Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Sep. 30, 2019	Oct. 31, 2019	Mar. 29, 2019
Document And Entity Information [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-09318
Entity Registrant Name	FRANKLIN RESOURCES, INC.
Entity Central Index Key	0000038777
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-2670991
Entity Address, Address Line One	One Franklin Parkway
Entity Address, City or Town	San Mateo
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94403
City Area Code	650
Local Phone Number	312-2000
Title of 12(b) Security	Common Stock, par value $0.10 per share
Trading Symbol	BEN
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 9.4
Entity Common Stock, Shares Outstanding		498,070,319
Documents Incorporated by Reference [Text Block]	Certain portions of the registrant’s definitive proxy statement for its annual meeting of stockholders, to be filed with the Securities and Exchange Commission within 120 days after September 30, 2019, are incorporated by reference into Part III of this report.

Consolidated Statements of Income - USD ($) $ in Millions	12 Months Ended
Consolidated Statements of Income - USD ($) $ in Millions	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Operating Revenues
Other	$ 128.4	$ 129.9	$ 101.7
Revenues	5,774.5	6,319.1	6,392.2
Operating Expenses
Sales, distribution and marketing	1,819.6	2,039.7	2,130.9
Compensation and benefits	1,584.7	1,390.6	1,333.7
Information systems and technology	258.5	243.9	219.8
Occupancy	133.6	128.6	121.3
General, administrative and other	420.7	397.7	322.2
Total operating expenses	4,217.1	4,200.5	4,127.9
Operating Income	1,557.4	2,118.6	2,264.3
Other Income (Expenses)
Investment and other income, net	115.1	145.3	336.3
Interest expense	(24.7)	(48.7)	(51.5)
Other income, net	90.4	96.6	284.8
Income before taxes	1,647.8	2,215.2	2,549.1
Taxes on income	442.3	1,472.5	759.4
Net income	1,205.5	742.7	1,789.7
Less: net income (loss) attributable to
Redeemable noncontrolling interests	6.2	(12.8)	53.0
Net Income Attributable to Franklin Resources, Inc.	$ 1,195.7	$ 764.4	$ 1,696.7
Earnings per Share
Basic	$ 2.35	$ 1.39	$ 3.01
Diluted	$ 2.35	$ 1.39	$ 3.01
Investment management fees [Member]
Operating Revenues
Operating revenues	$ 3,985.2	$ 4,367.5	$ 4,359.2
Sales and distribution fees [Member]
Operating Revenues
Operating revenues	1,444.6	1,599.8	1,705.6
Shareholder servicing fees [Member]
Operating Revenues
Operating revenues	$ 216.3	$ 221.9	$ 225.7

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Net Income	$ 1,205.5	$ 742.7	$ 1,789.7
Other Comprehensive Income (Loss)
Currency translation adjustments, net of tax	(52.5)	(91.9)	65.4
Net unrealized gains (losses) on defined benefit plans, net of tax	(2.0)	1.9	2.1
Net unrealized gains on investments, net of tax	1.5	4.3	2.2
Total other comprehensive income (loss)	(53.0)	(85.7)	69.7
Total comprehensive income	1,152.5	657.0	1,859.4
Less: comprehensive income (loss) attributable to
Redeemable noncontrolling interests	6.2	(12.8)	53.0
Comprehensive Income Attributable to Franklin Resources, Inc.	$ 1,142.7	$ 678.7	$ 1,766.4

Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2019	Sep. 30, 2018
Assets
Cash and cash equivalents	$ 5,957.6	$ 6,910.6
Receivables	740.0	733.7
Investments	1,555.8	1,426.5
Investments, at fair value	589.7	551.6
Property and equipment, net	683.7	535.0
Goodwill and other intangible assets, net	2,994.5	2,333.4
Other	197.7	220.7
Total Assets	14,532.2	14,383.5
Liabilities
Compensation and benefits	502.4	405.6
Accounts payable and accrued expenses	222.9	158.9
Dividends	137.4	127.7
Commissions	254.0	297.9
Income taxes	824.7	1,034.8
Debt	696.9	695.9
Deferred taxes	120.1	126.5
Other	270.6	184.1
Total liabilities	3,161.3	3,132.0
Commitments and Contingencies (Note 14)
Redeemable Noncontrolling Interests	746.7	1,043.6
Stockholders’ Equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued	0.0	0.0
Common stock, $0.10 par value, 1,000,000,000 shares authorized; 499,303,269 and 519,122,574 shares issued and outstanding at September 30, 2019 and 2018	49.9	51.9
Retained earnings	10,288.2	10,217.9
Accumulated other comprehensive loss	(431.6)	(370.6)
Total Franklin Resources, Inc. stockholders’ equity	9,906.5	9,899.2
Nonredeemable noncontrolling interests	717.7	308.7
Total stockholders’ equity	10,624.2	10,207.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	14,532.2	14,383.5
Consolidated Investment Products [Member]
Assets
Cash and cash equivalents	154.2	299.8
Receivables	99.0	114.2
Investments, at fair value	2,303.9	2,109.4
Other	0.0	1.0
Total Assets	2,557.1	2,524.4
Liabilities
Accounts payable and accrued expenses	81.5	68.0
Debt	50.8	32.6
Other	0.0	9.3
Total liabilities	132.3	109.9
Redeemable Noncontrolling Interests	746.7	1,043.6
Stockholders’ Equity
Total Franklin Resources, Inc. stockholders’ equity	1,129.6	1,092.6
Nonredeemable noncontrolling interests	548.5	278.3
Total stockholders’ equity	1,678.1	1,370.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	2,557.1	2,524.4
Franklin Resources, Inc. [Member]
Assets
Cash and cash equivalents	$ 5,803.4	$ 6,610.8

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2019	Sep. 30, 2018
Statement of Financial Position [Abstract]
Investments, at fair value	$ 589.7	$ 551.6
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.1	$ 0.1
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	499,303,269	519,122,574
Common stock, shares outstanding	499,303,269	519,122,574

Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Common Stock [Member]	Capital in Excess of Par Value [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Stockholders' Equity [Member]	Nonredeemable Noncontrolling Interests [Member]
Stockholders' Equity [Roll Forward]
Adoption of new accounting guidance \| ASU 2015-02 [Member]	$ (325.9)			$ 5.8	$ (7.1)	$ (1.3)	$ (324.6)
Beginning balance - Shares at Sep. 30, 2016		570.3
Beginning balance at Sep. 30, 2016		$ 57.0	$ 0.0	12,226.2	(347.4)	11,935.8
Beginning balance at Sep. 30, 2016							592.4
Beginning balance at Sep. 30, 2016	12,528.2
Stockholders' Equity [Roll Forward]
Net income (loss)	1,696.7			1,696.7		1,696.7
Nonredeemable noncontrolling interests							40.0
Net income (loss)	1,736.7
Other comprehensive income (loss)	69.7				69.7	69.7
Dividends declared on common stock	(449.9)			(449.9)		(449.9)
Repurchase of common stock - Shares		(19.1)
Repurchase of common stock - Amount	(771.5)	$ (1.9)	(140.1)	(629.5)		(771.5)
Issuance of common stock - Shares		3.7
Issuance of common stock - Amount	134.6	$ 0.4	134.2			134.6
Tax shortfall from stock-based compensation	(8.7)		(8.7)			(8.7)
Stock-based compensation	14.6		14.6			14.6
Net subscriptions (distributions) and other	17.3						17.3
Consolidation (deconsolidation) of investment products	(9.3)						(9.3)
Ending balance - Shares at Sep. 30, 2017		554.9
Ending balance at Sep. 30, 2017		$ 55.5	0.0	12,849.3	(284.8)	12,620.0
Ending balance at Sep. 30, 2017							315.8
Ending balance at Sep. 30, 2017	12,935.8
Stockholders' Equity [Roll Forward]
Adoption of new accounting guidance \| ASU 2016-09 [Member]	0.4		2.1	(1.6)	(0.1)	0.4
Net income (loss)	764.4			764.4		764.4
Nonredeemable noncontrolling interests							(8.9)
Net income (loss)	755.5
Other comprehensive income (loss)	(85.7)				(85.7)	(85.7)
Dividends declared on common stock	(2,131.3)			(2,131.3)		(2,131.3)
Repurchase of common stock - Shares		(39.9)
Repurchase of common stock - Amount	(1,426.7)	$ (4.0)	(170.4)	(1,252.3)		(1,426.7)
Issuance of common stock - Shares		3.3
Issuance of common stock - Amount	131.1	$ 0.3	130.8			131.1
Stock-based compensation	10.6		10.6			10.6
Net subscriptions (distributions) and other	(6.0)						(6.0)
Consolidation (deconsolidation) of investment products	2.4						2.4
Acquisition - Shares		0.8
Acquisition - Amount	27.0	$ 0.1	26.9			27.0
Purchase of noncontrolling interest	(5.2)			(10.6)		(10.6)	5.4
Ending balance - Shares at Sep. 30, 2018		519.1
Ending balance at Sep. 30, 2018	9,899.2	$ 51.9	0.0	10,217.9	(370.6)	9,899.2
Ending balance at Sep. 30, 2018	308.7						308.7
Ending balance at Sep. 30, 2018	10,207.9
Stockholders' Equity [Roll Forward]
Adoption of new accounting guidance \| ASU 2014-09 and 2016-01 [Member]	14.9			22.9		14.9
Adoption of new accounting guidance \| ASU 2016-01 [Member]					(8.0)
Net income (loss)	1,195.7			1,195.7		1,195.7
Nonredeemable noncontrolling interests							3.6
Net income (loss)	1,199.3
Other comprehensive income (loss)	(53.0)				(53.0)	(53.0)
Dividends declared on common stock	(528.3)			(528.3)		(528.3)
Repurchase of common stock - Shares		(24.6)
Repurchase of common stock - Amount	(756.3)	$ (2.5)	(133.8)	(620.0)		(756.3)
Issuance of common stock - Shares		4.8
Issuance of common stock - Amount	130.3	$ 0.5	129.8			130.3
Stock-based compensation	4.0		4.0			4.0
Net subscriptions (distributions) and other	165.0						165.0
Consolidation (deconsolidation) of investment products	24.3						24.3
Acquisition	216.1						216.1
Ending balance - Shares at Sep. 30, 2019		499.3
Ending balance at Sep. 30, 2019	9,906.5	$ 49.9	$ 0.0	$ 10,288.2	$ (431.6)	$ 9,906.5
Ending balance at Sep. 30, 2019	717.7						$ 717.7
Ending balance at Sep. 30, 2019	$ 10,624.2

Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Statement of Stockholders' Equity [Abstract]
Dividends declared per share	$ 1.04	$ 3.92	$ 0.8

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Net cash provided by operating activities
Net Income	$ 1,205.5	$ 742.7	$ 1,789.7
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions	85.8	80.7	72.0
Depreciation and other amortization	93.4	76.4	80.3
Stock-based compensation	111.5	117.8	123.4
Losses (income) from investments in equity method investees	10.4	(44.4)	(107.9)
Net losses (gains) on investments of consolidated investment products	26.3	55.0	(118.2)
Net (purchase) liquidation of investments by consolidated investment products	(1,497.6)	365.7	(812.2)
Deferred income taxes	(1.3)	(50.6)	8.8
Other	25.1	33.7	(14.9)
Changes in operating assets and liabilities:
Increase in receivables and other assets	(34.2)	(90.1)	(96.7)
Decrease (increase) in receivables of consolidated investment products	(34.3)	68.5	(64.3)
Decrease (increase) in investments, net	142.5	(39.2)	130.2
Increase (decrease) in accrued compensation and benefits	89.4	(19.1)	37.2
Increase (decrease) in commissions payable	(43.9)	(15.4)	11.3
Increase (decrease) in income taxes payable	(210.1)	965.2	44.5
Increase (decrease) in accounts payable, accrued expenses and other liabilities	126.0	(23.0)	(9.2)
Increase in accounts payable and accrued expenses of consolidated investment products	107.1	5.8	61.4
Net cash provided by operating activities	201.6	2,229.7	1,135.4
Net cash (used in) provided by investing activities
Purchase of investments	(393.9)	(358.2)	(372.5)
Liquidation of investments	343.2	286.2	344.9
Purchase of investments by consolidated investment products	0.0	(73.8)	(114.7)
Liquidation of investments by consolidated investment products	0.0	73.3	368.1
Additions of property and equipment, net	(233.7)	(106.5)	(74.9)
Adoption of new accounting guidance	0.0	0.0	(49.2)
Acquisitions, net of cash acquired	(684.2)	(86.8)	(14.0)
Net deconsolidation of investment products	(108.5)	(24.6)	(35.7)
Net cash (used in) provided by investing activities	(1,077.1)	(290.4)	52.0
Net cash used in financing activities
Issuance of common stock	23.3	24.8	24.9
Dividends paid on common stock	(518.6)	(2,116.9)	(441.2)
Repurchase of common stock	(754.5)	(1,424.8)	(765.3)
Excess tax benefit from stock-based compensation	0.0	0.0	0.9
Payments on debt	0.0	(361.9)	(300.0)
Proceeds from loan	1.7	0.0	0.0
Payments on loan	(1.5)	0.0	(53.7)
Proceeds from debt of consolidated investment products	19.9	0.0	20.6
Payments on debt by consolidated investment products	(2.0)	(21.0)	(308.5)
Payments on contingent consideration liability	(20.4)	(21.6)	(35.3)
Noncontrolling interests	1,211.6	159.7	901.6
Net cash used in financing activities	(40.5)	(3,761.7)	(956.0)
Effect of exchange rate changes on cash and cash equivalents	(37.0)	(16.7)	35.0
Increase (decrease) in cash and cash equivalents	(953.0)	(1,839.1)	266.4
Cash and cash equivalents, beginning of year	6,910.6	8,749.7	8,483.3
Cash and Cash Equivalents, End of Year	5,957.6	6,910.6	8,749.7
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	520.8	523.5	712.2
Cash paid for interest	27.4	38.6	42.3
Cash paid for interest by consolidated investment products	$ 2.3	$ 2.6	$ 11.2

Significant Accounting Policies

12 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Business. Franklin Resources, Inc. (“Franklin”) is a holding company that, together with its subsidiaries (collectively, the “Company”), operates as Franklin Templeton. The Company provides investment management and related services in jurisdictions worldwide for investors in investment products which include sponsored funds, as well as institutional and high-net-worth separate accounts. In addition to investment management, the Company’s services include fund administration, sales and distribution, and shareholder servicing.

Basis of Presentation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Management believes that the accounting estimates are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates. Certain comparative amounts for prior fiscal years have been reclassified to conform to the financial statement presentation as of and for the fiscal year ended September 30, 2019 (“fiscal year 2019”).

Consolidation. The consolidated financial statements include the accounts of Franklin and its subsidiaries and consolidated investment products (“CIPs”) in which it has a controlling financial interest. The Company has a controlling financial interest when it owns a majority of the voting interest in a voting interest entity (“VOE”) or is the primary beneficiary of a variable interest entity (“VIE”). Intercompany accounts and transactions have been eliminated.

A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or do not have defined rights and obligations normally associated with an equity investment. Substantially all of the Company’s VIEs are investment products, and its variable interests consist of its equity ownership interests in and investment management fees earned from these products.

The Company is the primary beneficiary of a VIE if it has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE. Investment management fees earned from VIEs are excluded from the primary beneficiary determination if they are deemed to be at market and commensurate with service. The key estimates and assumptions used in the analyses include the amount of assets under management (“AUM”) and the life of the investment product.

Related Parties include sponsored funds and equity method investees. A substantial amount of the Company’s operating revenues and receivables are from related parties.

Earnings per Share. Basic and diluted earnings per share are computed using the two-class method, which considers participating securities as a separate class of shares. The Company’s participating securities consist of its nonvested stock and stock unit awards that contain nonforfeitable rights to dividends or dividend equivalents. Basic earnings per share is computed by dividing net income available to the Company’s common stockholders, adjusted to exclude earnings allocated to participating securities, by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period.

Business combinations are accounted for by recognizing the acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition-date estimated fair values. Any excess of the purchase consideration over the acquisition-date fair values of these identifiable assets and liabilities is recognized as goodwill. During the measurement period, which is not to exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed due to new information about facts that existed as of the acquisition date, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in earnings.

Intangible assets acquired in business combinations consist of investment management contracts. The fair values of the acquired assets are based on the net present value of estimated future cash flows attributable to the contracts, which include significant assumptions about forecasts of the AUM growth rate, pre-tax profit margin, average effective fee rate, effective tax rate and discount rate. The intangible assets are amortized over their estimated useful lives, which range from three to 15 years, using the straight-line method, unless the asset is determined to have an indefinite useful life. Indefinite-lived intangible assets represent contracts to manage investment assets for which there is no foreseeable limit on the contract period.

Goodwill and indefinite-lived intangible assets are tested for impairment annually as of August 1 and when an event occurs or circumstances change that more likely than not reduce the fair value of the related reporting unit or indefinite-lived intangible asset below its carrying value. The Company has one reporting unit, investment management and related services, consistent with its single operating segment, to which all goodwill has been assigned. Amortization and impairment are recognized in general, administrative and other expense.

Goodwill and indefinite-lived intangible assets may first be assessed for qualitative factors to determine whether it is necessary to perform a quantitative impairment test. The qualitative analysis considers entity-specific and macroeconomic factors and their potential impact on the key assumptions used in the determination of the fair value of the reporting unit or indefinite-lived intangible asset. A quantitative impairment test is performed if the results of the qualitative assessment indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying value or an indefinite-lived intangible asset is impaired, or if a qualitative assessment is not performed.

If a quantitative goodwill impairment test indicates that the carrying value of the goodwill exceeds the fair value of the reporting unit, impairment is recognized in the amount of the excess of the carrying value over the implied fair value of the goodwill, which considers the fair value assigned to all other assets and liabilities of the reporting unit.

If a quantitative indefinite-lived intangible assets impairment test indicates that the carrying value of the asset exceeds the fair value, impairment is recognized in the amount of the difference in values.

The fair values of the reporting unit and indefinite-lived intangible assets are based on the net present value of estimated future cash flows, which include assumptions about the AUM growth rate, pre-tax profit margin, average effective fee rate, effective tax rate and discount rate.

Definite-lived intangible assets are tested for impairment quarterly. Impairment is indicated when the carrying value of an asset is not recoverable and exceeds its fair value. Recoverability is evaluated based on estimated undiscounted future cash flows using assumptions about the AUM growth rate, pre-tax profit margin, average effective fee rate and expected useful lives. If the carrying value of an asset is not recoverable through undiscounted cash flows, impairment is recognized in the amount by which the carrying value exceeds the asset’s fair value, as determined by discounted cash flows or other methods as appropriate for the asset type.

Fair Value Measurements. The Company uses a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable. The three levels of fair value hierarchy are set forth below. The assessment of the hierarchy level of the assets or liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.



Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities, which may include published net asset values (“NAV”) for fund products.

Level 2	Observable inputs other than Level 1 quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable or corroborated by observable market data. Level 2 quoted prices are generally obtained from two independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the significant assumptions are observable in the market or corroborated by observable market data. Quoted prices are validated through price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of third-party vendors.

Level 3	Unobservable inputs that are supported by little or no market activity. These inputs require significant management judgment and reflect the Company’s estimation of assumptions that market participants would use in pricing the asset or liability.

Quoted market prices may be adjusted if events occur, such as significant price changes in proxies traded in relevant markets after the close of corresponding markets, trade halts or suspensions, or unscheduled market closures. These proxies consist of correlated country-specific exchange-traded securities, such as futures, American Depositary Receipts indices or exchange-traded funds. The price adjustments are primarily determined based on third-party factors derived from model-based valuation techniques for which the significant assumptions are observable in the market.

A substantial amount of the Company’s investments is recorded at fair value or amounts that approximate fair value on a recurring basis. Investments in fund products for which fair value is estimated using NAV as a practical expedient (when the NAV is available to the Company as an investor but is not publicly available) are not classified in the fair value hierarchy. Fair values are estimated for disclosure purposes for financial instruments that are not measured at fair value.

Cash and Cash Equivalents primarily consist of nonconsolidated sponsored money market funds and deposits with financial institutions and are carried at cost. Due to the short-term nature and liquidity of these financial instruments, their carrying values approximate fair value.

The Company maintains cash and cash equivalents with financial institutions in various countries, limits the amount of credit exposure with any given financial institution and conducts ongoing evaluations of the creditworthiness of the financial institutions with which it does business.

Receivables consist primarily of fees receivable from investment products and are carried at invoiced amounts. Due to the short-term nature and liquidity of the receivables, their carrying values approximate fair value.

Investments consist of equity securities measured at fair value, debt securities, investments in equity method investees and other investments. At September 30, 2018, prior to the adoption of new accounting guidance, investments in equity securities with a readily determinable fair value were classified as either trading or available-for-sale and investments in fund products without a published NAV were carried at cost.

Equity Securities, at fair value consist primarily of nonconsolidated sponsored funds and to a lesser extent, other equity investment securities. Changes in the fair value of the investments are recognized as gains and losses in earnings. The fair values of funds are determined based on their published NAV or estimated using NAV as a practical expedient. The fair values of equity securities other than funds are determined using independent third-party broker or dealer price quotes or based on discounted cash flows using significant unobservable inputs.

Debt Securities consist of trading and available-for-sale securities and are carried at fair value. Changes in the fair value of trading securities are recognized as gains and losses in earnings. Unrealized gains and losses on available-for-sale securities are recorded net of tax as part of accumulated other comprehensive income (loss) until realized, at which time they are recognized in earnings using the average cost method. The fair values of debt securities are determined using independent third-party broker or dealer price quotes, or based on discounted cash flows using significant unobservable inputs.

Investments in Equity Method Investees consist of equity investments in entities, including sponsored funds, over which the Company is able to exercise significant influence, but not control. Significant influence is generally considered to exist when the Company’s ownership interest in the investee is between 20% and 50%, although other factors, such as representation on the investee’s board of directors and the impact of commercial arrangements, also are considered in determining whether the equity method of accounting is appropriate. Investments in limited partnerships and limited liability companies are accounted for using the equity method when the Company’s investment is more than minor or when the Company is the general partner. Under the equity method of accounting, the investments are initially carried at cost and subsequently adjusted by the Company’s proportionate share of the entities’ net income, which is recognized in earnings.

Other Investments consist of equity investments in entities over which the Company is unable to exercise significant influence and do not have a readily determinable fair value, time deposits with maturities greater than three months from the date of purchase, and life settlement contracts. The equity investments are measured at cost adjusted for observable price changes and impairment, if any, which are recognized in earnings. The fair value of the entities is generally estimated using significant unobservable inputs in either a market-based or income-based approach. The time deposits are carried at cost, which approximates fair value due to their short-term nature and liquidity. Life settlement contracts are carried at fair value, which is determined based on discounted cash flows using significant unobservable inputs.

Impairment of Investments. Investments in available-for-sale securities, equity method investees and equity investments that do not have a readily determinable fair value are evaluated for impairment on a quarterly basis. The evaluation of equity investments considers qualitative factors, including the financial condition and specific events related to an investee, that may indicate the fair value of the investment is less than its carrying value. Impairment of equity securities is recognized in earnings.

Available-for-sale debt securities are evaluated for other-than-temporary impairment when the cost of an investment exceeds its fair value. If the Company intends to sell or it is more likely than not that it will be required to sell a security before recovery of its amortized cost, the entire impairment is recognized in earnings. If the Company does not intend to sell or it is not more likely than not that it will be required to sell the security before anticipated recovery of its amortized cost, the impairment related to credit loss, which is the difference between the security’s amortized cost and the present value of its expected cash flows, is recognized in earnings with the remaining loss recognized in accumulated other comprehensive income (loss).

Cash and Cash Equivalents of CIPs consist of highly liquid investments, including money market funds, which are readily convertible into cash, and deposits with financial institutions, and are carried at cost. Due to the short-term nature and liquidity of these financial instruments, their carrying values approximate fair value.

Receivables of CIPs consist of investment and share transaction related receivables and are carried at transacted amounts. Due to the short-term nature and liquidity of the receivables, their carrying values approximate fair value.

Investments of CIPs consist of marketable debt and equity securities and other investments that are not generally traded in active markets, and are carried at fair value. Changes in the fair value of the investments are recognized as gains and losses in earnings. The fair values of marketable securities are determined using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices are not available.

The investments that are not generally traded in active markets consist of equity and debt securities of entities in emerging markets, fund products, other equity and debt instruments, real estate and loans. The fair values are determined using significant unobservable inputs in either a market-based or income-based approach, except for fund products, for which fair values are estimated using NAV as a practical expedient.

Property and Equipment, net are recorded at cost and depreciated using the straight-line method over their estimated useful lives which range from three to 35 years. Expenditures for repairs and maintenance are charged to expense when incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the lease term, whichever is shorter.

Internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized and amortized over the shorter of the estimated useful lives of the software or the license terms, beginning when the software project is complete and the application is put into production.

Property and equipment are tested for impairment when there is an indication that the carrying value of an asset may not be recoverable. Carrying values are not recoverable when the undiscounted cash flows estimated to be generated by the assets are less than their carrying values. When an asset is determined to not be recoverable, the impairment is measured based on the excess, if any, of the carrying value of the asset over its respective fair value. Fair value is determined by discounted future cash flows models, appraisals or other applicable methods.

Deferred Sales Commissions consist of upfront commissions paid to financial advisers and broker-dealers on shares of sponsored funds sold without a front-end sales charge, and are amortized over the periods in which they are generally recovered from related revenues, which range from 18 months to six years. Deferred sales commissions are included in other assets in the consolidated balance sheet.

Debt consists almost entirely of senior notes which are carried at amortized cost. The fair value is estimated using quoted market prices, independent third-party broker or dealer price quotes, or prices of publicly traded debt with similar maturities, credit risk and interest rates.

Debt of CIPs is carried at amortized cost. The fair value is estimated using a discounted cash flow model that considers current interest rate levels, the quality of the underlying collateral and current economic conditions.

Contingent Consideration Liability consisted of the expected future payments related to the Company’s commitment to acquire the remaining interests in K2 Advisors Holdings, LLC and was included in other liabilities in the consolidated balance sheet as of September 30, 2018. The liability, which was settled during fiscal year 2019, was carried at fair value, determined using the net present value of anticipated future cash flows.

Noncontrolling Interests relate almost entirely to CIPs. Noncontrolling interests that are currently redeemable or convertible for cash or other assets at the option of the holder are classified as temporary equity. Nonredeemable noncontrolling interests are classified as a component of equity. Net income (loss) attributable to third-party investors is reflected as net income (loss) attributable to nonredeemable and redeemable noncontrolling interests in the consolidated statements of income. Sales and redemptions of shares of CIPs by third-party investors are a component of the change in noncontrolling interests included in financing activities in the consolidated statements of cash flows.

Revenues. The Company earns revenue primarily from providing investment management and related services to its customers, which are generally investment products or investors in separate accounts. Related services include fund administration, sales and distribution, and shareholder servicing. Revenues are recognized when the Company’s obligations related to the services are satisfied and it is probable that a significant reversal of the revenue amount would not occur in future periods. The obligations are satisfied over time as the services are rendered, except for the sales and distribution obligations for the sale of shares of sponsored funds which are satisfied on trade date. Multiple services included in customer contracts are accounted for separately when the obligations are determined to be distinct.

Fees from providing investment management and fund administration services (“investment management fees”), other than performance-based investment management fees, are determined based on a percentage of AUM, primarily on a monthly basis using daily average AUM, and are recognized as the services are performed over time. Performance-based investment management fees are generated when investment products’ performance exceeds targets established in customer contracts. These fees are recognized when the amount is no longer probable of significant reversal and may relate to investment management services that were provided in prior periods.

Sales and distribution fees primarily consist of upfront sales commissions and ongoing distribution fees. Sales commissions are based on contractual rates for sales of certain classes of sponsored funds and are recognized on trade date. Distribution service fees are determined based on a percentage of AUM, primarily on a monthly basis using daily average AUM. As the fee amounts are uncertain on trade date, they are recognized over time as the amounts become known and may relate to sales and distribution services provided in prior periods.

Shareholder servicing fees are primarily determined based on a percentage of AUM on a monthly basis using daily average AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts, while fees from certain investment products are based only on AUM. The fees are recognized as the services are performed over time.

AUM is generally based on the fair value of the underlying securities held by investment products and is calculated using fair value methods derived primarily from unadjusted quoted market prices, unadjusted independent third-party broker or dealer price quotes in active markets, or market prices or price quotes adjusted for observable price movements after the close of the primary market in accordance with the Company’s global valuation and pricing policy. The fair values of securities for which market prices are not readily available are valued internally using various methodologies which incorporate significant unobservable inputs as appropriate for each security type and represent an insignificant percentage of total AUM.

Revenue is recorded gross of payments made to third-party service providers in the Company’s role as principal as it controls the delegated services provided to customers.

Stock-Based Compensation. The fair value of stock-based payment awards is estimated on the date of grant based on the market price of the underlying shares of the Company’s common stock and is amortized to compensation expense on a straight-line basis over the related vesting period, which is generally three years. Expense relating to awards subject to performance conditions is recognized if it is probable that the conditions will be achieved. The probability of achievement is assessed on a quarterly basis. Forfeitures are accounted for as they occur.

Postretirement Benefits. Defined contribution plan costs are expensed as incurred.

Income Taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is expected to be recovered or settled, respectively. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying values of deferred tax assets to the amount that is more likely than not to be realized. For each tax position taken or expected to be taken in a tax return, the Company determines whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the

position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Interest on tax matters is recognized in interest expense and penalties in other operating expenses.

As a multinational corporation, the Company operates in various locations outside the U.S. and generates earnings worldwide. The Company repatriates the earnings in excess of regulatory, capital or operational requirements of substantially all of its non-U.S. subsidiaries. Prior to January 1, 2018, the Company indefinitely reinvested the undistributed earnings of all its non-U.S. subsidiaries, except for income previously taxed in the U.S. or subject to regulatory or legal repatriation restrictions or requirements.

Foreign Currency Translation and Transactions. Assets and liabilities of non-U.S. subsidiaries for which the local currency is the functional currency are translated at current exchange rates as of the end of the accounting period. The related revenues and expenses are translated at average exchange rates in effect during the period. Net exchange gains and losses resulting from translation are excluded from income and are recorded as part of accumulated other comprehensive income (loss). Transactions denominated in a foreign currency are revalued at the current exchange rate at the transaction date and any related gains and losses are recognized in earnings.

New Accounting Guidance

12 Months Ended

Sep. 30, 2019

Accounting Changes and Error Corrections [Abstract]

New Accounting Guidance

Recently Adopted Accounting Guidance

On October 1, 2018, the Company adopted new guidance issued by the Financial Accounting Standards Board (“FASB”) that requires use of a single principles-based model for recognition of revenue from contracts with customers. The core principle of the model is that revenue is recognized upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration to be received for the goods or services. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. The Company adopted the new guidance using the modified retrospective approach which did not require the restatement of prior periods, and recognized a cumulative effect adjustment resulting in decreases in total assets, total liabilities and retained earnings of $9.1 million, $2.2 million and $6.9 million.

The adoption of the guidance had no impact on operating income or net income. Individual line items in the consolidated statements of income were impacted as follows:



(in millions)	As Reported		Adoption Impact			Amount Without Adoption
for the fiscal year ended September 30, 2019	As Reported		Adoption Impact			Amount Without Adoption
Operating Revenues
Investment management fees	$	3,985.2	$	59.6		$	4,044.8
Sales and distribution fees	1,444.6		(59.6		)	1,385.0
Shareholder servicing fees	216.3		(8.6		)	207.7

Operating Expenses
General, administrative and other	$	420.7	$	(8.6	)	$	412.1

On October 1, 2018, the Company adopted an amendment to the financial instruments guidance issued by the FASB that requires substantially all equity investments in nonconsolidated entities to be measured at fair value with changes recognized in earnings, except for those accounted for using the equity method of accounting, which impacted all equity securities previously classified as available-for-sale and investments in fund products for which fair value was estimated using NAV as a practical expedient. The amendment also provides an election to measure equity investments that do not have a readily determinable fair value at cost adjusted for observable price changes and impairment, if any, which the Company made. The Company adopted the amendment using the modified retrospective approach and recognized a cumulative effect adjustment resulting in increases in investments, retained earnings and accumulated other comprehensive loss of $21.8 million, $29.8 million and $8.0 million.

Accounting Guidance Not Yet Adopted

The FASB issued new guidance for the accounting for leases in February 2016. The new guidance requires lessees to recognize assets and liabilities arising from substantially all leases. The guidance also requires an evaluation at the inception of a contract to determine whether the contract is or contains a lease. The Company will adopt the guidance on October 1, 2019 using the modified retrospective approach and expects to recognize a right-of-use asset of approximately $270 million and a lease liability of approximately $315 million, substantially all of which relate to real estate leases.

The FASB issued new guidance for the accounting for credit losses in June 2016. The new guidance requires the application of a current expected credit loss model for financial assets measured at amortized cost, including receivables, and an allowance for credit loss model for available-for-sale debt securities. The guidance is effective for the Company on October 1, 2020 and requires a cumulative effect adjustment to retained earnings at adoption. The Company is currently evaluating the impact of adopting the guidance.

Acquisition

12 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Acquisition

On February 1, 2019, the Company acquired all of the outstanding ownership interests in Benefit Street Partners L.L.C., a U.S. alternative credit manager, for a purchase consideration of $720.1 million in cash, of which $135.0 million was used to retire debt. The acquisition provides the Company private credit capabilities that complement its alternative and fixed income strategies available to clients.

The initial and revised estimated fair values of the assets acquired and liabilities and noncontrolling interests assumed were as follows:



(in millions)	Initial Estimated Fair Value			Adjustments			Revised Estimated Fair Value
as of February 1, 2019	Initial Estimated Fair Value			Adjustments			Revised Estimated Fair Value
Cash	$	33.2		$	—		$	33.2
Investments	138.8			—			138.8
Investments of consolidated investment products	84.9			—			84.9
Indefinite-lived intangible assets	307.5			(27.4		)	280.1
Definite-lived intangible assets	75.8			—			75.8
Goodwill	315.8			29.9			345.7
Other assets	35.7			(0.5		)	35.2
Other liabilities	(58.2		)	0.7			(57.5		)
Nonredeemable noncontrolling interests	(216.1		)	—			(216.1		)
Total Identifiable Net Assets	$	717.4		$	2.7		$	720.1

The adjustments to the initial estimated fair values are a result of new information obtained about facts that existed as of the acquisition date. The fair values of the intangible assets, which relate to management contracts, and goodwill were retrospectively adjusted as of February 1, 2019. The estimated useful life of certain of the intangible assets was also retrospectively adjusted. The goodwill is primarily attributable to expected growth from the private credit asset class. The amount of goodwill expected to be deductible for tax purposes is $453.2 million, which includes deferred payments that are recognized as compensation expense for accounting purposes.

Costs incurred in connection with the acquisition were $6.8 million in fiscal year 2019.

The Company has not presented pro forma combined results of operations for this acquisition because the results of operations as reported in the accompanying consolidated statements of income would not have been materially different.

Earnings per Share

12 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings per Share

The components of basic and diluted earnings per share were as follows:



(in millions, except per share data)
for the fiscal years ended September 30,	2019		2018		2017
Net income attributable to Franklin Resources, Inc.	$	1,195.7	$	764.4	$	1,696.7
Less: allocation of earnings to participating nonvested stock and stock unit awards	10.9		17.6		12.4
Net Income Available to Common Stockholders	$	1,184.8	$	746.8	$	1,684.3

Weighted-average shares outstanding – basic	503.6		537.4		558.8
Dilutive effect of nonparticipating nonvested stock unit awards	0.7		0.6		0.3
Weighted-Average Shares Outstanding – Diluted	504.3		538.0		559.1

Earnings per Share
Basic	$	2.35	$	1.39	$	3.01
Diluted	2.35		1.39		3.01

Nonparticipating nonvested stock unit awards excluded from the calculation of diluted earnings per share because their effect would have been antidilutive were 0.2 million for fiscal year 2019, 0.3 million for the fiscal year ended September 30, 2018 (“fiscal year 2018”), and 0.7 million for the fiscal year ended September 30, 2017 (“fiscal year 2017”).

Revenues

12 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenues

Operating revenues by geographic area were as follows:



	Earned From Contracts With Customers										Not Earned From Contracts With Customers¹		Total
(in millions)	United States		Luxembourg		Americas Excluding United States		Asia-Pacific		Europe, Middle East and Africa, Excluding Luxembourg
for the fiscal year ended September 30, 2019	United States		Luxembourg		Americas Excluding United States		Asia-Pacific		Europe, Middle East and Africa, Excluding Luxembourg
Investment management fees	$	2,260.6	$	1,064.7	$	325.4	$	241.8	$	92.7	$	—	$	3,985.2
Sales and distribution fees	941.3		437.2		63.3		1.3		1.5		—		1,444.6
Shareholder servicing fees	175.7		30.1		0.1		10.4		—		—		216.3
Other	18.6		1.5		—		1.0		2.2		105.1		128.4
Total	$	3,396.2	$	1,533.5	$	388.8	$	254.5	$	96.4	$	105.1	$	5,774.5

^{__________________}


¹	Consists of interest and dividend income from consolidated investment products.

Operating revenues are attributed to geographic areas based on the locations of the subsidiaries that provide the services, which may differ from the regions in which the related investment products are sold.

Investments

12 Months Ended

Sep. 30, 2019

Investments [Abstract]

Investments

The disclosures below include details of the Company’s investments, excluding those of CIPs. See Note 11 – Consolidated Investment Products for information related to the investments held by these entities.

The Company adopted new accounting guidance on October 1, 2018 that requires substantially all equity investments in nonconsolidated entities to be measured at fair value with changes recognized in earnings, except for those accounted for using the equity method of accounting. The new guidance did not change the accounting for investments in non-equity securities. Investment balances and related changes for the prior year have not been reclassified to conform to the financial statement presentation as of and for the year ended September 30, 2019.

Investments consisted of the following:



(in millions)
as of September 30,	2019
Equity securities, at fair value
Sponsored funds	$	466.4
Other equity securities	63.6
Total equity securities, at fair value	530.0
Debt securities
Trading	44.2
Available-for-sale	4.0
Total debt securities	48.2
Investments in equity method investees	933.4
Other investments	44.2
Total	$	1,555.8



(in millions)
as of September 30,	2018
Investment securities, trading
Sponsored funds	$	248.1
Debt and other equity securities	97.6
Total investment securities, trading	345.7
Investment securities, available-for-sale
Sponsored funds	178.6
Debt and other equity securities	15.5
Total investment securities, available-for-sale	194.1
Investments in equity method investees	780.8
Other investments	105.9
Total	$	1,426.5

Investment securities with aggregate carrying amounts of $1.2 million were pledged as collateral at both September 30, 2019 and 2018.

Gross unrealized gains and losses relating to investment securities, available-for-sale were as follows:



			Gross Unrealized
(in millions)	Cost Basis		Gains		Losses			Fair Value
as of September 30, 2019
Debt securities	$	4.0	$	—	$	—		$	4.0

as of September 30, 2018
Sponsored funds	$	172.9	$	8.3	$	(2.6	)	$	178.6
Debt and other equity securities	16.8		0.5		(1.8		)	15.5
Total	$	189.7	$	8.8	$	(4.4	)	$	194.1

There were no gross unrealized losses relating to investment securities, available-for-sale at September 30, 2019. Such losses at September 30, 2018 aggregated by length of time that individual securities were in a continuous unrealized loss position were as follows:



	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
as of September 30, 2018	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Sponsored funds	$	48.8	$	(2.1	)	$	21.0	$	(0.5	)	$	69.8	$	(2.6	)
Debt and other equity securities	10.9		(1.8		)	—		—			10.9		(1.8		)
Total	$	59.7	$	(3.9	)	$	21.0	$	(0.5	)	$	80.7	$	(4.4	)

The Company recognized other-than-temporary impairment of $10.5 million in earnings during fiscal year 2019, and $1.7 million and $0.8 million during fiscal years 2018 and 2017.

Fair Value Measurements

12 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

The disclosures below include details of the Company’s fair value measurements, excluding those of CIPs. See Note 11 – Consolidated Investment Products for information related to fair value measurements of the assets and liabilities of these entities.

The assets and liability measured at fair value on a recurring basis were as follows:



(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2019	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
Assets
Equity securities, at fair value
Sponsored funds	$	397.0	$	—	$	—	$	69.4	$	466.4
Other equity securities	22.6		3.2		0.8		37.0		63.6
Debt securities
Trading	—		24.4		19.8		—		44.2
Available-for-sale	—		4.0		—		—		4.0
Life settlement contracts	—		—		11.5		—		11.5
Total Assets Measured at Fair Value	$	419.6	$	31.6	$	32.1	$	106.4	$	589.7



(in millions)	Level 1		Level 2		Level 3		Total
as of September 30, 2018	Level 1		Level 2		Level 3		Total
Assets
Investment securities, trading
Sponsored funds	$	248.1	$	—	$	—	$	248.1
Debt and other equity securities	26.6		50.5		20.5		97.6
Investment securities, available-for-sale
Sponsored funds	178.6		—		—		178.6
Debt and other equity securities	4.4		10.8		0.3		15.5
Life settlement contracts	—		—		11.8		11.8
Total Assets Measured at Fair Value	$	457.7	$	61.3	$	32.6	$	551.6

Liability
Contingent consideration liability	$	—	$	—	$	38.7	$	38.7

Investments for which fair value was estimated using reported NAV as a practical expedient primarily consist of nonredeemable private debt, equity, infrastructure and real estate funds. These investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets. The expected weighted-average life for $46.9 million of the investments was 1.3 years at September 30, 2019. The liquidation period for a $48.6 million investment in a private debt fund is unknown. The Company’s unfunded commitments to the funds totaled $4.7 million at September 30, 2019.

Changes in the Level 3 assets and liability were as follows:



	2019						2018
(in millions)	Investments			Contingent Consideration Liability			Investments			Contingent Consideration Liability
for the fiscal years ended September 30,	Investments			Contingent Consideration Liability			Investments			Contingent Consideration Liability
Balance at beginning of year	$	32.6		$	(38.7	)	$	199.9		$	(51.0	)
Total realized and unrealized gains (losses)
Included in investment and other income, net	7.0			—			4.5			—
Included in general, administrative and other expense	—			(2.0		)	—			(13.1		)
Purchases	10.7			—			14.5			—
Sales	(6.5		)	—			(2.6		)	—
Settlements	(4.6		)	40.7			(174.0		)	32.4
Transfers out of Level 3	(7.1		)	—			—			—
Foreign exchange revaluation and other	—			—			(9.7		)	(7.0		)
Balance at End of Year	$	32.1		$	—		$	32.6		$	(38.7	)
Change in unrealized gains (losses) included in net income relating to assets and liability held at end of year	$	3.4		$	—		$	2.1		$	(13.1	)

There were no transfers into Level 3 during fiscal years 2019 and 2018.

Valuation techniques and significant unobservable inputs used in the Level 3 fair value measurements were as follows:



(in millions)
as of September 30, 2019	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average ¹)
Debt securities, trading	$	19.8	Discounted cash flow	Discount rate	2.7%–13.3% (6.7%)
Debt securities, trading	$	19.8	Discounted cash flow	Risk premium	2.0%–6.1% (4.2%)

Life settlement contracts	11.5		Discounted cash flow	Life expectancy	19–107 months (57)
Life settlement contracts	11.5		Discounted cash flow	Discount rate	8.0%–20.0% (13.2%)

^{__________________}


¹	Based on the relative fair value of the instruments.



(in millions)
as of September 30, 2018	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Investment securities, trading - debt and other equity securities	$	20.5	Discounted cash flow	Discount rate	4.1%–12.3% (5.8%)
	$	20.5	Discounted cash flow	Risk premium	2.0%–6.7% (3.6%)

Life settlement contracts	11.8		Discounted cash flow	Life expectancy	20–115 months (61)
Life settlement contracts	11.8		Discounted cash flow	Discount rate	8.0%–20.0% (13.1%)

Contingent consideration liability	38.7		Discounted cash flow	Discount rate	13.0%

If the relevant significant inputs used in the discounted cash flow valuations were independently higher (lower) as of September 30, 2019, the resulting fair value of the assets would be lower (higher).

Financial instruments that were not measured at fair value were as follows:



		2019				2018
(in millions)	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
as of September 30,	Fair Value Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets
Cash and cash equivalents	1	$	5,803.4	$	5,803.4	$	6,610.8	$	6,610.8
Other investments
Time deposits	2	15.4		15.4		12.3		12.3
Equity securities	3	17.3		19.2		81.8		103.6

Financial Liability
Debt	2	$	696.9	$	718.7	$	695.9	$	671.1

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Property and Equipment

12 Months Ended

Sep. 30, 2019

Property, Plant and Equipment, Net [Abstract]

Property and Equipment

Property and equipment, net consisted of the following:



(in millions)							Useful Lives In Years
as of September 30,	2019			2018			Useful Lives In Years
Furniture, software and equipment	$	846.7		$	798.6		3 – 10
Premises and leasehold improvements	789.2			628.1			5 – 35
Land	80.1			74.1			N/A
Total cost	1,716.0			1,500.8
Less: accumulated depreciation and amortization	(1,032.3		)	(965.8		)
Property and Equipment, Net	$	683.7		$	535.0

Depreciation and amortization expense related to property and equipment was $83.2 million, $78.9 million and $81.5 million in fiscal years 2019, 2018 and 2017. The Company recognized $6.6 million of equipment impairment during fiscal year 2018, and insignificant impairment amounts during fiscal years 2019 and 2017.

Goodwill and Other Intangible Assets

12 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and other intangible assets, net consisted of the following:



(in millions)
as of September 30,	2019		2018
Goodwill	$	2,130.3	$	1,794.8
Indefinite-lived intangible assets	799.4		530.7
Definite-lived intangible assets, net	64.8		7.9
Goodwill and Other Intangible Assets, Net	$	2,994.5	$	2,333.4

Changes in the carrying value of goodwill were as follows:



(in millions)
for the fiscal years ended September 30,	2019			2018
Balance at beginning of year	$	1,794.8		$	1,687.2
Acquisitions	345.7			117.4
Foreign exchange revaluation and other	(10.2		)	(9.8		)
Balance at End of Year	$	2,130.3		$	1,794.8

During fiscal year 2019, the Company recognized $9.3 million of impairment of indefinite-lived intangible assets related to Canadian management contracts due to revised estimates of future pre-tax profit margins and AUM growth rates for the associated fund products. No impairment of indefinite-lived intangible assets was recognized during fiscal years 2018 and 2017, or of goodwill during fiscal years 2019, 2018 and 2017.

Definite-lived intangible assets were as follows:



	2019							2018
(in millions)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
as of September 30,	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Management contracts	$	125.4	$	(60.6	)	$	64.8	$	54.9	$	(47.0	)	$	7.9

The Company recognized impairment of definite-lived intangible assets of $4.0 million, $5.7 million and $9.6 million during fiscal years 2019, 2018 and 2017 primarily due to investor redemptions.

Amortization expense related to definite-lived intangible assets was $14.7 million, $1.8 million and $3.9 million for fiscal years 2019, 2018 and 2017.

Definite-lived intangible assets had a weighted-average remaining useful life of 3.7 years at September 30, 2019, with estimated remaining amortization expense as follows:



(in millions)
for the fiscal years ending September 30,	Amount
2020	$	18.9
2021	18.1
2022	16.6
2023	7.4
2024	2.8
Thereafter	1.0
Total	$	64.8

Debt

12 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

The disclosures below include details of the Company’s debt, excluding that of CIPs. See Note 11 – Consolidated Investment Products for information related to the debt of these entities.

Debt consisted of the following:



(in millions)	2019			Effective Interest Rate		2018			Effective Interest Rate
as of September 30,	2019			Effective Interest Rate		2018			Effective Interest Rate
Senior Notes
$300 million 2.80% notes due September 2022	$	299.8		2.93	%	$	299.7		2.93	%
$400 million 2.85% notes due March 2025	399.6			2.97	%	399.6			2.97	%
Total senior notes	699.4					699.3
Other
Loan due December 2019	0.2			9.30	%	—			N/A
Debt issuance costs	(2.7		)			(3.4		)
Total	$	696.9				$	695.9

At September 30, 2019, the Company’s outstanding senior unsecured unsubordinated notes had an aggregate face value of $700.0 million. The notes have fixed interest rates with interest payable semi-annually and contain an optional redemption feature that allows the Company to redeem each series of notes prior to maturity in whole or in part at any time, at a make-whole redemption price. The indentures governing the notes contain limitations on the Company’s ability and the ability of its subsidiaries to pledge voting stock or profit participating equity interests in its subsidiaries to secure other debt without similarly securing the notes equally and ratably. The indentures also include requirements that must be met if the Company consolidates or merges with, or sells all or substantially all of its assets to, another entity. The Company was in compliance with all debt covenants at September 30, 2019.

At September 30, 2019, the Company had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program which has been inactive since 2012.

Consolidated Investment Products

12 Months Ended

Sep. 30, 2019

Consolidated Investment Products [Abstract]

Consolidated Investment Products

CIPs consist of mutual and other investment funds, limited partnerships and similar structures, substantially all of which are sponsored by the Company, and include both VOEs and VIEs. The Company had 60 and 53 CIPs as of September 30, 2019 and 2018.

The balances related to CIPs included in the Company’s consolidated balance sheets were as follows:



(in millions)
as of September 30,	2019		2018
Assets
Cash and cash equivalents	$	154.2	$	299.8
Receivables	99.0		114.2
Investments, at fair value	2,303.9		2,109.4
Other assets	—		1.0
Total Assets	$	2,557.1	$	2,524.4

Liabilities
Accounts payable and accrued expenses	$	81.5	$	68.0
Debt	50.8		32.6
Other liabilities	—		9.3
Total liabilities	132.3		109.9
Redeemable Noncontrolling Interests	746.7		1,043.6
Stockholders’ Equity
Franklin Resources, Inc.’s interests	1,129.6		1,092.6
Nonredeemable noncontrolling interests	548.5		278.3
Total stockholders’ equity	1,678.1		1,370.9
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	2,557.1	$	2,524.4

The CIPs did not have a significant impact on net income attributable to the Company in fiscal years 2019, 2018 and 2017.

The Company has no right to the CIPs’ assets, other than its direct equity investments in them and investment management and other fees earned from them. The debt holders of the CIPs have no recourse to the Company’s assets beyond the level of its direct investment, therefore the Company bears no other risks associated with the CIPs’ liabilities.

Investment products are typically consolidated when the Company makes an initial investment in a newly launched investment entity. They are typically deconsolidated when the Company no longer has a controlling financial interest due to redemptions of its investment or increases in third-party investments. The Company’s investments in these products subsequent to deconsolidation are accounted for as either equity method investments or equity securities at fair value depending on the structure of the product and the Company’s role and level of ownership.

Fair Value Measurements

Assets and liabilities of CIPs measured at fair value on a recurring basis were as follows:



(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2019	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
Assets
Investments
Debt securities	$	0.1	$	1,083.6	$	131.4	$	—	$	1,215.1
Equity securities	195.1		223.9		296.4		204.1		919.5
Real estate	—		—		152.7		—		152.7
Loans	—		—		16.6		—		16.6
Total Assets Measured at Fair Value	$	195.2	$	1,307.5	$	597.1	$	204.1	$	2,303.9



(in millions)	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
as of September 30, 2018	Level 1		Level 2		Level 3		NAV as a Practical Expedient		Total
Assets
Investments
Debt securities	$	0.6	$	1,219.5	$	118.0	$	—	$	1,338.1
Equity securities	270.7		154.8		199.7		113.8		739.0
Loans	—		—		32.3		—		32.3
Total Assets Measured at Fair Value	$	271.3	$	1,374.3	$	350.0	$	113.8	$	2,109.4

Liabilities
Other liabilities	$	0.6	$	8.7	$	—	$	—	$	9.3

The fair value of other liabilities, which consist of short positions in debt and equity securities, is determined based on the fair value of the underlying securities using quoted market prices, or independent third-party broker or dealer price quotes if quoted market prices are not available.

Investments for which fair value was estimated using reported NAV as a practical expedient consist of nonredeemable real estate and private equity funds. These investments are expected to be returned through distributions over the life of the funds as a result of liquidations of the funds’ underlying assets over a weighted-average period of 4.4 years and 3.5 years at September 30, 2019 and 2018. The CIPs’ unfunded commitments to these funds totaled $168.7 million and $1.9 million, of which the Company was contractually obligated to fund $20.6 million and $0.4 million based on its ownership percentage in the CIPs, at September 30, 2019 and 2018.

Changes in Level 3 assets were as follows:



(in millions)	Equity Securities			Debt Securities			Real Estate		Loans			Total Level 3 Assets
for the fiscal year ended September 30, 2019	Equity Securities			Debt Securities			Real Estate		Loans			Total Level 3 Assets
Balance at beginning of year	$	199.7		$	118.0		$	—	$	32.3		$	350.0
Acquisition	45.2			39.7			—		—			84.9
Realized and unrealized gains (losses) included in investment and other income, net	8.0			(13.9		)	5.0		(3.3		)	(4.2		)
Purchases	155.5			12.0			147.0		9.2			323.7
Sales and settlements	(81.4		)	(20.2		)	—		(21.6		)	(123.2		)
Transfers into Level 3	0.1			0.4			—		—			0.5
Transfers out of Level 3	(25.4		)	(3.6		)	—		—			(29.0		)
Foreign exchange revaluation	(5.3		)	(1.0		)	0.7		—			(5.6		)
Balance at End of Year	$	296.4		$	131.4		$	152.7	$	16.6		$	597.1
Change in unrealized gains (losses) included in net income relating to assets held at end of year	$	(6.3	)	$	(5.7	)	$	5.0	$	(0.6	)	$	(7.6	)



(in millions)	Equity Securities			Debt Securities			Loans			Total Level 3 Assets
for the fiscal year ended September 30, 2018	Equity Securities			Debt Securities			Loans			Total Level 3 Assets
Balance at beginning of year	$	160.7		$	135.4		$	—		$	296.1
Realized and unrealized gains (losses) included in investment and other income, net	26.2			4.9			(0.7		)	30.4
Purchases	32.0			16.2			26.0			74.2
Sales and settlements	(17.5		)	(39.1		)	—			(56.6		)
Consolidation	—			—			7.0			7.0
Foreign exchange revaluation	(1.7		)	0.6			—			(1.1		)
Balance at End of Year	$	199.7		$	118.0		$	32.3		$	350.0
Change in unrealized gains (losses) included in net income relating to assets held at end of year	$	17.3		$	0.8		$	(0.7	)	$	17.4

There were no transfers into or out of Level 3 during fiscal year 2018.

Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:



(in millions)
as of September 30, 2019	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average ¹)
Equity securities	$	176.9	Market comparable companies	Enterprise value/ EBITDA multiple	4.5–11.8 (8.1)
				Discount for lack of marketability	15.0%–30.0% (23.1%)
				Risk premium	18.9%
				Enterprise value/ Revenue multiple	3.7
	97.2		Discounted cash flow	Discount rate	4.8%–16.3% (10.3%)
	97.2		Discounted cash flow	Discount for lack of marketability	17.0%
	22.3		Market pricing	Private sale pricing	$0.25–$20.13 ($2.06) per share

Debt securities	115.5		Discounted cash flow	Discount rate	4.8%–17.4% (9.7%)
	115.5		Discounted cash flow	Discount for lack of marketability	17.0%–24.7% (22.9%)
	15.9		Market comparable companies	Price-to-earnings ratio	10.0
	15.9		Market comparable companies	Enterprise value/ EBITDA multiple	21.9

Real estate	84.7		Discounted cash flow	Discount rate	6.4%–7.4% (7.1%)
Real estate	68.0		Yield capitalization	Equivalent yield	4.3%–6.1% (5.4%)

Loans	16.6		Discounted cash flow	Loss-adjusted discount rate	3.0%–23.9% (12.0%)

^{__________________}


¹	Based on the relative fair value of the instruments.



(in millions)
as of September 30, 2018	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range (Weighted Average)
Equity securities	$	171.9	Market comparable companies	Enterprise value/ EBITDA multiple	5.0–13.6 (9.3)
Equity securities	27.8		Discounted cash flow	Discount rate	8.0%–16.5% (14.1%)

Debt securities	78.7		Discounted cash flow	Discount rate	7.0%–14.8% (10.8%)
	33.9		Comparable trading multiple	Price-to-earnings ratio	10.0
	33.9		Comparable trading multiple	Enterprise value/ EBITDA multiple	20.9
	5.4		Market pricing	Private sale pricing	$42 per $100 of par

Loans	32.3		Discounted cash flow	Loss-adjusted discount rate	3.0%–22.7% (12.0%)

If the relevant significant inputs used in the market-based valuations, other than the discount for lack of marketability and risk premium, were independently higher (lower) as of September 30, 2019, the resulting fair value of the assets would be higher (lower). If the relevant significant inputs used in the discounted cash flow or yield capitalization valuations, as well as the discount for lack of marketability and risk premium in the market-based valuations, were independently higher (lower) as of September 30, 2019, the resulting fair value of the assets would be lower (higher).

Financial instruments of CIPs that were not measured at fair value were as follows:



(in millions)	Fair Value Level	2019				2018
(in millions)		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
as of September 30,		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Asset
Cash and cash equivalents	1	$	154.2	$	154.2	$	299.8	$	299.8
Financial Liability
Debt	3	$	50.8	$	51.0	$	32.6	$	32.4

Debt

Debt of CIPs totaled $50.8 million and $32.6 million at September 30, 2019 and 2018. The debt had fixed and floating interest rates ranging from 2.08% to 7.94% with a weighted-average effective interest rate of 5.09% at September 30, 2019, and from 3.07% to 7.88% with a weighted-average effective interest rate of 6.79% at September 30, 2018.

The contractual maturities for debt of CIPs at September 30, 2019 were as follows:



(in millions)
for the fiscal years ending September 30,	Amount
2020	$	23.3
2021	7.5
2022	—
2023	—
2024	20.0
Total	$	50.8

Redeemable Noncontrolling Interests

Changes in redeemable noncontrolling interests of CIPs were as follows:



(in millions)
for the fiscal years ended September 30,	2019			2018			2017
Balance at beginning of year	$	1,043.6		$	1,941.9		$	61.1
Adoption of new accounting guidance	—			—			824.7
Net income (loss)	6.2			(12.8		)	53.0
Net subscriptions and other	1,046.6			170.9			884.3
Net consolidations (deconsolidations)	(1,349.7		)	(1,056.4		)	118.8
Balance at End of Year	$	746.7		$	1,043.6		$	1,941.9

Nonconsolidated Variable Interest Entities

12 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nonconsolidated Variable Interest Entities

VIEs for which the Company is not the primary beneficiary consist of sponsored funds and other investment products in which the Company has an equity ownership interest. The Company’s maximum exposure to loss from these VIEs consists of equity investments and investment management and other fee receivables as follows:



(in millions)
as of September 30,	2019		2018
Investments	$	458.1	$	161.8
Receivables	149.5		140.1
Total	$	607.6	$	301.9

While the Company has no legal or contractual obligation to do so, it routinely makes cash investments in the course of launching sponsored funds. The Company also may voluntarily elect to provide its sponsored funds with additional direct or indirect financial support based on its business objectives. The Company did not provide financial or other support to its sponsored funds during fiscal year 2019. During fiscal year 2018, the Company purchased $32.6 million of certain equity and debt securities from two sponsored funds.

Taxes on Income

12 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Taxes on Income

The Tax Cuts and Jobs Act (“the Tax Act”), which was enacted into law in the U.S. in December 2017, includes various changes to the tax law, including a permanent reduction in the corporate income tax rate and assessment of a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiaries’ earnings. The estimated related changes in the Company’s deferred tax assets and deferred tax liabilities resulted in a $35.6 million decrease in deferred tax assets, an $88.9 million decrease in deferred tax liabilities and a $53.3 million net tax benefit in fiscal year 2018. The Company also reclassified $0.1 million from accumulated other comprehensive loss to retained earnings related to stranded tax effects resulting from the change in tax rate during fiscal year 2018.

The Company completed its analysis of the Tax Act impact during the first quarter of fiscal year 2019 with no significant adjustment to the provisional amounts previously recorded. The estimated transition tax expense recognized in fiscal year 2018 of $983.2 million was net of an $87.6 million tax benefit related to U.S. taxation of deemed foreign dividends. This benefit was reversed during fiscal year 2019 upon issuance of final regulations by the U.S. Department of Treasury, resulting in increased income tax expense and gross unrecognized tax benefits.

The remaining federal portion of the transition tax liability was $827.9 million at September 30, 2019, and will be paid over the next seven years, with 8% of the original liability payable in each of the next four years, 15% in year five, 20% in year six and 25% in year seven.

The Tax Act reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. The Company’s federal statutory rate for fiscal year 2018 was a blended rate of 24.5%, based on the pre- and post-Tax Act rates.

Prior to the Tax Act, the Company had not provided for U.S. income taxes on undistributed earnings and other outside basis differences of its non-U.S. subsidiaries as it was the Company’s intention for these tax basis differences to remain indefinitely reinvested. Following the Company’s change in policy effective January 1, 2018 to repatriate earnings of substantially all non-U.S. subsidiaries, other outside basis differences, which arose primarily from purchase accounting adjustments, undistributed earnings that are considered indefinitely reinvested and foreign earnings that are restricted by operational and regulatory requirements, remain indefinitely reinvested. These basis differences could reverse through sales of the subsidiaries or the receipt of dividends from the subsidiaries, as well as various other events, none of which are considered probable as of September 30, 2019. The Company has made no provision for U.S. income taxes on these outside basis differences, and determination of the amount of unrecognized deferred tax liability related to such basis differences is not practicable.

Taxes on income were as follows:



(in millions)
for the fiscal years ended September 30,	2019			2018			2017
Current expense
Federal	$	343.4		$	1,343.7		$	585.0
State	37.0			38.0			65.3
Non-U.S.	66.8			141.1			100.2
Deferred expense (benefit)	(4.9		)	(50.3		)	8.9
Total	$	442.3		$	1,472.5		$	759.4

The Company had a tax shortfall of $8.7 million in fiscal year 2017 associated with stock-based compensation plans, which increased the amount of income taxes that would have otherwise been payable and was reflected as a component of stockholders’ equity. Income tax effects of stock-based awards are recognized in income tax expense beginning in fiscal year 2018 in accordance with revised accounting guidance.

Income before taxes consisted of the following:



(in millions)
for the fiscal years ended September 30,	2019		2018		2017
U.S.	$	1,151.1	$	1,458.1	$	1,594.5
Non-U.S.	496.7		757.1		954.6
Total	$	1,647.8	$	2,215.2	$	2,549.1

The Company’s income in certain countries is subject to reduced tax rates due to tax rulings and incentives. The impact of the reduced rates on income tax expense was $4.1 million or $0.01 per diluted share for fiscal year 2019, $31.3 million or $0.06 per diluted share for fiscal year 2018, and $28.8 million or $0.05 per diluted share for fiscal year 2017. One tax incentive remained in effect at September 30, 2019 which will expire in December 2023.

The significant components of deferred tax assets and deferred tax liabilities were as follows:



(in millions)
as of September 30,	2019			2018
Deferred Tax Assets
Deferred compensation and benefits	$	39.7		$	33.1
Net operating loss carry-forwards	31.9			31.8
Stock-based compensation	19.6			21.9
Unrealized foreign exchange losses	11.0			3.7
Tax benefit for uncertain tax positions	8.7			10.0
Other	21.7			15.0
Total deferred tax assets	132.6			115.5
Valuation allowance	(26.9		)	(27.5		)
Deferred tax assets, net of valuation allowance	105.7			88.0
Deferred Tax Liabilities
Goodwill and other purchased intangibles	159.5			142.2
Depreciation on fixed assets	22.5			20.9
Investments in partnerships	6.6			16.4
Other	16.4			17.7
Total deferred tax liabilities	205.0			197.2
Net Deferred Tax Liability	$	99.3		$	109.2

Deferred income tax assets and liabilities that relate to the same tax jurisdiction are presented net on the consolidated balance sheets. The components of the net deferred tax liability were classified in the consolidated balance sheets as follows:



(in millions)
as of September 30,	2019		2018
Other assets	$	20.8	$	17.3
Deferred tax liabilities	120.1		126.5
Net Deferred Tax Liability	$	99.3	$	109.2

At September 30, 2019, there were $155.0 million of non-U.S. net operating loss carry-forwards, $73.7 million of which expire between fiscal years 2020 and 2038 with the remaining carry-forwards having an indefinite life. In addition, there were $34.8 million in state net operating loss carry-forwards that expire between fiscal years 2020 and 2039. A partial valuation allowance has been provided to offset the related deferred tax assets due to the uncertainty of realizing the benefit of the net operating loss carry-forwards. The valuation allowance decreased $0.6 million in fiscal year 2019 and increased $2.3 million in fiscal year 2018.

A reconciliation of the amount of tax expense at the federal statutory rate and taxes on income as reflected in the consolidated statements of income is as follows:



(in millions)
for the fiscal years ended September 30,	2019					2018					2017
Federal taxes at statutory rate	$	346.0		21.0	%	$	542.7		24.5	%	$	892.2		35.0	%
Transition tax on deemed repatriation of undistributed foreign earnings	86.0			5.2	%	983.2			44.4	%	—			—
Revaluation of net deferred tax liabilities	—			—		(53.3		)	(2.4	%)	—			—
Other Tax Act impacts	0.4			—		38.9			1.8	%	—			—
State taxes, net of federal tax effect	29.7			1.8	%	16.6			0.7	%	41.4			1.6	%
Effect of non-U.S. operations	(21.3		)	(1.3	%)	(61.9		)	(2.8	%)	(146.2		)	(5.7	%)
Effect of net (income) loss attributable to noncontrolling interests	(2.1		)	(0.1	%)	5.3			0.2	%	(32.6		)	(1.3	%)
Other	3.6			0.2	%	1.0			0.1	%	4.6			0.2	%
Tax Provision	$	442.3		26.8	%	$	1,472.5		66.5	%	$	759.4		29.8	%

Other Tax Act impacts consist primarily of foreign dividend distribution taxes and tax withholdings.

A reconciliation of the beginning and ending balances of gross unrecognized tax benefits is as follows:



(in millions)
for the fiscal years ended September 30,	2019			2018			2017
Balance at beginning of year	$	77.5		$	81.1		$	82.1
Additions for tax positions of prior years	131.8			3.6			6.6
Reductions for tax positions of prior years	(2.9		)	(6.6		)	(1.3		)
Tax positions related to the current year	10.7			11.6			11.6
Settlements with taxing authorities	(2.2		)	—			(5.2		)
Expirations of statute of limitations	(12.3		)	(12.2		)	(12.7		)
Balance at End of Year	$	202.6		$	77.5		$	81.1

If recognized, the balance, net of any deferred tax benefits, would favorably affect the Company’s effective income tax rate in future periods.

Accrued interest on uncertain tax positions at September 30, 2019 and 2018 was $11.9 million and $11.3 million, and is not presented in the unrecognized tax benefits table above. Interest expense of $0.7 million, $0.9 million and $1.6 million was recognized during fiscal years 2019, 2018 and 2017. Accrued penalties at September 30, 2019 and 2018 were insignificant.

The Company files a consolidated U.S. federal income tax return, multiple U.S. state and local income tax returns, and income tax returns in multiple non-U.S. jurisdictions. The Company is subject to examination by the taxing authorities in these jurisdictions. The Company’s major tax jurisdictions and the tax years for which the statutes of limitations have not expired are as follows: India 2003 to 2019; Canada 2011 to 2019; Hong Kong 2013 to 2019; Singapore 2014 to 2019; Luxembourg and the U.K. 2018 to 2019; U.S. federal 2016 to 2019; the States of Florida and Minnesota, and City of New York 2015 to 2019; and the States of California, Massachusetts and New York 2016 to 2019.

The Company has ongoing examinations in various stages of completion in the State of Florida, City of New York, Canada, France, Germany and India. Examination outcomes and the timing of settlements are subject to significant uncertainty. Such settlements may involve some or all of the following: the payment of additional taxes, the adjustment of deferred taxes and/or the recognition of unrecognized tax benefits. The Company has recognized a tax benefit only for those positions that meet the more-likely-than-not recognition threshold. It is reasonably possible that the total unrecognized tax benefit as of September 30, 2019 could decrease by an estimated $13.9 million within the next twelve months as a result of the expiration of statutes of limitations in the U.S. federal and certain U.S. state and local and non-U.S. tax jurisdictions, and potential settlements with U.S. states and non-U.S. taxing authorities.

Commitments and Contingencies

12 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Legal Proceedings

In 2016 and 2017, two former employees filed related class action lawsuits in the United States District Court for the Northern District of California, which were later consolidated, relating to the Franklin Templeton 401(k) Retirement Plan (“Plan”). The consolidated action named as defendants Franklin, the Plan’s fiduciary committees and certain committee members, and the Franklin Board of Directors and certain individual directors. The plaintiffs principally claimed that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act by, among other things, selecting certain mutual funds sponsored and managed by the Company as investment options for the Plan, when allegedly lower cost and better performing third-party investment options were available, and further challenged the Plan’s record keeping fees as excessive. On December 3, 2018, Franklin elected to enter into an agreement-in-principle to resolve the litigation for a cash payment of $13.9 million, which the Company accrued, and, among other Plan changes, an increase in the Company’s existing matching contribution rate from 75% to 85% for eligible participant contributions for a period of three years. On October 4, 2019, the court issued final approval of the agreement and dismissed the litigation.

The Company is from time to time involved in other litigation relating to claims arising in the normal course of business. Management is of the opinion that the ultimate resolution of such claims will not materially affect the Company’s business, financial position, results of operations or liquidity. In management’s opinion, an adequate accrual has been made as of September 30, 2019 to provide for any probable losses that may arise from such matters for which the Company could reasonably estimate an amount.

Other Commitments and Contingencies

The Company leases office space and equipment under operating leases expiring at various dates through fiscal year 2032. Lease expense was $61.7 million, $55.9 million and $56.3 million in fiscal years 2019, 2018 and 2017. Sublease income totaled $0.3 million, $0.2 million and $0.4 million in fiscal years 2019, 2018 and 2017.

Future minimum lease payments under long-term non-cancelable operating leases were as follows as of September 30, 2019:



(in millions)
for the fiscal years ending September 30,	Amount
2020	$	49.5
2021	45.3
2022	40.9
2023	39.1
2024	36.7
Thereafter	149.1
Total Minimum Lease Payments	$	360.6

Future minimum rentals to be received under non-cancelable subleases were insignificant at September 30, 2019.

While the Company has no legal or contractual obligation to do so, it routinely makes cash investments in the course of launching sponsored funds. At September 30, 2019, the Company had $267.8 million of committed capital contributions which relate to discretionary commitments to invest in sponsored funds and other investment products and entities. These unfunded commitments are not recorded in the Company’s consolidated balance sheet.

Stock-Based Compensation

12 Months Ended

Sep. 30, 2019

Share-based Compensation [Abstract]

Stock-Based Compensation

The Company’s stock-based compensation plans consist of the Amended and Restated Annual Incentive Compensation Plan (the “AIP”), the 2002 Universal Stock Incentive Plan, as amended and restated (the “USIP”) and the amended and restated Franklin Resources, Inc. 1998 Employee Stock Investment Plan (the “ESIP”). The Compensation Committee of the Board of Directors determines the terms and conditions of awards under the AIP, the USIP and the ESIP.

Stock-based compensation expenses were as follows:



(in millions)
for the fiscal years ended September 30,	2019		2018		2017
Stock and stock unit awards	$	105.7	$	111.6	$	117.0
Employee stock investment plan	5.8		6.2		6.4
Total	$	111.5	$	117.8	$	123.4

Stock and Stock Unit Awards

Under the terms of the AIP, eligible employees may receive cash, equity awards and/or mutual fund unit awards generally based on the performance of the Company and/or its funds, and the individual employee. The USIP provides for the issuance of the Company’s common stock for various stock-related awards to officers, directors and employees. There are 120.0 million shares authorized under the USIP, of which 14.3 million shares were available for grant at September 30, 2019.

Stock awards entitle holders to the right to sell the underlying shares of the Company’s common stock once the awards vest. Stock unit awards entitle holders to receive the underlying shares of common stock once the awards vest. Awards vest based on the passage of time or the achievement of predetermined Company financial performance goals.

Stock and stock unit award activity was as follows:



(shares in thousands)	Time-Based Shares		Performance- Based Shares		Total Shares		Weighted-Average Grant-Date Fair Value
for the fiscal year ended September 30, 2019	Time-Based Shares		Performance- Based Shares		Total Shares		Weighted-Average Grant-Date Fair Value
Nonvested balance at September 30, 2018	2,678		1,813		4,491		$	39.08
Granted	3,906		897		4,803		30.75
Vested	(2,347	)	(606	)	(2,953	)	35.80
Forfeited/canceled	(459	)	(250	)	(709	)	36.23
Nonvested balance at September 30, 2019	3,778		1,854		5,632		$	34.06

Total unrecognized compensation expense related to nonvested stock and stock unit awards was $131.0 million at September 30, 2019. This expense is expected to be recognized over a remaining weighted-average vesting period of 1.8 years. The weighted-average grant-date fair values of stock awards and stock unit awards granted during fiscal years 2019, 2018 and 2017 were $30.75, $42.63 and $34.23 per share. The total fair value of stock and stock unit awards vested during the same periods was $84.2 million, $91.5 million and $104.0 million.

The Company generally does not repurchase shares upon vesting of stock and stock unit awards. However, in order to pay taxes due in connection with the vesting of employee and executive officer stock and stock unit awards, shares are repurchased using a net stock issuance method.

Employee Stock Investment Plan

The ESIP allows eligible participants to buy shares of the Company’s common stock at a discount of its market value on defined dates. A total of 0.9 million shares were issued under the ESIP during fiscal year 2019, and 1.9 million shares were reserved for future issuance at September 30, 2019.

Defined Contribution Plans	12 Months Ended
Defined Contribution Plans	Sep. 30, 2019
Retirement Benefits [Abstract]
Defined Contribution Plans	Defined Contribution Plans The Company sponsors a 401(k) plan which covers substantially all U.S. employees meeting certain employment requirements. Participants may contribute up to 50% of their eligible salary and up to 100% of the cash portion of their year-end bonus, as defined by the plan and subject to Internal Revenue Code limitations, each year to the plan. The Company makes a matching contribution equal to 75% of eligible compensation contributed by participants. Under the terms of a litigation settlement, the Company will increase its matching contribution rate from 75% to 85% for a period of three years beginning January 1, 2020. See Note 14 – Commitments and Contingencies for information related to the litigation. Certain of the Company’s non-U.S. subsidiaries also sponsor defined contribution plans primarily for the purpose of providing deferred compensation incentives for employees and to comply with local regulatory requirements. The total expenses recognized for defined contribution plans were $52.2 million, $49.8 million and $45.5 million for fiscal years 2019, 2018 and 2017.

Segment and Geographic Information

12 Months Ended

Sep. 30, 2019

Segment Reporting, Measurement Disclosures [Abstract]

Segment and Geographic Information

The Company has one operating segment, investment management and related services.

Geographic information was as follows:



(in millions)
for the fiscal years ended September 30,	2019		2018		2017
Operating Revenues
United States	$	3,487.6	$	3,693.2	$	3,870.6
Luxembourg	1,533.7		1,732.5		1,654.8
Americas excluding United States	392.3		478.4		483.3
Asia-Pacific	257.0		299.7		282.6
Europe, Middle East and Africa, excluding Luxembourg	103.9		115.3		100.9
Total	$	5,774.5	$	6,319.1	$	6,392.2



(in millions)
as of September 30,	2019		2018		2017
Property and Equipment, Net
United States	$	542.8	$	465.4	$	426.1
Europe, Middle East and Africa	90.0		10.1		12.2
Asia-Pacific	40.7		42.1		60.2
Americas excluding United States	10.2		17.4		18.7
Total	$	683.7	$	535.0	$	517.2

Operating revenues are attributed to geographic areas based on the locations of the subsidiaries that provide the services, which may differ from the regions in which the related investment products are sold.

Other Income (Expenses)

12 Months Ended

Sep. 30, 2019

Other Income and Expenses [Abstract]

Other Income (Expenses)

Other income (expenses) consisted of the following:



(in millions)
for the fiscal years ended September 30,	2019			2018			2017
Investment and Other Income, Net
Dividend income	$	97.0		$	51.1		$	13.9
Interest income	31.0			76.5			74.9
Gains (losses) on investments, net	(9.7		)	6.0			23.6
Income (losses) from investments in equity method investees	(10.4		)	44.4			107.9
Gains (losses) on investments of CIPs, net	(26.3		)	(55.0		)	118.2
Rental income	19.8			15.9			11.1
Foreign currency exchange gains (losses), net	13.1			0.6			(16.0		)
Other, net	0.6			5.8			2.7
Total	115.1			145.3			336.3
Interest Expense	(24.7		)	(48.7		)	(51.5		)
Other Income, Net	$	90.4		$	96.6		$	284.8

Substantially all dividend income was generated by investments in nonconsolidated funds. Interest income was primarily generated by cash equivalents and debt securities. Gains (losses) on investments, net consists primarily of other-than-temporary impairment of investments and realized and unrealized gains (losses) on equity securities measured at fair value and trading debt securities.

There were no sales of available-for-sale securities in fiscal year 2019. Proceeds from the sale of available-for-sale securities were $85.5 million and $51.6 million in fiscal years 2018 and 2017.

Net losses recognized on equity securities measured at fair value and trading debt securities that were held by the Company at September 30, 2019 were $0.1 million, and net gains (losses) recognized on trading investment securities that were held by the Company at September 30, 2018 and 2017 were $(1.7) million and $5.0 million. Net gains (losses) recognized on investment securities of CIPs that were held at September 30, 2019, 2018 and 2017 were $1.0 million, $(24.5) million and $21.9 million.

Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component were as follows:



(in millions)	Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Unrealized Gains on Investments			Total
for the fiscal year ended September 30, 2019	Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Unrealized Gains on Investments			Total
Balance at October 1, 2018	$	(372.9	)	$	(4.2	)	$	6.5		$	(370.6	)
Adoption of new accounting guidance	—			—			(8.0		)	(8.0		)
Other comprehensive income (loss)
Other comprehensive loss before reclassifications, net of tax	(53.9		)	(2.4		)	(5.4		)	(61.7		)
Reclassifications to compensation and benefits expense, net of tax	—			0.4			—			0.4
Reclassifications to net investment and other income, net of tax	1.4			—			6.9			8.3
Total other comprehensive income (loss)	(52.5		)	(2.0		)	1.5			(53.0		)
Balance at September 30, 2019	$	(425.4	)	$	(6.2	)	$	—		$	(431.6	)



(in millions)	Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Unrealized Gains on Investments			Total
for the fiscal year ended September 30, 2018	Currency Translation Adjustments			Unrealized Losses on Defined Benefit Plans			Unrealized Gains on Investments			Total
Balance at October 1, 2017	$	(281.0	)	$	(6.0	)	$	2.2		$	(284.8	)
Adoption of new accounting guidance	—			(0.1		)	—			(0.1		)
Other comprehensive income (loss)
Other comprehensive income (loss) before reclassifications, net of tax	(85.5		)	1.5			7.3			(76.7		)
Reclassifications to compensation and benefits expense, net of tax	—			0.4			—			0.4
Reclassifications to net investment and other income, net of tax	(6.4		)	—			(3.0		)	(9.4		)
Total other comprehensive income (loss)	(91.9		)	1.9			4.3			(85.7		)
Balance at September 30, 2018	$	(372.9	)	$	(4.2	)	$	6.5		$	(370.6	)

Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Business

Business. Franklin Resources, Inc. (“Franklin”) is a holding company that, together with its subsidiaries (collectively, the “Company”), operates as Franklin Templeton. The Company provides investment management and related services in jurisdictions worldwide for investors in investment products which include sponsored funds, as well as institutional and high-net-worth separate accounts. In addition to investment management, the Company’s services include fund administration, sales and distribution, and shareholder servicing.

Basis of Presentation

Basis of Presentation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Management believes that the accounting estimates are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual amounts may differ from these estimates. Certain comparative amounts for prior fiscal years have been reclassified to conform to the financial statement presentation as of and for the fiscal year ended September 30, 2019 (“fiscal year 2019”).

Consolidation

Consolidation. The consolidated financial statements include the accounts of Franklin and its subsidiaries and consolidated investment products (“CIPs”) in which it has a controlling financial interest. The Company has a controlling financial interest when it owns a majority of the voting interest in a voting interest entity (“VOE”) or is the primary beneficiary of a variable interest entity (“VIE”). Intercompany accounts and transactions have been eliminated.

A VIE is an entity in which the equity investment holders have not contributed sufficient capital to finance its activities or do not have defined rights and obligations normally associated with an equity investment. Substantially all of the Company’s VIEs are investment products, and its variable interests consist of its equity ownership interests in and investment management fees earned from these products.

The Company is the primary beneficiary of a VIE if it has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE. Investment management fees earned from VIEs are excluded from the primary beneficiary determination if they are deemed to be at market and commensurate with service. The key estimates and assumptions used in the analyses include the amount of assets under management (“AUM”) and the life of the investment product.

Related Parties

Related Parties include sponsored funds and equity method investees. A substantial amount of the Company’s operating revenues and receivables are from related parties.

Earnings per Share

Earnings per Share. Basic and diluted earnings per share are computed using the two-class method, which considers participating securities as a separate class of shares. The Company’s participating securities consist of its nonvested stock and stock unit awards that contain nonforfeitable rights to dividends or dividend equivalents. Basic earnings per share is computed by dividing net income available to the Company’s common stockholders, adjusted to exclude earnings allocated to participating securities, by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period.

Business combinations