| Statement Of Income Alternative (USD $) | ||||
| In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
| Operating Revenues | ||||
| Investment management fees | $625,025 | $924,722 | $1,778,235 | $2,861,002 |
| Underwriting and distribution fees | 365,217 | 504,272 | 974,801 | 1,577,581 |
| Shareholder servicing fees | 67,113 | 73,127 | 199,969 | 219,719 |
| Consolidated sponsored investment products income, net | 2,908 | 2,768 | 6,555 | 9,436 |
| Other, net | 13,295 | 16,760 | (4,400) | 43,194 |
| Total operating revenues | 1,073,558 | 1,521,649 | 2,955,160 | 4,710,932 |
| Operating Expenses | ||||
| Underwriting and distribution | 350,675 | 492,385 | 933,738 | 1,530,587 |
| Compensation and benefits | 230,943 | 285,651 | 711,738 | 846,566 |
| Information systems, technology and occupancy | 68,203 | 78,477 | 202,199 | 237,948 |
| Advertising and promotion | 27,888 | 44,804 | 78,815 | 138,820 |
| Amortization of deferred sales commissions | 32,865 | 41,935 | 103,231 | 129,808 |
| Other | 36,798 | 46,182 | 107,567 | 140,172 |
| Total operating expenses | 747,372 | 989,434 | 2,137,288 | 3,023,901 |
| Operating Income | 326,186 | 532,215 | 817,872 | 1,687,031 |
| Other Income (Expenses) | ||||
| Consolidated sponsored investment products gains (losses), net | 35,660 | (9,005) | (10,160) | (36,046) |
| Investment and other income (losses), net | 52,285 | 33,969 | (26,653) | 147,135 |
| Interest expense | (211) | (3,287) | (3,503) | (15,280) |
| Other income (expenses), net | 87,734 | 21,677 | (40,316) | 95,809 |
| Income before taxes | 413,920 | 553,892 | 777,556 | 1,782,840 |
| Taxes on income | 116,204 | 150,580 | 248,134 | 495,116 |
| Net Income | $297,716 | $403,312 | $529,422 | $1,287,724 |
| Earnings per Share | ||||
| Basic | 1.3 | 1.72 | 2.29 | 5.42 |
| Diluted | 1.29 | 1.71 | 2.28 | 5.38 |
| Dividends per Share | 0.21 | 0.2 | 0.63 | 0.6 |
| Statement Of Financial Position Classified (USD $) | ||
| In Thousands | Jun. 30, 2009
| Sep. 30, 2008
|
| Current Assets | ||
| Cash and cash equivalents | $2,238,467 | $2,314,818 |
| Receivables | 595,437 | 690,351 |
| Investment securities, trading | 507,467 | 356,408 |
| Investment securities, available-for-sale | 1,565,610 | 600,146 |
| Other investments | 17,398 | 836,657 |
| Deferred taxes | 51,322 | 17,308 |
| Prepaid expenses and other | 24,703 | 33,944 |
| Total current assets | 5,000,404 | 4,849,632 |
| Banking/Finance Assets | ||
| Cash and cash equivalents | 132,198 | 212,734 |
| Investment securities, trading | 87,823 | 111,607 |
| Investment securities, available-for-sale | 492,457 | 320,910 |
| Loans held for sale | 19,047 | 32,582 |
| Loans receivable, net | 296,999 | 371,647 |
| Other | 9,326 | 11,899 |
| Total banking/finance assets | 1,037,850 | 1,061,379 |
| Non-Current Assets | ||
| Investment securities, available-for-sale | 134,438 | 155,295 |
| Investments in equity method investees and other | 371,518 | 328,247 |
| Deferred sales commissions | 134,680 | 187,807 |
| Property and equipment, net | 535,265 | 554,706 |
| Goodwill | 1,428,914 | 1,438,093 |
| Other intangible assets, net | 568,607 | 579,572 |
| Other | 31,230 | 21,789 |
| Total non-current assets | 3,204,652 | 3,265,509 |
| Total Assets | 9,242,906 | 9,176,520 |
| Current Liabilities | ||
| Compensation and benefits | 180,933 | 307,223 |
| Commercial paper | 1,435 | 13,287 |
| Accounts payable and accrued expenses | 296,215 | 289,985 |
| Commissions | 189,066 | 230,028 |
| Income taxes | 24,488 | 66,032 |
| Other | 25,336 | 29,335 |
| Total current liabilities | 717,473 | 935,890 |
| Banking/Finance Liabilities | ||
| Deposits | 646,607 | 570,279 |
| Variable funding notes | 0 | 28,551 |
| Federal Home Loan Bank advances | 95,000 | 109,000 |
| Other | 26,634 | 44,743 |
| Total banking/finance liabilities | 768,241 | 752,573 |
| Non-Current Liabilities | ||
| Long-term debt | 84,315 | 118,433 |
| Deferred taxes | 156,650 | 146,489 |
| Other | 85,981 | 71,609 |
| Total non-current liabilities | 326,946 | 336,531 |
| Total liabilities | 1,812,660 | 2,024,994 |
| Commitments and Contingencies (Note 11) | 0 | 0 |
| Minority Interest | 86,729 | 77,162 |
| Stockholders' Equity | ||
| Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued | 0 | 0 |
| Common stock, $0.10 par value, 1,000,000,000 shares authorized; 230,390,721 and 232,777,979 shares issued and outstanding, at June 30, 2009 and September 30, 2008 | 23,039 | 23,278 |
| Capital in excess of par value | 0 | 0 |
| Retained earnings | 7,299,342 | 7,044,732 |
| Accumulated other comprehensive income | 21,136 | 6,354 |
| Total stockholders' equity | 7,343,517 | 7,074,364 |
| Total Liabilities and Stockholders' Equity | $9,242,906 | $9,176,520 |
| Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
| Jun. 30, 2009
| Sep. 30, 2008
| |
| Preferred stock, par value | $1 | $1 |
| Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
| Preferred stock, 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 | 230,390,721 | 232,777,979 |
| Common stock, shares outstanding | 230,390,721 | 232,777,979 |
| Statement Of Cash Flows Indirect (USD $) | ||||||
| In Thousands | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 | Sep. 30, 2008
| Sep. 30, 2007
|
| Net Income | $297,716 | $403,312 | $529,422 | $1,287,724 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 129,997 | 156,817 | ||||
| Stock-based compensation | 61,918 | 57,487 | ||||
| Excess tax benefits from stock-based compensation arrangements | (3,385) | (27,329) | ||||
| Net losses (gains) on sale of assets | 11,553 | (22,850) | ||||
| Equity in net losses (income) of affiliated companies | 8,608 | (13,119) | ||||
| Provision for loan losses | 5,952 | 10,411 | ||||
| Other-than-temporary impairment of investments | 59,744 | 5,722 | ||||
| Deferred income taxes | (23,720) | 10,687 | ||||
| Changes in operating assets and liabilities: | ||||||
| Decrease in receivables, prepaid expenses and other | 47,457 | 18,839 | ||||
| Payments on (originations of) loans held for sale, net | 15,622 | (156,315) | ||||
| Proceeds from securitization of loans held for sale | 0 | 394,299 | ||||
| Increase in trading securities, net | (170,261) | (229,189) | ||||
| Advances of deferred sales commissions | (60,912) | (96,621) | ||||
| Decrease in income taxes payable | (24,403) | (35,850) | ||||
| Decrease in commissions payable | (40,962) | (5,216) | ||||
| Increase in other liabilities | 53,132 | 86,878 | ||||
| Decrease in accrued compensation and benefits | (110,752) | (30,897) | ||||
| Net cash provided by operating activities | 489,010 | 1,411,478 | ||||
| Purchase of investments | (1,748,981) | (1,561,773) | ||||
| Liquidation of investments | 1,506,632 | 1,418,998 | ||||
| Purchase of banking/finance investments | (208,920) | (213,400) | ||||
| Liquidation of banking/finance investments | 44,433 | 36,763 | ||||
| Decrease (increase) in loans receivable | 64,564 | (134,328) | ||||
| Additions of property and equipment, net | (32,428) | (57,609) | ||||
| Acquisitions of subsidiaries, net of cash acquired | 533 | 6,717 | ||||
| Net cash used in investing activities | (374,167) | (504,632) | ||||
| Increase in bank deposits, net | 76,328 | 103,304 | ||||
| Exercise of common stock options | 14,722 | 7,131 | ||||
| Dividends paid on common stock | (144,270) | (132,021) | ||||
| Purchase of common stock | (218,677) | (1,317,225) | ||||
| Excess tax benefits from stock-based compensation arrangements | 3,385 | 27,329 | ||||
| Proceeds from issuance of debt | 398,947 | 1,050,179 | ||||
| Payments on debt | (454,735) | (1,458,487) | ||||
| Minority interest | 69,747 | 278,835 | ||||
| Net cash used in financing activities | (254,553) | (1,440,955) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (17,177) | (5,960) | ||||
| Decrease in cash and cash equivalents | (156,887) | (540,069) | ||||
| Cash and cash equivalents, beginning of period | 2,527,552 | 3,584,183 | ||||
| Cash and Cash Equivalents, End of Period | 2,370,665 | 3,044,114 | 2,370,665 | 3,044,114 | 2,527,552 | 3,584,183 |
| Cash and cash equivalents, beginning of period: | ||||||
| Current assets | 2,314,818 | 3,304,495 | ||||
| Banking/finance assets | 212,734 | 279,688 | ||||
| Cash and cash equivalents, beginning of period | 2,527,552 | 3,584,183 | ||||
| Cash and cash equivalents, end of period: | ||||||
| Current assets | 2,238,467 | 2,880,797 | 2,238,467 | 2,880,797 | 2,314,818 | 3,304,495 |
| Banking/finance assets | 132,198 | 163,317 | 132,198 | 163,317 | 212,734 | 279,688 |
| Cash and Cash Equivalents, End of Period | 2,370,665 | 3,044,114 | 2,370,665 | 3,044,114 | 2,527,552 | 3,584,183 |
| Supplemental Disclosure of Non-Cash Information | ||||||
| Change in assets related to the net deconsolidation of certain sponsored investment products | (129,187) | (400,711) | ||||
| Change in liabilities related to the net deconsolidation of certain sponsored investment products | (69,794) | (113,061) | ||||
| Supplemental Disclosure of Cash Flow Information | ||||||
| Cash paid for income taxes | 305,730 | 512,669 | ||||
| Cash paid for interest | $7,189 | $40,822 |
| Notes to Financial Statements | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| Note 1 - Basis of Presentation | Note 1 - 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 (the SEC). Under these rules and regulations, some information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America (U.S. GAAP) 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 Companys audited financial statements included in its Form 10-K for the fiscal year ended September30, 2008 (fiscal year 2008). Certain amounts for the comparative prior fiscal year periods have been reclassified to conform to the financial presentation as of and for the periods ended June30, 2009. The Company has evaluated subsequent events through August7, 2009, which is the date that this Quarterly Report on Form 10-Q is filed with the SEC. |
| Note 2 - New Accounting Standards | Note 2 - New Accounting Standards The Company adopted the following accounting standards during the nine months ended June30, 2009. In May 2009, the Financial Accounting Standards Board (the FASB) issued Statement of Financial Accounting Standards (SFAS) No.165, Subsequent Events (SFAS 165). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is based substantially on the same principles as those that currently exist in the auditing standards. However, SFAS 165 requires an entity to disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued or were available to be issued. SFAS 165 is effective for fiscal years and interim periods ending after June15, 2009. The adoption of SFAS 165 did not have a material impact on the Companys consolidated financial statements. In April 2009, the FASB issued FASB Staff Position (FSP) FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. FSP FAS 107-1 and APB 28-1 amends SFAS No.107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods and amends Accounting Principles Board Opinion No.28, Interim Financial Reporting, to require entities to disclose the methods and significant assumptions used to estimate the fair value of financial instruments and describe changes in methods and significant assumptions, in both interim and annual financial statements. FSP FAS 107-1 and APB 28-1 is effective for interim reporting periods ending after June15, 2009. The adoption of FSP FAS 107-1 and APB 28-1 had no financial impact on the Companys consolidated financial statements. The Company has applied the disclosure requirements of FSP FAS 107-1 and APB 28-1 on a prospective basis. Accordingly, disclosures related to periods prior to the date of the adoption have not been presented. In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. FSP FAS 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased and includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective for interim reporting periods ending after June15, 2009. The adoption of FSP FAS 157-4 did not have a material impact on the Companys consolidated financial statements. In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. FSP FAS 115-2 and FAS 124-2 amends the presentation and disclosure of other-than-temporary impairments of debt and equity securities, as well as amends the recognition and measurement guidance for other-than-temporary impairments of debt securities. Under FSP FAS |
| Note 3 - Comprehensive Income | Note 3 - Comprehensive Income The components of comprehensive income were as follows: Three Months Ended June30, Nine Months Ended June30, (in thousands) 2009 2008 2009 2008 Net income $ 297,716 $ 403,312 $ 529,422 $ 1,287,724 Net unrealized gains (losses) on investments, net of tax 51,133 (14,502 ) 55,910 (73,932 ) Currency translation adjustments 78,877 (16,534 ) (41,000 ) (22,971 ) Other (45 ) (57 ) (128 ) (170 ) Total Comprehensive Income $ 427,681 $ 372,219 $ 544,204 $ 1,190,651 |
| Note 4 - Earnings per Share | Note 4 - Earnings per Share Basic earnings per share is computed on the basis of the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. The components of basic and diluted earnings per share were as follows: Three Months Ended June30, Nine Months Ended June30, (in thousands, except per share data) 2009 2008 2009 2008 Net income $ 297,716 $ 403,312 $ 529,422 $ 1,287,724 Weighted-average shares outstanding basic 229,804 234,631 230,871 237,593 Common stock options, nonvested stock awards and nonvested stock unit awards 1,019 1,854 963 1,967 Weighted-Average Shares Outstanding Diluted 230,823 236,485 231,834 239,560 Earnings per Share Basic $ 1.30 $ 1.72 $ 2.29 $ 5.42 Diluted 1.29 1.71 2.28 5.38 For the three and nine months ended June30, 2009, the Company excluded approximately 1.9million nonvested shares related to grants of stock awards and stock unit awards from the computation of diluted earnings per share because their effect would have been anti-dilutive. For the three and nine months ended June30, 2008, the Company excluded approximately 1.3million nonvested shares related to grants of stock awards and stock unit awards from the computation of diluted earnings per share because their effect would have been anti-dilutive. |
| Note 5 - Cash and Cash Equivalents | Note 5 - Cash and Cash Equivalents The Company discloses cash and cash equivalents as separate components of current assets and banking/finance assets in the condensed consolidated balance sheets. Cash and cash equivalents consisted of the following: (in thousands) June30, 2009 September30, 2008 Cash on hand and demand deposits with banks $ 441,177 $ 579,361 Federal funds sold 3,165 134,759 Sponsored money market funds 1,254,388 1,076,966 Time deposits, securities of U.S. Treasury and federal agencies and other 671,935 736,466 Total $ 2,370,665 $ 2,527,552 Federal Reserve Board regulations require certain of the Companys banking subsidiaries to maintain reserve and clearing balances on deposits with the Federal Reserve Banks. The required reserve balance was $6.4 million at June30, 2009 and September30, 2008. The required clearing balance was $1.2 million at June30, 2009 and September30, 2008. The Company maintains cash and cash equivalents with financial institutions in various countries, limits the amount of credit exposure with any given financial institution and conducts ongoing evaluations of the creditworthiness of the financial institutions with which it does business. |
| Note 6 - Investments | Note 6 - Investments Investments consisted of the following: (in thousands) June30, 2009 September30, 2008 Current Investment securities, trading $ 507,467 $ 356,408 Investment securities, available-for-sale Sponsored investment products 838,586 591,562 Securities of U.S. states and political subdivisions 12,137 5,104 Securities of U.S. Treasury and federal agencies 709,307 2,799 Other equity securities 5,580 681 Total investment securities, available-for-sale 1,565,610 600,146 Other investments1 17,398 836,657 Total Current $ 2,090,475 $ 1,793,211 Banking/Finance Investment securities, trading $ 87,823 $ 111,607 Investment securities, available-for-sale U.S. government-sponsored enterprise obligations2 387,410 315,683 Securities of U.S. states and political subdivisions 856 1,125 Securities of U.S. Treasury and federal agencies 3,588 3,760 Corporate debt securities3 100,382 Other equity securities 221 342 Total investment securities, available-for-sale 492,457 320,910 Total Banking/Finance $ 580,280 $ 432,517 Non-Current Investment securities, available-for-sale Sponsored investment products $ 23,588 $ 28,089 Securities of U.S. states and political subdivisions 106,459 119,031 Securities of U.S. Treasury and federal agencies 625 Other equity securities 4,391 7,550 Total investment securities, available-for-sale 134,438 155,295 Investments in equity method investees and other 371,518 328,247 Total Non-Current $ 505,956 $ 483,542 1 Other investments consist of time deposits with financial institutions having maturities greater than three months but not exceeding one year from the date of purchase. 2 At June30, 2009, U.S. government-sponsored enterprise obligations consisted of $334.5 million of residential mortgage-backed securities and $52.9 million of debentures. 3 Corporate debt securities are insured by the Federal Deposit Insurance Corporation or non-U.S. government agencies. At June30, 2009 and September30, 2008, current investment securities, trading included $320.1 million and $294.6 million of securities held by sponsored investment products that were consolidated in the Companys condensed financial statements. At June30, 2009 and September30, 2008, banking/finance segment investment securities with aggregate carrying values of $375.6 million and $294.1 million were pledged as collateral for the ability to borrow from various government agencies (see Note 10 Debt). In addition, investment management segment securities with aggregate carrying values of $5.5 million and $8.3 million were pledged as collateral at June30, 2009 and September30, 2008. A summary of the gross unrealized gains and losses rela |
| Note 7 - Fair Value Measurements | Note 7 - Fair Value Measurements On October1, 2008, the Company adopted SFAS 157, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). SFAS 157 also establishes a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable. The three levels of fair value hierarchy established by SFAS 157 are set forth below. The Companys assessment of the hierarchy level of the assets or liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Level1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level2 Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or corroborated by observable market data. Level 2 quoted prices are obtained from independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the significant assumptions are observable in the market or corroborated by observable market data. Level3 Unobservable inputs that are supported by little or no market activity. Level 3 valuations are derived primarily from model-based valuation techniques in which one or more significant inputs are unobservable in the market. These inputs require significant management judgment and reflect the Companys estimation of assumptions that market participants would use in pricing the asset or liability. The Company records substantially all of its investments at fair value or amounts that approximate fair value. Trading securities, securities available-for-sale, and derivatives are financial instruments recorded at fair value on a recurring basis. The table below presents the balances of assets measured at fair value on a recurring basis. (in thousands) as of June30, 2009 Level 1 Level 2 Level 3 Total Current Assets Investment securities, trading $ 372,964 $ 132,513 $ 1,990 $ 507,467 Investment securities, available-for-sale Sponsored investment products 838,586 838,586 Securities of U.S. states and political subdivisions 12,137 12,137 Securities of U.S. Treasury and federal agencies 55,446 653,861 709,307 Other equity securities 5,580 5,580 Banking/Finance Assets Investment securities, trading 59,269 28,554 87,823 Investment securities, available-for-sale U.S. gover |
| Note 8 - Securitization of Loans Held for Sale | Note 8 Securitization of Loans Held for Sale From time to time, the Company enters into automobile loan securitization transactions with securitization trusts structured as qualified special purpose entities (the securitization trusts), which then issue asset-backed securities to private investors. The Company records these transactions as sales. The securitization transactions are comprised of prime, non-prime and sub-prime contracts for retail installment sales that are secured by new and used automobiles purchased from motor vehicle dealers. The Company purchases the sale contracts in the ordinary course of business. Certain automobile loans to be sold in securitization transactions were held by special purpose statutory Delaware trusts (the trusts) that were organized to hold a portion of the Companys loans held for sale and issue notes under variable funding note warehouse credit facilities. The variable funding notes issued under these facilities were secured by cash and a pool of automobile loans that were expected to meet certain eligibility requirements. Directly and through the trusts, which were consolidated in the Companys financial statements, the Company entered into interest-rate swap agreements, accounted for as freestanding derivatives, intended to mitigate the interest rate risk between the fixed interest rate on the pool of automobile loans and the floating interest rate paid under the variable funding note warehouse credit facilities until the securitization and sale of the related loans. The Company terminated the trusts, the warehouse credit facilities and the related swap agreements in November 2008 and does not currently intend to replace them. When the Company sells automobile loans in a securitization transaction, it retains certain interests. Residual interests, which include interest-only strips receivable and cash on deposit, represent the Companys contractual right to receive excess interest and cash from the pool of securitized loans after the payment of required amounts to holders of the asset-backed securities and certain other costs associated with the securitization. The residual interests are generally fully realizable and subject to limited recourse provisions. Credit enhancements for the securitization trusts require the Company to maintain a certain amount of cash on deposit, which provides protection for the holders of the asset-backed securities against delays in payment and certain losses on the securitized loans. At June30, 2009 and September30, 2008, the amounts of cash on deposit were $48.9 million and $23.2 million. Discounted values of the cash on deposit were recognized as part of the residual interests. The Company may also retain subordinated securities from securitization transactions, which are senior to the residual interests. The retained interests in securitized assets, including the residual interests and the retained subordinated securities, are recognized as banking/finance trading securities in the consolidated balance sheets. Changes in the fair value of the retained interests are recognized currently in earnings. There were no automobile loan securitization transactions d |
| Note 9 - Goodwill and Other Intangible Assets | Note 9 - Goodwill and Other Intangible Assets Goodwill and other intangible assets have been assigned to one reporting unit, the investment management and related services operating segment. The changes in the carrying values of goodwill and gross intangible assets were as follows: (in thousands) Goodwill Amortized Intangible Assets Non-amortized Intangible Assets Balance at October1, 2008 $ 1,438,093 $ 200,983 $ 508,909 Foreign currency movements (9,179 ) (625 ) (2,943 ) Balance at June30, 2009 $ 1,428,914 $ 200,358 $ 505,966 Certain of the goodwill and intangible assets are denominated in currencies other than the U.S. dollar; therefore, their gross and net carrying values are subject to foreign currency movements. Intangible assets as of June30, 2009 and September30, 2008 were as follows: (in thousands) as of June30, 2009 Gross Carrying Value Accumulated Amortization Net Carrying Value Amortized intangible assets Customer base $ 165,331 $ (106,479 ) $ 58,852 Other 35,027 (31,238 ) 3,789 200,358 (137,717 ) 62,641 Non-amortized intangible assets Management contracts 505,966 505,966 Total $ 706,324 $ (137,717 ) $ 568,607 (in thousands) as of September30, 2008 Gross Carrying Value Accumulated Amortization Net Carrying Value Amortized intangible assets Customer base $ 165,953 $ (100,301 ) $ 65,652 Other 35,030 (30,019 ) 5,011 200,983 (130,320 ) 70,663 Non-amortized intangible assets Management contracts 508,909 508,909 Total $ 709,892 $ (130,320 ) $ 579,572 The Company completed its most recent annual impairment tests of goodwill and indefinite-lived intangible assets during the quarter ended December31, 2008, under the guidance of FASB Statement of Financial Accounting Standards No.142, Goodwill and Other Intangible Assets (SFAS 142), and determined that there was no impairment in the value of these assets as of October1, 2008. No impairment in the value of goodwill and indefinite-lived intangible assets was recognized during the nine months ended June30, 2009 and 2008. No impairment in the value of intangible assets subject to amortization was recognized during the nine months ended June30, 2009 and 2008 as our estimate of the fair value of these assets exceeded the asset carrying values. The Company completed its annual goodwill impairment test as of October1 of each year since the adoption of SFAS 142. During the quarter ended March31, 2009, the Company changed its annual impairment test date from October1 to August1 of each year. Management believes the August1 date better aligns its annual goodwill impairment test with the Companys fourth quarter budget data developed |
| Note 10 - Debt | Note 10 - Debt Outstanding debt consisted of the following: (in thousands) June30, 2009 September30, 2008 Current Commercial paper $ 1,435 $ 13,287 Banking/Finance Variable funding notes 28,551 Federal Home Loan Bank advances 95,000 109,000 95,000 137,551 Non-Current Long-term debt 84,315 118,433 Total Debt $ 180,750 $ 269,271 At June30, 2009, current debt consisted of commercial paper with a total face value of $1.4 million that was issued at a weighted-average annualized interest rate of 0.40% and matures during the quarter ending September30, 2009. The banking/finance segment has financed its automobile lending business primarily through Federal Home Loan Bank advances (FHLB advances), securitizations and the issuance of variable funding notes under one-year revolving variable funding note warehouse credit facilities. The Company terminated the warehouse credit facilities in November 2008 and does not currently intend to replace them. The variable funding notes issued under these facilities were secured by cash and a pool of automobile loans that met certain eligibility requirements (see Note 8 Securitization of Loans Held for Sale). At June30, 2009, the banking/finance segment had $95.0 million of total outstanding FHLB advances. Approximately $53.0 million of these advances mature by June30, 2010, while the remaining $42.0 million mature from July 2010 through January 2039. These advances had a weighted-average interest rate of 2.07% at June30, 2009 and are subject to collateralization requirements. Long-term debt primarily relates to deferred commission liabilities recognized in relation to deferred commission assets (DCA) generated in the United States that were originally financed through a sale of related future revenue to Lightning Finance Company Limited (LFL), a company in which the Company holds a 49% ownership interest. In December 2005, LFL transferred substantially all of its rights to this future revenue to Lightning Asset Finance Limited (LAFL), an Irish special purpose vehicle formed in December 2005, in which the Company also holds a 49% ownership interest. The holder of the 51% ownership interests in both LFL and LAFL is a subsidiary of an international banking institution, which is not affiliated with the Company. Due to its significant interest in LAFL, the Company continues to carry on its balance sheet the DCA and the financing liability related to the future revenue originally sold to LFL by Franklin/Templeton Distributors, Inc. until these assets are amortized or sold by LAFL. At June30, 2009, the Company had $420.0 million in short-term revolving credit available under a five-year credit facility with certain banks and financial institutions expiring on June9, 2010, $498.6 million of short-term commercial paper remaining available for issuance under an uncommitted $500.0 million private placement program, and $12.9 million available in uncommitted short-term bank lines of credit. The revolving credit facility supports certain of the |
| Note 11 - Commitments and Contingencies | Note 11 - Commitments and Contingencies Guarantees The Company is obligated to cover shortfalls for the automobile loan securitization trusts in amounts due to the holders of the asset-backed securities up to certain levels (see Note8Securitization of Loans Held for Sale). At June30, 2009, the banking/finance segment had issued financial standby letters of credit totaling $6.7 million which beneficiaries would be able to draw upon in the event of non-performance by its customers, primarily in relation to lease and lien obligations of these banking customers. These standby letters of credit were secured by marketable securities with a fair value of $9.6 million as of June30, 2009. Legal Proceedings As previously reported, the Company and certain of its subsidiaries, and in some instances, certain of the Franklin Templeton mutual funds (the Funds), current and former officers, employees, and Company and/or Fund directors have been named in multiple lawsuits in various United States federal courts, alleging violations of federal securities and state laws. Specifically, the lawsuits claim breach of duty with respect to alleged arrangements to permit market timing and/or late trading activity, or breach of duty with respect to the valuation of the portfolio securities of certain Templeton Funds managed by certain of the Companys subsidiaries, allegedly resulting in market timing activity. The majority of these lawsuits duplicate, in whole or in part, the allegations asserted in the February4, 2004 Massachusetts Administrative Complaint concerning one instance of market timing and the SECs findings regarding market timing in its August2, 2004 order, both of which matters were previously reported. The lawsuits are styled as class actions, or derivative actions on behalf of either the named Funds or the Company, and seek, among other relief, monetary damages, restitution, removal of Fund trustees, directors, advisers, administrators, and distributors, rescission of management contracts and distribution plans under Rule 12b-1 promulgated under the Investment Company Act of 1940 (Rule12b-1), and/or attorneys fees and costs. In 2003 and 2004, more than 400 similar lawsuits against at least 19 different mutual fund companies were filed in federal district courts throughout the country. Because these cases involve common questions of fact, on February20, 2004, the Judicial Panel on Multidistrict Litigation (the Judicial Panel) ordered the creation of a multidistrict litigation in the United States District Court for the District of Maryland, titled In re Mutual Funds Investment Litigation (the MDL). The Judicial Panel then transferred similar cases from different districts to the MDL for coordinated or consolidated pretrial proceedings. The following market timing lawsuits are pending against the Company and certain of its subsidiaries (and in some instances, continue to name certain current Company and/or Fund directors and Company officers, as well as a former employee) and have been transferred to the MDL: Kenerley v. Templeton Funds, Inc., et al., Case No.03-770 GPM, filed on November19, 2003 in the United States District Court for |
| Note 12 - Stock-Based Compensation | Note 12 - Stock-Based Compensation The Companys stock-based compensation plans include the Amended and Restated Annual Incentive Plan (the AIP) and the 2002 Universal Stock Incentive Plan, as amended and restated (the USIP). Under the terms of the AIP, eligible employees may receive cash, equity awards, and/or cash-settled equity awards generally based on the performance of the Company, its funds and the individual employee. The USIP provides for the issuance of up to 30.0million shares of the Companys common stock for various stock-related awards to officers, directors, and employees. At June30, 2009, approximately 4.2million shares were available for grant under the USIP. In addition to stock awards and stock unit awards, the Company may award options and other forms of stock-based compensation to officers, directors, and employees under the USIP. The Compensation Committee of the Board of Directors determines the terms and conditions of awards under the AIP and the USIP. Compensation expense for these plans is recognized in accordance with SFAS 123 (revised 2004), Share Based Payment. Stock Options The following table summarizes stock option activity: (in thousands, except weighted-average exercise price) Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term(inYears) Aggregate Intrinsic Value Outstanding at September 30, 2008 3,381 $ 37.84 Exercised (357 ) 37.21 Cancelled (37 ) 36.32 Outstanding and Exercisable at June 30, 2009 2,987 $ 37.94 2.9 $ 101,775 Stock option awards outstanding under the USIP generally have been granted at prices that are either equal to or above the market value of the underlying shares of the Companys common stock on the date of grant, generally vest over three years and expire no later than ten years after the grant date. No stock option awards have been granted under the USIP since November 2004. All stock options were fully vested and all related compensation cost was recognized prior to fiscal year 2008. Stock Awards and Stock Unit Awards The fair value of stock awards and stock unit awards granted under the USIP is estimated on the date of grant based on the market price of the underlying shares of the Companys common stock and is amortized to compensation expense on a straight-line basis over the related vesting period, which is generally three to four years. The total number of stock awards and stock unit awards expected to vest is adjusted for estimated forfeitures. Total unrecognized compensation cost related to nonvested stock awards and stock unit awards, net of estimated forfeitures, was $86.3 million at June30, 2009. This cost is expected to be recognized over a remaining weighted-average vesting period of 1.7 years. The following table summarizes nonvested stock award and stock unit award activity: (shares in thousands) Shares Weighted- AverageGrant- Date Fair Valueper Share Nonvested balance at September30, 2008 919 $ 116.12 Granted 1,012 68.38 Vested (13 |
| Note 13 - Common Stock Repurchases | Note 13 - Common Stock Repurchases During the three and nine months ended June30, 2009, the Company repurchased 1.7million and 3.8million shares of its common stock at a cost of $109.7 million and $218.7 million. The common stock repurchases made as of June30, 2009 reduced capital in excess of par value to nil and the excess amount was recognized as a reduction to retained earnings. At June30, 2009, approximately 11.3million shares of common stock remained available for repurchase under the stock repurchase program. During the three and nine months ended June30, 2008, the Company repurchased 1.8million and 11.9million shares of its common stock at a cost of $175.8 million and $1,317.2 million. The stock repurchase program is not subject to an expiration date. |
| Note 14 - Segment Information | Note 14 - Segment Information The Company bases its operating segment selection process primarily on services offered. The Company derives the majority of its operating revenues and net income from providing investment management and related services to its retail mutual funds, and to institutional, high net-worth and separately-managed accounts and other investment products. This is the Companys primary business activity and operating segment. The Companys sponsored investment products and investment management and related services are distributed or marketed to the public globally under six distinct brand names: Franklin, Templeton, Mutual Series, Bissett, Fiduciary Trust and Darby. The Companys secondary business activity and operating segment is banking/finance. The banking/finance segment offers selected retail banking and consumer lending services and private banking services to high net-worth clients. Consumer lending and retail banking activities include automobile lending services related to the purchase, securitization, and servicing of retail installment sales contracts originated by independent automobile dealerships, consumer credit and debit cards, real estate equity lines, home equity/mortgage lending, and other consumer lending. Financial information for the two operating segments is presented in the table below. Inter-segment transactions are immaterial and excluded from segment income (loss) and assets. Operating revenues of the banking/finance segment are reported net of interest expense, the provision for loan losses, and changes in fair value of residual interests from securitization transactions. Three Months Ended June30, Nine Months Ended June30, (in thousands) 2009 2008 2009 2008 Operating Revenues Investment management and related services $ 1,062,364 $ 1,507,339 $ 2,966,243 $ 4,675,288 Banking/finance 11,194 14,310 (11,083 ) 35,644 Total $ 1,073,558 $ 1,521,649 $ 2,955,160 $ 4,710,932 Income (Loss) Before Taxes Investment management and related services $ 409,620 $ 548,326 $ 854,620 $ 1,772,615 Banking/finance 4,300 5,566 (77,064 ) 10,225 Total $ 413,920 $ 553,892 $ 777,556 $ 1,782,840 Operating revenues of the banking/finance operating segment included above were as follows: Three Months Ended June30, Nine Months Ended June30, (in thousands) 2009 2008 2009 2008 Interest and fees on loans $ 4,611 $ 9,572 $ 15,009 $ 42,489 Interest and dividends on investment securities 5,083 4,614 15,528 14,572 Total interest income 9,694 14,186 30,537 57,061 Interest on deposits (1,423 ) (1,850 ) (4,748 ) (7,080 ) Interest on short-term debt (34 ) (4,668 ) (905 ) (13,758 ) Interest o |
| Note 15 - Other Income (Expenses) | Note 15 - Other Income (Expenses) Other income (expenses) consisted of the following: Three Months Ended June30, Nine Months Ended June30, (in thousands) 2009 2008 2009 2008 Consolidated sponsored investment products gains (losses), net Realized losses, net $ (5,435 ) $ (11,101 ) $ (41,498 ) $ (5,172 ) Unrealized gains (losses), net 49,938 2,096 27,453 (30,874 ) Minority interest (losses) income, net (8,843 ) 3,885 Total 35,660 (9,005 ) (10,160 ) (36,046 ) Investment and other income (losses), net Dividend income 8,261 7,670 29,203 35,852 Interest income 6,514 22,916 26,586 80,063 Capital gain distributions 36 550 14,309 9,248 Other-than-temporary impairment of investment securities, available-for-sale (2,092 ) (34 ) (59,744 ) (5,722 ) Realized gains on sale of investment securities, available-for-sale 2,478 8,806 4,438 26,092 Realized losses on sale of investment securities, available-for-sale (2,393 ) (3,128 ) (16,874 ) (4,177 ) Gains (losses) on trading investment securities, net 18,394 (262 ) (29,397 ) 503 Income (losses) from investments in equity method investees 27,868 (11,284 ) (8,608 ) 13,119 Foreign currency exchange (losses) gains, net (9,057 ) (64 ) 7,240 (5,784 ) Other, net 2,276 8,799 6,194 (2,059 ) Total 52,285 33,969 (26,653 ) 147,135 Interest expense (211 ) (3,287 ) (3,503 ) (15,280 ) Other income (expenses), net $ 87,734 $ 21,677 $ (40,316 ) $ 95,809 Substantially all of our dividend income, capital gain distributions, and realized gains (losses) on sale of investment securities, available-for-sale were generated by investments in our sponsored investment products. Interest income was primarily generated by investments in debt securities of the U.S. Treasury and federal agencies and cash equivalents. Proceeds from the sale of investment securities, available-for-sale were $256.9 million and $594.9 million for the three and nine months ended June30, 2009 and $85.4 million and $292.9 million for the three and nine months ended June30, 2008. Realized gains (losses) on sale of investment securities, available-for-sale are calculated using either the average cost method or specific identification method. The Company recognized net gains (losses) on trading investment securities, including securities held by consolidated sponsored investment products, that were still held at June30, 2009 and 2008 in the amounts of $56.7 million and $(42.3) million during the three and nine months ended June30, 2009, and $3.0 million and $(31.2) million during the three and nine |
| Note 16 - Banking Regulatory Ratios | Note 16 - Banking Regulatory Ratios The Company is a bank holding company and a financial holding company subject to various regulatory capital requirements administered by federal banking agencies, including the Federal Reserve Board. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional, discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. The Company must meet specific capital adequacy guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require us to maintain a minimum Tier 1 capital and Tier 1 leverage ratio (as defined in the regulations), as well as minimum Tier 1 and Total risk-based capital ratios (as defined in the regulations). Based on the calculations as of June30, 2009 and September30, 2008, the Company exceeded the applicable capital adequacy requirements as listed below. (dollar amounts in thousands) June30, 2009 September30, 2008 Capital Adequacy Minimum Tier 1 capital $ 5,319,721 $ 5,108,763 N/A Total risk-based capital 5,327,459 5,115,055 N/A Tier 1 leverage ratio 76% 71% 4% Tier 1 risk-based capital ratio 98% 101% 4% Total risk-based capital ratio 99% 101% 8% |
| Document Information | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Amendment Description | N.A. |
| Document Period End Date | 2009-06-30 |
| Entity Information (USD $) | |||
| 9 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| Mar. 31, 2008
| |
| Entity [Text Block] | |||
| Trading Symbol | BEN | ||
| Entity Registrant Name | FRANKLIN RESOURCES INC | ||
| Entity Central Index Key | 0000038777 | ||
| Current Fiscal Year End Date | --09-30 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Common Stock, Shares Outstanding | 230,328,224 | ||
| Entity Public Float | $13,300,000,000 |
