Contact: Franklin Resources, Inc.
Investor Relations: Alan Weinfeld (650) 525-8900
Corporate Communications: Holly Gibson Brady (650) 312-4701
franklintempleton.com
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FOR IMMEDIATE RELEASE
FRANKLIN RESOURCES, INC. ANNOUNCES FIRST QUARTER RESULTS
SAN MATEO, CA, JANUARY 25, 2001 -- Franklin Resources, Inc. (Franklin
Templeton Investments) (NYSE: BEN) today reported net income of $149.5 million,
including net pre-tax realized gains of approximately $17 million more than the
previous quarter or $0.05 per share diluted after tax. Net income was $0.61 per
share diluted, on revenues of $564.1 million for the quarter ended December 31,
2000, compared with net income of $140.8 million, or $0.58 per share diluted, on
revenues of $593.1 million in the preceding quarter and net income of $137.5
million, or $0.55 per share diluted, on revenues of $565.7 million in the
comparable quarter a year ago. Operating revenues for this quarter decreased 5%
from the quarter ended September 30, 2000, due to a decrease in average assets
under management and reduced underwriting and distribution fee revenues. The
company's operating expenses were down this quarter as compared to last quarter,
despite the increase in compensation expense primarily related to annual salary
increases awarded at fiscal year end.
As of December 31, 2000, assets under management by the company's
subsidiaries were $226.9 billion, as compared to $235.0 billion at this time
last year. Simple monthly average assets under management during the current
quarter were $226.5 billion compared to $231.4 billion in the preceding quarter
and $224.1 billion in the same quarter a year ago. Approximately $3.7 billion of
assets under management were added in October 2000 from the company's Bissett &
Associates Investment Management Ltd. acquisition. Equity assets now comprise
65% of total assets under management as compared to 66% at December 31, 1999.
Fixed income assets now comprise 29% of total assets under management as
compared to 27%, at the same time last year. For the three-month period ended
December 31, 2000, sales and reinvested dividends exceeded redemptions ("net
inflows") complex-wide by $2.6 billion. In the quarter ended September 30, 2000,
redemptions exceeded sales and reinvested dividends ("net outflows") by $1.6
billion and in the quarter ended December 31, 1999 net inflows were $0.7
billion. Domestic equity and fixed income products continued to have strong
relative performance to peer groups, while our global equity products' relative
performance improved materially compared to peer groups.
FIRST QUARTER 2001 HIGHLIGHTS
PERFORMANCE AND PRODUCTS
o Franklin Templeton Investments' overall U.S. domestic diversified equity
funds ranked #2 out of the 20 largest fund companies for one-year
performance through December 31, 2000, up from #7 last year and #20 in 1998
(Kanon Bloch Carre industry report, January 2001).
o Franklin Income Fund Class A ranked #1 out of 88 funds in LIPPER'S Income
Funds category for its one-year performance of 20.59%.
o Franklin Convertible Securities Fund Class A ranked #1 out of 64 funds in
LIPPER'S Convertible Securities Funds category for its one-year performance
of 15.36%.
o Mutual Series value-oriented products were up between 12% and 14% in 2000,
with Mutual Financial Services up 31%, placing all in their top two LIPPER
quartiles.
o Ninety-nine percent of Franklin tax-free income Class A assets were rated
four- or five-star by Morningstar. Sixty-nine percent ranked in the top
half of their LIPPER peer groups for one-year period and 91% for five-year
period ended December 31, 2000.
o For the calendar year 2000, 83% of the Templeton retail funds were in the
top half of their LIPPER peer groups. Templeton Growth Fund recorded return
of 1.74%, beating the MSCI World Index's -12.92% and LIPPER'S Global Funds
Average of -10.27%.
o The following equity and taxable fixed income funds ranked in the top
quartile in their respective LIPPER categories for one-year return of their
Class A shares as of December 31, 2000: Franklin Equity Income Fund,
Franklin Growth and Income Fund, Franklin Growth Fund, Franklin Real Estate
Securities Fund, Franklin Strategic Income Fund, Franklin Strategic
Mortgage Fund, Franklin Utilities Fund, Mutual Discovery Fund, Mutual
European Fund, Mutual Financial Services Fund and Templeton Growth Fund.
o Franklin Global Health Care Fund Class A was up 69.27% for one-year
performance as of December 31, 2000.
o Bissett Canadian Equity Fund Class A returned 19.7% for the year ended
December 31, 2000, outperforming the TSE 300 Index's return of 7.4%.
o Franklin Private Client Group's calendar year-end assets under management
increased more than 64% over 1999. Small cap, the group's fastest growing
investment strategy, returned approximately 9.20% for the year ended
December 31, 2000 while its benchmark, the Russell 2000 Growth Index, was
down -22.43% for the same time period.
o Introduced Franklin Global Growth Fund and Franklin Global Aggressive
Growth Fund in U.S. and Franklin World Growth Fund in Canada. Fiduciary
Trust Company International is advising the funds on behalf of Franklin.
o In partnership with Merrill Lynch, Franklin Templeton Investments launched
portfolios for NextGen(SM) College Savings Program, qualified state tuition
savings program under section 529 of the Internal Revenue Code, and offered
by the State of Maine.
GLOBAL BUSINESS DEVELOPMENTS
o Agreed to acquire Fiduciary Trust Company International to strengthen
presence in high net worth and institutional markets worldwide. Acquisition
scheduled to close by March 2001, pending shareholder and regulatory
approvals.
o Cross-company teams established to examine most effective ways to leverage
the strengths of the businesses with Fiduciary.
o Purchase of Bissett & Associates Investment Management Ltd., a
top-performing Canadian equity and fixed income manager, completed in early
October.
o Launched Wealth Management Group to serve high net worth individuals,
families, and private foundations in the western U.S. with personalized
investment management and comprehensive fiduciary services. Customized
multiple mandates and alternate investment strategies are provided.
o Received license from Swiss Federal Banking Commission to market over 30
equity and bond funds in Switzerland.
GLOBAL SERVICE ENHANCEMENTS
o U.S. domestic transfer agent ranked fifth out of the ten Top Market Leaders
in service rating agency Dalbar's, "Overall Operations Support" category,
up from ninth place in 1999.
o Canadian client service team achieved new highs in Dalbar's "Overall Client
Service" by ranking 4th out of 18 firms for English language service in
2000, up from 9th in 1999, and 5th of 14 firms for French language service
in 2000, up from 11th in 1999.
o Dalbar named franklintempleton.com's investment representative site a top
five "Mutual Fund Overall Web Site" for financial professionals.
o Online quarterly statements made available to fund shareholders via
franklintempleton.com and wholesaler look-up feature added to the
investment representative site.
o Franklin, Templeton and Mutual Series listings now listed under one heading
in THE WALL STREET JOURNAL (R) and other newspapers, allowing shareholders
and investmenT representatives to track more easily all of Franklin
Templeton's U.S. mutual fund performance returns.
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT ASSETS THREE MONTHS ENDED
UNDER MANAGEMENT AND PER SHARE DATA) DECEMBER 31
%
2000 1999 CHANGE
OPERATING REVENUES
Investment management fees $345,785 $344,042 1%
Underwriting and distribution fees 164,362 164,243 -
Shareholder servicing fees 48,222 51,759 (7)%
Other 5,705 5,623 1%
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TOTAL OPERATING REVENUES 564,074 565,667 -
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OPERATING EXPENSES
Underwriting and distribution 145,684 143,168 2%
Compensation and benefits 141,859 130,849 8%
Information systems, technology 57,528 51,631 11%
and occupancy
Advertising and promotion 22,126 22,545 (2)%
Amortization of deferred sales commissions 18,236 20,631 (12)%
Amortization of intangible assets 9,909 9,283 7%
Other 19,754 19,925 (1)%
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TOTAL OPERATING EXPENSES 415,096 398,032 4%
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OPERATING INCOME 148,978 167,635 (11)%
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OTHER INCOME (EXPENSE)
Investment and other income 49,956 16,679 200%
Interest expense (2,270) (3,364) (33)%
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OTHER INCOME (EXPENSE), NET 47,686 13,315 258%
--------------------------
Income before taxes on income 196,664 180,950 9%
Taxes on income 47,199 43,428 9%
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NET INCOME $149,465 $137,522 9%
===========================
EARNINGS PER SHARE
Basic $0.61 $0.55 11%
Diluted $0.61 $0.55 11%
DIVIDENDS PER SHARE $0.065 $0.06 8%
AVERAGE SHARES OUTSTANDING (IN THOUSANDS)
Basic 243,708 250,432 (3)%
Diluted 244,409 250,592 (2)%
EBITDA MARGIN(1) 38% 37% 3%
OPERATING MARGIN(2) 26% 30% (13)%
ASSETS UNDER MANAGEMENT (IN MILLIONS)
Beginning of Period $229,923 $218,100 5%
Sales 12,678 10,986 15%
Reinvested Dividends 5,419 4,181 30%
Redemptions (15,472) (14,435) 7%
(Depreciation)/appreciation (5,639) 16,215 N/A
END OF PERIOD $226,909 $235,047 (3)%
SIMPLE MONTHLY AVERAGE FOR PERIOD $226,534 $224,135 1%
(1) EBITDA Margin: Earnings before interest, taxes on income, depreciation and
the amortization of intangibles divided by total revenues.
(2) Operating Margin: Operating income divided by total operating revenues.
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT
PER SHARE DATA) THREE MONTHS ENDED
31-DEC-00 30-SEP-00 % 30-JUN-00 31-MAR-00 31-DEC-99
CHANGE
OPERATING REVENUES
Investment management fees $345,785 $354,265 (2)% $344,805 $356,009 $344,042
Underwriting and distribution fees 164,362 179,728 (9)% 165,181 200,133 164,243
Shareholder servicing fees 48,222 52,312 (8)% 54,143 53,202 51,759
Other 5,705 6,745 (15)% 4,768 3,182 5,623
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TOTAL OPERATING REVENUES 564,074 593,050 (5)% 568,897 612,526 565,667
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OPERATING EXPENSES
Underwriting and distribution 145,684 160,416 (9)% 142,684 176,876 143,168
Compensation and benefits 141,859 137,155 3% 133,125 134,581 130,849
Information systems, technology 57,528 59,890 (4)% 50,708 51,441 51,631
and occupancy
Advertising and promotion 22,126 27,477 (19)% 25,279 25,895 22,545
Amortization of deferred sales 18,236 20,416 (11)% 20,980 21,600 20,631
commissions
Amortization of intangible assets 9,909 9,314 6% 9,283 9,283 9,283
Other 19,754 23,483 (16)% 18,006 20,773 19,925
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TOTAL OPERATING EXPENSES 415,096 438,151 (5)% 400,065 440,449 398,032
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OPERATING INCOME 148,978 154,899 (4)% 168,832 172,077 167,635
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OTHER INCOME (EXPENSE)
Investment and other income 49,956 33,841 48% 19,836 19,752 16,679
Interest expense (2,270) (3,418) (34)% (3,998) (3,180) (3,364)
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OTHER INCOME (EXPENSE), NET 47,686 30,423 57% 15,838 16,572 13,315
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Income before taxes on income 196,664 185,322 6% 184,670 188,649 180,950
Taxes on income 47,199 44,499 6% 44,300 45,275 43,428
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NET INCOME $149,465 $140,823 6% $140,370 $143,374 $137,522
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EARNINGS PER SHARE
Basic $0.61 $0.58 5% $0.58 $0.58 $0.55
Diluted $0.61 $0.58 5% $0.58 $0.58 $0.55
DIVIDENDS PER SHARE $0.065 $0.06 8% $0.06 $0.06 $0.06
AVERAGE SHARES OUTSTANDING (IN
THOUSANDS)
Basic 243,708 243,665 - 243,542 246,826 250,432
Diluted 244,409 244,078 - 243,741 246,998 250,592
EBITDA MARGIN(1) 38% 35% 9% 37% 35% 37%
OPERATING MARGIN(2) 26% 26% - 30% 28% 30%
EMPLOYEES 6,328 6,489 (2)% 6,454 6,447 6,631
BILLABLE SHAREHOLDER ACCOUNTS (IN 9.7 9.2 5% 10.5 10.5 9.9
MILLIONS)
(1) EBITDA Margin: Earnings before interest taxes on income, depreciation and
the amortization of intangibles divided by total revenues.
(2) Operating Margin: Operating income divided by total operating revenues.
FRANKLIN RESOURCES, INC.
PRELIMINARY SUMMARY BALANCE SHEET
(DOLLAR AMOUNTS IN THOUSANDS)
PRELIMINARY
DECEMBER SEPTEMBER
31, 2000 30, 2000
ASSETS
Current Assets $1,568,222 $1,656,294
Banking Finance Assets 339,171 299,562
Other Assets 2,184,984 2,086,587
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TOTAL ASSETS $4,092,377 $4,042,443
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $404,396 $489,559
Banking/Finance Liabilities 266,964 238,954
Other Liabilities 342,725 348,437
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Total Liabilities 1,014,085 1,076,950
Total Stockholders' Equity 3,078,292 2,965,493
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,092,377 $4,042,443
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ENDING SHARES OF COMMON STOCK OUTSTANDING 244,129 243,730
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ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(In billions)
31-DEC-00 30-SEP-00 30-JUN-00 31-MAR-00 31-DEC-99
EQUITY
Global/international $96.4 $97.6 $103.6 $106.2 $111.0
Domestic 50.0 53.9 49.6 49.3 44.3
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Total Equity 146.4 151.5 153.2 155.5 155.3
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HYBRID FUNDS 10.1 9.3 8.9 9.0 9.6
FIXED INCOME
Tax-free 45.0 44.0 43.8 44.6 45.2
Taxable
Domestic 16.2 15.6 15.3 15.0 15.4
Global/international 3.7 4.2 3.5 3.6 3.9
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Total Fixed Income 64.9 63.8 62.6 63.2 64.5
MONEY FUNDS 5.5 5.3 5.2 5.7 5.6
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TOTAL ENDING ASSETS $226.9 $229.9 $229.9 $233.4 $235.0
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SIMPLE MONTHLY AVERAGE ASSETS $226.5 $231.4 $228.0 $231.0 $224.1
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ASSETS UNDER MANAGEMENT & FLOWS
(IN BILLIONS)
THREE MONTHS ENDED
31-DEC-00 30-SEP-00 % CHANGE 31-DEC-99 % CHANGE
BEGINNING ASSETS UNDER MANAGEMENT $229.9 $229.9 - $218.1 5%
US RETAIL ASSETS
Beginning Assets $174.1 $172.5 1% $166.2 5%
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Sales 7.9 8.3 (5)% 7.4 7%
Reinvested Dividends 5.0 0.6 733% 4.1 22%
Redemptions (10.9) (10.0) 9% (10.9) -
Appreciation/(Depreciation) (7.6) 2.7 N/A 8.8 N/A
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Ending Assets 168.5 174.1 (3)% 175.6 (4)%
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OTHER ASSETS, INCLUDING INTERNATIONAL AND INSTITUTIONAL
Beginning Assets 55.8 57.4 (3)% 51.9 8%
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Sales 4.8 3.3 45% 3.6 33%
Reinvested Dividends 0.4 0.0 100% 0.1 300%
Redemptions (4.6) (3.8) 21% (3.6) 28%
Appreciation/(Depreciation) 2.0 (1.1) N/A 7.4 (73)%
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Ending Assets 58.4 55.8 5% 59.4 (2)%
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ENDING ASSETS UNDER MANAGEMENT $226.9 $229.9 (1)% $235.0 (3)%
TOTAL ASSETS UNDER MANAGEMENT
BEGINNING ASSETS $229.9 $229.9 - $218.1 5%
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Sales 12.7 11.6 9% 11.0 15%
Reinvested Dividends 5.4 0.6 800% 4.2 29%
Redemptions (15.5) (13.8) 12% (14.5) 7%
Appreciation/(Depreciation) (5.6) 1.6 N/A 16.2 N/A
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ENDING ASSETS $226.9 $229.9 (1)% 235.0 (3)%
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Note: A significant number of institutional assets are invested in U.S. Retail funds and are
disclosed in that category in the above table. Total institutional assets at December 31, 2000
were over $50 billion.
ASSETS UNDER MANAGEMENT & FLOWS BY INVESTMENT OBJECTIVE
(In billions)
THREE MONTHS ENDED
31-DEC-00 30-SEP-00 31-DEC-99
GLOBAL/INTERNATIONAL EQUITY
Beginning Assets $97.6 $103.6 $96.8
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Sales 3.7 3.8 5.4
Reinvested Dividends 2.9 0.0 2.1
Redemptions (6.7) (6.6) (5.9)
Appreciation/(Depreciation) (1.1) (3.2) 12.6
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Ending Assets 96.4 97.6 111.0
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DOMESTIC EQUITY
Beginning Assets 53.9 49.6 37.6
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Sales 3.4 3.7 2.0
Reinvested Dividends 1.7 0.0 1.4
Redemptions (2.3) (2.6) (2.5)
Appreciation/(Depreciation) (6.7) 3.2 5.8
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Ending Assets 50.0 53.9 44.3
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HYBRID
Beginning Assets 9.3 8.9 10.2
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Sales 0.2 0.2 0.2
Reinvested Dividends 0.2 0.1 0.1
Redemptions (0.4) (0.4) (0.6)
Appreciation/(Depreciation) 0.8 0.5 (0.3)
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Ending Assets 10.1 9.3 9.6
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TAX-FREE INCOME
Beginning Assets 44.0 43.8 48.2
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Sales 0.9 0.8 0.9
Reinvested Dividends 0.3 0.3 0.3
Redemptions (1.2) (1.3) (2.4)
Appreciation/(Depreciation) 1.0 0.4 (1.8)
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Ending Assets 45.0 44.0 45.2
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TAXABLE FIXED INCOME
Beginning Assets 19.8 18.8 19.7
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Sales 1.5 1.3 1.0
Reinvested Dividends 0.2 0.1 0.2
Redemptions (1.3) (1.0) (1.2)
Appreciation/(Depreciation) (0.3) 0.6 (0.4)
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Ending Assets 19.9 19.8 19.3
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MONEY FUNDS
Beginning Assets 5.3 5.2 5.6
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Sales 3.0 1.8 1.5
Reinvested Dividends 0.1 0.1 0.1
Redemptions (3.6) (1.9) (1.9)
Appreciation/(Depreciation) 0.7 0.1 0.3
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Ending Assets 5.5 5.3 5.6
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ENDING ASSETS UNDER MANAGEMENT $226.9 $229.9 $235.0
CONFERENCE CALL INFORMATION
As previously announced, members of the investment community and general public
are invited to listen to the conference call TODAY, THURSDAY, JANUARY 25, 2001
AT 1:30 PM PACIFIC TIME, by dialing one of the following numbers approximately
TEN MINUTES prior to the scheduled starting time: (800) 230-1085 (U.S. callers)
or (612) 288-0340 (international callers.)
A live broadcast of the conference call will also be available on the Internet.
To access the call, visit franklintempleton.com and click the appropriate
hotlink on the home page.
REPLAY
A replay of the conference call will be available beginning January 25, 2001 at
5:00 pm Pacific Time and will run through February 1, 2001 at 11:59 pm Pacific
Time. To access the replay, please dial (800) 475-6701 (U.S. callers) or (320)
365-3844 (international callers) and enter access code 561146.
Franklin Templeton Investments provides global and domestic investment
management, shareholder and distribution services to the Franklin, Templeton and
Mutual Series mutual funds, institutional and private accounts in approximately
125 different nations worldwide. Franklin Templeton Investments' headquarters
are located at 777 Mariners Island Blvd., San Mateo, CA.
FORWARD-LOOKING STATEMENTS:
Statements in this presentation regarding Franklin Resources, Inc.'s
business and proposed acquisition of Fiduciary Trust Company International which
are not historical facts are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve a number of risks, uncertainties and other important factors
that could cause the actual results and outcomes to differ materially from any
future results or outcomes expressed or implied by such forward-looking
statements. Such risks, uncertainties and other important factors include the
following:
o We face strong competition from numerous and sometimes larger companies.
o Competing securities dealers and banks could restrict sales of our funds.
o Changes in the distribution channels on which we depend could reduce our
revenues and hinder our growth.
o New share classes that we have introduced yield lower revenues and have
reduced operating margins.
o If our asset mix shifts to predominantly fixed-income products, our
revenues could decline.
o We have become subject to an increased risk of asset volatility from
changes in the global equity markets.
o The levels of our assets under management are subject to significant
fluctuations.
o We face risks associated with conducting operations in numerous foreign
countries.
o General economic and securities markets fluctuations may reduce our sales
and market share.
o Our inability to meet cash needs could have a negative effect on our
financial condition and business operations.
o We face increased competition in hiring and retaining qualified employees.
o Our emerging market portfolios and related revenues are vulnerable to
political and economic risks associated with emerging markets.
o Diverse and strong competition limits the interest rates that we can charge
on consumer loans.
o Following the acquisition we will be subject to Federal Reserve Board
regulation.
o Fluctuating market prices that could cause the value of the Franklin's
stock to be received by the Fiduciary shareholders to be less than its
current value.
o The acquisition could adversely affect Franklin's combined financial
results on the market price of its common stock.
o Franklin may not be able to achieve the benefits it expects from the
acquisition.
o Uncertainties associated with the acquisition may cause Fiduciary to be
clients.
Please also refer to the risk factors described in Franklin's recent
filings with the U.S. Securities and Exchange Commission, especially with
respect to Franklin, the "Forward-Looking Statements" section of the
Management's Discussion and Analysis Of Financial Condition and Results of
Operations in Franklin's From 10-K for the fiscal year ended September 30, 2000.
ADDITIONAL INFORMATION:
On December 26, 2000, Franklin filed a registration statement with the
U.S. Securities and Exchange Commission in connection with its proposed
acquisition of Fiduciary Trust Company International. Franklin and Fiduciary
will be jointly preparing an amendment to the registration statement and will be
filing such amendment with the Securities and Exchange Commission as soon as
practicable. FIDUCIARY TRUST COMPANY INTERNATIONAL SHAREHOLDERS ARE URGED TO
READ THE PROSPECTUS AND THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS TO BE FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED TRANSACTION.
Investors will be able to obtain these documents free of charge at the
Commission's website at www.sec.gov or from Franklin by directing such requests
to Investor Relations, Franklin Resources, Inc., 777 Mariners Island Blvd., San
Mateo, CA 94409, (tel: 1-800-632-2350 x28900).