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Legg Mason Inc. (LM) filed Quarterly Report for the period ended 2011-12-31.
Legg Mason Inc. has a market cap of $3.81 billion; its shares were traded at around $27.28 with a P/E ratio of 18.9 and P/S ratio of 1.4. The dividend yield of Legg Mason Inc. stocks is 1.2%.
This is the annual revenues and earnings per share of LM over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of LM.
Highlight of Business Operations:
AUM at December 31, 2011, was $627.0 billion, a decrease of $44.8 billion or 6.7% from December 31, 2010. The decrease in AUM was attributable to net client outflows of $31.2 billion and dispositions of $22.9 billion, slightly offset by market appreciation and other of $9.3 billion. The majority of outflows were in fixed income asset classes and equity asset classes of $22.4 billion and $17.6 billion, respectively, with liquidity inflows of $8.8 billion. The majority of fixed income outflows were in products managed by Western Asset. With the exception of the June 2011 quarter, we have experienced outflows in our fixed income asset class since fiscal 2008. Equity outflows were primarily at LMCM, ClearBridge, and Batterymarch Financial Management, Inc. ("Batterymarch"). We generally earn higher fees and profits on equity AUM, and outflows in this asset class will more negativelyTotal operating revenues in the quarter ended December 31, 2011, were $627.0 million, a decrease of 13.2% from $721.9 million in the prior year quarter, primarily as a result of a 7% decrease in average AUM and a decline in performance fees. Also contributing to the decrease was the impact of a decrease in average AUM revenue yields, from 34.8 basis points in the three months ended December 31, 2010, to 34.4 basis points in the three months ended December 31, 2011. The previously discussed disposition of liquidity AUM related to the MSSB relationship resulted in a relatively small reduction in operating revenues of $14.4 million, net of related fee waivers, in the December 2011 quarter, as compared to the December 2010 quarter, as a significant portion of the management fees generated by these assets were being waived prior to the disposition.
Net Income Attributable to Legg Mason, Inc., hereafter referred to as “Net Income”, for the three months ended December 31, 2011, totaled $28.1 million, or $0.20 per diluted share, compared to $61.6 million, or $0.41 per diluted share, in the prior year quarter. The decrease in Net Income was primarily due to the net impact of decreased operating revenues, the increase in occupancy expense, and an increase in incentives from changes in an expense reimbursement arrangement with Western Asset, as previously discussed. These decreases were offset in part by a decrease in corporate compensation costs due to our business streamlining initiative, as previously discussed. Adjusted Income (see Supplemental Non-GAAP Financial Information) decreased to $76.8 million, or $0.55 per diluted share, for the quarter ended December 31, 2011, from $110.3 million, or $0.73 per diluted share, in the prior year quarter, primarily due to the decrease in Net Income, as previously discussed. Operating margin decreased to 9.5%
Total operating revenues in the nine months ended December 31, 2011, were $2.01 billion, a decrease of 2.7% from $2.07 billion in the prior year period, mostly due to a 3% decrease in average AUM and a decrease in performance fees. This decrease was offset in part by an increase in average AUM revenue yields, from 33.9 basis points in the nine months ended December 31, 2010, to 35.2 basis points in the nine months ended December 31, 2011, resulting from a more favorable average asset mix. The previously discussed disposition of liquidity AUM related to the MSSB relationship resulted in a relatively small reduction in operating revenues of $41.7 million, net of related fee waivers, in the nine months ended December 31, 2011, as compared to the nine months ended December 31, 2010, as a significant portion of the management fees generated by these assets were being waived prior to the disposition.
Net Income for the three months ended December 31, 2011, was $28.1 million, or $0.20 per diluted share, compared to $56.7 million, or $0.39 per diluted share, in the three months ended September 30, 2011. Operating revenues decreased 6.4% from $669.9 million in the three months ended September 30, 2011, to $627.0 million in the December 2011 quarter, reflecting a 3% decline in average AUM, a less favorable average asset mix and a $3.9 million decrease in performance fees. The decrease was also due to the impact of a decrease in average AUM revenue yields, from 35.3 basis points in the quarter ended September 30, 2011, to 34.4 basis points in the quarter ended December 31, 2011. Operating expenses increased 0.8%, from $563.0 million in the September quarter to $567.7 million in the December quarter, primarily due to a $20.7 million increase in occupancy expense, primarily consisting of transition-related costs. This increase was substantially offset by a reduction in distribution and servicing expenses as a result of a decrease in average AUM, as well as a $3.5 million decrease in transition-related compensation and benefits. Other non-operating expense decreased $39.5 million, primarily due to a $15.9 million increase due to net market gains on assets invested for deferred compensation plans and seed capital investments, reduced net market losses on investments in proprietary fund products, and net market gains related to CIVs. Adjusted Income (see Supplemental Non-GAAP Financial Information) was $76.8 million, or $0.55 per diluted share, for the December quarter, compared to $87.6 million, or $0.61 per diluted share, in the September quarter. Operating margin was 9.5% in the December 2011 quarter compared to 16.0% in the September 2011 quarter. Operating Margin, as Adjusted (see Supplemental Non-GAAP Financial Information), for the three months ended December 31, 2011, and September 30, 2011, was 21.7% and 21.3%, respectively.
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