FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to______________ Commission File No. 1-9318 FRANKLIN RESOURCES, INC. (Exact name of registrant as specified in its charter) Delaware 13-2670991 -------- ----------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 777 Mariners Island Blvd., San Mateo, CA 94404 (Address of Principal Executive Offices) (Zip Code) (415) 312-2000 (Registrant's telephone number, including area code) ___________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ______ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES _____ NO ______ APPLICABLE ONLY TO CORPORATE ISSUERS: Outstanding: 81,424,533 shares, common stock, par value $.10 per share at July 31, 1996 Exhibit index See Page _____ PART I -FINANCIAL INFORMATION Item 1. Condensed Financial Statements In the opinion of management, all appropriate adjustments necessary to a fair presentation of the results of operations have been made for the periods shown. All adjustments are of a normal recurring nature. Certain prior period amounts have been reclassified to conform to current period presentation. These financial statements should be read in conjunction with the Company's audited financial statements for the fiscal year ended September 30, 1995. Franklin Resources, Inc. Consolidated Statements of Income Unaudited Three months ended Nine months ended June 30 June 30 (Dollars in thousands, except per share data) 1996 1995 1996 1995 Operating revenues: Investment management fees $227,633 $187,114 $644,604 $534,270 Underwriting and distribution fees 143,649 115,691 415,595 331,630 Transfer, trust and related fees 23,569 16,747 67,589 48,210 Banking/finance, net and other 551 274 4,029 7,460 Total operating revenues 395,402 319,826 1,131,817 921,570 Operating expenses: Underwriting and distribution 144,137 107,108 409,369 300,838 General and administrative 121,380 98,097 349,556 279,438 Selling 18,118 15,229 50,929 53,350 Goodwill amortization 4,529 4,582 13,900 13,792 Total operating expenses 288,164 225,016 823,754 647,418 Operating income 107,238 94,810 308,063 274,152 Other income/(expense): Investment and other income 16,611 9,140 37,265 21,166 Interest expense (2,782) (2,874) (8,824) (9,177) Other income/(expense), net 13,829 6,266 28,441 11,989 Income before taxes on income 121,067 101,076 336,504 286,141 Taxes on income 40,001 32,047 106,275 90,768 Net income $81,066 $69,029 $230,229 $195,373 Earnings per share: Primary $0.98 $0.84 $2.77 $2.36 Fully diluted $0.97 $0.83 $2.76 $2.35 Dividends per share $0.11 $0.10 $0.33 $0.30 The accompanying notes are an integral part of these financial statements. Franklin Resources, Inc. Consolidated Balance Sheets Unaudited June September 30 30 (Dollars in thousands) 1996 1995 ASSETS: Current assets: Cash and cash equivalents $354,597 $246,184 Receivables: Fees from Franklin/Templeton Group 127,905 110,972 Other 30,419 38,407 Investment securities, available for sale 192,929 208,478 Prepaid expenses and other 9,833 7,167 Total current assets 715,683 611,208 Banking/finance group assets: Cash and cash equivalents 28,729 15,515 Loans receivable, net 367,958 450,013 Investment securities, available for sale 23,008 23,655 Other assets 5,676 6,876 Total banking/finance group assets 425,371 496,059 Other Assets: Investments: Investment securities, available for sale 20,715 15,291 Real Estate 8,804 8,826 Deferred costs 34,187 17,703 Premises and equipment, net 142,663 118,628 Goodwill, net of $69,571 and $56,375 amortization, respectively 646,438 660,363 Receivable from banking/finance group 248,282 302,273 Other assets 15,227 14,330 Total other assets 1,116,316 1,137,414 Total assets $2,257,370 $2,244,681 The accompanying notes are an integral part of these financial statements. Franklin Resources, Inc. Consolidated Balance Sheets Unaudited June September 30 30 (Dollars in thousands) 1996 1995 LIABILITIES: Current liabilities: Trade payables and accrued expenses $129,602 $117,744 Debt payable within one year 374 87,204 Dividends payable 8,980 8,123 Total current liabilities 138,956 213,071 Banking/finance group liabilities: Deposits of account holders: Interest bearing 135,313 159,627 Non-interest bearing 10,217 9,747 Payable to parent 248,282 302,273 Other liabilities 2,384 2,076 Total banking/finance group liabilities 396,196 473,723 Other Liabilities: Long-term debt 379,619 382,367 Other liabilities 16,808 14,477 Total other liabilities 396,427 396,844 Total liabilities 931,579 1,083,638 Stockholders' equity: Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued or outstanding Common stock, $.10 par value; 500,000,000 shares authorized; 82,264,982 shares issued; 80,345,492 and 80,939,611 shares outstanding, respectively 8,226 8,226 Capital in excess of par value 98,933 92,190 Retained earnings 1,294,750 1,091,204 Less cost of treasury stock (86,577) (48,519) Other 10,459 17,942 Total stockholders' equity 1,325,791 1,161,043 Total liabilities and stockholders' equity $2,257,370 $2,244,681 The accompanying notes are an integral part of these financial statements. Franklin Resources, Inc. Consolidated Statements of Cash Flows Unaudited Nine months ended June 30 (Dollars in thousands) 1996 1995 Net income $230,229 $195,373 Adjustments to reconcile net income to net cash provided by operating activities (Increase)/decrease in receivables, prepaid expenses and other (3,791) 2,214 Increase/(decrease) in trade payables, accrued expenses and other 30,475 (19,309) Depreciation and amortization 29,962 30,497 Gains on disposition of assets (13,418) (2,604) Net cash provided by operating activities 273,457 206,171 Sales/(purchases) of Franklin Templeton funds, net 11,543 (21,057) Purchases of banking/finance investment portfolio (38,605) (100,201) Liquidations of banking/finance investment portfolio 39,284 104,283 Originations of banking/finance loans receivable (21,382) (199,438) Collections of banking/finance loans receivable 90,201 110,355 Purchases of other investments, net (4,949) (1,754) Purchases of premises and equipment and other (39,977) (26,521) Net cash provided by (used in) investing activities 36,115 (134,333) Decrease in deposits of bank account holders (23,845) (7,016) Exercise of common stock options 1,167 - Dividends paid on common stock (25,826) (23,592) Purchases of treasury stock (50,682) (41,506) Issuance of debt 72,701 49,201 Repayment of debt (161,460) (34,833) Net cash used in financing activities (187,945) (57,746) Increase (decrease) in cash and cash equivalents 121,627 14,092 Cash and cash equivalents, beginning of the period 261,699 210,376 Cash and cash equivalents, end of the period $383,326 $224,468 Supplemental disclosure of non-cash information: Value of common stock issued in other transactions $17,675 $17,940 The accompanying notes are an integral part of these financial statements. Note to Condensed Consolidated Financial Statements 1. Debt The Company issued $60 million in medium-term notes during March 1996, maturing March 2001 with coupon rates of 6.56%. The proceeds were used to retire $20 million in medium-term notes that had matured and reduce outstanding short-term commercial paper. In June 1996, the Company retired an additional $20 million in medium-term notes that had matured. The Company's overall effective interest rate at June 30, 1996 was 6.48% on approximately $380 million of outstanding commercial paper, medium-term notes and subordinated debentures. In July 1996, the Company issued an additional $30 million in medium- term notes maturing July 1998 with coupon rates from 6.62% to 6.63% in order to retire $10 million in medium-term notes that had matured in July 1996 and to replace $20 million in medium-term notes that had matured in June 1996. The Company has entered into interest rate swap agreements to exchange variable-rate interest payment obligations for fixed-rate interest payment obligations without the exchange of underlying principal amounts. At June 30, 1996, the Company had swap agreements outstanding with an aggregate notional amount of $125 million, maturing August through September 1999, under which the Company paid fixed rates of interest ranging from 6.24% to 6.451%. These financial instruments are placed with major financial institutions. The credit worthiness of the counterparties is subject to continuing review and full performance is anticipated. Any potential loss from failure of the counterparties to perform is deemed to be immaterial. 2. Heine Merger On June 25, 1996, the Company and Heine Securities Corporation, Inc. ("Heine"), the investment advisor to Mutual Series Fund Inc. ("Mutual") announced they have agreed to a merger of the businesses of Heine and Franklin. The transaction has received certain government regulatory approvals and has been approved by the board of Mutual. It is subject to approval by the shareholders of Mutual at a meeting scheduled to be held on October 25, 1996. The transaction has an aggregate value of approximately $610 million. Heine Securities will receive $550 million in cash, along with 1.1 million shares of Franklin Resources, Inc. common stock which may not be sold for two years and which are subject to other restrictions. Heine will initially invest $150 million of the cash proceeds in Mutual with a minimum balance of $100 million for five years. The Company expects to finance the cash payment from cash and securities on hand, as well as its available commercial paper and medium-term note facilities. Heine Securities Corporation had approximately $17 billion under management as of June 30, 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL Franklin Resources, Inc. and its majority-owned subsidiaries (the "Company") derives substantially all of its revenue and net income from providing investment management, administration, distribution and related services to the Franklin Templeton funds, managed accounts and other investment products. The Company's revenues are derived largely from the amount and composition of assets under management. The Company has a diversified base of assets under management and a full range of investment management products and services to meet the needs of a variety of individuals and institutions. The Company's assets under management were $147.6 billion at June 30, 1996, an increase of $16.8 billion (13%) from September 30, 1995 and an increase of $21.7 billion (17%) from June 30, 1995. These increases were the result of both net sales and market appreciation. The Company operates in five geographic areas of the world: the United States, Canada, the Bahamas, Europe and Asia/Pacific. At June 30, 1996, the Company had offices in 18 countries. The Company continues to explore opportunities globally to increase its investment research capabilities and to support global distribution channels. I. Material Changes in Results of Operations Results of operations Three months ended Nine months ended June 30 % June 30 % (In millions) 1996 1995 Change 1996 1995 Change Net Income $81.1 $69.0 18% $230.2 $195.4 18% Earnings per share Primary $.98 $.84 17% $2.77 $2.36 17% Fully diluted $.97 $.83 17% $2.76 $2.35 17% Operating margin 27% 30% 27% 30% The increases in net income were primarily due to increases in investment management fees as a result of higher average assets under management and capital gains realized during the current period. Operating expenses increased at a higher rate than operating revenues resulting in a 3% decline in the Company's operating margins in the periods under review. Previously reported operating margins have been restated for all periods to conform to the new income statement presentations. The increases in operating expenses were primarily due to increases in underwriting and distribution expenses which increased approximately 35% in the periods under review. Operating revenues will continue to be dependent upon the amount and composition of assets under management, mutual fund sales and the number of mutual fund investors and institutional clients. Operating expenses are expected to increase with the Company's ongoing expansion, the increase in competition and the Company's commitment to improve its products and services. The contributions to the Company's operating profit from its non-U.S. operations remained unchanged from the previous quarter. These results will continue to be dependent on the amount and composition of assets managed by the Company's non-U.S. subsidiaries principally in Canada, the Bahamas and the Asia/Pacific region. There have been no significant changes to the Company's limited exposure to fluctuations in global currency markets. Assets under management* As of June 30 % (In billions) 1996 1995 Change Franklin Templeton Group: Fixed income funds: Tax-free $41.7 $39.9 5% U.S. government (primarily GNMA's) 15.5 16.2 (4%) Taxable and tax-free money funds 2.8 2.6 8% Global/international 2.9 2.8 4% Total fixed-income funds 62.9 61.5 2% Equity and income funds: Global/international 45.3 33.5 35% U.S. equity/income 18.8 15.1 24% Total equity and income funds 64.1 48.6 32% Total Franklin Templeton fund assets 127.0 110.1 15% Franklin Templeton institutional assets 20.6 15.8 30% Total Franklin Templeton Group $147.6 $125.9 17% *Certain prior year amounts have been reclassified to conform to current year presentation. Changes in assets under management Three months ended Nine months ended June 30 % June 30 % (In billions) 1996 1995 Change 1996 1995 Change Assets under management - beginning $141.4 $118.8 $130.8 $118.2 Sales & reinvestments 9.9 7.0 41% 27.2 21.1 29% Redemptions (5.6) (5.3) 6% (15.6) (17.4) (10%) Market appreciation/ (depreciation) 1.9 5.4 (65%) 5.2 (4.0) 30% Assets under management - ending $147.6 $125.9 17% $147.6 $125.9 17% Average assets under management $144.7 $122.8 18% $138.6 $118.9 17% Fixed-income funds represent 43% of assets under management as of June 30, 1996, down from 49% a year ago. This trend generally reflects investors' preference for equity funds and their relatively higher level of market appreciation during the periods under review. Equity and income funds represent 43% of assets under management as of June 30, 1996, up from 39% a year ago. Global/international equity funds' assets under management were up 35% from levels a year ago. U.S. equity/income funds increased 24% from levels a year ago. Both trends reflect increased sales and market appreciation. Institutional assets represent 14% of assets under management as of June 30, 1996 up from 13% a year ago. This increase resulted from an increase in the number of clients as well as additional investments from existing clients and market appreciation. The Company is strongly committed to the institutional business and intends to continue the expansion of the services it provides in this area. Operating revenue Three months ended Nine months ended June 30 % June 30 % (In millions) 1996 1995 Change 1996 1995 Change Investment management fees $227.6 $187.1 22% $644.6 $534.3 21% Underwriting and distribution fees 143.6 115.7 24% 415.6 331.6 25% Transfer, trust and related fees 23.6 16.7 41% 67.6 48.2 40% Banking/finance, net and other .6 .3 100% 4.0 7.5 (47%) Total operating revenues $395.4 $319.8 24% $1,131.8 $921.6 23% The Company's revenues from investment management fees are derived primarily from fixed-fee arrangements based upon the level of assets under management with open-end and closed-end investment companies, managed accounts and other investment products. There have been no significant changes in the management fee structures for the Franklin Templeton Group in the periods under review. Investment management fees increased primarily due to 18% and 17% increases in average assets under management during the three-and nine-month periods, respectively. The relatively higher growth rate of global equity fund assets, which generally have higher fee rates than fixed-income fund assets, also contributed to the trends during the periods. Underwriting and distribution fees include sales commission and distribution fee revenues earned primarily from fund sales. In the periods under review, the increase in underwriting and distribution fees from mutual fund sales was partially offset by a decrease in the commissions earned on annuity products due to a change in the fee structure effective September 1, 1995. Transfer, trust and related fees are generally fixed charges per account which vary with the particular type of fund and the service being rendered. Transfer, trust and related fees increased in part as a result of a 15% increase in retail fund shareholder accounts to 5.4 million from 4.7 million a year ago. Also, effective July 1, 1995, approximately 85 of the Company's U.S. mutual funds consisting of approximately 2.3 million shareholder accounts implemented an average annual fee increase of $4 per shareholder account. Banking/finance, net and other Three months ended Nine months ended June 30 % June 30 % (In millions) 1996 1995 Change 1996 1995 Change Revenues $11.5 $13.4 (14%) $36.6 $40.8 (10%) Provision for loan losses (4.8) (5.3) (9%) (13.2) (12.3) 7% Interest expense (6.1) (7.8) (22%) (19.4) (21.0) (8%) Total banking,finance, net and other $.6 $.3 100% $4.0 $7.5 (47%) The Company substantially increased its auto loan portfolio during fiscal year 1994 as it expanded this business activity. Because a substantial portion of the portfolio was new, the impact of delinquency and loss trends was not fully reflected in the financial performance of the Company until fiscal year 1995. As the Company has expanded its auto loan financing business, it has concurrently strengthened its collection capabilities, policies and procedures, as well as its underwriting criteria and its overall management team. Management is monitoring the results of its increased efforts in the credit and collection areas. Compared to the corresponding three-month period in the prior year, banking/finance, net and other revenues increased principally due to decreases in the provision for loan losses and interest expense attributable to the banking/finance group. Revenues decreased principally due to a 18% decrease in loans outstanding during the period. Provision for loan losses decreased due to a 4% decrease in delinquencies. Interest expense during the period decreased due to reduced borrowings by the banking/finance group from the parent as a result of net paydowns on dealer auto loans. Compared to the nine-month period in the prior year, banking/finance, net and other revenues declined due to a decrease in revenue as a result of lower average loan balances and an increase in the provision for loan losses as a result of increased delinquency and charge-off rates compared to the same period a year ago. Operating expenses Three months ended Nine months ended June 30 % June 30 % (In millions) 1996 1995 Change 1996 1995 Change Underwriting and distribution $144.1 $107.1 35% $409.4 $300.8 36% General and administrative 121.4 98.1 24% 349.6 279.4 25% Selling 18.1 15.2 19% 50.9 53.4 (5%) Goodwill amortization 4.6 4.6 -% 13.9 13.8 1% Total operating expenses $288.2 $225.0 28% $823.8 $647.4 27% Increases in operating expenses principally resulted from an increase in underwriting and distribution costs as well as the general expansion of the Company's business. Underwriting and distribution include sales commissions and distribution fees paid to third party intermediaries. During the third quarter of the previous fiscal year, many of the U.S. Franklin and Templeton funds introduced a new class of shares, Class II shares, which pay brokers a sales commission and distribution fees that are only partially recovered by the Company through distribution fee revenues. During the three-and nine-month periods under review, distribution expenses have grown at a faster rate than distribution revenues because of the relatively higher growth in the sales of Class II shares and similar products sold primarily in Canada. While Class II shares have increased the Company's distribution expenses and utilized the Company's capital resources over the short term, the Company believes that the new class of shares will result in an overall increase in assets under management by expanding distribution of fund shares. Sales of Class II shares represented 13% of the Company's long-term U.S. mutual fund sales during the first nine months of 1996. The level of underwriting and distribution expenses can be expected to vary with the level of sales, the level of assets under management and the composition of products sold. General and administrative expenses increased during the period due to higher employment, technology and facilities costs related to the expansion of the Company's business. Employee count increased approximately 8% from June 30, 1995 to over 4,800 at June 30, 1996. Employment costs represent approximately 30% of operating expenses during the three-and nine-month periods ended June 30, 1996 and represent approximately 90% and 85% of the increases in general and administrative expenses during the three-and nine-month periods, respectively. Employment costs include incentive-based compensation which will continue to be dependent upon changes in operating profits. Changes in selling expense during the comparative three-and nine-month periods were due mainly to periodic variations in media advertising and marketing campaigns. Other income/(expense) Three months ended Nine months ended June 30 % June 30 % (In millions) 1996 1995 Change 1996 1995 Change Investment and other income $16.6 $9.1 82% $37.2 $21.2 75% Interest expense (2.8) (2.8) -% (8.8) (9.2) (4%) Other income (expense), net $13.8 $6.3 119% $28.4 $12.0 137% The increases in investment income resulted from an increase in the average levels of interest-bearing assets invested, as well as $5.7 million and $13.4 million of capital gains realized during the three- and nine-month periods, respectively. The Company's overall effective interest rate at June 30, 1996 was 6.48% on approximately $380 million of outstanding commercial paper, medium-term notes and subordinated debentures as compared to 6.27% on $478 million of debt outstanding at June 30, 1995. The Company has fixed the interest rates it pays on 99% of its outstanding debt through its medium-term note program, its subordinated debentures and interest rate swap agreements. The increase in taxes on income is primarily attributable to the increase in pre-tax income. II. Material Changes in Financial Condition, Liquidity and Capital Resources Selected balance sheet items As of As of June 30 September 30 % (In millions) 1996 1995 Change Banking/finance loans receivable, net $368.0 $450.0 (18%) Receivable from the banking/finance group $248.3 $302.3 (18%) Deferred costs $34.2 $17.7 93% Debt payable within one year $.4 $87.2 (100%) Interest bearing deposits of bank account holders $135.3 $159.6 (15%) At June 30, 1996, banking/finance loans receivable, net decreased due to net paydowns and a decrease in funding of new auto loans as a result of more stringent credit requirements. The proceeds from net paydowns of loans were used to reduce the receivable from the banking/finance group. Deferred costs increased principally due to an increase in deferred commissions on sale of Canada-based funds and Class II shares. Debt payable within one year decreased as a result of the Company using the proceeds from a $40 million issuance of medium-term notes and approximately $47 million in cash from operations and sales of investments to reduce outstanding short-term commercial paper. Both interest bearing and non-interest bearing deposits are gathered for purposes of funding loans and purchasing securities. The decrease in interest bearing deposits was a result of decreased funding needs due to the sale of bank credit card receivables and the paydown of auto loan receivables. Selected cash flow items Nine months ended June 30 (In millions) 1996 1995 Cash flows from operating activities $273.5 $206.2 Cash flows from investing activities $36.1 ($134.3) Cash flows from financing activities ($187.9) ($57.7) The increase in cash flows from operating activities was primarily the result of an increase in net income and an increase in the net change in trade payables and accrued expenses. The cash flows from investing and financing activities during the period were affected primarily by the decrease in the Company's funding of auto and credit card loans of the banking/finance group, purchases of premises and equipment, repayment of debt, decrease in deposits of bank account holders and purchases of Company shares. The Company continues to fund these activities primarily from operating cash flows while utilizing its commercial paper and medium-term note facilities when appropriate. During the nine-month period ended June 30, 1996, the Company purchased 954,755 Franklin Resources, Inc. shares for $50.7 million. On March 14, 1996, the Board of Directors of the Company authorized the purchase of up to an additional 3,000,000 shares under its repurchase program. At June 30, 1996, the Company had 3,914,511 shares available under its authorized repurchase program. The Company will continue from time to time to purchase its own shares in the open market and in private transactions when it believes the market price of its shares merits such action. Distribution of Class II shares has required the Company to advance a one percent dealer commission which is expected to be recouped substantially during the subsequent twelve-month period primarily through a .75% and .50% asset based charge on equity and fixed income funds, respectively. The 1% dealer commission has been deferred and amortized on a straight-line basis over the eighteen-month contingent deferred sales charge period. The Company has funded these advances through operating cash flows and existing debt facilities. The Company anticipates increased sales of Class II shares which will result in increased advances of dealer commissions. At June 30, 1996, the Company held liquid assets of $757.6 million, including $383.3 million in cash and cash equivalents as compared to $643.2 million, including $261.7 million in cash and cash equivalents at September 30, 1995, respectively. FRANKLIN RESOURCES, INC. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed as part of the report: Exhibit 3(i)(a) Registrant's Certificate of Incorporation, as filed November 28, 1969, incorporated by reference to Exhibit (3)(i) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 (the "1994 Annual Report") Exhibit 3(i)(b) Registrant's Certificate of Amendment of Certificate of Incorporation, as filed March 1, 1985, incorporated by reference to Exhibit (3)(ii) to the 1994 Annual Report Exhibit 3(i)(c) Registrant's Certificate of Amendment of Certificate of Incorporation, as filed April 1, 1987, incorporated by reference to Exhibit (3)(iii) to the 1994 Annual Report Exhibit 3(i)(d) Registrant's Certificate of Amendment of Certificate of Incorporation, as filed February 2, 1994, incorporated by reference to Exhibit (3)(iv) to the 1994 Annual Report Exhibit (3)(ii) Registrant's By-Laws are incorporated by reference to Exhibit 3(v) to Registrant's Form 10-Q for the Quarterly Period ended December 31, 1994. Exhibit 10.1 Representative WRAP Account Supplement to Dealer's Agreement with Franklin/Templeton Distributors, Inc. Exhibit 10.2 Representative Master Custody Agreement between Bank of New York and Franklin/Templeton funds. Exhibit 10.3 Representative Management Agreement between Franklin Advisory Services, Inc. and certain Franklin funds. Exhibit 10.4 Amendment to Representative Investment Management Agreement between Templeton Global Strategy SICAV and Franklin Advisers, Inc. Exhibit 10.5 Representative Investment Management Agreement between Templeton Global Investment Trust and Templeton Investment Counsel, Inc. Exhibit 11 Computations of per share earnings. Exhibit 12. Computations of ratios of earnings to fixed charges Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K: (i) Form 8-K dated April 26, 1996 reporting under Item 5 Other Events the filing of an earnings press release by the Company on April 25, 1996 and including said press release as an Exhibit under Item 7 Financial Statements and Exhibits. (ii) Form 8-K dated June 25, 1996 as amended by Form 8-K/A dated June 26, 1996 reporting under Item 5 Other Events the filing of an Agreement to Merge the Businesses of Heine Securities Corporation, Elmore Securities Corporation and Franklin Resources, Inc., and the accompanying press release issued June 25, 1996 by the Company and including said Agreement and press release as an Exhibit under Item 7 Financial Statements and Exhibits. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FRANKLIN RESOURCES, INC. Registrant Date: August 14, 1996 /S/ Martin L. Flanagan --------------------------- MARTIN L. FLANAGAN Senior Vice President, Treasurer and Chief Financial Officer INDEX TO EXHIBITS Exhibit Exhibit 3(i)(a) Registrant's Certificate of Incorporation, as filed November 28, 1969, incorporated by reference to Exhibit (3)(i) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 (the "1994 Annual Report") Exhibit 3(i)(b) Registrant's Certificate of Amendment of Certificate of Incorporation, as filed March 1, 1985, incorporated by reference to Exhibit (3)(ii) to the 1994 Annual Report Exhibit 3(i)(c) Registrant's Certificate of Amendment of Certificate of Incorporation, as filed April 1, 1987, incorporated by reference to Exhibit (3)(iii) to the 1994 Annual Report Exhibit 3(i)(d) Registrant's Certificate of Amendment of Certificate of Incorporation, as filed February 2, 1994, incorporated by reference to Exhibit (3)(iv) to the 1994 Annual Report Exhibit (3)(ii) Registrant's By-Laws are incorporated by reference to Exhibit 3(v) to Registrant's Form 10-Q for the Quarterly Period ended December 31, 1994. Exhibit 10.1 Representative WRAP Account Supplement to Dealer's Agreement with Franklin/Templeton Distributors, Inc. Exhibit 10.2 Representative Master Custody Agreement between Bank of New York and Franklin/Templeton funds. Exhibit 10.3 Representative Management Agreement between Franklin Advisory Services, Inc. and certain Franklin funds. Exhibit 10.4 Amendment to Representative Investment Management Agreement between Templeton Global Strategy SICAV and Franklin Advisers, Inc. Exhibit 10.5 Representative Investment Management Agreement between Templeton Global Investment Trust and Templeton Investment Counsel, Inc. Exhibit 11 Computations of per share earnings. Exhibit 12. Computations of ratios of earnings to fixed charges Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K: (i) Form 8-K dated April 26, 1996 reporting under Item 5 Other Events the filing of an earnings press release by the Company on April 25, 1996 and including said press release as an Exhibit under Item 7 Financial Statements and Exhibits. (ii) Form 8-K dated June 25, 1996 as amended by Form 8-K/A dated June 26, 1996 reporting under Item 5 Other Events the filing of an Agreement to Merge the Businesses of Heine Securities Corporation, Elmore Securities Corporation and Franklin Resources, Inc., and the accompanying press release issued June 25, 1996 by the Company and including said Agreement and press release as an Exhibit under Item 7 Financial Statements and Exhibits.