x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-2670991 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
One Franklin Parkway, San Mateo, CA | 94403 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Emerging growth company o |
Page | |||
Financial Information | |||
Item 1. | Financial Statements (unaudited) | ||
3 | |||
4 | |||
5 | |||
6 | |||
8 | |||
Item 2. | 22 | ||
Item 3. | 46 | ||
Item 4. | 46 | ||
Other Information | |||
Item 1. | 47 | ||
Item 1A. | 47 | ||
Item 2. | 47 | ||
Item 6. | 47 | ||
48 | |||
49 |
FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF INCOME Unaudited | ||||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
(in millions, except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating Revenues | ||||||||||||||||
Investment management fees | $ | 1,117.1 | $ | 1,089.2 | $ | 2,230.7 | $ | 2,152.4 | ||||||||
Sales and distribution fees | 409.8 | 431.2 | 827.6 | 850.5 | ||||||||||||
Shareholder servicing fees | 61.3 | 56.4 | 116.2 | 113.0 | ||||||||||||
Other | 29.6 | 23.8 | 58.8 | 45.5 | ||||||||||||
Total operating revenues | 1,617.8 | 1,600.6 | 3,233.3 | 3,161.4 | ||||||||||||
Operating Expenses | ||||||||||||||||
Sales, distribution and marketing | 521.5 | 534.8 | 1,050.2 | 1,054.8 | ||||||||||||
Compensation and benefits | 355.5 | 343.4 | 688.0 | 654.9 | ||||||||||||
Information systems and technology | 58.1 | 54.0 | 113.1 | 105.7 | ||||||||||||
Occupancy | 34.1 | 29.0 | 63.5 | 58.1 | ||||||||||||
General, administrative and other | 92.9 | 83.9 | 181.7 | 145.5 | ||||||||||||
Total operating expenses | 1,062.1 | 1,045.1 | 2,096.5 | 2,019.0 | ||||||||||||
Operating Income | 555.7 | 555.5 | 1,136.8 | 1,142.4 | ||||||||||||
Other Income (Expenses) | ||||||||||||||||
Investment and other income, net | 87.4 | 84.6 | 168.7 | 130.7 | ||||||||||||
Interest expense | (10.0 | ) | (12.6 | ) | (20.8 | ) | (25.9 | ) | ||||||||
Other income, net | 77.4 | 72.0 | 147.9 | 104.8 | ||||||||||||
Income before taxes | 633.1 | 627.5 | 1,284.7 | 1,247.2 | ||||||||||||
Taxes on income | 150.2 | 192.5 | 1,373.7 | 393.4 | ||||||||||||
Net income (loss) | 482.9 | 435.0 | (89.0 | ) | 853.8 | |||||||||||
Less: net income (loss) attributable to | ||||||||||||||||
Nonredeemable noncontrolling interests | 24.5 | (6.0 | ) | 24.4 | (3.9 | ) | ||||||||||
Redeemable noncontrolling interests | 15.2 | 20.3 | 26.7 | (3.2 | ) | |||||||||||
Net Income (Loss) Attributable to Franklin Resources, Inc. | $ | 443.2 | $ | 420.7 | $ | (140.1 | ) | $ | 860.9 | |||||||
Earnings (Loss) per Share | ||||||||||||||||
Basic | $ | 0.79 | $ | 0.74 | $ | (0.29 | ) | $ | 1.52 | |||||||
Diluted | 0.78 | 0.74 | (0.29 | ) | 1.52 | |||||||||||
Dividends Declared per Share | $ | 3.23 | $ | 0.20 | $ | 3.46 | $ | 0.40 |
FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited | ||||||||||||||||
(in millions) | Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net Income (Loss) | $ | 482.9 | $ | 435.0 | $ | (89.0 | ) | $ | 853.8 | |||||||
Other Comprehensive Income (Loss) | ||||||||||||||||
Net unrealized gains (losses) on investments, net of tax | (0.2 | ) | 5.4 | 3.3 | 3.0 | |||||||||||
Currency translation adjustments, net of tax | 6.8 | 39.2 | 22.6 | (21.7 | ) | |||||||||||
Net unrealized gains (losses) on defined benefit plans, net of tax | 0.4 | — | (0.7 | ) | — | |||||||||||
Total other comprehensive income (loss) | 7.0 | 44.6 | 25.2 | (18.7 | ) | |||||||||||
Total comprehensive income (loss) | 489.9 | 479.6 | (63.8 | ) | 835.1 | |||||||||||
Less: comprehensive income (loss) attributable to | ||||||||||||||||
Nonredeemable noncontrolling interests | 24.5 | (6.0 | ) | 24.4 | (3.9 | ) | ||||||||||
Redeemable noncontrolling interests | 15.2 | 20.3 | 26.7 | (3.2 | ) | |||||||||||
Comprehensive Income (Loss) Attributable to Franklin Resources, Inc. | $ | 450.2 | $ | 465.3 | $ | (114.9 | ) | $ | 842.2 |
FRANKLIN RESOURCES, INC. CONSOLIDATED BALANCE SHEETS Unaudited | ||||||||
(in millions, except share and per share data) | March 31, 2018 | September 30, 2017 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 8,545.4 | $ | 8,523.3 | ||||
Receivables | 765.4 | 767.8 | ||||||
Investments (including $449.5 and $440.0 at fair value at March 31, 2018 and September 30, 2017) | 1,579.0 | 1,393.6 | ||||||
Assets of consolidated investment products | ||||||||
Cash and cash equivalents | 181.1 | 226.4 | ||||||
Receivables | 133.6 | 234.1 | ||||||
Investments, at fair value | 3,529.3 | 3,467.4 | ||||||
Property and equipment, net | 517.7 | 517.2 | ||||||
Goodwill and other intangible assets, net | 2,242.3 | 2,227.7 | ||||||
Other | 196.2 | 176.5 | ||||||
Total Assets | $ | 17,690.0 | $ | 17,534.0 | ||||
Liabilities | ||||||||
Compensation and benefits | $ | 291.7 | $ | 396.6 | ||||
Accounts payable and accrued expenses | 194.6 | 167.4 | ||||||
Dividends | 1,763.7 | 113.3 | ||||||
Commissions | 310.7 | 313.3 | ||||||
Income taxes | 1,178.3 | 74.7 | ||||||
Debt | 1,044.8 | 1,044.2 | ||||||
Liabilities of consolidated investment products | ||||||||
Accounts payable and accrued expenses | 67.9 | 124.1 | ||||||
Debt | 34.0 | 53.4 | ||||||
Deferred taxes | 129.9 | 170.6 | ||||||
Other | 187.8 | 198.7 | ||||||
Total liabilities | 5,203.4 | 2,656.3 | ||||||
Commitments and Contingencies (Note 10) | ||||||||
Redeemable Noncontrolling Interests | 2,084.4 | 1,941.9 | ||||||
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; 541,695,819 and 554,865,343 shares issued and outstanding at March 31, 2018 and September 30, 2017 | 54.2 | 55.5 | ||||||
Retained earnings | 10,263.9 | 12,849.3 | ||||||
Accumulated other comprehensive loss | (259.7 | ) | (284.8 | ) | ||||
Total Franklin Resources, Inc. stockholders’ equity | 10,058.4 | 12,620.0 | ||||||
Nonredeemable noncontrolling interests | 343.8 | 315.8 | ||||||
Total stockholders’ equity | 10,402.2 | 12,935.8 | ||||||
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity | $ | 17,690.0 | $ | 17,534.0 |
FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited | ||||||||
Six Months Ended March 31, | ||||||||
(in millions) | 2018 | 2017 | ||||||
Net Income (Loss) | $ | (89.0 | ) | $ | 853.8 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Amortization of deferred sales commissions | 40.5 | 34.4 | ||||||
Depreciation and other amortization | 38.3 | 40.5 | ||||||
Stock-based compensation | 61.2 | 63.3 | ||||||
Income from investments in equity method investees | (45.9 | ) | (70.5 | ) | ||||
Net (gains) losses on investments of consolidated investment products | (36.3 | ) | 6.8 | |||||
Deferred income taxes | (44.7 | ) | 0.6 | |||||
Other | 7.1 | (8.1 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Increase in receivables and other assets | (59.3 | ) | (16.7 | ) | ||||
Increase (decrease) in receivables of consolidated investment products | 100.3 | (58.4 | ) | |||||
Increase (decrease) in trading securities, net | (34.6 | ) | 65.8 | |||||
Increase in trading securities of consolidated investment products, net | (46.5 | ) | (285.6 | ) | ||||
Decrease in accrued compensation and benefits | (107.0 | ) | (79.1 | ) | ||||
Decrease in commissions payable | (2.6 | ) | (8.3 | ) | ||||
Increase in income taxes payable | 1,103.6 | 53.9 | ||||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | 11.3 | (26.5 | ) | |||||
Increase in accounts payable and accrued expenses of consolidated investment products | 0.6 | 48.4 | ||||||
Net cash provided by operating activities | 897.0 | 614.3 | ||||||
Purchase of investments | (182.6 | ) | (292.1 | ) | ||||
Liquidation of investments | 74.5 | 239.5 | ||||||
Purchase of investments by consolidated investment products | (40.3 | ) | (88.1 | ) | ||||
Liquidation of investments by consolidated investment products | 68.6 | 283.7 | ||||||
Additions of property and equipment, net | (43.7 | ) | (28.8 | ) | ||||
Adoption of new accounting guidance | — | (49.2 | ) | |||||
Acquisition of businesses | (9.7 | ) | (14.0 | ) | ||||
Net (deconsolidation) consolidation of investment products | (48.3 | ) | 23.1 | |||||
Net cash provided by (used in) investing activities | (181.5 | ) | 74.1 | |||||
Issuance of common stock | 13.6 | 13.0 | ||||||
Dividends paid on common stock | (239.0 | ) | (216.7 | ) | ||||
Repurchase of common stock | (619.4 | ) | (425.1 | ) | ||||
Excess tax benefit from stock-based compensation | — | 0.3 | ||||||
Payment on loan | — | (22.5 | ) | |||||
Proceeds from debt of consolidated investment products | — | 0.7 | ||||||
Payments on debt by consolidated investment products | (19.6 | ) | (44.7 | ) | ||||
Payments on contingent consideration liability | (21.6 | ) | (31.7 | ) | ||||
Noncontrolling interests | 121.5 | 364.9 | ||||||
Net cash used in financing activities | (764.5 | ) | (361.8 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 25.8 | (33.8 | ) | |||||
Increase (decrease) in cash and cash equivalents | (23.2 | ) | 292.8 |
FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited [Table continued from previous page] | ||||||||
Six Months Ended March 31, | ||||||||
(in millions) | 2018 | 2017 | ||||||
Cash and cash equivalents, beginning of period | $ | 8,749.7 | $ | 8,483.3 | ||||
Cash and Cash Equivalents, End of Period | $ | 8,726.5 | $ | 8,776.1 | ||||
Supplemental Disclosure of Cash Flow Information | ||||||||
Cash paid for income taxes | $ | 310.9 | $ | 332.0 | ||||
Cash paid for interest | 24.1 | 23.4 | ||||||
Cash paid for interest by consolidated investment products | 1.5 | 7.4 |
(in millions) | Franklin Resources, Inc. Stockholders’ Equity | Nonredeemable Noncontrolling Interests | Total Stockholders’ Equity | |||||||||
for the six months ended March 31, 2018 | ||||||||||||
Balance at October 1, 2017 | $ | 12,620.0 | $ | 315.8 | $ | 12,935.8 | ||||||
Adoption of new accounting guidance | 0.4 | — | 0.4 | |||||||||
Net income (loss) | (140.1 | ) | 24.4 | (115.7 | ) | |||||||
Other comprehensive income | 25.2 | 25.2 | ||||||||||
Cash dividends declared on common stock | (1,889.4 | ) | (1,889.4 | ) | ||||||||
Repurchase of common stock | (632.6 | ) | (632.6 | ) | ||||||||
Stock-based compensation | 74.9 | 74.9 | ||||||||||
Net subscriptions and other | 5.7 | 5.7 | ||||||||||
Deconsolidation of investment products | (2.1 | ) | (2.1 | ) | ||||||||
Balance at March 31, 2018 | $ | 10,058.4 | $ | 343.8 | $ | 10,402.2 |
(in millions) | Franklin Resources, Inc. Stockholders’ Equity | Nonredeemable Noncontrolling Interests | Total Stockholders’ Equity | |||||||||
for the six months ended March 31, 2017 | ||||||||||||
Balance at October 1, 2016 | $ | 11,935.8 | $ | 592.4 | $ | 12,528.2 | ||||||
Adoption of new accounting guidance | (1.3 | ) | (324.6 | ) | (325.9 | ) | ||||||
Net income (loss) | 860.9 | (3.9 | ) | 857.0 | ||||||||
Other comprehensive loss | (18.7 | ) | (18.7 | ) | ||||||||
Cash dividends declared on common stock | (226.3 | ) | (226.3 | ) | ||||||||
Repurchase of common stock | (428.5 | ) | (428.5 | ) | ||||||||
Stock-based compensation | 71.7 | 71.7 | ||||||||||
Net subscriptions and other | 15.7 | 15.7 | ||||||||||
Balance at March 31, 2017 | $ | 12,193.6 | $ | 279.6 | $ | 12,473.2 |
(in millions, except per share data) | Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income (loss) attributable to Franklin Resources, Inc. | $ | 443.2 | $ | 420.7 | $ | (140.1 | ) | $ | 860.9 | |||||||
Less: allocation of earnings to participating nonvested stock and stock unit awards | 15.2 | 3.5 | 16.3 | 6.4 | ||||||||||||
Net Income (Loss) Available to Common Stockholders | $ | 428.0 | $ | 417.2 | $ | (156.4 | ) | $ | 854.5 | |||||||
Weighted-average shares outstanding – basic | 545.0 | 560.3 | 547.9 | 562.7 | ||||||||||||
Dilutive effect of nonparticipating nonvested stock unit awards | 0.5 | 0.3 | — | 0.2 | ||||||||||||
Weighted-Average Shares Outstanding – Diluted | 545.5 | 560.6 | 547.9 | 562.9 | ||||||||||||
Earnings (Loss) per Share | ||||||||||||||||
Basic | $ | 0.79 | $ | 0.74 | $ | (0.29 | ) | $ | 1.52 | |||||||
Diluted | 0.78 | 0.74 | (0.29 | ) | 1.52 |
(in millions) | March 31, 2018 | September 30, 2017 | ||||||
Investment securities, trading | ||||||||
Sponsored funds | $ | 78.6 | $ | 31.1 | ||||
Debt and other equity securities | 271.0 | 283.4 | ||||||
Total investment securities, trading | 349.6 | 314.5 | ||||||
Investment securities, available-for-sale | ||||||||
Sponsored funds | 86.0 | 110.8 | ||||||
Debt and other equity securities | 1.7 | 1.9 | ||||||
Total investment securities, available-for-sale | 87.7 | 112.7 | ||||||
Investments in equity method investees | 1,043.0 | 893.5 | ||||||
Other investments | 98.7 | 72.9 | ||||||
Total | $ | 1,579.0 | $ | 1,393.6 |
(in millions) | Cost Basis | Gross Unrealized | Fair Value | |||||||||||||
Gains | Losses | |||||||||||||||
as of March 31, 2018 | ||||||||||||||||
Sponsored funds | $ | 80.4 | $ | 11.1 | $ | (5.5 | ) | $ | 86.0 | |||||||
Debt and other equity securities | 1.6 | 0.1 | — | 1.7 | ||||||||||||
Total | $ | 82.0 | $ | 11.2 | $ | (5.5 | ) | $ | 87.7 | |||||||
as of September 30, 2017 | ||||||||||||||||
Sponsored funds | $ | 107.9 | $ | 9.4 | $ | (6.5 | ) | $ | 110.8 | |||||||
Debt and other equity securities | 1.9 | — | — | 1.9 | ||||||||||||
Total | $ | 109.8 | $ | 9.4 | $ | (6.5 | ) | $ | 112.7 |
(in millions) | Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||||
as of March 31, 2018 | ||||||||||||||||||||||||
Sponsored funds | $ | 27.3 | $ | (5.5 | ) | $ | — | $ | — | $ | 27.3 | $ | (5.5 | ) | ||||||||||
as of September 30, 2017 | ||||||||||||||||||||||||
Sponsored funds | $ | 28.4 | $ | (6.3 | ) | $ | 2.4 | $ | (0.2 | ) | $ | 30.8 | $ | (6.5 | ) |
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
as of March 31, 2018 | ||||||||||||||||
Assets | ||||||||||||||||
Investment securities, trading | ||||||||||||||||
Sponsored funds | $ | 78.6 | $ | — | $ | — | $ | 78.6 | ||||||||
Debt and other equity securities | 20.0 | 55.4 | 195.6 | 271.0 | ||||||||||||
Investment securities, available-for-sale | ||||||||||||||||
Sponsored funds | 86.0 | — | — | 86.0 | ||||||||||||
Debt and other equity securities | 0.9 | 0.5 | 0.3 | 1.7 | ||||||||||||
Life settlement contracts | — | — | 12.2 | 12.2 | ||||||||||||
Total Assets Measured at Fair Value | $ | 185.5 | $ | 55.9 | $ | 208.1 | $ | 449.5 | ||||||||
Liability | ||||||||||||||||
Contingent consideration liability | $ | — | $ | — | $ | 31.2 | $ | 31.2 |
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
as of September 30, 2017 | ||||||||||||||||
Assets | ||||||||||||||||
Investment securities, trading | ||||||||||||||||
Sponsored funds | $ | 31.1 | $ | — | $ | — | $ | 31.1 | ||||||||
Debt and other equity securities | 18.2 | 78.4 | 186.8 | 283.4 | ||||||||||||
Investment securities, available-for-sale | ||||||||||||||||
Sponsored funds | 110.8 | — | — | 110.8 | ||||||||||||
Debt and other equity securities | 1.0 | 0.6 | 0.3 | 1.9 | ||||||||||||
Life settlement contracts | — | — | 12.8 | 12.8 | ||||||||||||
Total Assets Measured at Fair Value | $ | 161.1 | $ | 79.0 | $ | 199.9 | $ | 440.0 | ||||||||
Liability | ||||||||||||||||
Contingent consideration liability | $ | — | $ | — | $ | 51.0 | $ | 51.0 |
2018 | 2017 | |||||||||||||||
(in millions) | Investments | Contingent Consideration Liability | Investments | Contingent Consideration Liabilities | ||||||||||||
for the three months ended March 31, | ||||||||||||||||
Balance at beginning of period | $ | 210.1 | $ | (62.0 | ) | $ | 198.7 | $ | (83.7 | ) | ||||||
Acquisition | — | — | — | (5.7 | ) | |||||||||||
Total realized and unrealized gains (losses) | ||||||||||||||||
Included in investment and other income, net | 1.8 | — | 5.0 | — | ||||||||||||
Included in general, administrative and other expense | — | (1.6 | ) | — | (4.2 | ) | ||||||||||
Purchases | 1.4 | — | 0.3 | — | ||||||||||||
Settlements | (1.9 | ) | 32.4 | (0.8 | ) | 33.2 | ||||||||||
Transfers out of Level 3 | — | — | (0.4 | ) | — | |||||||||||
Foreign exchange revaluation and other | (3.3 | ) | — | 8.2 | — | |||||||||||
Balance at End of Period | $ | 208.1 | $ | (31.2 | ) | $ | 211.0 | $ | (60.4 | ) | ||||||
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at end of period | $ | 0.8 | $ | (1.6 | ) | $ | 4.4 | $ | (4.2 | ) |
2018 | 2017 | |||||||||||||||
(in millions) | Investments | Contingent Consideration Liability | Investments | Contingent Consideration Liabilities | ||||||||||||
for the six months ended March 31, | ||||||||||||||||
Balance at beginning of period | $ | 199.9 | $ | (51.0 | ) | $ | 205.1 | $ | (98.1 | ) | ||||||
Acquisition | — | — | — | (5.7 | ) | |||||||||||
Total realized and unrealized gains (losses) | ||||||||||||||||
Included in investment and other income, net | 3.0 | — | 5.6 | — | ||||||||||||
Included in general, administrative and other expense | — | (5.6 | ) | — | 8.0 | |||||||||||
Purchases | 6.7 | — | 0.8 | — | ||||||||||||
Sales | — | — | (2.4 | ) | — | |||||||||||
Settlements | (1.9 | ) | 32.4 | (2.5 | ) | 35.4 | ||||||||||
Transfers out of Level 3 | — | — | (0.4 | ) | — | |||||||||||
Foreign exchange revaluation and other | 0.4 | (7.0 | ) | 4.8 | — | |||||||||||
Balance at End of Period | $ | 208.1 | $ | (31.2 | ) | $ | 211.0 | $ | (60.4 | ) | ||||||
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at end of period | $ | 2.0 | $ | (5.6 | ) | $ | 4.2 | $ | 8.0 |
(in millions) | ||||||||||
as of March 31, 2018 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average) | ||||||
Investment securities, trading – debt and other equity securities | $ | 178.7 | Market pricing | Redemption price | $73 per $100 of par | |||||
Discount rate | 18.1% | |||||||||
16.9 | Discounted cash flow | Discount rate | 3.0%–6.7% (5.3%) | |||||||
Risk premium | 2.0%–4.7% (3.2%) | |||||||||
Life settlement contracts | 12.2 | Discounted cash flow | Life expectancy | 21–119 months (62) | ||||||
Discount rate | 8.0%–20.0% (13.0%) | |||||||||
Contingent consideration liability | 31.2 | Discounted cash flow | AUM growth rate | (4.0%) | ||||||
Discount rate | 14.9% |
(in millions) | ||||||||||
as of September 30, 2017 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average) | ||||||
Investment securities, trading – debt and other equity securities | $ | 175.7 | Market pricing | Redemption price | $73 per $100 of par | |||||
Discount rate | 18.6% | |||||||||
11.1 | Discounted cash flow | Discount rate | 4.1%–6.7% (5.7%) | |||||||
Risk premium | 2.0%–4.1% (2.9%) | |||||||||
Life settlement contracts | 12.8 | Discounted cash flow | Life expectancy | 20–123 months (62) | ||||||
Discount rate | 8.0%–20.0% (13.2%) | |||||||||
Contingent consideration liability | 51.0 | Discounted cash flow | AUM growth rate | 1.3%–9.4% (5.3%) | ||||||
Discount rate | 14.6% |
(in millions) | Fair Value Level | March 31, 2018 | September 30, 2017 | |||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||
Financial Assets | ||||||||||||||||||
Cash and cash equivalents | 1 | $ | 8,545.4 | $ | 8,545.4 | $ | 8,523.3 | $ | 8,523.3 | |||||||||
Other investments | ||||||||||||||||||
Time deposits | 2 | 30.9 | 30.9 | 13.4 | 13.4 | |||||||||||||
Cost method investments | 3 | 55.6 | 78.6 | 46.7 | 67.7 | |||||||||||||
Financial Liability | ||||||||||||||||||
Debt | 2 | $ | 1,044.8 | $ | 1,044.0 | $ | 1,044.2 | $ | 1,073.5 |
(in millions) | March 31, 2018 | September 30, 2017 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 181.1 | $ | 226.4 | ||||
Receivables | 133.6 | 234.1 | ||||||
Investments, at fair value | 3,529.3 | 3,467.4 | ||||||
Other assets | 1.0 | 0.9 | ||||||
Total Assets | $ | 3,845.0 | $ | 3,928.8 | ||||
Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 67.9 | $ | 124.1 | ||||
Debt | 34.0 | 53.4 | ||||||
Other liabilities | 11.9 | 8.7 | ||||||
Total liabilities | 113.8 | 186.2 | ||||||
Redeemable Noncontrolling Interests | 2,084.4 | 1,941.9 | ||||||
Stockholders’ Equity | ||||||||
Franklin Resources, Inc.’s interests | 1,330.0 | 1,511.8 | ||||||
Nonredeemable noncontrolling interests | 316.8 | 288.9 | ||||||
Total stockholders’ equity | 1,646.8 | 1,800.7 | ||||||
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity | $ | 3,845.0 | $ | 3,928.8 |
(in millions) | March 31, 2018 | September 30, 2017 | ||||||
Investment securities, trading | $ | 3,063.7 | $ | 3,017.2 | ||||
Other equity securities | 353.9 | 306.9 | ||||||
Other debt securities | 111.7 | 143.3 | ||||||
Total | $ | 3,529.3 | $ | 3,467.4 |
(in millions) | Level 1 | Level 2 | Level 3 | NAV as a Practical Expedient | Total | |||||||||||||||
as of March 31, 2018 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Equity securities | $ | 312.7 | $ | 266.6 | $ | 188.4 | $ | 167.1 | $ | 934.8 | ||||||||||
Debt securities | 1.3 | 2,481.0 | 112.2 | — | 2,594.5 | |||||||||||||||
Total Assets Measured at Fair Value | $ | 314.0 | $ | 2,747.6 | $ | 300.6 | $ | 167.1 | $ | 3,529.3 | ||||||||||
Liabilities | ||||||||||||||||||||
Other liabilities | $ | 0.6 | $ | 11.3 | $ | — | $ | — | $ | 11.9 |
(in millions) | Level 1 | Level 2 | Level 3 | NAV as a Practical Expedient | Total | |||||||||||||||
as of September 30, 2017 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Equity securities | $ | 331.4 | $ | 128.1 | $ | 160.7 | $ | 155.2 | $ | 775.4 | ||||||||||
Debt securities | 1.4 | 2,555.2 | 135.4 | — | 2,692.0 | |||||||||||||||
Total Assets Measured at Fair Value | $ | 332.8 | $ | 2,683.3 | $ | 296.1 | $ | 155.2 | $ | 3,467.4 | ||||||||||
Liabilities | ||||||||||||||||||||
Other liabilities | $ | 0.4 | $ | 8.3 | $ | — | $ | — | $ | 8.7 |
2018 | 2017 | |||||||||||||||||||||||
(in millions) | Equity Securities | Debt Securities | Total Level 3 Assets | Equity Securities | Debt Securities | Total Level 3 Assets | ||||||||||||||||||
for the three months ended March 31, | ||||||||||||||||||||||||
Balance at beginning of period | $ | 159.6 | $ | 136.2 | $ | 295.8 | $ | 131.6 | $ | 124.4 | $ | 256.0 | ||||||||||||
Realized and unrealized gains (losses) included in investment and other income, net | 15.6 | 2.0 | 17.6 | 4.2 | (14.2 | ) | (10.0 | ) | ||||||||||||||||
Purchases | 11.5 | 10.5 | 22.0 | 4.5 | 5.6 | 10.1 | ||||||||||||||||||
Sales | — | (37.7 | ) | (37.7 | ) | — | (1.9 | ) | (1.9 | ) | ||||||||||||||
Foreign exchange revaluation | 1.7 | 1.2 | 2.9 | 0.4 | 0.5 | 0.9 | ||||||||||||||||||
Balance at End of Period | $ | 188.4 | $ | 112.2 | $ | 300.6 | $ | 140.7 | $ | 114.4 | $ | 255.1 | ||||||||||||
Change in unrealized gains (losses) included in net income relating to assets held at end of period | $ | 15.4 | $ | — | $ | 15.4 | $ | 4.2 | $ | (14.3 | ) | $ | (10.1 | ) |
2018 | 2017 | |||||||||||||||||||||||
(in millions) | Equity Securities | Debt Securities | Total Level 3 Assets | Equity Securities | Debt Securities | Total Level 3 Assets | ||||||||||||||||||
for the six months ended March 31, | ||||||||||||||||||||||||
Balance at beginning of period | $ | 160.7 | $ | 135.4 | $ | 296.1 | $ | 160.3 | $ | 132.3 | $ | 292.6 | ||||||||||||
Adoption of new accounting guidance | — | — | — | (45.4 | ) | (0.5 | ) | (45.9 | ) | |||||||||||||||
Realized and unrealized gains (losses) included in investment and other income, net | 17.5 | 2.1 | 19.6 | 0.9 | (14.5 | ) | (13.6 | ) | ||||||||||||||||
Purchases | 22.6 | 10.5 | 33.1 | 25.5 | 7.8 | 33.3 | ||||||||||||||||||
Sales | (14.9 | ) | (37.7 | ) | (52.6 | ) | (0.1 | ) | (8.3 | ) | (8.4 | ) | ||||||||||||
Foreign exchange revaluation | 2.5 | 1.9 | 4.4 | (0.5 | ) | (2.4 | ) | (2.9 | ) | |||||||||||||||
Balance at End of Period | $ | 188.4 | $ | 112.2 | $ | 300.6 | $ | 140.7 | $ | 114.4 | $ | 255.1 | ||||||||||||
Change in unrealized gains (losses) included in net income relating to assets held at end of period | $ | 16.3 | $ | 0.1 | $ | 16.4 | $ | 0.8 | $ | (15.0 | ) | $ | (14.2 | ) |
(in millions) | ||||||||||
as of March 31, 2018 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average) | ||||||
Equity securities | $ | 160.9 | Market comparable companies | EBITDA multiple | 5.0–13.6 (9.1) | |||||
27.5 | Discounted cash flow | Discount rate | 5.7%–16.5% (13.5%) | |||||||
Debt securities | 77.8 | Discounted cash flow | Discount rate | 5.7%–14.6% (10.0%) | ||||||
31.1 | Comparable trading multiple | Price to earnings ratio | 10.0 | |||||||
Enterprise value/ EBITDA multiple | 20.9 | |||||||||
3.3 | Market pricing | Private sale pricing | $33 per $100 of par |
(in millions) | ||||||||||
as of September 30, 2017 | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average) | ||||||
Equity securities | $ | 101.9 | Market comparable companies | EBITDA multiple | 5.5–12.3 (9.0) | |||||
44.4 | Discounted cash flow | Discount rate | 5.7%–17.9% (14.3%) | |||||||
14.4 | Market pricing | Price to earnings ratio | 10.0 | |||||||
Debt securities | 112.7 | Discounted cash flow | Discount rate | 5.0%–33.0% (9.5%) | ||||||
Risk premium | 0.0%–25.0% (8.4%) | |||||||||
22.7 | Market pricing | Private sale pricing | $33–$57 ($52) per $100 of par |
(in millions) | Fair Value Level | March 31, 2018 | September 30, 2017 | |||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||
Financial Asset | ||||||||||||||||||
Cash and cash equivalents | 1 | $ | 181.1 | $ | 181.1 | $ | 226.4 | $ | 226.4 | |||||||||
Financial Liability | ||||||||||||||||||
Debt | 3 | $ | 34.0 | $ | 33.7 | $ | 53.4 | $ | 53.1 |
(in millions) | ||||||||
for the six months ended March 31, | 2018 | 2017 | ||||||
Balance at beginning of period | $ | 1,941.9 | $ | 61.1 | ||||
Adoption of new accounting guidance | — | 824.7 | ||||||
Net income (loss) | 26.7 | (3.2 | ) | |||||
Net subscriptions and other | 115.8 | 349.2 | ||||||
Net consolidations | — | 428.0 | ||||||
Balance at End of Period | $ | 2,084.4 | $ | 1,659.8 |
(in millions) | March 31, 2018 | September 30, 2017 | ||||||
Receivables | $ | 156.7 | $ | 155.6 | ||||
Investments | 72.4 | 129.3 | ||||||
Total | $ | 229.1 | $ | 284.9 |
(in millions) | March 31, 2018 | September 30, 2017 | ||||||
Deferred tax assets, net of valuation allowance | $ | 95.2 | $ | 141.3 | ||||
Deferred tax liabilities | 204.2 | 296.1 | ||||||
Net Deferred Tax Liability | $ | 109.0 | $ | 154.8 |
(in millions) | March 31, 2018 | September 30, 2017 | ||||||
Other assets | $ | 20.9 | $ | 15.8 | ||||
Deferred tax liabilities | 129.9 | 170.6 | ||||||
Net Deferred Tax Liability | $ | 109.0 | $ | 154.8 |
(in millions) | Three Months Ended March 31, 2018 | Six Months Ended March 31, 2018 | ||||||||||||
Amount | Percentage of Income Before Taxes | Amount | Percentage of Income Before Taxes | |||||||||||
Tax expense before one-time charges | $ | 151.0 | 23.9 | % | $ | 305.6 | 23.8 | % | ||||||
Transition tax on deemed repatriation of undistributed foreign earnings | (0.5 | ) | (0.1 | %) | 1,120.2 | 87.2 | % | |||||||
Revaluation of net deferred tax liabilities | (0.5 | ) | (0.1 | %) | (53.6 | ) | (4.2 | %) | ||||||
Other Tax Act impacts | 0.2 | 0.0 | % | 1.5 | 0.1 | % | ||||||||
Total | $ | 150.2 | 23.7 | % | $ | 1,373.7 | 106.9 | % |
(shares in thousands) | Time-Based Shares | Performance- Based Shares | Total Shares | Weighted-Average Grant-Date Fair Value | |||||||||
for the six months ended March 31, 2018 | |||||||||||||
Nonvested balance at October 1, 2017 | 2,783 | 1,761 | 4,544 | $ | 37.23 | ||||||||
Granted | 2,243 | 714 | 2,957 | 42.76 | |||||||||
Vested | (140 | ) | (512 | ) | (652 | ) | 39.22 | ||||||
Forfeited/canceled | (146 | ) | (138 | ) | (284 | ) | 45.99 | ||||||
Nonvested Balance at March 31, 2018 | 4,740 | 1,825 | 6,565 | $ | 39.14 |
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Investment and Other Income, Net | ||||||||||||||||
Interest income | $ | 25.7 | $ | 16.0 | $ | 49.5 | $ | 29.6 | ||||||||
Dividend income | 8.7 | 2.7 | 13.4 | 5.1 | ||||||||||||
Gains on trading investment securities, net | 1.8 | 8.4 | 2.5 | 10.4 | ||||||||||||
Realized gains on sale of investment securities, available-for-sale | 2.1 | 2.3 | 2.1 | 2.9 | ||||||||||||
Realized losses on sale of investment securities, available-for-sale | (0.4 | ) | (0.5 | ) | (0.4 | ) | (1.2 | ) | ||||||||
Income from investments in equity method investees | 10.7 | 36.3 | 45.9 | 70.5 | ||||||||||||
Other-than-temporary impairment of investments | (0.1 | ) | — | (0.6 | ) | (0.3 | ) | |||||||||
Gains (losses) on investments of CIPs, net | 38.6 | 22.7 | 54.6 | (7.2 | ) | |||||||||||
Foreign currency exchange gains (losses), net | (7.8 | ) | (6.2 | ) | (10.7 | ) | 13.6 | |||||||||
Other, net | 8.1 | 2.9 | 12.4 | 7.3 | ||||||||||||
Total | 87.4 | 84.6 | 168.7 | 130.7 | ||||||||||||
Interest Expense | (10.0 | ) | (12.6 | ) | (20.8 | ) | (25.9 | ) | ||||||||
Other Income, Net | $ | 77.4 | $ | 72.0 | $ | 147.9 | $ | 104.8 |
(in millions) | Unrealized Gains on Investments | Currency Translation Adjustments | Unrealized Losses on Defined Benefit Plans | Total | ||||||||||||
for the three months ended March 31, 2018 | ||||||||||||||||
Balance at January 1, 2018 | $ | 5.7 | $ | (265.2 | ) | $ | (7.1 | ) | $ | (266.6 | ) | |||||
Adoption of new accounting guidance | — | — | (0.1 | ) | (0.1 | ) | ||||||||||
Other comprehensive income (loss) | ||||||||||||||||
Other comprehensive income before reclassifications, net of tax | 1.5 | 8.3 | 0.4 | 10.2 | ||||||||||||
Reclassifications to net investment and other income, net of tax | (1.7 | ) | (1.5 | ) | — | (3.2 | ) | |||||||||
Total other comprehensive income (loss) | (0.2 | ) | 6.8 | 0.4 | 7.0 | |||||||||||
Balance at March 31, 2018 | $ | 5.5 | $ | (258.4 | ) | $ | (6.8 | ) | $ | (259.7 | ) |
(in millions) | Unrealized Gains on Investments | Currency Translation Adjustments | Unrealized Losses on Defined Benefit Plans | Total | ||||||||||||
for the six months ended March 31, 2018 | ||||||||||||||||
Balance at October 1, 2017 | $ | 2.2 | $ | (281.0 | ) | $ | (6.0 | ) | $ | (284.8 | ) | |||||
Adoption of new accounting guidance | — | — | (0.1 | ) | (0.1 | ) | ||||||||||
Other comprehensive income (loss) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications, net of tax | 5.0 | 24.1 | (0.7 | ) | 28.4 | |||||||||||
Reclassifications to net investment and other income, net of tax | (1.7 | ) | (1.5 | ) | — | (3.2 | ) | |||||||||
Total other comprehensive income (loss) | 3.3 | 22.6 | (0.7 | ) | 25.2 | |||||||||||
Balance at March 31, 2018 | $ | 5.5 | $ | (258.4 | ) | $ | (6.8 | ) | $ | (259.7 | ) |
(in millions) | Unrealized Gains (Losses) on Investments | Currency Translation Adjustments | Unrealized Losses on Defined Benefit Plans | Total | ||||||||||||
for the three months ended March 31, 2017 | ||||||||||||||||
Balance at January 1, 2017 | $ | (2.4 | ) | $ | (407.3 | ) | $ | (8.1 | ) | $ | (417.8 | ) | ||||
Other comprehensive income | ||||||||||||||||
Other comprehensive income before reclassifications, net of tax | 6.6 | 39.2 | — | 45.8 | ||||||||||||
Reclassifications to net investment and other income, net of tax | (1.2 | ) | — | — | (1.2 | ) | ||||||||||
Total other comprehensive income | 5.4 | 39.2 | — | 44.6 | ||||||||||||
Balance at March 31, 2017 | $ | 3.0 | $ | (368.1 | ) | $ | (8.1 | ) | $ | (373.2 | ) |
(in millions) | Unrealized Gains on Investments | Currency Translation Adjustments | Unrealized Losses on Defined Benefit Plans | Total | ||||||||||||
for the six months ended March 31, 2017 | ||||||||||||||||
Balance at October 1, 2016 | $ | 6.8 | $ | (346.1 | ) | $ | (8.1 | ) | $ | (347.4 | ) | |||||
Adoption of new accounting guidance | (6.8 | ) | (0.3 | ) | — | (7.1 | ) | |||||||||
Other comprehensive income (loss) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications, net of tax | 4.0 | (21.7 | ) | — | (17.7 | ) | ||||||||||
Reclassifications to net investment and other income, net of tax | (1.0 | ) | — | — | (1.0 | ) | ||||||||||
Total other comprehensive income (loss) | 3.0 | (21.7 | ) | — | (18.7 | ) | ||||||||||
Balance at March 31, 2017 | $ | 3.0 | $ | (368.1 | ) | $ | (8.1 | ) | $ | (373.2 | ) |
Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | |||||||||||||||||||
(in millions, except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Operating revenues | $ | 1,617.8 | $ | 1,600.6 | 1 | % | $ | 3,233.3 | $ | 3,161.4 | 2 | % | ||||||||||
Operating income | 555.7 | 555.5 | 0 | % | 1,136.8 | 1,142.4 | 0 | % | ||||||||||||||
Net income (loss) attributable to Franklin Resources, Inc. | 443.2 | 420.7 | 5 | % | (140.1 | ) | 860.9 | NM | ||||||||||||||
Diluted earnings (loss) per share | $ | 0.78 | $ | 0.74 | 5 | % | $ | (0.29 | ) | $ | 1.52 | NM | ||||||||||
Operating margin 1 | 34.3 | % | 34.7 | % | 35.2 | % | 36.1 | % |
1 | Defined as operating income divided by total operating revenues. |
(in billions) | March 31, 2018 | March 31, 2017 | Percent Change | ||||||||
Equity | |||||||||||
Global/international | $ | 202.7 | $ | 204.9 | (1 | %) | |||||
United States | 106.6 | 105.3 | 1 | % | |||||||
Total equity | 309.3 | 310.2 | 0 | % | |||||||
Multi-Asset/Balanced | 137.6 | 141.9 | (3 | %) | |||||||
Fixed Income | |||||||||||
Tax-free | 67.0 | 71.5 | (6 | %) | |||||||
Taxable | |||||||||||
Global/international | 165.0 | 157.6 | 5 | % | |||||||
United States | 48.2 | 52.8 | (9 | %) | |||||||
Total fixed income | 280.2 | 281.9 | (1 | %) | |||||||
Cash Management | 10.4 | 6.0 | 73 | % | |||||||
Total | $ | 737.5 | $ | 740.0 | 0 | % |
(in billions) | Average AUM | Percent Change | Mix of Average AUM | ||||||||||||||
for the three months ended March 31, | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Equity | |||||||||||||||||
Global/international | $ | 210.9 | $ | 201.6 | 5 | % | 28 | % | 28 | % | |||||||
United States | 109.5 | 104.0 | 5 | % | 15 | % | 14 | % | |||||||||
Total equity | 320.4 | 305.6 | 5 | % | 43 | % | 42 | % | |||||||||
Multi-Asset/Balanced | 141.5 | 140.4 | 1 | % | 19 | % | 19 | % | |||||||||
Fixed Income | |||||||||||||||||
Tax-free | 68.0 | 71.7 | (5 | %) | 9 | % | 10 | % | |||||||||
Taxable | |||||||||||||||||
Global/international | 165.1 | 155.1 | 6 | % | 22 | % | 21 | % | |||||||||
United States | 49.2 | 52.7 | (7 | %) | 6 | % | 7 | % | |||||||||
Total fixed income | 282.3 | 279.5 | 1 | % | 37 | % | 38 | % | |||||||||
Cash Management | 7.6 | 6.2 | 23 | % | 1 | % | 1 | % | |||||||||
Total | $ | 751.8 | $ | 731.7 | 3 | % | 100 | % | 100 | % |
(in billions) | Average AUM | Percent Change | Mix of Average AUM | ||||||||||||||
for the six months ended March 31, | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Equity | |||||||||||||||||
Global/international | $ | 210.3 | $ | 199.7 | 5 | % | 28 | % | 28 | % | |||||||
United States | 109.0 | 102.8 | 6 | % | 14 | % | 14 | % | |||||||||
Total equity | 319.3 | 302.5 | 6 | % | 42 | % | 42 | % | |||||||||
Multi-Asset/Balanced | 142.1 | 138.6 | 3 | % | 19 | % | 19 | % | |||||||||
Fixed Income | |||||||||||||||||
Tax-free | 69.0 | 73.1 | (6 | %) | 9 | % | 10 | % | |||||||||
Taxable | |||||||||||||||||
Global/international | 164.8 | 155.3 | 6 | % | 22 | % | 21 | % | |||||||||
United States | 49.7 | 52.6 | (6 | %) | 7 | % | 7 | % | |||||||||
Total fixed income | 283.5 | 281.0 | 1 | % | 38 | % | 38 | % | |||||||||
Cash Management | 7.1 | 6.1 | 16 | % | 1 | % | 1 | % | |||||||||
Total | $ | 752.0 | $ | 728.2 | 3 | % | 100 | % | 100 | % |
(in billions) | Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Beginning AUM | $ | 753.8 | $ | 720.0 | 5 | % | $ | 753.2 | $ | 733.3 | 3 | % | ||||||||||
Long-term sales | 28.6 | 30.5 | (6 | %) | 56.7 | 55.0 | 3 | % | ||||||||||||||
Long-term redemptions | (41.7 | ) | (44.5 | ) | (6 | %) | (81.1 | ) | (91.2 | ) | (11 | %) | ||||||||||
Long-term net exchanges | (0.1 | ) | 0.1 | NM | (0.2 | ) | (0.3 | ) | (33 | %) | ||||||||||||
Long-term reinvested distributions | 3.2 | 2.9 | 10 | % | 12.3 | 11.1 | 11 | % | ||||||||||||||
Net flows | (10.0 | ) | (11.0 | ) | (9 | %) | (12.3 | ) | (25.4 | ) | (52 | %) | ||||||||||
Net market change, distributions and other | (6.3 | ) | 31.0 | NM | (3.4 | ) | 32.1 | NM | ||||||||||||||
Ending AUM | $ | 737.5 | $ | 740.0 | 0 | % | $ | 737.5 | $ | 740.0 | 0 | % |
(in billions) | Equity | Multi-Asset/Balanced | Fixed Income | Cash Management | Total | |||||||||||||||||||||||||||
for the three months ended March 31, 2018 | Global/ International | United States | Tax-Free | Taxable Global/ International | Taxable United States | |||||||||||||||||||||||||||
AUM at January 1, 2018 | $ | 212.0 | $ | 109.4 | $ | 142.7 | $ | 69.4 | $ | 163.7 | $ | 50.0 | $ | 6.6 | $ | 753.8 | ||||||||||||||||
Long-term sales | 6.6 | 4.1 | 4.0 | 1.7 | 10.3 | 1.9 | — | 28.6 | ||||||||||||||||||||||||
Long-term redemptions | (11.6 | ) | (6.7 | ) | (6.3 | ) | (3.1 | ) | (11.0 | ) | (3.0 | ) | — | (41.7 | ) | |||||||||||||||||
Long-term net exchanges | 0.1 | 0.1 | — | (0.2 | ) | (0.1 | ) | — | — | (0.1 | ) | |||||||||||||||||||||
Long-term reinvested distributions | 0.4 | — | 1.2 | 0.5 | 0.9 | 0.2 | — | 3.2 | ||||||||||||||||||||||||
Net flows | (4.5 | ) | (2.5 | ) | (1.1 | ) | (1.1 | ) | 0.1 | (0.9 | ) | — | (10.0 | ) | ||||||||||||||||||
Net market change, distributions and other | (4.8 | ) | (0.3 | ) | (4.0 | ) | (1.3 | ) | 1.2 | (0.9 | ) | 3.8 | (6.3 | ) | ||||||||||||||||||
AUM at March 31, 2018 | $ | 202.7 | $ | 106.6 | $ | 137.6 | $ | 67.0 | $ | 165.0 | $ | 48.2 | $ | 10.4 | $ | 737.5 |
(in billions) | Equity | Multi-Asset/Balanced | Fixed Income | Cash Management | Total | |||||||||||||||||||||||||||
for the three months ended March 31, 2017 | Global/ International | United States | Tax-Free | Taxable Global/ International | Taxable United States | |||||||||||||||||||||||||||
AUM at January 1, 2017 | $ | 196.7 | $ | 101.6 | $ | 138.3 | $ | 71.7 | $ | 153.6 | $ | 51.9 | $ | 6.2 | $ | 720.0 | ||||||||||||||||
Long-term sales | 6.9 | 4.3 | 4.2 | 1.9 | 9.0 | 4.2 | — | 30.5 | ||||||||||||||||||||||||
Long-term redemptions | (13.8 | ) | (6.4 | ) | (6.0 | ) | (2.8 | ) | (11.6 | ) | (3.9 | ) | — | (44.5 | ) | |||||||||||||||||
Long-term net exchanges | — | 0.1 | 0.2 | — | (0.2 | ) | — | — | 0.1 | |||||||||||||||||||||||
Long-term reinvested distributions | 0.2 | 0.1 | 1.1 | 0.5 | 0.8 | 0.2 | — | 2.9 | ||||||||||||||||||||||||
Net flows | (6.7 | ) | (1.9 | ) | (0.5 | ) | (0.4 | ) | (2.0 | ) | 0.5 | — | (11.0 | ) | ||||||||||||||||||
Net market change, distributions and other | 14.9 | 5.6 | 4.1 | 0.2 | 6.0 | 0.4 | (0.2 | ) | 31.0 | |||||||||||||||||||||||
AUM at March 31, 2017 | $ | 204.9 | $ | 105.3 | $ | 141.9 | $ | 71.5 | $ | 157.6 | $ | 52.8 | $ | 6.0 | $ | 740.0 |
(in billions) | Equity | Multi-Asset/Balanced | Fixed Income | Cash Management | Total | |||||||||||||||||||||||||||
for the six months ended March 31, 2018 | Global/ International | United States | Tax-Free | Taxable Global/ International | Taxable United States | |||||||||||||||||||||||||||
AUM at October 1, 2017 | $ | 209.8 | $ | 107.2 | $ | 143.3 | $ | 71.0 | $ | 165.0 | $ | 50.6 | $ | 6.3 | $ | 753.2 | ||||||||||||||||
Long-term sales | 12.5 | 7.7 | 7.5 | 3.2 | 21.4 | 4.4 | — | 56.7 | ||||||||||||||||||||||||
Long-term redemptions | (23.2 | ) | (12.2 | ) | (12.1 | ) | (6.3 | ) | (21.2 | ) | (6.1 | ) | — | (81.1 | ) | |||||||||||||||||
Long-term net exchanges | 0.2 | 0.1 | 0.1 | (0.4 | ) | (0.4 | ) | 0.2 | — | (0.2 | ) | |||||||||||||||||||||
Long-term reinvested distributions | 2.4 | 3.4 | 2.9 | 1.0 | 2.1 | 0.5 | — | 12.3 | ||||||||||||||||||||||||
Net flows | (8.1 | ) | (1.0 | ) | (1.6 | ) | (2.5 | ) | 1.9 | (1.0 | ) | — | (12.3 | ) | ||||||||||||||||||
Net market change, distributions and other | 1.0 | 0.4 | (4.1 | ) | (1.5 | ) | (1.9 | ) | (1.4 | ) | 4.1 | (3.4 | ) | |||||||||||||||||||
AUM at March 31, 2018 | $ | 202.7 | $ | 106.6 | $ | 137.6 | $ | 67.0 | $ | 165.0 | $ | 48.2 | $ | 10.4 | $ | 737.5 |
(in billions) | Equity | Multi-Asset/Balanced | Fixed Income | Cash Management | Total | |||||||||||||||||||||||||||
for the six months ended March 31, 2017 | Global/ International | United States | Tax-Free | Taxable Global/ International | Taxable United States | |||||||||||||||||||||||||||
AUM at October 1, 2016 | $ | 200.4 | $ | 103.3 | $ | 137.4 | $ | 76.5 | $ | 156.2 | $ | 53.4 | $ | 6.1 | $ | 733.3 | ||||||||||||||||
Long-term sales | 12.8 | 8.0 | 8.2 | 4.1 | 15.1 | 6.8 | — | 55.0 | ||||||||||||||||||||||||
Long-term redemptions | (24.5 | ) | (13.9 | ) | (12.7 | ) | (6.5 | ) | (25.8 | ) | (7.8 | ) | — | (91.2 | ) | |||||||||||||||||
Long-term net exchanges | (0.2 | ) | 0.3 | 0.3 | (0.5 | ) | (0.4 | ) | 0.2 | — | (0.3 | ) | ||||||||||||||||||||
Long-term reinvested distributions | 2.3 | 3.2 | 2.5 | 1.0 | 1.6 | 0.5 | — | 11.1 | ||||||||||||||||||||||||
Net flows | (9.6 | ) | (2.4 | ) | (1.7 | ) | (1.9 | ) | (9.5 | ) | (0.3 | ) | — | (25.4 | ) | |||||||||||||||||
Net market change, distributions and other | 14.1 | 4.4 | 6.2 | (3.1 | ) | 10.9 | (0.3 | ) | (0.1 | ) | 32.1 | |||||||||||||||||||||
AUM at March 31, 2017 | $ | 204.9 | $ | 105.3 | $ | 141.9 | $ | 71.5 | $ | 157.6 | $ | 52.8 | $ | 6.0 | $ | 740.0 |
Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | |||||||||||||||||||
(in billions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
United States | $ | 494.1 | $ | 496.5 | 0 | % | $ | 496.5 | $ | 494.8 | 0 | % | ||||||||||
International | ||||||||||||||||||||||
Europe, Middle East and Africa | 110.8 | 102.2 | 8 | % | 109.9 | 101.8 | 8 | % | ||||||||||||||
Asia-Pacific | 97.7 | 84.8 | 15 | % | 96.1 | 83.8 | 15 | % | ||||||||||||||
Canada | 31.2 | 30.9 | 1 | % | 31.5 | 30.7 | 3 | % | ||||||||||||||
Latin America 1 | 18.0 | 17.3 | 4 | % | 18.0 | 17.1 | 5 | % | ||||||||||||||
Total international | 257.7 | 235.2 | 10 | % | 255.5 | 233.4 | 9 | % | ||||||||||||||
Total | $ | 751.8 | $ | 731.7 | 3 | % | $ | 752.0 | $ | 728.2 | 3 | % |
1 | Latin America sales region includes North America-based advisers serving non-resident clients. |
Benchmark Comparison 1,2 | Peer Group Comparison 1,3 | |||||||||||||||||||||||
% of AUM Exceeding Benchmark | % of AUM in Top Two Peer Group Quartiles | |||||||||||||||||||||||
as of March 31, 2018 | 1-Year | 3-Year | 5-Year | 10-Year | 1-Year | 3-Year | 5-Year | 10-Year | ||||||||||||||||
Equity | ||||||||||||||||||||||||
Global/international | 15 | % | 14 | % | 16 | % | 33 | % | 25 | % | 27 | % | 47 | % | 46 | % | ||||||||
United States | 51 | % | 43 | % | 22 | % | 28 | % | 37 | % | 56 | % | 43 | % | 76 | % | ||||||||
Total equity | 28 | % | 25 | % | 19 | % | 31 | % | 30 | % | 38 | % | 45 | % | 59 | % | ||||||||
Multi-Asset/Balanced | 9 | % | 10 | % | 11 | % | 11 | % | 6 | % | 8 | % | 10 | % | 86 | % | ||||||||
Fixed Income | ||||||||||||||||||||||||
Tax-free | 4 | % | 29 | % | 29 | % | 39 | % | 11 | % | 42 | % | 41 | % | 70 | % | ||||||||
Taxable | ||||||||||||||||||||||||
Global/international | 20 | % | 19 | % | 46 | % | 80 | % | 15 | % | 17 | % | 68 | % | 97 | % | ||||||||
United States | 30 | % | 26 | % | 45 | % | 59 | % | 0 | % | 12 | % | 12 | % | 28 | % | ||||||||
Total fixed income | 17 | % | 23 | % | 41 | % | 64 | % | 11 | % | 24 | % | 50 | % | 76 | % |
1 | AUM measured in the benchmark and peer group rankings represents 88% and 81% of our total AUM as of March 31, 2018. |
2 | The benchmark comparisons are based on each fund’s return as compared to a market index that has been selected to be generally consistent with the investment objectives of the fund. |
3 | The peer group rankings are sourced from either Lipper, a Thomson Reuters Company, Morningstar or eVestment in each fund’s market and were based on an absolute ranking of returns. © 2018 Morningstar, Inc. All rights reserved. The information herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
(in millions) | Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Investment management fees | $ | 1,117.1 | $ | 1,089.2 | 3 | % | $ | 2,230.7 | $ | 2,152.4 | 4 | % | ||||||||||
Sales and distribution fees | 409.8 | 431.2 | (5 | %) | 827.6 | 850.5 | (3 | %) | ||||||||||||||
Shareholder servicing fees | 61.3 | 56.4 | 9 | % | 116.2 | 113.0 | 3 | % | ||||||||||||||
Other | 29.6 | 23.8 | 24 | % | 58.8 | 45.5 | 29 | % | ||||||||||||||
Total Operating Revenues | $ | 1,617.8 | $ | 1,600.6 | 1 | % | $ | 3,233.3 | $ | 3,161.4 | 2 | % |
(in millions) | Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Asset-based fees | $ | 331.5 | $ | 332.2 | 0 | % | $ | 672.3 | $ | 670.5 | 0 | % | ||||||||||
Sales-based fees | 73.5 | 96.6 | (24 | %) | 147.8 | 175.4 | (16 | %) | ||||||||||||||
Contingent sales charges | 4.8 | 2.4 | 100 | % | 7.5 | 4.6 | 63 | % | ||||||||||||||
Sales and Distribution Fees | $ | 409.8 | $ | 431.2 | (5 | %) | $ | 827.6 | $ | 850.5 | (3 | %) |
Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | |||||||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Sales, distribution and marketing | $ | 521.5 | $ | 534.8 | (2 | %) | $ | 1,050.2 | $ | 1,054.8 | 0 | % | ||||||||||
Compensation and benefits | 355.5 | 343.4 | 4 | % | 688.0 | 654.9 | 5 | % | ||||||||||||||
Information systems and technology | 58.1 | 54.0 | 8 | % | 113.1 | 105.7 | 7 | % | ||||||||||||||
Occupancy | 34.1 | 29.0 | 18 | % | 63.5 | 58.1 | 9 | % | ||||||||||||||
General, administrative and other | 92.9 | 83.9 | 11 | % | 181.7 | 145.5 | 25 | % | ||||||||||||||
Total Operating Expenses | $ | 1,062.1 | $ | 1,045.1 | 2 | % | $ | 2,096.5 | $ | 2,019.0 | 4 | % |
Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | |||||||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Asset-based expenses | $ | 431.2 | $ | 429.6 | 0 | % | $ | 871.8 | $ | 861.4 | 1 | % | ||||||||||
Sales-based expenses | 68.9 | 87.9 | (22 | %) | 137.9 | 159.0 | (13 | %) | ||||||||||||||
Amortization of deferred sales commissions | 21.4 | 17.3 | 24 | % | 40.5 | 34.4 | 18 | % | ||||||||||||||
Sales, Distribution and Marketing | $ | 521.5 | $ | 534.8 | (2 | %) | $ | 1,050.2 | $ | 1,054.8 | 0 | % |
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net carrying value at beginning of period | $ | 105.9 | $ | 96.1 | $ | 102.1 | $ | 88.1 | ||||||||
Additions, net of disposals | 12.9 | 14.4 | 28.9 | 34.9 | ||||||||||||
Amortization | (11.9 | ) | (14.1 | ) | (24.1 | ) | (26.6 | ) | ||||||||
Net Carrying Value at End of Period | $ | 106.9 | $ | 96.4 | $ | 106.9 | $ | 96.4 |
Three Months Ended March 31, | Percent Change | Six Months Ended March 31, | Percent Change | |||||||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Investment and other income, net | $ | 87.4 | $ | 84.6 | 3 | % | $ | 168.7 | $ | 130.7 | 29 | % | ||||||||||
Interest expense | (10.0 | ) | (12.6 | ) | (21 | %) | (20.8 | ) | (25.9 | ) | (20 | %) | ||||||||||
Other Income, Net | $ | 77.4 | $ | 72.0 | 8 | % | $ | 147.9 | $ | 104.8 | 41 | % |
Accounting Classification 1 | Total Direct Portfolio | |||||||||||||||||||
(in millions) | Cash and Cash Equivalents and Other 2 | Trading Investments | Equity Method Investments | Direct Investments in CIPs | ||||||||||||||||
Cash and Cash Equivalents | $ | 8,545.4 | $ | — | $ | — | $ | — | $ | 8,545.4 | ||||||||||
Investments | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Global/international | 59.8 | 15.4 | 761.9 | 223.3 | 1,060.4 | |||||||||||||||
United States | 17.5 | 5.3 | — | 3.7 | 26.5 | |||||||||||||||
Total equity | 77.3 | 20.7 | 761.9 | 227.0 | 1,086.9 | |||||||||||||||
Multi-Asset/Balanced | 9.2 | 5.3 | 18.4 | 197.7 | 230.6 | |||||||||||||||
Fixed Income | ||||||||||||||||||||
Tax-free | 0.1 | — | 5.0 | — | 5.1 | |||||||||||||||
Taxable | ||||||||||||||||||||
Global/international | 64.7 | 263.5 | 257.7 | 567.4 | 1,153.3 | |||||||||||||||
United States | 35.1 | 60.1 | — | 336.8 | 432.0 | |||||||||||||||
Total fixed income | 99.9 | 323.6 | 262.7 | 904.2 | 1,590.4 | |||||||||||||||
Total investments | 186.4 | 349.6 | 1,043.0 | 1,328.9 | 2,907.9 | |||||||||||||||
Total Cash and Cash Equivalents and Investments | $ | 8,731.8 | $ | 349.6 | $ | 1,043.0 | $ | 1,328.9 | $ | 11,453.3 |
1 | See Note 1 – Significant Accounting Policies in the notes to consolidated financial statements in Item 8 of Part II of our Form 10-K for fiscal year 2017 for information on investment accounting classifications. |
2 | Other consists of $87.7 million of available-for-sale investments and $12.2 million of investments in life settlement contracts, both of which are measured at fair value, and $86.5 million of investments carried at cost. |
Six Months Ended March 31, | ||||||||
(in millions) | 2018 | 2017 | ||||||
Cash Flow Data | ||||||||
Operating cash flows | $ | 897.0 | $ | 614.3 | ||||
Investing cash flows | (181.5 | ) | 74.1 | |||||
Financing cash flows | (764.5 | ) | (361.8 | ) |
(in millions) | March 31, 2018 | September 30, 2017 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 8,545.4 | $ | 8,523.3 | ||||
Receivables | 765.4 | 767.8 | ||||||
Investments | 1,935.4 | 1,995.2 | ||||||
Total Liquid Assets | $ | 11,246.2 | $ | 11,286.3 | ||||
Liability | ||||||||
Debt | $ | 1,044.8 | $ | 1,044.2 |
Month | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
January 2018 | 1,066,623 | $ | 43.79 | 1,066,623 | 25,917,470 | ||||||||
February 2018 | 3,992,615 | 39.42 | 3,992,615 | 21,924,855 | |||||||||
March 2018 | 6,011,585 | 38.01 | 6,011,585 | 15,913,270 | |||||||||
Total | 11,070,823 | 11,070,823 |
Exhibit No. | Description | ||
3(i)(a) | |||
3(i)(b) | |||
3(i)(c) | |||
3(i)(d) | |||
3(i)(e) | |||
3(ii) | |||
10.1 | |||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
101 | The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, and (v) related notes (filed herewith) |
FRANKLIN RESOURCES, INC. | ||||
Date: | April 26, 2018 | By: | /S/ KENNETH A. LEWIS | |
Kenneth A. Lewis | ||||
Chief Financial Officer and Executive Vice President | ||||
(Duly Authorized Officer and Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Franklin Resources, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | April 26, 2018 | /s/ GREGORY E. JOHNSON | |
Gregory E. Johnson | |||
Chairman of the Board and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Franklin Resources, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | April 26, 2018 | /s/ KENNETH A. LEWIS | |
Kenneth A. Lewis | |||
Chief Financial Officer and Executive Vice President |
1. | The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
Date: | April 26, 2018 | /s/ GREGORY E. JOHNSON | |
Gregory E. Johnson | |||
Chairman of the Board and Chief Executive Officer |
1. | The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
Date: | April 26, 2018 | /s/ KENNETH A. LEWIS | |
Kenneth A. Lewis | |||
Chief Financial Officer and Executive Vice President |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 19, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Franklin Resources Inc | |
Entity Central Index Key | 0000038777 | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 540,208,274 |
Consolidated Statements of Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Operating Revenues | ||||
Investment management fees | $ 1,117.1 | $ 1,089.2 | $ 2,230.7 | $ 2,152.4 |
Sales and distribution fees | 409.8 | 431.2 | 827.6 | 850.5 |
Shareholder servicing fees | 61.3 | 56.4 | 116.2 | 113.0 |
Other | 29.6 | 23.8 | 58.8 | 45.5 |
Total operating revenues | 1,617.8 | 1,600.6 | 3,233.3 | 3,161.4 |
Operating Expenses | ||||
Sales, distribution and marketing | 521.5 | 534.8 | 1,050.2 | 1,054.8 |
Compensation and benefits | 355.5 | 343.4 | 688.0 | 654.9 |
Information systems and technology | 58.1 | 54.0 | 113.1 | 105.7 |
Occupancy | 34.1 | 29.0 | 63.5 | 58.1 |
General, administrative and other | 92.9 | 83.9 | 181.7 | 145.5 |
Total operating expenses | 1,062.1 | 1,045.1 | 2,096.5 | 2,019.0 |
Operating Income | 555.7 | 555.5 | 1,136.8 | 1,142.4 |
Other Income (Expenses) | ||||
Investment and other income, net | 87.4 | 84.6 | 168.7 | 130.7 |
Interest expense | (10.0) | (12.6) | (20.8) | (25.9) |
Other income, net | 77.4 | 72.0 | 147.9 | 104.8 |
Income before taxes | 633.1 | 627.5 | 1,284.7 | 1,247.2 |
Taxes on income | 150.2 | 192.5 | 1,373.7 | 393.4 |
Net income (loss) | 482.9 | 435.0 | (89.0) | 853.8 |
Less: net income (loss) attributable to | ||||
Nonredeemable noncontrolling interests | 24.5 | (6.0) | 24.4 | (3.9) |
Redeemable noncontrolling interests | 15.2 | 20.3 | 26.7 | (3.2) |
Net Income (Loss) Attributable to Franklin Resources, Inc. | $ 443.2 | $ 420.7 | $ (140.1) | $ 860.9 |
Earnings (Loss) per Share | ||||
Basic | $ 0.79 | $ 0.74 | $ (0.29) | $ 1.52 |
Diluted | 0.78 | 0.74 | (0.29) | 1.52 |
Dividends Declared per Share | $ 3.23 | $ 0.2 | $ 3.46 | $ 0.4 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income (Loss) | $ 482.9 | $ 435.0 | $ (89.0) | $ 853.8 |
Other Comprehensive Income (Loss) | ||||
Net unrealized gains (losses) on investments, net of tax | (0.2) | 5.4 | 3.3 | 3.0 |
Currency translation adjustments, net of tax | 6.8 | 39.2 | 22.6 | (21.7) |
Net unrealized gains (losses) on defined benefit plans, net of tax | 0.4 | 0.0 | (0.7) | 0.0 |
Total other comprehensive income (loss) | 7.0 | 44.6 | 25.2 | (18.7) |
Total comprehensive income (loss) | 489.9 | 479.6 | (63.8) | 835.1 |
Less: comprehensive income (loss) attributable to | ||||
Nonredeemable noncontrolling interests | 24.5 | (6.0) | 24.4 | (3.9) |
Redeemable noncontrolling interests | 15.2 | 20.3 | 26.7 | (3.2) |
Comprehensive Income (Loss) Attributable to Franklin Resources, Inc. | $ 450.2 | $ 465.3 | $ (114.9) | $ 842.2 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Investments, at fair value | $ 449.5 | $ 440.0 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.1 | $ 0.1 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 541,695,819 | 554,865,343 |
Common stock, shares outstanding | 541,695,819 | 554,865,343 |
Basis of Presentation |
6 Months Ended |
---|---|
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited interim financial statements of Franklin Resources, Inc. and its consolidated subsidiaries (collectively, the “Company”) included herein have been prepared by the Company in accordance with the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission. 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. These financial statements should be read together with the Company’s audited financial statements included in its Form 10-K for the fiscal year ended September 30, 2017 (“fiscal year 2017”). Certain comparative amounts for the prior fiscal year period have been reclassified to conform to the financial statement presentation as of and for the period ended March 31, 2018. |
New Accounting Guidance |
6 Months Ended |
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Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Guidance | New Accounting Guidance Recently Adopted Accounting Guidance On October 1, 2017, the Company adopted an amendment to the existing stock-based compensation guidance issued by the Financial Accounting Standards Board (“FASB”). The amendment requires all income tax effects of stock-based awards to be recognized as income tax expense when the awards vest or settle and clarifies the classification of these transactions within the statement of cash flows. The amendment also provides an election to account for forfeitures as they occur, which the Company made using the modified retrospective approach which did not require the restatement of prior-year periods and did not result in a material impact on retained earnings. The income tax effect and statement of cash flow changes were adopted on a prospective basis. The adoption of the amendment will increase the volatility of income tax expense as a result of fluctuations in the Company’s stock price. Accounting Guidance Not Yet Adopted The FASB issued new guidance in May 2014 that requires use of a single principles-based model for recognition of revenue from contracts with customers. The core principle of the model is that revenue is recognized upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration to be received for the goods or services. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. The guidance is effective for the Company on October 1, 2018 and allows for either a full retrospective or modified approach at adoption. While the Company’s implementation efforts are ongoing, it does not expect adoption of the guidance to have a significant impact on the timing of recognition for substantially all of its operating revenue or the accounting for its contract costs. The Company continues to assess certain arrangements to determine whether it continues to act as a principal and present the related revenue gross of associated expenses. The overall impact upon adoption may differ based on further evaluation of the Company’s arrangements and other facts and circumstances identified during implementation. The Company has not yet determined its transition approach. There were no other significant updates to the new accounting guidance not yet adopted by the Company as disclosed in its Form 10-K for fiscal year 2017. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ Equity | Stockholders’ Equity Changes in total stockholders’ equity were as follows:
During the three and six months ended March 31, 2018, the Company repurchased 11.1 million and 15.7 million shares of its common stock at a cost of $432.6 million and $632.6 million under its stock repurchase program. At March 31, 2018, 15.9 million shares remained available for repurchase under the program, which is not subject to an expiration date. On April 11, 2018, the Company’s Board of Directors authorized the Company to repurchase, from time to time, up to an additional 80.0 million shares of its common stock in either open market or private transactions. Shares repurchased under the stock repurchase program are retired. During the three and six months ended March 31, 2017, the Company repurchased 4.0 million and 11.1 million shares of its common stock at a cost of $166.8 million and $428.5 million. |
Earnings (Loss) per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) per Share | Earnings (Loss) per Share The components of basic and diluted earnings (loss) per share were as follows:
Nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings (loss) per share because their effect would have been antidilutive were insignificant and 1.9 million for the three and six months ended March 31, 2018, and 0.2 million and 0.7 million for the three and six months ended March 31, 2017. |
Investments |
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Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments The disclosures below include details of the Company’s investments, excluding those of consolidated investment products. See Note 7 – Consolidated Investment Products for information related to the investments held by these entities. Investments consisted of the following:
Debt and other equity trading securities consist primarily of corporate debt. Investment securities with aggregate carrying amounts of $1.2 million and $0.8 million were pledged as collateral at March 31, 2018 and September 30, 2017. Gross unrealized gains and losses relating to investment securities, available-for-sale were as follows:
Gross unrealized losses relating to investment securities, available-for-sale aggregated by length of time that individual securities have been in a continuous unrealized loss position were as follows:
The Company recognized $0.1 million and $0.6 million of other-than-temporary impairment during the three and six months ended March 31, 2018. During the six months ended March 31, 2017, the Company recognized $0.3 million of other-than-temporary impairment, none of which was recognized during the three months ended March 31, 2017. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The disclosures below include details of the Company’s fair value measurements, excluding those of consolidated investment products. See Note 7 – Consolidated Investment Products for information related to fair value measurements of the assets and liabilities of these entities. The assets and liability measured at fair value on a recurring basis were as follows:
Level 1 assets consist primarily of sponsored funds and other equity securities for which the fair values are based on published net asset values or quoted market prices. Level 2 assets consist of debt and equity securities for which the fair values are determined using independent third-party broker or dealer price quotes. Level 3 assets consist of corporate debt securities for which the fair value is determined using market pricing, and other debt securities and life settlement contracts for which the fair values are based on discounted cash flows using significant unobservable inputs. The fair value of the contingent consideration liability is determined using an income-based method which considers the net present value of anticipated future cash flows. Transfers into Level 2 from Level 1 were $0.5 million for the three and six months ended March 31, 2018, and related to securities for which the quoted market prices were adjusted as of March 31, 2018 due to significant price changes in U.S.-traded market proxies resulting from global market volatility. The adjustments were made after the close of foreign markets and were based on third-party factors derived from model-based valuation techniques for which the significant assumptions were observable in the market. There were no transfers into Level 1 from Level 2, or into or out of Level 3, during the six months ended March 31, 2018. There were no transfers between Level 1 and Level 2, or into Level 3, during the six months ended March 31, 2017. Changes in the Level 3 assets and liabilities were as follows:
Valuation techniques and significant unobservable inputs used in the Level 3 fair value measurements were as follows:
For investment securities, trading – debt and other equity securities using the market pricing technique, a significant increase (decrease) in the redemption price in isolation would result in a significantly higher (lower) fair value measurement, while a significant increase (decrease) in the discount rate in isolation would result in a significantly lower (higher) fair value measurement. For investment securities, trading – debt and other equity securities using the discounted cash flow technique, a significant increase (decrease) in the discount rate or risk premium in isolation would result in a significantly lower (higher) fair value measurement. For life settlement contracts, a significant increase (decrease) in the life expectancy or the discount rate in isolation would result in a significantly lower (higher) fair value measurement. For the contingent consideration liability, a significant increase (decrease) in the assets under management (“AUM”) growth rate, or decrease (increase) in the discount rate, in isolation would result in a significantly higher (lower) fair value measurement. Financial instruments that were not measured at fair value were as follows:
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Consolidated Investment Products |
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Consolidated Investment Products [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Investment Products | Consolidated Investment Products Consolidated investment products (“CIPs”) consist of mutual and other investment funds, limited partnerships and similar structures, substantially all of which are sponsored by the Company, and include both voting interest entities and variable interest entities. The Company had 54 and 58 CIPs as of March 31, 2018 and September 30, 2017. The balances related to CIPs included in the Company’s consolidated balance sheets were as follows:
The CIPs did not have a significant impact on net income (loss) attributable to the Company during the three and six months ended March 31, 2018 and 2017. The Company has no right to the CIPs’ assets, other than its direct equity investments in them and investment management 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. Investment products are typically consolidated when the Company makes an initial investment in a newly launched investment entity. They are typically deconsolidated when the Company no longer has a controlling financial interest due to redemptions of its investment or increases in third-party investments. The Company’s investments in these products subsequent to deconsolidation are accounted for as trading or available-for-sale investment securities, or equity method or cost method investments depending on the structure of the product and the Company’s role and level of ownership. Investments Investments of CIPs consisted of the following:
Investment securities, trading consist of debt and equity securities that are traded in active markets. Other equity securities consist of equity securities of entities in emerging markets and fund products. Other debt securities consist of debt securities of entities in emerging markets. Fair Value Measurements Assets and liabilities of CIPs measured at fair value on a recurring basis were as follows:
Level 1 assets consist of equity and debt securities for which the fair values are based on quoted market prices. Level 2 assets consist of debt and equity securities for which the fair values are determined using independent third-party broker or dealer price quotes. Level 3 assets consist of equity and debt securities of entities in emerging markets for which the fair values are determined using significant unobservable inputs in either a market-based or income-based approach. The fair value of other liabilities, which consist of short positions in debt and equity securities, is determined based on the fair value of the underlying securities using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices are not available. Transfers into Level 2 from Level 1 were $3.5 million for the three and six months ended March 31, 2018, and related to securities for which the quoted market prices were adjusted as of March 31, 2018 due to significant price changes in U.S.-traded market proxies resulting from global market volatility. The impacted securities trade in 11 different countries in Asia-Pacific, Europe and Latin America. The adjustments were made after the close of the foreign markets and were based on third-party factors derived from model-based valuation techniques for which the significant assumptions were observable in the market. There were no transfers into Level 1 from Level 2 during the six months ended March 31, 2018, and there were no transfers between Level 1 and Level 2 during the six months ended March 31, 2017. There were no transfers into or out of Level 3 during the six months ended March 31, 2018 and 2017. Investments for which fair value was estimated using reported net asset value (“NAV”) as a practical expedient consisted of nonredeemable real estate and private equity funds. These investments are expected to be returned through distributions as a result of liquidations of the funds’ underlying assets over a weighted-average period of 4.0 years and 4.4 years at March 31, 2018 and September 30, 2017. The CIPs’ unfunded commitments to these funds totaled $1.9 million, of which the Company was contractually obligated to fund $0.4 million based on its ownership percentage in the CIPs, at both March 31, 2018 and September 30, 2017. Changes in Level 3 assets were as follows:
Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:
For securities using the market comparable companies valuation technique, a significant increase (decrease) in the EBITDA multiple in isolation would result in a significantly higher (lower) fair value measurement. For securities using the discounted cash flow valuation technique, a significant increase (decrease) in the discount rate or risk premium in isolation would result in a significantly lower (higher) fair value measurement. For securities using the comparable trading multiple valuation technique, a significant increase (decrease) in the price to earnings ratio or enterprise value/EBITDA multiple in isolation would result in a significantly higher (lower) fair value measurement. For securities using the market pricing valuation technique, a significant increase (decrease) in the private sale pricing or price to earnings ratio in isolation would result in a significantly higher (lower) fair value measurement. Financial instruments of CIPs that were not measured at fair value were as follows:
Debt Debt of CIPs totaled $34.0 million and $53.4 million at March 31, 2018 and September 30, 2017. The debt had fixed and floating interest rates ranging from 3.07% to 7.13% with a weighted-average effective interest rate of 6.25% at March 31, 2018, and from 2.84% to 6.75% with a weighted-average effective interest rate of 5.15% at September 30, 2017. The debt carried at March 31, 2018 matures in fiscal year 2019. Redeemable Noncontrolling Interests Changes in redeemable noncontrolling interests of CIPs were as follows:
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Nonconsolidated Variable Interest Entities |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonconsolidated Variable Interest Entities | Nonconsolidated Variable Interest Entities 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 investment management fee receivables and equity investments as follows:
While the Company has no contractual obligation to do so, it routinely makes cash investments in the course of launching sponsored funds. 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 during the six months ended March 31, 2018 or fiscal year 2017. |
Taxes on Income |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes on Income | Taxes on Income The Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law in the U.S. on December 22, 2017. The Tax Act includes various changes to the tax law, including a permanent reduction in the corporate income tax rate. The Tax Act imposes a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiaries’ earnings. During the quarter ended December 31, 2017, the Company recognized an estimated transition tax expense of $1,120.7 million based on information then available. During the three months ended March 31, 2018, the Company decreased this estimate by $0.5 million as a result of additional technical guidance from the Department of Treasury and information that became available during the quarter. The expense may be further adjusted in future quarters upon issuance of additional technical guidance, legislative updates from states on tax reform, and the completion of the Company’s tax return filings. The federal portion of the transition tax liability, estimated to be $1,101.0 million, will be paid over eight years beginning in January 2019, with 8% of the liability payable in each of the first five years, 15% in year six, 20% in year seven and 25% in year eight. The Tax Act reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. The Company’s federal statutory rate for the fiscal year ending September 30, 2018 is a blended rate of 24.5%, based on the pre- and post-Tax Act rates, and will be 21% for future fiscal years. During the quarter ended December 31, 2017, the Company recognized the estimated related changes in its deferred tax assets and deferred tax liabilities, which resulted in a $35.7 million decrease in deferred tax assets, an $88.8 million decrease in deferred tax liabilities and a $53.1 million net tax benefit. During the three months ended March 31, 2018, the estimated net tax benefit increased by $0.5 million, and may be further revised in future quarters as the related temporary differences are realized or settled. Also during the three months ended March 31, 2018, the Company reclassified $0.1 million from accumulated other comprehensive loss to retained earnings related to stranded tax effects resulting from the change in tax rate. Deferred tax assets and deferred tax liabilities were as follows:
Deferred income tax assets and liabilities that relate to the same tax jurisdiction are presented net on the consolidated balance sheets. The components of the net deferred tax liability were classified in the consolidated balance sheets as follows:
Prior to the Tax Act, the Company indefinitely reinvested the undistributed earnings of all its foreign subsidiaries, except for income previously taxed in the U.S. or subject to regulatory or legal repatriation restrictions or requirements. The Company is currently reconsidering its repatriation policy in light of the changes contained in the Tax Act. The Company’s effective income tax rate was 23.7% and 106.9% for the three and six months ended March 31, 2018, and is expected to be approximately 70% for the full fiscal year 2018. Taxes on income and the related impacts on the effective income tax rate were as follows:
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Commitments and Contingencies |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings On July 28, 2016, a former employee filed a class action lawsuit captioned Cryer v. Franklin Resources, Inc., et al. in the United States District Court for the Northern District of California against Franklin, the Franklin Templeton 401(k) Retirement Plan (“Plan”) Investment Committee (“Investment Committee”), and unnamed Investment Committee members. The plaintiff asserts a claim for breach of fiduciary duty under the Employee Retirement Income Security Act (“ERISA”), alleging that the defendants selected mutual funds sponsored and managed by the Company (the “Funds”) as investment options for the Plan when allegedly lower-cost and better performing non-proprietary investment vehicles were available. The plaintiff also claims that the total Plan costs, inclusive of investment management and administrative fees, are excessive. The plaintiff alleges that Plan losses exceed $79.0 million and seeks, among other things, damages, disgorgement, rescission of the Plan’s investments in the Funds, attorneys’ fees and costs, and pre- and post-judgment interest. On November 2, 2017, a second former employee, represented by the same law firm, filed another putative class action lawsuit relating to the Plan in the same court, captioned Fernandez v. Franklin Resources Inc., et al. The plaintiff filed an amended complaint on February 6, 2018 naming the same defendants as those named in the Cryer action, as well as the Franklin Board of Directors, the Plan Administrative Committee, individual current and former Franklin directors, and individual current and former Investment Committee members. The plaintiff in this second lawsuit asserts the same ERISA breach of fiduciary duty claim asserted in the Cryer action, as well as claims for alleged prohibited transactions by virtue of the Plan’s investments in the Funds and for an alleged failure to monitor the performance of the Investment Committee. The plaintiff alleges that Plan losses exceed $60.0 million and seeks the same relief sought in the Cryer action, on behalf of the same class. On April 6, 2018, the court consolidated the Fernandez action with the existing Cryer action. Management strongly believes that the claims asserted in the litigation are without merit. The fact discovery phase in the consolidated action is closed and the parties are currently in the expert discovery phase. Franklin is defending against the consolidated action vigorously. Franklin cannot at this time predict the eventual outcome of the litigation or whether it will have a material negative impact on the Company, or reasonably estimate the possible loss or range of loss that may arise from any negative outcome. 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, 2018 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount. Other Commitments and Contingencies At March 31, 2018, there were no material changes in the other commitments and contingencies as reported in the Company’s Form 10-K for fiscal year 2017. |
Stock-Based Compensation |
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Share-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock and stock unit award activity was as follows:
Total unrecognized compensation expense related to nonvested stock and stock unit awards was $180.6 million at March 31, 2018. This expense is expected to be recognized over a remaining weighted-average vesting period of 1.9 years. |
Other Income (Expenses) |
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Other Income (Expenses) | Other Income (Expenses) Other income (expenses) consisted of the following:
Interest income was primarily generated by cash equivalents and trading investment securities. Substantially all of the dividend income and realized gains and losses on sale of available-for-sale securities were generated by investments in nonconsolidated funds. Proceeds from the sale of available-for-sale securities were $25.4 million and $41.4 million for the three and six months ended March 31, 2018, and $17.2 million and $25.8 million for the three and six months ended March 31, 2017. Net gains recognized on the Company’s trading investment securities that were held at March 31, 2018 and 2017 were $2.1 million and $3.3 million for the three and six months ended March 31, 2018, and $1.2 million and $1.4 million for the three and six months ended March 31, 2017. Net gains (losses) recognized on trading investment securities of CIPs that were held at March 31, 2018 and 2017 were $(30.1) million and $(10.0) million for the three and six months ended March 31, 2018, and $27.0 million and $8.4 million for the three and six months ended March 31, 2017. |
Accumulated Other Comprehensive Income (Loss) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) by component were as follows:
|
Subsequent Event |
6 Months Ended |
---|---|
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On April 20, 2018, the Company gave notice that on May 21, 2018 it will redeem all of its outstanding $350.0 million 4.625% senior notes due in May 2020. The make-whole redemption price is expected to approximate $363 million. |
Fair Value Measurements Accounting Policies (Policies) |
6 Months Ended |
---|---|
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Fair Value Measurements | Level 1 assets consist primarily of sponsored funds and other equity securities for which the fair values are based on published net asset values or quoted market prices. Level 2 assets consist of debt and equity securities for which the fair values are determined using independent third-party broker or dealer price quotes. Level 3 assets consist of corporate debt securities for which the fair value is determined using market pricing, and other debt securities and life settlement contracts for which the fair values are based on discounted cash flows using significant unobservable inputs. The fair value of the contingent consideration liability is determined using an income-based method which considers the net present value of anticipated future cash flows. |
Stockholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in total stockholders' equity | Changes in total stockholders’ equity were as follows:
|
Earnings (Loss) per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of basic and diluted earnings (loss) per share | The components of basic and diluted earnings (loss) per share were as follows:
|
Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of investments | Investments consisted of the following:
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Summary of the gross unrealized gains and losses relating to investment securities, available-for-sale | Gross unrealized gains and losses relating to investment securities, available-for-sale were as follows:
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Summary of gross unrealized losses and fair values of investment securities in a continuous unrealized loss position | Gross unrealized losses relating to investment securities, available-for-sale aggregated by length of time that individual securities have been in a continuous unrealized loss position were as follows:
|
Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liability measured at fair value on a recurring basis | The assets and liability measured at fair value on a recurring basis were as follows:
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Schedule of changes in Level 3 assets and liabilities | Changes in the Level 3 assets and liabilities were as follows:
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Schedule of valuation techniques and significant unobservable inputs used in level 3 fair value measurements | Valuation techniques and significant unobservable inputs used in the Level 3 fair value measurements were as follows:
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Schedule of financial instruments not measured at fair value | Financial instruments that were not measured at fair value were as follows:
|
Consolidated Investment Products (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Investment Products [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of balances of CIPs | The balances related to CIPs included in the Company’s consolidated balance sheets were as follows:
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Schedule of investments of CIPs | Investments of CIPs consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | Assets and liabilities of CIPs measured at fair value on a recurring basis were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in Level 3 assets of CIPs | Changes in Level 3 assets were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of valuation techniques and significant unobservable inputs used in Level 3 fair value measurements | Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial instruments of CIPs not measured at fair value | Financial instruments of CIPs that were not measured at fair value were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in redeemable noncontrolling interests of CIPs | Changes in redeemable noncontrolling interests of CIPs were as follows:
|
Nonconsolidated Variable Interest Entities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of maximum exposure loss from nonconsolidated VIEs | The Company’s maximum exposure to loss from these VIEs consists of investment management fee receivables and equity investments as follows:
|
Taxes on Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of deferred tax assets and liabilities | Deferred tax assets and deferred tax liabilities were as follows:
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Components of net deferred tax assets or liabilities as classified in the consolidated balance sheets | The components of the net deferred tax liability were classified in the consolidated balance sheets as follows:
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Taxes on income and the related impact on the effective income tax rate | Taxes on income and the related impacts on the effective income tax rate were as follows:
|
Stock-Based Compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of nonvested stock and stock unit award activity | Stock and stock unit award activity was as follows:
|
Other Income (Expenses) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other income (expenses) | Other income (expenses) consisted of the following:
|
Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in accumulated other comprehensive income (loss) by component | Changes in accumulated other comprehensive income (loss) by component were as follows:
|
Stockholders' Equity - Narrative (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Apr. 11, 2018 |
|
Stockholders' Equity Note [Abstract] | |||||
Number of shares repurchased during period | 11.1 | 4.0 | 15.7 | 11.1 | |
Cost of shares repurchased during period | $ 432.6 | $ 166.8 | $ 632.6 | $ 428.5 | |
Remaining number of shares authorized to be repurchased | 15.9 | 15.9 | |||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Additional number of shares authorized to be repurchased | 80.0 |
Earnings (Loss) per Share - Narrative (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Earnings Per Share [Abstract] | |||
Shares of nonparticipating nonvested stock unit awards excluded from the calculation of diluted EPS | 0.2 | 1.9 | 0.7 |
Investments - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Sep. 30, 2017 |
|
Investments [Abstract] | |||||
Aggregate carrying amounts of investment securities pledged as collateral | $ 1.2 | $ 1.2 | $ 0.8 | ||
Other-than-temporary impairment of investments | $ 0.1 | $ 0.0 | $ 0.6 | $ 0.3 |
Investments - Summary of Investments (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Investment Holdings [Line Items] | ||
Investment securities, trading | $ 349.6 | $ 314.5 |
Investment securities, available-for-sale | 87.7 | 112.7 |
Investments in equity method investees | 1,043.0 | 893.5 |
Other investments | 98.7 | 72.9 |
Total | 1,579.0 | 1,393.6 |
Sponsored Funds [Member] | ||
Investment Holdings [Line Items] | ||
Investment securities, trading | 78.6 | 31.1 |
Investment securities, available-for-sale | 86.0 | 110.8 |
Debt and Other Equity Securities [Member] | ||
Investment Holdings [Line Items] | ||
Investment securities, trading | 271.0 | 283.4 |
Investment securities, available-for-sale | $ 1.7 | $ 1.9 |
Investments - Summary of Gross Unrealized Gains and Losses Relating to Investment Securities, Available-for-Sale (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Investment Holdings [Line Items] | ||
Cost Basis | $ 82.0 | $ 109.8 |
Gross Unrealized Gains | 11.2 | 9.4 |
Gross Unrealized Losses | (5.5) | (6.5) |
Fair Value | 87.7 | 112.7 |
Sponsored Funds [Member] | ||
Investment Holdings [Line Items] | ||
Cost Basis | 80.4 | 107.9 |
Gross Unrealized Gains | 11.1 | 9.4 |
Gross Unrealized Losses | (5.5) | (6.5) |
Fair Value | 86.0 | 110.8 |
Debt and Other Equity Securities [Member] | ||
Investment Holdings [Line Items] | ||
Cost Basis | 1.6 | 1.9 |
Gross Unrealized Gains | 0.1 | 0.0 |
Gross Unrealized Losses | 0.0 | 0.0 |
Fair Value | $ 1.7 | $ 1.9 |
Investments - Summary of Gross Unrealized Losses, AFS, Continuous Loss Position (Details) - Sponsored Funds [Member] - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value | $ 27.3 | $ 28.4 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Gross Unrealized Losses | (5.5) | (6.3) |
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Greater, Fair Value | 0.0 | 2.4 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Greater, Gross Unrealized Losses | 0.0 | (0.2) |
Available-for-sale Securities, Continuous Unrealized Loss Position, Total Fair Value | 27.3 | 30.8 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Total Gross Unrealized Losses | $ (5.5) | $ (6.5) |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Fair Value Disclosures [Abstract] | ||||
Transfers into Level 1 from Level 2 - assets | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
Transfers into Level 2 from Level 1 - assets | 0.5 | 0.0 | 0.5 | 0.0 |
Transfers into Level 1 from Level 2 - liabilities | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers into Level 2 from Level 1 - liabilities | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers into Level 3 - assets | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers into Level 3 - liabilities | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers out of Level 3 - assets | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers out of Level 3 - liabilities | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
Fair Value Measurements - Schedule of Financial Instruments not Measured at Fair Value (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|---|---|
Assets [Abstract] | ||||
Cash and cash equivalents | $ 8,726.5 | $ 8,749.7 | $ 8,776.1 | $ 8,483.3 |
Carrying Value [Member] | ||||
Assets [Abstract] | ||||
Cash and cash equivalents | 8,545.4 | 8,523.3 | ||
Time deposits | 30.9 | 13.4 | ||
Cost method investments | 55.6 | 46.7 | ||
Financial Liabilities [Abstract] | ||||
Debt | 1,044.8 | 1,044.2 | ||
Estimated Fair Value [Member] | Level 1 [Member] | ||||
Assets [Abstract] | ||||
Cash and cash equivalents | 8,545.4 | 8,523.3 | ||
Estimated Fair Value [Member] | Level 2 [Member] | ||||
Assets [Abstract] | ||||
Time deposits | 30.9 | 13.4 | ||
Financial Liabilities [Abstract] | ||||
Debt | 1,044.0 | 1,073.5 | ||
Estimated Fair Value [Member] | Level 3 [Member] | ||||
Assets [Abstract] | ||||
Cost method investments | $ 78.6 | $ 67.7 |
Consolidated Investment Products - Schedule of Investments of CIPs (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Schedule Of Consolidated Investment Products [Line Items] | ||
Investment securities, trading | $ 349.6 | $ 314.5 |
Fair value | 449.5 | 440.0 |
CIPs [Member] | ||
Schedule Of Consolidated Investment Products [Line Items] | ||
Investment securities, trading | 3,063.7 | 3,017.2 |
Other equity securities | 353.9 | 306.9 |
Other debt securities | 111.7 | 143.3 |
Fair value | $ 3,529.3 | $ 3,467.4 |
Consolidated Investment Products - Schedule of Redeemable Noncontrolling Interest of CIPs (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Oct. 01, 2016 |
|
Temporary Equity [Line Items] | |||||
Balance at beginning of period | $ 1,941.9 | $ 61.1 | |||
Net income (loss) | $ 15.2 | $ 20.3 | 26.7 | (3.2) | |
Net subscriptions and other | 5.7 | 15.7 | |||
Net consolidations | (2.1) | ||||
Balance at End of Period | $ 2,084.4 | $ 1,659.8 | 2,084.4 | 1,659.8 | |
Redeemable noncontrolling interests [Member] | |||||
Temporary Equity [Line Items] | |||||
Net subscriptions and other | 115.8 | 349.2 | |||
Net consolidations | $ 0.0 | $ 428.0 | |||
ASU 2015-02 [Member] | |||||
Temporary Equity [Line Items] | |||||
Adoption of new accounting guidance | $ (325.9) | ||||
ASU 2015-02 [Member] | Redeemable noncontrolling interests [Member] | |||||
Temporary Equity [Line Items] | |||||
Adoption of new accounting guidance | $ 824.7 |
Nonconsolidated Variable Interest Entities (Details) - Nonconsolidated VIEs [Member] - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss | $ 229.1 | $ 284.9 |
Receivables [Member] | ||
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss | 156.7 | 155.6 |
Investments [Member] | ||
Variable Interest Entity [Line Items] | ||
Maximum exposure to loss | $ 72.4 | $ 129.3 |
Taxes on Income - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, net of valuation allowance | $ 95.2 | $ 141.3 |
Deferred tax liabilities | 204.2 | 296.1 |
Net Deferred Tax Liability | $ 109.0 | $ 154.8 |
Taxes on Income - Components of Net Deferred Tax Assets or Liabilities as Classified in the Consolidated Balance Sheets (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Other assets | $ 20.9 | $ 15.8 |
Deferred tax liabilities | 129.9 | 170.6 |
Net Deferred Tax Liability | $ 109.0 | $ 154.8 |
Taxes on Income - Taxes on income and the related impact on the effective income tax rate (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Tax expense before one-time charges | $ 151.0 | $ 305.6 | |||
Tax expense before one-time charges, percentage | 23.90% | 23.80% | |||
Total | $ 150.2 | $ 192.5 | $ 1,373.7 | $ 393.4 | |
Total, percentage | 23.70% | 106.90% | |||
Tax Cuts and Jobs Act [Member] | |||||
Income Tax Examination [Line Items] | |||||
Transition tax on deemed repatriation of undistributed foreign earnings | $ (0.5) | $ 1,120.7 | $ 1,120.2 | ||
Transition tax on deemed repatriation of undistributed foreign earnings, percentage | (0.10%) | 87.20% | |||
Revaluation of net deferred tax liabilities | $ 0.5 | $ 53.1 | $ (53.6) | ||
Revaluation of net deferred tax liabilities, percentage | (0.10%) | (4.20%) | |||
Other Tax Act impacts | $ 0.2 | $ 1.5 | |||
Other Tax Act impacts, percentage | 0.00% | 0.10% |
Commitments and Contingencies - Narrative (Details) $ in Millions |
6 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Plaintiff Cryer 401K Plan [Member] | |
Loss Contingencies [Line Items] | |
The plaintiff alleges that plan losses exceed | $ 79.0 |
Plaintiff Fernandez 401K Plan [Member] | |
Loss Contingencies [Line Items] | |
The plaintiff alleges that plan losses exceed | $ 60.0 |
Stock-Based Compensation - Narrative (Details) $ in Millions |
6 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Share-based Compensation [Abstract] | |
Unrecognized compensation expense related to nonvested stock and stock unit awards, net of estimated forfeitures | $ 180.6 |
Remaining weighted-average vesting period | 1 year 11 months |
Other Income (Expenses) - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Other Income and Expenses [Abstract] | ||||
Proceeds from the sale of available-for-sale securities | $ 25.4 | $ 17.2 | $ 41.4 | $ 25.8 |
Net gains recognized on trading investment securities | 2.1 | 1.2 | 3.3 | 1.4 |
Net gains (losses) recognized on trading investment securities of CIPs | $ (30.1) | $ 27.0 | $ (10.0) | $ 8.4 |
Other Income (Expenses) - Schedule of Other Income (Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Other Income and Expenses [Abstract] | ||||
Interest income | $ 25.7 | $ 16.0 | $ 49.5 | $ 29.6 |
Dividend income | 8.7 | 2.7 | 13.4 | 5.1 |
Gains on trading investment securities, net | 1.8 | 8.4 | 2.5 | 10.4 |
Realized gains on sale of investment securities, available-for-sale | 2.1 | 2.3 | 2.1 | 2.9 |
Realized losses on sale of investment securities, available-for-sale | (0.4) | (0.5) | (0.4) | (1.2) |
Income from investments in equity method investees | 10.7 | 36.3 | 45.9 | 70.5 |
Other-than-temporary impairment of investments | (0.1) | 0.0 | (0.6) | (0.3) |
Gains (losses) on investments of CIPs, net | 38.6 | 22.7 | 54.6 | (7.2) |
Foreign currency exchange gains (losses), net | (7.8) | (6.2) | (10.7) | 13.6 |
Other, net | 8.1 | 2.9 | 12.4 | 7.3 |
Total | 87.4 | 84.6 | 168.7 | 130.7 |
Interest Expense | (10.0) | (12.6) | (20.8) | (25.9) |
Other Income, Net | $ 77.4 | $ 72.0 | $ 147.9 | $ 104.8 |
Subsequent Event - Narrative (Details) - NotesDueMay2020 [Member] - Subsequent Event [Member] $ in Millions |
Apr. 20, 2018
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Senior notes | $ 350.0 |
Stated interest rate | 4.625% |
Redemption price, approximate | $ 363.0 |
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