filings.toolsItem 1. Financial Statements.
96K characters. Original on sec.gov · Markdown
Item 1. Financial Statements.
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||
| (in millions, except per share data) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Operating Revenues | ||||||||||||||||||||||||||
| Investment management fees | $ | 1,866.2 | $ | 1,640.8 | $ | 5,533.4 | $ | 5,113.7 | ||||||||||||||||||
| Sales and distribution fees | 404.5 | 351.9 | 1,189.8 | 1,092.3 | ||||||||||||||||||||||
| Shareholder servicing fees | 74.3 | 59.9 | 214.2 | 185.3 | ||||||||||||||||||||||
| Other | 13.4 | 11.4 | 43.0 | 35.7 | ||||||||||||||||||||||
| Total operating revenues | 2,358.4 | 2,064.0 | 6,980.4 | 6,427.0 | ||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Compensation and benefits | 958.5 | 901.1 | 2,953.9 | 2,812.5 | ||||||||||||||||||||||
| Sales, distribution and marketing | 555.4 | 480.7 | 1,640.3 | 1,491.1 | ||||||||||||||||||||||
| Information systems and technology | 160.8 | 162.7 | 475.4 | 477.4 | ||||||||||||||||||||||
| Occupancy | 71.4 | 69.5 | 205.3 | 213.9 | ||||||||||||||||||||||
| Amortization of intangible assets | 50.7 | 112.2 | 156.4 | 337.3 | ||||||||||||||||||||||
| Impairment of intangible assets | 33.0 | — | 33.0 | 24.4 | ||||||||||||||||||||||
| General, administrative and other | 312.8 | 183.7 | 696.0 | 551.7 | ||||||||||||||||||||||
| Total operating expenses | 2,142.6 | 1,909.9 | 6,160.3 | 5,908.3 | ||||||||||||||||||||||
| Operating Income | 215.8 | 154.1 | 820.1 | 518.7 | ||||||||||||||||||||||
| Other Income (Expenses) | ||||||||||||||||||||||||||
| Investment and other income, net | 131.0 | 23.4 | 267.3 | 128.0 | ||||||||||||||||||||||
| Interest expense | (23.5) | (25.8) | (63.8) | (69.7) | ||||||||||||||||||||||
| Investment and other income (losses) of consolidated investment products, net | 54.8 | 35.9 | 276.2 | (14.7) | ||||||||||||||||||||||
| Expenses of consolidated investment products | (7.2) | (11.0) | (31.4) | (29.8) | ||||||||||||||||||||||
| Other income, net | 155.1 | 22.5 | 448.3 | 13.8 | ||||||||||||||||||||||
| Income before taxes | 370.9 | 176.6 | 1,268.4 | 532.5 | ||||||||||||||||||||||
| Taxes on income | 115.6 | 59.9 | 319.7 | 172.1 | ||||||||||||||||||||||
| Net income | 255.3 | 116.7 | 948.7 | 360.4 | ||||||||||||||||||||||
| Less: net income (loss) attributable to | ||||||||||||||||||||||||||
| Redeemable noncontrolling interests | 18.5 | 20.0 | 82.1 | (88.8) | ||||||||||||||||||||||
| Nonredeemable noncontrolling interests | 65.3 | 4.4 | 171.4 | 41.9 | ||||||||||||||||||||||
| Net Income Attributable to Franklin Resources, Inc. | $ | 171.5 | $ | 92.3 | $ | 695.2 | $ | 407.3 | ||||||||||||||||||
| Earnings per Share | ||||||||||||||||||||||||||
| Basic | $ | 0.31 | $ | 0.15 | $ | 1.26 | $ | 0.70 | ||||||||||||||||||
| Diluted | 0.31 | 0.15 | 1.26 | 0.70 |
See Notes to Consolidated Financial Statements.
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited
| (in millions) | Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net Income | $ | 255.3 | $ | 116.7 | $ | 948.7 | $ | 360.4 | ||||||||||||||||||
| Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||
| Currency translation adjustments, net of tax | (3.3) | 88.3 | (45.2) | 11.7 | ||||||||||||||||||||||
| Net unrealized losses on defined benefit plans, net of tax | — | (2.7) | — | (5.5) | ||||||||||||||||||||||
| Net unrealized gains (losses) on investments, net of tax | (1.4) | 0.1 | (1.4) | 0.1 | ||||||||||||||||||||||
| Total other comprehensive income (loss) | (4.7) | 85.7 | (46.6) | 6.3 | ||||||||||||||||||||||
| Total comprehensive income | 250.6 | 202.4 | 902.1 | 366.7 | ||||||||||||||||||||||
| Less: comprehensive income (loss) attributable to | ||||||||||||||||||||||||||
| Redeemable noncontrolling interests | 18.5 | 20.0 | 82.1 | (88.8) | ||||||||||||||||||||||
| Nonredeemable noncontrolling interests | 65.3 | 4.4 | 171.4 | 41.9 | ||||||||||||||||||||||
| Comprehensive Income Attributable to Franklin Resources, Inc. | $ | 166.8 | $ | 178.0 | $ | 648.6 | $ | 413.6 |
See Notes to Consolidated Financial Statements.
FRANKLIN RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
Unaudited
| (in millions, except share and per share data) | June 30, 2026 | September 30, 2025 | ||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 2,670.3 | $ | 3,088.1 | ||||||||||
| Receivables | 1,566.9 | 1,541.7 | ||||||||||||
| Investments (including $1,047.7 and $1,179.5 at fair value at June 30, 2026 and September 30, 2025) | 2,706.9 | 2,374.0 | ||||||||||||
| Assets of consolidated investment products | ||||||||||||||
| Cash and cash equivalents | 1,090.6 | 485.8 | ||||||||||||
| Investments, at fair value | 15,535.2 | 12,278.8 | ||||||||||||
| Property and equipment, net | 886.6 | 949.1 | ||||||||||||
| Goodwill | 6,299.9 | 6,206.0 | ||||||||||||
| Intangible assets, net | 4,015.8 | 4,166.0 | ||||||||||||
| Operating lease right-of-use assets | 752.2 | 764.3 | ||||||||||||
| Other | 718.6 | 514.5 | ||||||||||||
| Total Assets | $ | 36,243.0 | $ | 32,368.3 | ||||||||||
| Liabilities | ||||||||||||||
| Compensation and benefits | $ | 1,730.1 | $ | 1,760.3 | ||||||||||
| Accounts payable and accrued expenses | 632.7 | 615.4 | ||||||||||||
| Debt | 2,401.9 | 2,362.0 | ||||||||||||
| Liabilities of consolidated investment products | ||||||||||||||
| Accounts payable and accrued expenses | 1,244.7 | 1,063.0 | ||||||||||||
| Debt | 13,333.5 | 9,937.3 | ||||||||||||
| Deferred tax liabilities | 341.1 | 261.6 | ||||||||||||
| Operating lease liabilities | 974.6 | 1,000.6 | ||||||||||||
| Other | 1,183.7 | 1,179.3 | ||||||||||||
| Total liabilities | 21,842.3 | 18,179.5 | ||||||||||||
| Commitments and Contingencies (Note 10) | ||||||||||||||
| Redeemable Noncontrolling Interests | 1,480.8 | 1,182.0 | ||||||||||||
| 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; 507,507,250 and 520,951,796 shares issued and outstanding at June 30, 2026 and September 30, 2025 | 50.8 | 52.1 | ||||||||||||
| Capital in excess of par | 660.5 | 956.8 | ||||||||||||
| Retained earnings | 11,520.6 | 11,516.0 | ||||||||||||
| Accumulated other comprehensive loss | (493.7) | (447.1) | ||||||||||||
| Total Franklin Resources, Inc. stockholders’ equity | 11,738.2 | 12,077.8 | ||||||||||||
| Nonredeemable noncontrolling interests | 1,181.7 | 929.0 | ||||||||||||
| Total stockholders’ equity | 12,919.9 | 13,006.8 | ||||||||||||
| Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity | $ | 36,243.0 | $ | 32,368.3 |
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 nine months ended June 30, 2026 | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 1, 2025 | 521.0 | $ | 52.1 | $ | 956.8 | $ | 11,516.0 | $ | (447.1) | $ | 12,077.8 | $ | 929.0 | $ | 13,006.8 | |||||||||||||||||||||||||||||||||||
| Adoption of new accounting guidance | 25.3 | 25.3 | 25.3 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 255.5 | 255.5 | 51.6 | 307.1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | (1.1) | (1.1) | (1.1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on common stock ($0.33 per share) | (177.6) | (177.6) | (177.6) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | (1.8) | (0.2) | (41.7) | — | (41.9) | (41.9) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | 0.8 | 0.1 | 28.8 | 28.9 | 28.9 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 47.1 | 47.1 | 47.1 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net subscriptions and other | 17.2 | 17.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net deconsolidation of investment products | (32.2) | (32.2) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of redeemable noncontrolling interests | (79.1) | (79.1) | (79.1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | 520.0 | $ | 52.0 | $ | 991.0 | $ | 11,540.1 | $ | (448.2) | $ | 12,134.9 | $ | 965.6 | $ | 13,100.5 | |||||||||||||||||||||||||||||||||||
| Net income | 268.2 | 268.2 | 54.5 | 322.7 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | (40.8) | (40.8) | (40.8) | |||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on common stock ($0.33 per share) | (177.5) | (177.5) | (177.5) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | (2.3) | (0.2) | (56.9) | — | (57.1) | (57.1) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | 1.9 | 0.2 | 54.7 | 54.9 | 54.9 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 11.1 | 11.1 | 11.1 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net subscriptions and other | 149.9 | 149.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net deconsolidation of investment products | (157.4) | (157.4) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of redeemable noncontrolling interests | (69.9) | (69.9) | (69.9) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | 519.6 | $ | 52.0 | $ | 999.9 | $ | 11,560.9 | $ | (489.0) | $ | 12,123.8 | $ | 1,012.6 | $ | 13,136.4 | |||||||||||||||||||||||||||||||||||
| Net income | 171.5 | 171.5 | 65.3 | 236.8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | (4.7) | (4.7) | (4.7) | |||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on common stock ($0.33 per share) | (173.4) | (173.4) | (173.4) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | (10.4) | (1.0) | (347.1) | — | (348.1) | (348.1) | ||||||||||||||||||||||||||||||||||||||||||||
| (Forfeiture) issuance of common stock, net | (1.7) | (0.2) | 4.2 | 4.0 | 4.0 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 3.5 | 13.5 | 17.0 | 17.0 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net subscriptions and other | 103.8 | 103.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of redeemable noncontrolling interests | (51.9) | (51.9) | (51.9) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | 507.5 | $ | 50.8 | $ | 660.5 | $ | 11,520.6 | $ | (493.7) | $ | 11,738.2 | $ | 1,181.7 | $ | 12,919.9 |
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 nine months ended June 30, 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 | |||||||||||||||||||||||||||||||||||
| Net income | 92.3 | 92.3 | 4.4 | 96.7 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | 85.7 | 85.7 | 85.7 | |||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on common stock ($0.32 per share) | (171.0) | (171.0) | (171.0) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | (7.3) | (0.7) | (156.7) | — | (157.4) | (157.4) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | 0.3 | — | 6.7 | 6.7 | 6.7 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 42.6 | 42.6 | 42.6 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net subscriptions and other | 28.1 | 28.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net consolidation of investment products | 2.9 | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of redeemable noncontrolling interests | (41.0) | (41.0) | (41.0) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | 518.4 | $ | 51.8 | $ | 955.0 | $ | 11,610.3 | $ | (413.2) | $ | 12,203.9 | $ | 850.5 | $ | 13,054.4 |
See Notes to Consolidated Financial Statements.
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
| Nine Months Ended June 30, | ||||||||||||||
| (in millions) | 2026 | 2025 | ||||||||||||
| Net Income | $ | 948.7 | $ | 360.4 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Stock-based compensation | 151.0 | 170.0 | ||||||||||||
| Amortization of deferred sales commissions | 74.3 | 58.9 | ||||||||||||
| Depreciation and other amortization | 90.3 | 94.2 | ||||||||||||
| Amortization of intangible assets | 156.4 | 337.3 | ||||||||||||
| Impairment of intangible assets | 33.0 | 24.4 | ||||||||||||
| Net (gains) losses on investments | (32.8) | 41.7 | ||||||||||||
| Income from investments in equity method investees | (58.6) | (38.5) | ||||||||||||
| Net (gains) losses on investments of consolidated investment products | (114.4) | 63.1 | ||||||||||||
| Net purchase of investments by consolidated investment products | (639.7) | (87.6) | ||||||||||||
| Deferred income taxes | 94.4 | (38.3) | ||||||||||||
| Other | 74.1 | 188.9 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Decrease (increase) in receivables and other assets | (309.9) | 24.3 | ||||||||||||
| Decrease (increase) in investments, net | (12.3) | 15.5 | ||||||||||||
| Decrease in accrued compensation and benefits | (36.0) | (183.7) | ||||||||||||
| Increase (decrease) in accounts payable, accrued expenses and other liabilities | (137.0) | 63.7 | ||||||||||||
| Increase (decrease) in accounts payable and accrued expenses of consolidated investment products | 17.0 | (7.5) | ||||||||||||
| Net cash provided by operating activities | 298.5 | 1,086.8 | ||||||||||||
| Purchase of investments | (970.0) | (904.4) | ||||||||||||
| Liquidation of investments | 609.6 | 443.9 | ||||||||||||
| Purchase of investments by consolidated collateralized loan obligations | (6,549.0) | (4,880.6) | ||||||||||||
| Liquidation of investments by consolidated collateralized loan obligations | 3,652.7 | 3,653.4 | ||||||||||||
| Proceeds from sale (additions) of property and equipment, net | (15.0) | (123.3) | ||||||||||||
| Acquisition, net of cash acquired | (78.6) | — | ||||||||||||
| Payments of deferred consideration liability | — | (90.5) | ||||||||||||
| Net consolidation of investment products | 13.8 | 0.2 | ||||||||||||
| Net cash used in investing activities | (3,336.5) | (1,901.3) | ||||||||||||
[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]
| Nine Months Ended June 30, | ||||||||||||||
| (in millions) | 2026 | 2025 | ||||||||||||
| Issuance of common stock | $ | 13.0 | $ | 10.2 | ||||||||||
| Dividends paid on common stock | (522.8) | (512.6) | ||||||||||||
| Repurchase of common stock | (444.8) | (173.2) | ||||||||||||
| Proceeds from debt | 650.0 | 300.0 | ||||||||||||
| Payment on debt | (600.0) | (400.0) | ||||||||||||
| Proceeds from repurchase agreement | 20.6 | 98.0 | ||||||||||||
| Payments on repurchase agreement | (22.7) | (48.9) | ||||||||||||
| Proceeds from debt of consolidated investment products | 6,797.3 | 5,184.0 | ||||||||||||
| Payments on debt of consolidated investment products | (3,471.7) | (4,320.1) | ||||||||||||
| Payments on contingent consideration liabilities | (0.4) | (6.8) | ||||||||||||
| Noncontrolling interests | 834.5 | 233.3 | ||||||||||||
| Net cash provided by financing activities | 3,253.0 | 363.9 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (28.0) | (1.3) | ||||||||||||
| Increase (decrease) in cash and cash equivalents | 187.0 | (451.9) | ||||||||||||
| Cash and cash equivalents, beginning of period | 3,573.9 | 4,408.9 | ||||||||||||
| Cash and Cash Equivalents, End of Period | $ | 3,760.9 | $ | 3,957.0 | ||||||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||||||||
| Cash paid for income taxes | $ | 436.2 | $ | 417.3 | ||||||||||
| Cash paid for interest | 62.8 | 62.2 | ||||||||||||
| Cash paid for interest by consolidated investment products | 540.7 | 597.4 | ||||||||||||
| Non-cash purchase of investments | 28.8 | — |
See Notes to Consolidated Financial Statements.
FRANKLIN RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(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, 2025 (“fiscal year 2025”).
Revision to previously issued financial statements
During the quarter ended March 31, 2026, the Company identified that the amount reported in the supplemental disclosure of cash flow information in its consolidated statement of cash flows for cash paid for income taxes was understated for the nine month period ended June 30, 2025 by $185.2 million, and the revised amount for that period was $417.3 million.
There is no impact on net income attributable to the Company, earnings per share, total assets, total liabilities, retained earnings, total shareholders’ equity or operating cash flow activities. There is no impact on the financial results attributable to the Company’s shareholders. The Company has determined this did not result in a material misstatement to its previously issued consolidated financial statements. Nonetheless, for comparability, the Company has revised the comparative prior period amounts included in the consolidated statements of cash flows.
Note 2 – New Accounting Guidance
Recently Adopted Accounting Guidance
On October 1, 2025, the Company adopted an amendment to the existing intangible assets guidance issued by the Financial Accounting Standards Board. The amendment requires eligible crypto assets to be measured at fair value, with changes recognized in net income, along with expanded disclosures. The Company adopted the amendment using the modified-retrospective transition approach and recognized a cumulative effective adjustment resulting in an increase of $25.3 million in retained earnings as of October 1, 2025. The crypto assets are presented within intangible assets, net on the consolidated balance sheets.
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 2025.
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 June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net income attributable to Franklin Resources, Inc. | $ | 171.5 | $ | 92.3 | $ | 695.2 | $ | 407.3 | ||||||||||||||||||
| Less: allocation of earnings to participating nonvested stock and stock unit awards | 11.1 | 13.3 | 43.3 | 42.9 | ||||||||||||||||||||||
| Net Income Available to Common Stockholders | $ | 160.4 | $ | 79.0 | $ | 651.9 | $ | 364.4 | ||||||||||||||||||
| Weighted-average shares outstanding – basic | 515.2 | 515.7 | 516.7 | 517.4 | ||||||||||||||||||||||
| Dilutive effect of nonparticipating nonvested stock unit awards | 0.8 | 0.8 | 0.8 | 0.8 | ||||||||||||||||||||||
| Weighted-Average Shares Outstanding – Diluted | 516.0 | 516.5 | 517.5 | 518.2 | ||||||||||||||||||||||
| Earnings per Share | ||||||||||||||||||||||||||
| Basic | $ | 0.31 | $ | 0.15 | $ | 1.26 | $ | 0.70 | ||||||||||||||||||
| Diluted | 0.31 | 0.15 | 1.26 | 0.70 |
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 nine months ended June 30, 2026 and such awards were not significant for the three and nine months ended June 30, 2025.
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 June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 1,367.0 | $ | 266.5 | $ | 94.7 | $ | 63.3 | $ | 74.7 | $ | 1,866.2 | ||||||||||||||||||||||||||
| Sales and distribution fees | 265.6 | 120.0 | 8.0 | 10.1 | 0.8 | 404.5 | ||||||||||||||||||||||||||||||||
| Shareholder servicing fees | 64.8 | 8.9 | 0.5 | 0.1 | — | 74.3 | ||||||||||||||||||||||||||||||||
| Other | 13.2 | — | 0.2 | — | — | 13.4 | ||||||||||||||||||||||||||||||||
| Total | $ | 1,710.6 | $ | 395.4 | $ | 103.4 | $ | 73.5 | $ | 75.5 | $ | 2,358.4 |
| (in millions) | United States | Luxembourg | Asia-Pacific | Americas Excluding United States | Europe, Middle East and Africa, Excluding Luxembourg | Total | ||||||||||||||||||||||||||||||||
| for the nine months ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 4,064.4 | $ | 758.5 | $ | 265.2 | $ | 190.4 | $ | 254.9 | $ | 5,533.4 | ||||||||||||||||||||||||||
| Sales and distribution fees | 800.6 | 334.8 | 22.0 | 30.4 | 2.0 | 1,189.8 | ||||||||||||||||||||||||||||||||
| Shareholder servicing fees | 187.2 | 25.4 | 1.4 | 0.2 | — | 214.2 | ||||||||||||||||||||||||||||||||
| Other | 41.7 | — | 1.1 | — | 0.2 | 43.0 | ||||||||||||||||||||||||||||||||
| Total | $ | 5,093.9 | $ | 1,118.7 | $ | 289.7 | $ | 221.0 | $ | 257.1 | $ | 6,980.4 |
| (in millions) | United States | Luxembourg | Asia-Pacific | Americas Excluding United States | Europe, Middle East and Africa, Excluding Luxembourg | Total | ||||||||||||||||||||||||||||||||
| for the three months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 1,240.9 | $ | 214.2 | $ | 76.6 | $ | 49.5 | $ | 59.6 | $ | 1,640.8 | ||||||||||||||||||||||||||
| Sales and distribution fees | 249.9 | 87.1 | 5.2 | 9.4 | 0.3 | 351.9 | ||||||||||||||||||||||||||||||||
| Shareholder servicing fees | 52.0 | 7.5 | 0.4 | — | — | 59.9 | ||||||||||||||||||||||||||||||||
| Other | 11.1 | — | 0.2 | — | 0.1 | 11.4 | ||||||||||||||||||||||||||||||||
| Total | $ | 1,553.9 | $ | 308.8 | $ | 82.4 | $ | 58.9 | $ | 60.0 | $ | 2,064.0 |
| (in millions) | United States | Luxembourg | Asia-Pacific | Americas Excluding United States | Europe, Middle East and Africa, Excluding Luxembourg | Total | ||||||||||||||||||||||||||||||||
| for the nine months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 3,874.7 | $ | 654.0 | $ | 223.9 | $ | 152.3 | $ | 208.8 | $ | 5,113.7 | ||||||||||||||||||||||||||
| Sales and distribution fees | 776.2 | 270.1 | 16.5 | 29.0 | 0.5 | 1,092.3 | ||||||||||||||||||||||||||||||||
| Shareholder servicing fees | 160.8 | 23.2 | 1.2 | 0.1 | — | 185.3 | ||||||||||||||||||||||||||||||||
| Other | 35.0 | — | 0.6 | — | 0.1 | 35.7 | ||||||||||||||||||||||||||||||||
| Total | $ | 4,846.7 | $ | 947.3 | $ | 242.2 | $ | 181.4 | $ | 209.4 | $ | 6,427.0 |
Operating revenues are attributed to geographic areas based on the jurisdiction of the subsidiaries that provide the services, which may differ from the regions in which the related investment products are sold and domicile of the fund vehicle or client.
Revenues earned from sponsored funds were 84% of the Company’s total operating revenues for the three and nine months ended June 30, 2026 and 83% for the three and nine months ended June 30, 2025.
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) | June 30, 2026 | September 30, 2025 | ||||||||||||
| Investments, at fair value | ||||||||||||||
| Sponsored funds and separate accounts | $ | 658.8 | $ | 809.6 | ||||||||||
| Investments related to long-term incentive plans | 307.1 | 288.1 | ||||||||||||
| Other equity and debt investments | 81.8 | 81.8 | ||||||||||||
| Total investments, at fair value | 1,047.7 | 1,179.5 | ||||||||||||
| Investments in equity method investees | 1,243.9 | 893.9 | ||||||||||||
| Other investments | 415.3 | 300.6 | ||||||||||||
| Total | $ | 2,706.9 | $ | 2,374.0 |
The Company has entered into repurchase agreements with a third-party financing company for certain investments held by the Company. As of June 30, 2026 and September 30, 2025, other liabilities includes repurchase agreements of $195.6 million and $200.5 million with investments of $198.9 million and $206.4 million in carrying value pledged as collateral. The repurchase agreements have contractual maturity dates ranging between 2030 to 2039.
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 June 30, 2026 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Investments, at fair value | ||||||||||||||||||||||||||||||||
| Sponsored funds and separate accounts | $ | 334.6 | $ | 285.1 | $ | 1.9 | $ | 37.2 | $ | 658.8 | ||||||||||||||||||||||
| Investments related to long-term incentive plans | 283.8 | 0.4 | — | 22.9 | 307.1 | |||||||||||||||||||||||||||
| Other equity and debt investments | 23.9 | 19.7 | 1.6 | 31.6 | 76.8 | |||||||||||||||||||||||||||
| Crypto assets | 8.3 | 4.9 | — | — | 13.2 | |||||||||||||||||||||||||||
| Total Assets Measured at Fair Value | $ | 650.6 | $ | 310.1 | $ | 3.5 | $ | 91.7 | $ | 1,055.9 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Securities sold short | $ | 238.4 | $ | — | $ | — | $ | — | $ | 238.4 | ||||||||||||||||||||||
| Contingent consideration liabilities | — | — | 29.5 | — | 29.5 | |||||||||||||||||||||||||||
| Total Liabilities Measured at Fair Value | $ | 238.4 | $ | — | $ | 29.5 | $ | — | $ | 267.9 |
| (in millions) | Level 1 | Level 2 | Level 3 | NAV as a Practical Expedient | Total | |||||||||||||||||||||||||||
| as of September 30, 2025 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Investments, at fair value | ||||||||||||||||||||||||||||||||
| Sponsored funds and separate accounts | $ | 463.9 | $ | 305.2 | $ | 2.2 | $ | 38.3 | $ | 809.6 | ||||||||||||||||||||||
| Investments related to long-term incentive plans | 253.4 | 3.3 | — | 31.4 | 288.1 | |||||||||||||||||||||||||||
| Other equity and debt investments | 12.4 | 9.4 | 1.8 | 29.2 | 52.8 | |||||||||||||||||||||||||||
| Total Assets Measured at Fair Value | $ | 729.7 | $ | 317.9 | $ | 4.0 | $ | 98.9 | $ | 1,150.5 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Securities sold short | $ | 193.7 | $ | — | $ | — | $ | — | $ | 193.7 | ||||||||||||||||||||||
| Contingent consideration liabilities | — | — | 20.4 | — | 20.4 | |||||||||||||||||||||||||||
| Total Liabilities Measured at Fair Value | $ | 193.7 | $ | — | $ | 20.4 | $ | — | $ | 214.1 |
As of June 30, 2026 and September 30, 2025, there were $5.0 million and $29.0 million of other investments which were adjusted to fair value on a nonrecurring basis and excluded from the tables above.
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 and private real estate funds. These investments were as follows:
| (in millions) | June 30, 2026 | September 30, 2025 | ||||||||||||
| Nonredeemable investments****1 | ||||||||||||||
| Investments with known liquidation periods | $ | 20.0 | $ | 19.7 | ||||||||||
| Investments with unknown liquidation periods | 14.5 | 15.2 | ||||||||||||
| Redeemable investments****2 | 57.2 | 64.0 | ||||||||||||
| Unfunded commitments | 12.9 | 13.3 |
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 1.8 years and 2.2 years at June 30, 2026 and September 30, 2025.
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 | June 30, 2026 | September 30, 2025 | |||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||||||
| Financial Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 1 | $ | 2,670.3 | $ | 2,670.3 | $ | 3,088.1 | $ | 3,088.1 | |||||||||||||||||||||||
| Other investments | ||||||||||||||||||||||||||||||||
| Time deposits | 2 | 8.2 | 8.2 | 9.2 | 9.2 | |||||||||||||||||||||||||||
| Equity securities | 3 | 407.1 | 407.1 | 291.4 | 291.4 | |||||||||||||||||||||||||||
| Financial Liability | ||||||||||||||||||||||||||||||||
| Debt | 2 | $ | 2,401.9 | $ | 2,011.4 | $ | 2,362.0 | $ | 1,970.9 |
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 balances related to CIPs included in the Company’s consolidated balance sheets were as follows:
| (in millions) | June 30, 2026 | September 30, 2025 | ||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 1,090.6 | $ | 485.8 | ||||||||||
| Receivables | 230.1 | 313.1 | ||||||||||||
| Investments, at fair value | 15,535.2 | 12,278.8 | ||||||||||||
| Total Assets | $ | 16,855.9 | $ | 13,077.7 | ||||||||||
| Liabilities | ||||||||||||||
| Accounts payable and accrued expenses | $ | 1,244.7 | $ | 1,063.0 | ||||||||||
| Debt | 13,333.5 | 9,937.3 | ||||||||||||
| Other liabilities | 20.1 | 17.5 | ||||||||||||
| Total liabilities | 14,598.3 | 11,017.8 | ||||||||||||
| Redeemable Noncontrolling Interests | 343.5 | 289.6 | ||||||||||||
| Stockholders’ Equity | ||||||||||||||
| Franklin Resources, Inc.’s interests | 1,156.7 | 1,220.6 | ||||||||||||
| Nonredeemable noncontrolling interests | 757.4 | 549.7 | ||||||||||||
| Total stockholders’ equity | 1,914.1 | 1,770.3 | ||||||||||||
| Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity | $ | 16,855.9 | $ | 13,077.7 |
The consolidation of CIPs did not have a significant impact on net income attributable to the Company during the three and nine months ended June 30, 2026 and 2025.
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 June 30, 2026 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents of CLOs | $ | 1,008.0 | $ | — | $ | — | $ | — | $ | 1,008.0 | ||||||||||||||||||||||
| Receivables of CLOs | — | 136.6 | — | — | 136.6 | |||||||||||||||||||||||||||
| Investments | ||||||||||||||||||||||||||||||||
| Equity and debt securities | 384.9 | 908.8 | 752.6 | 96.8 | 2,143.1 | |||||||||||||||||||||||||||
| Loans | — | 13,378.6 | 13.5 | — | 13,392.1 | |||||||||||||||||||||||||||
| Total Assets Measured at Fair Value | $ | 1,392.9 | $ | 14,424.0 | $ | 766.1 | $ | 96.8 | $ | 16,679.8 | ||||||||||||||||||||||
| (in millions) | Level 1 | Level 2 | Level 3 | NAV as a Practical Expedient | Total | |||||||||||||||||||||||||||
| as of September 30, 2025 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents of CLOs | $ | 472.1 | $ | — | $ | — | $ | — | $ | 472.1 | ||||||||||||||||||||||
| Receivables of CLOs | — | 113.0 | — | — | 113.0 | |||||||||||||||||||||||||||
| Investments | ||||||||||||||||||||||||||||||||
| Equity and debt securities | 393.2 | 731.5 | 601.0 | 189.1 | 1,914.8 | |||||||||||||||||||||||||||
| Loans | — | 10,354.1 | 9.9 | — | 10,364.0 | |||||||||||||||||||||||||||
| Total Assets Measured at Fair Value | $ | 865.3 | $ | 11,198.6 | $ | 610.9 | $ | 189.1 | $ | 12,863.9 | ||||||||||||||||||||||
Investments for which fair value was estimated using reported NAV as a practical expedient consist of a redeemable global hedge fund and nonredeemable private debt and equity funds. These investments were as follows:
| (in millions) | June 30, 2026 | September 30, 2025 | ||||||||||||
| Redeemable investments****1 | $ | 73.6 | $ | 74.4 | ||||||||||
| Nonredeemable investments****2 | ||||||||||||||
| Investments with unknown liquidation periods | 23.2 | 114.7 | ||||||||||||
| Unfunded commitments3 | 15.7 | 14.0 | ||||||||||||
1Investments are redeemable on a monthly basis and liquidation periods are unknown.
2The investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets.
3Of the total unfunded commitments, the Company was contractually obligated to fund $6.7 million and $5.3 million based on its ownership percentage in the CIPs at June 30, 2026 and September 30, 2025.
Changes in Level 3 assets of equity and debt securities were as follows:
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Balance at beginning of period | $ | 673.3 | $ | 545.0 | $ | 601.0 | $ | 550.1 | ||||||||||||||||||
| Gains (losses) included in investment and other income (losses) of consolidated investment products, net | 48.7 | (4.6) | 144.4 | 19.7 | ||||||||||||||||||||||
| Purchases | 30.6 | 19.1 | 75.2 | 39.2 | ||||||||||||||||||||||
| Sales | — | (17.2) | (19.1) | (31.5) | ||||||||||||||||||||||
| Net (deconsolidations) consolidations | — | 8.4 | (32.1) | 12.2 | ||||||||||||||||||||||
| Transfers into Level 3 | — | — | — | 0.2 | ||||||||||||||||||||||
| Transfers out of Level 3 | — | (0.1) | (16.8) | (39.3) | ||||||||||||||||||||||
| Balance at End of Period | $ | 752.6 | $ | 550.6 | $ | 752.6 | $ | 550.6 | ||||||||||||||||||
| Change in unrealized gains (losses) included in net income relating to assets held at end of period | $ | 70.2 | $ | (3.9) | $ | 77.4 | $ | (8.0) |
Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:
| (in millions) | ||||||||||||||||||||||||||
| as of June 30, 2026 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average1) | ||||||||||||||||||||||
| Equity and debt securities | $ | 532.4 | Market pricing | Private sale pricing | $0.01–$5,265.90 ($655.33) per share | |||||||||||||||||||||
| Discount for lack of marketability | 25.0%–90.0% (32.7%) | |||||||||||||||||||||||||
| 149.6 | Market comparable companies | Enterprise value/ Revenue multiple | 1.3–8.6 (5.0) | |||||||||||||||||||||||
| Discount for lack of marketability | 8.7%–16.4% (13.9%) | |||||||||||||||||||||||||
| 46.1 | Discounted cash flow | Discount rate | 6.7%–14.5% (7.2%) | |||||||||||||||||||||||
| 24.5 | Option pricing model | Volatility | 35.8%–48.9% (42.0%) | |||||||||||||||||||||||
| Discount for lack of marketability | 9.1%–12.1% (10.0%) | |||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| as of September 30, 2025 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average1) | ||||||||||||||||||||||
| Equity and debt securities | $ | 302.0 | Market pricing | Private sale pricing | $0.27–$2,120.00 ($176.53) per share | |||||||||||||||||||||
| Discount for lack of marketability | 5.0%–75.0% (23.9%) | |||||||||||||||||||||||||
| 225.9 | Market comparable companies | Enterprise value/ Revenue multiple | 1.4–21.0 (9.5) | |||||||||||||||||||||||
| Discount for lack of marketability | 6.0%–11.0% (8.5%) | |||||||||||||||||||||||||
| 54.4 | Discounted cash flow | Discount rate | 6.5%–13.0% (6.8%) | |||||||||||||||||||||||
| 18.7 | Option pricing model | Volatility | 34.0%–60.9% (38.2%) | |||||||||||||||||||||||
| Discount for lack of marketability | 9.1%–13.5% (9.4%) | |||||||||||||||||||||||||
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), 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), 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 | June 30, 2026 | September 30, 2025 | |||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||||||
| Financial Asset | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 1 | $ | 82.6 | $ | 82.6 | $ | 13.7 | $ | 13.7 | |||||||||||||||||||||||
| Financial Liabilities | ||||||||||||||||||||||||||||||||
| Debt of CLOs1 | 2 or 3 | $ | 13,333.5 | $ | 13,349.8 | $ | 9,937.3 | $ | 9,786.0 | |||||||||||||||||||||||
1Substantially all was Level 2.
Debt
Debt of CLOs totaled $13,333.5 million and $9,937.3 million at June 30, 2026 and September 30, 2025. The debt had fixed and floating interest rates based on Secured Overnight Financing Rate (“SOFR”) ranging from 2.39% to 11.67% with a weighted-average effective interest rate of 5.32% at June 30, 2026, and from 2.39% to 12.26% based on SOFR and Euro Interbank Offered Rate with a weighted-average effective interest rate of 6.00% at September 30, 2025.
The contractual maturities for the debt of CLOs at June 30, 2026 were as follows:
| (in millions) | ||||||||
| for the fiscal years ending September 30, | Amount | |||||||
| 2026 (remainder of year) | $ | — | ||||||
| 2027 | 21.3 | |||||||
| 2028 | 9.6 | |||||||
| 2029 | — | |||||||
| 2030 | — | |||||||
| Thereafter | 13,302.6 | |||||||
| Total | $ | 13,333.5 |
Collateralized Loan Obligations
The unpaid principal balance and fair value of the investments of CLOs were as follows:
| (in millions) | June 30, 2026 | September 30, 2025 | ||||||||||||
| Unpaid principal balance | $ | 14,082.7 | $ | 10,641.0 | ||||||||||
| Difference between unpaid principal balance and fair value | (340.7) | (43.3) | ||||||||||||
| Fair Value | $ | 13,742.0 | $ | 10,597.7 |
Investments 90 days or more past due were immaterial at June 30, 2026 and September 30, 2025.
The Company recognized $2.7 million and $17.5 million of net gains during the three and nine months ended June 30, 2026 and $14.0 million and $41.3 million of net gains during the three and nine months ended June 30, 2025, related to its own economic interests in the CLOs. The aggregate principal related to the debt of CLOs was $13,700.1 million and $9,958.6 million at June 30, 2026 and September 30, 2025.
Note 8 – Redeemable Noncontrolling Interests
Changes in redeemable noncontrolling interests were as follows:
| (in millions) | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||
| CIPs | Minority Interests | Total | CIPs | Minority Interests | Total | |||||||||||||||||||||||||||||||||
| for the three months ended June 30, | ||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 397.0 | $ | 1,081.9 | $ | 1,478.9 | $ | 1,196.1 | $ | 820.8 | $ | 2,016.9 | ||||||||||||||||||||||||||
| Net income | 2.2 | 16.3 | 18.5 | 9.0 | 11.0 | 20.0 | ||||||||||||||||||||||||||||||||
| Net subscriptions (distributions) and other | 149.6 | (12.8) | 136.8 | 22.1 | (33.4) | (11.3) | ||||||||||||||||||||||||||||||||
| Net deconsolidations | (205.3) | — | (205.3) | (686.1) | — | (686.1) | ||||||||||||||||||||||||||||||||
| Adjustment to fair value | — | 51.9 | 51.9 | — | 41.0 | 41.0 | ||||||||||||||||||||||||||||||||
| Balance at End of Period | $ | 343.5 | $ | 1,137.3 | $ | 1,480.8 | $ | 541.1 | $ | 839.4 | $ | 1,380.5 |
| (in millions) | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||
| CIPs | Minority Interests | Total | CIPs | Minority Interests | Total | |||||||||||||||||||||||||||||||||
| for the nine months ended June 30, | ||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 289.6 | $ | 892.4 | $ | 1,182.0 | $ | 687.8 | $ | 634.0 | $ | 1,321.8 | ||||||||||||||||||||||||||
| Net income (loss) | 40.5 | 41.6 | 82.1 | (119.5) | 30.7 | (88.8) | ||||||||||||||||||||||||||||||||
| Net subscriptions (distributions) and other | 641.5 | (30.4) | 611.1 | 147.2 | (31.8) | 115.4 | ||||||||||||||||||||||||||||||||
| Net deconsolidations | (628.1) | — | (628.1) | (174.4) | — | (174.4) | ||||||||||||||||||||||||||||||||
| Acquisition | — | 32.8 | 32.8 | — | — | — | ||||||||||||||||||||||||||||||||
| Adjustment to fair value | — | 200.9 | 200.9 | — | 206.5 | 206.5 | ||||||||||||||||||||||||||||||||
| Balance at End of Period | $ | 343.5 | $ | 1,137.3 | $ | 1,480.8 | $ | 541.1 | $ | 839.4 | $ | 1,380.5 |
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) | June 30, 2026 | September 30, 2025 | ||||||||||||
| Investments | $ | 1,451.0 | $ | 1,274.5 | ||||||||||
| Receivables | 245.3 | 225.1 | ||||||||||||
| Total | $ | 1,696.3 | $ | 1,499.6 |
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 additional financial or other support to its sponsored funds assessed as VIEs during the nine months ended June 30, 2026 or fiscal year 2025.
Note 10 – Commitments and Contingencies
Legal Proceedings
India Credit Fund Closure Matters. The previously reported “first information report” (the preliminary step in an investigation) registered by the Economic Offences Wing of the Chennai police department in or around September 2020, was closed by the relevant court on July 17, 2026, with no action taken against the Company Respondents. During the nine months ended June 30, 2026, there were no other significant changes from the disclosure in the Form 10‑K for the fiscal year ended September 30, 2025.
Western Asset Management Investigations and Litigation. As previously disclosed, the Company launched an internal investigation into certain trade allocations of treasury derivatives in select Western Asset Management (“WAM”) managed accounts by its then-co-Chief Investment Officer, Ken Leech. 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. The Company and WAM fully cooperated with these investigations. As previously disclosed, the CFTC informed WAM that it closed its investigation. On June 3, 2026, the DOJ notified WAM that it is no longer a subject of the DOJ investigation and that it will take no further action. On June 5, 2026, the SEC issued an order resolving its investigation of WAM in its entirety (the “Settlement”). Under the Settlement, WAM, without admitting any wrongdoing, agreed to pay a civil penalty of $100.0 million to be paid into a Fair Fund for the benefit of investors. These outcomes end the investigations of WAM by the DOJ and the SEC.
Mr. Leech received a “Wells Notice” from the staff of the SEC in August 2024, and was placed on administrative leave at that time. Mr. Leech retired and is no longer with the Company, as previously disclosed. 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. On June 12, 2026, all criminal charges against Mr. Leech alleging unlawful trade allocations were dismissed and Mr. Leech and the DOJ reached a plea agreement on one charge of obstruction of a pending proceeding. The SEC case against Mr. Leech remains pending.
On July 3, 2025, Franklin, WAM and Mr. Leech were named as defendants in a lawsuit filed by the Western PA Electrical Employees Insurance Trust Fund in the U.S. District Court for the Western District of Pennsylvania seeking class certification on behalf of shareholders of two funds managed by WAM for the period January 1, 2021 through October 31, 2023. On December 19, 2025, Abilene Firemen’s Relief and Retirement Fund was named the lead plaintiff in the action and effective January 9, 2026, the case was transferred to the U.S. District Court for the Central District of California. The plaintiffs filed an amended complaint on March 16, 2026, which, among other things, expanded the alleged class period through November 25, 2024, and named as additional defendants certain Franklin and WAM executives. The plaintiffs are pursuing claims under the Securities Exchange Act of 1934 against all defendants in connection with trade allocations made by Mr. Leech in that period that were also the subject of the investigations reported above. The plaintiffs are seeking, among other things, damages, interest, and costs and expenses, including attorneys’ fees.
Franklin Templeton 401(k) Retirement Plan Litigation. On July 22, 2025, Franklin and the Franklin Templeton 401(k) Retirement Plan Committee were named as defendants in a lawsuit filed by certain former employees in the U.S. District Court for the Northern District of California. On November 10, 2025, the plaintiffs filed an amended complaint adding as defendants the Franklin Templeton 401(k) Retirement Plan Investment Committee and Gallagher Fiduciary Advisors, LLC. The plaintiffs seek to represent a class of participants and beneficiaries of the Franklin Templeton 401(k) Retirement Plan (the “Plan”) who were invested in funds managed by the Company at any time on or after July 22, 2019. The plaintiffs are pursuing claims under the Employee Retirement Income Security Act of 1974 for alleged breaches of fiduciary duties and failure to monitor the Plan fiduciaries in connection with the Plan’s inclusion of certain proprietary funds as investment options. The plaintiffs are seeking, among other things, damages, disgorgement, removal of certain investments from the Plan, removal and replacement of the Plan’s fiduciaries, attorneys’ fees and costs, and pre-judgment interest. On April 17, 2026, the court denied the Franklin defendants’ motion to dismiss.
Putnam Mutual Fund Litigation. On June 22, 2026, two Putnam U.S. trusts and certain current and former trustees, as well as Franklin and certain Franklin investment adviser and distributor subsidiaries were named as defendants in a lawsuit filed in the Massachusetts Superior Court, Suffolk County. The plaintiffs allege they are fund shareholders and seek to represent a class of investors who purchased shares of certain Putnam U.S. mutual funds on or after June 22, 2023. The plaintiffs are pursuing claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, for allegedly false and misleading statements, or material omissions, in fund disclosures that relate to the treatment of accrued income as assets of the funds in the calculation of fund net asset values. The plaintiffs are seeking, among other things, damages, rescission, injunctive relief, attorneys’ fees and costs, and pre- and post-judgment interest.
The lawsuits reported above against the Company are in their early stages. Management believes the claims made in the lawsuits are without merit and the Company intends to defend against them vigorously. The Company cannot predict the outcome of these lawsuits or estimate any reasonably possible loss or range of loss that may arise from any negative outcome.
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 June 30, 2026 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, an adequate accrual has been made as of June 30, 2026 to provide for any probable losses pursuant to such indemnification agreements and/or guarantees.
Other Commitments and Contingencies
At June 30, 2026, 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 2025.
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 nine months ended June 30, 2026 | ||||||||||||||||||||||||||
| Nonvested balance at October 1, 2025 | 14,959 | 353 | 15,312 | $ | 22.81 | |||||||||||||||||||||
| Granted | 8,691 | 176 | 8,867 | 22.68 | ||||||||||||||||||||||
| Vested | (2,252) | (180) | (2,432) | 26.25 | ||||||||||||||||||||||
| Forfeited/canceled | (2,353) | — | (2,353) | 20.76 | ||||||||||||||||||||||
| Nonvested Balance at June 30, 2026 | 19,045 | 349 | 19,394 | $ | 22.57 |
Total unrecognized compensation expense related to nonvested stock and stock unit awards was $200.0 million at June 30, 2026. This expense is expected to be recognized over a remaining weighted-average vesting period of 1.7 years.
Note 12 – Investment and Other Income, Net
Investment and other income, net consisted of the following:
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Dividend and interest income | $ | 31.1 | $ | 38.9 | $ | 124.4 | $ | 101.4 | ||||||||||||||||||
| Gains (losses) on investments, net | 62.1 | (31.4) | 32.8 | (41.7) | ||||||||||||||||||||||
| Income from investments in equity method investees | 22.8 | 23.0 | 58.6 | 38.5 | ||||||||||||||||||||||
| Losses on crypto assets, net | (0.5) | — | (19.3) | — | ||||||||||||||||||||||
| Rental income | 11.4 | 10.7 | 34.3 | 32.8 | ||||||||||||||||||||||
| Foreign currency exchange gains (losses), net | 2.7 | (14.4) | 0.2 | (7.4) | ||||||||||||||||||||||
| Other, net | 1.4 | (3.4) | 36.3 | 4.4 | ||||||||||||||||||||||
| Investment and other income, net | $ | 131.0 | $ | 23.4 | $ | 267.3 | $ | 128.0 |
Net gains (losses) recognized on equity securities measured at fair value and trading debt securities that were held by the Company were $68.9 million and $23.1 million for the three and nine months ended June 30, 2026 and $56.3 million and $(3.6) million for the three and nine months ended June 30, 2025.
Note 13 – Segment and Geographic Information
The Company has one operating segment, which provides investment management and related services.
The chief operating decision maker (“CODM”), identified as the Company’s Chief Executive Officer, assesses the performance of the business and allocates resources primarily based on consolidated net income attributable to Franklin Resources, Inc. This measure is used to support decision making activities and assess the performance of the operating segment.
The CODM regularly reviews the significant segment expenses categories that are presented on the Company’s consolidated statements of income. Total assets on the consolidated balance sheets is the measure of segment assets.
Note 14 - Subsequent Event
On July 30, 2026, the Company entered into an amendment and restatement of its Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement amends and restates the Company’s existing revolving credit agreement to, among other things, increase the aggregate commitments and extend its maturity to July 30, 2031. The Second Amended and Restated Credit Agreement provides for a five-year revolving credit facility with $1.5 billion of aggregate commitments with the option to increase the aggregate commitments by a maximum of $500.0 million. As of July 30, 2026, there was $700.0 million outstanding under the Second Amended and Restated Credit Agreement.
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