| As of September 30, 2011, cash and cash equivalents and investments were $9.4 billion versus $6.8 billion as of September 30, 2010. The reported quarter included $0.9 billion related to consolidated variable interest entities as a result of new accounting guidance adopted effective October 1, 2010. Total stockholders’ equity was $9.1 billion as of September 30, 2011 versus $7.7 billion as of September 30, 2010.
AUM by the company’s subsidiaries was $659.9 billion (in line with the Zacks Digest average) as of September 30, 2011, down $74.3 billion or 10.0% sequentially, during the quarter. The decline was owing to $87.6 billion in market depreciation. AUM increased $15.0 billion or 2.0% y/y, primarily due to $36.4 billion of net new flows and $12.5 billion from acquisitions, partially offset by $30.5 billion in market depreciation.
Outlook: Fundamentally, some of the firms prefer Franklin’s positioning with a diverse AUM base that overall generates equity-like fee rates due to its material international exposure. With a recognized presence in numerous international markets, the company is extremely well positioned for demographic trends that clearly indicate growing demand for investment management products and services. In the near term, the firms are concerned about global macroeconomic trends as well as the company’s position in the municipal bond market.
Share Repurchase Program
The company had 217.7 million shares of common stock outstanding as of September 30, 2011, compared with 224.0 million shares outstanding as of September 30, 2010. During the quarter ended on September 30, 2011, the company repurchased 3.1 million shares of its common stock for a total cost of $337.1 million.
On December 16, 2010, the company's Board of Directors authorized the company to purchase, from time to time, up to an aggregate of 10.0 million shares of its common stock in either open market or off-market transactions. The stock repurchase program is not subject to an expiration date. The new authorization is in addition to the existing authorization, of which approximately 2.2 million shares remained available for repurchase as of November 30, 2010.
On January 24, 2008, Franklin’s Board of Directors authorized the company to purchase, from time to time, up to an aggregate of 10 million shares of its common stock in either open market or off-market transactions. The size and timing of these purchases will depend on price, market and business conditions, and other factors. The stock repurchase program is not subject to an expiration date.
Dividend
On October 14, 2011, Franklin Resources paid a quarterly cash dividend of $0.25 per share to stockholders of record holding shares of common stock at the close of business on September 30, 2011.
On July 15, 2011, Franklin Resources paid a quarterly cash dividend of $0.25 per share to stockholders of record holding shares of common stock at the close of business on June 30, 2011.
Outlook: Some firms expect Franklin to continue returning capital to shareholders in the form of dividends and share buybacks. They estimate a dividend increase in FY12 and expect the company to be active in repurchasing shares.
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