EXHIBIT 99.1
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One Franklin Parkway
San Mateo, CA 94403-1906
tel 650/312.2000
franklintempleton.com
[LOGO OMITTED]
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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 22, 2004 - Franklin Resources, Inc. (Franklin
Templeton Investments) (NYSE: BEN) today reported net income of $172.3 million,
or $0.69 per share diluted on revenues of $806.2 million for the quarter ended
December 31, 2003, including a cumulative effect of an accounting change of $4.8
million, net of tax or $0.02 per share diluted, resulting from adopting FASB
Interpretation No. 46, CONSOLIDATION OF VARIABLE INTEREST ENTITIES (REVISED
DECEMBER 2003). Net income was $152.1 million, or $0.61 per share diluted, on
revenues of $722.0 million in the preceding quarter. In the comparable quarter a
year ago, net income was $109.8 million, or $0.43 per share diluted on revenues
of $605.5 million. Operating income increased 12% this quarter over the prior
quarter and increased 60% over the same quarter in the prior year.
As of December 31, 2003, assets under management by the company's
subsidiaries were $336.7 billion, as compared to $301.9 billion last quarter and
$257.7 billion at this time last year. Simple monthly average assets under
management during the current quarter were $318.7 billion compared to $294.0
billion in the preceding quarter and $254.8 billion in the same quarter a year
ago. Equity assets now comprise 54% of total assets under management as compared
to 51% last quarter and 48% at December 31, 2002. Fixed-income assets now
comprise 29% of total assets under management, as compared to 32% last quarter
and 34% at the same time last year. As of December 31, 2003, hybrid/balanced
assets account for 15% of total assets under management, and remained unchanged
from last quarter and the comparable quarter a year ago. Sales exceeded
redemptions by $7.4 billion for the current quarter compared to $4.9 billion for
the prior quarter and $1.1 billion for the comparable quarter a year ago.
FISCAL FIRST QUARTER 2004 HIGHLIGHTS
PERFORMANCE AND PRODUCTS /1,/2
(See important footnotes in "Supplemental Information" section at the end of the
release.)
* Approximately 70% of Franklin Templeton's long-term mutual fund assets were
in funds ranked in the top two quartiles of their respective LIPPER peer
groups for the one-year period ended December 31, 2003, while approximately
95% of the long-term mutual fund assets were in funds ranked in the top two
quartiles for the three-, five- and 10-year periods ended December 31,
2003./3,/4
* More than 70% of Franklin's equity mutual fund assets were in funds ranked
in the top two quartiles of their respective LIPPER peer groups for the
one-year period ended December 31, 2003, while over 85% of Franklin's
equity mutual fund assets were in funds ranked in the top two quartiles for
the three-, five- and 10-year periods. /3,/5
* Franklin Flex Cap Growth Fund, managed by Franklin Advisers, Inc., ranked
in the top third of its LIPPER peer group for the one-, three-, five- and
10-year periods ended December 31, 2003. The fund was also rated 4 stars
overall by MORNINGSTAR as of December 31, 2003. /6,/7
* Franklin Income Fund, Franklin Templeton's largest fund with $18 billion in
assets, ranked in the top decile of its LIPPER peer group for the one-,
three- and five-year periods and ranked in the top two quartiles of its
LIPPER peer group for the 10-year period ended December 31, 2003. The fund,
managed by Franklin Advisers, Inc., was also rated 4 stars overall by
MORNINGSTAR as of December 31, 2003. /6,/8
* Templeton Growth Fund and Templeton World Fund ranked in the top two
quartiles of their LIPPER peer group over the one-year period, and ranked
in the top quartile over the three-, five- and 10-year periods ended
December 31, 2003. The funds, managed by Templeton Global Advisors Limited,
were also rated 4 stars overall by MORNINGSTAR as of December 31, 2003.
/6,/9
* All six Mutual Series open-end funds received Lipper Leaders awards for
Total Return and Preservation as of December 31, 2003. /10
* Over 97% of Franklin tax-free income mutual fund assets were in funds
ranked in the top two quartiles of their respective LIPPER peer groups for
the one-, three-, five- and 10-year periods ended December 31, 2003. /3,/11
* Franklin Federal Tax-Free Income Fund, managed by Franklin Advisers, Inc.,
ranked in the top two quartiles of its LIPPER peer group for the one-,
three-, five- and 10-year periods ended December 31, 2003. The fund was
also rated 4 stars overall by MORNINGSTAR as of December 31, 2003. /6,/12
GLOBAL BUSINESS DEVELOPMENTS
* Franklin Resources appointed Martin Flanagan and Greg Johnson as co-CEOs
effective January 1, 2004.
* Franklin Templeton's assets under management in Italy, Hong Kong and India
crossed the $1 billion, $2 billion and $3 billion marks, respectively.
* Since the acquisition in October 2000, Bissett assets under management have
increased approximately 90% to more than $7 billion.
* Shares of Franklin Mutual Recovery Fund were made available for sale to
retail investors.
* Templeton Growth (Euro) Fund and Franklin High Yield Fund, two foreign-sold
Franklin Templeton Investment Funds (SICAV), each crossed the $3 billion
mark in total assets under management.
* MORNINGSTAR Korea ranked Franklin Templeton as 2nd best equity manager and
3rd best fixed-income manager in Korea.
* New fund launches in Canada, Bissett Income Trust and Dividend Fund and
Bissett Canadian Short Term Bond Fund, and two local fund-of-fund products
in India, which invest in existing Franklin Templeton India funds.
* Launched Fiduciary International Small Cap Growth Strategy to U.S.
institutional investors.
* Franklintempleton.com was recognized for the fourth consecutive year as a
"Top 10 Intermediary Web Site" in an annual "Intermediary Web Site Trends
and Best Practices" study by kasina, an internet consultant.
* Fiduciary Trust was awarded the Financial News Award for "Swiss Asset
Management Firm of the Year," which was voted on by a panel of 40 pension
and investment consultants from across Europe.
* Three new Franklin Templeton television commercials aired on major networks
highlighting Franklin Templeton's distinct brands.
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except assets under THREE MONTHS ENDED
management and per share data) DECEMBER 31
%
2003 2002 CHANGE
---- ---- ------
OPERATING REVENUES
Investment management fees $454,508 $351,412 29%
Underwriting and distribution fees 272,752 185,937 47%
Shareholder servicing fees 61,338 48,051 28%
Consolidated sponsored investment products income, net 26 -- N/A
Other, net 17,545 20,051 (12%)
---------------------------------
TOTAL OPERATING REVENUES 806,169 605,451 33%
---------------------------------
OPERATING EXPENSES
Underwriting and distribution 245,879 168,847 46%
Compensation and benefits 189,204 159,118 19%
Information systems, technology and occupancy 69,648 72,595 (4%)
Advertising and promotion 21,232 22,644 (6%)
Amortization of deferred sales commissions 22,448 16,045 40%
Amortization of intangible assets 4,402 4,234 4%
Other 30,496 22,513 35%
---------------------------------
TOTAL OPERATING EXPENSES 583,309 465,996 25%
---------------------------------
OPERATING INCOME 222,860 139,455 60%
---------------------------------
OTHER INCOME (EXPENSES)
Consolidated sponsored investment products gains, net 4,000 -- N/A
Investment and other income 16,191 12,303 32%
Interest expense (7,111) (3,032) 135%
---------------------------------
OTHER INCOME, NET 13,080 9,271 41%
---------------------------------
Income before taxes on income and cumulative effect of an
accounting change 235,940 148,726 59%
Taxes on income 68,423 38,966 76%
---------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF AN ACCOUNTING
CHANGE, NET OF TAX 167,517 109,760 53%
Cumulative effect of an accounting change, net of tax 4,779 -- N/A
---------------------------------
NET INCOME $172,296 $109,760 57%
=================================
BASIC EARNINGS PER SHARE
Income before cumulative effect of an accounting change
$0.68 $0.43 58%
Cumulative effect of an accounting change 0.02 -- N/A
---------------------------------
Net income $0.70 $0.43 63%
=================================
DILUTED EARNINGS PER SHARE
Income before cumulative effect of an accounting change $0.67 $0.43 56%
Cumulative effect of an accounting change 0.02 -- N/A
---------------------------------
Net income $0.69 $0.43 60%
=================================
DIVIDENDS PER SHARE $0.085 $0.075 13%
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 247,758 257,600 (4%)
Diluted 250,234 258,218 (3%)
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except assets under
management and per share data)
THREE MONTHS ENDED
DECEMBER 31
%
2003 2002 CHANGE
---- ---- ------
OPERATING MARGIN /1 28% 23% --
ASSETS UNDER MANAGEMENT (in millions)
Beginning of period $301,857 $247,760 22%
Sales 23,829 17,124 39%
Reinvested distributions 1,920 1,437 34%
Redemptions (16,448) (16,035) 3%
Distributions (2,659) (2,095) 27%
Acquisitions 878 -- N/A
Appreciation 27,344 9,544 187%
END OF PERIOD $336,721 $257,735 31%
SIMPLE MONTHLY AVERAGE FOR PERIOD $318,739 $254,842 25%
/1 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-03 30-SEP-03 CHANGE 30-JUN-03 31-MAR-03 31-DEC-02
--------- --------- ------ --------- --------- ---------
OPERATING REVENUES
Investment management fees $454,508 $411,469 10% $376,553 $347,897 $351,412
Underwriting and distribution fees 272,752 238,947 14% 225,632 194,158 185,937
Shareholder servicing fees 61,338 56,429 9% 57,430 55,315 48,051
Consolidated sponsored investment products
income, net 26 93 (72%) -- -- --
Other, net 17,545 15,017 17% 24,292 15,765 20,051
-----------------------------------------------------------------
TOTAL OPERATING REVENUES 806,169 721,955 12% 683,907 613,135 605,451
-----------------------------------------------------------------
OPERATING EXPENSES
Underwriting and distribution 245,879 211,857 16% 207,071 173,068 168,847
Compensation and benefits 189,204 166,725 13% 163,230 160,809 159,118
Information systems, technology and
occupancy 69,648 70,871 (2%) 70,459 71,404 72,595
Advertising and promotion 21,232 23,248 (9%) 22,281 24,226 22,644
Amortization of deferred sales commissions 22,448 21,257 6% 19,159 17,040 16,045
Amortization of intangible assets 4,402 4,245 4% 4,244 4,238 4,234
September 11, 2001 recovery, net -- (4,401) (100%) -- -- --
Other 30,496 28,613 7% 28,088 22,644 22,513
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TOTAL OPERATING EXPENSES 583,309 522,415 12% 514,532 473,429 465,996
-----------------------------------------------------------------
OPERATING INCOME 222,860 199,540 12% 169,375 139,706 139,455
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OTHER INCOME (EXPENSES)
Consolidated sponsored investment products
gains, net 4,000 1,645 143% -- -- --
Investment and other income 16,191 20,116 (20%) 22,415 15,558 12,303
Interest expense (7,111) (7,105) -- (6,736) (3,037) (3,032)
-----------------------------------------------------------------
OTHER INCOME, NET 13,080 14,656 (11%) 15,679 12,521 9,271
-----------------------------------------------------------------
Income before taxes on income and
cumulative effect of an accounting change 235,940 214,196 10% 185,054 152,227 148,726
Taxes on income 68,423 62,117 10% 53,666 42,624 38,966
-----------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE, NET OF TAX 167,517 152,079 10% 131,388 109,603 109,760
Cumulative effect of an accounting change,
net of tax 4,779 -- N/A -- -- --
-----------------------------------------------------------------
NET INCOME $172,296 $152,079 13% $131,388 $109,603 $109,760
=================================================================
BASIC EARNINGS PER SHARE
Income before cumulative effect of an
accounting change $0.68 $0.61 11% $0.52 $0.43 $0.43
Cumulative effect of an accounting change 0.02 -- N/A -- -- --
-----------------------------------------------------------------
Net income $0.70 $0.61 15% $0.52 $0.43 $0.43
=================================================================
DILUTED EARNINGS PER SHARE
Income before cumulative effect of an
accounting change $0.67 $0.61 10% $0.52 $0.43 $0.43
Cumulative effect of an accounting change 0.02 -- N/A -- -- --
-----------------------------------------------------------------
Net income $0.69 $0.61 13% $0.52 $0.43 $0.43
=================================================================
DIVIDENDS PER SHARE $0.085 $0.075 13% $0.075 $0.075 $0.075
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except
per share data)
THREE MONTHS ENDED
%
31-DEC-03 30-SEP-03 CHANGE 30-JUN-03 31-MAR-03 31-DEC-02
--------- --------- ------ --------- --------- ---------
AVERAGE SHARES OUTSTANDING (in
thousands)
Basic 247,758 247,761 -- 252,633 257,023 257,600
Diluted 250,234 249,263 -- 253,254 257,654 258,218
OPERATING MARGIN /2 28% 28% -- 25% 23% 23%
EMPLOYEES 6,462 6,504 (1%) 6,540 6,619 6,670
BILLABLE SHAREHOLDER ACCOUNTS (in millions) 15.1 14.2 6% 15.2 14.3 10.1
/2 Operating margin: Operating income divided by total operating revenues.
FRANKLIN RESOURCES, INC.
PRELIMINARY SUMMARY BALANCE SHEET
(Dollar amounts in thousands)
PRELIMINARY
DECEMBER 31, SEPTEMBER 30,
2003 2003
---- ----
ASSETS
Current assets $3,311,870 $2,968,827
Banking/ finance assets 851,379 918,425
Non-current assets 3,254,153 3,083,497
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TOTAL ASSETS $7,417,402 $6,970,749
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $649,846 $488,526
Banking/ finance liabilities 728,487 801,980
Non-current liabilities and minority interest 1,440,440 1,370,135
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Total liabilities 2,818,773 2,660,641
Total stockholders' equity 4,598,629 4,310,108
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,417,402 $6,970,749
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ENDING SHARES OF COMMON STOCK OUTSTANDING 248,761 245,932
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NEW ACCOUNTING STANDARDS
- ------------------------
FIN 46
In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). Under FIN 46,
a variable interest entity ("VIE") is defined as a corporation, trust,
partnership or other entity where the equity investment holders have not
contributed sufficient capital to finance the activities of the VIE or the
equity investment holders do not have defined rights and obligations normally
associated with an equity investment. FIN 46 requires consolidation of a VIE by
the enterprise that has the majority of the risks and rewards of ownership,
referred to as the primary beneficiary. The consolidation and disclosure
provisions of FIN 46 are effective immediately for VIEs created after January
31, 2003. Effective July 1, 2003, six of our sponsored investment products
created after January 31, 2003, were consolidated in our financial statements.
In December 2003, the FASB published FASB Interpretation No. 46, CONSOLIDATION
OF VARIABLE INTEREST ENTITIES (REVISED DECEMBER 2003) (FIN46-R), clarifying FIN
46 and exempting certain entities from the provisions of FIN 46. Generally,
application of FIN 46-R is required in financial statements of public entities
that have interests in structures commonly referred to as special-purpose
entities for periods ending after December 15, 2003, and, for other types of
VIEs, for periods ending after March 15, 2004. We early adopted FIN 46-R as of
December 31, 2003, and, as a result, we have recognized a cumulative effect of
an accounting change, net of tax, as of this date to reflect the accumulated
retained earnings of VIEs in which we became an interest holder prior to
February 1, 2003.
The following tables present the effect on our consolidated results of
operations and financial position of applying FIN 46-R. These tables present the
effect of consolidating VIEs for which the Company is the primary beneficiary
and are intended to provide transparency. These tables reflect the continuing
activity of VIEs with inception dates after January 31, 2003, which were
consolidated effective July 1, 2003, and they present the cumulative effect
adjustment for sponsored investment products with an inception date prior to
February 1, 2003. These products primarily include open-end funds registered in
Canada and in other international locations. The cumulative effect adjustment,
net of tax related to the sponsored investment products included in Table I is
$8.0 million. The impact of consolidating these sponsored investment products on
our balance sheet, included in the Table II presentation, is to increase current
assets by $44.6 million, current liabilities by $9.7 million and minority
interest by $34.9 million.
In addition to consolidating certain sponsored investment products, we qualified
as the primary beneficiary of a lessor trust, a special purpose entity that
financed the construction of our headquarters campus. The cumulative effect
adjustment, net of tax, related to this trust is a charge of $3.2 million. The
impact of consolidating the lessor trust in our balance sheet at December 31,
2003, is to increase property and equipment, net, by approximately $157.6
million, and debt by approximately $164.9 million. The debt matures on September
30, 2004, and will continue to be shown in our consolidated balance sheet as a
current liability until it is refinanced or paid.
TABLE I
CONSOLIDATED INCOME STATEMENT
(Dollar amounts in thousands except
per share data)
THREE MONTHS ENDED
DECEMBER 31, 2003 CONSOLIDATED THREE
BEFORE FIN 46-R FIN 46-R MONTHS ENDED
ADJUSTMENTS ADJUSTMENTS /3 DECEMBER 31, 2003
OPERATING REVENUES
Investment management fees $454,646 ($138) $454,508
Underwriting and distribution fees 272,754 (2) 272,752
Shareholder servicing fees 61,352 (14) 61,338
Sponsored investment products income, net -- 26 26
Other, net 17,545 -- 17,545
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TOTAL OPERATING REVENUES 806,297 (128) 806,169
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OPERATING EXPENSES
Underwriting and distribution 245,879 -- 245,879
Compensation and benefits 189,204 -- 189,204
Information systems, technology and
occupancy 69,648 -- 69,648
Advertising and promotion 21,232 -- 21,232
Amortization of deferred sales commissions 22,448 -- 22,448
Amortization of intangible assets 4,402 -- 4,402
September 11, 2001 recovery, net -- -- --
Other 30,496 -- 30,496
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TOTAL OPERATING EXPENSES 583,309 -- 583,309
-------------------------------------------------------------
OPERATING INCOME 222,988 (128) 222,860
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OTHER INCOME (EXPENSES)
Sponsored investment product gains, net -- 4,000 4,000
Investment and other income 17,742 (1,551) 16,191
Interest expense (7,111) -- (7,111)
-------------------------------------------------------------
OTHER INCOME, NET 10,631 2,449 13,080
-------------------------------------------------------------
Income before taxes on income and
cumulative effect of an accounting change 233,619 2,321 235,940
Taxes on income 67,750 673 68,423
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INCOME BEFORE CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE, NET OF TAX 165,869 1,648 167,517
Cumulative effect of an accounting change,
net of tax -- 4,779 4,779
-------------------------------------------------------------
NET INCOME $165,869 $6,427 $172,296
=============================================================
BASIC EARNINGS PER SHARE
Income before cumulative effect of an
accounting change $0.68
Cumulative effect of an accounting change 0.02
----------------------
Net income $0.70
======================
DILUTED EARNINGS PER SHARE
Income before cumulative effect of an
accounting change $0.67
Cumulative effect of an accounting change 0.02
----------------------
Net income $0.69
======================
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 247,758
Diluted 250,234
/3 Adjustments to consolidate variable interest entities and related elimination adjustments.
TABLE II
CONSOLIDATED BALANCE SHEET
(DOLLAR AMOUNTS IN THOUSANDS)
PRELIMINARY PRELIMINARY
DECEMBER 31, CONSOLIDATED
2003 BEFORE FIN FIN 46-R DECEMBER 31,
46-R ADJUSTMENTS ADJUSTMENTS /4 2003
ASSETS
Current assets $3,257,467 $54,403 $3,311,870
Banking/ finance assets 851,379 -- 851,379
Non-current assets 3,096,548 157,605 3,254,153
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TOTAL ASSETS $7,205,394 $212,008 $7,417,402
- ---------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $471,333 $178,513 $649,846
Banking/ finance liabilities 728,487 -- 728,487
Non-current liabilities and minority interest 1,403,756 36,684 1,440,440
- ---------------------------------------------------------------------------------------
Total liabilities 2,603,576 215,197 2,818,773
Total stockholders' equity 4,601,818 (3,189) 4,598,629
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,205,394 $212,008 $7,417,402
- ---------------------------------------------------------------------------------------
/4 Adjustments to consolidate variable interest entities and related elimination adjustments.
ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(in billions) 31-DEC-03 30-SEP-03 30-JUN-03 31-MAR-03 31-DEC-02
-------------------------------------------------------------
EQUITY
Global/international $118.5 $99.8 $91.6 $75.7 $81.4
Domestic (U.S.) 63.6 55.4 50.7 42.7 43.5
-------------------------------------------------------------
Total equity 182.1 155.2 142.3 118.4 124.9
-------------------------------------------------------------
HYBRID/BALANCED 51.1 45.8 42.8 37.4 38.3
FIXED-INCOME
Tax-free 52.4 52.2 53.6 52.3 52.1
Taxable:
Domestic (U.S.) 32.2 31.1 31.4 29.4 27.3
Global/international 13.1 11.8 10.9 9.4 9.1
-------------------------------------------------------------
Total fixed-income 97.7 95.1 95.9 91.1 88.5
-------------------------------------------------------------
MONEY MARKET 5.8 5.8 6.0 5.5 6.0
-------------------------------------------------------------
TOTAL ENDING ASSETS $336.7 $301.9 $287.0 $252.4 $257.7
-------------------------------------------------------------
SIMPLE MONTHLY AVERAGE ASSETS $318.7 $294.0 $272.2 $255.1 $254.8
=============================================================
ASSETS UNDER MANAGEMENT & FLOWS
(in billions) THREE MONTHS ENDED
31-DEC-03 30-SEP-03 % CHANGE 31-DEC-02 % CHANGE
--------- --------- -------- --------- --------
BEGINNING ASSETS UNDER MANAGEMENT $301.9 $287.0 5% $247.8 22%
U.S. RETAIL ASSETS
Beginning assets $188.0 $180.0 4% $157.7 19%
---------------------------------------------------------------------------------------------
Sales 13.4 12.9 4% 9.4 43%
Reinvested distributions 1.7 0.6 183% 1.3 31%
Redemptions (8.4) (10.0) (16%) (8.8) (5%)
Distributions (2.3) (1.1) 109% (1.9) 21%
Acquisitions -- -- -- -- --
Appreciation 15.6 5.6 179% 5.0 212%
---------------------------------------------------------------------------------------------
Ending assets 208.0 188.0 11% 162.7 28%
---------------------------------------------------------------------------------------------
OTHER ASSETS, INCLUDING INTERNATIONAL AND INSTITUTIONAL
Beginning assets $113.9 $107.0 6% $90.1 26%
---------------------------------------------------------------------------------------------
Sales 10.4 11.7 (11%) 7.7 35%
Reinvested distributions 0.2 -- N/A 0.1 100%
Redemptions (8.0) (9.7) (18%) (7.2) 11%
Distributions (0.4) (0.1) 300% (0.2) 100%
Acquisitions 0.9 -- N/A -- N/A
Appreciation 11.7 5.0 134% 4.5 160%
---------------------------------------------------------------------------------------------
Ending assets 128.7 113.9 13% 95.0 35%
---------------------------------------------------------------------------------------------
ENDING ASSETS UNDER MANAGEMENT $336.7 $301.9 12% $257.7 31%
TOTAL ASSETS UNDER MANAGEMENT
BEGINNING ASSETS $301.9 $287.0 5% $247.8 22%
--------------------------------------------------------------------------------------------
Sales 23.8 24.6 (3%) 17.1 39%
Reinvested distributions 1.9 0.6 217% 1.4 36%
Redemptions (16.4) (19.7) (17%) (16.0) 2%
Distributions (2.7) (1.2) 125% (2.1) 29%
Acquisitions 0.9 -- N/A -- N/A
Appreciation 27.3 10.6 158% 9.5 187%
--------------------------------------------------------------------------------------------
ENDING ASSETS $336.7 $301.9 12% $257.7 31%
--------------------------------------------------------------------------------------------
Note: Institutional assets totaling approximately $24.4 billion are invested in U.S. retail
fund and annuity products and are disclosed in U.S. retail assets in the above table. Total
institutional and high net-worth assets at December 31, 2003, were approximately $113.2
billion, of which high net-worth assets comprised $10.8 billion.
ASSETS UNDER MANAGEMENT & FLOWS BY INVESTMENT OBJECTIVE (in billions)
THREE MONTHS ENDED 31-DEC-03 30-SEP-03 31-DEC-02
- ------------------ --------- --------- ---------
GLOBAL/INTERNATIONAL EQUITY
Beginning assets $99.8 $91.6 $76.5
------------------------------------------------------------------------------------------
Sales 8.8 7.9 6.5
Reinvested distributions 0.9 -- 0.6
Redemptions (5.6) (7.3) (5.8)
Distributions (1.1) -- (0.6)
Acquisitions 0.3 -- --
Appreciation 15.4 7.6 4.2
------------------------------------------------------------------------------------------
Ending assets 118.5 99.8 81.4
------------------------------------------------------------------------------------------
DOMESTIC (U.S.) EQUITY
Beginning assets 55.4 50.7 41.4
------------------------------------------------------------------------------------------
Sales 4.1 4.3 2.5
Reinvested distributions 0.2 -- 0.3
Redemptions (2.8) (2.1) (2.6)
Distributions (0.3) -- (0.3)
Acquisitions -- -- --
Appreciation 7.0 2.5 2.2
------------------------------------------------------------------------------------------
Ending assets 63.6 55.4 43.5
------------------------------------------------------------------------------------------
HYBRID/BALANCED
Beginning assets 45.8 42.8 36.6
------------------------------------------------------------------------------------------
Sales 3.3 3.2 0.9
Reinvested distributions 0.3 0.1 0.1
Redemptions (1.0) (1.1) (1.0)
Distributions (0.4) (0.2) (0.2)
Acquisitions -- -- --
Appreciation 3.1 1.0 1.9
------------------------------------------------------------------------------------------
Ending assets 51.1 45.8 38.3
------------------------------------------------------------------------------------------
TAX-FREE INCOME
Beginning assets 52.2 53.6 52.8
------------------------------------------------------------------------------------------
Sales 1.2 1.6 1.5
Reinvested distributions 0.3 0.3 0.3
Redemptions (1.5) (2.2) (1.5)
Distributions (0.6) (0.6) (0.7)
Acquisitions -- -- --
Appreciation/(depreciation) 0.8 (0.5) (0.3)
------------------------------------------------------------------------------------------
Ending assets 52.4 52.2 52.1
------------------------------------------------------------------------------------------
TAXABLE FIXED-INCOME
Beginning assets 42.9 42.3 34.7
------------------------------------------------------------------------------------------
Sales 4.1 5.1 3.1
Reinvested distributions 0.2 0.2 0.1
Redemptions (3.2) (4.1) (2.3)
Distributions (0.3) (0.4) (0.3)
Acquisitions 0.6 -- --
Appreciation/(depreciation) 1.0 (0.2) 1.1
------------------------------------------------------------------------------------------
Ending assets 45.3 42.9 36.4
------------------------------------------------------------------------------------------
MONEY MARKET
Beginning assets 5.8 6.0 5.8
------------------------------------------------------------------------------------------
Sales 2.3 2.5 2.6
Reinvested distributions -- -- --
Redemptions (2.3) (2.9) (2.8)
Distributions -- -- --
Acquisitions -- -- --
Appreciation -- 0.2 0.4
------------------------------------------------------------------------------------------
Ending assets 5.8 5.8 6.0
------------------------------------------------------------------------------------------
ENDING ASSETS UNDER MANAGEMENT $336.7 $301.9 $257.7
CONFERENCE CALL INFORMATION
On Thursday, January 22, 2004, Franklin Resources, Inc., [NYSE:BEN] will
release its first fiscal quarter 2004 financial results. Martin Flanagan and
Greg Johnson, co-CEOs of Franklin Resources, Inc., will lead a live conference
call at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss the quarterly
results and answer analysts' questions.
Access to the teleconference will be available via franklintempleton.com 10
minutes before the start of the call or by dialing (877) 574-4065 in the U.S. or
(706) 679-3804 internationally.
A replay of the call will be archived on franklintempleton.com through
January 29, 2004. The replay can also be accessed by calling (800) 642-1687 in
the U.S. or (706) 645-9291 internationally using access code #4951519, after
5:30 p.m. Eastern Time on January 22, 2004, through 5:30 p.m. Eastern Time on
January 29, 2004.
Questions regarding the teleconference call should be directed to Franklin
Resources, Inc., Investor Relations at (650) 525-8900 or Corporate
Communications at (650) 312-3395.
Franklin Resources, Inc. is a global investment organization operating as
Franklin Templeton Investments. Franklin Templeton provides global and domestic
investment management services through its Franklin, Templeton, Mutual Series
and Fiduciary Trust subsidiaries. The San Mateo, CA-based company has over 50
years of investment experience and more than $336 billion in assets under
management as of December 31, 2003. For more information, please call 1-800/DIAL
BEN(R) or visit franklintempleton.com.
SUPPLEMENTAL INFORMATION
1. Nothing in this section shall be considered a solicitation to buy or
an offer to sell a security to any person in any jurisdiction where
such offer, solicitation, purchase or sale would be unlawful under the
securities laws of such jurisdiction. For more information on any U.S.
Franklin Templeton fund, investors should request a prospectus
containing more complete information, including sales charges,
expenses and risks, from securities dealers or by calling Franklin
Templeton Distributors, Inc. at 1-800/DIAL BEN(R) (1-800/342-5236).
Investors should read the prospectus carefully before investing or
sending money. Franklin Templeton Distributors, Inc., One Franklin
Parkway, San Mateo, CA, is the funds' principal distributor and a
wholly owned subsidiary of Franklin Resources, Inc.
2. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. MORNINGSTAR
ratings are based on Class A shares. LIPPER rankings are based on
Class A shares, with the exception of those for Mutual Series, which
are based on Class Z shares, which are offered to qualified investors
only and have no sales charges nor Rule 12b-1 fees. All asset data is
based on 11/30/03 figures unless noted otherwise. Unless otherwise
noted, fund returns quoted reflect Class A shares. Performance
returns, ratings and rankings for other classes may vary. Investment
return and principal value will fluctuate with market conditions and
an investor may experience a gain or loss when they sell their shares.
3. LIPPER calculates averages by taking all the funds in a peer group and
averaging their total returns for the periods indicated. LIPPER tracks
129 peer groups of long-term U.S. retail mutual funds, and the groups
vary in size from 4 to 1098. LIPPER total return calculations include
reinvested dividends and capital gains, but do not include sales
charges or expense subsidization by the manager. Results may have been
different if these or other factors had been considered.
4. Source: LIPPER(R) Inc., 12/31/03. Of the eligible Franklin Templeton
long-term mutual funds tracked by LIPPER, 34, 44, 44 and 30 funds
ranked in the top quartile and 25, 29, 25 and 20 funds ranked in the
second quartile, for the one-, three-, five- and 10-year periods,
respectively, for their respective LIPPER peer groups.
5. Source: LIPPER(R) Inc., 12/31/03. Of the eligible Franklin equity
funds tracked by Lipper, 6, 9, 12 and 2 funds ranked in the top
quartile and 9, 8, 6 and 6 funds ranked in the second quartile, for
the one-, three-, five- and 10-year periods, respectively, for their
respective LIPPER peer groups.
6. Source: MORNINGSTAR(C) 12/31/03. For each fund with at least a
three-year history, MORNINGSTAR calculates a MORNINGSTAR Rating based
on a MORNINGSTAR Risk-Adjusted Return measure that accounts for
variation in a fund's monthly performance (including the effects of
sales charges, loads, and redemption fees), placing more emphasis on
downward variations and rewarding consistent performance. The top 10%
of funds in each category receive 5 stars, the next 22.5% receive 4
stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars
and the bottom
10% receive 1 star. (Each share class is counted as a fraction of one
fund within this scale and rated separately, which may cause slight
variations in the distribution percentages.) The Overall MORNINGSTAR
Rating for a fund is derived from a weighted-average of the
performance figures associated with its three-, five- and 10-year (if
applicable) MORNINGSTAR Rating metrics. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. MORNINGSTAR Rating is for the A share class
only; other classes may have different performance characteristics.
The following fund was rated against 613; 396; 126 Mid-Cap Growth
funds for the respective 3-, 5- and 10-year periods ended 12/31/03, as
applicable. For the 3-, 5- and 10-year periods ended 12/31/03, the
MORNINGSTAR ratings were: Franklin Flex Cap Growth Fund 3, 3, 5. The
following fund was rated against 177; 140; 35 Conservative Allocation
funds for the respective 3-, 5- and 10-year periods ended 12/31/03, as
applicable. For the 3-, 5- and 10-year periods ended 12/31/03, the
MORNINGSTAR ratings were: Franklin Income Fund 5, 5, 3. The following
funds were rated against 268; 211; 59 World Stock funds for the
respective 3-, 5- and 10-year periods ended 12/31/03, as applicable.
For the 3-, 5- and 10-year periods ended 12/31/03, the MORNINGSTAR
ratings were: Templeton Growth Fund 4, 4, 4 and Templeton World Fund
4, 4, 4. The following fund was rated against 237, 215, 120 Municipal
National Long funds for the respective 3-, 5- and 10-year periods
ended 12/31/03, as applicable. For the 3-, 5- and 10-year periods
ended 12/31/03, the MORNINGSTAR ratings were: Franklin Federal
Tax-Free Income Fund 3, 3, 4.
7. Source: LIPPER(R) Inc., 12/31/03. Franklin Flex Cap Growth Fund Class
A ranked 78 in a universe of 384 funds in LIPPER'S "Multi-Cap Growth
Funds" group for the one-year period, 92 of 300 for the three-year
period, 11 of 158 for the five-year period and 3 of 63 for the 10-year
period. Franklin Flex Cap Growth Fund has experienced negative fund
performance.
8. Source: LIPPER(R) Inc., 12/31/03. Franklin Income Fund Class A ranked
8 in a universe of 154 funds in LIPPER'S "Income Funds" group for the
one-year period, 3 of 95 for the three-year period, 2 of 74 for the
five-year period and 7 of 19 for the 10-year period.
9. Source: LIPPER(R) Inc., 12/31/03. Templeton Growth Fund Class A ranked
150 in a universe of 332 funds in LIPPER'S "Global Funds" group for
the one-year period, 16 of 244 for the three-year period, 15 of 179
for the five-year period and 7 of 44 for the 10-year period. Templeton
World Fund Class A ranked 142 in a universe of 332 funds in LIPPER'S
"Global Funds" group for the one-year period, 26 of 244 for the
three-year period, 39 of 179 for the five-year period and 11 of 44 for
the 10-year period.
10. Source: LIPPER(R)Inc., 12/31/03. Lipper Leaders Awards are based on
Class A shares only. LIPPER scores for Total Return reflect funds'
historical total return performance relative to peers. LIPPER scores
for Preservation reflect funds' historical loss avoidance relative to
other funds within the same asset class. Preservation ratings are
relative, rather than absolute, measures, and funds named LIPPER
Leaders for Preservation may still experience losses periodically;
those losses may be larger for equity and mixed equity funds than for
fixed-income funds. The LIPPER ratings are subject to change every
month and are based on an equal-weighted average of percentile
rankings for the Total Return and Preservation metrics over 3-, 5- and
10-year periods (if applicable). 20% of funds in each peer group are
named LIPPER Leaders, the next 20% receive a score of 2, the middle
20% are scored 3, the next 20% are scored 4, and the lowest 20% are
scored 5. The following Mutual Series open-end funds were awarded
LIPPER Leader status in Total Return: Mutual Shares Fund, Mutual
Beacon Fund and Mutual Qualified Fund rated among 313 Multi-Cap Value
funds; Mutual Discovery Fund rated among 38 Global Small-Cap funds;
Mutual European Fund rated among 119 European Region funds; and Mutual
Financial Services Fund rated among 92 Financial Services funds. The
following Mutual Series open-end funds were awarded LIPPER Leader
status in Preservation: Mutual Shares, Mutual Beacon, Mutual
Qualified, Mutual Discovery, Mutual European and Mutual Financial
Services Funds rated among 6,996 Equity funds. UNDER NO CIRCUMSTANCES
DOES INFORMATION ABOUT LIPPER LEADERS CONSTITUTE A RECOMMENDATION TO
BUY OR SELL FUNDS, NOR DOES IT NECESSARILY IMPLY THAT A FUND NAMED AS
A LIPPER LEADER HAD THE BEST PERFORMANCE WITHIN ITS CATEGORY. LIPPER
LEADERS RATINGS ARE BASED ON PAST FUND PERFORMANCE, AND PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. LIPPER LEADERS ARE
DETERMINED MONTHLY USING DATA AVAILABLE AT THE TIME OF CALCULATION;
LIPPER UNDERTAKES NO RESPONSIBILITY FOR UPDATING THE CALCULATIONS MORE
FREQUENTLY THAN MONTHLY TO INCORPORATE MORE CURRENT DATA.
11. Source: LIPPER(R) Inc., 12/31/03. Of the eligible Franklin Templeton
non-money market tax-free funds tracked by LIPPER, 21, 15, 17 and 19
funds ranked in the top quartile and 9, 18, 13 and 10 funds ranked in
the second quartile, for the one-, three-, five- and 10-year periods,
respectively, for their respective LIPPER peer groups.
12. Source: LIPPER(R) Inc., 12/31/03. Franklin Federal Tax-Free Income
Fund Class A ranked 36 in a universe of 296 funds in LIPPER'S "General
Municipal Debt Funds" group for the one-year period, 100 of 257 for
the three-year period, 69 of 219 for the five-year period and 29 of
116 for the 10-year period.
FORWARD-LOOKING STATEMENTS
Statements in this press release regarding Franklin Resources, Inc.'s
business, 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, some of which are listed below, 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. These and
other risks, uncertainties and other important factors are described in more
detail in Franklin's recent filings with the U.S. Securities and Exchange
Commission, including, without limitation, the "Risk Factors" section of the
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Franklin's Annual Report on Form 10-K for the fiscal year ended
September 30, 2003.
* Volatility in the equity markets may cause the levels of our assets
under management, which in turn impacts revenue, to fluctuate
significantly.
* Weak market conditions may lower our assets under management and
reduce our revenues and income.
* We face strong competition from numerous and sometimes larger
companies.
* Changes in the distribution channels on which we depend could reduce
our revenues or hinder our growth.
* We face risks associated with conducting operations in numerous
foreign countries.
* Certain of the portfolios we manage, including our emerging market
portfolios and related revenues, are vulnerable to market-specific
political and economic risks.
* Our ability to meet cash needs depends upon certain factors, including
our asset value, credit worthiness and the market value of our stock.
* Technology and operating risks and limitations could constrain our
operations.
* Governmental investigations and regulatory or legislative actions and
reforms, particularly those specifically focused on the mutual fund
industry, could adversely impact our assets under management and
revenues, increase costs or otherwise negatively impact the
profitability of the company and future financial results.
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