PDF Version

Note 19 – Other Income (Expenses)Other income (expenses) consisted of the following:(in thousands)for the fiscal years ended September 30, 2009 2008 2007Consolidated Sponsored Investment Products Gains (Losses), NetRealized (losses) gains, net ...................................... $(36,732) $ (4,786) $ 53,886Unrealized gains (losses), net .................................... 65,517 (55,444) 3,784Minority interest .............................................. (7,079) (11,323) —Total ................................................... 21,706 (71,553) 57,670Investment and Other Income, NetDividend income .............................................. 37,886 43,278 72,376Interest income ............................................... 31,918 100,428 133,398Capital gain distributions ....................................... 14,535 10,083 7,282Other-than-temporary impairment of investment securities,available-for-sale ............................................ (63,068) (13,845) (858)Realized gains on sale of investment securities, available-for-sale ....... 9,750 37,828 88,874Realized losses on sale of investment securities, available-for-sale ....... (13,694) (6,673) (1,002)Gains (losses) on trading investment securities, net ................... 6,154 (5,231) 3,859Income from investments in equity method investees ................. 17,727 28,353 63,566Foreign currency exchange gains (losses), net ....................... 9,923 15,050 (5,050)Other, net .................................................... 9,432 15,627 859Total ................................................... 60,563 224,898 363,304Interest expense ............................................... (3,771) (15,758) (23,220)Other Income, Net ............................................ $ 78,498 $137,587 $397,754Substantially all of the Company’s dividend income, capital gain distributions, and realized gains andlosses on sale of investment securities, available-for-sale were generated by investments in its sponsoredinvestment products. Interest income was primarily generated by investments in debt securities of the U.S.Treasury and federal agencies and cash equivalents. Proceeds from the sale of investment securities,available-for-sale were $706.8 million, $185.1 million and $675.0 million for fiscal years 2009, 2008 and2007.The Company recognized net gains (losses) on trading investment securities, including securities heldby consolidated sponsored investment products, that were still held at September 30, 2009, 2008 and 2007in the amounts of $16.9 million, $(74.8) million and $7.6 million.Note 20 – Banking Regulatory RatiosFranklin is a bank holding company and a financial holding company subject to various regulatorycapital requirements administered by federal banking agencies, including the Federal Reserve Board.Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional,discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’sconsolidated financial statements. The Company must meet specific capital adequacy guidelines thatinvolve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated underregulatory accounting practices. The capital amounts and classification are also subject to qualitativejudgments by the regulators about components, risk weightings and other factors.Quantitative measures established by regulation to ensure capital adequacy require the Company tomaintain a minimum Tier 1 capital and Tier 1 leverage ratio (as defined in the regulations), as well as109