0000038777false00000387772021-11-012021-11-01

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 2021

FRANKLIN RESOURCES, INC.
(Exact name of registrant as specified in its charter)

Delaware 001-09318 13-2670991
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
               
One Franklin Parkway, San Mateo, CA 94403
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (650) 312-2000

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, par value $0.10 per share BEN New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   




Item 2.02 Results of Operations and Financial Condition.

On November 1, 2021, Franklin Resources, Inc. (the “Company”) issued a press release announcing the preliminary financial results for the Company’s fourth fiscal quarter and fiscal year ended September 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

The Company also posted a preliminary fourth quarter and fiscal year 2021 earnings commentary on its internet website, available via investors.franklinresources.com.

On November 1, 2021, the Company announced that it had entered into a definitive agreement to acquire Lexington Partners, L.P. (the “Transaction”). The Company posted an investor presentation about the Transaction on its internet website, available via investors.franklinresources.com.

The contents of the Company’s website referenced herein and in the exhibits are not incorporated into this Current Report on Form 8-K.
The information in these Items 2.02 and 7.01, including the exhibits hereto other than Exhibit 99.2, (x) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and (y) shall not be incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibits in this particular report with respect to Item 2.02 or Item 7.01, as the case may be, are incorporated by reference).

Item 8.01 Other Events.

A copy of the press release announcing the Transaction is included as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference herein. The Transaction is subject to customary closing conditions and is expected to close in the first half of calendar year 2022.
Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits.

The exhibits listed on the Exhibit Index are incorporated herein by reference.


Exhibit Index
Exhibit No. Description
99.1 
99.2 
104  Cover Page Interactive Data File (embedded within the Inline XBRL document)

2



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FRANKLIN RESOURCES, INC.
Date: November 1, 2021 /s/ Matthew Nicholls
Matthew Nicholls
Executive Vice President and Chief Financial Officer
Date: November 1, 2021 /s/ Gwen L. Shaneyfelt
Gwen L. Shaneyfelt
Chief Accounting Officer

3


EXHIBIT 99.1
FTLOGOPOSA45.JPG
ADDRESSBLOCK123114A01B66.GIF

Contact: Franklin Resources, Inc.
Investor Relations: Selene Oh (650) 312-4091, selene.oh@franklintempleton.com
Media Relations: Matt Walsh (650) 312-2245, matthew.walsh@franklintempleton.com
investors.franklinresources.com

FOR IMMEDIATE RELEASE

Franklin Resources, Inc. Announces Preliminary Fourth Quarter and Fiscal Year Results

San Mateo, CA, November 1, 2021 – Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced preliminary net income1 of $665.7 million or $1.30 per diluted share for the quarter ended September 30, 2021, as compared to $438.4 million or $0.86 per diluted share for the previous quarter, and $78.9 million or $0.15 per diluted share for the quarter ended September 30, 2020. Preliminary net income1 for the year ended September 30, 2021 was $1,831.2 million or $3.57 per diluted share, as compared to $798.9 million or $1.59 per diluted share for the prior year. Preliminary operating income was $531.5 million for the quarter ended September 30, 2021, as compared to $478.1 million for the previous quarter and $103.6 million in the prior year. The quarter ended September 30, 2021 includes a tax benefit2 of $155.1 million or $0.30 per diluted share due to the release of certain tax reserves primarily related to the closure of Internal Revenue Service audits and increases in our ability to utilize certain tax attributes resulting from the integration of our business.

As supplemental information, the Company is providing certain adjusted performance measures which are based on methodologies other than generally accepted accounting principles. Preliminary adjusted net income3 was $644.6 million and adjusted diluted earnings per share3 was $1.26 for the quarter ended September 30, 2021, inclusive of the aforementioned $0.30 per share tax benefit, as compared to $493.7 million and $0.96 for the previous quarter, and $291.0 million and $0.56 for the quarter ended September 30, 2020. Preliminary adjusted net income3 was $1,915.2 million and adjusted diluted earnings per share3 was $3.74 for the year ended September 30, 2021, as compared to $1,311.0 million and $2.61 for the prior year. Preliminary adjusted operating income3 was $647.1 million for the quarter ended September 30, 2021, as compared to $601.2 million for the previous quarter and $428.9 million in the prior year.

“Fiscal 2021 was the first full year of results since we closed the Legg Mason transaction. The strategic and financial benefits from the acquisition have exceeded our goals and position our company for success in the years ahead,” said Jenny Johnson, President and CEO of Franklin Resources, Inc. “Investment performance across our specialist investment managers was strong and improved meaningfully across all time periods compared to a year ago. Improved performance has led to increased and more diversified gross sales as well as improved redemption rates. We continue to see momentum in a number of core growth areas, with positive net flows during the fiscal year in alternatives, wealth management, SMAs and ESG-specific strategies.

“Building upon our existing strengths, we have thoughtfully deployed our balance sheet capital to seize opportunities in areas that will drive industry growth. Our focus on growing our alternatives capabilities led us to today’s announced acquisition of Lexington Partners and we are delighted to attract such a talented team to partner with Franklin Templeton. The acquisition will further diversify our alternative asset management business to include alternative equity, the largest segment of the market. We also ended the quarter with our announced acquisition of O’Shaughnessy Asset Management (OSAM) and its Canvas Custom Indexing platform. OSAM is poised to take our existing strengths in SMA to the next level, particularly in our tax management, factor-based, and ESG customization capabilities.”
1


Quarter Ended % Change Quarter Ended % Change Fiscal Year Ended September 30, % Change
30-Sep-21 30-Jun-21 Qtr. vs. Qtr. 30-Sep-20 Year vs. Year 2021 2020
Financial Results
(in millions, except per share data)
Operating revenues $ 2,181.0  $ 2,172.9  % $ 1,705.0  28  % $ 8,425.5  $ 5,566.5  51  %
Operating income 531.5  478.1  11  % 103.6  413  % 1,875.0  1,048.9  79  %
Operating margin 24.4  % 22.0  % 6.1  % 22.3  % 18.8  %
Net income¹ $ 665.7  $ 438.4  52  % $ 78.9  744  % $ 1,831.2  $ 798.9  129  %
Diluted earnings per share 1.30  0.86  51  % 0.15  767  % 3.57  1.59  125  %
As adjusted (non-GAAP):3
Adjusted operating income $ 647.1  $ 601.2  % $ 428.9  51  % $ 2,379.3  $ 1,491.1  60  %
Adjusted operating margin 39.0  % 36.5  % 34.7  % 37.7  % 38.5  %
Adjusted net income $ 644.6  $ 493.7  31  % $ 291.0  122  % $ 1,915.2  $ 1,311.0  46  %
Adjusted diluted earnings per share 1.26  0.96  31  % 0.56  125  % 3.74  2.61  43  %
Assets Under Management
(in billions)
Ending $ 1,530.1  $ 1,552.1  (1  %) $ 1,418.9  % $ 1,530.1  $ 1,418.9  %
Average4
1,552.9  1,531.0  % 1,227.8  26  % 1,504.1  832.9  81  %
Long-term net flows (9.9) (6.6) (12.6) (25.2) (61.6)

Total assets under management (“AUM”) were $1,530.1 billion at September 30, 2021, down $22.0 billion or 1% during the quarter due to $11.7 billion of net market change, distributions and other, $9.9 billion of long-term net outflows and $3.9 billion of cash management net outflows, slightly offset by $3.5 billion from an acquisition. AUM increased $111.2 billion or 8% during the fiscal year due to $148.0 billion of net market change, distributions and other, and $3.5 billion from an acquisition, partially offset by $25.2 billion of long-term net outflows and $15.1 billion of cash management net outflows.

Cash and cash equivalents and investments were $5.9 billion at September 30, 2021, as compared to $4.3 billion at September 30, 2020. Including the Company’s direct investments in consolidated investment products, cash and cash equivalents and investments were $6.9 billion at September 30, 2021, as compared to $5.1 billion at September 30, 2020. Total stockholders’ equity was $11.8 billion at September 30, 2021, as compared to $10.9 billion at September 30, 2020. The Company had 501.8 million shares of common stock outstanding at September 30, 2021, as compared to 495.1 million shares outstanding at September 30, 2020. The Company repurchased 2.2 million shares of its common stock for a total cost of $70.4 million during the quarter ended September 30, 2021, and 7.3 million shares for a total cost of $208.2 million during the fiscal year.
2



Conference Call Information

A written commentary on the results by Jenny Johnson, President and CEO; Matthew Nicholls, Executive Vice President and CFO; and Adam Spector, Executive Vice President, Head of Global Distribution will be available via investors.franklinresources.com today at approximately 8:30 a.m. Eastern Time.

Ms. Johnson and Messrs. Nicholls and Spector will also lead a live teleconference today at 11:00 a.m. Eastern Time to answer questions. Access to the teleconference will be available via investors.franklinresources.com or by dialing (833) 350-1245 in the U.S. and Canada or (236) 712-2205 internationally. A replay of the teleconference can also be accessed by calling (800) 585-8367 in the U.S. and Canada or (416) 621-4642 internationally using access code 1859388, after 2:00 p.m. Eastern Time on November 1, 2021 through November 8, 2021, or via investors.franklinresources.com.

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 at (650) 312-4091 before the live teleconference for any clarifications or questions related to the earnings release or commentary.
3


FRANKLIN RESOURCES, INC.
PRELIMINARY CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(in millions, except per share data) Three Months Ended
September 30,
%
Change
Twelve Months Ended
September 30,
%
Change
2021 2020 2021 2020
Operating Revenues
Investment management fees $ 1,705.5  $ 1,284.6  33  % $ 6,541.6  $ 3,981.7  64  %
Sales and distribution fees 408.1  366.7  11  % 1,635.5  1,362.0  20  %
Shareholder servicing fees 55.6  45.7  22  % 211.2  195.1  %
Other 11.8  8.0  48  % 37.2  27.7  34  %
Total operating revenues 2,181.0  1,705.0  28  % 8,425.5  5,566.5  51  %
Operating Expenses
Compensation and benefits 742.1  732.3  % 2,971.3  1,873.9  59  %
Sales, distribution and marketing 526.5  466.7  13  % 2,105.8  1,703.1  24  %
Information systems and technology 130.3  102.0  28  % 486.1  288.4  69  %
Occupancy 54.0  47.5  14  % 218.1  147.9  47  %
Amortization of intangible assets 57.9  40.1  44  % 232.0  54.0  330  %
General, administrative and other 138.7  212.8  (35  %) 537.2  450.3  19  %
Total operating expenses 1,649.5  1,601.4  % 6,550.5  4,517.6  45  %
Operating Income 531.5  103.6  413  % 1,875.0  1,048.9  79  %
Other Income (Expenses)
Investment and other income (losses), net 67.5  25.1  169  % 264.7  (38.4) NM
Interest expense
(14.1) (18.4) (23  %) (85.4) (33.4) 156  %
Investment and other income of consolidated investment products,net 157.8  95.6  65  % 421.1  70.2  500  %
Expenses of consolidated investment products
(4.7) (6.3) (25  %) (31.2) (29.4) %
Other income (expenses), net 206.5  96.0  115  % 569.2  (31.0) NM
Income before taxes 738.0  199.6  270  % 2,444.2  1,017.9  140  %
Taxes on income2
(4.8) 73.1  NM 349.6  230.8  51  %
Net income 742.8  126.5  487  % 2,094.6  787.1  166  %
Less: net income (loss) attributable to
Redeemable noncontrolling interests 29.7  36.8  (19  %) 94.1  48.6  94  %
Nonredeemable noncontrolling interests 47.4  10.8  339  % 169.3  (60.4) NM
Net Income Attributable to Franklin Resources, Inc. $ 665.7  $ 78.9  744  % $ 1,831.2  $ 798.9  129  %
Earnings per Share
Basic $ 1.31  $ 0.15  773  % $ 3.58  $ 1.59  125  %
Diluted 1.30  0.15  767  % 3.57  1.59  125  %
Dividends Declared per Share $ 0.28  $ 0.27  % $ 1.12  $ 1.08  %
Average Shares Outstanding
Basic 488.9  491.1  % 489.9  491.9  %
Diluted 489.7  491.7  % 490.6  492.4  %
Operating Margin 24.4  % 6.1  % 22.3  % 18.8  %

4


FRANKLIN RESOURCES, INC.
PRELIMINARY CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(in millions, except per share data) Three Months Ended %
Change
Three Months Ended
30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-20 30-Sep-20
Operating Revenues
Investment management fees $ 1,705.5  $ 1,697.3  % $ 1,598.4  $ 1,540.4  $ 1,284.6 
Sales and distribution fees 408.1  416.9  (2  %) 413.6  396.9  366.7 
Shareholder servicing fees 55.6  50.5  10  % 55.7  49.4  45.7 
Other 11.8  8.2  44  % 8.8  8.4  8.0 
Total operating revenues 2,181.0  2,172.9  % 2,076.5  1,995.1  1,705.0 
Operating Expenses
Compensation and benefits 742.1  771.4  (4  %) 732.3  725.5  732.3 
Sales, distribution and marketing 526.5  531.0  (1  %) 541.8  506.5  466.7 
Information systems and technology 130.3  121.8  % 117.5  116.5  102.0 
Occupancy 54.0  54.6  (1  %) 53.8  55.7  47.5 
Amortization of intangible assets 57.9  58.0  % 57.9  58.2  40.1 
General, administrative and other 138.7  158.0  (12  %) 116.9  123.6  212.8 
Total operating expenses 1,649.5  1,694.8  (3  %) 1,620.2  1,586.0  1,601.4 
Operating Income 531.5  478.1  11  % 456.3  409.1  103.6 
Other Income (Expenses)
Investment and other income, net 67.5  52.9  28  % 67.1  77.2  25.1 
Interest expense (14.1) (25.7) (45  %) (15.9) (29.7) (18.4)
Investment and other income of consolidated investment products, net 157.8  61.0  159  % 111.2  91.1  95.6 
Expenses of consolidated investment products
(4.7) (10.9) (57  %) (5.2) (10.4) (6.3)
Other income, net 206.5  77.3  167  % 157.2  128.2  96.0 
Income before taxes 738.0  555.4  33  % 613.5  537.3  199.6 
Taxes on income2
(4.8) 83.8  NM 128.1  142.5  73.1 
Net income 742.8  471.6  58  % 485.4  394.8  126.5 
Less: net income (loss) attributable to
Redeemable noncontrolling interests 29.7  33.7  (12  %) 12.0  18.7  36.8 
Nonredeemable noncontrolling interests 47.4  (0.5) NM 91.6  30.8  10.8 
Net Income Attributable to Franklin Resources, Inc. $ 665.7  $ 438.4  52  % $ 381.8  $ 345.3  $ 78.9 
Earnings per Share
Basic $ 1.31  $ 0.86  52  % $ 0.74  $ 0.67  $ 0.15 
Diluted 1.30  0.86  51  % 0.74  0.67  0.15 
Dividends Declared per Share $ 0.28  $ 0.28  0% $ 0.28  $ 0.28  $ 0.27 
Average Shares Outstanding
Basic 488.9  489.2  % 490.5  491.1  491.1 
Diluted 489.7  489.9  % 490.9  491.7  491.7 
Operating Margin 24.4  % 22.0  % 22.0  % 20.5  % 6.1  %

5


AUM AND FLOWS
(in billions) Three Months Ended
September 30,
%
Change
Twelve Months Ended
September 30,
%
Change
2021 2020 2021 2020
Beginning AUM $ 1,552.1  $ 622.8  149  % $ 1,418.9  $ 692.6  105  %
Long-term inflows 83.2  65.4  27  % 364.7  182.4  100  %
Long-term outflows (93.1) (78.0) 19  % (389.9) (244.0) 60  %
Long-term net flows (9.9) (12.6) (21  %) (25.2) (61.6) (59  %)
Cash management net flows (3.9) (11.1) (65  %) (15.1) (9.9) 53  %
Total net flows (13.8) (23.7) (42  %) (40.3) (71.5) (44  %)
Acquisitions 3.5  797.4  (100  %) 3.5  806.5  (100  %)
Net market change, distributions and other5
(11.7) 22.4  NM 148.0  (8.7) NM
Ending AUM $ 1,530.1  $ 1,418.9  8  % $ 1,530.1  $ 1,418.9  8  %
Average AUM $ 1,552.9  $ 1,227.8  26  % $ 1,504.1  $ 832.9  81  %

AUM BY ASSET CLASS
(in billions) 30-Sep-21 30-Jun-21 % Change 31-Mar-21 31-Dec-20 30-Sep-20
Fixed Income $ 650.3  $ 658.1  (1  %) $ 642.3  $ 669.9  $ 656.9 
Equity 523.6  536.9  (2  %) 511.9  495.7  438.1 
Multi-Asset 152.4  153.0  % 148.2  141.1  129.4 
Alternative 145.2  140.8  % 131.1  127.1  122.1 
Cash Management 58.6  63.3  (7  %) 65.4  64.2  72.4 
Total AUM $ 1,530.1  $ 1,552.1  (1  %) $ 1,498.9  $ 1,498.0  $ 1,418.9 
Average AUM for the Three-Month Period $ 1,552.9  $ 1,531.0  1  % $ 1,497.9  $ 1,443.8  $ 1,227.8 

AUM AND FLOWS - UNITED STATES AND INTERNATIONAL
As of and for the Three Months Ended
(in billions) 30-Sep-21 % of Total 30-Jun-21 % of Total 30-Sep-20 % of Total
Long-Term Inflows
United States $ 58.6  70  % $ 62.3  74  % $ 47.4  72  %
International 24.6  30  % 21.4  26  % 18.0  28  %
Total long-term inflows $ 83.2  100  % $ 83.7  100  % $ 65.4  100  %
Long-Term Outflows
United States $ (66.5) 71  % $ (60.1) 67  % $ (50.9) 65  %
International (26.6) 29  % (30.2) 33  % (27.1) 35  %
Total long-term outflows $ (93.1) 100  % $ (90.3) 100  % $ (78.0) 100  %
AUM
United States $ 1,140.2  75  % $ 1,151.2  74  % $ 1,024.0  72  %
International 389.9  25  % 400.9  26  % 394.9  28  %
Total AUM $ 1,530.1  100  % $ 1,552.1  100  % $ 1,418.9  100  %

6


AUM AND FLOWS BY ASSET CLASS

(in billions)
for the three months ended
September 30, 2021
Fixed
Income
Equity Multi-Asset Alternative Cash
Management
Total
AUM at July 1, 2021 $ 658.1  $ 536.9  $ 153.0  $ 140.8  $ 63.3  $ 1,552.1 
Long-term inflows
40.8  29.1  8.8  4.5  —  83.2 
Long-term outflows
(46.1) (35.4) (8.7) (2.9) —  (93.1)
Long-term net flows (5.3) (6.3) 0.1  1.6  —  (9.9)
Cash management net flows
—  —  —  —  (3.9) (3.9)
Total net flows
(5.3) (6.3) 0.1  1.6  (3.9) (13.8)
Acquisition 3.5  —  —  —  —  3.5 
Net market change, distributions and other5
(6.0) (7.0) (0.7) 2.8  (0.8) (11.7)
AUM at September 30, 2021 $ 650.3  $ 523.6  $ 152.4  $ 145.2  $ 58.6  $ 1,530.1 

(in billions)
for the three months ended
June 30, 2021
Fixed
Income
Equity Multi-Asset Alternative Cash
Management
Total
AUM at April 1, 2021 $ 642.3  $ 511.9  $ 148.2  $ 131.1  $ 65.4  $ 1,498.9 
Long-term inflows
40.2  29.1  8.6  5.8  —  83.7 
Long-term outflows
(38.1) (40.6) (8.9) (2.7) —  (90.3)
Long-term net flows 2.1  (11.5) (0.3) 3.1  —  (6.6)
Cash management net flows
—  —  —  —  (2.2) (2.2)
Total net flows
2.1  (11.5) (0.3) 3.1  (2.2) (8.8)
Net market change, distributions and other5
13.7  36.5  5.1  6.6  0.1  62.0 
AUM at June 30, 2021 $ 658.1  $ 536.9  $ 153.0  $ 140.8  $ 63.3  $ 1,552.1 

(in billions)
for the three months ended
September 30, 2020
Fixed
Income
Equity Multi-Asset Alternative Cash
Management
Total
AUM at July 1, 2020 $ 211.3  $ 235.8  $ 118.5  $ 46.8  $ 10.4  $ 622.8 
Long-term inflows
34.4  19.8  7.6  3.6  —  65.4 
Long-term outflows
(36.8) (29.4) (9.2) (2.6) —  (78.0)
Long-term net flows (2.4) (9.6) (1.6) 1.0  —  (12.6)
Cash management net flows
—  —  —  —  (11.1) (11.1)
Total net flows
(2.4) (9.6) (1.6) 1.0  (11.1) (23.7)
Acquisition
449.6  189.2  9.1  73.9  75.6  797.4 
Net market change, distributions and other5
(1.6) 22.7  3.4  0.4  (2.5) 22.4 
AUM at September 30, 2020 $ 656.9  $ 438.1  $ 129.4  $ 122.1  $ 72.4  $ 1,418.9 

7


Supplemental Non-GAAP Financial Measures
As supplemental information, we are providing performance measures for “adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share,” each of which is based on methodologies other than generally accepted accounting principles (“non-GAAP measures”). Management believes these non-GAAP measures are useful indicators of our financial performance and may be helpful to investors in evaluating our relative performance against industry peers as these measures exclude the impact of consolidated investment products (“CIPs”) and mitigate the margin variability related to sales and distribution revenues and expenses across multiple distribution channels globally. These measures also exclude performance-based investment management fees which are fully passed through as compensation and benefits expense per the terms of a previous acquisition by Legg Mason and have no impact on net income. These non-GAAP measures also exclude acquisition-related expenses, certain items which management considers to be nonrecurring, unrealized investment gains and losses included in investment and other income (losses), net, and the related income tax effect of these adjustments, as applicable. These non-GAAP measures also exclude the impact on compensation and benefits expense from gains and losses on investments made to fund deferred compensation plans and on seed investments under certain historical revenue sharing arrangements, which is offset in investment and other income (losses), net.
“Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are defined below, followed by reconciliations of operating income, operating margin, net income attributable to Franklin Resources, Inc. and diluted earnings per share on a U.S. GAAP basis to these non-GAAP measures. Non-GAAP measures should not be considered in isolation from, or as substitutes for, any financial information prepared in accordance with U.S. GAAP, and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to these non-GAAP measures if deemed appropriate.
Adjusted Operating Income
We define adjusted operating income as operating income adjusted to exclude the following:
Elimination of operating revenues upon consolidation of investment products.
Acquisition-related retention compensation.
Impact on compensation and benefits expense from gains and losses on investments related to Legg Mason deferred compensation plans and seed investments, which is offset in investment and other income (losses), net.
Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration liabilities.
Amortization and impairment of intangible assets and goodwill.
Special termination benefits related to workforce optimization initiatives related to past acquisitions and specific initiatives announced by the Company.
Adjusted Operating Margin
We calculate adjusted operating margin as adjusted operating income divided by adjusted operating revenues. We define adjusted operating revenues as operating revenues adjusted to exclude the following:
Acquisition-related performance-based investment management fees which are passed through as compensation and benefits expense.
Sales and distribution fees and a portion of investment management fees allocated to cover sales, distribution and marketing expenses paid to the financial advisers and other intermediaries who sell our funds on our behalf.
Elimination of operating revenues upon consolidation of investment products.
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Adjusted Net Income
We define adjusted net income as net income attributable to Franklin Resources, Inc. adjusted to exclude the following:
Activities of CIPs, including investment and other income (losses), net, and income (loss) attributable to noncontrolling interests, net of revenues eliminated upon consolidation of investment products.
Acquisition-related retention compensation.
Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration liabilities.
Amortization and impairment of intangible assets.
Impairment of goodwill and write off of noncontrolling interests related to the wind down of an acquired business.
Special termination benefits related to workforce optimization initiatives related to past acquisitions and specific initiatives announced by the Company.
Net gains or losses on investments related to Legg Mason deferred compensation plans which are not offset by compensation and benefits expense.
Unrealized investment gains and losses other than those that are offset by compensation and benefits expense.
Interest expense for amortization of Legg Mason debt premium from acquisition-date fair value adjustment.
Net income tax expense of the above adjustments based on the respective blended rates applicable to the adjustments.
Adjusted Diluted Earnings Per Share
We define adjusted diluted earnings per share as diluted earnings per share adjusted to exclude the per share impacts of the adjustments applied to net income in calculating adjusted net income.
In calculating adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per share, we adjust for activities of CIPs because the impact of consolidated products is not considered reflective of the underlying results of our operations. We adjust for acquisition-related retention compensation, other acquisition-related expenses, amortization and impairment of intangible assets and goodwill, the write-off of noncontrolling interests, and interest expense for amortization of the Legg Mason debt premium to facilitate comparability of our operating results with the results of other asset management firms. We adjust for special termination benefits related to workforce optimization initiatives related to past acquisitions and specific initiatives announced by the Company because these items are deemed nonrecurring. In calculating adjusted net income and adjusted diluted earnings per share, we adjust for unrealized investment gains and losses included in investment and other income (losses), net and net gains or losses on investments related to Legg Mason deferred compensation plans which are not offset by compensation and benefits expense because these items primarily relate to seed and strategic investments which have been and are generally expected to be held long term.
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The calculations of adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per share are as follows:
(in millions) Three Months Ended Twelve Months Ended
30-Sep-21 30-Jun-21 30-Sep-20 30-Sep-21 30-Sep-20
Operating income $ 531.5  $ 478.1  $ 103.6  $ 1,875.0  $ 1,048.9 
Add (subtract):
Elimination of operating revenues upon consolidation of investment products*
6.1  5.2  5.7  22.8  23.6 
Acquisition-related retention
34.5  39.1  131.8  163.7  195.8 
Compensation and benefits expense from gains on deferred compensation and seed investments, net (1.2) 9.6  1.2  22.7  1.2 
Other acquisition-related expenses 13.0  7.3  47.8  36.0  57.4 
Amortization of intangible assets
57.9  58.0  40.1  232.0  54.0 
Impairment of goodwill and intangible assets —  —  52.6  —  55.4 
Special termination benefits
5.3  3.9  46.1  27.1  54.8 
Adjusted operating income $ 647.1  $ 601.2  $ 428.9  $ 2,379.3  $ 1,491.1 
Total operating revenues $ 2,181.0  $ 2,172.9  $ 1,705.0  $ 8,425.5  $ 5,566.5 
Add (subtract):
Acquisition-related pass through performance fees
—  —  (9.4) (25.3) (9.4)
Sales and distribution fees
(408.1) (416.9) (366.7) (1,635.5) (1,362.0)
Allocation of investment management fees for sales, distribution and marketing expenses
(118.4) (114.1) (100.0) (470.3) (341.1)
Elimination of operating revenues upon consolidation of investment products*
6.1  5.2  5.7  22.8  23.6 
Adjusted operating revenues $ 1,660.6  $ 1,647.1  $ 1,234.6  $ 6,317.2  $ 3,877.6 
Operating margin 24.4  % 22.0  % 6.1  % 22.3  % 18.8  %
Adjusted operating margin 39.0  % 36.5  % 34.7  % 37.7  % 38.5  %
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(in millions, except per share data) Three Months Ended Twelve Months Ended
30-Sep-21 30-Jun-21 30-Sep-20 30-Sep-21 30-Sep-20
Net income attributable to Franklin Resources, Inc.
$ 665.7  $ 438.4  $ 78.9  $ 1,831.2  $ 798.9 
Add (subtract):
Net (income) loss of consolidated investment products*
(17.1) (0.6) 1.5  (2.8) (4.6)
Acquisition-related retention
34.5  39.1  131.8  163.7  195.8 
Other acquisition-related expenses 13.0  7.2  50.7  34.0  58.6 
Amortization of intangible assets
57.9  58.0  40.1  232.0  54.0 
Impairment of goodwill and intangible assets —  —  52.6  —  55.4 
Special termination benefits
5.3  3.9  46.1  27.1  54.8 
Net (gains) losses on deferred compensation plan investments not offset by compensation and benefits expense 1.1  (0.9) (0.1) (1.2) (0.1)
Unrealized investment (gains) losses (99.1) (30.1) (26.9) (285.7) 221.0 
Interest expense for amortization of debt premium
(22.1) (6.4) (4.7) (51.4) (4.7)
Write off of noncontrolling interests —  —  (16.7) —  (16.7)
Net income tax benefit (expense) of adjustments 5.4  (14.9) (62.3) (31.7) (101.4)
Adjusted net income $ 644.6  $ 493.7  $ 291.0  $ 1,915.2  $ 1,311.0 
Diluted earnings per share $ 1.30  $ 0.86  $ 0.15  $ 3.57  $ 1.59 
Adjusted diluted earnings per share
1.26  0.96  0.56  3.74  2.61 
__________________
*    The impact of consolidated investment products is summarized as follows:
(in millions) Three Months Ended Twelve Months Ended
30-Sep-21 30-Jun-21 30-Sep-20 30-Sep-21 30-Sep-20
Elimination of operating revenues upon consolidation
$ (6.1) $ (5.2) $ (5.7) $ (22.8) $ (23.6)
Other income, net 78.4  13.1  55.3  207.4  33.6 
Less: income attributable to noncontrolling interests 55.2  7.3  51.1  181.8  5.4 
Net income (loss) $ 17.1  $ 0.6  $ (1.5) $ 2.8  $ 4.6 
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Notes
1.Net income represents net income attributable to Franklin Resources, Inc.
2.Taxes on income for the quarter ended September 30, 2021 includes a tax benefit of $155.1 million due to the release of certain tax reserves primarily related to the closure of Internal Revenue Service audits and increases in our ability to utilize certain tax attributes resulting from the integration of our business. For the quarter ended June 30, 2021, taxes on income includes a $23.1 million tax benefit from a valuation allowance release for interest expense carryforwards in the U.K.
3.“Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are based on methodologies other than generally accepted accounting principles. See “Supplemental Non-GAAP Financial Measures” for definitions and reconciliations of these measures.
4.Average AUM represents simple monthly average AUM.
5.Net market change, distributions and other includes appreciation (depreciation), distributions to investors that represent return on investments and return of capital, and foreign exchange revaluation.

Franklin Resources, Inc. (NYSE: BEN) is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 165 countries. Franklin Templeton’s mission is to help people all over the world achieve the most important milestones of their lives through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the Company brings extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has over 70 years of investment experience and approximately $1.5 trillion in AUM as of September 30, 2021. The Company posts information that may be significant for investors in the Investor Relations and News Center sections of its website, and encourages investors to consult those sections regularly. For more information, please visit investors.franklinresources.com.
Forward-Looking Statements

The financial results in this press release are preliminary. Some of the statements herein may include forward-looking statements that reflect our current views with respect to future events and financial performance. Such statements are provided under the “safe harbor” protection of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and generally can be identified by words or phrases written in the future tense and/or preceded by words such as “anticipate,” “believe,” “could,” “depends,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “potential,” “preliminary,” “seek,” “should,” “will,” “would,” or other similar words or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that may cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. While forward-looking statements are our best prediction at the time that they are made, you should not rely on them and are cautioned against doing so. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other possible 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. They are neither statements of historical fact nor guarantees or assurances of future performance. 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.

12


These and other risks, uncertainties and other important factors are described in more detail in our 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 our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 and our subsequent Quarterly Reports on Form 10-Q:

Our business and operations are subject to adverse effects from the outbreak and spread of contagious diseases such as COVID-19, which adverse effects may continue.
Volatility and disruption of our business and 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 significant risk of asset volatility from changes in the global financial, equity, debt and commodity markets.
Our funds may be subject to liquidity risks or an unanticipated large number of redemptions and fund closures.
A shift in our asset mix toward lower fee products may negatively impact our revenues.
We may not effectively manage risks associated with the replacement of benchmark indices.
Poor investment performance of our products could reduce the level of our AUM or affect our sales, and negatively impact our revenues and income.
Harm to our reputation may negatively impact our revenues and income.
Our completed acquisition of Legg Mason, Inc. remains subject to integration risks.
Our business operations are complex and a failure to perform operational tasks properly or comply with applicable regulatory requirements could have an adverse effect on our revenues and income.
Failure to establish adequate controls and risk management policies, or the circumvention of controls and policies, could have an adverse effect on our global operations, reputation and financial position.
We face risks, and corresponding potential costs and expenses, associated with conducting operations and growing our business in numerous countries.
Our focus on international markets as a source of investments and sales of our products subjects us to increased exchange rate and market-specific political, economic or other risks that may adversely impact our revenues and income generated overseas.
We may review and pursue strategic transactions that could pose risks to our business.
Failure to properly address the increased transformative pressures affecting the asset management industry could negatively impact our business.
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.
Increasing competition and other changes in the third-party distribution and sales channels on which we depend could reduce our income and hinder our growth.
Any failure of our third-party providers to fulfill their obligations, or our failure to maintain good relationships with our providers, could adversely impact our business.
We may be adversely affected if any of our third-party providers is subject to a successful cyber or security attack.
Our ability to manage and grow our business successfully can be impeded by systems and other technological limitations.
Any significant limitation, failure or security breach of our information and cyber security infrastructure, software applications, technology or other systems that are critical to our operations could disrupt our business and harm our operations and reputation.
Our inability to recover successfully, should we experience a disaster or other business continuity problem, could cause material financial loss, regulatory actions, legal liability, and/or reputational harm.
We depend on key personnel and our financial performance could be negatively affected by the loss of their services.
Our ability to meet cash needs depends upon certain factors, including the market value of our assets, our operating cash flows and our perceived creditworthiness.
We are dependent on the earnings of our subsidiaries.
We are subject to extensive, complex, overlapping and frequently changing rules, regulations, policies, and legal interpretations.
We may be adversely affected as a result of new or revised legislation or regulations or by changes in the interpretation of existing laws and regulations, in the U.S. and other jurisdictions.
Global regulatory and legislative actions and reforms have made compliance in the regulatory environment in which we operate more costly and future actions and reforms could adversely impact our financial condition and results of operations.
Failure to comply with the laws, rules or regulations in any of the jurisdictions in which we operate could result in substantial harm to our reputation and results of operations.
13


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.
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 contractual obligations may subject us to indemnification costs and liability to third parties.
Failure to protect our intellectual property may negatively impact our business.

If a circumstance occurs after the date of this press release that causes any of our forward-looking statements to be inaccurate, whether as a result of new information, future developments or otherwise, we undertake no obligation to announce publicly the change to our expectations, or to make any revision to our forward-looking statements, to reflect any change in assumptions, beliefs or expectations, or any change in events, conditions or circumstances upon which any forward-looking statement is based, unless required by law.

# # #

14

Exhibit 99.2
FTLOGOPOSA45B.JPG
ADDRESSBLOCK123114A01B66B.GIF
From: Franklin Resources, Inc.
Investor Relations: Selene Oh (650) 312-4091, selene.oh@franklintempleton.com
Corporate Communications:
Lisa Gallegos, (650) 312-3395, lisa.gallegos@franklintempleton.com
Becky Radosevich, (212) 632-3207, rebecca.radosevich@franklintempleton.com
franklinresources.com
FOR IMMEDIATE RELEASE

Franklin Templeton to Acquire Lexington Partners, a Global Leader in Secondary Private Equity and Co-Investments

Materially expands breadth and scale of Franklin Templeton’s alternative asset capabilities

Growing market sector with long-term potential to extend access of private asset classes to additional investors

Structured to provide continuity for Lexington’s highly experienced team and continued strong alignment with investors


SAN MATEO, CA, November 1, 2021 – Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton, today announced that it has entered into a definitive agreement to acquire Lexington Partners L.P. (“Lexington”), a leading global manager of secondary private equity and co-investment funds. This acquisition will bolster Franklin Templeton’s alternative asset capabilities, complementing its existing strengths in real estate, private credit, and hedge fund strategies, at a time when investors are increasingly allocating capital across the full spectrum of alternative asset offerings.

“We could not be more excited to welcome Lexington and its world-class team,” said Jenny Johnson, President and CEO of Franklin Templeton. “This acquisition will position us to capitalize on the highly sought after secondary private equity market, an area of growth that complements Franklin Templeton’s existing alternative asset capabilities to meet the growing appetite of our clients for alternative asset management around the globe.”

Since its founding in 1994, Lexington has established itself as one of the world’s largest and most successful independent managers of secondary private equity and co-investment funds. Lexington has raised in excess of $55 billion in aggregate commitments from more than 1,000 institutional investors, deploying capital across more than 4,500 secondary, co-investment and primary interests. Lexington is currently investing from its $14 billion flagship global secondary fund, its $2.7 billion middle market secondary fund and its $3.2 billion co-investment vehicle.

A global firm with current fee-based AUM of $34 billion, Lexington has eight offices strategically located in major centers for private equity and alternative investing including New York, Boston, Menlo Park, London, Hong Kong, Santiago, São Paulo and Luxembourg. Lexington’s 35 partners and principals average 17 years of alternative investment experience and more than 14 years together at Lexington.

Wil Warren, President of Lexington, added, “The strategic and cultural fit between Franklin Templeton and Lexington is ideal. My colleagues and I are delighted to continue to pursue our investment strategies while benefiting from the resources and support of one of the industry’s largest and most diverse investment management organizations. This transaction provides for long-term continuity and stability for our investors, management team and employees. Furthermore, the transaction has been structured to provide significant ongoing ownership of Lexington by our team, providing continued strong alignment with our limited partners. We are very excited to partner with Franklin Templeton to grow and innovate in our market segments, as we have over the past 27 years.”

Tom Gahan, Head of Alternatives at Franklin Templeton, commented, “Lexington is a powerful and complementary addition to our alternative asset capabilities. Adding Lexington’s leading private equity expertise alongside the real




estate strength of Clarion Partners, the private credit capabilities of Benefit Street Partners and the hedge fund offerings of K2 Advisors provides Franklin Templeton with a substantial and diverse alternative asset platform.”

Franklin Templeton has demonstrated a commitment to expanding its alternative asset management business, through a combination of both acquisitions and organic growth. With the addition of Lexington, Franklin Templeton’s alternative assets under management are expected to be approximately $200 billion at the time of transaction close.

Transaction Terms and Financial Impact

Franklin Templeton is acquiring 100% of Lexington from its current owners, for aggregate cash payments of $1.75 billion, made up of $1 billion at close and additional payments totaling $750 million over the next three years. Lexington will operate as a Specialist Investment Manager within Franklin Templeton with its current management team continuing in their roles post transaction. As part of the transaction, Lexington partners and employees will simultaneously be granted a 25% ownership stake in Lexington vesting over five years and $338 million of performance-based cash retention awards to be paid out over approximately five years.

The transaction will be funded from Franklin Templeton’s existing balance sheet resources and is expected to be immediately accretive to adjusted earnings per share.

The transaction is subject to customary closing conditions and is expected to close by the end of the second fiscal quarter of 2022.

Broadhaven Capital Partners, LLC, BofA Securities, and Citi served as financial advisors to Franklin Templeton, and Willkie Farr & Gallagher LLP acted as legal counsel. Goldman Sachs & Co. LLC served as exclusive financial advisor to Lexington Partners, and Morgan Stanley & Co. LLC served as financial advisor to the Trust representing Lexington’s founder and majority shareholder. Simpson Thacher & Bartlett LLP served as legal counsel to Lexington. Weil, Gotshal & Manges LLP served as legal counsel to Lexington’s majority shareholder.

Conference Call Information

Executives from Franklin Templeton and Lexington will lead a live teleconference today at 11:00 a.m. Eastern Time to discuss the transaction, along with Franklin Templeton’s results for the quarter and fiscal year ending September 30, 2021. Access to the teleconference will be available by dialing (833) 350-1245 in the U.S. and Canada or (236) 712- 2205 internationally, and a supplementary presentation will be available to investors via franklinresources.com. A replay of the teleconference can also be accessed by calling (800) 585-8367 in the U.S. and Canada or (416) 621- 4642 internationally, using access code 1859388, after 2:00 p.m. ET on November 1, 2021, through November 8,
2021.

About Franklin Templeton

Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 165 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the Company brings extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has over 70 years of investment experience and over $1.5 trillion in assets under management as of September 30, 2021. For more information, please visit franklinresources.com.

About Lexington

Lexington Partners is a leading global alternative investment manager primarily involved in providing liquidity solutions to owners of private equity and other alternative investments and in making co-investments alongside leading private equity sponsors. Lexington Partners is one of the largest independent managers of secondary acquisition and co- investment funds with $55 billion in committed capital since inception. Lexington has acquired over 3,900 secondary and co-investment interests through more than 1,000 transactions with a total value in excess of $67 billion, including $17 billion of syndications. Lexington also invests in private investment funds during their initial formation and has committed to more than 550 new funds in the U.S., Europe, Latin America, and the Asia-Pacific region. Lexington has offices strategically located in major centers for private equity and alternative investing - New York, Boston, Menlo Park, London, Hong Kong, Santiago, São Paulo and Luxembourg. Additional information can be found at lexingtonpartners.com.





Forward-Looking Statements

Statements in this press release that 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,” “preliminary” or other similar words are forward-looking statements.

Various forward-looking statements in this press release relate to the acquisition by Franklin Resources, Inc. (“Franklin”) of Lexington Partners L.P. (“Lexington”), including regarding expected scale opportunities, operating efficiencies and results, growth, client and stockholder benefits, key assumptions, timing of closing of the transaction, revenue realization, cost and expense synergies, financial benefits or returns, accretion and integration costs.

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. Important transaction-related and other risk factors that may cause such differences include: (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the acquisition agreement; (ii) the transaction closing conditions may not be satisfied in a timely manner or at all, including due to the failure to obtain Lexington regulatory and client approvals; (iii) the announcement and pendency of the acquisition may disrupt Lexington’s business operations (including the threatened or actual loss of employees, clients or suppliers); (iv) Lexington could experience financial or other setbacks if the transaction encounters unanticipated problems; (v) anticipated benefits of the transaction, including the realization of revenue, accretion, financial benefits or returns, may not be fully realized or may take longer to realize than expected; and (vi) Franklin may be unable to successfully integrate Lexington’s businesses with those of Franklin or to integrate the businesses within the anticipated timeframe.

Other important factors that may affect our business or the combined business’ future operating results, include, but are not limited to: (i) 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; (ii) the amount and mix of assets under management (“AUM”) are subject to significant fluctuations; (iii) the significant risk of asset volatility from changes in the global financial, equity, debt and commodity markets; (iv) harm to our, or Lexington’s, reputation may negatively impact revenues and income; (v) Franklin may review and pursue other strategic transactions that could pose risks to our business operations; (vi) 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 their market share, revenues and income; (vii) the ability to manage and grow our business and the combined business successfully can be impeded by systems and other technological limitations; (viii) dependence on key personnel could negatively affect financial performance; (ix) the businesses are subject to extensive, complex, and frequently changing rules, regulations, policies, and legal interpretations; (x) our contractual obligations may subject us to indemnification costs and liability to third parties; (xi) any significant limitation, failure or security breach of information and cyber security infrastructure, software applications, technology or other systems that are critical to operations could disrupt the businesses and harm operations and reputation; and (xii) regulatory and governmental examinations and/or investigations, litigation and the legal risks associated with the businesses, could adversely impact AUM, increase costs and negatively impact profitability and/or our future financial results. For a detailed discussion of other risk factors, please refer to the risks, uncertainties and factors described in Franklin’s recent filings with the U.S. Securities and Exchange Commission (“SEC”), including, without limitation, Franklin’s most recent Annual Report on Form 10-K and subsequent periodic and current reports.

Any forward-looking statement made in this press release speaks only as of the date on which it is made. Factors or events that could cause actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Franklin and Lexington 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.

# # #

Copyright © 2021. Franklin Templeton. All rights reserved.