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February 3, 2016 8:32 AM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 3, 2016

FRANKLIN RESOURCES, INC.
(Exact name of registrant as specified in its charter)

 Delaware
  001-09318
 13-2670991
(State or other jurisdiction
(Commission File Number)
(IRS Employer Identification No.)
of incorporation)
 
 
               
One Franklin Parkway, San Mateo, California 94403
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (650) 312-2000

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02 Results of Operations and Financial Condition.

On February 3, 2016, Franklin Resources, Inc. (the “Company”) issued a press release announcing the financial results for the Company’s first fiscal quarter ended December 31, 2015. The Company also posted a first quarter financial results presentation on its internet website, as stated in the press release. A copy of the press release is attached hereto as Exhibit 99.1 and a copy of the presentation is attached hereto as Exhibit 99.2, and each is incorporated herein by reference.

The information in this report, including the exhibits hereto, (x) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and (y) shall not be incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibits in this particular report are incorporated by reference).

Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits.
 
 
 
 
 
 
 
Exhibit No.
 
Description
 
99.1
 
Press Release dated February 3, 2016 issued by Franklin Resources, Inc.
 
99.2
 
Franklin Resources, Inc. First Quarter Results presentation, dated February 3, 2016.

2



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
FRANKLIN RESOURCES, INC.
 
 
 
Date:
February 3, 2016
/s/ Kenneth A. Lewis
 
 
Name:  Kenneth A. Lewis
Title:    Chief Financial Officer and Executive Vice President

3



Exhibit Index

Exhibit No.
 
Description
99.1
 
Press Release dated February 3, 2016 issued by Franklin Resources, Inc.
99.2
 
Franklin Resources, Inc. First Quarter Results presentation, dated February 3, 2016.




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

Franklin Resources, Inc. Announces First Quarter Results

San Mateo, CA, February 3, 2016 - Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income1 of $447.8 million or $0.74 per diluted share for the quarter ended December 31, 2015, as compared to $358.2 million or $0.59 per diluted share for the previous quarter and $566.4 million or $0.91 per diluted share for the quarter ended December 31, 2014.

“Market volatility continued this quarter, but we are confident that we have the talent, discipline and foresight to continue driving our long-term success,” said Greg Johnson, Chairman and CEO. “We have a long history of weathering periods like this, and emerging stronger as a firm – well positioned to benefit from long-term trends driving global markets.” 
 
 
Quarter Ended
 
% Change
 
Quarter Ended
 
% Change
 
 
31-Dec-15
 
30-Sep-15
 
Qtr. vs. Qtr.
31-Dec-14
 
Year vs. Year
Financial Results
 
 
 
 
 
 
 
 
 
(in millions, except per share data)
 
 
 
 
 
 
 
 
 
Operating revenues
 
$
1,758.0

 
$
1,873.8

 
(6
)%
$
2,064.3

 
(15
)%
Operating income
 
653.6

 
718.1

 
(9
)%
782.0

 
(16
)%
Operating margin
 
37.2
%
 
38.3
%
 
 
37.9
%
 
 
 
 
 
 
 
 
 
 
 
 
Net income1
 
$
447.8

 
$
358.2

 
25
 %
$
566.4

 
(21
)%
Diluted earnings per share
 
0.74

 
0.59

 
25
 %
0.91

 
(19
)%
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
 
 
 
 
 
 
 
 
(in billions)
 
 
 
 
 
 
 
 
 
Ending
 
$
763.9

 
$
770.9

 
(1
)%
$
880.1

 
(13
)%
Average2
 
781.5

 
824.5

 
(5
)%
894.1

 
(13
)%
Net new flows
 
(20.6
)
 
(28.6
)
 
(28
)%
(3.5
)
 
489
 %

Total assets under management (“AUM”) were $763.9 billion at December 31, 2015, down $7.0 billion or 1% during the quarter primarily due to $20.6 billion of net new outflows, partially offset by $15.0 billion of market appreciation and other, which is net of a $1.6 billion decrease from foreign exchange revaluation.

Cash and cash equivalents and investments were $10.5 billion at December 31, 2015, as compared to $10.6 billion at September 30, 2015. Total stockholders’ equity was $12.4 billion at December 31, 2015, as compared to $12.5 billion at September 30, 2015. The Company had 595.2 million shares of common stock outstanding at December 31, 2015, as compared to 603.5 million shares outstanding at September 30, 2015. During the quarter ended December 31, 2015, the Company repurchased 10.5 million shares of its common stock for a total cost of $404.1 million.

1



Conference Call Information

Pre-recorded audio commentary on the results from Franklin Resources, Inc.’s Chairman and CEO Greg Johnson and CFO and Executive Vice President Ken Lewis will be available today at approximately 8:30 a.m. Eastern Time. They will also lead a live teleconference today at 11:00 a.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 investors.franklinresources.com. The pre-recorded audio commentary can also be accessed by dialing (877) 523-5612 in the U.S. and Canada or (201) 689-8483 internationally using access code 7055790, any time through March 3, 2016.

Access to the live teleconference will be available at investors.franklinresources.com or by dialing (877) 407-8293 in the U.S. and Canada or (201) 689-8349 internationally. A replay of the teleconference can also be accessed by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally using access code 13627935, after 2:00 p.m. Eastern Time on February 3, 2016 through March 3, 2016.

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

Performance Rankings of Franklin Templeton’s U.S.-Registered and Cross-Border Long-Term Mutual Funds3,4,5:
 
 
Percentage of Assets in Top Two Peer Group Quartiles
Period ended December 31, 2015
 
1-Year
 
3-Year
 
5-Year
 
10-Year
Equity and Hybrid (AUM: $278 billion)
 
28
%
 
35
%
 
42
%
 
75
%
Fixed Income (AUM: $229 billion)
 
38
%
 
69
%
 
73
%
 
84
%
Total (AUM: $507 billion)
 
32
%
 
51
%
 
56
%
 
79
%

Performance quoted above represents past performance, which cannot predict or guarantee future results. All investments involve risks, including loss of principal.


2


FRANKLIN RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(in millions, except per share data and AUM)
 
Three Months Ended
December 31,
 
% Change
 
2015
 
2014
 
Operating Revenues
 
 
 
 
 
 
Investment management fees
 
$
1,186.7

 
$
1,382.4

 
(14
)%
Sales and distribution fees
 
478.4

 
595.0

 
(20
)%
Shareholder servicing fees
 
61.9

 
65.8

 
(6
)%
Other
 
31.0

 
21.1

 
47
 %
Total operating revenues
 
1,758.0

 
2,064.3

 
(15
)%
Operating Expenses
 
 
 
 
 
 
Sales, distribution and marketing
 
588.6

 
731.5

 
(20
)%
Compensation and benefits
 
342.5

 
375.5

 
(9
)%
Information systems and technology
 
51.2

 
51.2

 
0
 %
Occupancy
 
30.7

 
34.3

 
(10
)%
General, administrative and other
 
91.4

 
89.8

 
2
 %
Total operating expenses
 
1,104.4

 
1,282.3

 
(14
)%
Operating Income
 
653.6

 
782.0

 
(16
)%
Other Income (Expenses)
 
 
 
 
 
 
Investment and other income, net
 
30.5

 
51.7

 
(41
)%
Interest expense
 
(12.0
)
 
(11.3
)
 
6
 %
Other income, net
 
18.5

 
40.4

 
(54
)%
Income before taxes
 
672.1

 
822.4

 
(18
)%
Taxes on income
 
209.7

 
256.1

 
(18
)%
Net income
 
462.4

 
566.3

 
(18
)%
Less: net income (loss) attributable to
 
 
 
 
 

Nonredeemable noncontrolling interests
 
13.6

 
6.7

 
103
 %
Redeemable noncontrolling interests
 
1.0

 
(6.8
)
 
NM

Net Income Attributable to Franklin Resources, Inc.
 
$
447.8

 
$
566.4

 
(21
)%
 
 
 
 
 
 
 
Earnings per Share
 
 
 
 
 
 
Basic
 
$
0.74

 
$
0.91

 
(19
)%
Diluted
 
0.74

 
0.91

 
(19
)%
Dividends per Share
 
$
0.18

 
$
0.65

 
(72
)%
 
 
 
 
 
 
 
Average Shares Outstanding
 
 
 
 
 
Basic
 
597.6

 
620.1

 
(4
)%
Diluted
 
597.7

 
620.2

 
(4
)%
 
 
 
 
 
 
 
Operating Margin
 
37.2
%
 
37.9
%
 
 
 
 
 
 
 
 
 
AUM (in billions)
 
 
 
 
 
 
Ending
 
$
763.9

 
$
880.1

 
(13
)%
Average
 
781.5

 
894.1

 
(13
)%
Net new flows
 
(20.6
)
 
(3.5
)
 
489
 %


3


FRANKLIN RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(in millions, except per share data and employees)
 
Three Months Ended
 
% Change
 
Three Months Ended
 
31-Dec-15
 
30-Sep-15
 
 
30-Jun-15
 
31-Mar-15
 
31-Dec-14
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees
 
$
1,186.7

 
$
1,256.9

 
(6
)%
 
$
1,340.9

 
$
1,347.6

 
$
1,382.4

Sales and distribution fees
 
478.4

 
510.6

 
(6
)%
 
566.8

 
580.0

 
595.0

Shareholder servicing fees
 
61.9

 
64.4

 
(4
)%
 
66.5

 
66.1

 
65.8

Other
 
31.0

 
41.9

 
(26
)%
 
26.6

 
16.1

 
21.1

Total operating revenues
 
1,758.0

 
1,873.8

 
(6
)%
 
2,000.8

 
2,009.8

 
2,064.3

Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Sales, distribution and marketing
 
588.6

 
626.3

 
(6
)%
 
694.0

 
710.5

 
731.5

Compensation and benefits
 
342.5

 
336.8

 
2
 %
 
363.5

 
377.5

 
375.5

Information systems and technology
 
51.2

 
64.9

 
(21
)%
 
58.3

 
49.9

 
51.2

Occupancy
 
30.7

 
35.6

 
(14
)%
 
30.7

 
32.1

 
34.3

General, administrative and other
 
91.4

 
92.1

 
(1
)%
 
84.5

 
82.1

 
89.8

Total operating expenses
 
1,104.4

 
1,155.7

 
(4
)%
 
1,231.0

 
1,252.1

 
1,282.3

Operating Income
 
653.6

 
718.1

 
(9
)%
 
769.8

 
757.7

 
782.0

Other Income (Expenses)
 
 
 
 
 
 
 
 
 
 
 
 
Investment and other income (losses), net
 
30.5

 
(109.5
)
 
NM

 
(4.7
)
 
102.9

 
51.7

Interest expense
 
(12.0
)
 
(12.9
)
 
(7
)%
 
(13.7
)
 
(1.7
)
 
(11.3
)
Other income (expenses), net
 
18.5

 
(122.4
)
 
NM

 
(18.4
)
 
101.2

 
40.4

Income before taxes
 
672.1

 
595.7

 
13
 %
 
751.4

 
858.9

 
822.4

Taxes on income
 
209.7

 
214.2

 
(2
)%
 
217.4

 
236.0

 
256.1

Net income
 
462.4

 
381.5

 
21
 %
 
534.0

 
622.9

 
566.3

Less: net income (loss) attributable to
 
 
 
 
 
 
 
 
 
 
 
 
Nonredeemable noncontrolling interests
 
13.6

 
26.1

 
(48
)%
 
28.6

 
14.1

 
6.7

Redeemable noncontrolling interests
 
1.0

 
(2.8
)
 
NM

 
1.2

 
2.3

 
(6.8
)
Net Income Attributable to Franklin Resources, Inc.
 
$
447.8

 
$
358.2

 
25
 %
 
$
504.2

 
$
606.5

 
$
566.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.74

 
$
0.59

 
25
 %
 
$
0.82

 
$
0.98

 
$
0.91

Diluted
 
0.74

 
0.59

 
25
 %
 
0.82

 
0.98

 
0.91

Dividends per Share
 
$
0.18

 
$
0.15

 
20
 %
 
$
0.15

 
$
0.15

 
$
0.65

 
 
 
 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding
 
 
 
 
 
 
 
 
 
 
Basic
 
597.6

 
607.4

 
(2
)%
 
614.1

 
617.6

 
620.1

Diluted
 
597.7

 
607.4

 
(2
)%
 
614.2

 
617.7

 
620.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Margin
 
37.2
%
 
38.3
%
 
 
 
38.5
%
 
37.7
%
 
37.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Employees
 
9,412

 
9,489

 
(1
)%
 
9,576

 
9,362

 
9,368

Billable Shareholder Accounts
25.1

 
24.8

 
1
 %
 
25.3

 
24.8

 
24.3



4


AUM AND FLOWS
(in billions)
 
Three Months Ended
December 31,
 
% 
Change
 
2015
 
2014
 
Beginning AUM
 
$
770.9

 
$
898.0

 
(14
)%
Long-term sales
 
33.1

 
46.7

 
(29
)%
Long-term redemptions
 
(53.3
)
 
(50.0
)
 
7
 %
Net cash management
 
(0.4
)
 
(0.2
)
 
100
 %
Net new flows
 
(20.6
)
 
(3.5
)
 
489
 %
Reinvested distributions
 
11.5

 
15.1

 
(24
)%
Net flows
 
(9.1
)
 
11.6

 
NM

Distributions
 
(12.9
)
 
(17.4
)
 
(26
)%
Appreciation (depreciation) and other6
 
15.0

 
(12.1
)
 
NM

Ending AUM
 
$
763.9

 
$
880.1

 
(13
)%

AUM BY INVESTMENT OBJECTIVE
(in billions)
 
31-Dec-15
 
30-Sep-15
 
% Change
 
30-Jun-15
 
31-Mar-15
 
31-Dec-14
Equity
 
 
 
 
 
 
 
 
 
 
 
 
Global/international
 
$
211.7

 
$
212.1

 
0
 %
 
$
247.3

 
$
251.8

 
$
248.5

United States
 
102.0

 
100.8

 
1
 %
 
114.4

 
115.6

 
113.1

Total equity
 
313.7

 
312.9

 
0
 %
 
361.7

 
367.4

 
361.6

Hybrid
 
134.4

 
138.3

 
(3
)%
 
154.8

 
158.2

 
157.1

Fixed Income
 
 
 
 
 
 
 
 
 
 
 
 
Tax-free
 
72.4

 
71.7

 
1
 %
 
72.7

 
74.2

 
73.2

Taxable
 
 
 
 
 
 
 
 
 
 
 
 
Global/international
 
182.0

 
182.7

 
0
 %
 
208.5

 
211.1

 
219.1

United States
 
54.8

 
58.5

 
(6
)%
 
61.8

 
63.1

 
62.2

Total fixed income
 
309.2

 
312.9

 
(1
)%
 
343.0

 
348.4

 
354.5

Cash Management
 
6.6

 
6.8

 
(3
)%
 
7.0

 
6.6

 
6.9

Total AUM
 
$
763.9

 
$
770.9

 
(1
)%
 
$
866.5

 
$
880.6

 
$
880.1

Average AUM for the Three-Month Period
 
$
781.5

 
$
824.5

 
(5
)%
 
$
882.6

 
$
881.6

 
$
894.1


AUM AND FLOWS - UNITED STATES AND INTERNATIONAL7 
 
 
As of and for the Three Months Ended
(in billions)
 
31-Dec-15
 
% of Total
 
30-Sep-15
 
% of Total
 
31-Dec-14
 
% of Total
Long-Term Sales
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
15.7

 
47
%
 
$
16.3

 
53
%
 
$
22.2

 
48
%
International
 
17.4

 
53
%
 
14.2

 
47
%
 
24.5

 
52
%
Total long-term sales
 
$
33.1

 
100
%
 
$
30.5

 
100
%
 
$
46.7

 
100
%
Long-Term Redemptions
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
(35.2
)
 
66
%
 
$
(33.1
)
 
57
%
 
$
(26.7
)
 
53
%
International
 
(18.1
)
 
34
%
 
(25.0
)
 
43
%
 
(23.3
)
 
47
%
Total long-term redemptions
 
$
(53.3
)
 
100
%
 
$
(58.1
)
 
100
%
 
$
(50.0
)
 
100
%
AUM
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
513.2

 
67
%
 
$
522.4

 
68
%
 
$
580.6

 
66
%
International
 
250.7

 
33
%
 
248.5

 
32
%
 
299.5

 
34
%
Total AUM
 
$
763.9

 
100
%
 
$
770.9

 
100
%
 
$
880.1

 
100
%

5


AUM AND FLOWS BY INVESTMENT OBJECTIVE
(in billions)
 
Equity
 
 
 
Fixed Income
 
 
 
 
for the three months ended
December 31, 2015
 
Global/
International
 
United
States
 
Hybrid
 
Tax-Free
 
Taxable
Global/
International
 
Taxable
United
States
 
Cash
Management
 
Total
AUM at October 1, 2015
 
$
212.1

 
$
100.8

 
$
138.3

 
$
71.7

 
$
182.7

 
$
58.5

 
$
6.8

 
$
770.9

Long-term sales
 
6.6

 
3.5

 
4.0

 
1.7

 
15.0

 
2.3

 
—

 
33.1

Long-term redemptions
 
(11.9
)
 
(7.0
)
 
(9.2
)
 
(2.2
)
 
(18.4
)
 
(4.6
)
 
—

 
(53.3
)
Net exchanges
 
(0.1
)
 
0.4

 
(0.4
)
 
0.3

 
(0.2
)
 
(0.2
)
 
0.2

 
—

Net cash management
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.4
)
 
(0.4
)
Net new flows
 
(5.4
)
 
(3.1
)
 
(5.6
)
 
(0.2
)
 
(3.6
)
 
(2.5
)
 
(0.2
)
 
(20.6
)
Reinvested distributions
 
3.1

 
4.3

 
1.9

 
0.5

 
1.3

 
0.4

 
—

 
11.5

Net flows
 
(2.3
)
 
1.2

 
(3.7
)
 
0.3

 
(2.3
)
 
(2.1
)
 
(0.2
)
 
(9.1
)
Distributions
 
(3.4
)
 
(4.7
)
 
(2.1
)
 
(0.6
)
 
(1.6
)
 
(0.5
)
 
—

 
(12.9
)
Appreciation (depreciation) and other6
 
5.3

 
4.7

 
1.9

 
1.0

 
3.2

 
(1.1
)
 
—

 
15.0

AUM at December 31, 2015
$
211.7

 
$
102.0

 
$
134.4

 
$
72.4

 
$
182.0

 
$
54.8

 
$
6.6

 
$
763.9


(in billions)
 
Equity
 
 
 
Fixed Income
 
 
 
 
for the three months ended
September 30, 2015
 
Global/
International
 
United
States
 
Hybrid
 
Tax-Free
 
Taxable
Global/
International
 
Taxable
United
States
 
Cash
Management
 
Total
AUM at July 1, 2015
 
$
247.3

 
$
114.4

 
$
154.8

 
$
72.7

 
$
208.5

 
$
61.8

 
$
7.0

 
$
866.5

Long-term sales
 
8.1

 
3.9

 
4.3

 
1.7

 
9.7

 
2.8

 
—

 
30.5

Long-term redemptions
 
(13.1
)
 
(7.6
)
 
(8.2
)
 
(3.5
)
 
(21.3
)
 
(4.4
)
 
—

 
(58.1
)
Net exchanges
 
(0.1
)
 
0.2

 
(0.5
)
 
—

 
(0.6
)
 
0.2

 
0.8

 
—

Net cash management
 
—

 
—

 
—

 
—

 
—

 
—

 
(1.0
)
 
(1.0
)
Net new flows
 
(5.1
)
 
(3.5
)
 
(4.4
)
 
(1.8
)
 
(12.2
)
 
(1.4
)
 
(0.2
)
 
(28.6
)
Reinvested distributions
 
0.8

 
0.8

 
1.2

 
0.5

 
1.2

 
0.3

 
—

 
4.8

Net flows
 
(4.3
)
 
(2.7
)
 
(3.2
)
 
(1.3
)
 
(11.0
)
 
(1.1
)
 
(0.2
)
 
(23.8
)
Distributions
 
(1.0
)
 
(0.8
)
 
(1.4
)
 
(0.6
)
 
(1.7
)
 
(0.5
)
 
—

 
(6.0
)
Appreciation (depreciation) and other6
 
(29.9
)
 
(10.1
)
 
(11.9
)
 
0.9

 
(13.1
)
 
(1.7
)
 
—

 
(65.8
)
AUM at September 30, 2015
$
212.1

 
$
100.8

 
$
138.3

 
$
71.7

 
$
182.7

 
$
58.5

 
$
6.8

 
$
770.9


(in billions)
 
Equity
 
 
 
Fixed Income
 
 
 
 
for the three months ended
December 31, 2014
 
Global/
International
 
United
States
 
Hybrid
 
Tax-Free
 
Taxable
Global/
International
 
Taxable
United
States
 
Cash
Management
 
Total
AUM at October 1, 2014
 
$
261.5

 
$
109.5

 
$
159.0

 
$
72.1

 
$
225.1

 
$
63.8

 
$
7.0

 
$
898.0

Long-term sales
 
10.8

 
5.2

 
7.5

 
2.0

 
17.6

 
3.6

 
—

 
46.7

Long-term redemptions
 
(14.2
)
 
(6.5
)
 
(6.5
)
 
(2.1
)
 
(16.5
)
 
(4.2
)
 
—

 
(50.0
)
Net exchanges
 
(0.1
)
 
0.4

 
—

 
0.1

 
(0.3
)
 
(0.2
)
 
0.1

 
—

Net cash management
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.2
)
 
(0.2
)
Net new flows
 
(3.5
)
 
(0.9
)
 
1.0

 
—

 
0.8

 
(0.8
)
 
(0.1
)
 
(3.5
)
Reinvested distributions
 
4.3

 
3.9

 
1.9

 
0.5

 
3.9

 
0.6

 
—

 
15.1

Net flows
 
0.8

 
3.0

 
2.9

 
0.5

 
4.7

 
(0.2
)
 
(0.1
)
 
11.6

Distributions
 
(4.9
)
 
(4.2
)
 
(2.1
)
 
(0.7
)
 
(4.8
)
 
(0.7
)
 
—

 
(17.4
)
Appreciation (depreciation) and other6
 
(8.9
)
 
4.8

 
(2.7
)
 
1.3

 
(5.9
)
 
(0.7
)
 
—

 
(12.1
)
AUM at December 31, 2014
$
248.5

 
$
113.1

 
$
157.1

 
$
73.2

 
$
219.1

 
$
62.2

 
$
6.9

 
$
880.1


6


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.
4.
Franklin/Templeton Distributors, Inc., a wholly owned subsidiary of Franklin Resources, Inc., is the principal distributor of Franklin Templeton Investments’ U.S. registered funds, which are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable legislation. Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other Franklin Templeton Investments affiliates and/or their distributors as local legislation permits.
5.
The peer group rankings are sourced from either Lipper, a Thomson Reuters Company, or Morningstar, as the case may be, and are based on an absolute ranking of returns as of December 31, 2015. Lipper rankings for Franklin Templeton U.S.-registered long-term mutual funds are based on Class A shares and do not include sales charges. Franklin Templeton U.S.-registered long-term funds are compared against a universe of all share classes. Performance rankings for other share classes may differ. Morningstar rankings for Franklin Templeton cross-border long-term mutual funds are based on primary share classes and do not include sales charges. Performance rankings for other share classes may differ. Results may have been different if these or other factors had been considered. The figures in the table are based on data available from Lipper and Morningstar as of January 7, 2016 and are subject to revision. © 2016 Morningstar, Inc. All Rights Reserved. The information herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
6.
Appreciation (depreciation) and other includes foreign exchange revaluation.
7.
International includes North America-based advisors serving non-resident clients.

Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 150 countries. Through specialized teams, the Company has expertise across all asset classes - including equity, fixed income, alternative and custom solutions. The Company’s more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California-based company has more than 65 years of investment experience and $763.9 billion in AUM as of December 31, 2015. The Company posts information that may be significant for investors in the Investor Relations and News Center sections of its website, and encourages investors to consult those sections regularly. For more information, please visit investors.franklinresources.com.

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. While forward-looking statements are our best prediction at the time that they are made, you should not rely on them, and you are hereby cautioned against doing so. 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. 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, 2015 and Franklin’s subsequent Quarterly Report 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.

7


•
We are subject to extensive, complex, overlapping and frequently changing rules, regulations and legal interpretations.
•
Global 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 financial condition and results of operations.
•
Failure to comply with the laws, rules or regulations in any of the jurisdictions in which we operate could result in substantial harm to our reputation and results of operations.
•
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 information and cyber security infrastructure, software applications, technology or other systems that are critical to our operations could harm our operations and reputation.
•
Our business operations are complex and a failure to properly perform operational tasks or the misrepresentation of our products and services, or the termination of investment management agreements representing a significant portion of our AUM, 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 market-specific political, economic or other risks that may adversely impact our revenues and income generated overseas.
•
Harm to our reputation or poor investment performance of our products could reduce the level of our AUM or affect our sales, potentially negatively impacting our revenues and income.
•
Our future results are dependent upon maintaining an appropriate level of expenses, which is subject to fluctuation.
•
Our ability to successfully manage and grow our business 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.
•
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.
•
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.

# # #


8
Franklin Resources, Inc. First Quarter Results Greg Johnson Chairman and Chief Executive Officer Ken Lewis Chief Financial Officer February 3, 2016 Exhibit 99.2

 
Statements in this presentation 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 presentation, 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. While forward-looking statements are our best prediction at the time that they are made, you should not rely on them, and you are hereby cautioned against doing so. 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. 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, 2015 and Franklin’s subsequent Quarterly Report on Form 10-Q: (1) 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; (2) the amount and mix of our assets under management (“AUM”) are subject to significant fluctuations; (3) we are subject to extensive, complex, overlapping and frequently changing rules, regulations and legal interpretations; (4) Global 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 financial condition and results of operations; (5) failure to comply with the laws, rules or regulations in any of the jurisdictions in which we operate could result in substantial harm to our reputation and results of operations; (6) 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; (7) any significant limitation, failure or security breach of our information and cyber security infrastructure, software applications, technology or other systems that are critical to our operations could harm our operations and reputation; (8) our business operations are complex and a failure to properly perform operational tasks or the misrepresentation of our products and services, or the termination of investment management agreements representing a significant portion of our AUM, could have an adverse effect on our revenues and income; (9) we face risks, and corresponding potential costs and expenses, associated with conducting operations and growing our business in numerous countries; (10) we depend on key personnel and our financial performance could be negatively affected by the loss of their services; (11) 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; (12) changes in the third-party distribution and sales channels on which we depend could reduce our income and hinder our growth; (13) our increasing focus on international markets as a source of investments and sales of investment products subjects us to increased exchange rate and market-specific political, economic or other risks that may adversely impact our revenues and income generated overseas; (14) harm to our reputation or poor investment performance of our products could reduce the level of our AUM or affect our sales, potentially negatively impacting our revenues and income; (15) our future results are dependent upon maintaining an appropriate level of expenses, which is subject to fluctuation; (16) our ability to successfully manage and grow our business can be impeded by systems and other technological limitations; (17) 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; (18) 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; (19) our ability to meet cash needs depends upon certain factors, including the market value of our assets, operating cash flows and our perceived creditworthiness; (20) we are dependent on the earnings of our subsidiaries. Any forward-looking statement made by us in this presentation 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. The information in this presentation is provided solely in connection with this presentation, and is not directed toward existing or potential investment advisory clients or fund shareholders. Forward-Looking Statements 2

 
Audio Commentary and Conference Call Details Pre-recorded audio commentary on the results from Franklin Resources, Inc.’s Chairman and CEO Greg Johnson and CFO and Executive Vice President Ken Lewis will be available today at approximately 8:30 a.m. Eastern Time. They will also lead a live teleconference today at 11:00 a.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, this presentation or the pre-recorded audio commentary. Access to the pre-recorded audio commentary and accompanying slides are available at investors.franklinresources.com. The pre-recorded audio commentary can also be accessed by dialing (877) 523-5612 in the U.S. and Canada or (201) 689- 8483 internationally using access code 7055790, any time through March 3, 2016. Access to the live teleconference will be available at investors.franklinresources.com or by dialing (877) 407-8293 in the U.S. and Canada or (201) 689-8349 internationally. A replay of the teleconference can also be accessed by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally using access code 13627935, after 2:00 p.m. Eastern Time on February 3, 2016 through March 3, 2016. Questions regarding the pre-recorded audio commentary or live teleconference should be directed to Franklin Resources, Inc., Investor Relations at (650) 312-4091 or Media Relations at (650) 312-2245. 3

 
Highlights 4 INVESTMENT PERFORMANCE & FLOWS FINANCIAL RESULTS CAPITAL MANAGEMENT INVESTING IN FUTURE GROWTH Hired a new head of global ETFs, and filed registration statements for the initial suite of Franklin LibertyQ strategic beta ETFs Announced a 20% increase to the quarterly dividend, which has more than doubled over the last 5 years Repurchased 10.5 million shares in the quarter, significantly more than offsetting issuance from long-term equity awards Cost savings initiatives so far have decreased controllable expenses 6% vs. the 1st quarter of 2015 The operating margin remained strong at 37.2% for the quarter A majority of U.S. and cross-border mutual fund assets ranked in the top-half of their respective peer groups for the 3-, 5- and 10-year periods Institutional flows rebounded with a $5.5 billion global macro mandate

 
Investment Performance

 
5-Year 3-Year 10-Year Investment Performance 6 The peer group rankings are sourced from either Lipper, a Thomson Reuters Company or Morningstar, as the case may be, and are based on an absolute ranking of returns as of December 31, 2015. Lipper rankings for Franklin Templeton U.S.-registered long-term mutual funds are based on Class A shares and do not include sales charges. Franklin Templeton U.S.-registered long-term funds are compared against a universe of all share classes. Performance rankings for other share classes may differ. Morningstar rankings for Franklin Templeton cross-border long-term mutual funds are based on primary share classes and do not include sales charges. Performance rankings for other share classes may differ. Results may have been different if these or other factors had been considered. The figures in the table are based on data available from Lipper and Morningstar as of January 7, 2016 and are subject to revision. © 2016 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Performance quoted above represents past performance, which cannot predict or guarantee future results. All investments involve risks, including loss of principal. U.S.-Registered and Cross-Border Mutual Funds Percentage of Total Long-Term Assets ($507 billion) in the Top Two Peer Group Quartiles 51% 79% 56% 42% 73% 75% 84% 35% 69% Equity & Hybrid - $278 billion Fixed Income - $229 billion

 
Assets Under Management and Flows

 
Simple Monthly Average vs. End of Period 8 (in US$ billions, for the three months ended)  Average AUM  Ending AUM Assets Under Management Growth 894.1 881.6 882.6 824.5 781.5 880.1 880.6 866.5 770.9 763.9 12/14 3/15 6/15 9/15 12/15

 
Dec-15 Sep-15 % Change United States $ 513.2 $ 522.4 (2%) Europe, the Middle East and Africa 114.1 116.4 (2%) Asia-Pacific 85.0 78.8 8% Canada 31.3 31.4 (0%) Latin America 20.3 21.9 (7%) Total $ 763.9 $ 770.9 (1%) Assets Under Management Diversification 9 Investment Objective As of December 31, 2015 (in US$ billions, for the three months ended) 67% 15% 11% 4% 3% 41% 18% 40% 1% Sales Region Dec-15 Sep-15 % Change Equity $ 313.7 $ 312.9 0% Hybrid 134.4 138.3 (3%) Fixed Income 309.2 312.9 (1%) Cash Management 6.6 6.8 (3%) Total $ 763.9 $ 770.9 (1%)

 
Long-Term Flows Long-Term Flows and Market Return Summary 10 1. Long-term net new flows are defined as long-term sales less long-term redemptions plus long-term net exchanges.  Long-Term Net New Flows1  Long-Term Sales  Long-Term Redemptions (in US$ billions, for the three months ended) Appreciation (Depreciation) & Other (12.1) 7.0 (2.1) (65.8) 15.0 12/14 3/15 6/15 9/15 12/15 46.7 46.5 37.7 30.5 33.1 (50.0) (51.9) (49.0) (58.1) (53.3) (3.4) (5.3) (11.4) (28.4) (20.4) 12/14 3/15 6/15 9/15 12/15

 
United States and International, Retail and Institutional Flows 11 (in US$ billions, for the three months ended) United States International  Retail Long-Term Sales  Retail Long-Term Redemptions  Institutional Long-Term Sales  Institutional Long-Term Redemptions Graphs do not include high net worth client flows. 17.2 17.5 14.6 12.5 11.9 4.0 5.0 3.9 3.5 3.4 (22.4) (20.3) (18.9) (28.7) (29.5) (4.0) (4.7) (5.6) (4.2) (5.4) 12/14 3/15 6/15 9/15 12/15 14.4 13.7 12.3 9.8 7.2 10.1 9.2 6.4 4.3 10.2 (17.0) (19.0) (16.2) (16.8) (12.8) (6.2) (7.6) (7.9) (8.2) (5.3) 12/14 3/15 6/15 9/15 12/15

 
Flows by Investment Objective: Global / International Equity and Fixed Income 12 1. Sales and redemptions as a percentage of beginning assets under management are annualized. % of Beg. AUM1 Prior 4 Quarters Avg. Current Quarter Sales 16% 12% Redemptions 22% 22% % of Beg. AUM1 Prior 4 Quarters Avg. Current Quarter Sales 26% 33% Redemptions 34% 40% (in US$ billions, for the three months ended) Global / International Equity Global / International Fixed Income  Long-Term Net New Flows  Long-Term Sales  Long-Term Redemptions 10.8 11.6 9.8 8.1 6.6 (14.2) (13.3) (14.7) (13.1) (11.9) (3.5) (1.6) (4.6) (5.1) (5.4) 12/14 3/15 6/15 9/15 12/15 17.6 15.9 12.9 9.7 15.0 (16.5) (19.5) (15.5) (21.3) (18.4) 0.8 (4.0) (2.9) (12.2) (3.6) 12/14 3/15 6/15 9/15 12/15

 
Flows by Investment Objective: U.S. Equity and Hybrid 13 1. Sales and redemptions as a percentage of beginning assets under management are annualized. % of Beg. AUM1 Prior 4 Quarters Avg. Current Quarter Sales 17% 14% Redemptions 23% 28% % of Beg. AUM1 Prior 4 Quarters Avg. Current Quarter Sales 15% 12% Redemptions 18% 27% (in US$ billions, for the three months ended) U.S. Equity Hybrid  Long-Term Net New Flows  Long-Term Sales  Long-Term Redemptions 5.2 5.5 4.6 3.9 3.5 (6.5) (6.6) (5.6) (7.6) (7.0) (0.9) (0.6) (1.0) (3.5) (3.1) 12/14 3/15 6/15 9/15 12/15 7.5 6.7 5.6 4.3 4.0 (6.5) (6.4) (7.3) (8.2) (9.2) 1.0 0.3 (1.7) (4.4) (5.6) 12/14 3/15 6/15 9/15 12/15

 
Flows by Investment Objective: Tax-Free and Taxable U.S. Fixed Income 14 1. Sales and redemptions as a percentage of beginning assets under management are annualized. % of Beg. AUM1 Prior 4 Quarters Avg. Current Quarter Sales 11% 9% Redemptions 14% 12% % of Beg. AUM1 Prior 4 Quarters Avg. Current Quarter Sales 22% 16% Redemptions 25% 31% (in US$ billions, for the three months ended) Tax-Free Fixed Income Taxable U.S. Fixed Income  Long-Term Net New Flows  Long-Term Sales  Long-Term Redemptions 2.0 2.4 2.1 1.7 1.7 (2.1) (2.2) (2.5) (3.5) (2.2) 0.0 0.2 (0.5) (1.8) (0.2) 12/14 3/15 6/15 9/15 12/15 3.6 4.4 2.7 2.8 2.3 (4.2) (3.9) (3.4) (4.4) (4.6) (0.8) 0.4 (0.7) (1.4) (2.5) 12/14 3/15 6/15 9/15 12/15

 
Financial Results

 
Quarterly Financial Highlights 16 1. Net income attributable to Franklin Resources, Inc.  Operating Income  Net Income1 (in US$ millions, except per share data, for the three months ended) Unaudited Operating and Net Income1 Diluted Earnings Per Share 782 758 770 718 654 566 607 504 358 448 12/14 3/15 6/15 9/15 12/15 $0.91 $0.98 $0.82 $0.59 $0.74 12/14 3/15 6/15 9/15 12/15

 
Operating Revenues 17 Unaudited (in US$ millions, for the three months ended) Dec-15 Sep-15 Dec-15 vs. Sep-15 Jun-15 Mar-15 Dec-14 Dec-15 vs. Dec-14 Investment management fees $ 1,186.7 $ 1,256.9 (6%) $ 1,340.9 $ 1,347.6 $ 1,382.4 (14%) Sales and distribution fees 478.4 510.6 (6%) 566.8 580.0 595.0 (20%) Shareholder servicing fees 61.9 64.4 (4%) 66.5 66.1 65.8 (6%) Other 31.0 41.9 (26%) 26.6 16.1 21.1 47% Total Operating Revenues $ 1,758.0 $ 1,873.8 (6%) $ 2,000.8 $ 2,009.8 $ 2,064.3 (15%)

 
Operating Expenses 18 Unaudited (in US$ millions, for the three months ended) Dec-15 Sep-15 Dec-15 vs. Sep-15 Jun-15 Mar-15 Dec-14 Dec-15 vs. Dec-14 Sales, distribution and marketing $ 588.6 $ 626.3 (6%) $ 694.0 $ 710.5 $ 731.5 (20%) Compensation and benefits 342.5 336.8 2% 363.5 377.5 375.5 (9%) Information systems and technology 51.2 64.9 (21%) 58.3 49.9 51.2 0% Occupancy 30.7 35.6 (14%) 30.7 32.1 34.3 (10%) General, administrative and other 91.4 92.1 (1%) 84.5 82.1 89.8 2% Total Operating Expenses $ 1,104.4 $ 1,155.7 (4%) $ 1,231.0 $ 1,252.1 $ 1,282.3 (14%)

 
Operating Leverage 19 Unaudited 1. Fiscal year-to date operating income is annualized for CAGR calculation. CAGR is the compound average annual growth rate over the trailing 10-year period. 1,633 2,068 2,099 1,203 1,959 2,660 2,515 2,921 3,221 3,028 654 Fiscal Year Operating Income (in US$ millions) Average AUM: 4.9% CAGR Operating Income1: 4.8% CAGR Operating Margin (%) vs. Average AUM (in US$ billions for the fiscal year ended)  Operating Margin  Average AUM 482 582 605 442 571 694 706 808 888 870 782 32.3% 33.3% 34.8% 28.7% 33.5% 37.3% 35.4% 36.6% 37.9% 38.1% 37.2% 09/06 09/07 09/08 09/09 09/10 09/11 09/12 09/13 09/14 09/15 FYTD 12/15

 
Associated Financial Statement Components $24.1 Million2 ($5.6) Million Cash and cash equivalents, investment securities, available-for- sale and investment securities, trading Investments in equity method investees Investment securities, available-for- sale Investment securities, trading Debt and deferred taxes Foreign exchange revaluations of cash and cash equivalents held by subsidiaries with a non-USD functional currency and other miscellaneous non-operating income Investments of consolidated SIPs Investments of consolidated VIEs Related noncontrolling interests attributable to third-party investors 20 1. Reflects the portion of noncontrolling interests related to consolidated SIPs and VIEs included in Other income. 2. Net of the impact of consolidating SIPs and VIEs as summarized in the appendix. Dividend and interest income Equity method investments Available-for- sale investments Trading investments Interest expense Foreign exchange and other Consolidated sponsored investment products (SIPs) Consolidated variable interest entities (VIEs) Total other income Noncontrolling interests1 Other income, net of noncontrolling interests Unaudited (in US$ millions, for the three months ended December 31, 2015) Other Income – U.S. GAAP 6.4 24.8 6.6 (7.3) (12.0) 5.6 (5.7) 0.1 18.5 8.5 27.0

 
Capital Management

 
Strong Dividend Growth Increased Every Year Since 1981 Unaudited Compound Annual Growth of Regular Dividends as of December 31, 2015 22  BEN  U.S. Asset Managers Average (ex-BEN)1 1. U.S. asset managers include AB, AMG, APAM, APO, ARES, BLK, BX, CG, CLMS, CNS, EV, FIG, FII, GBL, IVZ, JNS, KKR, LM, MN, OAK, OMAM, OZM, PZN, TROW, VRTS, WDR and WETF. Source: SNL Financial and Bloomberg 20% 23% 17% 16% 5% 15% 15% 8% 1-year 3-year 5-year 10-year

 
404 500 218 190 151 178 129 179 137 265 105 23 98 99 282 126 291 337 204 215 199 $0 $10 $20 $30 $40 $50 $60 12/156/1512/146/1412/136/1312/126/1212/116/1112/10  Share Repurchase Amount  BEN Average Price for the Period Special Cash Dividend Declared U.S. Asset Managers (ex-BEN)1: 2.8% Compound Annual Dilution Share Repurchases Accretive to Earnings per Share 23 1. U.S. asset managers include AB, AMG, APAM, APO, ARES, BLK, BX, CG, CLMS, CNS, EV, FIG, FII, GBL, IVZ, JNS, KKR, LM, MN, OAK, OMAM, OZM, PZN, TROW, VRTS, WDR and WETF. Source: Thomson Reuters and company reports.  BEN  U.S. Asset Managers Average (ex-BEN)1 Unaudited Change in Ending Shares Outstanding Share Repurchases (US$ millions) vs. Average BEN Price BEN: 2.3% Compound Annual Accretion Special Cash Dividends per Share Declared: Dec-14: $0.50 Nov-12: $1.00 Dec-11: $0.67 Dec-09: $1.00 -20% -10% 0% 10% 20% 12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15

 
Return of Capital Distributing U.S. Free Cash Flow Unaudited Trailing 12 Months Share Repurchases and Dividends1 (US$ millions and percentage of net income)  Dividends  Share Repurchases 24 1. The chart above illustrates the amount of share repurchases and dividends over the trailing 12 months, for the period ended. Dividend payout is calculated as dividend amount declared divided by net income attributable to Franklin Resources, Inc. for the trailing 12-month period. Repurchase payout is calculated as stock repurchase amount divided by net income attributable to Franklin Resources, Inc. for the trailing 12-month period. 27% 27% 29% 34% 20% 27% 27% 32% 52% 68% 1,267 1,296 1,403 1,741 1,696 12/14 3/15 6/15 9/15 12/15

 
Appendix

 
Strong Balance Sheet Unaudited Net Cash and Investments1 (US$ billions) 26 1. Net cash and investments consists of Franklin Resources, Inc. cash and investments (including only direct investments in consolidated SIPs and VIEs), net of debt and deposits.  U.S. Net Cash and Investments  Non-U.S. Net Cash and Investments 0.9 0.8 1.8 1.7 5.6 6.5 7.4 7.9 6.5 7.3 9.2 9.6 9.5 FYE-9/12 FYE-9/13 FYE-9/14 FYE-9/15 12/15

 
Sales and Distribution Summary This table summarizes the asset- and sales- based distribution fees, net of expense. • Asset-based expenses are generally not directly correlated with asset-based revenue due to international fee structures which provide for recovery of certain distribution costs through investment management fees. • Sales-based expenses are determined as a percentage of sales and are incurred from the same commissionable sales transactions that generate sales fee revenues. • Deferred sales commissions, which are related to up-front commissions on shares sold without a front-end sales charge, are amortized over the periods in which commissions are generally recovered from distribution fee revenues (and to a lesser extent, from contingent deferred sales charges received from shareholders of the funds upon redemption of their shares). 27 Unaudited (in US$ millions, for the three months ended) • Sales and distribution fees, net decreased this quarter due to lower asset-based expenses driven by the decline in non-U.S. assets under management Dec-15 Sep-15 Change % Change Asset-based fees $ 377.2 $ 396.9 Asset-based expenses (478.6) (504.1) Asset-based fees, net $ (101.4) $ (107.2) $ 5.8 (5%) Sales-based fees 99.1 110.9 Contingent sales charges 2.1 2.8 Sales-based expenses (87.2) (96.6) Sales-based fees, net $ 14.0 $ 17.1 $ (3.1) (18%) Amortization of deferred sales commissions (22.8) (25.6) 2.8 (11%) Sales and Distribution Fees, Net $ (110.2) $ (115.7) $ 5.5 (5%)

 
Consolidated SIPs and VIEs Related Adjustments 28 Unaudited (in US$ millions, for the three months ended) This table summarizes the impact of consolidating SIPs and VIEs on the Company’s reported U.S. GAAP operating results. Dec-15 Operating Revenues $ 22.4 Operating Expenses 2.4 Operating Income 20.0 Investment Income (0.6) Interest Expense (1.0) Consolidated SIPs (5.7) Consolidated VIEs 0.1 Other Income (7.2) Net Income 12.8 Less: net income attributable to noncontrolling interests 14.6 Net Income Attributable to Franklin Resources, Inc. $ (1.8)

 

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