EX-99.1 2 dex991.htm PRESS RELEASE DATED JANUARY 24, 2008 Press Release dated January 24, 2008

EXHIBIT 99.1

LOGO

 

Contact:

   

Franklin Resources, Inc.

  

Investor Relations: Brian Sevilla (650) 312-4091

  

Corporate Communications: Lisa Gallegos (650) 312-3395

  

franklintempleton.com

 

 

FOR IMMEDIATE RELEASE

Franklin Resources, Inc. Announces First Quarter Results

San Mateo, CA, January 24, 2008 - Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE: BEN) today announced net income of $518.3 million, or $2.12 per share diluted, on revenues of $1,685.6 million for the quarter ended December 31, 2007. In the quarter ended September 30, 2007, net income was $436.9 million, or $1.76 per share diluted, on revenues of $1,629.1 million. For the quarter ended December 31, 2006, net income was $426.8 million, or $1.67 per share diluted, on revenues of $1,427.8 million.

Operating income for the quarter ended December 31, 2007 was $635.7 million, as compared to $541.4 million for the prior quarter and $508.1 million for the quarter ended December 31, 2006. The company’s non-operating income for the quarter ended December 31, 2007 included $80.8 million of investment and other income, net, as compared to $86.0 million in the prior quarter and $71.1 million for the quarter ended December 31, 2006.

Total assets under management by the company’s subsidiaries were $643.7 billion at December 31, 2007, as compared to $645.9 billion at September 30, 2007 and $552.9 billion at December 31, 2006. Simple monthly average assets under management during the quarter ended December 31, 2007 were $651.5 billion, as compared to $627.3 billion in the preceding quarter and $533.1 billion in the same quarter a year ago. Equity assets comprised 59% of total assets under management at December 31, 2007, as compared to 60% of total assets under management at September 30, 2007 and December 31, 2006. Fixed-income assets comprised 22% of total assets under management at December 31, 2007, as compared to 21% of total assets under management at September 30, 2007 and December 31, 2006. Hybrid assets accounted for 18% of total assets under management at December 31, 2007, September 30, 2007 and December 31, 2006. Sales exceeded redemptions by $4.9 billion for the quarter ended December 31, 2007, as compared to $9.8 billion for the prior quarter and $10.0 billion for the comparable quarter a year ago.

Cash and cash equivalents were $2.9 billion at December 31, 2007, as compared to $3.6 billion at September 30, 2007. Stockholders’ equity was $7.0 billion at December 31, 2007, as compared to $7.3 billion at September 30, 2007. The company had 239.7 million shares of common stock outstanding at December 31, 2007, as compared to 245.5 million shares outstanding at September 30, 2007. During the quarter ended December 31, 2007, the company repurchased 6.5 million shares of its common stock for a total cost of $780.5 million.

 

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On January 24, 2008, the company’s Board of Directors authorized the company to purchase, from time to time, up to an aggregate of 10.0 million shares of its common stock in either open market or off-market transactions. The size and timing of these purchases will depend on price, market and business conditions and other factors. The stock repurchase program is not subject to an expiration date. The new board authorization is in addition to the existing authorization, of which 1,371,118 shares remained available for repurchase at January 15, 2008. The company repurchased an aggregate of 7.9 million shares during the period October 1, 2007 to January 15, 2008. Shares repurchased under the program are retired.

Fiscal First Quarter 2008 Highlights

Global Business Developments1

(See important footnotes in “Supplemental Information” section at the end of this release.)

 

  •  

Franklin Resources, Inc. announced a 33.3% increase in its quarterly dividend over the dividend paid the prior quarter and the same quarter last year. The company has increased its annual dividend rate every year since 1981.

  •  

The Industrial and Commercial Bank of China, China’s largest commercial bank, selected Franklin Templeton Investments to manage its newest Qualified Domestic Institutional Investor fund for domestic Chinese retail and institutional investors.

  •  

The NJBEST college savings program, comprised of NJBEST 529 College Savings Plan – New Jersey and Franklin Templeton 529 College Savings Plan, offered by the State of New Jersey Higher Education Student Assistance Authority and managed and distributed by Franklin/Templeton Distributors, Inc., reported that collective assets in the plans surpassed $2 billion.

  •  

Franklin Templeton Investments introduced U.S.-registered Franklin Focused Core Equity Fund and Templeton International Bond Fund.

  •  

Franklin Templeton Investments launched Templeton Emerging Markets Smaller Companies Fund, a new SICAV (Sociétés d’Investissement à Capital Variable) fund.

  •  

Franklin Templeton Investments (India) launched Franklin Asian Equity Fund, a new open-end equity fund that leverages the expertise of local asset management teams in India, Korea and China.

  •  

In Germany, Templeton Asian Growth Fund and Templeton Global Bond Fund received the Feri Fund Award 2008 in their respective categories of Equities Asia ex Japan and Bonds Global Currencies.

  •  

In Austria, Geld magazine awarded the Austrian Fund of Funds Award to Franklin Templeton Strategic Income Fund for the Best Balanced Fund of Funds/Bonds-Oriented 2007 for the one-year period.

  •  

In Canada, DALBAR ranked Franklin Templeton Investments #1 among broker-distributed firms for English and French call center services.

  •  

Franklin Templeton Institutional expanded its U.S. Consultant Relations Team to provide enhanced regional coverage and capitalize on the increased recognition of FT Institutional’s capabilities among investment consultants.

  •  

Mutual Fund Education Alliance awarded Franklin Templeton Investments its STAR Award for Educational Brochure in the Large Company category.

Lipper Performance Rankings of Franklin Templeton’s U.S.-Registered Long-Term Mutual Funds1,2

FRANKLIN TEMPLETON3,4

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    49%   66%   79%   92%  
 

3rd & 4th

    51%   34%   21%   8%  

 

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FRANKLIN TEMPLETON EQUITY3,5

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    29%   51%   70%   88%  
 

3rd & 4th

    71%   49%   30%   12%  

FRANKLIN TEMPLETON FIXED INCOME3,6

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    95%   99%   98%   99%  
 

3rd & 4th

    5%   1%   2%   1%  

FRANKLIN EQUITY3,7

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    12%   73%   73%   84%  
 

3rd & 4th

    88%   27%   27%   16%  

TEMPLETON EQUITY3,8

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    40%   19%   71%   89%  
 

3rd & 4th

    60%   81%   29%   11%  

MUTUAL SERIES EQUITY3,9

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    50%   62%   62%   100%  
 

3rd & 4th

    50%   38%   38%   0%  

FRANKLIN TEMPLETON TAXABLE FIXED INCOME3,10

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    94%   98%   92%   98%  
 

3rd & 4th

    6%   2%   8%   2%  

 

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FRANKLIN TEMPLETON TAX-FREE FIXED INCOME3,11

 

    Lipper Quartile    Period Ended December 31, 2007    
         1-Year   3-Year   5-Year   10-Year    
         Assets (%)   Assets (%)   Assets (%)   Assets (%)    
 

1st & 2nd

    95%   100%   100%   100%  
 

3rd & 4th

    5%   0%   0%   0%  

Performance quoted above represents past performance, which cannot predict or guarantee future results.

 

- 4 -

Franklin Resources, Inc.

Preliminary Condensed Consolidated Income Statements

Unaudited

 

(in thousands, except per share data and assets under management)        Three months ended
December 31
         2007    2006    % Change

Operating Revenues

             

Investment management fees

      $1,020,315    $831,890    23%    

Underwriting and distribution fees

      573,796    509,773    13%    

Shareholder servicing fees

      73,175    67,565    8%    

Consolidated sponsored investment products income, net

      2,904    837    247%    

Other, net

      15,401    17,750    (13% )    

Total operating revenues

      1,685,591    1,427,815    18%      

Operating Expenses

             

Underwriting and distribution

      552,590    478,051    16%    

Compensation and benefits

      280,290    251,016    12%    

Information systems, technology and occupancy

      79,617    75,063    6%    

Advertising and promotion

      46,644    34,861    34%    

Amortization of deferred sales commissions

      44,551    33,747    32%    

Other

      46,170    47,007    (2%)      

Total operating expenses

      1,049,862    919,745    14%      

Operating income

      635,729    508,070    25%      

Other Income (Expenses)

             

Consolidated sponsored investment products (losses) gains, net

      (977)    30,286    N/A    

Investment and other income, net

      80,773    71,109    14%    

Interest expense

      (6,045)    (6,122)    (1%)      

Other income, net

      73,751    95,273    (23%)      

Income before taxes on income

      709,480    603,343    18%    

Taxes on income

      191,164    176,543    8%      

Net income

      $518,316    $426,800    21%    
   

Earnings per Share

             

Basic

      $2.15    $1.69    27%    

Diluted

      2.12    1.67    27%    

Dividends per share

      $0.20    $0.15    33%    

Average Shares Outstanding (in thousands)

             

Basic

      241,585    252,400    (4%)    

Diluted

      244,147    255,547    (4%)    

Operating Margin1

      38%    36%     

Assets Under Management (in millions)

             

Beginning of period

      $645,889    $511,330    26%    

Sales

      50,615    37,611    35%    

Reinvested distributions

      19,476    12,864    51%    

Redemptions

      (45,661)    (27,661)    65%    

Distributions

      (23,074)    (15,554)    48%    

Dispositions2

      —      (1,968)    (100%)    

(Depreciation) appreciation

      (3,500)    36,283    N/A      

End of period

      $643,745    $552,905    16%    
   

Simple Monthly Average for Period

      $651,478    $533,138    22%    

1 Operating margin: Operating income divided by total operating revenues.

2 The quarter ended December 31, 2006 includes the divestiture of assets under management of a former subsidiary at October 1, 2006.

 

- 5 -

Franklin Resources, Inc.

Preliminary Condensed Consolidated Income Statements

Unaudited

 

(in thousands, except per share data, employees

and billable shareholder accounts)    Three months ended
     31-Dec-07    30-Sep-07    % Change    30-Jun-07    31-Mar-07    31-Dec-06

Operating Revenues

                  

Investment management fees

    $1,020,315    $963,316    6%    $927,843    $850,796    $831,890

Underwriting and distribution fees

    573,796    577,762    (1%)    619,315    570,848    509,773

Shareholder servicing fees

    73,175    71,035    3%    70,126    68,333    67,565

Consolidated sponsored investment products income, net

    2,904    2,506    16%    3,134    1,327    837

Other, net

    15,401    14,518    6%    19,393    17,702    17,750
                             

Total operating revenues

    1,685,591    1,629,137    3%    1,639,811    1,509,006    1,427,815
                             

Operating Expenses

                  

Underwriting and distribution

    552,590    552,729    —%    595,905    533,946    478,051

Compensation and benefits

    280,290    285,631    (2%)    275,516    268,471    251,016

Information systems, technology and occupancy

    79,617    89,187    (11%)    79,735    73,953    75,063

Advertising and promotion

    46,644    56,128    (17%)    52,358    46,035    34,861

Amortization of deferred sales commissions

    44,551    45,935    (3%)    40,817    37,615    33,747

Other

    46,170    58,139    (21%)    76,474    49,903    47,007
                             

Total operating expenses

    1,049,862    1,087,749    (3%)    1,120,805    1,009,923    919,745
                             

Operating income

    635,729    541,388    17%    519,006    499,083    508,070
                             

Other Income (Expenses)

                  

Consolidated sponsored investment products (losses) gains, net

    (977)    (2,719)    (64%)    16,348    13,755    30,286

Investment and other income, net

    80,773    86,034    (6%)    105,304    100,857    71,109

Interest expense

    (6,045)    (4,971)    22%    (6,137)    (5,990)    (6,122)
                             

Other income, net

    73,751    78,344    (6%)    115,515    108,622    95,273
                             

Income before taxes on income

    709,480    619,732    14%    634,521    607,705    603,343

Taxes on income

    191,164    182,824    5%    166,157    166,839    176,543
                             

Net income

    $518,316    $436,908    19%    $468,364    $440,866    $426,800
                             

Earnings per Share

                  

Basic

    $2.15    $1.78    21%    $1.89    $1.75    $1.69

Diluted

    2.12    1.76    20%    1.86    1.73    1.67

Dividends per share

    $0.20    $0.15    33%    $0.15    $0.15    $0.15

Average Shares Outstanding (in thousands)

               

Basic

    241,585    244,807    (1%)    247,858    251,763    252,400

Diluted

    244,147    247,869    (2%)    251,305    255,160    255,547

Operating Margin1

    38%    33%       32%    33%    36%

Employees

    8,875    8,699    2%    8,665    8,337    8,211

Billable Shareholder Accounts (in millions)

    21.2    20.4    4%    21.0    20.5    19.5

1 Operating margin: Operating income divided by total operating revenues.

 

- 6 -

ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE

(in billions)         Three months ended
          31-Dec-07    30-Sep-07    % Change    30-Jun-07    31-Mar-07    31-Dec-06

Equity

                        

Global/international

       $286.1    $286.7    —%    $274.4    $248.7    $240.6   

Domestic (U.S.)

       95.8    100.5    (5%)    101.6    95.1    91.0     

Total equity

       381.9    387.2    (1%)    376.0    343.8    331.6     

Hybrid

       116.4    117.2    (1%)    112.7    105.0    98.7   

Fixed-Income

                        

Tax-free

       59.3    59.0    1%    58.2    57.3    56.6   

Taxable:

                        

Global/international

       47.2    43.0    10%    37.8    31.0    27.3   

Domestic (U.S.)

       31.5    31.8    (1%)    32.8    33.0    32.4     

Total fixed-income

       138.0    133.8    3%    128.8    121.3    116.3   

Money Market

       7.4    7.7    (4%)    6.5    5.9    6.3     

Total Ending Assets

       $643.7    $645.9    —%    $624.0    $576.0    $552.9   
    

Simple Monthly Average Assets

       $651.5    $627.3    4%    $605.5    $563.7    $533.1   

ASSETS UNDER MANAGEMENT AND FLOWS

(in billions)    Three months ended
         31-Dec-07    30-Sep-07    % Change    31-Dec-06    % Change

Beginning Assets Under Management

    $645.9    $624.0    4%    $511.3    26%

U.S. retail assets1

               
  Beginning assets    $369.7    $366.5    1%    $307.2    20%
   
 

Sales

    15.8    17.8    (11%)    17.8    (11%)
 

Reinvested distributions

    16.7    1.2    —      11.5    45%
 

Redemptions

    (15.6)    (16.0)    (3%)    (11.5)    36%
 

Distributions

    (21.6)    (1.9)    —      (14.0)    54%
 

(Depreciation) appreciation

    (2.9)    2.1    N/A    19.9    N/A
   
  Ending assets    $362.1    $369.7    (2%)    $330.9    9%
   

Other assets, including international and institutional

         
  Beginning assets    $276.2    $257.5    7%    $204.1    35%
   
 

Sales

    34.8    34.8    —%    19.8    76%
 

Reinvested distributions

    2.8    0.4    600%    1.4    100%
 

Redemptions

    (30.1)    (26.8)    12%    (16.1)    87%
 

Distributions

    (1.5)    (0.4)    275%    (1.6)    (6%)
 

Dispositions2

    —      —      N/A    (2.0)    (100%)
 

(Depreciation) appreciation

    (0.6)    10.7    N/A    16.4    N/A
   
  Ending assets    $281.6    $276.2    2%    $222.0    27%
   
  Total Ending Assets    $643.7    $645.9    —%    $552.9    16%
   

Total Assets Under Management

               
  Beginning assets    $645.9    $624.0    4%    $511.3    26%
 

Sales

    50.6    52.6    (4%)    37.6    35%
 

Reinvested distributions

    19.5    1.6    —      12.9    51%
 

Redemptions

    (45.7)    (42.8)    7%    (27.6)    66%
 

Distributions

    (23.1)    (2.3)    904%    (15.6)    48%
 

Dispositions2

    —      —      N/A    (2.0)    (100%)
 

(Depreciation) appreciation

    (3.5)    12.8    N/A    36.3    N/A
   
  Ending assets    $643.7    $645.9    —%    $552.9    16%
   

1 U.S. retail assets include institutional assets totaling approximately $39.1 billion that are invested in U.S. retail fund and annuity products. Total institutional and high net-worth assets at December 31, 2007 were approximately $202.5 billion, of which high net-worth assets comprised $11.5 billion.

2 The quarter ended December 31, 2006 includes the divestiture of assets under management of a former subsidiary at October 1, 2006.

 

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ASSETS UNDER MANAGEMENT AND FLOWS BY INVESTMENT OBJECTIVE

(in billions)

    Three months ended
         31-Dec-07    30-Sep-07    31-Dec-06

Global/international equity

         
 

Beginning assets

    $286.7    $274.4    $217.6
   
 

Sales

    20.8    21.9    15.2
 

Reinvested distributions

    11.3    0.1    7.1
 

Redemptions

    (19.4)    (17.8)    (11.9)
 

Distributions

    (12.3)    (0.1)    (8.1)
 

Dispositions1

    —      —      (2.0)
 

(Depreciation) appreciation

    (1.0)    8.2    22.7
   
 

Ending assets

    286.1    286.7    240.6
   

Domestic (U.S.) equity

         
 

Beginning assets

    100.5    101.6    84.4
   
 

Sales

    4.0    4.7    4.4
 

Reinvested distributions

    5.0    —      3.9
 

Redemptions

    (4.8)    (4.4)    (3.6)
 

Distributions

    (5.6)    (0.1)    (4.3)
 

(Depreciation) appreciation

    (3.3)    (1.3)    6.2
   
 

Ending assets

    95.8    100.5    91.0
   

Hybrid

         
 

Beginning assets

    117.2    112.7    90.6
 

Sales

    3.9    4.7    5.7
 

Reinvested distributions

    2.0    0.6    1.1
 

Redemptions

    (2.9)    (2.9)    (2.2)
 

Distributions

    (2.9)    (0.9)    (1.5)
 

(Depreciation) appreciation

    (0.9)    3.0    5.0
   
 

Ending assets

    116.4    117.2    98.7
   

Tax-free income

         
 

Beginning assets

    59.0    58.2    55.6
   
 

Sales

    2.2    2.2    1.9
 

Reinvested distributions

    0.4    0.4    0.4
 

Redemptions

    (1.8)    (1.8)    (1.4)
 

Distributions

    (0.7)    (0.6)    (0.6)
 

Appreciation

    0.2    0.6    0.7
   
 

Ending assets

    59.3    59.0    56.6
   

Taxable fixed-income

         
 

Beginning assets

    74.8    70.6    56.8
   
 

Sales

    10.5    10.3    6.8
 

Reinvested distributions

    0.7    0.4    0.3
 

Redemptions

    (7.9)    (8.5)    (4.9)
 

Distributions

    (1.5)    (0.5)    (1.0)
 

Appreciation

    2.1    2.5    1.7
   
 

Ending assets

    78.7    74.8    59.7
   

Money market

         
 

Beginning assets

    7.7    6.5    6.3
   
 

Sales

    9.2    8.8    3.6
 

Reinvested distributions

    0.1    0.1    0.1
 

Redemptions

    (8.9)    (7.4)    (3.6)
 

Distributions

    (0.1)    (0.1)    (0.1)
 

Depreciation

    (0.6)    (0.2)    —  
   
 

Ending assets

    7.4    7.7    6.3
   

Ending Assets Under Management

    $643.7    $645.9    $552.9
 

 

1

The quarter ended December 31, 2006 includes the divestiture of assets under management of a former subsidiary at October 1, 2006.

 

- 8 -

Conference Call Information

President and Chief Executive Officer of Franklin Resources, Inc., Greg Johnson, and Executive Vice President and Chief Financial Officer, Ken Lewis, will lead a live conference call on Thursday, January 24, 2008 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss Franklin Resources’ fiscal first quarter 2008 financial results and answer analysts’ questions.

Access to the teleconference will be available via franklintempleton.com 10 minutes before the start of the call or by dialing (877) 480-6346 in the U.S. or (706) 902-1906 internationally.

A replay of the call will be archived on the “Our Company” page of franklintempleton.com through February 8, 2008. The replay can also be accessed by calling (800) 642-1687 in the U.S. or (706) 645-9291 internationally using access code 30100275, after 5:30 p.m. Eastern Time on January 24, 2008, through 11:59 p.m. Eastern Time on February 8, 2008.

Questions regarding the teleconference call should be directed to Franklin Resources, Inc., Investor Relations at (650) 312-4091 or Corporate Communications at (650) 312-2245.

Franklin Resources, Inc. [NYSE:BEN] 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 and Fiduciary Trust investment teams. The San Mateo, CA-based company has 60 years of investment experience and over $643 billion in assets under management as of December 31, 2007. For more information, please call 1-800/DIAL BEN® or visit franklintempleton.com.

Supplemental Information

Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a 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® (1-800/342-5236). Please read the prospectus carefully before investing.

 

  1.

Nothing in this press release 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 U.S.-registered funds’ principal distributor and a wholly owned subsidiary of Franklin Resources, Inc. The information on Global Business Developments is being provided for information purposes only.

  2.

Lipper rankings for Franklin Templeton U.S.-registered mutual funds are based on Class A shares. Performance returns, ratings and rankings for other classes may vary. Franklin Templeton mutual funds are compared against a universe of all share classes.

  3.

Lipper calculates averages by taking all of the funds and share classes in a peer group and averaging their total returns for the periods indicated. Lipper tracks 146 peer groups of U.S. retail mutual funds, and the groups vary in size from 2 to 943 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.

 

4.

Source: Lipper® Inc., 12/31/07. Of the eligible Franklin Templeton long-term mutual funds tracked by Lipper, 42, 47, 48 and 49 funds ranked in the top quartile and 29, 20, 18 and 15 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

 

5.

Source: Lipper® Inc., 12/31/07. Of the eligible Franklin Templeton equity mutual funds tracked by Lipper, 18, 14, 11 and 15 funds ranked in the top quartile and 12, 10, 13 and 9 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

 

6.

Source: Lipper® Inc., 12/31/07. Of the eligible Franklin Templeton non-money market fixed income mutual funds tracked by Lipper, 24, 33, 37 and 34 funds ranked in the top quartile and 17, 10, 5 and 6 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

 

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7.

Source: Lipper® Inc., 12/31/07. Of the eligible Franklin equity mutual funds tracked by Lipper, 12, 9, 6 and 7 funds ranked in the top quartile and 7, 6, 9 and 7 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

 

8.

Source: Lipper® Inc., 12/31/07. Of the eligible Templeton equity mutual funds tracked by Lipper, 5, 2, 3 and 3 funds ranked in the top quartile and 2, 1, 1 and 1 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

 

9.

Source: Lipper® Inc., 12/31/07. Of the eligible Mutual Series equity mutual funds tracked by Lipper, 1, 3, 2 and 5 funds ranked in the top quartile and 3, 3, 3 and 1 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

 

10.

Source: Lipper® Inc., 12/31/07. Of the eligible Franklin Templeton non-money market taxable fixed income mutual funds tracked by Lipper, 7, 4, 5 and 3 funds ranked in the top quartile and 2, 6, 4 and 4 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

 

11.

Source: Lipper® Inc., 12/31/07. Of the eligible Franklin Templeton non-money market tax-free fixed income mutual funds tracked by Lipper, 17, 29, 32 and 31 funds ranked in the top quartile and 15, 4, 1 and 2 funds ranked in the second quartile, for the one-, three-, five- and 10-year periods, respectively, for their respective Lipper peer groups.

Forward-Looking Statements:

The financial results in this press release are preliminary. Statements in this press release regarding Franklin Resources, Inc., which are not historical facts, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that could cause the actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin’s recent filings with the U.S. Securities and Exchange Commission, including, without limitation, 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, 2007.

 

  •  

We are subject to extensive and often complex, overlapping and frequently changing rules, regulations and legal interpretations in the United States and abroad.

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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 assets under management, increase costs and negatively impact our profitability and future financial results.

  •  

Our ability to maintain the beneficial tax treatment we anticipate with respect to non-U.S. earnings we have repatriated is based on current interpretations of the American Jobs Creation Act of 2004 (the “Jobs Act”) and timely and permitted use of such amounts in accordance with our domestic reinvestment plan and the Jobs Act.

  •  

Any significant limitation or failure of our software applications and other technology systems that are critical to our operations could constrain our operations.

  •  

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 net income.

  •  

Changes in the distribution channels on which we depend could reduce our revenues and hinder our growth.

  •  

The amount or mix of our assets under management are subject to significant fluctuations and could negatively impact our revenues and income.

  •  

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 earnings and income generated overseas.

  •  

Poor investment performance of our products could affect our sales or reduce the level of assets under management, potentially negatively impacting our revenues and income.

  •  

We could suffer losses in earnings or revenue if our reputation is harmed.

 

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Our future results are dependent upon maintaining an appropriate level of expenses, which is subject to fluctuation.

 

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Our ability to successfully integrate widely varied business lines can be impeded by systems and other technological limitations.

 

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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.

 

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Certain of the portfolios we manage, including our emerging market portfolios, are vulnerable to market-specific political, economic or other risks, any of which may negatively impact our revenues and income.

 

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Our revenues, earnings and income could be adversely affected if the terms of our management agreements are significantly altered or these agreements are terminated by the funds we advise.

 

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Diverse and strong competition limits the interest rates that we can charge on consumer loans.

 

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Civil litigation arising out of or relating to previously settled governmental investigations or other matters, governmental or regulatory investigations and/or examinations and the legal risks associated with our business could adversely impact our assets under management, increase costs and negatively impact our profitability and/or our future financial results.

 

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Our ability to meet cash needs depends upon certain factors, including our asset value, credit worthiness and the market value of our stock.

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