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Franklin Resources, Inc. Announces First Quarter Results

Franklin Resources, Inc. Announces First Quarter Results 
SAN MATEO, CA -- (Marketwire) -- 02/01/13 --  Franklin Resources,
Inc. (the "Company") (NYSE: BEN) today announced net income(1) of
$516.1 million or $2.42 per diluted share for the quarter ended
December 31, 2012, as compared to $492.1 million or $2.31 per diluted
share for the previous quarter and $480.8 million or $2.20 per
diluted share for the quarter ended December 31, 2011.  


 
                                                                            
                                                        Quarter             
                       Quarter Ended       % Change      Ended     % Change 
                  ----------------------              ----------            
                                           Qtr. vs.                Year vs. 
                   31-Dec-12   30-Sep-12     Qtr.      31-Dec-11     Year   
                  ----------  ----------  ---------   ----------  --------- 
Financial Results                                                           
($ in millions,                                                             
 except per share                                                           
 amounts)                                                                   
Operating                                                                   
 revenues         $  1,901.8  $  1,816.2          5%  $  1,701.9         12%
Operating income  $    685.1  $    622.7         10%  $    632.4          8%
Operating margin        36.0%       34.3%                   37.2%           
                                                                            
Net income(1)     $    516.1  $    492.1          5%  $    480.8          7%
Diluted earnings                                                            
 per share        $     2.42  $     2.31          5%  $     2.20         10%
                                                                            
Assets Under                                                                
 Management                                                                 
(in billions)                                                               
Ending            $    781.8  $    749.9          4%  $    670.3         17%
Average(2)             763.6       726.7          5%       675.0         13%
Net new flows            0.3         2.9        (90)%      (15.6)        NM 

 
Non-operating income for the quarter ended December 31, 2012 included
$45.5 million of investment and other income, net, as compared to
$64.1 million for the prior quarter and $71.2 million for the quarter
ended December 31, 2011.  
Total assets under management ("AUM") were $781.8 billion at December
31, 2012, up $31.9 billion or 4% during the quarter. The increase was
primarily due to $24.8 billion in market appreciation and $8.7
billion from an acquisition. AUM increased $111.5 billion or 17% year
over year, primarily due to $94.0 billion in market appreciation and
$13.6 billion of net new flows.  
Cash and cash equivalents and investments were $7.6 billion at
December 31, 2012, as compared to $8.4 billion at September 30, 2012.
Total stockholders' equity was $9.5 billion at December 31, 2012, as
compared to $9.8 billion at September 30, 2012. The Company had 212.5
million shares of common stock outstanding at December 31, 2012, as
compared to 212.2 million shares outstanding at September 30, 2012.
During the quarter ended December 31, 2012, the Company repurchased
approximately 0.8 million shares of its common stock for a total cost
of $98.0 million. 
On November 16, 2012, the Company declared a special cash dividend of
$3.00 per share which was paid on December 20, 2012. On December 3,
2012, the Company declared a regular quarterly cash dividend of $0.29
per share which was paid on December 31, 2012. The quarterly dividend
represents a 7% increase over the dividends paid in the prior quarter
and the same quarter a year ago. The special and quarterly dividends
are consistent with the Company's long-term capital management
strategy of continuing to invest in the business, maintaining
financial strength and flexibility, and returning a substantial
portion of the Company's earnings to stockholders through the payment
of dividends and common stock repurchases. 
Conference Call Information  
Pre-recorded audio commentary on the results from Franklin Resources,
Inc.'s President and Chief Executive Officer Greg Johnson and
Executive Vice President and Chief Financial Officer Ken Lewis will
be available today at approximately 8:30 a.m. Eastern Time. Due to
the Friday release date and related scheduling issues, this quarter
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 franklinresources.com. The pre-recorded audio
commentary can also be accessed by dialing (888) 843-7419 in the U.S.
and Canada or (630) 652-3042 internationally using access code
34052662, any time through March 2, 2013. 
Access to the live teleconference will be available at
franklinresources.com or by dialing (888) 895-5271 in the U.S. and
Canada or (847) 619-6547 internationally. A replay of the call can
also be accessed by calling (888) 843-7419 in the U.S. and Canada or
(630) 652-3042 internationally using access code 34052665, after 1:30
p.m. Eastern Time on February 1, 2013 through March 2, 2013. 
Questions regarding the pre-recorded audio commentary or live
teleconference should be directed to Franklin Resources, Inc.,
Investor Relations at (650) 312-4091 or Corporate Communications at
(650) 312-2245. 
Lipper Performance Rankings of Franklin Templeton's U.S.-Registered
Long-Term Mutual Funds(3, 4): 


 
                                                                            
                                           Period Ended December 31, 2012   
                                         -----------------------------------
                                            Percent of Assets in Top Two    
                                                    Quartiles(5)            
                                         -----------------------------------
                                          1-Year   3-Year   5-Year   10-Year
                                         -------- -------- -------- --------
Franklin Templeton(6)                         66%      79%      86%      82%
Franklin Templeton Equity(7)                  65%      82%      84%      71%
Franklin Templeton Fixed-Income(8)            67%      76%      88%      93%
Franklin Equity(9)                            67%      84%      87%      84%
Templeton Equity(10)                          89%      86%      89%      38%
Mutual Series Equity(11)                      14%      70%      63%      62%
Franklin Templeton Taxable Fixed-                                           
 Income(12)                                   80%      83%      83%      83%
Franklin Templeton Tax-Free Fixed-                                          
 Income(13)                                   58%      71%      92%     100%

 
Performance quoted above represents past performance, which cannot
predict or guarantee future results. 
Investors should carefully consider a fund's investment goals, risks,
charges and expenses before investing. To obtain a summary prospectus
and/or prospectus, which contains this and other information, for any
U.S.-registered Franklin Templeton fund, investors should talk to
their financial advisors or call Franklin/Templeton Distributors,
Inc. at 1-800/DIAL BEN(R) (1-800/342-5236). Please read a prospectus
carefully before investing. 


 
                                                                            
Franklin Resources, Inc.                                                    
Condensed Consolidated Statements of Income                                 
Unaudited                                                                   
(in millions, except per share data and      Three Months Ended             
 AUM)                                           December 31,                
                                            --------------------            
                                               2012       2011    % Change  
                                            ---------  ---------  --------  
Operating Revenues                                                          
  Investment management fees                $ 1,199.9  $ 1,075.1        12% 
  Sales and distribution fees                   604.1      524.3        15% 
  Shareholder servicing fees                     74.4       75.4        (1)%
  Other, net                                     23.4       27.1       (14)%
                                            ---------  ---------  --------  
    Total operating revenues                  1,901.8    1,701.9        12% 
                                            ---------  ---------  --------  
Operating Expenses                                                          
  Sales, distribution and marketing             730.9      630.6        16% 
  Compensation and benefits                     335.1      300.4        12% 
  Information systems and technology             43.6       41.4         5% 
  Occupancy                                      33.4       31.8         5% 
  General, administrative and other              73.7       65.3        13% 
                                            ---------  ---------  --------  
    Total operating expenses                  1,216.7    1,069.5        14% 
                                            ---------  ---------  --------  
Operating Income                                685.1      632.4         8% 
                                            ---------  ---------  --------  
Other Income (Expenses)                                                     
  Investment and other income, net               45.5       71.2       (36)%
  Interest expense                              (14.5)      (8.6)       69% 
                                            ---------  ---------  --------  
    Other income, net                            31.0       62.6       (50)%
                                            ---------  ---------  --------  
  Income before taxes                           716.1      695.0         3% 
  Taxes on income                               211.4      201.3         5% 
                                            ---------  ---------  --------  
  Net income                                    504.7      493.7         2% 
  Less: net income (loss) attributable to                                   
    Nonredeemable noncontrolling interests      (12.7)      10.1        NM  
    Redeemable noncontrolling interests           1.3        2.8       (54)%
                                            ---------  ---------  --------  
Net Income Attributable to Franklin                                         
 Resources, Inc.                            $   516.1  $   480.8         7% 
                                            =========  =========  ========  
                                                                            
Earnings per Share                                                          
    Basic                                   $    2.42  $    2.21        10% 
    Diluted                                      2.42       2.20        10% 
Dividends per Share                         $    3.29  $    2.27        45% 
                                                                            
Average Shares Outstanding                                                  
  Basic                                         211.5      216.1        (2)%
  Diluted                                       211.8      216.7        (2)%
                                                                            
Operating Margin                                 36.0%      37.2%           
                                                                            
AUM (in billions)                                                           
  Ending                                    $   781.8  $   670.3        17% 
  Average                                       763.6      675.0        13% 
  Net new flows                                   0.3      (15.6)       NM  
                                                                            
                                                                            
                                                                            
Franklin Resources, Inc.                                                    
Condensed Consolidated Statements of Income                                 
Unaudited                                                                   
                                                                            
(in millions,                                                               
 except per share                                                           
 data and                                                                   
 employees)       Three Months Ended                Three Months Ended      
                  ------------------           ---------------------------- 
                   31-Dec-   30-Sep-     %      30-Jun-   31-Mar-   31-Dec- 
                     12        12     Change      12        12        11    
----------------- --------  --------  ------   --------  --------  -------- 
Operating                                                                   
 Revenues                                                                   
  Investment                                                                
   management                                                               
   fees           $1,199.9  $1,142.8       5%  $1,114.4  $1,126.4  $1,075.1 
  Sales and                                                                 
   distribution                                                             
   fees              604.1     579.9       4%     569.2     585.9     524.3 
  Shareholder                                                               
   servicing fees     74.4      73.1       2%      77.3      76.7      75.4 
  Other, net          23.4      20.4      15%      22.7      10.3      27.1 
                  --------  --------  ------   --------  --------  -------- 
    Total                                                                   
     operating                                                              
     revenues      1,901.8   1,816.2       5%   1,783.6   1,799.3   1,701.9 
                  --------  --------  ------   --------  --------  -------- 
Operating                                                                   
 Expenses                                                                   
  Sales,                                                                    
   distribution                                                             
   and marketing     730.9     701.6       4%     692.0     715.5     630.6 
  Compensation                                                              
   and benefits      335.1     317.5       6%     314.6     323.0     300.4 
  Information                                                               
   systems and                                                              
   technology         43.6      54.1     (19)%     44.1      43.3      41.4 
  Occupancy           33.4      34.7      (4)%     31.5      31.9      31.8 
  General,                                                                  
   administrative                                                           
   and other          73.7      85.6     (14)%     58.4      68.5      65.3 
                  --------  --------  ------   --------  --------  -------- 
    Total                                                                   
     operating                                                              
     expenses      1,216.7   1,193.5       2%   1,140.6   1,182.2   1,069.5 
                  --------  --------  ------   --------  --------  -------- 
Operating Income     685.1     622.7      10%     643.0     617.1     632.4 
                  --------  --------  ------   --------  --------  -------- 
Other Income                                                                
 (Expenses)                                                                 
  Investment and                                                            
   other income                                                             
   (losses), net      45.5      64.1     (29)%    (18.0)     82.4      71.2 
  Interest                                                                  
   expense           (14.5)     (8.4)     73%     (10.1)     (9.6)     (8.6)
                  --------  --------  ------   --------  --------  -------- 
    Other income                                                            
     (expenses),                                                            
     net              31.0      55.7     (44)%    (28.1)     72.8      62.6 
                  --------  --------  ------   --------  --------  -------- 
  Income before     
                                                        
   taxes             716.1     678.4       6%     614.9     689.9     695.0 
  Taxes on income    211.4     174.4      21%     184.9     202.1     201.3 
                  --------  --------  ------   --------  --------  -------- 
  Net income         504.7     504.0       0%     430.0     487.8     493.7 
  Less: net                                                                 
   income (loss)                                                            
   attributable                                                             
   to                                                                       
    Nonredeemable                                                           
     noncontroll-                                                           
     ing interests    (12.7)      9.1      NM      (24.2)    (15.9)     10.1 
    Redeemable                                                              
     noncontroll-                                                           
     ing interests      1.3       2.8     (54)%     (1.1)      0.5       2.8 
                  --------  --------  ------   --------  --------  -------- 
Net Income                                                                  
 Attributable to                                                            
 Franklin                                                                   
 Resources, Inc.  $  516.1  $  492.1       5%  $  455.3  $  503.2  $  480.8 
                  ========  ========  ======   ========  ========  ======== 
                                                                            
Earnings per                                                                
 Share                                                                      
  Basic           $   2.42  $   2.32       4%  $   2.12  $   2.33  $   2.21 
  Diluted             2.42      2.31       5%      2.12      2.32      2.20 
Dividends per                                                               
 Share            $   3.29  $   0.27      NM   $   0.27  $   0.27  $   2.27 
                                                                            
Average Shares                                                              
 Outstanding                                                                
  Basic              211.5     211.4       0%     213.1     214.5     216.1 
  Diluted            211.8     211.9       0%     213.6     215.1     216.7 
                                                                            
Operating Margin      36.0%     34.3%              36.1%     34.3%     37.2%
                                                                            
Employees            8,702     8,558       2%     8,563     8,451     8,484 
Billable                                                                    
 Shareholder                                                                
 Accounts             23.3      23.0       1%      26.6      26.1      25.6 

 
AUM AND FLOWS 


 
                                                                            
                                                    Three Months            
                                                        Ended               
(in billions)                                       December 31,      %     
                                                  ----------------          
                                                    2012     2011   Change  
                                                  -------  -------  ------  
Beginning AUM                                     $ 749.9  $ 659.9      14% 
  Long-term sales                                    46.0     38.2      20% 
  Long-term redemptions                             (44.7)   (53.0)    (16)%
  Net cash management                                (1.0)    (0.8)     25% 
                                                  -------  -------  ------  
    Net new flows                                     0.3    (15.6)     NM  
  Reinvested distributions                            9.1      7.3      25% 
                                                  -------  -------  ------  
    Net flows                                         9.4     (8.3)     NM  
  Distributions                                     (11.0)    (8.5)     29% 
  Acquisition                                         8.7        -      NM  
  Appreciation and other                             24.8     27.2      (9)%
                                                  -------  -------  ------  
Ending AUM                                        $ 781.8  $ 670.3      17% 
                                                  =======  =======  ======  

 
AUM BY INVESTMENT OBJECTIVE  


 
                                                                            
                            31-Dec- 30-Sep-    %     30-Jun- 31-Mar- 31-Dec-
(in billions)                  12      12   Change      12      12      11  
                            ------- ------- ------   ------- ------- -------
Equity                                                                      
  Global/international      $ 222.2 $ 214.9      3%  $ 198.9 $ 216.2 $ 194.5
  United States                81.2    82.2     (1)%    79.7    83.7    75.7
                            ------- ------- ------   ------- ------- -------
    Total equity              303.4   297.1      2%    278.6   299.9   270.2
                            ------- ------- ------   ------- ------- -------
Hybrid                        121.0   110.1     10%    103.2   103.5    96.4
Fixed-Income                                                                
  Tax-free                     84.3    83.2      1%     80.1    77.3    74.1
  Taxable                                                                   
    Global/international      209.8   196.4      7%    185.9   187.8   174.7
    United States              57.6    56.7      2%     53.5    51.5    48.9
                            ------- ------- ------   ------- ------- -------
    Total fixed-income        351.7   336.3      5%    319.5   316.6   297.7
Cash Management                 5.7     6.4    (11)%     5.8     5.7     6.0
                            ------- ------- ------   ------- ------- -------
    Total AUM               $ 781.8 $ 749.9      4%  $ 707.1 $ 725.7 $ 670.3
                            ======= ======= ======   ======= ======= =======
Average AUM for the Three-                                                  
 Month Period               $ 763.6 $ 726.7      5%  $ 710.7 $ 706.9 $ 675.0

 
AUM AND FLOWS - UNITED STATES AND INTERNATIONAL(14)  


 
                                                                            
                                 As of and for the Three Months Ended       
                          ------------------------------------------------- 
                          31-Dec-   % of   30-Sep-   % of   31-Dec-   % of  
(in billions)                12     Total     12     Total     11     Total 
                          -------  ------  -------  ------  -------  ------ 
Long-Term Sales                                                             
  United States           $  23.0      50% $  21.7      51% $  21.2      55%
  International              23.0      50%    20.8      49%    17.0      45%
                          -------  ------  -------  ------  -------  ------ 
    Total long-term sales $  46.0     100% $  42.5     100% $  38.2     100%
                          =======  ======  =======  ======  =======  ====== 
Long-Term Redemptions                                                       
  United States           $ (23.2)     52% $ (19.0)     47% $ (33.1)     62%
  International             (21.5)     48%   (21.2)     53%   (19.9)     38%
                          -------  ------  -------  ------  -------  ------ 
    Total long-term                                                         
     redemptions          $ (44.7)    100% $ (40.2)    100% $ (53.0)    100%
                          =======  ======  =======  ======  =======  ====== 
AUM                                                                         
  United States           $ 507.3      65% $ 492.6      66% $ 439.0      65%
  International             274.5      35%   257.3      34%   231.3      35%
                          -------  ------  -------  ------  -------  ------ 
    Total AUM             $ 781.8     100% $ 749.9     100% $ 670.3     100%
                          =======  ======  ==
=====  ======  =======  ====== 

 
AUM AND FLOWS BY INVESTMENT OBJECTIVE  


 
                                                                            
(in billions)        Equity                 Fixed-Income                    
                ---------------        ---------------------                
for the three                                Taxable                        
 months ended   Global/                      Global/ Taxable   Cash         
December 31,    Interna  United         Tax- Interna United  Manage-        
 2012            tional  States Hybrid  Free  tional  States   ment    Total 
                ------- ------- ------ ----- ------- ------- ------- ------ 
AUM at October                                                              
 1, 2012        $ 214.9 $  82.2 $110.1 $83.2 $ 196.4 $  56.7 $   6.4 $749.9 
  Long-term                                                                 
   sales            9.6     3.4    5.5   3.8    19.7     4.0       -   46.0 
  Long-term                                                                 
   redemptions    (13.8)   (5.1)  (4.8) (3.2)  (14.0)   (3.8)      -  (44.7)
  Net exchanges    (0.2)   (0.3)  (0.2)    -     0.2     0.2     0.3      - 
  Net cash                                                                  
   management         -       -      -     -       -       -    (1.0)  (1.0)
                ------- ------- ------ ----- ------- ------- ------- ------ 
    Net new                                                                 
     flows         (4.4)   (2.0)   0.5   0.6     5.9     0.4    (0.7)   0.3 
  Reinvested                                                                
   distributions    2.5     1.4    1.2   0.6     2.9     0.5       -    9.1 
                ------- ------- ------ ----- ------- ------- ------- ------ 
    Net flows      (1.9)   (0.6)   1.7   1.2     8.8     0.9    (0.7)   9.4 
  Distributions    (2.6)   (1.5)  (1.5) (0.8)   (3.8)   (0.8)      -  (11.0)
  Acquisition         -       -    8.7     -       -       -       -    8.7 
  Appreciation                                                              
   and other       11.8     1.1    2.0   0.7     8.4     0.8       -   24.8 
                ------- ------- ------ ----- ------- ------- ------- ------ 
AUM at December                                                             
 31, 2012       $ 222.2 $  81.2 $121.0 $84.3 $ 209.8 $  57.6 $   5.7 $781.8 
                ======= ======= ====== ===== ======= ======= ======= ====== 
                                                                            
                                                                            
                                                                            
(in billions)        Equity                 Fixed-Income                    
                ---------------        ---------------------                
for the three                                Taxable                        
 months ended   Global/                      Global/ Taxable   Cash         
September 30,   Interna  United         Tax- Interna United  Manage-        
 2012            tional  States Hybrid  Free  tional  States   ment   Total 
                ------- ------- ------ ----- ------- ------- ------- ------ 
AUM at July 1,                                                              
 2012           $ 198.9 $  79.7 $103.2 $80.1 $ 185.9 $  53.5 $   5.8 $707.1 
  Long-term                                                                 
   sales           10.0     3.4    5.2   3.4    15.7     4.8       -   42.5 
  Long-term                                                                 
   redemptions    (10.4)   (5.0)  (3.6) (2.2)  (15.6)   (3.4)      -  (40.2)
  Net exchanges    (0.3)      -    0.1     -    (0.1)    0.3       -      - 
  Net cash                    
                                              
   management         -       -      -     -       -       -     0.6    0.6 
                ------- ------- ------ ----- ------- ------- ------- ------ 
    Net new                                                                 
     flows         (0.7)   (1.6)   1.7   1.2       -     1.7     0.6    2.9 
  Reinvested                                                                
   distributions    0.4     0.3    1.0   0.6     1.0     0.4       -    3.7 
                ------- ------- ------ ----- ------- ------- ------- ------ 
    Net flows      (0.3)   (1.3)   2.7   1.8     1.0     2.1     0.6    6.6 
  Distributions    (0.4)   (0.3)  (1.3) (0.8)   (1.3)   (0.5)      -   (4.6)
  Appreciation                                                              
   and other       16.7     4.1    5.5   2.1    10.8     1.6       -   40.8 
                ------- ------- ------ ----- ------- ------- ------- ------ 
AUM at                                                                      
 September 30,                                                              
 2012           $ 214.9 $  82.2 $110.1 $83.2 $ 196.4 $  56.7 $   6.4 $749.9 
                ======= ======= ====== ===== ======= ======= ======= ====== 
                                                                            
                                                                            
                                                                            
(in billions)        Equity                 Fixed-Income                    
                ---------------        ---------------------                
for the three                                Taxable                        
 months ended   Global/                      Global/ Taxable   Cash         
December 31,    Interna  United         Tax- Interna United  Manage-        
 2011            tional  States Hybrid  Free  tional  States   ment   Total 
                ------- ------- ------ ----- ------- ------- ------- ------ 
AUM at October                                                              
 1, 2011        $ 185.8 $  68.4 $101.3 $72.0 $ 178.8 $  46.9 $   6.7 $659.9 
  Long-term                                                                 
   sales            9.8     3.7    4.1   2.8    14.2     3.6       -   38.2 
  Long-term                                                                 
   redemptions    (10.4)   (4.3) (15.1) (2.2)  (17.7)   (3.3)      -  (53.0)
  Net exchanges    (0.7)    0.1    0.1   0.2    (0.5)    0.7     0.1      - 
  Net cash                                                                  
   management         -       -      -     -       -       -    (0.8)  (0.8)
                ------- ------- ------ ----- ------- ------- ------- ------ 
    Net new                                                                 
     flows         (1.3)   (0.5) (10.9)  0.8    (4.0)    1.0    (0.7) (15.6)
  Reinvested                                                                
   distributions    1.5     1.3    1.2   0.6     2.3     0.4       -    7.3 
                ------- ------- ------ ----- ------- ------- ------- ------ 
    Net flows       0.2     0.8   (9.7)  1.4    (1.7)    1.4    (0.7)  (8.3)
  Distributions    (1.8)   (1.4)  (1.4) (0.8)   (2.6)   (0.5)      -   (8.5)
  Appreciation                                                              
   and other       10.3     7.9    6.2   1.5     0.2     1.1       -   27.2 
                ------- ------- ------ ----- ------- ------- ------- ------ 
AUM at December                                                             
 31, 2011       $ 194.5 $  75.7 $ 96.4 $74.1 $ 174.7 $  48.9 $   6.0 $670.3 
                ======= ======= ====== ===== ======= ======= ======= ====== 

 
Franklin Resources, Inc. is a global investment management
organization operating as Franklin Templeton Investments. Franklin
Templeton Investments provides global and domestic investment
management solutions managed by its Franklin, Templeton, Mutual
Series, Fiduciary Trust, Darby and Bissett investment teams. The San
Mateo, CA-based company has 65 years of investment experience and
$781.8 billion in AUM as of December 31, 2012. For more information
about the company, please visit franklinresources.com. 
Notes
 1. Net
income represents net income attributable to Franklin Resources, Inc. 
2. Average AUM represents simple monthly average AUM. 
3. 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. Franklin/Templeton
Distributors, Inc., One Franklin Parkway, San Mateo, CA, is the
funds' principal distributor and a wholly-owned subsidiary of
Franklin Resources, Inc. 
4. Lipper rankings for Franklin Templeton U.S.-registered mutual
funds are based on Class A shares. Franklin Templeton funds are
compared against a universe of all share classes. Performance
rankings for other share classes may differ. Lipper calculates
averages by taking all the funds and share classes in a peer group
and averaging their total returns for the periods indicated. Lipper
tracks 158 peer groups of U.S. retail mutual funds, and the groups
vary in size from 8 to 981 funds. 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.  
5. The figures in the table are based on data available from
LipperCopyright Inc. as of January 7, 2013 and are subject to
revision.  
6. Of the eligible Franklin Templeton long-term mutual funds tracked
by Lipper, 25, 34, 40 and 36 funds ranked in the top quartile and 23,
33, 33 and 24 funds ranked in the second quartile, for the one-,
three-, five- and 10-year periods, respectively, for their respective
Lipper peer groups.  
7. Of the eligible Franklin Templeton equity mutual funds tracked by
Lipper, 13, 18, 17 and 8 funds ranked in the top quartile and 8, 12,
17 and 13 funds ranked in the second quartile, for the one-, three-,
five- and 10-year periods, respectively, for their respective Lipper
peer groups.  
8. Of the eligible Franklin Templeton non-money market fixed-income
mutual funds tracked by Lipper, 12, 16, 23 and 28 funds ranked in the
top quartile and 15, 21, 16 and 11 funds ranked in the second
quartile, for the one-, three-, five- and 10-year periods,
respectively, for their respective Lipper peer groups. 
9. Of the eligible Franklin equity mutual funds tracked by Lipper, 6,
10, 11 and 6 funds ranked in the top quartile and 4, 7, 11 and 9
funds ranked in the second quartile, for the one-, 
 three-, five-and 10-year periods, respectively, for their respective Lipper peer
groups. 
10. Of the eligible Templeton equity mutual funds tracked by Lipper,
6, 6, 4 and 1 funds ranked in the top quartile and 2, 1, 4 and 2
funds ranked in the second quartile, for the one-, three-, five- and
10-year periods, respectively, for their respective Lipper peer
groups. 
11. Of the eligible Mutual Series equity mutual funds tracked by
Lipper, 1, 2, 2 and 1 funds ranked in the top quartile and 2, 4, 2
and 2 funds ranked in the second quartile, for the one-, three-,
five- and 10-year periods, respectively, for their respective Lipper
peer groups. 
12. Of the eligible Franklin Templeton non-money market taxable
fixed-income mutual funds tracked by Lipper, 5, 6, 5 and 6 funds
ranked in the top quartile and 4, 5, 5 and 2 funds ranked in the
second quartile, for the one-, three-, five- and 10-year periods,
respectively, for their respective Lipper peer groups. 
13. Of the eligible Franklin Templeton non-money market tax-free
fixed-income mutual funds
 tracked by Lipper, 7, 10, 18 and 22 funds
ranked in the top quartile and 11, 16, 11 and 9 funds ranked in the
second quartile, for the one-, three-, five- and 10-year periods,
respectively, for their respective Lipper peer groups. 
14. International includes North America-based advisors serving
non-resident clients. 
Forward-Looking Statements  
Statements in this press release regarding Franklin Resources, Inc.
("Franklin") and its subsidiaries, which are not historical facts,
are "forward-looking statements" within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. When used in this
press release, words or phrases generally written in the future tense
and/or preceded by words such as "will," "may," "could," "expect,"
"believe," "anticipate," "intend," "plan," "seek," "estimate" or
other similar words are forward-looking statements.  
Forward-looking statements involve a number of known and unknown
risks, uncertainties and other important factors, some of which are
listed below, that could cause actual results and outcomes to differ
materially from any future results or outcomes expressed or implied
by such forward-looking statements. Forward-looking statements are
based on our current expectations and assumptions regarding our
business, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject to
inherent uncertainties, risks and changes in circumstances that are
difficult to predict. We caution you therefore against relying on any
of these forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.  
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, in
Risk Factors and 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, 2012 and Franklin's
subsequent Quarterly Report on Form 10-Q: 


 
--  Volatility and disruption of the capital and credit markets, and
    adverse changes in the global economy, may significantly affect our
    results of operations and may put pressure on our financial results.
--  The amount and mix of our AUM are subject to significant fluctuations.
--  We are subject to extensive and complex, overlapping and frequently
    changing rules, regulations and legal interpretations.
--  Regulatory and legislative actions and reforms have made the
    regulatory environment in which we operate more costly and future
    actions and reforms could adversely impact our AUM, increase costs and
    negatively impact our profitability and future financial results.
--  Failure to comply with the laws, rules or regulations in any of the
    non-U.S. jurisdictions in which we operate could result in substantial
    harm to our reputation and results of operations.
--  Changes in tax laws or exposure to additional income tax liabilities
    could have a material impact on our financial condition, results of
    operations and liquidity.
--  Any significant limitation, failure or security breach of our software
    applications, technology or other systems that are critical to our
    operations could constrain our operations.
--  Our business operations are complex and a failure to properly perform
    operational tasks or the misrepresentation of our products and
    services, or the termination of investment management agreements
    representing a significant portion of our AUM, could have an adverse
    effect on our revenues and income.
--  We face risks, and corresponding potential costs and expenses,
    associated with conducting operations and growing our business in
    numerous countries.
--  We depend on key personnel and our financial performance could be
    negatively affected by the loss of their services.
--  Strong competition from numerous and sometimes larger companies with
    competing offerings and products could limit or reduce sales of our
    products, potentially resulting in a decline in our market share,
    revenues and income.
--  Changes in the third-party distribution and sales channels on which we
    depend could reduce our income and hinder our growth.
--  Our increasing focus on international markets as a source of
    investments and sales of investment products subjects us to increased
    exchange rate and other risks in connection with our revenues and
    income generated overseas.
--  Harm to our reputation or poor investment performance of our products
    could reduce the level of our AUM or affect our sales, potentially
    negatively impacting our revenues and income.
--  Our future results are dependent upon maintaining an appropriate level
    of expenses, which is subject to fluctuation.
--  Our ability to successfully integrate widely varied business lines can
    be impeded by systems and other technological limitations.
--  Our inability to successfully recover should we experience a disaster
    or other business continuity problem could cause material financial
    loss, loss of human capital, regulatory actions, reputational harm, or
    legal liability.
--  Certain of the portfolios we manage, including our emerging market
    portfolios, are vulnerable to significant market-specific political,
    economic or other risks, any of which may negatively impact our
    revenues and income.
--  Regulatory and governmental examinations and/or investigations,
    litigation and the legal risks associated with our business, could
    adversely impact our AUM, increase costs and negatively impact our
    profitability and/or our future financial results.
--  Our ability to meet cash needs depends upon certain factors, including
    the market value of our assets, operating cash flows and our perceived
    creditworthiness.
--  Our business could be negatively affected if we or our banking
    subsidiaries fail to satisfy capital and other regulatory standards,
    and liquidity needs could affect our banking services.
--  We are dependent on the earnings of our subsidiaries.

  
Any forward-looking statement made by us in this press release speaks
only as of the date on which it is made. Factors or events that could
cause our actual results to differ may emerge from time to time, and
it is not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement, whether
as a result of new information, future developments or otherwise,
except as may be required by law. 
Contacts:  
Franklin Resources, Inc. 
Investor Relations: 
Brian Sevilla 
(650) 312-4091 
Corporate Communications: 
Matt Walsh 
(650) 312-2245 
franklinresources.com