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Franklin Resources, Inc. Announces Second Quarter Results

SAN MATEO, CA, Apr 27, 2016 (Marketwired via COMTEX) -- Franklin Resources, Inc. (the "Company") BEN, -3.78% today announced net income(1) of $360.4 million or $0.61 per diluted share for the quarter ended March 31, 2016, as compared to $447.8 million or $0.74 per diluted share for the previous quarter and $606.5 million or $0.98 per diluted share for the quarter ended March 31, 2015.

"As equities rebounded toward the second half of the quarter, we were pleased to see improved performance for a number of our key investment strategies, particularly our hybrid and emerging markets funds," said Greg Johnson, Chairman and CEO of Franklin Resources, Inc. "Looking ahead, we will continue to strategically invest in the business to best serve our clients, including the expansion of our multi-asset solution capabilities and the further build-out of our local asset management business, while managing our expense structure and remaining focused on enhancing shareholder value."

                                                        %    Quarter     %
                                    Quarter Ended    Change   Ended   Change
                                 -------------------        ---------
                                                      Qtr.             Year
                                                       vs.              vs.
                                 31-Mar-16 31-Dec-15  Qtr.  31-Mar-15  Year
                                 --------- --------- ------ --------- ------
Financial Results
(in millions, except per share
 data)
Operating revenues               $1,613.9  $1,758.0    (8)% $2,009.8   (20)%
Operating income                    537.3     653.6   (18)%    757.7   (29)%
Operating margin                     33.3%     37.2%            37.7%

Net income(1)                    $  360.4  $  447.8   (20)% $  606.5   (41)%
Diluted earnings per share           0.61      0.74   (18)%     0.98   (38)%

Assets Under Management
(in billions)
Ending                           $  742.6  $  763.9    (3)% $  880.6   (16)%
Average(2)                          737.1     781.5    (6)%    881.6   (16)%
Net new flows                       (24.6)    (20.6)            (5.6)



Total assets under management ("AUM") were $742.6 billion at March 31, 2016, down $21.3 billion or 3% during the quarter primarily due to $24.6 billion of net new outflows, partially offset by $4.2 billion of market appreciation and other, which primarily consists of a $4.6 billion increase from foreign exchange revaluation.

Cash and cash equivalents and investments were $10.6 billion at both March 31, 2016 and September 30, 2015. Total stockholders' equity was $12.4 billion at March 31, 2016, as compared to $12.5 billion at September 30, 2015. The Company had 586.1 million shares of common stock outstanding at March 31, 2016, as compared to 603.5 million shares outstanding at September 30, 2015. During the quarter ended March 31, 2016, the Company repurchased 9.6 million shares of its common stock for a total cost of $337.3 million.

Conference Call Information

Pre-recorded audio commentary on the results from Franklin Resources, Inc.'s Chairman and CEO Greg Johnson and CFO and Executive Vice President Ken Lewis will be available today at approximately 8:30 a.m. Eastern Time. They will also lead a live teleconference today at 11:00 a.m. Eastern Time to answer questions of a material nature. Analysts and investors are encouraged to review the Company's recent filings with the U.S. Securities and Exchange Commission and to contact Investor Relations before the live teleconference for any clarifications or questions related to the earnings release or pre-recorded audio commentary.

Access to the pre-recorded audio commentary and accompanying slides are available at investors.franklinresources.com. The pre-recorded audio commentary can also be accessed by dialing (877) 523-5612 in the U.S. and Canada or (201) 689-8483 internationally using access code 7055790, any time through May 27, 2016.

Access to the live teleconference will be available at investors.franklinresources.com or by dialing (877) 407-8293 in the U.S. and Canada or (201) 689-8349 internationally. A replay of the teleconference can also be accessed by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally using access code 13634442, after 2:00 p.m. Eastern Time on April 27, 2016 through May 27, 2016.

Questions regarding the pre-recorded audio commentary or live teleconference should be directed to Franklin Resources, Inc., Investor Relations at (650) 312-4091 or Media Relations at (650) 312-2245.

Performance Rankings of Franklin Templeton's U.S.-Registered and Cross-Border Long-Term Mutual Funds(3,4,5):

                                           Percentage of Assets in Top Two
                                                 Peer Group Quartiles
                                         -----------------------------------
Period ended March 31, 2016               1-Year   3-Year   5-Year   10-Year
                                         -------- -------- -------- --------
Equity and Hybrid (AUM: $270 billion)         22%      30%      44%      73%
Fixed Income (AUM: $220 billion)               5%      47%      71%      84%
   Total (AUM: $490 billion)                  15%      38%      56%      78%



Performance quoted above represents past performance, which cannot predict or guarantee future results. All investments involve risks, including loss of principal.

FRANKLIN RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited

                        Three Months Ended          Six Months Ended
                            March 31,                  March 31,
                       -------------------        -------------------
(in millions, except
 per share data and                           %                          %
 AUM)                     2016      2015   Change    2016      2015   Change
                       --------- --------- ------ --------- --------- ------
Operating Revenues
Investment management
 fees                  $1,095.2  $1,347.6   (19)% $2,281.9  $2,730.0   (16)%
Sales and distribution
 fees                     437.0     580.0   (25)%    915.4   1,175.0   (22)%
Shareholder servicing
 fees                      61.8      66.1    (7)%    123.7     131.9    (6)%
Other                      19.9      16.1    24%      50.9      37.2    37%
                       --------- --------- ------ --------- --------- ------
  Total operating
   revenues             1,613.9   2,009.8   (20)%  3,371.9   4,074.1   (17)%
                       --------- --------- ------ --------- --------- ------
Operating Expenses
Sales, distribution
 and marketing            531.7     710.5   (25)%  1,120.3   1,442.0   (22)%
Compensation and
 benefits                 374.3     377.5    (1)%    716.8     753.0    (5)%
Information systems
 and technology            49.6      49.9    (1)%    100.8     101.1     0%
Occupancy                  33.0      32.1     3%      63.7      66.4    (4)%
General,
 administrative and
 other                     88.0      82.1     7%     179.4     171.9     4%
                       --------- --------- ------ --------- --------- ------
  Total operating
   expenses             1,076.6   1,252.1   (14)%  2,181.0   2,534.4   (14)%
                       --------- --------- ------ --------- --------- ------
Operating Income          537.3     757.7   (29)%  1,190.9   1,539.7   (23)%
                       --------- --------- ------ --------- --------- ------
Other Income
 (Expenses)
Investment and other
 income, net               17.4     102.9   (83)%     47.9     154.6   (69)%
Interest expense          (12.2)     (1.7)  618%     (24.2)    (13.0)   86%
                       --------- --------- ------ --------- --------- ------
  Other income, net         5.2     101.2   (95)%     23.7     141.6   (83)%
                       --------- --------- ------ --------- --------- ------
Income before taxes       542.5     858.9   (37)%  1,214.6   1,681.3   (28)%
Taxes on income           181.7     236.0   (23)%    391.4     492.1   (20)%
                       --------- --------- ------ --------- --------- ------
Net income                360.8     622.9   (42)%    823.2   1,189.2   (31)%
Less: net income
 (loss) attributable
 to
  Nonredeemable
   noncontrolling
   interests                1.9      14.1   (87)%     15.5      20.8   (25)%
  Redeemable
   noncontrolling
   interests               (1.5)      2.3      NM     (0.5)     (4.5)  (89)%
                       --------- --------- ------ --------- --------- ------
Net Income
 Attributable to
 Franklin Resources,
 Inc.                  $  360.4  $  606.5   (41)% $  808.2  $1,172.9   (31)%
                       ========= ========= ====== ========= ========= ======

Earnings per Share
Basic                  $   0.61  $   0.98   (38)% $   1.36  $   1.88   (28)%
Diluted                    0.61      0.98   (38)%     1.36      1.88   (28)%
Dividends Declared per
 Share                 $   0.18  $   0.15    20%  $   0.36  $   0.80   (55)%

Average Shares
 Outstanding
Basic                     587.0     617.6    (5)%    592.4     618.9    (4)%
Diluted                   587.1     617.7    (5)%    592.4     619.0    (4)%

Operating Margin           33.3%     37.7%            35.3%     37.8%

AUM (in billions)
Ending                 $  742.6  $  880.6   (16)% $  742.6  $  880.6   (16)%
Average                   737.1     881.6   (16)%    758.7     889.0   (15)%
Net new flows             (24.6)     (5.6)           (45.2)     (9.1)



FRANKLIN RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited

                     Three Months Ended              Three Months Ended
                    -------------------        -----------------------------
(in millions,
 except per share
 data and                                  %
 employees)         31-Mar-16 31-Dec-15 Change 30-Sep-15 30-Jun-15 31-Mar-15
                    --------- --------- ------ --------- --------- ---------
Operating Revenues
Investment
 management fees    $1,095.2  $1,186.7    (8)% $1,256.9  $1,340.9  $1,347.6
Sales and
 distribution fees     437.0     478.4    (9)%    510.6     566.8     580.0
Shareholder
 servicing fees         61.8      61.9     0%      64.4      66.5      66.1
Other                   19.9      31.0   (36)%     41.9      26.6      16.1
                    --------- --------- ------ --------- --------- ---------
  Total operating
   revenues          1,613.9   1,758.0    (8)%  1,873.8   2,000.8   2,009.8
                    --------- --------- ------ --------- --------- ---------
Operating Expenses
Sales, distribution
 and marketing         531.7     588.6   (10)%    626.3     694.0     710.5
Compensation and
 benefits              374.3     342.5     9%     336.8     363.5  ...

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