Franklin Resources (BEN) 10-Q 8 Feb 10 2010 Q1 Quarterly report Financial data

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Thousands, except Per Share data	3 Months Ended Dec. 31, 2009	3 Months Ended Dec. 31, 2008
Operating Revenues
Investment management fees	$806,664	$600,274
Underwriting and distribution fees	488,053	304,929
Shareholder servicing fees	69,543	66,342
Consolidated sponsored investment products income, net	448	1,886
Other, net	12,703	(4,101)
Total operating revenues	1,377,411	969,330
Operating Expenses
Underwriting and distribution	467,027	289,529
Compensation and benefits	254,312	244,063
Information systems, technology and occupancy	68,610	68,598
Advertising and promotion	34,848	24,227
Amortization of deferred sales commissions	46,546	36,612
Other	39,091	37,937
Total operating expenses	910,434	700,966
Operating income	466,977	268,364
Other Income (Expenses)
Consolidated sponsored investment products gains (losses), net	15,072	(47,442)
Investment and other income (losses), net	32,978	(45,022)
Interest expense	(742)	(1,200)
Other income (expenses), net	47,308	(93,664)
Income before taxes	514,285	174,700
Taxes on income	156,736	64,771
Net Income	357,549	109,929
Less: Net income (loss) attributable to noncontrolling interests	1,946	(10,971)
Net Income attributable to Franklin Resources, Inc.	$355,603	$120,900
Earnings per Share
Basic	1.55	0.52
Diluted	1.54	0.52
Dividends per Share	3.22	0.21

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Thousands	Dec. 31, 2009	Sep. 30, 2009
Current Assets
Cash and cash equivalents	$2,753,253	$2,982,539
Receivables	632,517	581,810
Investment securities, trading	476,403	502,609
Investment securities, available-for-sale	1,063,711	1,027,287
Other investments	7,111	51,950
Deferred taxes	70,535	67,773
Prepaid expenses and other	28,098	30,452
Total current assets	5,031,628	5,244,420
Banking/Finance Assets
Cash and cash equivalents	97,055	121,912
Investment securities, trading	70,667	110,600
Investment securities, available-for-sale	457,589	472,055
Loans held for sale	13,117	15,711
Loans receivable, net	362,393	310,504
Other	9,212	8,383
Total banking/finance assets	1,010,033	1,039,165
Non-Current Assets
Investment securities, available-for-sale	103,291	108,838
Investments in equity method investees and other	399,600	398,995
Deferred sales commissions	105,050	103,993
Property and equipment, net	530,926	535,459
Goodwill	1,439,874	1,436,626
Other intangible assets, net	567,345	567,974
Other	36,382	32,993
Total non-current assets	3,182,468	3,184,878
Total Assets	9,224,129	9,468,463
Current Liabilities
Compensation and benefits	158,819	210,789
Commercial paper	256,657	64,156
Accounts payable and accrued expenses	159,905	174,525
Commissions	240,781	219,356
Income taxes	128,297	28,363
Other	26,848	28,351
Total current liabilities	971,307	725,540
Banking/Finance Liabilities
Deposits	689,245	664,580
Federal Home Loan Bank advances	66,000	57,000
Other	18,613	24,653
Total banking/finance liabilities	773,858	746,233
Non-Current Liabilities
Deferred taxes	223,645	218,845
Other	83,929	78,284
Total non-current liabilities	307,574	297,129
Total liabilities	2,052,739	1,768,902
Commitments and Contingencies (Note 11)
Redeemable noncontrolling interests	34,313	65,126
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; 228,205,363 and 229,324,345 shares issued and outstanding, at December 31, 2009 and September 30, 2009	22,821	22,932
Retained earnings	6,986,831	7,505,890
Accumulated other comprehensive income	125,399	103,351
Total Franklin Resources, Inc. stockholders' equity	7,135,051	7,632,173
Nonredeemable noncontrolling interests	2,026	2,262
Total stockholders' equity	7,137,077	7,634,435
Total Liabilities and Stockholders' Equity	$9,224,129	$9,468,463

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
	Dec. 31, 2009	Sep. 30, 2009
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	228,205,363	229,324,345
Common stock, shares outstanding	228,205,363	229,324,345

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Thousands	3 Months Ended Dec. 31, 2009	3 Months Ended Dec. 31, 2008	Sep. 30, 2009	Sep. 30, 2008
Net Income	$357,549	$109,929
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	66,001	46,680
Stock-based compensation	19,619	18,719
Excess tax benefits from stock-based compensation arrangements	(9,502)	(3,012)
Net (gains) losses on sale of assets	(1,715)	12,064
Equity in net (income) losses of affiliated companies	(4,150)	25,460
Provision for loan losses	1,053	4,102
Other-than-temporary impairment of investments	1,462	33,849
Deferred income taxes	(106)	(3,472)
Changes in operating assets and liabilities:
(Increase) decrease in receivables, prepaid expenses and other	(56,321)	112,161
Principal collected on loans held for sale, net	1,668	4,613
Increase in trading securities, net	(74,237)	(33,452)
Advances of deferred sales commissions	(47,326)	(17,303)
Increase (decrease) in income taxes payable	114,691	(3,093)
Increase (decrease) in commissions payable	21,425	(61,917)
Decrease in other liabilities	(19,528)	(38,715)
Decrease in accrued compensation and benefits	(53,508)	(164,668)
Net cash provided by operating activities	317,075	41,945
Purchase of investments	(166,982)	(473,937)
Liquidation of investments	231,096	671,543
Purchase of banking/finance investments	0	(39,692)
Liquidation of banking/finance investments	67,119	9,122
(Increase) decrease in loans receivable	(52,494)	14,320
Additions of property and equipment, net	(9,590)	(21,784)
Acquisitions of subsidiaries, net of cash acquired	0	533
Net cash provided by investing activities	69,149	160,105
Increase in bank deposits, net	24,665	206,327
Exercise of common stock options	8,303	3,084
Dividends paid on common stock	(732,970)	(46,540)
Purchase of common stock	(173,996)	(40,678)
Excess tax benefits from stock-based compensation arrangements	9,502	3,012
Proceeds from issuance of commercial paper, net	192,451	22,815
Proceeds from issuance of debt	9,000	49,250
Payments on debt	0	(67,551)
Noncontrolling interests, net	22,454	22,352
Net cash (used in) provided by financing activities	(640,591)	152,071
Effect of exchange rate changes on cash and cash equivalents	224	(44,876)
(Decrease) increase in cash and cash equivalents	(254,143)	309,245
Cash and cash equivalents, beginning of period	3,104,451	2,527,552
Cash and Cash Equivalents, End of Period	2,850,308	2,836,797	3,104,451	2,527,552
Cash and cash equivalents, beginning of period:
Current assets	2,982,539	2,314,818
Banking/finance assets	121,912	212,734
Cash and cash equivalents, beginning of period	3,104,451	2,527,552
Cash and cash equivalents, end of period:
Current assets	2,753,253	2,453,127	2,982,539	2,314,818
Banking/finance assets	97,055	383,670	121,912	212,734
Cash and Cash Equivalents, End of Period	2,850,308	2,836,797	3,104,451	2,527,552
Supplemental Disclosure of Non-Cash Information
Change in assets related to the net deconsolidation of certain sponsored investment products	(63,020)	(85,196)
Change in liabilities related to the net deconsolidation of certain sponsored investment products	(6,753)	(51,685)
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	40,476	64,265
Cash paid for interest	$1,707	$3,035

Basis of Presentation

Basis of Presentation
	3 Months Ended Dec. 31, 2009 USD / shares
Basis of Presentation	Note 1 - Basis of Presentation The unaudited interim financial statements of Franklin Resources, Inc. (Franklin) and its consolidated subsidiaries (collectively, the Company) included herein have been prepared 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 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, 2009 (fiscal year 2009). Certain amounts for the comparative prior fiscal year periods have been reclassified to conform to the financial statement presentation as of and for the period ended December31, 2009, including those required by the retrospective adoption of new accounting guidance relating to noncontrolling interests and the computation of earnings per share (see Note 2 New Accounting Standards). The Company has evaluated subsequent events through February8, 2010, which is the date that this Quarterly Report on Form 10-Q is filed with the SEC.

New Accounting Standards

New Accounting Standards
	3 Months Ended Dec. 31, 2009 USD / shares
New Accounting Standards	Note 2 - New Accounting Standards The Company adopted the following accounting standards during the three months ended December31, 2009. There were no significant updates to new accounting standards not yet adopted by the Company as disclosed in its Form 10-K for fiscal year 2009. In September 2009, the Financial Accounting Standards Board (FASB) issued a new standard that permits a reporting entity to measure the fair value of certain alternative investments that do not have a readily determinable fair value on the basis of the investments net asset value per share or its equivalent. The adoption of the standard had no impact on the Companys consolidated financial statements. In December 2007, the FASB issued a new standard that establishes accounting and reporting standards for noncontrolling interests in a subsidiary (previously referred to as minority interests) and for the deconsolidation of a subsidiary. The standard clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as a component of equity, separate from the parents equity, in the consolidated financial statements. In addition, it modifies the presentation of consolidated net income to include the amount attributable to noncontrolling interests. The standard requires retrospective adoption of the presentation and disclosure requirements for existing noncontrolling interests. All other requirements of the standard are applied prospectively. The adoption of the standard did not have a material effect on the Companys consolidated financial position or results of operations, but resulted in changes in financial statement presentation and disclosure for all periods presented. Minority interests have been recharacterized as redeemable noncontrolling interests and classified as temporary equity, if currently redeemable or convertible for cash or other assets at the option of the holder, or otherwise as nonredeemable noncontrolling interests and classified as a component of equity. Additionally, the presentation of consolidated net income was modified to include the amount attributable to noncontrolling interests. In June 2008, the FASB issued a new standard that specifies that unvested share-based payment awards containing nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. All prior period earnings per share data presented must be adjusted retrospectively. The adoption of the standard did not have a material impact on basic or diluted earnings per share.

Stockholders' Equity and Compre

Stockholders' Equity and Comprehensive Income
	10/1/2009 - 12/31/2009 USD / shares
Stockholders' Equity and Comprehensive Income	Note 3 - Stockholders Equity and Comprehensive Income The changes in stockholders equity and redeemable noncontrolling interests for the three months ended December31, 2009 and 2008 were as follows: (in thousands) Franklin Resources,Inc. Stockholders Equity Nonredeemable Noncontrolling Interests Total Stockholders Equity Redeemable Noncontrolling Interests Balance at October1, 2009 $ 7,632,173 $ 2,262 $ 7,634,435 $ 65,126 Net income 355,603 216 355,819 1,730 Other comprehensive income Net unrealized gains on investments, net of tax 12,438 12,438 Currency translation adjustments 9,447 9,447 Net unrealized gains on defined benefit plans, net of tax 163 163 Cash dividends on common stock (736,926 ) (736,926 ) Repurchase of common stock (173,996 ) (173,996 ) Other 36,149 (452 ) 35,697 (32,543 ) Balance at December31, 2009 $ 7,135,051 $ 2,026 $ 7,137,077 $ 34,313 (in thousands) Franklin Resources,Inc. Stockholders Equity Nonredeemable Noncontrolling Interests Total Stockholders Equity Redeemable Noncontrolling Interests Balance at October1, 2008 $ 7,074,364 $ 29,608 $ 7,103,972 $ 47,554 Net income (loss) 120,900 (3,922 ) 116,978 (7,049 ) Other comprehensive income Net unrealized losses on investments, net of tax (7,832 ) (7,832 ) Currency translation adjustments (81,999 ) (81,999 ) Cash dividends on common stock (48,871 ) (48,871 ) Repurchase of common stock (40,678 ) (40,678 ) Other 22,362 (23,220 ) (858 ) 12,060 Balance at December31, 2008 $ 7,038,246 $ 2,466 $ 7,040,712 $ 52,565 The components of comprehensive income, including amounts attributable to redeemable noncontrolling interests, were as follows: (in thousands) Three Months Ended December31, 2009 2008 Net income $ 357,549 $ 109,929 Net unrealized gains (losses) on investments, net of tax 12,438 (7,832 ) Currency translation adjustments 9,447 (81,999 ) Net unrealized gains on defined benefit plans, net of tax 163 Total Comprehensive Income 379,597 20,098 Less: Comprehensive income (loss) attributable to noncontrolling interests 1,946 (10,971 ) Total Comprehensive Income attributable to Franklin Resources, Inc. $ 377,651 $ 31,069

Earnings per Share

Earnings per Share
	3 Months Ended Dec. 31, 2009 USD / shares
Earnings per Share	Note 4 - Earnings per Share Effective October1, 2009, the Company retrospectively adopted a new FASB standard that modifies the earnings per share calculation to recognize its nonvested stock awards and nonvested stock unit awards that contain nonforfeitable rights to dividends or dividend equivalents as if they were a separate class of stock. 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 two-class method. The nonvested stock awards and nonvested stock unit awards are not included as incremental shares in the diluted earnings per share calculation. The components of basic and diluted earnings per share were as follows: (in thousands, except per share data) Three Months Ended December31, 2009 2008 Net Income attributable to Franklin Resources, Inc. $ 355,603 $ 120,900 Less: Allocation of earnings to nonvested stock awards and stock unit awards 3,265 860 Net Income Available to Common Stockholders $ 352,338 $ 120,040 Weighted-average shares outstanding basic 227,892 231,626 Effect of dilutive common stock options 1,359 1,062 Weighted-Average Shares Outstanding Diluted 229,251 232,688 Earnings per Share Basic $ 1.55 $ 0.52 Diluted $ 1.54 $ 0.52

Cash and Cash Equivalents

Cash and Cash Equivalents
	3 Months Ended Dec. 31, 2009 USD / shares
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 its condensed consolidated balance sheets. Cash and cash equivalents consisted of the following: (in thousands) December31, 2009 September30, 2009 Cash on hand and non-interest-bearing deposits with financial institutions $ 39,276 $ 134,508 Interest-bearing deposits with financial institutions 426,482 350,483 Federal funds sold 18,468 5,242 Sponsored money market funds 1,008,706 1,407,801 Time deposits, securities of the U.S. Treasury and federal agencies and other 1,357,376 1,206,417 Total $ 2,850,308 $ 3,104,451 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 balances were $6.8 million at December31, 2009 and $7.0 million at September30, 2009. The required clearing balance was $1.2 million at December31, 2009 and September30, 2009. 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.

Investments

Investments
	3 Months Ended Dec. 31, 2009 USD / shares
Investments	Note 6 - Investments Investments consisted of the following: (in thousands) December31, 2009 September30, 2009 Current Investment securities, trading $ 476,403 $ 502,609 Investment securities, available-for-sale Sponsored investment products 911,897 943,824 U.S. government-sponsored enterprise obligations1 76,000 5,200 Securities of U.S. states and political subdivisions 14,124 15,118 Securities of the U.S. Treasury and federal agencies 52,010 50,616 Other equity securities 9,680 12,529 Total investment securities, available-for-sale 1,063,711 1,027,287 Other investments2 7,111 51,950 Total Current $ 1,547,225 $ 1,581,846 Banking/Finance Investment securities, trading $ 70,667 $ 110,600 Investment securities, available-for-sale U.S. government-sponsored enterprise obligations1 351,984 365,655 Securities of U.S. states and political subdivisions 846 852 Securities of the U.S. Treasury and federal agencies 3,415 3,566 Corporate debt securities3 101,139 101,774 Other equity securities 205 208 Total investment securities, available-for-sale 457,589 472,055 Total Banking/Finance $ 528,256 $ 582,655 Non-Current Investment securities, available-for-sale Sponsored investment products $ 29,383 $ 23,947 Securities of U.S. states and political subdivisions 72,727 83,838 Other equity securities 1,181 1,053 Total investment securities, available-for-sale 103,291 108,838 Investments in equity method investees and other 399,600 398,995 Total Non-Current $ 502,891 $ 507,833 1 At December31, 2009 and September30, 2009, U.S. government-sponsored enterprise obligations consisted of $299.8 million and $313.0 million of residential mortgage-backed securities and $128.2 million and $57.9 million of debentures. 2 Other investments consist of time deposits with financial institutions having original maturities greater than three months but not exceeding one year from the date of purchase. 3 Corporate debt securities are insured by the Federal Deposit Insurance Corporation or non-U.S. government agencies. At December31, 2009 and September30, 2009, current investment securities, trading included $249.3 million and $277.6 million of securities held by sponsored investment products that were consolidated in the Companys condensed financial statements. At December31, 2009 and September30, 2009, banking/finance segment investment securities with aggregate carrying values of $239.2 million and $245.9 million were pledged as collateral for the ability to borrow from the Federal Reserve Bank, $95.2 million and $99.6 million were pledged as collateral for outstanding Federal Home Loan Bank (FHLB) borrowings and amounts available in secured FHLB short

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Dec. 31, 2009 USD / shares
Fair Value Measurements	Note 7 - Fair Value Measurements The Company uses 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 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. These inputs require significant management judgment and reflect the Companys estimation of assumptions that market participants would use in pricing the asset or liability. Level 3 valuations are derived primarily from model-based valuation techniques in which one or more significant inputs are unobservable in the market. The Company records substantially all of its investments at fair value or amounts that approximate fair value. Trading securities and securities available-for-sale 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 December31, 2009 Level 1 Level 2 Level 3 Total Current Assets Investment securities, trading $ 362,776 $ 111,859 $ 1,768 $ 476,403 Investment securities, available-for-sale Sponsored investment products 911,897 911,897 U.S. government-sponsored enterprise obligations 76,000 76,000 Securities of U.S. states and political subdivisions 14,124 14,124 Securities of the U.S. Treasury and federal agencies 52,010 52,010 Other equity securities 5,466 4,214 9,680 Banking/Finance Assets Investment securities, trading 40,162 30,505 70,667 Investment securities, available-for-sale U.S. government-sponsored enterprise obligations 351,984 351,984 Securities of U.S. states and political subdivisions 846 846 Securities of the U.S. Treasury and federal agencies 3,415 3,415 Corporate debt securities 101,139 101,139 Other equity securities 205

Securitization of Loans Held fo

Securitization of Loans Held for Sale
	3 Months Ended Dec. 31, 2009 USD / shares
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. 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 December31, 2009 and September30, 2009, the amounts of cash on deposit were $44.8 million and $46.9 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 condensed consolidated balance sheets. Changes in the fair value of the retained interests were recognized in earnings. The Company did not enter into any automobile loan securitization transactions during the three months ended December31, 2009 and 2008. The securitization transactions in which the Company entered into through September30, 2008 were similar in all material respects. As a result of a securitization transaction that the Company entered into in June 2008, it retained the subordinated securities in addition to the residual interests. The remaining retained subordinated securities held by the Company at December31, 2009 had a BBB- credit rating from Standard Poor. The Company determines the fair value of the retained interests in securitized assets at the date of securitization and at the end of each period (see Note 1 Significant Accounting Policies in the Companys Form 10-K for fiscal year 2009 for a description of fair value methodologies used). The following table shows the sensitivity of the retained interests to hypothetical adverse changes in the key economic assumptions used to measure fair value: (dollar amounts in thousands) December31, 2009 September30, 2009 Fair va

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets
	3 Months Ended Dec. 31, 2009 USD / shares
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 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, 2009 $ 1,436,626 $ 200,952 $ 507,737 Foreign currency movements 3,248 134 1,932 Balance at December31, 2009 $ 1,439,874 $ 201,086 $ 509,669 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 were as follows: (in thousands) as of December31, 2009 GrossCarrying Value Accumulated Amortization NetCarrying Value Amortized intangible assets Customer base $ 166,046 $ (111,345 ) $ 54,701 Other 35,040 (32,065 ) 2,975 201,086 (143,410 ) 57,676 Non-amortized intangible assets Management contracts 509,669 509,669 Total $ 710,755 $ (143,410 ) $ 567,345 (in thousands) as of September30, 2009 GrossCarrying Value Accumulated Amortization NetCarrying Value Amortized intangible assets Customer base $ 165,915 $ (109,059 ) $ 56,856 Other 35,037 (31,656 ) 3,381 200,952 (140,715 ) 60,237 Non-amortized intangible assets Management contracts 507,737 507,737 Total $ 708,689 $ (140,715 ) $ 567,974 The Company completed its most recent annual impairment tests of goodwill and indefinite-lived intangible assets during the quarter ended September30, 2009, and determined that there was no impairment in the value of these assets as of August1, 2009. Additionally, no impairment loss in the value of goodwill and indefinite-lived intangible assets was recognized during the three months ended December31, 2009 and 2008. No impairment loss in the value of intangible assets subject to amortization was recognized during the three months ended December31, 2009 and 2008 as the estimates of the undiscounted expected cash flows from these assets exceeded the asset carrying values. Amortization expense related to definite-lived intangible assets was $2.6 million for the three months ended December31, 2009 and 2008. The estimated remaining amortization expense related to definite-lived intangible assets as of December31, 2009 was as follows: (in thousands) For the fiscal years ending September30, Amount 2010 (remaining nine months) $ 7,814 2011 10,406 2012 8,912 2013 8,789 2014 8,789 Thereafter 12,966 Total $ 57,676

Debt

Debt
	3 Months Ended Dec. 31, 2009 USD / shares
Debt	Note 10 - Debt Outstanding debt consisted of the following: (in thousands) December31, 2009 September30, 2009 Current Commercial paper $ 256,657 $ 64,156 Banking/Finance Federal Home Loan Bank advances 66,000 57,000 Total Debt $ 322,657 $ 121,156 At December31, 2009, current debt consisted of commercial paper with a total face value of $256.7 million that was issued at a weighted-average annualized interest rate of 0.20% and matures during the quarter ending March31, 2010. The banking/finance segment has financed its automobile lending business primarily through FHLB advances, which had a total outstanding balance of $66.0 million at December31, 2009. Approximately $15.0 million of these advances mature by December31, 2010, while the remaining $51.0 million mature between June 2011 and January 2039. These advances had a weighted-average interest rate of 2.93% at December31, 2009 and are subject to collateralization requirements. At December31, 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, $243.3 million of short-term commercial paper available for issuance under an uncommitted $500.0 million private placement program, and $14.3 million available in uncommitted short-term bank lines of credit. The revolving credit facility is available for general corporate purposes, including the support of the Companys commercial paper program. It is subject to various financial covenants, including, but not limited to, minimum requirements related to the Companys interest coverage ratio and maintenance of working capital as well as limitations on capitalization ratio, indebtedness, investments and liens. Interest rates on loans under the revolving credit facility are determined at the time of issuance and depend on the type of loan issued. As of December31, 2009, there were no amounts outstanding under the revolving credit facility and the Company was in compliance with the financial covenants related to this facility. In addition, at December31, 2009, the banking/finance segment had $295.0 million available in uncommitted short-term bank lines of credit under the Federal Reserve system, $229.2 million available in secured Federal Reserve Bank short-term discount window and $55.6 million available in secured FHLB short-term borrowing capacity (see Note 6 Investments). At December31, 2009 and September30, 2009, loans receivable with aggregate carrying values of $39.4 million and $30.6 million were pledged as collateral for the ability to obtain FHLB advances.

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Dec. 31, 2009 USD / shares
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 Note 8 Securitization of Loans Held for Sale). At December31, 2009, the banking/finance segment had issued financial standby letters of credit totaling $6.3 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 $7.5 million as of December31, 2009. Legal Proceedings As previously reported, between 2003 and 2006, following industry-wide market timing and late trading investigations by U.S. and Canadian regulators, and U.S. state government offices, Franklin and certain related parties were named in civil lawsuits in the U.S. and one of Franklins adviser subsidiaries was named in civil lawsuits in Canada. In the U.S., the lawsuits were filed against Franklin and certain of its adviser and distributor affiliates, individual Franklin officers and directors, a former Franklin employee, and trustees of certain Franklin Templeton Investments mutual funds (the Funds). In 2004, the lawsuits were consolidated for coordinated proceedings with similar lawsuits against numerous other mutual fund complexes in a multi-district litigation titled In re Mutual Funds Investment Litigation, pending in the U.S. District Court for the District of Maryland, Case No.04-md-15862 (the MDL). Plaintiffs filed consolidated amended complaints in the MDL on September29, 2004. The three consolidated lawsuits involving the Company include a class action (Sharkey IRO/IRA v. Franklin Resources, Inc., et al., Case No.04-cv-01310), a derivative action on behalf of the Funds (McAlvey v. Franklin Resources, Inc., et al., Case No.04-cv-01274), and a derivative action on behalf of Franklin (Hertz v. Burns, et al., Case No.04-cv-01624) and seek, among other forms of relief, one or more of the following: unspecified monetary damages; punitive damages; 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; and attorneys fees and costs. On February25, 2005, the Company-related parties filed motions to dismiss the consolidated amended class action and Fund derivative action complaints. On June26, 2008, the court issued its order granting in part and denying in part the Companys motion to dismiss the consolidated amended class action complaint. In its order, the court dismissed certain claims, while allowing others under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and under Sections 36(b) and 48(a) of the Investment Company Act of 1940 to remain, and dismissed all class action claims against the named Funds. Pursuant to stipulation, the court also dismissed all claims against certain individual defendants, including the independent trustees to the named Funds

Stock-Based Compensation

Stock-Based Compensation
	3 Months Ended Dec. 31, 2009 USD / shares
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 December31, 2009, approximately 3.5million 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 USIP. 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(in Years) Aggregate Intrinsic Value Outstanding at September30, 2009 2,737 $ 37.86 Exercised (225 ) 36.69 Outstanding and Exercisable at December31, 2009 2,512 $ 37.97 2.5 $ 169,284 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. Cash received from stock option exercises for the three months ended December31, 2009 and 2008 was $8.3 million and $3.1 million. Income tax benefits from stock option exercises were $8.7 million and $3.4 million for the three months ended December31, 2009 and 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 $127.2 million at December31, 2009. This cost is expected to be recognized over a remaining weighted-average vesting period of 1.9 years. The following table summarizes nonvested stock award and stock unit award activity: (shares in thousands) Shares Weighted- AverageGrant- Date Fair Valueper Sh

Common Stock Repurchases

Common Stock Repurchases
	3 Months Ended Dec. 31, 2009 USD / shares
Common Stock Repurchases	Note 13 - Common Stock Repurchases During the three months ended December31, 2009, the Company repurchased 1.6million shares of its common stock at a cost of $174.0 million. The common stock repurchases made as of December31, 2009 reduced capital in excess of par value to nil and the excess amount was recognized as a reduction to retained earnings. At December31, 2009, approximately 8.0million shares of common stock remained available for repurchase under the stock repurchase program. During the three months ended December31, 2008, the Company repurchased 0.7million shares of its common stock at a cost of $40.7 million. The stock repurchase program is not subject to an expiration date.

Segment Information

Segment Information
	3 Months Ended Dec. 31, 2009 USD / shares
Segment Information	Note 14 - Segment Information The Company bases its operating segment selection process primarily on services offered. The Company derives substantially all of its operating revenues and net income from providing investment management and related services to its sponsored investment products. This is the Companys primary business activity and operating segment. The Companys investment management and related services are 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 Companys 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. (in thousands) as of and for the three months ended December31, 2009 Investment Management and Related Services Banking/ Finance Total Assets $ 8,214,096 $ 1,010,033 $ 9,224,129 Operating revenues 1,366,764 10,647 1,377,411 Income before taxes 508,400 5,885 514,285 for the three months ended December31, 2008 Operating revenues $ 975,959 $ (6,629 ) $ 969,330 Income (losses) before taxes 208,860 (34,160 ) 174,700 as of September30, 2009 Assets $ 8,429,298 $ 1,039,165 $ 9,468,463 Operating revenues of the banking/finance segment included above were as follows: (in thousands) Three Months Ended December 31, 2009 2008 Interest and fees on loans $ 4,581 $ 6,053 Interest and dividends on investment securities 3,641 6,976 Total interest income 8,222 13,029 Interest on deposits (1,300 ) (1,758 ) Interest on short-term debt (6 ) (771 ) Interest on long-term debt (452 ) (410 ) Total interest expense (1,758 ) (2,939 ) Net interest income 6,464 10,090 Unrealized gains (losses) on trading investments, net 205 (17,703 ) Other income 5,031 5,086 Provision for loan losses (1,053 ) (4,102 ) Total $ 10,647 $ (6,629 )

Other Income

Other Income (Expenses)
	3 Months Ended Dec. 31, 2009 USD / shares
Other Income (Expenses)	Note 15 - Other Income (Expenses) Other income (expenses) consisted of the following: (in thousands) Three Months Ended December31, 2009 2008 Consolidated Sponsored Investment Products Gains (Losses), Net Realized gains (losses), net $ 5,056 $ (26,923 ) Unrealized gains (losses), net 10,016 (20,519 ) Total 15,072 (47,442 ) Investment and Other Income (Losses), Net Dividend income 10,548 12,439 Interest income 3,581 11,603 Capital gain distributions 862 14,222 Other-than-temporary impairment of investment securities, available-for-sale (1,462 ) (33,849 ) Realized gains on sale of investment securities, available-for-sale 2,130 1,833 Realized losses on sale of investment securities, available-for-sale (487 ) (14,115 ) Gains (losses) on trading investment securities, net 12,389 (26,556 ) Income (losses) from investments in equity method investees 4,150 (25,460 ) Foreign currency exchange (losses) gains, net (1,422 ) 12,545 Other, net 2,689 2,316 Total 32,978 (45,022 ) Interest expense (742 ) (1,200 ) Other income (expenses), net $ 47,308 $ (93,664 ) Substantially all of the Companys dividend income, capital gain distributions, and realized gains and losses on sale of investment securities, available-for-sale were generated by investments in its 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 $105.6 million and $80.3 million for the three months ended December31, 2009 and 2008. The Company recognized net gains (losses) on trading investment securities, including securities held by consolidated sponsored investment products, that were still held at December31, 2009 and 2008 in the amounts of $10.4 million and $(46.3) million during the three months ended December31, 2009 and 2008.

Banking Regulatory Ratios

Banking Regulatory Ratios
	3 Months Ended Dec. 31, 2009 USD / shares
Banking Regulatory Ratios	Note 16 - Banking Regulatory Ratios Franklin 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 Companys consolidated 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 the Company 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 Companys calculations as of December31, 2009 and September30, 2009, it exceeded the applicable capital adequacy requirements as listed below. (dollar amounts in thousands) December31, 2009 September30, 2009 Capital Adequacy Minimum Tier 1 capital $ 4,996,501 $ 5,495,995 N/A Total risk-based capital 5,003,150 5,503,022 N/A Tier 1 leverage ratio 68% 75% 4% Tier 1 risk-based capital ratio 97% 97% 4% Total risk-based capital ratio 97% 97% 8%

Document Information

Document Information
	3 Months Ended Dec. 31, 2009 USD / shares
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-12-31

Entity Information

Entity Information (USD $)
	3 Months Ended Dec. 31, 2009	Jan. 31, 2010
Trading Symbol	BEN
Entity Registrant Name	FRANKLIN RESOURCES INC
Entity Central Index Key	0000038777
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		228,220,726