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| Franklin Resources, Inc. Announces Fourth Quarter Results |
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| From: |
| Franklin Resources, Inc. |
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| Telephone: |
Contact: |
| (650) 312-8900 |
Alan Weinfeld |
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San Mateo, CA, October 25, 2000-- Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE: BEN) today reported net income of $140.8 million, or $0.58 per share diluted, on revenues of $593.1 million for the quarter ended September 30, 2000, compared with net income of $140.4 million, or $0.58 per share diluted, on revenues of $568.9 million in the preceding quarter and net income of $132.4 million, or $0.52 per share diluted, on revenues of $574.0 million in the comparable quarter a year ago. The quarter ended September 30, 2000 included pre-tax $8.2 million of non-operating income related to the $32.8 million gain on the sale of the company's headquarters in July. The gain will be recognized over the twelve month lease-back-period, while the organization transitions to its new worldwide headquarters in San Mateo. Information systems, technology and occupancy costs were higher than the run rate due to technology initiatives which resulted in service and operating enhancements and higher real estate transition costs.
Net income for the year ended September 30, 2000 was $562.1 million, or $2.28 per share diluted, on revenues of $2,340.1 million as compared to net income of $426.7 million, or $1.69 per share diluted, on revenues of $2,262.5 million a year ago. Pretax restructuring charges of $58.5 million, or $0.17 per share diluted after tax, were incurred in the comparable period last year.
As of September 30, 2000, assets under management by the company's subsidiaries were $229.9 billion, as compared to $218.1 billion at this time last year. Simple monthly average assets under management during the current quarter were $231.4 billion compared to $228.0 billion in the preceding quarter and $223.3 billion in the same quarter a year ago. Equity assets now comprise 66% of total assets under management as compared to 62% at September 30, 1999. Fixed income funds now comprise 28% of total assets under management as compared to 31%, at the same time last year. For the three-month period ended September 30, 2000, net outflows complex-wide were $1.6 billion, including reinvested dividends, as compared to net inflows of $0.6 billion last quarter and net outflows of $1.2 billion for the same period last year. Net flows excluding reinvested dividends improved during the quarter. Gross asset inflows increased 24% for the year ended September 30, 2000 as compared to the prior year. 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.
Fiscal Year 2000 Highlights
Financial Highlights
- Diluted earnings per share increased 23% for the year ended September 30, 2000, excluding last year's restructuring charge.
- Share repurchases of approximately 8.4 million shares were made at an average price of $29.50 for the year ended September 30, 2000.
Performance & Products
- 70% of Franklin Templeton Investments' U.S. retail mutual fund assets were rated four- or five-star by Morningstar as of September 30, 2000.
- 78% of Franklin U.S. equity growth assets ranked in the top quartile of their Lipper peer groups for the one-year period ending September 30, 2000 and 89% were in the top half of their groups.
- Top quartile performance of Mutual Series value funds positions them for increased flows.
- 69% of Franklin tax-free products are ranked in the top half of their Lipper peer groups for the one-year period and 94% for the five-year period ended September 30, 2000.
- 60% of Franklin U.S. retail taxable fixed income products ranked in the top half of their Lipper peer groups for one- and five-year performance as of September 30, 2000.
- Top Lipper quartile performance of Franklin Small Cap Growth Fund I for the one- and three-year period ended September 30, 2000 drove the fund's sales to the No. 1 position in the complex.
- Top Lipper quartile performance of Franklin Floating Rate Trust for the one-year period ended September 30, 2000 drove the fund's gross sales to the No. 3 position in the complex.
- The superior investment performance of Franklin's domestic equity growth products in the U.S. paved the way for new fund rollouts in several international markets.
- Templeton Developing Markets Trust and Franklin California Growth Fund ranked in the "Money 100," Money Magazine's annual ranking of the top 100 mutual fund managers.
- Conrad Herrmann, portfolio manager of Franklin California Growth Fund, made Barron's "Top 100 Fund Managers".
- Mark Mobius, portfolio manager of Templeton Developing Markets Trust, made Money's "Ultimate Investment Club" and the Carson Group's ranking of the "Top Money Managers in the 20th Century."
Global Business Developments
- "Franklin Templeton Investments" brand was adopted globally to more accurately reflect company's core business focus.
- Senior management reorganized to further expand responsibilities of company leaders, create opportunities for employees and enhance accountability throughout the organization.
- Announced the acquisition of Bissett & Associates Investment Management Ltd., a top-performing Canadian equity and fixed income manager, which enhances the company's product selection in the highly competitive Canadian marketplace.
- Completed the buy-out of our joint venture partner creating the first 100% foreign-owned investment trust management company in Korea.
- Merger with NIB Asset Management, a subsidiary of Nedcor, fortified company's position in the growing South African asset management industry.
Global Service Enhancements
- Created the Financial Advisor Service Team dedicated to servicing our best-selling investment representatives with a single point of contact to handle all questions and service needs.
- Kasina recognized franklintempleton.com as the No. 2 site in its "Online Services" category.
- DALBAR highlighted franklintempleton.com's investment representative site as a top 10 "Mutual Fund Professional Website" for two consecutive quarters.
- An "eMail Alerts" program for investment representatives and online proxy voting for shareholders were among a number of features added to franklintempleton.com.
- Wireless Application Protocol (WAP) sites were introduced in the United Kingdom and Germany, providing shareholders with fund price information immediately following market close.
| Franklin Resources, Inc. Consolidated Income Statements |
| (Dollar amounts in thousands except assets under management and per share data) |
|
Three Months Ended
September 30
|
Year Ended
September 30
|
|
2000 |
1999 |
% Change |
2000 |
1999 |
% Change |
| Operating revenues: |
| Investment management fees |
$354,265 |
$347,308 |
2% |
$1,399,121 |
$1,340,612 |
4% |
| Underwriting and distribution fees |
179,728 |
175,743 |
2% |
709,285 |
718,871 |
(1)% |
| Shareholder servicing fees |
52,312 |
46,076 |
14% |
211,416 |
184,948 |
14% |
| Other |
6,745 |
4,845 |
39% |
20,318 |
18,066 |
12% |
| Total operating revenues |
593,050 |
573,972 |
3% |
2,340,140 |
2,262,497 |
3% |
|
| Operating expenses: |
| Underwriting and distribution |
160,416 |
152,348 |
5% |
623,144 |
620,047 |
1% |
| Compensation and benefits |
137,155 |
125,686 |
9% |
535,710 |
515,137 |
4% |
| Information systems, technology and occupancy |
59,890 |
58,076 |
3% |
213,670 |
212,495 |
1% |
| Advertising and promotion |
27,477 |
25,925 |
6% |
101,196 |
105,935 |
(4)% |
| Amortization of deferred sales commissions |
20,416 |
24,366 |
(16)% |
83,627 |
95,948 |
(13)% |
| Amortization of intangible assets |
9,314 |
9,281 |
|
37,163 |
37,220 |
|
| Other |
23,483 |
17,573 |
34% |
82,187 |
78,152 |
5% |
| Restructuring charges |
|
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|
|
58,455 |
NA |
| Total operating expenses |
438,151 |
413,255 |
6% |
1,676,697 |
1,723,389 |
(3)% |
|
| Operating income |
154,899 |
160,717 |
(4)% |
663,443 |
539,108 |
23% |
|
| Other income (expense): |
| Investment and other income |
33,841 |
18,681 |
81% |
90,108 |
55,934 |
61% |
| Interest expense |
(3,418) |
(5,133) |
(33)% |
(13,960) |
(20,958) |
(33) |
| Other income, net |
30,423 |
13,548 |
125% |
76,148 |
34,976 |
118% |
|
| Income before taxes on income |
185,322 |
174,265 |
6% |
739,591 |
574,084 |
29% |
| Taxes on income |
44,499 |
41,824 |
6% |
177,502 |
147,373 |
20% |
|
| Net income |
$140,823 |
$132,441 |
6% |
$562,089 |
$426,711 |
32% |
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| Earnings per share: |
| Basic |
$0.58 |
$0.53 |
9% |
$2.28 |
$1.69 |
35% |
| Diluted |
$0.58 |
$0.52 |
12% |
$2.28 |
$1.69 |
35% |
|
| Dividends per share |
$0.06 |
$0.055 |
9% |
$0.24 |
$0.22 |
9% |
|
| Average shares outstanding (in thousands): |
| Basic |
243,665 |
252,005 |
(3)% |
246,116 |
252,122 |
(2)% |
| Diluted |
244,078 |
252,618 |
(3)% |
246,624 |
252,757 |
(2)% |
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| EBITDA Margin1 |
35% |
35% |
|
36% |
33% |
9% |
| Operating Margin2 |
26% |
28% |
(7)% |
28% |
26% |
8% |
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| Assets under management (in millions): |
| Beginning of Period |
$229,878 |
$227,727 |
1% |
$218,100 |
$208,591 |
5% |
| Sales |
11,588 |
10,659 |
9% |
51,699 |
41,807 |
24% |
| Reinvested Dividends |
619 |
1,451 |
(57)% |
8,686 |
3,918 |
122% |
| Redemptions |
(13,834) |
(13,352) |
4% |
(62,749) |
(59,538) |
5% |
| Appreciation/(Depreciation) |
1,672 |
(8,385) |
NA |
14,187 |
23,322 |
(39)% |
| End of period |
$229,923 |
$218,100 |
5% |
$229,923 |
$218,100 |
5% |
| Simple monthly average for period |
$231,370 |
$223,345 |
4% |
$227,682 |
$219,809 |
4% |
|
1 EBITDA Margin: Earnings before interest, taxes on income, depreciation and the amortization of intangibles divided by total revenues. 1999 fiscal year is stated before restructuring charges.
2 Operating Margin: Operating income divided by total operating revenues. 1999 fiscal year is stated before restructuring charges.
| Franklin Resources, Inc. Consolidated Income Statements |
| (Dollar amounts in thousands except assets under management and per share data.) |
|
Three months ended |
|
30-Sep-00 |
30-Jun-00 |
% Change |
31-Mar-00 |
31-Dec-99 |
30-Sep-99 |
| Operating revenues: |
| Investment management fees |
$354,265 |
$344,805 |
3% |
$356,009 |
$344,042 |
$347,308 |
| Underwriting and distribution fees |
179,728 |
165,181 |
9% |
200,133 |
164,243 |
175,743 |
| Shareholder servicing fees |
52,312 |
54,143 |
(3)% |
53,202 |
51,759 |
46,076 |
| Other |
6,745 |
4,768 |
41% |
3,182 |
5,623 |
4,845 |
| Total operating revenues |
593,050 |
568,897 |
4% |
612,526 |
565,667 |
573,972 |
|
| Operating expenses: |
| Underwriting and distribution |
160,416 |
142,684 |
12% |
176,876 |
143,168 |
152,248 |
| Compensation and benefits |
137,155 |
133,125 |
3% |
134,581 |
130,849 |
125,686 |
| Information systems, technology and occupancy |
59,890 |
50,708 |
18% |
51,441 |
51,631 |
58,076 |
| Advertising and promotion |
27,477 |
25,279 |
9% |
25,895 |
22,545 |
25,925 |
| Amortization of deferred sales commissions |
20,416 |
20,980 |
(3)% |
21,600 |
20,631 |
24,366 |
| Amortization of intangible assets |
9,314 |
9,283 |
|
9,283 |
9,283 |
9,281 |
| Other |
23,483 |
18,006 |
30% |
20,773 |
19,925 |
17,573 |
| Total operating expenses |
438,151 |
400,065 |
10% |
440,449 |
398,032 |
413,255 |
|
| Operating income |
154,899 |
168,832 |
(8)% |
172,077 |
167,635 |
160,717 |
|
| Other income (expense): |
| Investment and other income |
33,841 |
19,836 |
71% |
19,752 |
16,679 |
18,681 |
| Interest expense |
(3,418) |
(3,998) |
(15)% |
(3,180) |
(3,364) |
(5,133) |
| Other income (expense), net |
30,423 |
15,838 |
92% |
16,572 |
13,315 |
13,548 |
|
| Income before taxes on income |
185,322 |
184,670 |
|
188,649 |
180,950 |
174,265 |
| Taxes on income |
44,499 |
44,300 |
|
45,275 |
43,428 |
41,824 |
|
| Net income |
$140,823 |
$140,370 |
|
$143,374 |
$137,522 |
$132,441 |
|
| Earnings per share: |
| Basic |
$0.58 |
$0.58 |
|
$0.58 |
$0.55 |
$0.53 |
| Diluted |
$0.58 |
$0.58 |
|
$0.58 |
$0.55 |
$0.52 |
|
| Dividends per share |
$0.06 |
$0.06 |
|
$0.06 |
$0.06 |
$0.055 |
|
| Average shares outstanding (in thousands): |
| Basic |
243,665 |
243,542 |
|
246,826 |
250,432 |
252,005 |
| Diluted |
244,078 |
243,741 |
|
246,998 |
250,592 |
252,618 |
|
| EBITDA Margin1 |
35% |
37% |
(5)% |
35% |
37% |
35% |
| Operating Margin2 |
26% |
30% |
(13)% |
28% |
30% |
28% |
|
| Employees |
6,489 |
6,454 |
1% |
6,447 |
6,631 |
6,650 |
| Billable Shareholder Accounts (in millions) |
9.2 |
10.5 |
(12)% |
10.5% |
9.9% |
9.6% |
1 EBITDA Margin: Earnings before interest taxes on income, depreciation and the amortization of intangibles divided by total revenues. 1999 fiscal year is stated before restructuring charges.
2 Operating Margin: Operating income divided by total operating revenues. 1999 fiscal year is stated before restructuring charges.
| PRELIMINARY SUMMARY BALANCE SHEET AS OF SEPTEMBER 30(Dollar amounts in thousands) |
|
|
Preliminary |
|
|
2000 |
1999 |
| Assets |
|
|
| Current Assets |
$1,656,294 |
$1,485,889 |
| Banking Finance Assets |
299,562 |
2217,778 |
| Other Assets |
$2,086,587 |
$1,963,123 |
| Total Assets |
$4,042,443 |
$3,666,790 |
| |
| Liabilities and Stockholders' Equity |
|
|
| Current Liabilities |
$489,559 |
$486,490 |
| Banking/Finance Liabilities |
238,954 |
176,406 |
| Other Liabilities |
348,437 |
346,900 |
| Total Liabilities |
1,076,950 |
1,009,796 |
| Total Stockholders' Equity |
2,965,493 |
2,656,994 |
| Total Liabilities and Stockholders' Equity |
$4,042,443 |
$3,666,790 |
| |
| Ending Shares of Common Stock Outstanding |
243,730 |
251,007 |
| ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE(In billions) |
|
|
30-Sep-00 |
30-Jun-00 |
31-Mar-00 |
31-Dec-99 |
30-Sep-99 |
|
| Equity: |
|
|
Global/international |
$97.6 |
$103.6 |
$106.2 |
$111.0 |
$96.8 |
|
Domestic (U.S.) |
53.9 |
49.6 |
49.3 |
44.3 |
37.6 |
|
Total Equity |
151.5 |
153.2 |
155.5 |
155.3 |
134.4 |
|
| Hybrid funds |
9.3 |
8.9 |
9.0 |
9.6 |
10.2 |
|
| Fixed income: |
|
Tax-free |
44.0 |
43.8 |
44.6 |
45.2 |
48.2 |
|
Taxable: |
|
Domestic |
15.6 |
15.3 |
15.0 |
15.4 |
15.8 |
|
Global/international |
4.2 |
3.5 |
3.6 |
3.9 |
3.9 |
|
Total Fixed Income |
63.8 |
62.6 |
63.2 |
64.5 |
67.9 |
|
| Money funds |
5.3 |
5.2 |
5.7 |
5.6 |
5.6 |
|
| Total Ending Assets |
$229.9 |
$229.9 |
$233.4 |
$235.0 |
$218.1 |
|
| Simple Monthly Average Assets |
$231.4 |
$228.0 |
$231.0 |
$224.1 |
$223.3 |
| ASSETS UNDER MANAGEMENT & FLOWS(In billions) |
|
|
30-Sep-00 |
30-Jun-00 |
% Change |
30-Sep-99 |
% Change |
| US Retail Assets |
|
Beginning Assets |
$172.5 |
$175.9 |
(2)% |
$174.4 |
(1)% |
|
Sales |
8.3 |
8.6 |
(3)% |
7.6 |
9% |
|
Reinvested Dividends |
0.6 |
2.7 |
(78)% |
1.4 |
(60)% |
|
Redemptions |
(10.0) |
(11.6) |
(14)% |
(10.6) |
(5)% |
|
Appreciation/(Depreciation) |
2.7 |
(3.1) |
NA |
(6.7) |
NA |
|
Ending Assets |
174.1 |
172.5 |
1% |
166.2 |
1.5% |
|
| Other Assets, including International and Institutional |
|
Beginning Assets |
57.4 |
57.5 |
|
53.3 |
8% |
|
Sales |
3.3 |
4.7 |
(30)% |
3.1 |
6% |
|
Reinvested Dividends |
0.0 |
0.5 |
(100)% |
0.0 |
NA |
|
Redemptions |
(3.8) |
(4.3) |
(12)% |
(2.8) |
36% |
|
Appreciation/(Depreciation) |
(1.1) |
(1.0) |
10% |
(1.7) |
(35)% |
|
Ending Assets |
55.8 |
57.4 |
(3)% |
51.9 |
8% |
| Ending Assets Under Management |
$229.9 |
$229.9 |
|
$218.1 |
5% |
|
| Total Assets Under Management |
|
Beginning Assets |
$229.9 |
$233.4 |
(1)% |
$227.7 |
1% |
|
Sales |
11.6 |
13.3 |
(13)% |
10.7 |
8% |
|
Reinvested Dividends |
0.6 |
3.2 |
(81)% |
1.5 |
(60)% |
|
Redemptions |
(13.8) |
(15.9) |
(13)% |
(13.4) |
3% |
|
Appreciation/(Depreciation) |
1.6 |
(4.1) |
|
(8.4) |
|
|
Ending Assets |
$229.9 |
$229.9 |
|
$218.1 |
5% |
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 September 30, 2000 were over $50 billion.
| ASSETS UNDER MANAGEMENT & FLOWS BY INVESTMENT OBJECTIVE(in billions) |
| |
|
Three Months Ended |
|
30-Sep-00 |
30-Jun-00 |
30-Sep-99 |
| Global/International Equity |
|
Beginning Assets |
$103.6 |
$106.2 |
$102.0 |
|
Sales |
3.8 |
5.8 |
5.0 |
|
Reinvested Dividends |
0.0 |
0.9 |
0.1 |
|
Redemptions |
(6.6) |
(7.3) |
(5.8) |
|
Appreciation/(Depreciation) |
(3.2) |
(2.0) |
(4.5) |
|
Ending Assets |
97.6 |
103.6 |
96.8 |
|
| Domestic Equity |
|
Beginning Assets |
49.6 |
49.3 |
40.4 |
|
Sales |
3.7 |
3.6 |
1.5 |
|
Reinvested Dividends |
0.0 |
1.5 |
0.5 |
|
Redemptions |
(2.6) |
(3.1) |
(2.3) |
|
Appreciation/(Depreciation) |
3.2 |
(1.7) |
(2.5) |
|
Ending Assets |
53.9 |
49.6 |
37.6 |
|
| Hybrid |
|
Beginning Assets |
8.9 |
9.0 |
10.8 |
|
Sales |
0.2 |
0.1 |
0.3 |
|
Reinvested Dividends |
0.1 |
0.2 |
0.2 |
|
Redemptions |
(0.4) |
(0.6) |
(0.5) |
|
Appreciation/(Depreciation) |
0.5 |
0.2 |
(0.6) |
|
Ending Assets |
9.3 |
8.9 |
10.2 |
|
| Tax-Free Income |
|
Beginning Assets |
43.8 |
44.6 |
50.0 |
|
Sales |
0.8 |
0.6 |
1.2 |
|
Reinvested Dividends |
0.3 |
0.3 |
0.3 |
|
Redemptions |
(1.3) |
(1.5) |
(1.9) |
|
Appreciation/(Depreciation) |
0.4 |
(0.2) |
(1.4) |
|
Ending Assets |
44.0 |
43.8 |
48.2 |
|
| Taxable Fixed Income |
|
Beginning Assets |
18.8 |
18.6 |
19.8 |
|
Sales |
1.3 |
1.4 |
1.2 |
|
Reinvested Dividends |
0.1 |
0.2 |
0.3 |
|
Redemptions |
(1.0) |
(1.1) |
(1.0) |
|
Appreciation/(Depreciation) |
0.6 |
(0.3) |
(0.6) |
|
Ending Assets |
19.8 |
18.8 |
19.7 |
|
| Money Funds |
|
Beginning Assets |
5.2 |
5.7 |
4.7 |
|
Sales |
1.8 |
1.8 |
1.5 |
|
Reinvested Dividends |
0.1 |
0.1 |
0.1 |
|
Redemptions |
(1.9) |
(2.3) |
(1.9) |
|
Appreciation/(Depreciation) |
0.1 |
(0.1) |
1.2 |
|
Ending Assets |
5.3 |
5.2 |
5.6 |
|
Ending Assets Under Management |
$229.9 |
$229.9 |
$218.1 |
Analyst Meeting and Conference Call Information
Members of the investment community and general public are invited to attend a meeting today, Wednesday, October 25, 2000 at 11:00 am Eastern Time. The meeting will be held in the Broadway Room of the Drake Hotel, 440 Park Avenue (56th and Park) in New York City.
Conference Call/Webcast Options
Those who cannot attend the meeting can listen to the presentation by dialing one of the following numbers approximately ten minutes prior to the scheduled starting time: (800) 700-7860 (US callers) or (612) 332-1210 (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 on October 25 at 2:30 pm Eastern Time (11:30 am Pacific Time) and will run through November 2 at 3:00 am Eastern Time (12:00 am Pacific Time). To access the replay, please dial (800) 475-6701 or (320) 365-3844 (international callers) and enter access code 539414.
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.
Statements in this press release regarding Franklin Templeton Investments' business which are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the company's Annual Report, Form 10-K for the most recently ended fiscal year as well as other documents filed by the company with the Securities and Exchange Commission.
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