FILED BY FRANKLIN RESOURCES, INC.
PURSUANT TO RULE 425 UNDER THE
SECURITIES ACT OF 1933
COMMISSION FILE NO.: 001-9318
SUBJECT COMPANY: FIDUCIARY TRUST COMPANY
INTERNATIONAL
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Contact: Franklin Resources, Inc.
Investor Relations: Alan Weinfeld (650) 525-8900
Corporate Communications: Lisa Gallegos (650) 312-3395
franklintempleton.com
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FOR IMMEDIATE RELEASE
FRANKLIN RESOURCES, INC. ANNOUNCES FOURTH QUARTER RESULTS*
SAN MATEO, CA, OCTOBER 25, 2000-- Franklin Resources, Inc. (Franklin
Templeton Investments) (NYSE: BEN) today reported net income of $140.8 million,
or $0.58 per share diluted, on revenues of $593.1 million for the quarter ended
September 30, 2000, compared with net income of $140.4 million, or $0.58 per
share diluted, on revenues of $568.9 million in the preceding quarter and net
income of $132.4 million, or $0.52 per share diluted, on revenues of $574.0
million in the comparable quarter a year ago. The quarter ended September 30,
2000 included pre-tax $8.2 million non-operating income related to the $32.8
million gain on the sale of the company's headquarters in July. The gain will be
recognized over the twelve month lease-back-period, while the organization
transitions to its new worldwide headquarters in San Mateo. Information systems,
technology and occupancy costs were higher than the run rate due to technology
initiatives which resulted in service and operating enhancements and higher real
estate transition costs.
Net income for the year ended September 30, 2000 was $562.1 million,
or $2.28 per share diluted, on revenues of $2,340.1 million as compared to net
income of $426.7 million, or $1.69 per share diluted, on revenues of $2,262.5
million a year ago. Pretax restructuring charges of $58.5 million, or $0.17 per
share diluted after tax, were incurred in the comparable period last year.
As of September 30, 2000, assets under management by the company's
subsidiaries were $229.9 billion, as compared to $218.1 billion at this time
last year. Simple monthly average assets under management during the current
quarter were $231.4 billion compared to $228.0 billion in the preceding quarter
and $223.3 billion in the same quarter a year ago. Equity assets now comprise
66% of total assets under management as compared to 62% at September 30, 1999.
Fixed income funds now comprise 28% of total assets under management as compared
-----------------------------
* This press release is being issued simultaneously with a joint press release
announcing the acquisition of Fiduciary Trust Company International by Franklin
Resources, Inc. and an earnings and dividend announcement press release of
Fiduciary Trust Company International.
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to 31%, at the same time last year. For the three-month period ended September
30, 2000, net outflows complex-wide were $1.6 billion, including reinvested
dividends, as compared to net inflows of $0.6 billion last quarter and net
outflows of $1.2 billion for the same period last year. Net flows excluding
reinvested dividends improved during the quarter. Gross asset inflows increased
24% for the year ended September 30, 2000 as compared to the prior year.
Domestic equity and fixed income products continued to have strong relative
performance to peer groups, while our global equity products' relative
performance improved materially compared to peer groups.
FISCAL YEAR 2000 HIGHLIGHTS
FINANCIAL HIGHLIGHTS
o Diluted earnings per share increased 23% for the year ended September
30, 2000, excluding last year's restructuring charge.
o Share repurchases of approximately 8.4 million shares were made at an
average price of $29.50 for the year ended September 30, 2000.
PERFORMANCE & PRODUCTS
o 70% of Franklin Templeton Investments' U.S. retail mutual fund assets
were rated four- or five-star by Morningstar as of September 30, 2000.
o 78% of Franklin U.S. equity growth assets ranked in the top quartile of
their Lipper peer groups for the one-year period ending September 30,
2000 and 89% were in the top half of their groups.
o Top quartile performance of Mutual Series value funds positions them
for increased flows.
o 69% of Franklin tax-free products are ranked in the top half of their
Lipper peer groups for the one-year period and 94% for the five-year
period ended September 30, 2000.
o At least 60% of Franklin U.S. retail taxable fixed income products
ranked in the top half of their Lipper peer groups for one- and
five-year performance as of September 30, 2000.
o Top Lipper quartile performance of Franklin Small Cap Growth Fund I for
the one- and three-year period ended September 30, 2000 drove the
fund's sales to the No. 1 position in the complex.
o Top Lipper quartile performance of Franklin Floating Rate Trust for the
one-year period ended September 30, 2000 drove the fund's gross sales
to the No. 3 position in the complex.
o The superior investment performance of Franklin's domestic equity
growth products in the U.S. paved the way for new fund rollouts in
several international markets.
o Templeton Developing Markets Trust and Franklin California Growth Fund
ranked in the "Money 100," Money Magazine's annual ranking of the top
100 mutual fund managers.
o Conrad Herrmann, portfolio manager of Franklin California Growth Fund,
made Barron's "Top 100 Fund Managers".
o Mark Mobius, portfolio manager of Templeton Developing Markets Trust,
made Money's "Ultimate Investment Club" and the Carson Group's ranking
of the "Top Money Managers in the 20th Century."
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GLOBAL BUSINESS DEVELOPMENTS
o "Franklin Templeton Investments" brand was adopted globally to more
accurately reflect company's core business focus.
o Senior management reorganized to further expand responsibilities of
company leaders, create opportunities for employees and enhance
accountability throughout the organization.
o Acquired Bissett & Associates Investment Management Ltd., a
top-performing Canadian equity and fixed income manager, which enhances
the company's product selection in Canada .
o Completed the buy-out of our joint venture partner creating the first
100% foreign-owned investment trust management company in Korea.
o Merger with NIB Asset Management, a subsidiary of Nedcor, fortified
company's position in the growing South African asset management
industry.
GLOBAL SERVICE ENHANCEMENTS
o Created the Financial Advisor Service Team dedicated to servicing our
best-selling investment representatives with a single point of contact
to handle all questions and service needs.
o Kasina recognized franklintempleton.com as the No. 2 site in its
"Online Services" category.
o DALBAR highlighted franklintempleton.com's investment representative
site as a top 10 "Mutual Fund Professional Website" for two consecutive
quarters.
o An "eMail Alerts" program for investment representatives and online
proxy voting for shareholders were among a number of features added to
franklintempleton.com.
o Wireless Application Protocol (WAP) sites were introduced in the United
Kingdom and Germany, providing shareholders with fund price information
immediately following market close.
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<TABLE>
<CAPTION>
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except assets under THREE MONTHS ENDED YEAR ENDED
management and per share data)
SEPTEMBER 30 SEPTEMBER 30
-------------------------------------------------------------------------------
2000 1999 % CHANGE 2000 1999 % CHANGE
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Investment management fees $354,265 $347,308 2% $1,399,121 $1,340,612 4%
Underwriting and distribution fees 179,728 175,743 2% 709,285 718,871 (1)%
Shareholder servicing fees 52,312 46,076 14% 211,416 184,948 14%
Other 6,745 4,845 39% 20,318 18,066 12%
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TOTAL OPERATING REVENUES 593,050 573,972 3% 2,340,140 2,262,497 3%
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OPERATING EXPENSES
Underwriting and distribution 160,416 152,348 5% 623,144 620,047 1%
Compensation and benefits 137,155 125,686 9% 535,710 515,137 4%
Information systems, technology and occupancy 59,890 58,076 3% 213,670 212,495 1%
Advertising and promotion 27,477 25,925 6% 101,196 105,935 (4)%
Amortization of deferred sales commissions 20,416 24,366 (16)% 83,627 95,948 (13)%
Amortization of intangible assets 9,314 9,281 - 37,163 37,220 -
Other 23,483 17,573 34% 82,187 78,152 5%
Restructuring charges - - - - 58,455 NA
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TOTAL OPERATING EXPENSES 438,151 413,255 6% 1,676,697 1,723,389 (3)%
-------------------------------------------------------------------------------
OPERATING INCOME 154,899 160,717 (4)% 663,443 539,108 23%
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OTHER INCOME (EXPENSE)
Investment and other income 33,841 18,681 81% 90,108 55,934 61%
Interest expense (3,418) (5,133) (33)% (13,960) (20,958) (33)%
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OTHER INCOME (EXPENSE), NET 30,423 13,548 125% 76,148 34,976 118%
-------------------------------------------------------------------------------
Income before taxes on income 185,322 174,265 6% 739,591 574,084 29%
Taxes on income 44,499 41,824 6% 177,502 147,373 20%
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NET INCOME $140,823 $132,441 6% $562,089 $426,711 32%
===============================================================================
EARNINGS PER SHARE
Basic $0.58 $0.53 9% $2.28 $1.69 35%
Diluted $0.58 $0.52 12% $2.28 $1.69 35%
DIVIDENDS PER SHARE $0.06 $0.055 9% $0.24 $0.22 9%
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<PAGE>
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 243,665 252,005 (3)% 246,116 252,122 (2)%
Diluted 244,078 252,618 (3)% 246,624 252,757 (2)%
EBITDA MARGIN(1) 35% 35% - 36% 33% 9%
OPERATING MARGIN(2) 26% 28% (7)% 28% 26% 8%
ASSETS UNDER MANAGEMENT (in millions)
Beginning of Period $229,878 $227,727 1% $218,100 $208,591 5%
Sales 11,588 10,659 9% 51,699 41,807 24%
Reinvested Dividends 619 1,451 (57)% 8,686 3,918 122%
Redemptions (13,834) (13,352) 4% (62,749) (59,538) 5%
Appreciation/(Depreciation) 1,672 (8,385) N/A 14,187 23,322 (39)%
END OF PERIOD $229,923 $218,100 5% $229,923 $218,100 5%
SIMPLE MONTHLY AVERAGE FOR PERIOD $231,370 $223,345 4% $227,682 $219,809 4%
</TABLE>
(1) EBITDA Margin: Earnings before interest, taxes on income, depreciation
and the amortization of intangibles divided by total revenues. 1999
fiscal year is stated before restructuring charges.
(2) Operating Margin: Operating income divided by total operating revenues.
1999 fiscal year is stated before restructuring charges.
<TABLE>
<CAPTION>
FRANKLIN RESOURCES, INC.
CONSOLIDATED INCOME STATEMENTS
(Dollar amounts in thousands except
per share data) THREE MONTHS ENDED
30-SEP-00 30-JUN-00 % CHANGE 31-MAR-00 31-DEC-99 30-SEP-99
--------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Investment management fees $354,265 $344,805 3% $356,009 $344,042 $347,308
Underwriting and distribution fees 179,728 165,181 9% 200,133 164,243 175,743
Shareholder servicing fees 52,312 54,143 (3)% 53,202 51,759 46,076
Other 6,745 4,768 41% 3,182 5,623 4,845
-------------------------------------------------------------------------------------
TOTAL OPERATING REVENUES 593,050 568,897 4% 612,526 565,667 573,972
-------------------------------------------------------------------------------------
OPERATING EXPENSES
Underwriting and distribution 160,416 142,684 12% 176,876 143,168 152,348
Compensation and benefits 137,155 133,125 3% 134,581 130,849 125,686
Information systems, technology and occupancy 59,890 50,708 18% 51,441 51,631 58,076
Advertising and promotion 27,477 25,279 9% 25,895 22,545 25,925
5
<PAGE>
Amortization of deferred sales commissions 20,416 20,980 (3)% 21,600 20,631 24,366
Amortization of intangible assets 9,314 9,283 - 9,283 9,283 9,281
Other 23,483 18,006 30% 20,773 19,925 17,573
-------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 438,151 400,065 10% 440,449 398,032 413,255
-------------------------------------------------------------------------------------
OPERATING INCOME 154,899 168,832 (8)% 172,077 167,635 160,717
-------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Investment and other income 33,841 19,836 71% 19,752 16,679 18,681
Interest expense (3,418) (3,998) (15)% (3,180) (3,364) (5,133)
-------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE), NET 30,423 15,838 92% 16,572 13,315 13,548
-------------------------------------------------------------------------------------
Income before taxes on income 185,322 184,670 - 188,649 180,950 174,265
Taxes on income 44,499 44,300 - 45,275 43,428 41,824
-------------------------------------------------------------------------------------
NET INCOME $140,823 $140,370 - $143,374 $137,522 $132,441
=====================================================================================
EARNINGS PER SHARE
Basic $0.58 $ 0.58 - $0.58 $0.55 $0.53
Diluted $0.58 $ 0.58 - $0.58 $0.55 $0.52
DIVIDENDS PER SHARE $0.06 $0.06 - $0.06 $0.06 $0.055
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 243,665 243,542 - 246,826 250,432 252,005
Diluted 244,078 243,741 - 246,998 250,592 252,618
EBITDA MARGIN(1) 35% 37% (5)% 35% 37% 35%
OPERATING MARGIN(2) 26% 30% (13)% 28% 30% 28%
EMPLOYEES 6,489 6,454 1% 6,447 6,631 6,650
BILLABLE SHAREHOLDER ACCOUNTS (in millions) 9.2 10.5 (12)% 10.5 9.9 9.6
</TABLE>
(1) EBITDA Margin: Earnings before interest taxes on income, depreciation
and the amortization of intangibles divided by total revenues. 1999
fiscal year is stated before restructuring charges.
(2) Operating Margin: Operating income divided by total operating revenues.
1999 fiscal year is stated before restructuring charges.
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<TABLE>
<CAPTION>
FRANKLIN RESOURCES, INC.
PRELIMINARY SUMMARY BALANCE SHEET
AS OF SEPTEMBER 30
(Dollar amounts in thousands)
PRELIMINARY
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current Assets $1,656,294 $1,485,889
Banking Finance Assets 299,562 217,778
Other Assets 2,086,587 1,963,123
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TOTAL ASSETS $4,042,443 $3,666,790
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $489,559 $486,490
Banking/Finance Liabilities 238,954 176,406
Other Liabilities 348,437 346,900
----------------------------------------
Total Liabilities 1,076,950 1,009,796
Total Stockholders' Equity 2,965,493 2,656,994
----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,042,443 $3,666,790
----------------------------------------------------------------------------------------------
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ENDING SHARES OF COMMON STOCK OUTSTANDING 243,730 251,007
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ASSETS UNDER MANAGEMENT BY INVESTMENT OBJECTIVE
(In billions)
THREE MONTHS ENDED
30-SEP-00 30-JUN-00 31-MAR-00 31-DEC-99 30-SEP-99
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EQUITY
Global/international $97.6 $103.6 $106.2 $111.0 $96.8
Domestic 53.9 49.6 49.3 44.3 37.6
----------------------------------------------------------------------------
Total Equity 151.5 153.2 155.5 155.3 134.4
----------------------------------------------------------------------------
HYBRID FUNDS 9.3 8.9 9.0 9.6 10.2
FIXED INCOME
Tax-free 44.0 43.8 44.6 45.2 48.2
Taxable
Domestic 15.6 15.3 15.0 15.4 15.8
Global/international 4.2 3.5 3.6 3.9 3.9
----------------------------------------------------------------------------
Total Fixed Income 63.8 62.6 63.2 64.5 67.9
----------------------------------------------------------------------------
MONEY FUNDS 5.3 5.2 5.7 5.6 5.6
----------------------------------------------------------------------------
TOTAL ENDING ASSETS $229.9 $229.9 $233.4 $235.0 $218.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SIMPLE MONTHLY AVERAGE ASSETS $231.4 $228.0 $231.0 $224.1 $223.3
============================================================================
ASSETS UNDER MANAGEMENT & FLOWS
(IN BILLIONS)
THREE MONTHS ENDED
30-SEP-00 30-JUN-00 % CHANGE 30-SEP-99 % CHANGE
--------- --------- -------- --------- --------
BEGINNING ASSETS UNDER MANAGEMENT $229.9 $233.4 (2)% $227.7 1%
US RETAIL ASSETS
Beginning Assets $172.5 $175.9 (2)% $174.4 (1)%
--------------------------------------------------------------------------------------------------------------------------
Sales 8.3 8.6 (3)% 7.6 9%
Reinvested Dividends 0.6 2.7 (78)% 1.4 (60)%
Redemptions (10.0) (11.6) (14)% (10.6) (5)%
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Appreciation/(Depreciation) 2.7 (3.1) N/A (6.7) N/A
--------------------------------------------------------------------------------------------------------------------------
Ending Assets 174.1 172.5 1% 166.2 1.5%
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OTHER ASSETS, INCLUDING INTERNATIONAL AND INSTITUTIONAL
Beginning Assets 57.4 57.5 - 53.3 8%
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Sales 3.3 4.7 (30)% 3.1 6%
Reinvested Dividends 0.0 0.5 (100)% 0.0 N/A
Redemptions (3.8) (4.3) (12)% (2.8) 36%
Appreciation/(Depreciation) (1.1) (1.0) 10% (1.7) (35)%
--------------------------------------------------------------------------------------------------------------------------
Ending Assets 55.8 57.4 (3)% 51.9 8%
--------------------------------------------------------------------------------------------------------------------------
ENDING ASSETS UNDER MANAGEMENT $229.9 $229.9 - $218.1 5%
TOTAL ASSETS UNDER MANAGEMENT
BEGINNING ASSETS $229.9 $233.4 (1)% $227.7 1%
------------------------------------------------------------------------------------------------------------------------
Sales 11.6 13.3 (13)% 10.7 8%
Reinvested Dividends 0.6 3.2 (81)% 1.5 (60)%
Redemptions (13.8) (15.9) (13)% (13.4) 3%
Appreciation/(Depreciation) 1.6 (4.1) - (8.4) -
------------------------------------------------------------------------------------------------------------------------
ENDING ASSETS $229.9 $229.9 - $218.1 5%
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</TABLE>
Note: A significant number of institutional assets are invested in U.S. Retail
funds and are disclosed in that category in the above table. Total institutional
assets at September 30, 2000 were over $50 1.6 billion.
<TABLE>
<CAPTION>
ASSETS UNDER MANAGEMENT & FLOWS BY INVESTMENT OBJECTIVE
(In billions)
THREE MONTHS ENDED
30-SEP-00 30-JUN-00 30-SEP-99
--------- --------- ---------
<S> <C> <C> <C>
GLOBAL/INTERNATIONAL EQUITY
Beginning Assets $103.6 $106.2 $102.0
------------------------------------------------------------------------------------------------------
Sales 3.8 5.8 5.0
Reinvested Dividends 0.0 0.9 0.1
Redemptions (6.6) (7.3) (5.8)
Appreciation/(Depreciation) (3.2) (2.0) (4.5)
------------------------------------------------------------------------------------------------------
Ending Assets 97.6 103.6 96.8
------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY
Beginning Assets 49.6 49.3 40.4
------------------------------------------------------------------------------------------------------
Sales 3.7 3.6 1.5
Reinvested Dividends 0.0 1.5 0.5
Redemptions (2.6) (3.1) (2.3)
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Appreciation/(Depreciation) 3.2 (1.7) (2.5)
------------------------------------------------------------------------------------------------------
Ending Assets 53.9 49.6 37.6
------------------------------------------------------------------------------------------------------
HYBRID
Beginning Assets 8.9 9.0 10.8
------------------------------------------------------------------------------------------------------
Sales 0.2 0.1
0.3
Reinvested Dividends 0.1 0.2 0.2
Redemptions (0.4) (0.6) (0.5)
Appreciation/(Depreciation) 0.5 0.2 (0.6)
------------------------------------------------------------------------------------------------------
Ending Assets 9.3 8.9 10.2
------------------------------------------------------------------------------------------------------
TAX-FREE INCOME
Beginning Assets 43.8 44.6 50.0
------------------------------------------------------------------------------------------------------
Sales 0.8 0.6 1.2
Reinvested Dividends 0.3 0.3 0.3
Redemptions (1.3) (1.5) (1.9)
Appreciation/(Depreciation) 0.4 (0.2) (1.4)
------------------------------------------------------------------------------------------------------
Ending Assets 44.0 43.8 48.2
------------------------------------------------------------------------------------------------------
TAXABLE FIXED INCOME
Beginning Assets 18.8 18.6 19.8
------------------------------------------------------------------------------------------------------
Sales 1.3 1.4 1.2
Reinvested Dividends 0.1 0.2 0.3
Redemptions (1.0) (1.1) (1.0)
Appreciation/(Depreciation) 0.6 (0.3) (0.6)
------------------------------------------------------------------------------------------------------
Ending Assets 19.8 18.8 19.7
------------------------------------------------------------------------------------------------------
MONEY FUNDS
Beginning Assets 5.2 5.7 4.7
------------------------------------------------------------------------------------------------------
Sales 1.8 1.8 1.5
Reinvested Dividends 0.1 0.1 0.1
Redemptions (1.9) (2.3) (1.9)
Appreciation/(Depreciation) 0.1 (0.1) 1.2
------------------------------------------------------------------------------------------------------
Ending Assets 5.3 5.2 5.6
------------------------------------------------------------------------------------------------------
ENDING ASSETS UNDER MANAGEMENT $229.9 $229.9 $218.1
</TABLE>
ANALYST MEETING AND CONFERENCE CALL INFORMATION
Members of the Investment Community are invited to attend a meeting today,
Wednesday, October 25, 2000 at 11:00 am Eastern Time . The meeting will be held
in the Broadway Room of the Drake Hotel, 440 Park Avenue (56th and Park) in New
York City.
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Conference Call/Webcast Options
Those who cannot attend the meeting can listen to the presentation by dialing
one of the following numbers approximately ten minutes prior to the scheduled
starting time: (800) 700-7860 (US callers) or (612) 332-1210 (international
callers.)
A live broadcast of the conference call will also be available on the Internet.
To access the call, visit franklintempleton.com and click the appropriate
hotlink on the home page.
Replay
A replay of the conference call will be available beginning on October 25 at
2:30 pm Eastern Time (11:30 am Pacific Time) and will run through November 2 at
3:00 am Eastern Time (12:00 am Pacific Time). To access the replay, please dial
(800) 475-6701 or (320) 365-3844 (international callers) and enter access code
539414.
Franklin Templeton Investments provides global and domestic
investment management, shareholder and distribution services to the Franklin,
Templeton and Mutual Series mutual funds, institutional and private accounts in
approximately 130 different nations worldwide. Franklin Templeton Investments'
headquarters are located at 777 Mariners Island Blvd., San Mateo, CA.
Statements in this press release regarding Franklin Templeton
Investments' business which are not historical facts are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 that involve risk and uncertainties. For a discussion of such risks and
uncertainties which could cause actual results to differ from those contained in
the forward-looking statements, see "Risk Factors" in the company's Annual
Report, Form 10-K for the most recently ended fiscal year as well as other
documents filed by the company with the Securities and Exchange Commission.
###
Additional Information: It is expected that Franklin will file a
registration statement and other relevant documents concerning the proposed
transaction with the U.S. Securities and Exchange Commission and will mail a
prospectus to shareholders of Fiduciary Trust Company International. FIDUCIARY
TRUST COMPANY INTERNATIONAL SHAREHOLDERS ARE URGED TO READ THE PROSPECTUS AND
THE REGISTRATION STATEMENT WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED TRANSACTION. Investors
will be able to obtain these documents free of charge at the Commission's
website at www.sec.gov or from Franklin by directing such requests to Investor
Relations, Franklin Resources, Inc., 777 Mariners Island Blvd., San Mateo, CA
94409, (tel: 1-800-632-2350 x28900).
11
