富蘭克林資源 (BEN) 2005 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen.

My name is Brian and I will be your conference facilitator today.

At this time, I would like to welcome everyone to the Franklin Resources quarterly analysts' conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions).

I will now turn the conference over to Mr. Greg Johnson.

You may begin your conference, sir.

Thank you and good afternoon.

This is Greg Johnson, Chief Executive Officer of Franklin Resources and joining me today is Jim Baio, our CFO.

With that, I'm happy to be able to share with you terrific results for the quarter, but first let me direct you to our forward-looking statement.

There's a copy of that in our 10-K and our most recent 10-Q, but just a point or two that I would like to address, a subset of which states forward-looking statements involve a number of risks, uncertainties and other important factors that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements which may be discussed here today.

First looking at the assets under management, we are pleased to see a 6% rise from the prior quarter to 453 billion from 425.

The winds were clearly at our back in the last quarter, with the EPA rising over the three-month period 10.5% and the overall S&P and Dow about 3.5%.

Looking at the assets by the various groups, Franklin reached 186.7 billion, Templeton, 166 billion.

The trend towards equity and hybrid continued with equity growing at just over 58% from 57 in the prior quarter, fixed income dropping from 24.5% of assets down to 23.2, hybrid increasing from 17.2 to 17.3.

Looking at the flows for the Company overall, $8 billion, which was just about a 4% increase from the prior quarter.

We benefited from asset appreciation, as I mentioned, 20.3 billion overall for the Company.

Gross sales were up about 6% to 31.5 billion, up 35% from the prior year.

Redemptions increased 6.8% to 23.5 for net sales of 8 billion or a 4% increase.

Looking at the flow detail between equity and fixed income, equity flows totaled 2.8 versus 3.8 in the prior period and of the total of 20 billion in appreciation, 18.4 was from equity.

On the fixed income side, we saw an increase in net sales from 1.4 to 1.6 and had a slight depreciation of $100 million of the asset base quarter to quarter.

Looking at it between global and domestic, global international equity decreased from 3.6 to 2.8.

Domestic equity from 200 million of inflows to 100 million in redemption and hybrid net with the Franklin Income Fund continued to grow from 2.7 to 3.5 billion.

Tax-frees turned in their best quarter in awhile with net (technical difficulty) of approximately 600 million, rising from 300 million and taxable has remained fairly consistent, right around 1 billion in net flows.

The investment performance again overall very strong and consistent across the group with over 70% of the long-term assets in the top two quartiles for the one, three, five and ten-year period.

A taxable fixed tax-free continued to perform extremely strong as well, specifically with some of the funds.

Templeton Growth Fund ranked in the top third for the one, three, five and 10-year.

The Templeton Global Bond Fund in the top quartile, qualified, ranked in the top quartile for one, three, five and 10, and the Franklin Income Fund along with the federal and Caltex refunds continued to have very strong relative performance.

I will now turn it over to Jim Baio with the operating results.

Thanks, Greg and hello, everyone.

Take a look and see how those business activities translated into our financial results, and just starting with a couple of the highlights, starting with operating revenues.

For the quarter, operating revenues were 1,163,000,000, an increase of 5% over last quarter and a 32% increase over the same period a year ago.

Then looking at the bottom line, net income for the quarter, $335 million, a 28% increase over last quarter.

And for the full fiscal year, net income was $1,058,000,000, a 50% increase over 2004.

So with that as some background, we'll look at some details and add a little color for you.

And starting with operating revenues, our investment management fees were $655 million, up 2% over the last quarter.

And you'll recall last quarter, we had performance fees in our operating investment management fees which drove our effective fee rate up to 61.7 basis points.

This quarter, we did not have those performance fees and so our effective fee was 59.7 basis points, but still a nice increase over the second quarter's 58.2.

And that increase is really just due to the shift in mix and of course the higher assets.

The underwriting and distribution revenues were 427 million, a 10% increase.

You'll see an uptick in our margin, mostly this is for a couple of reasons.

One was a product merger that put one fund that didn't have a (indiscernible) fee into another that did.

And that was in lieu of a different fee, so no real impact to the Company, although that margin looks a little bit better.

And then most of the rest of the increase in the margin was just due to the sales and product mix.

Shareholder servicing fees were $62 million, a decrease of 2.9%.

And as you know, we purge our U.S. accounts, our inactive accounts, during this quarter and that accounts for the decrease in that line item.

The rest of the revenue section did not have very much of a dollar impact and so total revenues then, as I say, 1,163,000,000, up 5% over the prior quarter.

Turning then to operating expenses, the comp and benefit line is down 10% to $208 million.

Once again, you'll recall that in the third quarter, we not only had those performance fee revenues but we had a bonus program that went along with it.

In the absence of those performance fees and the related bonus in the fourth quarter is primarily what reduced the comp and benefit line to what you see there.

IS&P and occupancy, $77 million over 73 last quarter.

Advertising and promotion was $43 million, a 17% increase over last quarter.

And here, we had the opportunity to take advantage of some low pricing for some media placement in August and September, which we did not only in the U.S. but also in Germany and other European countries, as well as Italy -- sorry, India and Korea as well.

So just taking advantage of what the market had to offer at that time.

In other expenses, $43 million compared to $35 million last quarter.

And here the story is just the business is getting a little bit bigger.

There was more T&E and also we incurred professional fees this quarter in excess of the prior quarter, mostly around some of the private litigation that we are involved with as well as some of the wrapping up the year-end compliance activities.

So all in all, operating expenses for the quarter, 795 million up 4% from last quarter.

But you'll recall that we had the insurance recovery of our legal fees last quarter of about $8 million so you can make that adjustment on your own.

Our operating income then was $369 million compared to 347 last quarter, up 6% as we reported it and we did see an uptick in the margin to 31.7% from 31.2.

Then looking below the line and this is where a lot of the story is, as we put in our press release this quarter, and this is basically all a good news story here.

Our sponsored investment products that we invest in and to get started, you know, went along with the appreciation that Greg talked about earlier this call.

And so we had a $10 million revenue item there compared to $4 million the last quarter.

Now investment in other income was up nearly $50 million or was up to $50 million from 22 million last quarter and here again, this reflects a lot of what was going on in the market.

Interest rates were higher, our balances that we were earning interest and dividends on were higher and we also got an interest refund really from the state of California, which I'll talk about when we get to income taxes.

But essentially, anything that could go well in this section of the income statement went very well this quarter and some of that goes along with the volatility that we've spoken about in the past.

So income before taxes for the quarter, $419 million, up 15%.

Now as we mentioned in our press release, we accrued taxes this quarter at 20.25% and in the past, you've seen numbers more like 27, 28%.

The story here is that we had requested a ruling from the state of California into the method in which we record taxable income in California.

We went through that process and the state agreed with our position, and that has allowed us to reclaim some of the taxes all the way back to the year 2000, all the way through 2004.

And we can also use that methodology to record our taxes for 2005, through at least 2007, according to the ruling.

So that was really great news for us and all of that pickup happened and was recorded in the quarter that we are reporting to you today.

So somewhat of a onetime event for that recovery but very good news nonetheless.

So that brings us to net income of $334 million, up 28% quarter-over-quarter and 78% year-over-year.

In terms of earnings per share diluted, was $4.06 for the year, $1.28 for the quarter and compared to $1 last quarter.

And then finally, we report that in terms of share buybacks and dividends, we did repurchase some shares this quarter, about 300,000 shares, and also paid a dividend so our total payout ratio for the quarter was about 14%, but for the fiscal year was about 73%.

So all in all, very good operations for the quarter; we are pleased with what we are seeing there, and we have some things below the line that are somewhat unique to this quarter.

And with that, I'll turn it back to Greg for business highlights.

Just a few highlights before we open up the Q&A.

I think the big story for us in the U.S. retail marketplace over the last quarter, we're kicking off our partnership with Edward Jones and that's an area that we identified would require some additional resources.

We are adding some additional wholesalers to cover Jones, but have been very encouraged by the initial reception and flows that we are seeing from such a strong dealer like Edward Jones.

In Canada, our potential program, which you may recall is really a almost a fund to fund or one that uses multiple managers crossed the $3 billion mark there and is one of the top-selling programs in Canada today and we're very pleased with that.

And we kicked off retail distribution in Poland by registering 44 of our CCAT funds over the last quarter, as well as kicked off our opening in our office in Mexico and our retail activities there.

So with that, we will now open it up for Q&A.

I think Jim and I, as we mentioned, we are very pleased with the results for the quarter and we will continue to be very focused on leveraging our strong investment performance to grow our assets under management.

And now we would like to open up to questions.

Thank you, sir. (Operator Instructions).

Daniel Goldberg, Bear Stearns.

Just a qualification on the tax rate.

I understand what's happened so far but going forward, you said through 2007, should we expect a lower rate through 2007 and what rate would you say that we include in our models?

You should expect a lower rate because of that ruling.

And you know, it will of course not only depend on that ruling but also the mix of assets as it has always depended.

I think our best estimate, not knowing exactly the mix of assets in the future, at this point is in the 27% range plus or minus maybe a quarter or half a point.

Okay.

On the headcount, it looks like the headcount -- headcount actually rose I think about 2% sequentially.

Any particular areas there where you are adding people and then how should we think about that in 2006?

Calendar?

Yes.

We are adding to the business and most of (technical difficulty) have added people in the portfolio group as well as the back office.

I think the thing to keep in mind about the headcount is generally speaking, there is a move to a lower cost site and lower cost per FTD, so perhaps maybe some of the traditional models that you've looked at in terms of that line (technical difficulty) benchmarks against it may over time be improving slightly.

Okay.

And on the flows, domestic equity flows, Greg, as you mentioned, net outflows although they were small, it's the first time I guess in about five quarters or so, any more color there, what went on to cause those asset outflows?

No, I don't think so.

I think there may have been -- I don't even want to speculate because it's not a big difference really to the prior year.

They just haven't been that strong and I think overall for the industry they haven't and international was really the stronger area during the quarter.

But nothing unusual.

It could have been investment only accounts switching over that may have caused that little bit of negative variance there but nothing unusual really on the resale flow side.

Cynthia Mayer, Merrill Lynch.

Another net flow question.

On the global international flows, it looked like those were down versus last quarter and maybe due -- looked like the redemptions ticked up.

So I'm just wondering if those were more institutional or retail and was there anything special going on there?

Yes, I had the same question and I think there really isn't anything special other than probably some movement of some institutional accounts and I think I was just surprised as well by that redemption number being a little higher in a very strong period for the international market.

But there was really nothing unusual when we went back and looked and asked (ph) a various business that it would probably just -- on institutional accounts -- that we didn't even see any large movements of note.

So it could have just been a little one (technical difficulty) on the (technical difficulty), but really nothing as far as trends to think about.

Okay.

And I guess on the retail side, judging by the Sun flow (ph) data we see, it looks as if you've had very strong global international flows of course on an absolute basis.

But in terms of marketshare, there are some others who are gaining marketshare a lot faster and I'm just wondering is that a function of performance maybe or just greater competition in this case, did flows pick up generally?

Yes, I think it's probably both.

I think you do have more competitors; you have some new names in there that have had very strong short-term performance that have picked up a lot of share.

And when you have a big marketshare like we have there it leaves you a little bit vulnerable.

And then I think in the near term, Templeton always has the issue with how the dollar performs and how that affects relative performance.

And if the dollar is a little bit stronger, that tends to hurt the shorter-term numbers.

But we feel good about the overall performance and the awareness out there.

We went out and did a big campaign this year and actually increased our share when we did that campaign.

So I think we don't think there's anything broken there.

The performance is good and continue to have a lot of support from the dealers.

Okay, great.

And lastly, can you give a little guidance maybe on the upcoming options expense?

Sure, Cynthia.

As we've said, we stopped issuing options a couple of years ago so the tail is very short.

In fact, it will almost all be gone by the end of next fiscal year.

So on a quarterly basis, we are estimating it to be a significant number.

Bill Katz, Buckingham Research Group.

Thank you very much.

Just a couple of questions.

I'm sort of curious as to, as you look forward, how you weigh your capital management between sort of new investment versus sort of repatriation for lack of a better word, to shareholders.

I appreciate the very high payout ratio on a full-year basis, but sort of on a quarterly basis, the 13% seems a little sort of on the skimpier side.

Just sort of curious, how should we be thinking about that going forward?

In the repatriation area, we have been working on it quite a bit, and we've gotten it to the point where we have done our homework and we have now asked our outside accountants to look at the numbers we've developed and see where that goes.

We've talked to our Board about it and gotten their guidance.

We anticipate really having a little bit more clarity to you on this call next quarter in terms of that particular issue.

Assuming we get the money back for the states, then we still have some of the very same basic philosophies about our capital program and we will be opportunistic where we can with share buybacks and the like.

And if we still like having a strong balance sheet and it gives us a lot of ability to be flexible and on a very short period, a short turnaround.

Okay.

Greg, a question for you if I may.

If you could sort of expand a little bit more about the initiative with Edward D. Jones.

I was really curious, are you replacing somebody?

And I was also curious as to what products you might be selling.

Is it a full slate of products or still have a specific product?

No, we are an addition to the group and they are focusing on some specific funds but it's really the entire lineup that is being pulled through that network.

Okay.

I'm just sort of curious if you could comment a little bit.

Last quarter you provided a metric on where you have FA selling your funds at something like 24% of those, are selling at least three and maybe a bit more of the Franklin funds.

I wonder if you could give us an update on what that number was this quarter?

I don't have that number available.

Okay.

And then just sort of final question, on the purge this year, this past quarter, could you give us what the size of that was?

Yes, Bill.

It was approximately 1.2 million accounts.

David Haas, Fox-Pitt Kelton.

Just a quick follow-up on the compensation line.

Even with the lack of incentive payouts for performance fees, it looks like it was fairly light in the quarter.

I understand there may have been a true up.

Was there anything else that was sort of one time-ish in nature in there?

Well, yes.

Again, almost all of it was -- a great deal of it was really due to the lack of performance fees.

We did have some compensation true-ups with some executives leaving the Company, as you know.

But other than that, it was also the end of the year, so there was some minor cleanup in year-end pulls and things like that.

But the real story to focus on is the performance fee.

Okay.

And just once again on the comp line.

Would you say that you feel like you have more flexibility today relative to the strength in the asset growth as of late in that compensation line?

How do you think about that going forward?

Well if I understand your question, we do the compensation line where we try to maintain flexibility.

So a lot of the compensation line is tied to how well the Company does and that's not a new concept; that's what we've been doing.

And so there's all the typical base types of compensation, which we have, but we maintain our flexibility with letting the bonus pool really reflect what's going on in that organization.

Okay.

And then just a follow-up on the advertising.

It seems like you took advantage of some good pricing.

How can we think about that run rate going forward?

Well, I think if you look at the history, this quarter tends to be a little bit lower as far as the overall spend.

But I think as far as an ongoing level, that's probably a good level.

Okay.

And then the same type of issue with the other line item, I guess there was some legal fees in there as well?

Yes, true.

And that, to some extent, or to a large extent, really, that is beyond our control.

When some of those legal things have activity, that's when the lawyers work on them and that's when they tell us.

So that's likely to be choppy.

But there's not much we can do about it.

Okay.

And then last, just on flows in the hybrid area, still doing very well.

Just an update on sort of capacity issues there, anything you are seeing in the current quarter about whether or not those trends are maintained?

Well as I mentioned earlier, I mean they actually accelerated a bit as far as net flows (indiscernible) for the income fund.

And we just don't feel like at this stage we have any capacity issues.

If we do, the portfolio manager has that authority to tell us to close the fund and we will do that.

But the income fund is a fund that's made up of a lot of large cap names and big converts and corporate bonds so it really has significant capacity out there.

And there's funds in its class that are two or three times its size.

Jeff Hopson, A.G. Edwards.

Can you just -- a sense of the breakout of the international flows between U.S. clients and non U.S. clients?

And then on the Ed Jones thing, is that would you say, are you still in the ramp-up process there, or how long exactly have you been involved with them?

Well, I hope we are in the ramp-up process.

We have really been kicked off in the system for about two months now and it already has had a fairly I think dramatic impact.

As far as the flows I don't have the specific number for the quarter.

I can just give you a rough number run rate.

It's about a third of the flows for the year, were the clients outside of the U.S.

Okay.

Any sense that that has changed more recently?

It was actually fairly stable year to year.

I think if you look at the globe, Europe had an extremely strong year as far as growth, and the open architecture themes we talked about, we really benefited from, especially in Germany.

And Asia was a little bit tougher for other reasons like the dollar and with the U.S. government fund, that created the dollar being strong.

The challenge is there as well as other fixed income in Asia.

So as far as the world looks, Europe did much better than Asia, on a retail basis, and the U.S. did extremely well as far as increasing net flows for the year.

Okay.

And we've talked about this before, but the U.S. growth products, you have a few that I guess are emerging the growth series.

How do you feel about that product are today?

Some people think the growth has turned the corner, I guess.

Any update thoughts on growth products?

Well, I mean we've been very clear it's a priority to the organization.

We feel like we have the right people, the right complement of funds in that category and it's really getting that awareness out there.

So it's a priority for us.

It's one that we had two major campaigns in the U.S. retail.

One of them was on Templeton Global and the other was on Franklin's growth group.

So we are pushing it.

It's a tough battle when you have a strong brand awareness, the recognition that we have in the other categories to be thought of as a growth manager, but one that we are continuing to build and develop people and want to make sure we have a competitive record there.

So that's still a priority.

It's still going to be an uphill battle to get that kind of (indiscernible).

Mark Constant, Lehman Brothers.

It's amazing how much money you can make as soon as you get rid of Marty, isn't it?

Exactly.

I'm kidding of course.

Just one last question for Greg.

I apologize if I missed it.

I think you said that 70% of Franklin Templeton long-term products are above the one, three, five and 10.

Do you happen to have what they were for each of those four periods in front of you?

Yes, I think I do.

Hold on one second, I'll --

I presume this is always kind of a lowest common denominator exercise there?

Yes, it's 78 for one, 75 for three, 92 for five, and 95 for 10.

Not bad.

Okay.

And Jim, just a couple of little things I want to make sure I heard straight.

You were talking about the fund merger effect on gross underwriting and distribution revenues and expenses.

Did they offset in there for the sort of net margin increase -- nearly offset, so that that net margin increase is sort of is what it is?

Or was there some offset to that net margin increase in promotion or something like that?

There was an offset elsewhere so that's why I said there was really no -- no --

No Company effect (multiple speakers).

No Company effect.

But where would the other offset be?

Would it be a promotion or was that part of comp or I can't imagine it was comp.

I guess it was promotional?

No it was in the shareholder servicing line.

Netted from shareholder services?

Yes.

I guess an offset of revenue effect, okay.

And I think I also heard you mention something about, when you were doing the other income discussion, you said something about interest from the California ruling that you had mentioned the taxes later.

Was there something in addition to the tax reduction?

Was there a sort of onetime catch-up of interest on prior taxes or something?

Well, the interest carried forward from that interest back from all the way back to 2000. (multiple speakers)

Okay.

So it was less gains and more -- if we look at the delta of that investment in other income, it was less sort of realization of gains and more realization of the interest from those prior tax payments that you got back?

Yes.

I mean the interest on the tax payments was an item that was unique to this quarter that didn't exist last quarter and won't exist next quarter.

Got it.

The rest of what was going on was just our other investments just didn't go up.

Glenn Schorr, UBS.

Just two quick follow-ups.

On Mark's question on performance, last quarter, the least common denominator was 85% and this one was 70.

And I appreciate that this is still a great long-term track record; it's just amazing that a one and three-year track record could fall from 85 or better to 75 in one quarter.

Was it something that three years ago rolled off that was really good or something this quarter weighed on it?

It's an interesting swing on obviously a good track record.

I mean I think when you have large asset classes like Templeton that they tend to perform in sync, if they move down just below, that could have a dramatic effect.

And looking across the line, I think that's the only one that could have contributed to that number.

I don't know it specifically because it is an asset-weighted number, but I think the international equity side and especially with the effect of the dollar recently on their relative performance could have had impact on the short-term numbers and driven that.

But I think overall, you don't want to lose sight that it is very strong and as I -- we said it just recently, even though that says over 70, it's 78% on the one year and 75 on the three.

It's still -- then the five and 10 are 92 and 95; still very strong.

Right, cool.

And then I just want to clarify your comments on the investment and other income upticked for several reasons.

Obviously, there's a great underlying trend of you just keep making that kind of money and interest rates are going up.

Is there any way to help us to know how much of that, in other words, if you look at the last, I don't know eight, 10 quarters, it bounces around with an upper trend.

But -- and you know, I mean not too long ago it was more like a high 20s number and this was high 40s.

Is it somewhere in between the way we should think about it?

Well, it's a very tough number to estimate as you might imagine because it's not just interest of dividends, it's the performance on investments we've made that some quarters have great quarters just like our assets performed fairly well this quarter.

So my sense is this quarter is really at the high end and the other numbers you were citing were probably at the low end, so.

Okay.

That's good enough.

And then one last clarification is you mentioned that the advertising and promo line might be a reasonable look forward.

I'm assuming that -- this is obviously a lot higher than we've seen in the past.

I'm assuming that the Edward D. Jones relationship has an impact on it, great performance and wanting to brag about it has an impact on that.

So I just want to make sure that I heard correct on this is a reasonable rate going forward.

I said that if you look at our spent and this in the first quarter tends to be a bit lower than average, and I think that number probably for the last quarter is a little bit higher than what we would expect for the next year.

And we did make incremental strategic spends in markets like India and Germany and Korea that we don't think we'll be doing that again, but that could happen again.

We felt like it was a good opportunity in some other markets outside of the U.S.

So I think it will be something a little lower than that number and definitely in the next quarter will.

Okay, that's super.

Thanks, guys.

Robert Lee, KBW.

Just a quick question.

I mean commented a lot on various retail products and flows and I apologize if I missed this, but could you give us a sense on how the institutional business is going, what flows may have been -- a little better feel for what flows may have been from some -- is it separate account business, domestic globally and what types of products if any and how that business is going?

It's going well.

I think the global equity continues.

We continue to have a very strong response and have had some significant wins in that area.

Global fixed income is another one that we are seeing a lot of interest in recently.

So I think overall, the same trends that we talked about in past calls, there wasn't any real big swings one way or the other over the last quarter, but we continue to add to existing accounts and add some smaller size, medium-size wins, but nothing really I think on an individual basis one way or another that was very noteworthy.

Are there any particular marketing initiatives going on in that part of the business?

You talked about getting your retail products into Poland.

Are there any new markets on the institutional side that you are looking in or new initiatives there?

Well I think we feel like we have good coverage around the globe.

That's relatively easy to do with not a lot of people, but we have added additional resources in that area.

We have now a global consultant relations group that is an addition to our existing sales force that concentrates specifically on the relationships with the various consultants on a global basis and we think that's going to help us as far as the databases and maintaining those relationships.

But I think as far as the sales force recovering all the markets, I mean there's opportunities.

Obviously, the Middle East is one where we have gotten some nice wins and we think there's more opportunities there.

We feel like we have good coverage of those markets.

Chris Meyer, Morgan Stanley.

Hey, Greg, could you just give us an update on what you see as the acquisition landscape?

It seems to have gone kind of quiet since this Legg Mason/Citi deal, and I'm just really intrigued as to whether the seller's expectations have run up in sort of line with the big run-up in some of the publicly listed asset managers.

I think that's as good a guess as any.

You know I don't think, as I've said before, there's always going to be plenty of movement in this business, as far as opportunities, and I still believe there's going to be some big deals done out there in the next year or two.

But anything that happened in the last quarter that's unusual one way or another, I don't have any additional insights on that.

And Greg, maybe just on the capital return to shareholders, does the level of interest rates have any bearing really on how much capital you retain versus payout?

No, I think it's just one more factor.

We try to look at everything and there's no easy answer that will satisfy the demand to know exactly what we will do.

But I think the -- it is very much the top of our list, but part of that is the repatriation and how that all works.

And next year, as we are right now, we are very busy looking at all of those factors, including dividend payouts and what's the right level for the balance sheet, what's the right level to give back to shareholders.

We want to make sure that we do our best to get that night.

I think I picked up a delay in the repatriation decision.

Is that a Washington decision or was that a logistical decision that BEN is making?

I'm sorry, Chris, if I wasn't clear.

What I was trying to say was that we have been working on it all along, but as you may know, the Treasury Department has issued three or four rounds of additional guidance or guidance in addition to the actual statute itself.

We found that each one of those pieces of guidance impacted us directly so we were happy to have that additional guidance and to wait for it.

We believe that they are now, as far as we know, we don't expect any more significant guidance from treasury so we are busily working on our calculations and having them reviewed by our outside accountants.

Okay.

And do they have to bless anything you propose?

Well, they don't have to but it certainly gives you a, as you may imagine, quite a complex set of calculations and so on.

So it's good to take that extra minute and get that extra set of eyes on it.

Okay.

Well, thank you, everybody, for participating on the call and we look forward to speaking to you next quarter.

Thank you.

Ladies and gentlemen, thank you for your participation in today's Franklin Resources quarterly analysts' conference call.

This does conclude today's conference call.

You may now disconnect.