Legg Mason Reports Results for Third Quarter of Fiscal Year 2010
By Legg Mason Inc., PRNEWednesday, January 20, 2010
Net Income of US$44.9 Million, or US$0.28 per Diluted Share -
BALTIMORE, January 21 - Legg Mason, Inc. (NYSE: LM) today reported its operating results for the
third fiscal quarter ended December 31, 2009.
The Company reported net income of US$44.9 million, or US$0.28 per
diluted share including US$0.11 per diluted share in real estate lease
losses, as compared with US$45.8 million or US$0.30 per share in the previous
quarter. The second quarter included US$22.0 million, or US$0.09 per diluted
share in transaction costs related to the exchange of equity units. Cash
income, as adjusted, for the third quarter was US$93.2 million, as compared
to US$90.0 million in the second quarter of fiscal 2010.
Assets Under Management ("AUM") were US$681.6 billion, down 3% from
US$702.7 billion at September 30, 2009, driven by outflows, and were down 2%
from December 31, 2008 AUM of US$698.2 billion.
(Amounts in millions, except per share amounts)
(All monetary amounts are in US$)
Quarters Ended Nine Months Ended
Dec Sept Dec Dec Dec
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Operating Revenues $690.5 $659.9 $720.0 $1,963.5 $2,740.2
Operating Expenses 611.3 582.0 1,793.0 1,748.1 3,364.0
Operating Income (Loss) 79.2 77.9 (1,073.0) 215.4 (623.8)
Net Income (Loss)(1) 44.9 45.8 (1,492.8) 140.8 (1,637.7)
Cash Income (Loss), as
adjusted(2) 93.2 90.0 (756.6) 270.0 (449.9)
Net Income (Loss) Per Share -
Diluted(1) 0.28 0.30 (10.59) 0.92 (11.64)
Cash Income (Loss) Per Share,
as adjusted(2) 0.57 0.59 (5.37) 1.76 (3.20)
(1) Net income represents net income (loss) attributable to Legg
Mason, Inc.
(2) Please see Supplemental Data below for non-GAAP performance measures.
Comments on the Results of the Third Quarter of Fiscal Year 2010
Mark R. Fetting, Chairman and CEO, said, "Overall, we are pleased with
the continued progress achieved in the quarter, particularly, the significant
improvement of performance at many of our investment managers over the same
period a year ago. While outflows increased this quarter, stronger
performance at Western Asset and Permal led to substantially higher
performance fees. Operating margins, as adjusted have improved over the past
three quarters and net income and cash income, as adjusted, excluding real
estate lease losses this quarter, continued to trend in the right direction.
We have reduced our overall debt significantly, leaving us with US$1 billion
in corporate cash to reinvest in our business.
However, we can pick up the pace in restoring growth and improving
margins. We are cognizant of the fact that it takes some time for flows to
follow performance and we are working hard in conjunction with our
distribution teams to position ourselves to capture assets as improved
performance continues to reflect in our medium and longer term numbers. We
will also increase our vigilance on cost and efficiencies."
Assets Under Management Decreased to US$682 Billion
AUM decreased 3% to US$681.6 billion as compared with US$702.7 billion at
September 30, 2009. AUM decreased 2% from US$698.2 billion at December 31,
2008.
- Total outflows were approximately US$33 billion for the
quarter ended December 31. Fixed income, equity and liquidity outflows
were US$24 billion, US$4 billion and US$5 billion, respectively.
- At December 31, 2009, fixed income represented 54% of total AUM,
equity 25% and liquidity 21%.
- AUM for U.S. domiciled clients was 65% of total AUM and, for
non-US clients, 35%. By business division, 69% of AUM was in the
Americas Division and 31% of AUM was in the International Division.
- Average AUM during the quarter was US$693.3 billion as compared
to US$684.0 billion in the second quarter of fiscal 2010 and US$745.1
billion in the third quarter of fiscal 2009.
Comparison to the Second Quarter of Fiscal Year 2010
Net income was US$44.9 million or US$0.28 per diluted share as compared
to US$45.8 million or US$0.30 per diluted share in the second quarter. The
current quarter included charges of US$28.3 million pre-tax or US$0.11 per
diluted share related to sublease agreements entered into during the quarter.
The prior quarter included US$22.0 million, or US$0.09 per diluted share in
costs related to the exchange of equity units.
- Revenues of US$690.5 million were up 5% from US$659.9 million
in the quarter ended September 30, 2009. This reflects an increase in
performance fees earned in the quarter and higher average AUM.
- Operating expenses of US$611.3 million increased 5% from US$582.0
million in the second quarter of fiscal 2010. The increase was
primarily attributable to the US$28.3 million in real estate lease
losses and US$5.4 million related to a closed-end fund launch.
Excluding these charges operating expenses were essentially flat
compared to the prior quarter.
- Operating margin was 11.5% as compared to 11.8% in second quarter
of fiscal 2010. Operating margin, as adjusted(1), was 17.9% as compared
to 21.0% in the second fiscal quarter. The impact of the real estate
lease losses on the operating margin, as adjusted, was 5.5%.
- Other non-operating income (expense) was (US$6.9) million, as
compared to (US$2.9) million in the second quarter of fiscal 2010,
which included US$22.0 million in transaction costs from the exchange
of equity units. In addition, gains on funded deferred compensation
plan and seed investments that are offset in compensation and benefits
were US$12.6 million in the current quarter as compared to US$24.1
million in the second quarter. Gains on corporate investments,
primarily seed investments, were US$7.5 million as compared with
US$16.2 million in the previous quarter.
- Cash income, as adjusted, was US$93.2 million, or US$0.57 per
diluted share, as compared to cash income, as adjusted, of US$90.0
million or US$0.59 per diluted share in the second quarter.
- Pre-tax profit margin decreased to 10.5% from 11.4% in the second
quarter. Pre-tax profit margin, as adjusted, was 14.1%, compared to
14.3% in the second quarter of 2010.
Comparison to the Third Quarter of Fiscal Year 2009
Net income was US$44.9 million or US$0.28 per diluted share, up from a
net loss of US$1.5 billion or US$10.59 per diluted share, in the third
quarter of fiscal 2009 as the prior year's third quarter results included
significant money market fund support and impairment charges.
- Revenues of US$690.5 million decreased 4% from the prior year
quarter, driven by a decline in fees earned due to lower average AUM.
- Operating expenses decreased by 66% from the prior year quarter.
This was primarily due to impairment charges incurred in the December
2008 quarter of US$1.2 billion.
- Operating margin was 11.5% as compared to a loss in the prior
year quarter. Operating margin, as adjusted, was 17.9% as compared with
20.9% for the prior year quarter.
- Other non-operating income (expense) in the third quarter was
(US$6.9) million as compared to (US$1.2) billion in the prior year
quarter, primarily due to US$1.1 billion in money market fund support
charges in the prior year period.
- Cash income, as adjusted, was US$93.2 million, or US$0.57 per
diluted share, as compared to a cash loss, as adjusted, of US$756.6
million for the quarter ended December 31, 2008, or US$5.37 per diluted
share.
- Pre-tax profit margin increased to 10.5% from a loss in the third
fiscal quarter of 2009. The pre-tax profit margin, as adjusted, was
14.1%, as compared with 4.7% in the prior year quarter.
Quarterly Business Developments
Product
- Legg Mason raised US$315.8 million, assuming full exercise of
the underwriters' over allotment option, in the Western Asset Global
Corporate Defined Opportunity Fund, their third and largest closed-end
fund offering during 2009.
- ClearBridge Advisors was selected by Pax World and Morningstar to
serve as a subadvisor in their new SRI Asset Allocation offering in
four strategies: Aggressive Growth, Growth, Moderate and Conservative.
- The Legg Mason Permal Global Absolute fund, a Dublin domiciled
fund was launched in October and registered in the UK.
Performance
- At December 31, 2009, 69% of Legg Mason's long-term U.S. fund
assets were beating their Lipper category averages for the 1-year
period; 69% for the 3-year period; 67% for the 5-year period and 81%
for the 10-year period.
- 52% of Legg Mason's U.S. Mutual fund assets were rated 4 or 5
stars by Morningstar, including 92% of Royce's fund assets, at December
31, 2009.
- At December 31, 2009, all nine Western Asset Funds outperformed
their benchmarks for the quarter-to-date period and eight of nine
outperformed their benchmarks for the 1-year period, while longer term
performance versus benchmarks continue to improve.
- At December 31, 2009, eight of 13 funds managed by ClearBridge
outperformed their benchmarks for the 1-year period, seven of 13
outperformed for the 3-year period and 11 of 13 outperformed for the
10-year period.
- At December 31, 2009, 14 of 25 funds managed by Royce &
Associates outperformed their benchmarks for the quarter-to-date
period, 17 of 22 outperformed for the 1-year period, and 18 of 20
outperformed for the 3-year period.
- At December 31, 2009, all six funds managed by LM Capital
Management outperformed their benchmarks for the 1-year period,
although longer term performance remains challenged.
Balance Sheet
At December 31, 2009, Legg Mason's cash position was US$1.4 billion.
Total debt was US$2.0 billion and stockholders' equity was US$5.8 billion.
The ratio of total debt to total capital (total equity plus total debt) was
25%. In January 2010, the Company received a tax refund of US$459 million and
subsequently paid down a US$550 million term loan, bringing the ratio of
total debt to total capital to 20%.
Conference Call to Discuss Results
A conference call to discuss the Company's results, hosted by Mr.
Fetting, will be held at 8:30 a.m. E.S.T. today. The call will be open to the
general public. Interested participants should access the call by dialing
1-866-814-8470 (or for international calls +1-703-639-1369) at least 10
minutes prior to the scheduled start to ensure connection.
The presentation slides that will be reviewed during the conference call
will be available on the Investor Relations section of the Legg Mason website
(www.leggmason.com/investor_relations.aspx) shortly after the release of the
quarter ended December 31, 2009 financial results.
A replay of the live broadcast will be available on the Legg Mason
website, in the investor relations section, or by dialing 1-888-266-2081 (or
for international calls +1-703-925-2533), access Pin Number 1426214 after the
completion of the call. Please note that the replay will be available
beginning at 2:00 p.m., E.S.T. on Thursday, January 21, 2010 and ending on
February 4, 2010.
About Legg Mason
Legg Mason is a global asset management firm, with US$681.6 billion in
assets under management as of December 31, 2009. The Company provides active
asset management in many major investment centers throughout the world. Legg
Mason is headquartered in Baltimore, Maryland, and its common stock is listed
on the New York Stock Exchange (symbol: LM).
This release contains forward-looking statements subject to risks,
uncertainties and other factors that may cause actual results to differ
materially. For a discussion of these risks and uncertainties, see "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Legg Mason's Annual Report on Form 10-K for the
fiscal year ended March 31, 2009 and in the Company's quarterly reports on
Form 10-Q.
Cash Income (Loss) and Cash Income (Loss), as Adjusted
We define "cash income" as net income (loss) attributable to Legg Mason,
Inc. plus amortization and deferred taxes related to intangible assets and
goodwill, and imputed interest and tax benefits on contingent convertible
debt less deferred income taxes on goodwill and intangible asset impairment.
We define "cash income, as adjusted" as cash income plus (less) net money
market fund support losses (gains) and impairment charges less net losses on
the sale of the underlying SIV securities.
We believe that cash income and cash income, as adjusted, provide good
representations of our operating performance adjusted for non-cash
acquisition related items and other items that facilitate comparison of our
results to the results of other asset management firms that have not engaged
in money market fund support transactions, issued contingent convertible debt
or made significant acquisitions, including any related goodwill or
intangible asset impairments.
We also believe that cash income and cash income, as adjusted, are
important metrics in estimating the value of an asset management business.
These measures are provided in addition to net income, but are not a
substitute for net income and may not be comparable to non-GAAP performance
measures, including measures of cash earnings or cash income, of other
companies. Further, cash income and cash income, as adjusted, are not
liquidity measures and should not be used in place of cash flow measures
determined under GAAP. Legg Mason considers cash income and cash income, as
adjusted, to be useful to investors because they are important metrics in
measuring the economic performance of asset management companies, as
indicators of value, and because they facilitate comparisons of Legg Mason's
operating results with the results of other asset management firms that have
not engaged in money market fund support transactions, significant
acquisitions, or issued contingent convertible debt.
In calculating cash income, we add the impact of the amortization of
intangible assets from acquisitions, such as management contracts, to net
income to reflect the fact that these non-cash expenses distort comparisons
of Legg Mason's operating results with the results of other asset management
firms that have not engaged in significant acquisitions. Deferred taxes on
indefinite-life intangible assets and goodwill represent actual tax benefits
that are not realized under GAAP absent an impairment charge or the
disposition of the related business. Because we actually receive these tax
benefits on indefinite-life intangibles and goodwill over time, we add them
to net income in the calculation of cash income. Conversely, we subtract the
income tax benefits on impairment charges that have been recognized under
GAAP. We also add back imputed interest on contingent convertible debt, which
is a non-cash expense, as well as the actual tax benefits on the related
contingent convertible debt that are not realized under GAAP. In calculating
cash income, as adjusted, we add (subtract) net money market fund support
losses (gains) (net of losses on the sale of the underlying SIV securities,
if applicable) and impairment charges to cash income to reflect that these
charges distort comparisons of Legg Mason's operating results to prior
periods and the results of other asset management firms that have not engaged
in money market fund support transactions or significant acquisitions,
including any related impairments.
Should a disposition or impairment charge for indefinite-life intangibles
or goodwill occur, its impact on cash income and cash income, as adjusted,
may distort actual changes in the operating performance or value of our firm.
Also, realized losses on money market fund support transactions are
reflective of changes in the operating performance and value of our firm.
Accordingly, we monitor these items and their related impact, including
taxes, on cash income and cash income, as adjusted, to ensure that
appropriate adjustments and explanations accompany such disclosures.
Although depreciation and amortization of fixed assets are non-cash
expenses, we do not add these charges in calculating cash income or cash
income, as adjusted, because these charges are related to assets that will
ultimately require replacement.
Operating Margin, as Adjusted
We calculate "operating margin, as adjusted," by dividing (i) operating
income, adjusted to exclude the impact on compensation expense of gains or
losses on investments made to fund deferred compensation plans, the impact on
compensation expense of gains or losses on seed capital investments by our
affiliates under revenue sharing agreements and, impairment charges by (ii)
our operating revenues less distribution and servicing expenses that are
passed through to third-party distributors, which we refer to as "adjusted
operating revenues". The compensation items are removed from operating income
in the calculation because they are offset by an equal amount in Other
non-operating income (expense), and thus have no impact on Net Income. We use
adjusted operating revenues in the calculation to show the operating margin
without distribution revenues that are passed through to third parties as a
direct cost of selling our products. Legg Mason believes that operating
margin, as adjusted, is a useful measure of our performance because it
provides a measure of our core business activities excluding items that have
no impact on net income and because it indicates what Legg Mason's operating
margin would have been without the distribution revenues that are passed
through to third parties as a direct cost of selling our products. This
measure is provided in addition to the Company's operating margin calculated
under GAAP, but is not a substitute for calculations of margins under GAAP
and may not be comparable to non-GAAP performance measures, including
measures of adjusted margins, of other companies.
Pre-tax Profit Margin, as Adjusted
We calculate "pre-tax margin, as adjusted," by dividing income (loss)
from operations before income tax provision adjusted to exclude the impact of
net money market fund support gains and losses, and impairment charges by
adjusted operating revenues. Legg Mason believes that pre-tax profit margin
adjusted for distribution and servicing expense, money market fund support
gains and losses, and impairment charges is a useful measure of our
performance because it indicates what Legg Mason's pre-tax profit margin
would have been without the distribution revenues that are passed through to
third parties as a direct cost of selling our products, money market fund
support gains and losses, and impairment charges that we do not consider part
of our core business metrics, and thus shows the effect of these items on our
pre-tax profit margin. This measure is provided in addition to the pre-tax
profit margin calculated under GAAP, but is not a substitute for calculations
of margin under GAAP and may not be comparable to non-GAAP performance
measures, including measures of adjusted margins, of other companies.
(1) Please see supplemental data below
(All monetary amounts are in US$)
LEGG MASON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
For the
Quarters Nine Months
Ended Ended
-------- ------------
December September December December December
2009 2009 2008 2009 2008
-------- ---------- --------- --------- ---------
Operating Revenues:
Investment
advisory fees:
Separate
accounts $208,860 $206,972 $225,156 $606,720 $824,947
Funds 350,767 347,371 389,367 1,026,162 1,499,754
Performance
fees 31,546 9,566 2,910 46,796 16,492
Distribution and
service fees 97,900 94,619 99,990 279,220 389,285
Other 1,406 1,368 2,565 4,561 9,678
----- ----- ----- ----- -----
Total
operating
revenues 690,479 659,896 719,988 1,963,459 2,740,156
------- ------- ------- --------- ---------
Operating
Expenses:
Compensation and
benefits 287,657 287,559 195,238 844,028 895,089
Distribution and
servicing 177,660 174,388 202,502 524,512 789,344
Communications
and technology 39,845 40,538 45,140 120,873 144,511
Occupancy 63,225 35,689 70,656 131,498 138,555
Amortization of
intangible
assets 5,746 5,664 9,252 17,038 28,475
Impairment
charges - - 1,225,100 - 1,225,100
Other 37,198 38,174 45,105 110,163 142,927
------ ------ ------ ------- -------
Total
operating
expenses 611,331 582,012 1,792,993 1,748,112 3,364,001
------- ------- --------- --------- ---------
Operating Income
(Loss) 79,148 77,884 (1,073,005) 215,347 (623,845)
------ ------ ---------- ------- --------
Other Non-
Operating Income
(Expense)
Interest income 2,225 1,737 8,468 5,783 52,761
Interest
expense (29,241) (28,565) (45,588) (101,196) (135,883)
Fund support - 5,613 (1,085,296) 23,171 (1,676,810)
Other income
(expense) 20,107 18,324 (75,606) 84,831 (112,945)
Total other
non-
operating
income ------ ------ ---------- ------ ----------
(expense) (6,909) (2,891) (1,198,022) 12,589 (1,872,877)
------ ------ ---------- ------ ----------
Income (Loss)
before Income
Tax Provision
(Benefit) 72,239 74,993 (2,271,027) 227,936 (2,496,722)
Income tax
provision
(benefit) 26,006 27,671 (778,047) 82,057 (858,672)
------ ------ -------- ------ --------
Net Income
(Loss) 46,233 47,322 (1,492,980) 145,879 (1,638,050)
Less: Net income
(loss)
attributable
to noncontrolling
interests 1,311 1,548 (148) 5,129 (356)
----- ----- ---- ----- ----
Net Income
(Loss)
attributable to
Legg
Mason, Inc. $44,922 $45,774 $(1,492,832) $140,750 $(1,637,694)
======= ======= =========== ======== ===========
Net income
(loss) per
share
attributable to
Legg Mason, Inc.
common
shareholders:
Basic $0.28 $0.30 $(10.59) $0.93 $(11.64)
===== ===== ======= ===== =======
Diluted $0.28 $0.30 $(10.59) $0.92 $(11.64)
===== ===== ======= ===== =======
Weighted
average
number of
shares
outstanding:
Basic 160,815 151,267 141,019 151,417 140,652
Diluted
(1) 162,949 153,224 141,019 153,559 140,652
(1) Diluted shares are the same as basic shares for periods with a loss
LEGG MASON, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO LEGG MASON, INC.
TO CASH INCOME (LOSS), AND CASH INCOME, AS ADJUSTED (1)
(Amounts in thousands, except per share amounts)
(Unaudited)
For the
Quarters Nine Months
Ended Ended
-------- -------------
Dec. Sept. Dec. Dec. Dec.
2009 2009 2008 2009 2008
------ ------ ----- ------ ------
Net Income (Loss)
attributable
to Legg Mason, Inc. $44,922 $45,774 $(1,492,832) $140,750 $(1,637,694)
Plus:
Amortization of
intangible
assets 5,746 5,664 9,252 17,038 28,475
Deferred income taxes
on
intangible assets 33,855 34,023 37,260 103,175 107,115
Deferred income taxes
on
impairment charges - - (374,353) - (374,353)
Imputed interest on
convertible
debt (2) 8,632 8,587 8,105 25,583 24,020
------ ------ ---------- ------- ----------
Cash Income (Loss) 93,155 94,048 (1,812,568) 286,546 (1,852,437)
------ ------ ---------- ------- ----------
Plus
(Less):
Net money market fund
support
(gains) losses (3) - (4,041) 662,577 (16,565) 1,009,130
Impairment charges - - 1,225,100 - 1,225,100
Less:
Net loss on sale of
SIV
securities (3) - - (831,699) - (831,699)
------- ------- --------- -------- ---------
Cash Income (Loss),
as adjusted $93,155 $90,007 $(756,590) $269,981 $(449,906)
------- ------- --------- -------- ---------
Net Income (Loss) per
Diluted Share attributable
to Legg Mason, Inc.
common
shareholders $0.28 $0.30 $(10.59) $0.92 $(11.64)
Plus:
Amortization of
intangible
assets 0.03 0.04 0.07 0.11 0.20
Deferred income taxes
on intangible
assets 0.21 0.22 0.26 0.67 0.75
Deferred income taxes
on impairment
charges - - (2.65) - (2.65)
Imputed interest on
convertible
debt (2) 0.05 0.05 0.06 0.17 0.17
---- ---- ------ ---- ------
Cash Income (Loss) per
Diluted Share 0.57 0.61 (12.85) 1.87 (13.17)
---- ---- ------ ---- ------
Plus
(Less):
Net money market fund
support
(gains) losses (3) - (0.02) 4.70 (0.11) 7.17
Impairment charges - - 8.68 - 8.71
Less:
Net loss on sale of
SIV
securities (3) - - (5.90) - (5.91)
----- ----- ------ ----- ------
Cash Income (loss)
per Diluted
Share, as adjusted $0.57 $0.59 $(5.37) $1.76 $(3.20)
----- ----- ------ ----- ------
(1) See explanations for Use of Supplemental Data as Non-GAAP
Performance Measures
(2) Effective April 1, 2009, Legg Mason was required to retroactively
impute (non-cash) interest expense on convertible debt using an
effective interest rate that would have been attributable to
nonconvertible debt at the original date of issuance. This
adjustment also includes the actual tax benefits relating to the
convertible debt that are not recognized for GAAP purposes.
(3) Includes related adjustments to operating expenses, if applicable,
and income tax provision (benefit).
LEGG MASON, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
RECONCILIATION OF OPERATING MARGIN, AS ADJUSTED AND
PRE-TAX PROFIT MARGIN, AS ADJUSTED (1)
(Amounts in thousands)
(Unaudited)
For the
Quarters Nine Months
Ended Ended
--------- ------------
Dec. 2009 Sept. 2009 Dec. 2008 Dec. 2009 Dec. 2008
--------- ---------- --------- --------- ---------
Operating
Revenues,
GAAP basis $690,479 $659,896 $719,988 $1,963,459 $2,740,156
Less:
Distribution
and servicing
expense 177,660 174,388 202,502 524,512 789,344
------- ------- ------- ------- -------
Operating
Revenues,
as adjusted $512,819 $485,508 $517,486 $1,438,947 $1,950,812
-------- -------- -------- ---------- ----------
Operating Income
(Loss) $79,148 $77,884 $(1,073,005) $215,347 $(623,845)
Add (Less):
Gains (losses) on
deferred compensation
and seed
investments 12,615 24,133 (43,981) 68,134 (69,051)
Impairment
charges - - 1,225,100 - 1,225,100
- - --------- - ---------
Operating Income,
as adjusted $91,763 $102,017 $108,114 $283,481 $532,204
------- -------- -------- -------- --------
Operating margin,
GAAP basis 11.5 11.8 % (149.0)% 11.0 % (22.8)%
Operating margin,
as adjusted 17.9 21.0 20.9 19.7 27.3
Income (Loss)
before Income
Tax Provision
(Benefit), GAAP
Basis $72,239 $74,993 $(2,271,027) $227,936 $(2,496,722)
------- ------- ----------- -------- -----------
Add (Less):
Net money market
fund
support (gains)
losses (2) - (5,613) 1,070,296 (23,171) 1,631,810
Impairment
charges - - 1,225,100 - 1,225,100
- - --------- - ---------
Income (Loss)
before Income
Tax Provision
(Benefit), as
adjusted $72,239 $69,380 $24,369 $204,765 $360,188
------- ------- ------- -------- --------
Pre-tax profit
margin,
GAAP basis 10.5 % 11.4 % (315.4)% 11.6 % (91.1)%
Pre-tax profit
margin, as
adjusted 14.1 14.3 4.7 14.2 18.5
(1) See explanations for Use of Supplemental Data as Non-GAAP
Performance Measures
(2) Includes related adjustments to operating expenses, if applicable
LEGG MASON, INC. AND SUBSIDIARIES
(Amounts in billions)
(Unaudited)
Assets Under
Management
Quarters Ended
--------------
Dec. 2009 Sept. 2009 June 2009 March 2009 Dec. 2008
--------- ---------- --------- ---------- ---------
By asset class:
Equity $168.7 $165.6 $143.6 $126.9 $148.4
Fixed Income 365.8 385.7 366.6 357.6 392.1
Liquidity 147.1 151.4 146.7 147.9 157.7
----- ----- ----- ----- -----
Total $681.6 $702.7 $656.9 $632.4 $698.2
====== ====== ====== ====== ======
By asset
class (average):
Equity $164.6 $155.7 $138.0 $134.2 $169.6
Fixed Income 378.8 377.5 362.3 370.0 408.3
Liquidity 149.9 150.8 146.9 153.2 167.2
----- ----- ----- ----- -----
Total $693.3 $684.0 $647.2 $657.4 $745.1
====== ====== ====== ====== ======
By division:
Americas $472.9 $484.3 $457.1 $446.7 $490.6
International 208.7 218.4 199.8 185.7 207.6
----- ----- ----- ----- -----
Total $681.6 $702.7 $656.9 $632.4 $698.2
====== ====== ====== ====== ======
Component Changes
in Assets Under
Management
Quarters Ended
--------------
Dec. 2009 Sept. 2009 June 2009 March 2009 Dec. 2008
--------- ---------- --------- ---------- ---------
Beginning of
period $702.7 $656.9 $632.4 $698.2 $841.9
Net client cash
flows (32.7) (8.1) (30.3) (43.5) (77.0)
Market
performance
and other 11.6 53.9 54.8 (21.7) (66.7)
Acquisitions
(Dispositions),
net - - - (0.6) -
--- --- --- ---- ---
End of period $681.6 $702.7 $656.9 $632.4 $698.2
====== ====== ====== ====== ======
By Division
Americas
Beginning of
period $484.3 $457.1 $446.7 $490.6 $591.5
Net client cash
flows (21.4) (11.8) (27.0) (28.4) (47.4)
Market
performance and
other 10.0 39.0 37.4 (14.9) (53.5)
Acquisitions
(Dispositions),
net - - - (0.6) -
--- --- --- ---- ---
End of period $472.9 $484.3 $457.1 $446.7 $490.6
====== ====== ====== ====== ======
International
Beginning of
period $218.4 $199.8 $185.7 $207.6 $250.4
Net client cash
flows (11.3) 3.7 (3.3) (15.1) (29.6)
Market
performance and
other 1.6 14.9 17.4 (6.8) (13.2)
Acquisitions
(Dispositions),
net - - - - -
--- --- --- --- ---
End of period $208.7 $218.4 $199.8 $185.7 $207.6
====== ====== ====== ====== ======
LEGG MASON, INC. AND SUBSIDIARIES
COMPONENT CHANGES IN ASSETS UNDER MANAGEMENT
(Amounts in billions)
(Unaudited)
For the For the
Nine Months Twelve Months
Ended Ended
------------ ---------------
--------- --------- --------- ---------
Dec. 2009 Dec. 2008 Dec. 2009 Dec. 2008
--------- --------- --------- ---------
Beginning of period $632.4 $950.1 $698.2 $998.5
Net client cash
flows (71.1) (115.4) (114.6) (134.6)
Market performance
and other 120.3 (136.0) 98.6 (164.5)
Acquisitions
(Dispositions), net - (0.5) (0.6) (1.2)
--- ---- ---- ----
End of period $681.6 $698.2 $681.6 $698.2
====== ====== ====== ======
By Division
For the For the
Nine Months Twelve Months
Ended Ended
----------- -------------
Americas
Beginning of
period $446.7 $672.2 $490.6 $713.0
Net client cash
flows (60.2) (81.7) (88.6) (90.5)
Market
performance and
other 86.4 (99.4) 71.5 (131.4)
Acquisitions
(Dispositions),
net - (0.5) (0.6) (0.5)
--- ---- ---- ----
End of period $472.9 $490.6 $472.9 $490.6
====== ====== ====== ======
International
Beginning of
period $185.7 $277.9 $207.6 $285.5
Net client cash
flows (10.9) (33.7) (26.0) (44.1)
Market
performance and
other 33.9 (36.6) 27.1 (33.1)
Acquisitions
(Dispositions),
net - - - (0.7)
--- --- --- ----
End of period $208.7 $207.6 $208.7 $207.6
====== ====== ====== ======
Use of Supplemental Data as Non-GAAP Performance Measures
As supplemental information, we are providing the following performance
measures that are based on methodologies other than generally accepted
accounting principles ("non-GAAP") that management uses as benchmarks in
evaluating and comparing the period-to-period operating performance of Legg
Mason, Inc. and its subsidiaries:
- Cash income
- Cash income, as adjusted
- Operating margin, as adjusted
- Pre-tax profit margin, as adjusted
Investors, Alan Magleby, +1-410-454-5246, amagleby at leggmason.com, or Media, Mary Athridge, +1-212-805-6035, mkathridge at leggmason.com
Tags: Baltimore, Legg Mason Inc., maryland, Western Europe
