BEN Franklin Resources, Inc.

Management Discussion

• Operating income decreased $128.2 million for the three months ended June 30, 2019, as compared to the same period in the prior fiscal year, as operating revenues decreased 5% and operating expenses increased 4%. Net income attributable to Franklin Resources, Inc. decreased $156.1 million primarily due to the decrease in operating income and an $86.4 million revision to the estimated tax charge upon issuance of final regulations related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), partially offset by higher investment and other income, net, less the portion attributable to noncontrolling interests.
• Operating income decreased $474.0 million for the nine months ended June 30, 2019, as compared to the same period in the prior fiscal year, as operating revenues decreased 10% and operating expenses were unchanged. Net income attributable to Franklin Resources, Inc. increased $627.4 million for the nine months ended June 30, 2019 primarily due to a prior-year estimated income tax charge of $1.1 billion resulting from enactment of the Tax Act, partially offset by the decrease in operating income.
• Diluted earnings per share decreased for the three months ended June 30, 2019 and increased for the nine-month period, consistent with the changes in net income and the impacts of 6% and 7% decreases in diluted average common shares outstanding primarily resulting from repurchases of shares of our common stock during the twelve-month period ended June 30, 2019.