

 
$
707.1


(in billions)
 
Equity
 
 
 
Fixed-Income
 
 
 
 
for the three months ended
March 31, 2012
 
Global/
International
 
United
States
 
Hybrid
 
Tax-Free
 
Taxable
Global/
International
 
Taxable
United
States
 
Cash
Management
 
Total
AUM at January 1, 2012
 
$
194.5

 
$
75.7

 
$
96.4

 
$
74.1

 
$
174.7

 
$
48.9

 
$
6.0

 
$
670.3

Long-term sales
 
11.6

 
4.9

 
5.5

 
3.8

 
18.2

 
4.5

 
—

 
48.5

Long-term redemptions
 
(11.2
)
 
(4.9
)
 
(3.5
)
 
(2.3
)
 
(17.6
)
 
(3.2
)
 
—

 
(42.7
)
Net exchanges
 
(0.2
)
 
0.2

 
0.2

 
—

 
(0.1
)
 
0.1

 
(0.2
)
 
—

Net cash management
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.2
)
 
(0.2
)
Net new flows
 
0.2

 
0.2

 
2.2

 
1.5

 
0.5

 
1.4

 
(0.4
)
 
5.6

Reinvested distributions
 
0.1

 
—

 
1.0

 
0.6

 
1.1

 
0.4

 
—

 
3.2

Net flows
 
0.3

 
0.2

 
3.2

 
2.1

 
1.6

 
1.8

 
(0.4
)
 
8.8

Distributions
 
—

 
—

 
(1.1
)
 
(0.8
)
 
(1.9
)
 
(0.5
)
 
—

 
(4.3
)
Appreciation and other
 
21.4

 
7.8

 
5.0

 
1.9

 
13.4

 
1.3

 
0.1

 
50.9

AUM at March 31, 2012
 
$
216.2

 
$
83.7

 
$
103.5

 
$
77.3

 
$
187.8

 
$
51.5

 
$
5.7

 
$
725.7


(in billions)
 
Equity
 
 
 
Fixed-Income
 
 
 
 
for the three months ended
June 30, 2011
 
Global/
International
 
United
States
 
Hybrid
 
Tax-Free
 
Taxable
Global/
International
 
Taxable
United
States
 
Cash
Management
 
Total
AUM at April 1, 2011
 
$
225.4

 
$
83.5

 
$
113.4

 
$
67.5

 
$
160.6

 
$
47.1

 
$
6.0

 
$
703.5

Long-term sales
 
12.1

 
4.6

 
5.6

 
2.0

 
29.7

 
3.4

 
—

 
57.4

Long-term redemptions
 
(11.9
)
 
(4.8
)
 
(4.1
)
 
(2.8
)
 
(9.5
)
 
(2.8
)
 
—

 
(35.9
)
Net exchanges
 
(0.2
)
 
(0.1
)
 
0.1

 
(0.1
)
 
0.3

 
(0.1
)
 
0.1

 
—

Net cash management
 
—

 
—

 
—

 
—

 
—

 
—

 
0.2

 
0.2

Net new flows
 
—

 
(0.3
)
 
1.6

 
(0.9
)
 
20.5

 
0.5

 
0.3

 
21.7

Reinvested distributions
 
0.2

 
0.1

 
1.4

 
0.6

 
1.1

 
0.4

 
—

 
3.8

Net flows
 
0.2

 
(0.2
)
 
3.0

 
(0.3
)
 
21.6

 
0.9

 
0.3

 
25.5

Distributions
 
(0.2
)
 
(0.1
)
 
(1.6
)
 
(0.8
)
 
(1.2
)
 
(0.5
)
 
—

 
(4.4
)
Appreciation (depreciation) and other
 
0.8

 
0.4

 
0.3

 
3.2

 
4.4

 
0.6

 
(0.1
)
 
9.6

AUM at June 30, 2011
 
$
226.2

 
$
83.6

 
$
115.1

 
$
69.6

 
$
185.4

 
$
48.1

 
$
6.2

 
$
734.2


6


Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over $707 billion in AUM as of June 30, 2012. For more information about our company, please visit franklinresources.com.

Notes
1.
Net income represents net income attributable to Franklin Resources, Inc.
2.
Average AUM represents simple monthly average AUM.
3.
Nothing in this section shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Franklin/Templeton Distributors, Inc., One Franklin Parkway, San Mateo, CA, is the funds' principal distributor and a wholly-owned subsidiary of Franklin Resources, Inc.
4.
Lipper rankings for Franklin Templeton U.S.-registered mutual funds are based on Class A shares. Franklin Templeton funds are compared against a universe of all share classes. Performance rankings for other share classes may differ. Lipper calculates averages by taking all the funds and share classes in a peer group and averaging their total returns for the periods indicated. Lipper tracks 155 peer groups of U.S. retail mutual funds, and the groups vary in size from 8 to 1,094 funds. Lipper total return calculations include reinvested dividends and capital gains, but do not include sales charges or expense subsidization by the manager. Results may have been different if these or other factors had been considered.
5.
The figures in the table are based on data available from Lipper© Inc. as of July 6, 2012 and are subject to revision.
6.
Of the eligible Franklin Templeton long-term mutual funds tracked by Lipper, 31, 27, 39 and 44 funds ranked in the top quartile and 27, 32, 26 and 16 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
7.
Of the eligible Franklin Templeton equity mutual funds tracked by Lipper, 14, 13, 17 and 13 funds ranked in the top quartile and 10, 12, 11 and 8 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
8.
Of the eligible Franklin Templeton non-money market fixed-income mutual funds tracked by Lipper, 17, 14, 22 and 31 funds ranked in the top quartile and 17, 20, 15 and 8 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
9.
Of the eligible Franklin equity mutual funds tracked by Lipper, 6, 9, 13 and 9 funds ranked in the top quartile and 9, 6, 7 and 5 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
10.
Of the eligible Templeton equity mutual funds tracked by Lipper, 2, 2, 2 and 1 funds ranked in the top quartile and 1, 4, 2 and 2 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
11.
Of the eligible Mutual Series equity mutual funds tracked by Lipper, 6, 2, 2 and 3 funds ranked in the top quartile and 0, 2, 2 and 1 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
12.
Of the eligible Franklin Templeton non-money market taxable fixed-income mutual funds tracked by Lipper, 2, 4, 5 and 5 funds ranked in the top quartile and 4, 5, 3 and 3 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
13.
Of the eligible Franklin Templeton non-money market tax-free fixed-income mutual funds tracked by Lipper, 15, 10, 17 and 26 funds ranked in the top quartile and 13, 15, 12 and 5 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.
14.
In the quarter ended September 30, 2011, the Company discontinued the classification of a portion of the investment management fees earned by certain of its non-U.S. subsidiaries as sales and distribution fees. This presentation change does not represent a restatement of any previously published financial results. See the Company's Form 10-K for the fiscal year ended September 30, 2011 for additional information.
15.
International includes North America-based advisors serving non-resident clients.

7


Forward-Looking Statements

Statements in this press release regarding Franklin Resources, Inc. (“Franklin”) and its subsidiaries, which are not historical facts, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. When used in this press release, words or phrases generally written in the future tense and/or preceded by words such as “will,” “may,” “could,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “estimate” or other similar words are forward-looking statements.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the U.S. Securities and Exchange Commission, including, without limitation, in Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations in Franklin's Annual Report on Form 10-K for the fiscal year ended September 30, 2011 and Franklin's subsequent Quarterly Reports on Form 10-Q:
•
Volatility and disruption of the capital and credit markets, and adverse changes in the global economy, may significantly affect our results of operations and may put pressure on our financial results.
•
The amount and mix of our AUM are subject to significant fluctuations.
•
We are subject to extensive and complex, overlapping and frequently changing rules, regulations and legal interpretations.
•
Regulatory and legislative actions and reforms have made the regulatory environment in which we operate more costly and future actions and reforms could adversely impact our AUM, increase costs and negatively impact our profitability and future financial results.
•
Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, results of operations and liquidity.
•
Any significant limitation, failure or security breach of our software applications, technology or other systems that are critical to our operations could constrain our operations.
•
Our investment management business operations are complex and a failure to properly perform operational tasks or the misrepresentation of our products and services could have an adverse effect on our revenues and income.
•
We face risks, and corresponding potential costs and expenses, associated with conducting operations and growing our business in numerous countries.
•
We depend on key personnel and our financial performance could be negatively affected by the loss of their services.
•
Strong competition from numerous and sometimes larger companies with competing offerings and products could limit or reduce sales of our products, potentially resulting in a decline in our market share, revenues and income.
•
Changes in the third-party distribution and sales channels on which we depend could reduce our income and hinder our growth.
•
Our increasing focus on international markets as a source of investments and sales of investment products subjects us to increased exchange rate and other risks in connection with our revenues and income generated overseas.
•
Poor investment performance of our products could affect our sales or reduce the level of AUM, potentially negatively impacting our revenues and income.
•
We could suffer losses in our revenues and income if our reputation is harmed.
•
Our future results are dependent upon maintaining an appropriate level of expenses, which is subject to fluctuation.
•
Our ability to successfully integrate widely varied business lines can be impeded by systems and other technological limitations.
•
Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm, or legal liability.
•
Certain of the portfolios we manage, including our emerging market portfolios, are vulnerable to significant market-specific political, economic or other risks, any of which may negatively impact our revenues and income.
•
Our revenues and income could be adversely affected if the terms of our management agreements are significantly altered or these agreements are terminated by the funds and other sponsored investment products we advise.
•
Regulatory and governmental examinations and/or investigations, litigation and the legal risks associated with our business, could adversely impact our AUM, increase costs and negatively impact our profitability and/or our future financial results.
•
Our ability to meet cash needs depends upon certain factors, including the market value of our assets, operating cash flows and our perceived creditworthiness.

8


•
Our business could be negatively affected if we or our banking subsidiaries fail to remain well capitalized, and liquidity needs could affect our banking business.
•
We are dependent on the earnings of our subsidiaries.

Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. 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. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

# # #


9

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