FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period
Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to______________
Commission File No. 1-9318
FRANKLIN RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2670991
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
777 Mariners Island Blvd., San Mateo, CA 94404
(Address of Principal Executive Offices)
(Zip Code)
(415) 312-2000
(Registrant's telephone number, including area code)
---------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES _____ NO ______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Outstanding:126,094,683 shares,common stock, par value $.10 per share
at January 31,1997
PART I -FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
FRANKLIN RESOURCES, INC.
Consolidated Statements of Income
Unaudited
Three months ended
December 31
(In thousands, except per share data) 1996 1995
- --------------------------------------------------------------------------------
Operating revenues:
Investment management fees $275,674 $202,228
Underwriting and distribution fees 136,486 119,036
Shareholder servicing fees 24,828 20,796
Banking/finance, net and other 3,051 554
- --------------------------------------------------------------------------------
Total operating revenues 440,039 342,614
- --------------------------------------------------------------------------------
Operating expenses:
Underwriting and distribution 142,918 116,061
Employee related 99,571 76,862
General and administrative 45,990 30,192
Advertising and promotion 18,666 15,525
Amortization of intangibles 7,345 4,841
- --------------------------------------------------------------------------------
Total operating expenses 314,490 243,481
- --------------------------------------------------------------------------------
Operating income 125,549 99,133
Other income/(expenses):
Investment and other income 19,608 10,665
Interest expense (8,173) (2,623)
- --------------------------------------------------------------------------------
Other income/(expenses), net 11,435 8,042
- --------------------------------------------------------------------------------
Income before taxes on income 136,984 107,175
Taxes on income 40,755 33,224
- --------------------------------------------------------------------------------
Net income $96,229 $73,951
- --------------------------------------------------------------------------------
Earnings per share:
Primary $0.76 $0.59
Fully diluted $0.76 $0.59
Dividends per share $0.08 $0.07
The accompanying notes are an integral part of these consolidated
financial statements.
FRANKLIN RESOURCES, INC.
Consolidated Balance Sheets
Unaudited
As of As of
December 31 September 30
(In thousands) 1996 1996
- --------------------------------------------------------------------------------
ASSETS:
Current assets:
Cash and cash equivalents $267,194 $483,975
Receivables:
Fees from Franklin Templeton funds 145,845 133,453
Other 13,510 54,727
Investment securities, available for sale 171,075 174,156
Prepaid expenses and other 12,134 9,952
- -----------------------------------------------------------------------------
Total current assets 609,758 856,263
- -----------------------------------------------------------------------------
Banking/Finance assets:
Cash and cash equivalents 13,169 18,214
Loans receivable, net 335,629 345,399
Investment securities, available for sale 25,470 25,325
Other 4,394 4,660
- -----------------------------------------------------------------------------
Total banking/finance assets 378,662 393,598
- -----------------------------------------------------------------------------
Other assets:
Deferred sales commissions, net 22,868 24,316
Property and equipment, net 166,038 161,613
Intangible assets, net of $81,377
and $74,027 accumulated amortization,
respectively 1,250,757 641,983
Receivable from banking/finance group 228,032 236,532
Other 70,639 59,862
- -----------------------------------------------------------------------------
Total other assets 1,738,334 1,124,306
- -----------------------------------------------------------------------------
Total assets $2,726,754 $2,374,167
=============================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
FRANKLIN RESOURCES, INC.
Consolidated Balance Sheets
Unaudited
As of As of
December 31 September 30
(In thousands) 1996 1996
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accrued employee related $57,276 $77,935
Commissions payable 31,413 28,067
Income taxes payable 53,759 27,673
Short-term debt 150,532 427
Other 39,797 48,099
- -----------------------------------------------------------------------------
Total current liabilities 332,777 182,201
- -----------------------------------------------------------------------------
Banking/finance liabilities:
Deposits:
Interest bearing 115,933 125,124
Non-interest bearing 7,005 6,095
Payable to parent 228,032 236,532
Other 1,874 1,725
- -----------------------------------------------------------------------------
Total banking/finance liabilities 352,844 369,476
- -----------------------------------------------------------------------------
Other Liabilities:
Long-term debt 468,320 399,462
Other 24,569 22,437
- -----------------------------------------------------------------------------
Total other liabilities 492,889 421,899
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total liabilities 1,178,510 973,576
- -----------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, $1.00 par value,
1,000,000 shares authorized;
none issued
Common stock, $.10 par value,
500,000,000 shares authorized;
126,084,224 and 82,264,982
shares issued; 126,083,558
and 80,272,131 shares
outstanding, respectively 12,608 8,226
Capital in excess of par value 83,671 101,226
Retained earnings 1,452,446 1,370,513
Less cost of treasury stock (49) (90,301)
Other (432) 10,927
- -----------------------------------------------------------------------------
Total stockholders' equity 1,548,244 1,400,591
- -----------------------------------------------------------------------------
Total liabilities and
stockholders' equity $2,726,754 $2,374,167
=============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
FRANKLIN RESOURCES, INC.
Consolidated Statements of Cash Flows
Unaudited
Three months ended
(In thousands) Dec-96 Dec-95
- -----------------------------------------------------------------------------
Net income $96,229 $73,951
Adjustments to reconcile net income
to net cash provided by
operating activities:
Decrease in receivables,
prepaid expenses and other current assets 28,076 21,420
Decrease (increase) in deferred sales
commissions, net 1,448 (8,396)
Decrease in other current liabilities (9,237) (5,849)
Increase in income taxes payable 26,085 26,330
Increase in commissions payable 3,346 71
Increase/(decrease) in accrued employee related (3,429) 3,165
Depreciation and amortization 13,603 10,093
Realized gains on disposition of assets (10,866) (3,479)
- -----------------------------------------------------------------------------
Net cash provided by operating activities 145,255 117,306
- -----------------------------------------------------------------------------
Purchase of investments (32,247) (14,897)
Liquidation of investments 33,313 11,751
Purchase of banking/finance investments (9,129) (30,350)
Liquidation of banking/finance investments 9,000 31,172
Originations of banking/finance loans receivable (31,662) (8,692)
Collections of banking/finance loans receivable 42,119 38,174
Purchase of property and equipment (9,957) (9,249)
Acquisition of assets and liabilities of Heine
Securities Corporation (550,536) -
- -----------------------------------------------------------------------------
Net cash provided by (used in) investing
activities (549,099) 17,909
- -----------------------------------------------------------------------------
Decrease in bank deposits (8,281) (3,878)
Exercise of common stock options 1,085 301
Dividends paid on common stock (8,830) (8,109)
Purchase of treasury stock (6,800) (50,682)
Issuance of debt 371,072 146
Payments on debt (74,123) (11,504)
Purchase of option rights from subordinated
debenture holders (91,685) -
Other (420) -
- ------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities 182,018 (73,726)
- ------------------------------------------------------------------------------
Increase(decrease) in cash and cash equivalents (221,826) 61,489
Cash and cash equivalents, beginning of period 502,189 261,699
- -----------------------------------------------------------------------------
Cash and cash equivalents, end of period $280,363 $323,188
- -----------------------------------------------------------------------------
Supplemental disclosure of non-cash information:
Value of stock issued for Heine acquisition $65,558 -
Value of stock issued for redemption of
debentures $75,015 -
Value of common stock issued in other
transactions $26,444 $17,706
The accompanying notes are an integral part of these consolidated
financial statements.
FRANKLIN RESOURCES, INC.
Notes to Consolidated Financial Statements
December 31, 1996
(Unaudited)
1. Basis of Presentation
The unaudited interim consolidated financial statements of Franklin Resources,
Inc. (the "Company") included herein have been prepared in accordance with the
instructions to Form 10-Q pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. In the opinion of management, all appropriate adjustments
necessary to a fair presentation of the results of operations have been made for
the periods shown. All adjustments are of a normal recurring nature. Certain
prior year amounts have been reclassified to conform to current year
presentation. The number of shares used for purposes of calculating earnings per
share and all per share data have been adjusted for both periods presented to
reflect a three-for-two stock split paid on January 15, 1997. Stockholders'
equity as of September 30, 1996 has not been restated. These financial
statements should be read in conjunction with the Company's audited financial
statements for the fiscal year ended September 30, 1996.
2. Debt
During October, 1996 the Company issued $270.8 million in commercial paper as
part of the financing of the Heine transaction (see below).
During December, 1996 the holders of the option rights related to the Company's
$150 million of subordinated debentures exercised their rights to receive
approximately 2.4 million shares of the Company's common stock in return for
approximately $75 million of the subordinated debentures. In addition, the
Company purchased the remaining $75 million of subordinated debentures and
associated option rights, representing approximately 2.4 million shares, from
the holders for approximately $165.8 million plus accrued interest. This
transaction was financed in part through the issuance of $100 million in
medium-term notes, maturing in years 1998 through 1999 with coupon rates from
6.02% to 6.19%. No material gain or loss was recognized on this transaction.
At December 31, 1996, the Company had interest-rate swap agreements, maturing in
years 1998 through 2000, which effectively fixed interest rates on $295.0
million of commercial paper. The fixed rates of interest ranged from 6.24% to
6.65%. These financial instruments are placed with major financial institutions.
The creditworthiness of the counterparties is subject to continuous review and
full performance is anticipated. Any potential loss from failure of the
counterparties to perform is deemed to be immaterial. As of December 31, 1996,
the weighted average effective interest rate, including the effect of
interest-rate swap agreements, was 6.09% on approximately $620 million of
outstanding commercial paper and medium-term notes.
3. Acquisition
On November 1, 1996, the Company acquired the assets and liabilities of Heine
Securities Corporation ("Heine"), the former investment advisor to Mutual Series
Fund Inc. and other funds and private accounts ("Mutual"). One of the Company's
subsidiaries, Franklin Mutual Advisers, Inc. ("FMAI"), now serves as the
investment adviser to Mutual. This transaction (the "Acquisition") had an
aggregate value of approximately $616 million. Heine received $550 million in
cash and 1.1 million pre-split shares of the Company's common stock which may
not be sold for two years and which are subject to other restrictions. The
Acquisition has been accounted for using the purchase method of accounting. The
excess of the purchase price over the fair values of the net assets acquired was
recorded as intangibles, principally the value of management contracts, which is
being amortized over 35 years.
The results of operations of FMAI have been included in the accompanying
consolidated statements of income from November 1, 1996, the date of the
Acquisition. Proforma combined results of operations are not presented because
the results of operations as reported in the accompanying consolidated
statements of income would not have been materially different.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
Franklin Resources, Inc. and its majority-owned subsidiaries (the "Company")
derives substantially all of its revenue and net income from providing
investment management and administration, distribution, shareholder servicing
and related services to the Franklin Templeton funds, managed accounts and other
investment products. The Company's revenues are derived largely from the amount
and composition of assets under management. The Company has a diversified base
of assets under management and a full range of investment management products
and services to meet the needs of a variety of individuals and institutions.
I. Material Changes in Results of Operations Results of operations
Three months ended
December 31 %
(In millions) 1996 1995 Change
- --------------------------------------------------------------------------
Net income $96.2 $74.0 30%
Earnings per share
Primary $.76 $.59 29%
Fully-diluted $.76 $.59 29%
Operating margin 29% 29%
- ------------------------------------------------------------------------
Net income during the quarter ended December 31, 1996 increased as compared to
the same quarter in the previous fiscal year primarily due to an increase in
investment management fees as a result of higher average assets under management
and to realized gains from the disposition of some of the Company's investment
portfolio, the proceeds of which were used to fund portions of the Acquisition.
The Acquisition became effective November 1, 1996. The earnings for the quarter,
therefore, included two months of post-Acquisition results. The effect of the
Acquisition on consolidated revenues, net income and earnings per share for the
quarter was not material. Previously reported earnings per share have been
restated for both periods to reflect the three-for-two stock split payable on
January 15, 1997 for shareholders of record on December 31, 1996.
Operating revenues will continue to be dependent upon the amount and composition
of assets under management, mutual fund sales, and the number of mutual fund
investors and institutional clients. Operating expenses are expected to increase
with the Company's ongoing expansion, the increase in competition and the
Company's commitment to improve its products and services. These endeavors will
likely result in an increase in advertising and promotion expenses, employment
costs and general and administrative expenses.
The contributions to the Company's operating profit from its non-U.S. operations
increased in 1996 principally as a result of increased fee revenues from
investment management services provided by its foreign subsidiaries. This trend
will continue to be dependent on the amount and composition of assets managed by
the Company's non-U.S. subsidiaries. There have been no significant changes to
the Company's limited exposure to fluctuations in global currency markets.
Assets under management
As of
December 31 %
(In billions) 1996 1995 Change
- ------------------------------------------------------------------------------
Franklin Templeton Group:
Fixed-income funds:
Tax-free $43.2 $41.9 3%
U.S. government fixed-income
(primarily GNMA's) 15.6 16.8 (7%)
Taxable and tax-free money funds 2.9 2.7 7%
Global/international
fixed-income 3.0 2.9 3%
- ---------------------------------------------------------------------------
Total fixed-income funds 64.7 64.3 1%
- ---------------------------------------------------------------------------
Equity/income funds:
Global/international equity 52.5 36.7 43%
U.S. equity/income 20.3 16.7 22%
Mutual Series funds 19.4 - -
- ---------------------------------------------------------------------------
Total equity/income funds 92.2 53.4 73%
Total Franklin Templeton fund assets 156.9 117.7 33%
- ---------------------------------------------------------------------------
Franklin Templeton
institutional assets 24.0 17.4 38%
- ---------------------------------------------------------------------------
Total Franklin Templeton Group $180.9 $135.1 34%
===========================================================================
Changes in assets under management
Three months ended
December 31 %
(In billions) 1996 1995 Change
- ------------------------------------------------------------------------------
Assets under management - beginning $151.5 $130.8 16%
Mutual acquisition 18.6 - -
Sales & reinvestments, net of
underwriting commissions 11.7 7.4 58%
Redemptions (8.5) (5.0) 70%
Market appreciation 7.6 1.9 300%
- ------------------------------------------------------------------------------
Assets under management - ending $180.9 $135.1 34%
- ------------------------------------------------------------------------------
Monthly average assets under
management $166.3 $132.1 26%
- ------------------------------------------------------------------------------
The Company's assets under management were $180.9 billion at December 31, 1996,
which included $19.9 billion in assets as a result of the Acquisition, an
increase of $29.3 billion (19%) from September 30, 1996 and an increase of $45.8
billion (34%) from December 31, 1995. These increases were also the result of
both net sales and market appreciation.
Fixed income funds represented 36% of assets under management as of December 31,
1996, down from 48% a year ago primarily as a result of the impact of Mutual's
assets on the Company's product mix.
Equity/income funds grew to 51% of assets under management as of December 31,
1996, up from 40% a year ago. This increase was primarily the result of the
addition of $19.4 billion of Mutual assets under management to the Company's
equity/income mix. However, U.S. equity/income funds, excluding Mutual assets,
increased 22% from levels a year ago due to both net sales and market
appreciation. Global/international equity funds' assets under management were up
43% from levels a year ago.
Institutional assets, comprised predominantly of global/international
portfolios, represented 13% of assets under management as of December 31, 1996,
the same percentage as a year ago, even though they increased 38% from levels a
year ago. This increase is consistent with the growth experienced by the
Company's other equity products. The Company is strongly committed to the
institutional account area and intends to continue the expansion of the services
it provides in this area.
Operating revenue
Three months ended
December 31 %
(In millions) 1996 1995 Change
- -------------------------------------------------------------------------
Investment management fees $275.6 $202.2 36%
Underwriting and distribution fees 136.5 119.0 15%
Shareholder servicing fees 24.8 20.8 19%
Banking/finance, net and other 3.1 .6 417%
=========================================================================
Total operating revenues $440.0 $342.6 28%
=========================================================================
The Company's revenues from investment management fees are derived primarily
from contractual fixed-fee arrangements that are based upon the level of assets
under management with open-end and closed-end investment companies and managed
accounts. Under the various investment management agreements, annual rates vary
and generally decline as the average net assets of the portfolios exceed certain
threshold levels. Investment management fees charged to Franklin Templeton funds
are reviewed and approved annually by each fund's Board of Directors/Trustees.
There have been no significant changes in the management fee structures for the
Franklin Templeton Group in the period under review. Investment management fees
increased primarily due to the 36% increase in equity assets as well as the
addition of Mutual.
Revenues from underwriting commissions are earned primarily from fund sales.
Most sales of Franklin Templeton funds include a sales commission, of which a
significant portion is reallowed to selling intermediaries. Certain subsidiaries
of the Company act as distributors for its sponsored funds and receive
distribution fees, including 12b-1 fees, from those funds in reimbursement for
distribution expenses incurred up to a maximum allowed by each fund. A
significant portion of distribution fees are reallowed to selling
intermediaries. Distribution fees are typically based on levels of assets under
management.
Underwriting and distribution fees increased 15% over the same period last year
primarily as a result of increased retail mutual fund sales partially offset by
a decrease in effective commission rates. Effective commission rates declined as
relative sales of products with lower commission rates, such as Class II shares
and annuity products increased.
Shareholder servicing fees are generally fixed charges per account which vary
with the particular type of fund and the service being rendered. Shareholder
servicing fees increased in part as a result of a 27% increase in retail fund
shareholder accounts to 6.2 million from 4.9 million a year ago. Some of the
increase in shareholder accounts was due to the impact of the addition of
approximately .6 million Mutual shareholders. Effective January 1, 1997,
approximately 85 of the Company's U.S. mutual funds, consisting of approximately
3.3 million shareholder accounts, implemented an average annual increase in
shareholder servicing fees of approximately $5.30 per account.
Banking/finance, net and other
Three months ended
December 31 %
(In millions) 1996 1995 Change
- -----------------------------------------------------------------------
Revenues $10.2 $12.9 (21%)
Provision for loan losses (1.3) (5.3) (75%)
Interest expense (5.8) (7.0) (17%)
=======================================================================
Total banking, finance, net
and other $3.1 $.6 417%
=======================================================================
Compared to the corresponding period in the prior year, banking/finance, net and
other revenues increased principally due to decreases in the provision for loan
losses. Charge-offs decreased $2.6 million (63%) and delinquencies decreased
$10.3 million (38%) compared to the same period in the prior year. Revenues
decreased principally due to an 18% decrease in average loans outstanding as a
result of net paydowns of dealer auto loans. Interest expense decreased in the
period due to a $96.3 million (21%) reduction in the borrowing requirements of
the banking/finance group.
Operating expenses
Three months ended
December 31 %
(In millions) 1996 1995 Change
- ------------------------------------------------------------------------
Underwriting and distribution $142.9 $116.1 23%
Employee related 99.6 76.9 30%
General and administrative 46.0 30.2 52%
Advertising and promotion 18.7 15.5 21%
Amortization of intangible assets 7.3 4.8 52%
========================================================================
Total operating expenses $314.5 $243.5 29%
========================================================================
Increases in operating expenses principally resulted from the general expansion
of the Company's business and the Acquisition.
Underwriting and distribution includes sales commissions and distribution fees
paid to brokers and other third party intermediaries. Generally distribution
expenses increased at a greater rate than distribution revenues because of the
relatively higher growth in the sales of Class II shares and similar products
sold primarily by the Company's Canadian subsidiary.
While Class II shares will increase distribution expenses of the Company and
will utilize the Company's capital resources over the short term, the Company
believes that Class II shares will result in an overall increase in assets under
management by expanding distribution of fund shares. Sales of Class II shares
represented approximately 14% and 10% of total U.S.-based long-term mutual fund
new sales for the three-month periods ended December 31, 1996 and 1995,
respectively.
Employee related costs increased 30% over the same period in 1995 as a result of
a 12% increase in the number of employees, increases in the Company's incentive
compensation related to the Company's increased earnings and additional employee
related costs associated with the Acquisition.
General and administrative expenses increased during the period due principally
to higher technology and facilities costs related to the expansion of the
Company's business.
Advertising and promotion expenses increased during the comparative three-month
period mainly due to periodic variations in media advertising and the timing of
marketing campaigns.
Amortization of intangible assets increased as a result of approximately $615
million of additional intangibles related to the Acquisition.
Other income/(expenses)
Three months ended
December 31 %
(In millions) 1996 1995 Change
- -----------------------------------------------------------------------
Investment and other income $19.6 $10.6 85%
Interest expense (8.2) (2.6) 215%
=======================================================================
Other income (expenses), net $11.4 $8.0 43%
=======================================================================
The increase in investment income primarily resulted from realized gains from
the sale of investment securities, the proceeds of which were used for funding
the Acquisition.
Interest expense increased primarily due to a $174.0 million increase in
commercial paper and a $140.0 million increase in medium-term notes outstanding
during the current period as compared to the same period a year ago, partially
offset by a $150 million reduction in subordinated debentures. The Company's
overall weighted average effective interest rate at December 31, 1996, including
the effect of interest-rate swap agreements, was 6.09% on $620.0 million of
outstanding commercial paper and medium-term notes as compared to 6.21% on
$456.0 million of debt outstanding at December 31, 1995.
At December 31, 1996, the Company had interest-rate swap agreements outstanding
with an aggregate notional amount of $295.0 million, maturing in years 1998
through 2000, under which the Company paid fixed rates of interest ranging from
6.24% to 6.65%.
The effective tax rate decreased slightly to 30% of pretax income. The effective
tax rate will continue to be reflective of the relative contributions of foreign
earnings which are subject to reduced tax rates and are not currently includable
in U.S. taxable income.
II. Material Changes in Financial Condition, Liquidity and Capital Resources
As of December 31, 1996, stockholders' equity approximated $1.5 billion compared
to approximately $1.4 billion at September 30, 1996. The increase in
stockholders' equity was primarily a result of increased net income and the
issuance of 1.1 million pre-split shares in connection with the Acquisition.
Cash provided by operating activities at December 31, 1996 increased $27.9
million from $117.3 million at December 31, 1995 also as a result of net income.
The Company used net cash of $549.1 million during the period for investing
activities primarily for the Acquisition. Net cash provided by financing
activities during the period was $182.0 million primarily as a result of the
issuance of $371.1 million in medium-term notes and commercial paper which was
partially offset by payment on debt of $74.5 million and the purchase of option
rights related to the subordinated debentures of $91.7 million. During the
period, the Company paid $8.8 million in dividends to stockholders and purchased
.1 million shares of its common stock for $6.8 million. As of December 31, 1996,
the Company had 5.7 million shares remaining under its authorized repurchase
program. The Company will continue from time to time to purchase its own shares
in the open market and in private transactions for use in connection with
various corporate employee incentive programs and when it believes the market
price of its shares merits such action.
At December 31, 1996, the Company held liquid assets of $598.9 million,
including $280.4 million in cash and cash equivalents, as compared to $889.9
million and $502.2 million, respectively at September 30, 1996. The Company
maintains a $400 million commercial paper program and a $500 million medium-term
note program. The Company has also established two revolving credit and
competitive auction facilities as back-up for the commercial paper program. At
December 31, 1996, total back-up credit facilities were $400 million of which
$150 million was under a 364-day revolving credit facility. The remaining $250
million back-up facility has a five-year term. At December 31, 1996,
approximately $400 million was available to the Company under unused credit
facilities.
Management expects that the principal needs for cash will be to fund increased
property and equipment acquisitions, pay shareholder dividends, repurchase
shares of the Company's common stock, repay debt and advance sales commissions
for Class II shares and Canadian products. Management believes that the
Company's existing liquid assets, together with the expected continuing cash
flow from operations, its ability to issue stock, and its borrowing capacity
under current credit facilities, will be sufficient to meet its present and
reasonably foreseeable cash needs.
FRANKLIN RESOURCES, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of the report:
Exhibit
Exhibit 3(i)(a) Registrant's Certificate of Incorporation, as filed
November 28, 1969, incorporated by reference to Exhibit (3)(i)
to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994 (the "1994 Annual Report")
Exhibit 3(i)(b) Registrant's Certificate of Amendment of Certificate of
Incorporation, as filed March 1, 1985, incorporated by
reference to Exhibit (3)(ii) to the 1994 Annual Report
Exhibit 3(i)(c) Registrant's Certificate of Amendment of Certificate of
Incorporation, as filed April 1, 1987, incorporated by
reference to Exhibit(3)(iii) to the 1994 Annual Report
Exhibit 3(i)(d) Registrant's Certificate of Amendment of Certificate of
Incorporation, as filed February 2, 1994, incorporated by
reference to Exhibit (3)(iv) to the 1994 Annual Report
Exhibit(3)(ii) Registrant's By-Laws are incorporated by reference to Exhibit
3(v) to Registrant's Form 10-Q for the Quarterly Period ended
December 31, 1994.
Exhibit 11 Computations of per share earnings.
Exhibit 12 Computations of ratios of earnings to fixed charges
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
(i) Form 8-K dated October 25, 1996 reporting under Item 5 "Other
Events" the filing of an earnings press release by the
Registrant on October 25, 1996 and including said press release
as an Exhibit under Item 7 "Financial Statements and Exhibits".
(ii) Form 8-K dated October 31, 1996 reporting under Item 2
"Acquisition of Asset" of the consummation of the acquisition
of certain assets and liabilities of Heine Securities
Corporation including a press release and certain related
agreements as Exhibits under Item 7 "Financial Statements, Pro
Forma Information and Exhibits".
(iii) Form 8-K dated November 27, 1996 reporting under Item 5 "Other
Events" on the Registrant's repurchase of certain of its debt
securities, including a press release issued November 27, 1996
as an Exhibit under Item 7 "Financial Statements and Exhibits".
(iv) Form 8-K dated January 23, 1997 reporting under Item 5 "Other
Events" the filing of an earnings press release by the
Registrant on January 23, 1997 and including said press release
as an Exhibit under Item 7 "Financial Statements and Exhibits".
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANKLIN RESOURCES, INC.
Registrant
Date: February 14, 1997 /S/ Martin L. Flanagan
---------------------------
MARTIN L. FLANAGAN
Senior Vice President,
Treasurer and Chief
Financial Officer
INDEX TO EXHIBITS
Exhibit
Exhibit 3(i)(a) Registrant's Certificate of Incorporation, as filed
November 28, 1969, incorporated by reference to Exhibit (3)(i)
to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994 (the "1994 Annual Report")
Exhibit 3(i)(b) Registrant's Certificate of Amendment of Certificate of
Incorporation, as filed March 1, 1985, incorporated by
reference to Exhibit (3)(ii) to the 1994 Annual Report
Exhibit 3(i)(c) Registrant's Certificate of Amendment of Certificate of
Incorporation, as filed April 1, 1987, incorporated by
reference to Exhibit(3)(iii) to the 1994 Annual Report
Exhibit 3(i)(d) Registrant's Certificate of Amendment of Certificate of
Incorporation, as filed February 2, 1994, incorporated by
reference to Exhibit (3)(iv) to the 1994 Annual Report
Exhibit(3)(ii) Registrant's By-Laws are incorporated by reference to
Exhibit 3(v) to Registrant's Form 10-Q for the Quarterly Period
ended December 31, 1994.
Exhibit 11 Computations of per share earnings.
Exhibit 12 Computations of ratios of earnings to fixed charges
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
(i) Form 8-K dated October 25, 1996 reporting under Item 5 "Other
Events" the filing of an earnings press release by the
Registrant on October 25, 1996 and including said press release
as an Exhibit under Item 7 "Financial Statements and Exhibits".
(ii) Form 8-K dated October 31, 1996 reporting under Item 2
"Acquisition of Asset" of the consummation of the acquisition
of certain assets and liabilities of Heine Securities
Corporation including a press release and certain related
agreements as Exhibits under Item 7 "Financial Statements, Pro
Forma Information and Exhibits".
(iii) Form 8-K dated November 27, 1996 reporting under Item 5 "Other
Events" on the Registrant's repurchase of certain of its debt
securities, including a press release issued November 27, 1996
as an Exhibit under Item 7 "Financial Statements and Exhibits".
an Exhibit under Item 7 "Financial Statements and Exhibits".
(iv) Form 8-K dated January 23, 1997 reporting under Item 5 "Other
Events" the filing of an earnings press release by the
Registrant on January 23, 1997 and including said press release
as an Exhibit under Item 7 "Financial Statements and Exhibits".