x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-2670991 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One Franklin Parkway, San Mateo, CA | 94403 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Page | ||||
Financial Information | ||||
Item 1. | Financial Statements (unaudited) | |||
3 | ||||
4 | ||||
5 | ||||
7 | ||||
9 | ||||
Item 2. | 23 | |||
Item 3. | 44 | |||
Item 4. | 45 | |||
Other Information | ||||
Item 1. | 46 | |||
Item 1A. | 46 | |||
Item 2. | 46 | |||
Item 6. | 47 | |||
48 | ||||
Three Months Ended December 31, | ||||||||
(in millions, except per share data) | 2013 | 2012 | ||||||
Operating Revenues | ||||||||
Investment management fees | $ | 1,373.8 | $ | 1,199.9 | ||||
Sales and distribution fees | 636.7 | 604.1 | ||||||
Shareholder servicing fees | 76.1 | 74.4 | ||||||
Other, net | 22.9 | 23.4 | ||||||
Total operating revenues | 2,109.5 | 1,901.8 | ||||||
Operating Expenses | ||||||||
Sales, distribution and marketing | 776.7 | 730.9 | ||||||
Compensation and benefits | 349.0 | 335.1 | ||||||
Information systems and technology | 50.2 | 43.6 | ||||||
Occupancy | 33.1 | 33.4 | ||||||
General, administrative and other | 87.4 | 73.7 | ||||||
Total operating expenses | 1,296.4 | 1,216.7 | ||||||
Operating Income | 813.1 | 685.1 | ||||||
Other Income (Expenses) | ||||||||
Investment and other income, net | 48.2 | 45.5 | ||||||
Interest expense | (12.6 | ) | (14.5 | ) | ||||
Other income, net | 35.6 | 31.0 | ||||||
Income before taxes | 848.7 | 716.1 | ||||||
Taxes on income | 252.7 | 211.4 | ||||||
Net income | 596.0 | 504.7 | ||||||
Less: Net income (loss) attributable to | ||||||||
Nonredeemable noncontrolling interests | (17.2 | ) | (12.7 | ) | ||||
Redeemable noncontrolling interests | 9.4 | 1.3 | ||||||
Net Income Attributable to Franklin Resources, Inc. | $ | 603.8 | $ | 516.1 | ||||
Earnings per Share | ||||||||
Basic | $ | 0.96 | $ | 0.81 | ||||
Diluted | 0.96 | 0.81 | ||||||
Dividends per Share | $ | 0.120 | $ | 1.097 |
(in millions) | Three Months Ended December 31, | |||||||
2013 | 2012 | |||||||
Net Income | $ | 596.0 | $ | 504.7 | ||||
Other Comprehensive Income (Loss) | ||||||||
Net unrealized losses on investments, net of tax | (10.0 | ) | (2.1 | ) | ||||
Currency translation adjustments, net of tax | 8.1 | 3.9 | ||||||
Net unrealized losses on defined benefit plans, net of tax | (1.3 | ) | — | |||||
Total comprehensive income | 592.8 | 506.5 | ||||||
Less: Comprehensive income (loss) attributable to | ||||||||
Nonredeemable noncontrolling interests | (17.2 | ) | (12.7 | ) | ||||
Redeemable noncontrolling interests | 9.4 | 1.3 | ||||||
Comprehensive Income Attributable to Franklin Resources, Inc. | $ | 600.6 | $ | 517.9 |
(in millions) | December 31, 2013 | September 30, 2013 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 6,552.2 | $ | 6,186.0 | ||||
Receivables | 1,049.6 | 1,038.9 | ||||||
Investments (including $1,835.6 and $1,892.7 at fair value at December 31, 2013 and September 30, 2013) | 2,480.4 | 2,439.2 | ||||||
Loans held for sale | 189.2 | — | ||||||
Loans receivable, net | 9.6 | 229.7 | ||||||
Assets of consolidated variable interest entities | ||||||||
Cash and cash equivalents | 65.3 | 44.0 | ||||||
Investments, at fair value | 908.8 | 941.1 | ||||||
Assets of consolidated sponsored investment products | ||||||||
Cash and cash equivalents | 82.2 | 93.1 | ||||||
Investments, at fair value | 1,369.4 | 1,203.2 | ||||||
Deferred taxes | 118.7 | 112.4 | ||||||
Property and equipment, net | 559.4 | 564.1 | ||||||
Goodwill and other intangible assets, net | 2,351.0 | 2,359.2 | ||||||
Other | 173.5 | 179.4 | ||||||
Total Assets | $ | 15,909.3 | $ | 15,390.3 | ||||
Liabilities | ||||||||
Compensation and benefits | $ | 250.9 | $ | 444.5 | ||||
Accounts payable and accrued expenses | 260.8 | 262.8 | ||||||
Commissions | 454.1 | 437.7 | ||||||
Deposits | 654.4 | 586.8 | ||||||
Income taxes | 211.8 | 20.8 | ||||||
Debt | 1,197.8 | 1,197.7 | ||||||
Liabilities of consolidated variable interest entities | ||||||||
Debt, at fair value | 936.6 | 988.5 | ||||||
Other, at fair value | 16.3 | 10.9 | ||||||
Liabilities of consolidated sponsored investment products | ||||||||
Debt | 122.8 | 108.9 | ||||||
Other (including $36.8 and nil at fair value at December 31, 2013 and September 30, 2013) | 45.3 | 8.5 | ||||||
Deferred taxes | 271.6 | 272.5 | ||||||
Other | 248.7 | 243.4 | ||||||
Total liabilities | 4,671.1 | 4,583.0 | ||||||
Commitments and Contingencies (Note 9) | ||||||||
Redeemable Noncontrolling Interests | 153.8 | 121.8 |
(in millions) | December 31, 2013 | September 30, 2013 | ||||||
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; 630,916,855 and 630,917,532 shares issued and outstanding at December 31, 2013 and September 30, 2013 | 63.1 | 63.1 | ||||||
Retained earnings | 10,423.6 | 9,991.2 | ||||||
Appropriated retained earnings of consolidated variable interest entities | 17.5 | 12.7 | ||||||
Accumulated other comprehensive income | 2.9 | 6.1 | ||||||
Total Franklin Resources, Inc. stockholders’ equity | 10,507.1 | 10,073.1 | ||||||
Nonredeemable noncontrolling interests | 577.3 | 612.4 | ||||||
Total stockholders’ equity | 11,084.4 | 10,685.5 | ||||||
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity | $ | 15,909.3 | $ | 15,390.3 |
Three Months Ended December 31, | ||||||||
(in millions) | 2013 | 2012 | ||||||
Net Income | $ | 596.0 | $ | 504.7 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Amortization of deferred sales commissions | 34.2 | 32.9 | ||||||
Depreciation and other amortization | 25.1 | 21.0 | ||||||
Stock-based compensation | 30.9 | 27.6 | ||||||
Excess tax benefit from stock-based compensation | (2.8 | ) | (5.7 | ) | ||||
Gains on sale of assets | (20.2 | ) | (20.6 | ) | ||||
Income from investments in equity method investees | (24.9 | ) | (21.8 | ) | ||||
Net (gains) losses on other investments of consolidated sponsored investment products | 16.2 | (14.1 | ) | |||||
Net (gains) losses of consolidated variable interest entities | (6.6 | ) | 17.5 | |||||
Other | (2.2 | ) | 3.6 | |||||
Changes in operating assets and liabilities: | ||||||||
Increase in receivables, prepaid expenses and other | (126.2 | ) | (56.1 | ) | ||||
Increase in trading securities, net | (36.8 | ) | (66.4 | ) | ||||
Increase in trading securities of consolidated sponsored investment products, net | (230.4 | ) | (10.5 | ) | ||||
Decrease in accrued compensation and benefits | (193.9 | ) | (162.7 | ) | ||||
Increase (decrease) in commissions payable | 16.4 | (109.3 | ) | |||||
Increase in income taxes payable | 194.5 | 149.4 | ||||||
Increase (decrease) in other liabilities | 55.4 | (3.1 | ) | |||||
Net cash provided by operating activities | 324.7 | 286.4 | ||||||
Purchase of investments | (80.1 | ) | (78.4 | ) | ||||
Liquidation of investments | 194.1 | 237.5 | ||||||
Purchase of investments by consolidated sponsored investment products | (95.2 | ) | (41.8 | ) | ||||
Liquidation of investments by consolidated sponsored investment products | 32.1 | 48.6 | ||||||
Purchase of investments by consolidated variable interest entities | (45.0 | ) | (243.1 | ) | ||||
Liquidation of investments by consolidated variable interest entities | 128.0 | 140.6 | ||||||
Decrease (increase) in loans receivable, net | 30.9 | (24.9 | ) | |||||
Additions of property and equipment, net | (15.0 | ) | (12.3 | ) | ||||
Acquisition of subsidiary, net of cash acquired | — | 5.7 | ||||||
Increase (decrease) in cash from net consolidation (deconsolidation) of sponsored investment products | (34.0 | ) | 2.6 | |||||
Net cash provided by investing activities | 115.8 | 34.5 | ||||||
Increase in deposits | 66.5 | 213.5 | ||||||
Issuance of common stock | 7.2 | 11.4 | ||||||
Dividends paid on common stock | (64.1 | ) | (757.9 | ) | ||||
Repurchase of common stock | (137.1 | ) | (98.0 | ) | ||||
Excess tax benefit from stock-based compensation | 2.8 | 5.7 | ||||||
Payments on debt | — | (479.4 | ) | |||||
Proceeds from issuance of debt by consolidated sponsored investment products | 190.3 | 133.5 | ||||||
Payments on debt by consolidated sponsored investment products | (176.8 | ) | (146.7 | ) | ||||
Payments on debt by consolidated variable interest entities | (60.0 | ) | (40.4 | ) |
Three Months Ended December 31, | ||||||||
(in millions) | 2013 | 2012 | ||||||
Payments on contingent consideration liability | $ | (2.7 | ) | $ | — | |||
Noncontrolling interests | 101.4 | 17.9 | ||||||
Net cash used in financing activities | (72.5 | ) | (1,140.4 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 8.6 | 10.8 | ||||||
Increase (decrease) in cash and cash equivalents | 376.6 | (808.7 | ) | |||||
Cash and cash equivalents, beginning of period | 6,323.1 | 6,051.4 | ||||||
Cash and Cash Equivalents, End of Period | $ | 6,699.7 | $ | 5,242.7 | ||||
Supplemental Disclosure of Non-Cash Activities | ||||||||
Transfer of loans receivable, net to loans held for sale | $ | 189.2 | $ | — | ||||
Contingent consideration liability recognized due to acquisition | — | 90.6 | ||||||
Increase in noncontrolling interests due to acquisition | — | 38.2 | ||||||
Increase in noncontrolling interests due to net consolidation of sponsored investment products | — | 4.1 | ||||||
Supplemental Disclosure of Cash Flow Information | ||||||||
Cash paid for income taxes | $ | 68.0 | $ | 61.6 | ||||
Cash paid for interest | 14.2 | 19.4 | ||||||
Cash paid for interest by consolidated sponsored investment products and consolidated variable interest entities | 11.9 | 11.4 |
(in millions) | Franklin Resources, Inc. Stockholders’ Equity | Nonredeemable Noncontrolling Interests | Total Stockholders’ Equity | Redeemable Noncontrolling Interests | ||||||||||||
for the three months ended December 31, 2013 | ||||||||||||||||
Balance at October 1, 2013 | $ | 10,073.1 | $ | 612.4 | $ | 10,685.5 | $ | 121.8 | ||||||||
Net income (loss) | 603.8 | (17.2 | ) | 586.6 | 9.4 | |||||||||||
Net income reclassified to appropriated retained earnings | 4.8 | (4.8 | ) | — | ||||||||||||
Other comprehensive loss | (3.2 | ) | (3.2 | ) | ||||||||||||
Cash dividends on common stock | (75.9 | ) | (75.9 | ) | ||||||||||||
Repurchase of common stock | (137.1 | ) | (137.1 | ) | ||||||||||||
Noncontrolling interests | ||||||||||||||||
Net subscriptions (redemptions) | (13.1 | ) | (13.1 | ) | 114.5 | |||||||||||
Net deconsolidation of sponsored investment products | — | — | (91.9 | ) | ||||||||||||
Other1 | 41.6 | 41.6 | ||||||||||||||
Balance at December 31, 2013 | $ | 10,507.1 | $ | 577.3 | $ | 11,084.4 | $ | 153.8 |
1 | Primarily relates to stock-based compensation plans. |
(in millions) | Franklin Resources, Inc. Stockholders’ Equity | Nonredeemable Noncontrolling Interests | Total Stockholders’ Equity | Redeemable Noncontrolling Interests | ||||||||||||
for the three months ended December 31, 2012 | ||||||||||||||||
Balance at October 1, 2012 | $ | 9,201.3 | $ | 559.2 | $ | 9,760.5 | $ | 26.7 | ||||||||
Net income (loss) | 516.1 | (12.7 | ) | 503.4 | 1.3 | |||||||||||
Net loss reclassified to appropriated retained earnings | (18.5 | ) | 18.5 | — | ||||||||||||
Other comprehensive income | 1.8 | 1.8 | ||||||||||||||
Cash dividends on common stock | (702.0 | ) | (702.0 | ) | ||||||||||||
Repurchase of common stock | (98.0 | ) | (98.0 | ) | ||||||||||||
Noncontrolling interests | ||||||||||||||||
Net subscriptions | 12.5 | 12.5 | 5.4 | |||||||||||||
Net consolidation of sponsored investment products | 4.1 | 4.1 | — | |||||||||||||
Acquisition | 5.4 | 5.4 | 32.8 | |||||||||||||
Other1 | 47.1 | 47.1 | ||||||||||||||
Balance at December 31, 2012 | $ | 8,947.8 | $ | 587.0 | $ | 9,534.8 | $ | 66.2 |
1 | Primarily relates to stock-based compensation plans. |
(in millions, except per share data) | Three Months Ended December 31, | |||||||
2013 | 2012 | |||||||
Net Income Attributable to Franklin Resources, Inc. | $ | 603.8 | $ | 516.1 | ||||
Less: Allocation of earnings to participating nonvested stock and stock unit awards | 3.5 | 4.0 | ||||||
Net Income Available to Common Stockholders | $ | 600.3 | $ | 512.1 | ||||
Weighted-average shares outstanding – basic | 628.1 | 634.5 | ||||||
Effect of dilutive common stock options and non-participating nonvested stock unit awards | 0.4 | 0.9 | ||||||
Weighted-Average Shares Outstanding – Diluted | 628.5 | 635.4 | ||||||
Earnings per Share | ||||||||
Basic | $ | 0.96 | $ | 0.81 | ||||
Diluted | 0.96 | 0.81 |
(in millions) | December 31, 2013 | September 30, 2013 | ||||||
Investment securities, trading | $ | 1,235.2 | $ | 1,196.7 | ||||
Investment securities, available-for-sale | ||||||||
SIPs | 466.7 | 534.6 | ||||||
Securities of U.S. states and political subdivisions | 17.5 | 23.1 | ||||||
Securities of the U.S. Treasury and federal agencies | 2.3 | 2.3 | ||||||
Mortgage-backed securities – agency residential1 | 92.9 | 110.9 | ||||||
Other equity securities | 7.1 | 11.3 | ||||||
Total investment securities, available-for-sale | 586.5 | 682.2 | ||||||
Investments in equity method investees | 589.1 | 485.4 | ||||||
Other investments | 69.6 | 74.9 | ||||||
Total | $ | 2,480.4 | $ | 2,439.2 |
1 | Consist of U.S. government-sponsored enterprise obligations. |
(in millions) | Gross Unrealized | |||||||||||||||
as of December 31, 2013 | Cost Basis | Gains | Losses | Fair Value | ||||||||||||
SIPs | $ | 403.5 | $ | 64.9 | $ | (1.7 | ) | $ | 466.7 | |||||||
Securities of U.S. states and political subdivisions | 16.9 | 0.6 | — | 17.5 | ||||||||||||
Securities of the U.S. Treasury and federal agencies | 2.3 | — | — | 2.3 | ||||||||||||
Mortgage-backed securities – agency residential | 91.2 | 1.7 | — | 92.9 | ||||||||||||
Other equity securities | 6.6 | 0.5 | — | 7.1 | ||||||||||||
Total | $ | 520.5 | $ | 67.7 | $ | (1.7 | ) | $ | 586.5 |
(in millions) | Gross Unrealized | |||||||||||||||
as of September 30, 2013 | Cost Basis | Gains | Losses | Fair Value | ||||||||||||
SIPs | $ | 465.4 | $ | 71.7 | $ | (2.5 | ) | $ | 534.6 | |||||||
Securities of U.S. states and political subdivisions | 22.3 | 0.8 | — | 23.1 | ||||||||||||
Securities of the U.S. Treasury and federal agencies | 2.3 | — | — | 2.3 | ||||||||||||
Mortgage-backed securities – agency residential | 108.9 | 2.0 | — | 110.9 | ||||||||||||
Other equity securities | 10.9 | 0.4 | — | 11.3 | ||||||||||||
Total | $ | 609.8 | $ | 74.9 | $ | (2.5 | ) | $ | 682.2 |
Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
(in millions) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
as of December 31, 2013 | ||||||||||||||||||||||||
SIPs | $ | 18.0 | $ | (1.6 | ) | $ | 1.4 | $ | (0.1 | ) | $ | 19.4 | $ | (1.7 | ) |
Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
(in millions) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
as of September 30, 2013 | ||||||||||||||||||||||||
SIPs | $ | 50.3 | $ | (2.4 | ) | $ | 1.4 | $ | (0.1 | ) | $ | 51.7 | $ | (2.5 | ) |
(in millions) | Cost Basis | Fair Value | ||||||
Due in one year or less | $ | 5.1 | $ | 5.3 | ||||
Due after one year through five years | 12.5 | 12.9 | ||||||
Due after five years through ten years | — | — | ||||||
Due after ten years | 1.6 | 1.6 | ||||||
Total | $ | 19.2 | $ | 19.8 |
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. |
Level 2 | Observable inputs other than Level 1 quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or corroborated by observable market data. Level 2 quoted prices are generally obtained from two independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the significant assumptions are observable in the market or corroborated by observable market data. Quoted prices are validated through price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of third-party vendors. |
Level 3 | Unobservable inputs that are supported by little or no market activity. These inputs require significant management judgment and reflect the Company’s estimation of assumptions that market participants would use in pricing the asset or liability. |
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
as of December 31, 2013 | ||||||||||||||||
Assets | ||||||||||||||||
Investment securities, trading | $ | 1,161.0 | $ | 74.2 | $ | — | $ | 1,235.2 | ||||||||
Investment securities, available-for-sale | ||||||||||||||||
SIPs | 466.7 | — | — | 466.7 | ||||||||||||
Securities of U.S. states and political subdivisions | — | 17.5 | — | 17.5 | ||||||||||||
Securities of the U.S. Treasury and federal agencies | — | 2.3 | — | 2.3 | ||||||||||||
Mortgage-backed securities – agency residential | — | 92.9 | — | 92.9 | ||||||||||||
Other equity securities | 2.3 | 4.8 | — | 7.1 | ||||||||||||
Life settlement contracts | — | — | 13.9 | 13.9 | ||||||||||||
Total Assets Measured at Fair Value | $ | 1,630.0 | $ | 191.7 | $ | 13.9 | $ | 1,835.6 | ||||||||
Liabilities | ||||||||||||||||
Contingent consideration liabilities | $ | — | $ | — | $ | 101.2 | $ | 101.2 |
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
as of September 30, 2013 | ||||||||||||||||
Assets | ||||||||||||||||
Investment securities, trading | $ | 1,121.5 | $ | 75.2 | $ | — | $ | 1,196.7 | ||||||||
Investment securities, available-for-sale | ||||||||||||||||
SIPs | 534.6 | — | — | 534.6 | ||||||||||||
Securities of U.S. states and political subdivisions | — | 23.1 | — | 23.1 | ||||||||||||
Securities of the U.S. Treasury and federal agencies | — | 2.3 | — | 2.3 | ||||||||||||
Mortgage-backed securities – agency residential | — | 110.9 | — | 110.9 | ||||||||||||
Other equity securities | 11.3 | — | — | 11.3 | ||||||||||||
Life settlement contracts | — | — | 13.8 | 13.8 | ||||||||||||
Total Assets Measured at Fair Value | $ | 1,667.4 | $ | 211.5 | $ | 13.8 | $ | 1,892.7 | ||||||||
Liabilities | ||||||||||||||||
Contingent consideration liabilities | $ | — | $ | — | $ | 97.7 | $ | 97.7 |
2013 | 2012 | |||||||||||||||
(in millions) | Investments | Contingent Consideration Liabilities | Investments | Contingent Consideration Liabilities | ||||||||||||
for the three months ended December 31, | ||||||||||||||||
Balance at beginning of period | $ | 13.8 | $ | (97.7 | ) | $ | 14.8 | $ | — | |||||||
Acquisition | — | — | — | (90.6 | ) | |||||||||||
Total realized and unrealized gains (losses) | ||||||||||||||||
Included in investment and other income, net | 0.7 | — | 0.4 | — | ||||||||||||
Included in general, administrative and other expense | — | (5.9 | ) | — | (2.4 | ) | ||||||||||
Other | — | (0.3 | ) | — | (0.3 | ) | ||||||||||
Purchases | 0.1 | — | 0.6 | — | ||||||||||||
Sales | (0.7 | ) | — | (1.6 | ) | — | ||||||||||
Settlements | — | 2.7 | (1.2 | ) | 3.0 | |||||||||||
Balance at End of Period | $ | 13.9 | $ | (101.2 | ) | $ | 13.0 | $ | (90.3 | ) | ||||||
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at period end | $ | 0.3 | $ | (6.2 | ) | $ | 0.4 | $ | (2.7 | ) |
(in millions) | ||||||||||
as of December 31, 2013 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average) | ||||||
Life settlement contracts | $ | 13.9 | Discounted cash flow | Life expectancy | 25–158 months (75) | |||||
Discount rate | 3.3%–21.7% (11.7%) | |||||||||
Contingent consideration liabilities | 101.2 | Discounted cash flow | AUM growth rate | 6.0%–21.3% (14.2%) | ||||||
EBITDA margin | 28.2% - 43.2% (35.7%) | |||||||||
Discount rate | 14.0% |
(in millions) | ||||||||||
as of September 30, 2013 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average) | ||||||
Life settlement contracts | $ | 13.8 | Discounted cash flow | Life expectancy | 25–160 months (76) | |||||
Discount rate | 3.3%–21.7% (11.7%) | |||||||||
Contingent consideration liabilities | 97.7 | Discounted cash flow | AUM growth rate | 6.0%–25.0% (14.6%) | ||||||
EBITDA margin | 26.4% - 38.9% (34.4%) | |||||||||
Discount rate | 14.0% |
(in millions) | December 31, 2013 | September 30, 2013 | ||||||||||||||||
Fair Value Level | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||||
Financial Assets | ||||||||||||||||||
Cash and cash equivalents | 1 | $ | 6,552.2 | $ | 6,552.2 | $ | 6,186.0 | $ | 6,186.0 | |||||||||
Other investments1 | 2 or 3 | 55.7 | 64.3 | 61.1 | 69.2 | |||||||||||||
Loans held for sale | 2 | 189.2 | 189.7 | — | — | |||||||||||||
Loans receivable, net | 2 | 9.6 | 9.8 | 229.7 | 230.1 | |||||||||||||
Financial Liabilities | ||||||||||||||||||
Deposits | 2 | $ | 654.4 | $ | 654.4 | $ | 586.8 | $ | 587.2 | |||||||||
Debt | 2 | 1,197.8 | 1,209.1 | 1,197.7 | 1,221.5 |
(dollars in millions) | December 31, 2013 | September 30, 2013 | Effective Interest Rate | ||||||||
$250 million 3.125% notes due May 2015 | $ | 249.9 | $ | 249.9 | 3.32 | % | |||||
$300 million 1.375% notes due September 2017 | 298.8 | 298.7 | 1.66 | % | |||||||
$350 million 4.625% notes due May 2020 | 349.7 | 349.7 | 4.74 | % | |||||||
$300 million 2.800% notes due September 2022 | 299.4 | 299.4 | 2.93 | % | |||||||
Total Debt | $ | 1,197.8 | $ | 1,197.7 |
(in millions) | Amount | |||
for the fiscal years ending September 30, | ||||
2014 | $ | — | ||
2015 | 249.9 | |||
2016 | — | |||
2017 | 298.8 | |||
2018 | — | |||
Thereafter | 649.1 | |||
Total | $ | 1,197.8 |
December 31, 2013 | September 30, 2013 | |||||||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||||||||
(in millions) | VIEs | SIPs | Total | VIEs | SIPs | Total | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 65.3 | $ | 82.2 | $ | 147.5 | $ | 44.0 | $ | 93.1 | $ | 137.1 | ||||||||||||
Receivables | 5.5 | 24.9 | 30.4 | 37.7 | 19.1 | 56.8 | ||||||||||||||||||
Investments, at fair value | 908.8 | 1,369.4 | 2,278.2 | 941.1 | 1,203.2 | 2,144.3 | ||||||||||||||||||
Other assets | — | 0.7 | 0.7 | — | 0.7 | 0.7 | ||||||||||||||||||
Total Assets | $ | 979.6 | $ | 1,477.2 | $ | 2,456.8 | $ | 1,022.8 | $ | 1,316.1 | $ | 2,338.9 | ||||||||||||
Liabilities | ||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | — | $ | 33.3 | $ | 33.3 | $ | — | $ | 25.2 | $ | 25.2 | ||||||||||||
Debt, at fair value | 936.6 | — | 936.6 | 988.5 | — | 988.5 | ||||||||||||||||||
Debt | — | 122.8 | 122.8 | — | 108.9 | 108.9 | ||||||||||||||||||
Other liabilities | 16.3 | 45.3 | 61.6 | 10.9 | 8.5 | 19.4 | ||||||||||||||||||
Total liabilities | 952.9 | 201.4 | 1,154.3 | 999.4 | 142.6 | 1,142.0 | ||||||||||||||||||
Redeemable Noncontrolling Interests | — | 153.8 | 153.8 | — | 121.8 | 121.8 | ||||||||||||||||||
Stockholders' Equity | ||||||||||||||||||||||||
Franklin Resources, Inc.'s interests | 26.7 | 560.4 | 587.1 | 23.4 | 454.8 | 478.2 | ||||||||||||||||||
Nonredeemable noncontrolling interests | — | 561.6 | 561.6 | — | 596.9 | 596.9 | ||||||||||||||||||
Total stockholders' equity | 26.7 | 1,122.0 | 1,148.7 | 23.4 | 1,051.7 | 1,075.1 | ||||||||||||||||||
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity | $ | 979.6 | $ | 1,477.2 | $ | 2,456.8 | $ | 1,022.8 | $ | 1,316.1 | $ | 2,338.9 |
Three Months Ended December 31, | ||||||||
(in millions) | 2013 | 2012 | ||||||
Net gains from changes in fair value of assets | $ | 13.4 | $ | 22.2 | ||||
Net losses from changes in fair value of liabilities | (7.7 | ) | (41.3 | ) | ||||
Total Net Gains (Losses) | $ | 5.7 | $ | (19.1 | ) |
(in millions) | Total Investments | Investments 90 Days or More Past Due | Debt | |||||||||
as of December 31, 2013 | ||||||||||||
Unpaid principal balance | $ | 910.2 | $ | 7.9 | $ | 968.5 | ||||||
Difference between unpaid principal balance and fair value | (1.4 | ) | (7.7 | ) | (31.9 | ) | ||||||
Fair Value | $ | 908.8 | $ | 0.2 | $ | 936.6 |
(in millions) | Total Investments | Investments 90 Days or More Past Due | Debt | |||||||||
as of September 30, 2013 | ||||||||||||
Unpaid principal balance | $ | 943.6 | $ | 7.9 | $ | 1,017.8 | ||||||
Difference between unpaid principal balance and fair value | (2.5 | ) | (7.7 | ) | (29.3 | ) | ||||||
Fair Value | $ | 941.1 | $ | 0.2 | $ | 988.5 |
December 31, 2013 | September 30, 2013 | |||||||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||||||||
(in millions) | VIEs | SIPs | Total | VIEs | SIPs | Total | ||||||||||||||||||
Investment securities, trading | $ | — | $ | 359.0 | $ | 359.0 | $ | — | $ | 244.1 | $ | 244.1 | ||||||||||||
Other debt securities | 908.8 | 254.4 | 1,163.2 | 941.1 | 272.3 | 1,213.4 | ||||||||||||||||||
Other equity securities | — | 756.0 | 756.0 | — | 686.8 | 686.8 | ||||||||||||||||||
Total Investments | $ | 908.8 | $ | 1,369.4 | $ | 2,278.2 | $ | 941.1 | $ | 1,203.2 | $ | 2,144.3 |
December 31, 2013 | Effective Interest Rate | September 30, 2013 | Effective Interest Rate | |||||||||||
(dollars in millions) | ||||||||||||||
Debt of consolidated VIEs, at fair value, due fiscal years 2018-2024 | $ | 936.6 | 1.34 | % | $ | 988.5 | 1.32 | % | ||||||
Debt of consolidated SIPs due fiscal years 2014-2019 | 122.8 | 3.83 | % | 108.9 | 4.08 | % | ||||||||
Total Debt | $ | 1,059.4 | $ | 1,097.4 |
(in millions) | ||||
for the fiscal years ending September 30, | ||||
2014 | $ | 55.9 | ||
2015 | — | |||
2016 | — | |||
2017 | 27.8 | |||
2018 | 321.5 | |||
Thereafter | 654.2 | |||
Total | $ | 1,059.4 |
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
as of December 31, 2013 | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents of consolidated VIEs | $ | 65.3 | $ | — | $ | — | $ | 65.3 | ||||||||
Receivables of consolidated VIEs | — | 5.5 | — | 5.5 | ||||||||||||
Investments of consolidated VIEs | — | 908.3 | 0.5 | 908.8 | ||||||||||||
Investments of consolidated SIPs | ||||||||||||||||
Debt securities | 0.8 | 122.0 | 254.4 | 377.2 | ||||||||||||
Equity securities | 217.9 | 271.7 | 502.6 | 992.2 | ||||||||||||
Total Assets Measured at Fair Value | $ | 284.0 | $ | 1,307.5 | $ | 757.5 | $ | 2,349.0 | ||||||||
Liabilities | ||||||||||||||||
Debt of consolidated VIEs | $ | — | $ | 884.4 | $ | 52.2 | $ | 936.6 | ||||||||
Other liabilities of consolidated VIEs | — | 16.3 | — | 16.3 | ||||||||||||
Other liabilities of consolidated SIPs | 17.5 | 19.3 | — | 36.8 | ||||||||||||
Total Liabilities Measured at Fair Value | $ | 17.5 | $ | 920.0 | $ | 52.2 | $ | 989.7 |
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
as of September 30, 2013 | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents of consolidated VIEs | $ | 44.0 | $ | — | $ | — | $ | 44.0 | ||||||||
Receivables of consolidated VIEs | — | 37.7 | — | 37.7 | ||||||||||||
Investments of consolidated VIEs | — | 940.6 | 0.5 | 941.1 | ||||||||||||
Investments of consolidated SIPs | ||||||||||||||||
Debt securities | 4.5 | 83.8 | 272.3 | 360.6 | ||||||||||||
Equity securities | 158.1 | 213.6 | 470.9 | 842.6 | ||||||||||||
Total Assets Measured at Fair Value | $ | 206.6 | $ | 1,275.7 | $ | 743.7 | $ | 2,226.0 | ||||||||
Liabilities | ||||||||||||||||
Debt of consolidated VIEs | $ | — | $ | 928.8 | $ | 59.7 | $ | 988.5 | ||||||||
Other liabilities of consolidated VIEs | — | 10.9 | — | 10.9 | ||||||||||||
Total Liabilities Measured at Fair Value | $ | — | $ | 939.7 | $ | 59.7 | $ | 999.4 |
(in millions) | Redemption Frequency | Fair Value Level | December 31, 2013 | September 30, 2013 | ||||||||
Hedge funds | Monthly or quarterly | 2 | $ | 22.3 | $ | 6.6 | ||||||
Global fixed-income fund | Monthly | 2 | 227.6 | 191.8 | ||||||||
Hedge funds | Annually or triennially | 3 | 2.1 | 1.5 | ||||||||
Real estate and private equity funds | Nonredeemable | 3 | 255.3 | 242.1 | ||||||||
Total | $ | 507.3 | $ | 442.0 |
(in millions) | Investments of Consolidated VIEs | Investments of Consolidated SIPs | Total Level 3 Assets | Debt of Consolidated VIEs | ||||||||||||||||
for the three months ended December 31, 2013 | Debt | Equity | ||||||||||||||||||
Balance at October 1, 2013 | $ | 0.5 | $ | 272.3 | $ | 470.9 | $ | 743.7 | $ | (59.7 | ) | |||||||||
Realized and unrealized gains (losses) included in investment and other income, net | — | (27.7 | ) | (3.7 | ) | (31.4 | ) | 7.5 | ||||||||||||
Purchases | — | 22.2 | 50.2 | 72.4 | — | |||||||||||||||
Sales | — | (13.9 | ) | (15.6 | ) | (29.5 | ) | — | ||||||||||||
Effect of exchange rate changes | — | 1.5 | 0.8 | 2.3 | — | |||||||||||||||
Balance at December 31, 2013 |