Legg Mason Inc. Reports Operating Results (10-Q)

Legg Mason Inc. (LM, Financial) filed Quarterly Report for the period ended 2009-12-31.

Legg Mason Inc. has a market cap of $3.96 billion; its shares were traded at around $24.54 with and P/S ratio of 1.2. The dividend yield of Legg Mason Inc. stocks is 0.5%. Legg Mason Inc. had an annual average earning growth of 9.6% over the past 10 years.LM is in the portfolios of Ronald Muhlenkamp of Muhlenkamp Fund, Murray Stahl of Horizon Asset Management, Brian Rogers of T Rowe Price Equity Income Fund, John Keeley of Keeley Fund Management, Louis Moore Bacon of Moore Capital Management, LP, Dodge & Cox, Robert Olstein of Olstein Financial Alert Fund, Manning & Napier Advisors, Inc, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

During the quarter ended December 31, 2009, deferred tax assets relating to U.S. federal and state taxing jurisdictions, which represent tax benefits that we expect to realize in future periods, decreased by approximately $554 million to $731 million, largely due to our receipt of tax refunds under newly enacted net operating loss carryback provisions. Under accounting rules, we are required to recognize a charge to earnings to reduce our deferred tax assets if it is determined that any future tax benefits are not likely to be realized before they expire. Deferred tax assets generated in U.S. jurisdictions resulting from net operating losses generally expire 20 years after they are generated, while those that relate to foreign tax credits expire after 10 years. In order to realize these future tax benefits, we estimate that we must generate approximately $3.8 billion in U.S. pre-tax earnings to avoid some portion of the benefits expiring. There can be no assurances that we will achieve a level of earnings before some portion of these tax benefits expires. In addition, our belief that we will likely be able to realize these future tax benefits is based in part upon our estimates of the timing of other differences in revenue and expense recognition between tax returns and financial statements and our current understanding of the application of tax law and regulations, which are subject to future change. If we are required to recognize a charge to earnings to reduce our deferred tax assets, the charge may be material to our earnings or financial condition.

In accordance with the terms of the original purchase agreement for the acquisition of Permal Group Ltd. (Permal), the final payment of up to $149 million for this transaction was due on the sixth anniversary of the transaction closing in November 2011. On December 13, 2009, pursuant to a Supplemental Agreement among Legg Mason, Permal and the sellers in the Permal transaction, Legg Mason settled the final payment with the Permal sellers for $9 million, which represents the fair value of the obligation.

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