Item 1. Financial Statements.

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Item 1. Financial Statements.

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited


	Three Months Ended March 31,				Six Months Ended March 31,
(in millions, except per share data)	2025		2024		2025		2024
Operating Revenues
Investment management fees	$	1,673.6	$	1,713.9	$	3,472.9	$	3,366.1
Sales and distribution fees	364.9		358.3		740.4		654.7
Shareholder servicing fees	61.9		68.0		125.4		100.5
Other	11.0		12.6		24.3		22.6
Total operating revenues	2,111.4		2,152.8		4,363.0		4,143.9
Operating Expenses
Compensation and benefits	920.0		1,028.2		1,911.4		1,996.5
Sales, distribution and marketing	498.1		484.3		1,010.4		885.1
Information systems and technology	158.7		155.1		314.7		286.1
Occupancy	69.3		76.2		144.4		142.9
Amortization of intangible assets	112.5		84.6		225.1		170.4
Impairment of intangible assets	24.4		—		24.4		—
General, administrative and other	182.8		195.1		368.0		327.1
Total operating expenses	1,965.8		2,023.5		3,998.4		3,808.1
Operating Income	145.6		129.3		364.6		335.8
Other Income (Expenses)
Investment and other income, net	94.1		52.5		104.6		225.7
Interest expense	(20.8)		(27.7)		(43.9)		(46.5)
Investment and other income (losses) of consolidated investment products, net	(164.7)		89.9		(50.6)		66.1
Expenses of consolidated investment products	(11.5)		(5.9)		(18.8)		(11.8)
Other income (expenses), net	(102.9)		108.8		(8.7)		233.5
Income before taxes	42.7		238.1		355.9		569.3
Taxes on income	31.1		62.8		112.2		137.7
Net income	11.6		175.3		243.7		431.6
Less: net income (loss) attributable to
Redeemable noncontrolling interests	(158.4)		42.8		(108.8)		52.3
Nonredeemable noncontrolling interests	18.6		8.3		37.5		3.8
Net Income Attributable to Franklin Resources, Inc.	$	151.4	$	124.2	$	315.0	$	375.5

Earnings per Share
Basic	$	0.26	$	0.23	$	0.55	$	0.71
Diluted	0.26		0.23		0.55		0.71

See Notes to Consolidated Financial Statements.

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited


(in millions)		Three Months Ended March 31,						Six Months Ended March 31,
	2025			2024			2025			2024
Net Income		$	11.6		$	175.3		$	243.7		$	431.6
Other Comprehensive Income (Loss)
Currency translation adjustments, net of tax		28.5			(29.5)			(76.6)			29.6
Net unrealized gains (losses) on defined benefit plans, net of tax		(3.1)			0.5			(2.8)			0.4
Net unrealized gains on investments, net of tax		—			0.1			—			0.1
Total other comprehensive income (loss)		25.4			(28.9)			(79.4)			30.1
Total comprehensive income		37.0			146.4			164.3			461.7
Less: comprehensive income (loss) attributable to
Redeemable noncontrolling interests		(158.4)			42.8			(108.8)			52.3
Nonredeemable noncontrolling interests		18.6			8.3			37.5			3.8
Comprehensive Income Attributable to Franklin Resources, Inc.		$	176.8		$	95.3		$	235.6		$	405.6

See Notes to Consolidated Financial Statements.

FRANKLIN RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

Unaudited


(in millions, except share and per share data)	March 31, 2025		September 30, 2024
Assets
Cash and cash equivalents	$	2,754.0	$	3,309.5
Receivables	1,453.2		1,479.1
Investments (including $636.4 and $838.0 at fair value at March 31, 2025 and September 30, 2024)	2,229.4		2,338.4
Assets of consolidated investment products
Cash and cash equivalents	785.1		1,099.4
Investments, at fair value	11,859.6		11,034.9
Property and equipment, net	987.7		946.4
Goodwill	6,197.9		6,211.4
Intangible assets, net	4,544.0		4,802.1
Operating lease right-of-use assets	780.1		823.3
Other	398.8		420.0
Total Assets	$	31,989.8	$	32,464.5

Liabilities
Compensation and benefits	$	1,301.9	$	1,801.3
Accounts payable and accrued expenses	585.4		551.5

Income taxes	140.1		406.4
Debt	2,671.3		2,780.3
Liabilities of consolidated investment products
Accounts payable and accrued expenses	535.2		861.3
Debt	9,532.3		9,341.5
Deferred tax liabilities	210.8		284.9
Operating lease liabilities	989.2		965.1
Other	845.6		907.4
Total liabilities	16,811.8		17,899.7
Commitments and Contingencies (Note 10)
Redeemable Noncontrolling Interests	2,016.9		1,321.8
Stockholders’ Equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued	—		—
Common stock, $0.10 par value, 1,000,000,000 shares authorized; 525,404,160 and 523,596,548 shares issued and outstanding at March 31, 2025 and September 30, 2024	52.5		52.4
Capital in excess of par	1,062.4		947.6
Retained earnings	11,730.0		11,927.6
Accumulated other comprehensive loss	(498.9)		(419.5)
Total Franklin Resources, Inc. stockholders’ equity	12,346.0		12,508.1
Nonredeemable noncontrolling interests	815.1		734.9
Total stockholders’ equity	13,161.1		13,243.0
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	31,989.8	$	32,464.5

See Notes to Consolidated Financial Statements.

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Unaudited


		Franklin Resources, Inc.																Non- redeemable Non- controlling Interests		Total Stockholders’ Equity
	Common Stock					Capital in Excess of Par Value			Retained Earnings			Accum- ulated Other Compre- hensive Loss			Stockholders’ Equity
(in millions)
for the six months ended March 31, 2025	Shares		Amount
Balance at October 1, 2024		523.6		$	52.4		$	947.6		$	11,927.6		$	(419.5)		$	12,508.1	$	734.9	$	13,243.0
Net income										163.6						163.6		18.9		182.5
Other comprehensive loss													(104.8)			(104.8)				(104.8)
Dividends declared on common stock ($0.32 per share)										(173.6)						(173.6)				(173.6)
Repurchase of common stock		(0.3)		—			(5.8)			—						(5.8)				(5.8)
Issuance of common stock		0.7		—			21.5									21.5				21.5
Stock-based compensation							51.6									51.6				51.6
Net subscriptions and other																		13.1		13.1
Net consolidation of investment products																		4.7		4.7
Adjustment to fair value of redeemable noncontrolling interests										1.5						1.5				1.5
Balance at December 31, 2024		524.0		$	52.4		$	1,014.9		$	11,919.1		$	(524.3)		$	12,462.1	$	771.6	$	13,233.7
Net income										151.4						151.4		18.6		170.0
Other comprehensive income													25.4			25.4				25.4
Dividends declared on common stock ($0.32 per share)										(173.5)						(173.5)				(173.5)
Repurchase of common stock		(0.5)		(0.1)			(9.9)			—						(10.0)				(10.0)
Issuance of common stock		1.9		0.2			44.7									44.9				44.9
Stock-based compensation							12.7									12.7				12.7

Net subscriptions and other																		38.4		38.4
Net deconsolidation of investment products																		(13.5)		(13.5)
Adjustment to fair value of redeemable noncontrolling interests										(167.0)						(167.0)				(167.0)
Balance at March 31, 2025		525.4		$	52.5		$	1,062.4		$	11,730.0		$	(498.9)		$	12,346.0	$	815.1	$	13,161.1

See Notes to Consolidated Financial Statements.


		Franklin Resources, Inc.																Non- redeemable Non- controlling Interests		Total Stockholders’ Equity
	Common Stock					Capital in Excess of Par Value			Retained Earnings			Accum- ulated Other Compre- hensive Loss			Stockholders’ Equity
(in millions)
for the six months ended March 31, 2024	Shares		Amount
Balance at October 1, 2023		495.9		$	49.6		$	—		$	12,376.6		$	(509.3)		$	11,916.9	$	630.9	$	12,547.8

Net income (loss)										251.3						251.3		(4.5)		246.8
Other comprehensive income													59.0			59.0				59.0
Dividends declared on common stock ($0.31 per share)										(167.6)						(167.6)				(167.6)
Repurchase of common stock		(2.4)		(0.2)			(66.6)			8.0						(58.8)				(58.8)
Issuance of common stock		1.2		0.1			26.7									26.8				26.8
Stock-based compensation							39.9									39.9				39.9
Net subscriptions and other																		9.6		9.6

Adjustment to fair value of redeemable noncontrolling interests										(65.9)						(65.9)				(65.9)
Balance at December 31, 2023		494.7		$	49.5		$	—		$	12,402.4		$	(450.3)		$	12,001.6	$	636.0	$	12,637.6
Net income										124.2						124.2		8.3		132.5
Other comprehensive loss													(28.9)			(28.9)				(28.9)
Dividends declared on common stock ($0.31 per share)										(169.3)						(169.3)				(169.3)
Repurchase of common stock		(0.4)		(0.1)			(11.6)			—						(11.7)				(11.7)
Issuance of common stock		0.3		—			10.7									10.7				10.7
Stock-based compensation							86.3									86.3				86.3
Acquisition		31.6		3.2			936.9									940.1		25.8		965.9
Net subscriptions and other																		63.1		63.1
Net deconsolidation of investment products																		(12.6)		(12.6)
Adjustment to fair value of redeemable noncontrolling interests										(91.9)						(91.9)				(91.9)
Balance at March 31, 2024		526.2		$	52.6		$	1,022.3		$	12,265.4		$	(479.2)		$	12,861.1	$	720.6	$	13,581.7

See Notes to Consolidated Financial Statements.

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited


	Six Months Ended March 31,
(in millions)	2025		2024

Net Income	$	243.7	$	431.6
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation	119.9		132.0
Amortization of deferred sales commissions	39.0		28.3
Depreciation and other amortization	60.7		57.5
Amortization of intangible assets	225.1		170.4
Impairment of intangible assets	24.4		—
Net losses (gains) on investments	10.3		(41.6)
Income from investments in equity method investees	(15.5)		(81.3)
Net losses (gains) on investments of consolidated investment products	101.8		(3.0)
Net purchase of investments by consolidated investment products	(230.7)		(232.2)
Deferred income taxes	(39.9)		(15.0)
Other	139.2		57.4
Changes in operating assets and liabilities:
Increase in receivables and other assets	(48.2)		(55.1)
Decrease in investments, net	3.3		10.0
Decrease in accrued compensation and benefits	(488.0)		(316.0)
Decrease in income taxes payable	(266.3)		(177.2)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	(33.8)		22.6
Decrease in accounts payable and accrued expenses of consolidated investment products	(40.3)		(103.7)
Net cash used in operating activities	(195.3)		(115.3)
Purchase of investments	(545.1)		(501.0)
Liquidation of investments	480.2		543.6
Purchase of investments by consolidated collateralized loan obligations	(3,199.4)		(2,294.3)
Liquidation of investments by consolidated collateralized loan obligations	2,357.1		1,769.9
Additions of property and equipment, net	(109.3)		(61.2)
Acquisitions, net of cash acquired (including $281.4 in cash and cash equivalents of consolidated investment products in fiscal year 2024)	—		177.9

Payments of deferred consideration liability	—		(60.8)
Net (deconsolidation) consolidation of investment products	(4.1)		15.1
Net cash used in investing activities	(1,020.6)		(410.8)

[Table continued on next page]

See Notes to Consolidated Financial Statements.

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

[Table continued from previous page]


	Six Months Ended March 31,
(in millions)	2025		2024


Issuance of common stock	$	10.2	$	7.3
Dividends paid on common stock	(339.4)		(321.4)
Repurchase of common stock	(15.8)		(70.5)
Proceeds from debt	300.0		—

Payment on debt	(400.0)		—
Proceeds from repurchase agreement	41.2		—
Payments on repurchase agreement	(32.4)		—
Proceeds from debt of consolidated investment products	3,266.5		587.4
Payments on debt of consolidated investment products	(2,596.9)		(35.5)
Payments on contingent consideration liabilities	(0.7)		(2.9)
Noncontrolling interests	147.6		67.7
Net cash provided by financing activities	380.3		232.1
Effect of exchange rate changes on cash and cash equivalents	(34.2)		15.9
Decrease in cash and cash equivalents	(869.8)		(278.1)
Cash and cash equivalents, beginning of period	4,408.9		4,402.4
Cash and Cash Equivalents, End of Period	$	3,539.1	$	4,124.3

Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	217.1	$	318.4
Cash paid for interest	49.2		51.3
Cash paid for interest by consolidated investment products	403.7		345.6

See Notes to Consolidated Financial Statements.

FRANKLIN RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

Note 1 – Basis of Presentation

The unaudited interim financial statements of Franklin Resources, Inc. (“Franklin”) and its consolidated subsidiaries (collectively, the “Company”) included herein have been prepared in accordance with the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Under these rules and regulations, some information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America have been shortened or omitted. Management believes that all adjustments necessary for a fair statement of the financial position and the results of operations for the periods shown have been made. All adjustments are normal and recurring. Management also believes that the accounting estimates are appropriate, and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates. These financial statements should be read together with the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (“fiscal year 2024”).

Note 2 – New Accounting Guidance

Accounting Guidance Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued an amendment to the existing segment reporting guidance. The amendment requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker by reportable segment and clarifies that single reportable segment entities are required to apply all existing segment disclosures in the guidance. The Company will adopt the annual disclosures in its Annual Report on Form 10-K for the fiscal year ending September 30, 2025 and interim disclosure in its Quarterly report on Form 10-Q for the quarter ending December 31, 2025.

There were no other significant updates to the new accounting guidance that the Company has not yet adopted as disclosed in its Form 10-K for fiscal year 2024.

Note 3 – Earnings per Share

The components of basic and diluted earnings per share were as follows:


(in millions, except per share data)		Three Months Ended March 31,						Six Months Ended March 31,
	2025			2024			2025			2024
Net income attributable to Franklin Resources, Inc.		$	151.4		$	124.2		$	315.0		$	375.5
Less: allocation of earnings to participating nonvested stock and stock unit awards		14.3			7.2			29.7			16.3
Net Income Available to Common Stockholders		$	137.1		$	117.0		$	285.3		$	359.2

Weighted-average shares outstanding – basic		519.1			518.4			518.3			502.6
Dilutive effect of nonparticipating nonvested stock unit awards		0.8			0.8			0.7			0.8
Weighted-Average Shares Outstanding – Diluted		519.9			519.2			519.0			503.4

Earnings per Share
Basic		$	0.26		$	0.23		$	0.55		$	0.71
Diluted		0.26			0.23			0.55			0.71

There were no nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive for the three and six months ended March 31, 2025 and such awards were insignificant for the three and six months ended March 31, 2024.

Note 4 – Revenues

Operating revenues by geographic area were as follows:


(in millions)	United States		Luxembourg		Asia-Pacific		Americas Excluding United States		Europe, Middle East and Africa, Excluding Luxembourg		Total
for the three months ended March 31, 2025
Investment management fees	$	1,272.4	$	215.9	$	71.5	$	49.2	$	64.6	$	1,673.6
Sales and distribution fees	259.2		89.6		6.4		9.6		0.1		364.9
Shareholder servicing fees	53.7		7.7		0.4		0.1		—		61.9
Other	10.8		—		0.2		—		—		11.0
Total	$	1,596.1	$	313.2	$	78.5	$	58.9	$	64.7	$	2,111.4


(in millions)	United States		Luxembourg		Asia-Pacific		Americas Excluding United States		Europe, Middle East and Africa, Excluding Luxembourg		Total
for the six months ended March 31, 2025
Investment management fees	$	2,633.8	$	439.8	$	147.3	$	102.8	$	149.2	$	3,472.9
Sales and distribution fees	526.3		183.0		11.3		19.6		0.2		740.4
Shareholder servicing fees	108.8		15.7		0.8		0.1		—		125.4
Other	23.9		—		0.4		—		—		24.3
Total	$	3,292.8	$	638.5	$	159.8	$	122.5	$	149.4	$	4,363.0


(in millions)	United States		Luxembourg		Asia-Pacific		Americas Excluding United States		Europe, Middle East and Africa, Excluding Luxembourg		Total
for the three months ended March 31, 2024
Investment management fees	$	1,285.5	$	222.2	$	69.9	$	63.2	$	73.1	$	1,713.9
Sales and distribution fees	256.3		87.1		5.0		9.9		—		358.3
Shareholder servicing fees	59.4		7.9		0.7		—		—		68.0
Other	9.4		0.2		3.0		—		—		12.6
Total	$	1,610.6	$	317.4	$	78.6	$	73.1	$	73.1	$	2,152.8


(in millions)	United States		Luxembourg		Asia-Pacific		Americas Excluding United States		Europe, Middle East and Africa, Excluding Luxembourg		Total
for the six months ended March 31, 2024
Investment management fees	$	2,546.1	$	413.9	$	138.4	$	114.7	$	153.0	$	3,366.1
Sales and distribution fees	462.0		163.6		9.6		19.5		—		654.7
Shareholder servicing fees	83.6		15.5		1.3		0.1		—		100.5
Other	18.4		0.7		3.2		—		0.3		22.6
Total	$	3,110.1	$	593.7	$	152.5	$	134.3	$	153.3	$	4,143.9

Operating revenues are attributed to geographic areas based on the locations of the subsidiaries that provide the services, which may differ from the regions in which the related investment products are sold.

Revenues earned from sponsored funds were 83% of the Company’s total operating revenues for the three and six months ended March 31, 2025 and March 31, 2024.

Note 5 – Investments

The disclosures below include details of the Company’s investments, excluding those of consolidated investment products (“CIPs”). See Note 7 – Consolidated Investment Products for information related to the investments held by these entities.

Investments consisted of the following:


(in millions)	March 31, 2025		September 30, 2024
Investments, at fair value
Sponsored funds and separate accounts	$	278.0	$	509.1
Investments related to long-term incentive plans	258.2		271.6
Other equity and debt investments	100.2		57.3
Total investments, at fair value	636.4		838.0
Investments in equity method investees	1,178.7		1,219.7
Other investments	414.3		280.7
Total	$	2,229.4	$	2,338.4

The Company has entered into repurchase agreements with a third-party financing company for certain investments held by the Company. As of March 31, 2025 and September 30, 2024, other liabilities includes repurchase agreements of $119.9 million and $111.4 million with investments of $124.1 million and $121.7 million in carrying value pledged as collateral. The repurchase agreements have contractual maturity dates ranging between 2030 to 2038.

Note 6 – Fair Value Measurements

The disclosures below include details of the Company’s fair value measurements, excluding those of CIPs. See Note 7 – Consolidated Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

The assets and liabilities measured at fair value on a recurring basis were as follows:


(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of March 31, 2025
Assets
Investments, at fair value
Sponsored funds and separate accounts	$	54.7	$	178.0	$	9.0	$	36.3	$	278.0
Investments related to long-term incentive plans	226.2		2.8		—		29.2		258.2
Other equity and debt investments	13.2		11.5		1.6		34.2		60.5

Total Assets Measured at Fair Value	$	294.1	$	192.3	$	10.6	$	99.7	$	596.7

Liabilities
Securities sold short	$	116.6	$	—	$	—	$	—	$	116.6
Contingent consideration liabilities	—		—		27.5		—		27.5
Total Liabilities Measured at Fair Value	$	116.6	$	—	$	27.5	$	—	$	144.1

As of March 31, 2025, there were $39.7 million of other investments which were adjusted to fair value on a nonrecurring basis and excluded from the table above.


(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2024
Assets
Investments, at fair value
Sponsored funds and separate accounts	$	306.3	$	157.4	$	5.2	$	40.2	$	509.1
Investments related to long-term incentive plans	242.5		—		—		29.1		271.6
Other equity and debt investments	4.1		11.1		2.6		39.5		57.3

Total Assets Measured at Fair Value	$	552.9	$	168.5	$	7.8	$	108.8	$	838.0

Liabilities
Securities sold short	$	178.1	$	—	$	—	$	—	$	178.1
Contingent consideration liabilities	—		—		28.2		—		28.2
Total Liabilities Measured at Fair Value	$	178.1	$	—	$	28.2	$	—	$	206.3

Investments for which fair value was estimated using reported NAV as a practical expedient primarily consist of nonredeemable private equity, debt and infrastructure funds, and redeemable alternative credit, global equity, private real estate funds and alternatives. These investments were as follows:


(in millions)	March 31, 2025		September 30, 2024
Nonredeemable investments1
Investments with known liquidation periods	$	25.8	$	32.4
Investments with unknown liquidation periods	15.4		16.1

Redeemable investments2	58.5		60.3

Unfunded commitments	11.0		14.0

1The investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets. Investments with known liquidation periods have an expected weighted-average life of 2.1 years and 1.9 years at March 31, 2025 and September 30, 2024.

2Investments are redeemable on a semi-monthly, monthly and quarterly basis.

Financial instruments that were not measured at fair value were as follows:


(in millions)	Fair Value Level	March 31, 2025				September 30, 2024
	Carrying Value	Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	2,754.0	$	2,754.0	$	3,309.5	$	3,309.5
Other investments
Time deposits	2	12.8		12.8		9.8		9.8
Equity securities	3	401.5		401.5		270.9		270.9

Financial Liability
Debt	2	$	2,671.3	$	2,234.4	$	2,780.3	$	2,387.0

Note 7 – Consolidated Investment Products

CIPs consist of mutual and other investment funds, limited partnerships and similar structures and collateralized loan obligations (“CLOs”), all of which are sponsored by the Company, and include both voting interest entities and variable interest entities (“VIEs”). The Company had 73 CIPs, including 21 CLOs, as of March 31, 2025 and 77 CIPs, including 22 CLOs, as of September 30, 2024.

The balances related to CIPs included in the Company’s consolidated balance sheets were as follows:


(in millions)	March 31, 2025		September 30, 2024
Assets
Cash and cash equivalents	$	785.1	$	1,099.4
Receivables	165.3		217.5
Investments, at fair value	11,859.6		11,034.9
Total Assets	$	12,810.0	$	12,351.8

Liabilities
Accounts payable and accrued expenses	$	535.2	$	861.3
Debt	9,532.3		9,341.5
Other liabilities	11.0		39.9
Total liabilities	10,078.5		10,242.7
Redeemable Noncontrolling Interests	1,196.1		687.8
Stockholders’ Equity
Franklin Resources, Inc.’s interests	1,110.9		1,080.9
Nonredeemable noncontrolling interests	424.5		340.4
Total stockholders’ equity	1,535.4		1,421.3
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	12,810.0	$	12,351.8

The consolidation of CIPs did not have a significant impact on net income attributable to the Company during the three and six months ended March 31, 2025 and 2024.

The Company has no right to the CIPs’ assets, other than its direct equity investments in them and investment management and other fees earned from them. The debt holders of the CIPs have no recourse to the Company’s assets beyond the level of its direct investment; therefore the Company bears no other risks associated with the CIPs’ liabilities.

Fair Value Measurements

Assets of CIPs measured at fair value on a recurring basis were as follows:


(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of March 31, 2025
Assets
Cash and cash equivalents of CLOs	$	537.9	$	—	$	—	$	—	$	537.9
Receivables of CLOs	—		122.3		—		—		122.3
Investments
Equity and debt securities	511.6		1,331.3		545.0		155.4		2,543.3
Loans	—		9,307.8		8.5		—		9,316.3

Total Assets Measured at Fair Value	$	1,049.5	$	10,761.4	$	553.5	$	155.4	$	12,519.8


(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2024
Assets
Cash and cash equivalents of CLOs	$	764.3	$	—	$	—	$	—	$	764.3
Receivables of CLOs	—		149.6		—		—		149.6
Investments
Equity and debt securities	229.7		889.4		550.1		187.1		1,856.3
Loans	—		9,178.1		0.5		—		9,178.6

Total Assets Measured at Fair Value	$	994.0	$	10,217.1	$	550.6	$	187.1	$	11,948.8

Investments for which fair value was estimated using reported NAV as a practical expedient consist of nonredeemable private debt and equity funds, a redeemable global hedge fund and a redeemable U.S. equity fund. These investments were as follows:


(in millions)	March 31, 2025		September 30, 2024
Nonredeemable investments1

Investments with unknown liquidation periods	$	97.1	$	49.0

Redeemable investments2	58.3		138.1

Unfunded commitments3	—		42.8

1The investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets.

2Investments are redeemable on a monthly basis and liquidation periods are unknown.

3As of March 31, 2025, there were no investments with unfunded commitments. Of the total unfunded commitments, the Company was contractually obligated to fund $9.9 million based on its ownership percentage in the CIPs, at September 30, 2024.

Changes in Level 3 assets were as follows:


(in millions)	Equity and Debt Securities
for the three months ended March 31, 2025
Balance at January 1, 2025	$	573.5

Gains included in investment and other income (losses) of consolidated investment products, net	2.3
Purchases	10.9
Sales	(2.7)

Transfers into Level 3	0.2
Transfers out of Level 3	(39.2)
Balance at March 31, 2025	$	545.0
Change in unrealized losses included in net income relating to assets held at March 31, 2025	$	(17.1)


(in millions)	Equity and Debt Securities
for the six months ended March 31, 2025
Balance at October 1, 2024	$	550.1

Gains included in investment and other income (losses) of consolidated investment products, net	24.3
Purchases	20.1
Sales	(14.3)
Net consolidations	3.8
Transfers into Level 3	0.2
Transfers out of Level 3	(39.2)
Balance at March 31, 2025	$	545.0
Change in unrealized gains included in net income relating to assets held at March 31, 2025	$	2.8


(in millions)	Equity and Debt Securities
for the three months ended March 31, 2024
Balance at January 1, 2024	$	551.5
Acquisition	29.6
Losses included in investment and other income of consolidated investment products, net	(0.1)
Purchases	22.8
Sales	(0.3)
Net deconsolidations	(12.5)



Balance at March 31, 2024	$	591.0
Change in unrealized gains included in net income relating to assets held at March 31, 2024	$	—


(in millions)	Equity and Debt Securities
for the six months ended March 31, 2024
Balance at October 1, 2023	$	584.9
Acquisition	29.6
Losses included in investment and other income of consolidated investment products, net	(38.2)
Purchases	26.6
Sales	(0.5)
Net deconsolidations	(12.5)
Transfers into Level 3	1.1


Balance at March 31, 2024	$	591.0
Change in unrealized losses included in net income relating to assets held at March 31, 2024	$	(37.6)

Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:


(in millions)
as of March 31, 2025		Fair Value			Valuation Technique		Significant Unobservable Inputs		Range (Weighted Average1)
Equity and debt securities		$	260.5		Market pricing		Private sale pricing		$0.37–$1,850.00 ($162.84) per share
							Discount for lack of marketability		10.0%–50.0% (22.2%)
		234.5			Market comparable companies		Enterprise value/ Revenue multiple		1.3–27.3 (10.4)
						Discount for lack of marketability		8.2%–11.6% (10.9%)
	39.9			Discounted cash flow		Discount rate		6.8%–7.1% (6.9%)
	10.1			Option pricing model		Volatility		40.8%–101.7% (46.6%)
						Discount for lack of marketability		10.3%–21.1% (11.3%)


(in millions)
as of September 30, 2024		Fair Value			Valuation Technique		Significant Unobservable Inputs	Range (Weighted Average1)
Equity and debt securities		$	291.6		Market comparable companies		Enterprise value/ Revenue multiple	1.2–22.8 (10.9)
					Discount for lack of marketability		0.1%–10.4% (8.1%)
	214.5	Market pricing			Private sale pricing		$0.01–$1,000.00 ($73.04) per share
				Discount for lack of marketability		9.8%–17.5% (11.5%)
	44.0	Discounted cash flow		Discount rate		6.8%

1Based on the relative fair value of the instruments.

If the relevant significant inputs used in the market-based valuations, other than discount for lack of marketability, were independently higher (lower) as of March 31, 2025, the resulting fair value of the assets would be higher (lower). If the relevant significant inputs used in the discounted cash flow, as well as the discount for lack of marketability used in the market-based valuations, were independently higher (lower) as of March 31, 2025, the resulting fair value of the assets would be lower (higher).

Financial instruments of CIPs that were not measured at fair value were as follows:


(in millions)	Fair Value Level	March 31, 2025				September 30, 2024
	Carrying Value	Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Asset
Cash and cash equivalents	1	$	247.2	$	247.2	$	335.1	$	335.1

Financial Liabilities
Debt of CLOs1	2 or 3	$	9,532.3	$	9,343.8	$	9,341.5	$	9,167.3

1Substantially all was Level 2.

Debt

Debt of CLOs totaled $9,532.3 million and $9,341.5 million at March 31, 2025 and September 30, 2024. The debt had fixed and floating interest rates ranging from 2.39% to 13.04% with a weighted-average effective interest rate of 6.58% at March 31, 2025, and from 2.39% to 13.73% with a weighted-average effective interest rate of 7.36% at September 30, 2024. The floating rates were based on the Secured Overnight Financing Rate.

The contractual maturities for the debt of CLOs at March 31, 2025 were as follows:


(in millions)
for the fiscal years ending September 30,	Amount
2025 (remainder of year)		$	—
2026		—
2027		12.0
2028		—
2029		—
Thereafter		9,520.3
Total		$	9,532.3

Collateralized Loan Obligations

The unpaid principal balance and fair value of the investments of CLOs were as follows:


(in millions)	March 31, 2025		September 30, 2024
Unpaid principal balance	$	9,481.8	$	9,371.9
Difference between unpaid principal balance and fair value	8.9		(19.8)
Fair Value	$	9,490.7	$	9,352.1

Investments 90 days or more past due were immaterial at March 31, 2025 and September 30, 2024.

The Company recognized $15.6 million and $27.3 million of net gains during the three and six months ended March 31, 2025 and $9.7 million and $30.5 million of net gains during the three and six months ended March 31, 2024, related to its own economic interests in the CLOs. The aggregate principal related to the debt of CLOs was $9,481.7 million and $9,282.8 million at March 31, 2025 and September 30, 2024.

Note 8 – Redeemable Noncontrolling Interests

Changes in redeemable noncontrolling interests were as follows:


(in millions)		2025									2024
	CIPs			Minority Interests			Total			CIPs			Minority Interests			Total
for the three months ended March 31,
Balance at beginning of period		$	1,466.5		$	639.5		$	2,106.0		$	555.3		$	523.2		$	1,078.5
Net income (loss)		(167.4)			9.0			(158.4)			32.7			10.1			42.8
Net subscriptions (distributions) and other		(50.5)			5.3			(45.2)			(8.5)			(14.8)			(23.3)
Net consolidations (deconsolidations)		(52.5)			—			(52.5)			43.8			—			43.8
Acquisition		—			—			—			20.2			—			20.2
Adjustment to fair value		—			167.0			167.0			—			91.9			91.9
Balance at End of Period		$	1,196.1		$	820.8		$	2,016.9		$	643.5		$	610.4		$	1,253.9


(in millions)		2025									2024
	CIPs			Minority Interests			Total			CIPs			Minority Interests			Total
for the six months ended March 31,
Balance at beginning of period		$	687.8		$	634.0		$	1,321.8		$	580.1		$	446.0		$	1,026.1
Net income (loss)		(128.5)			19.7			(108.8)			29.8			22.5			52.3
Net subscriptions (distributions) and other		125.1			1.6			126.7			29.6			(15.9)			13.7
Net consolidations (deconsolidations)		511.7			—			511.7			(16.2)			—			(16.2)
Acquisition		—			—			—			20.2			—			20.2
Adjustment to fair value		—			165.5			165.5			—			157.8			157.8
Balance at End of Period		$	1,196.1		$	820.8		$	2,016.9		$	643.5		$	610.4		$	1,253.9

Note 9 – Nonconsolidated Variable Interest Entities

VIEs for which the Company is not the primary beneficiary consist of sponsored funds and other investment products in which the Company has an equity ownership interest. The Company’s maximum exposure to loss from these VIEs consists of equity investments, investment management and other fee receivables as follows:


(in millions)	March 31, 2025		September 30, 2024
Investments	$	1,123.3	$	1,074.4
Receivables	211.5		226.0
Total	$	1,334.8	$	1,300.4

While the Company has no legal or contractual obligation to do so, it routinely makes cash investments in the course of launching sponsored funds. As it has done in the past, the Company also may voluntarily elect to provide its sponsored funds with additional direct or indirect financial support based on its business objectives. The Company did not provide financial or other support to its sponsored funds assessed as VIEs during the six months ended March 31, 2025 or fiscal year 2024.

Note 10 – Commitments and Contingencies

Legal Proceedings

India Credit Fund Closure Matters. During the six months ended March 31, 2025, there were no significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2024.

Western Asset Management Investigations. As previously disclosed, the Company launched an internal investigation into certain trade allocations of treasury derivatives in select Western Asset Management (“WAM”) managed accounts. WAM received notification of parallel investigations by the SEC and the U.S. Department of Justice (“DOJ”). WAM also received notice of an investigation into these trading activities by the CFTC. As previously disclosed, Ken Leech, the former co-Chief Investment Officer of WAM, received a “Wells Notice” from the staff of the SEC in August 2024 and is now on administrative leave. On November 25, 2024, the SEC filed a complaint in the United States District Court for the Southern District of New York against Mr. Leech alleging violations of certain laws related to trade allocations. Concurrently, the DOJ filed an indictment with the United States District Court for the Southern District of New York against Mr. Leech for similar allegations and for false statements made to the SEC. The Company and WAM have fully cooperated, and will continue to fully cooperate with these investigations.

Blockchain Litigation. The Company, two of its subsidiaries, the Company’s CEO, and an individual employee were named as defendants in litigation filed by Blockchain Innovation, LLC. The parties reached an agreement to resolve this previously-disclosed matter, pursuant to which the action is expected to be dismissed. The resolution of this matter did not have a material impact on the consolidated financial statements.

Other Litigation and Regulatory Matters. The Company is from time to time involved in other litigation relating to claims arising in the normal course of business. Management is of the opinion that the ultimate resolution of such claims will not materially affect the Company’s business, financial position, results of operations or liquidity. In management’s opinion, an adequate accrual has been made as of March 31, 2025 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

Indemnifications and Guarantees

In the ordinary course of business or in connection with certain acquisition agreements, the Company enters into contracts that provide for indemnifications by the Company in certain circumstances. In addition, certain Company entities guarantee certain financial and performance-related obligations of various Franklin subsidiaries. The Company is also subject to certain legal requirements and agreements providing for indemnifications of directors, officers and personnel against liabilities and expenses they may incur under certain circumstances in connection with their service. The terms of these indemnities and guarantees vary pursuant to applicable facts and circumstances, and from agreement to agreement. Future payments for claims against the Company under these indemnities or guarantees could negatively impact the Company’s financial condition. In management’s opinion, no material loss was deemed probable or reasonably possible pursuant to such indemnification agreements and/or guarantees as of March 31, 2025.

Other Commitments and Contingencies

At March 31, 2025, there were no other material changes in the other commitments and contingencies as reported in the Company’s Annual Report on Form 10-K for fiscal year 2024.

Note 11 – Stock-Based Compensation

Stock and stock unit award activity was as follows:


(shares in thousands)	Time-Based Shares	Performance- Based Shares	Total Shares	Weighted- Average Grant-Date Fair Value
for the six months ended March 31, 2025
Nonvested balance at October 1, 2024	16,594	3,314	19,908	$	24.03
Granted	7,901	169	8,070	20.73
Vested	(2,011)	(166)	(2,177)	27.87
Forfeited/canceled	(315)	(189)	(504)	24.01
Nonvested Balance at March 31, 2025	22,169	3,128	25,297	$	22.65

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $259.1 million at March 31, 2025. This expense is expected to be recognized over a remaining weighted-average vesting period of 1.9 years.

Note 12 – Investment and Other Income, Net

Investment and other income, net consisted of the following:


	Three Months Ended March 31,				Six Months Ended March 31,
(in millions)	2025		2024		2025		2024
Dividend and interest income	$	19.4	$	38.0	$	62.5	$	92.8
Gains (losses) on investments, net	46.8		(18.5)		(10.3)		41.6
Income from investments in equity method investees	23.1		24.4		15.5		81.3
Gains (losses) on derivatives, net	(1.1)		(6.4)		5.5		(14.6)
Rental income	10.9		10.9		22.1		21.7
Foreign currency exchange (losses) gains, net	(7.5)		(1.3)		7.0		(8.7)
Other, net	2.5		5.4		2.3		11.6
Investment and other income, net	$	94.1	$	52.5	$	104.6	$	225.7

Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $82.7 million and $(1.0) million for the three and six months ended March 31, 2025 and $9.5 million and $86.1 million for the three and six months ended March 31, 2024.

Note 13 - Subsequent Event

On April 30, 2025, the Company entered into an Amended and Restated Revolving Credit Agreement (the “Amended and Restated Credit Agreement”) with a five year term and $1.1 billion of aggregate available borrowings. As of April 30, 2025, the $300.0 million of borrowings outstanding under the Company’s prior credit facility were transferred to the Amended and Restated Credit Agreement. For additional information please see Part II. Item 5. Other Information - Entry into Amended and Restated Revolving Credit Agreement.

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