<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8529
LEGG MASON, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-1200960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 South Calvert Street - Baltimore, MD 21203-1476
(Address of principal executive offices) (Zip code)
(410) 539-0000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
18,364,991 shares of Common Stock as of the close of business on
August 1, 1997.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LEGG MASON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands of dollars)
<TABLE>
<CAPTION>
June 30,1997 March 31,1997
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents.............. $ 205,891 $ 150,976
Cash and securities segregated for
regulatory purposes................... 491,967 442,305
Resale agreements...................... 77,795 132,801
Receivable from customers.............. 576,102 527,456
Securities borrowed.................... 418,756 263,612
Securities owned, at market value...... 119,855 78,862
Investment securities, at market value. 52,028 66,983
Office equipment and leasehold
improvements.......................... 42,141 35,809
Intangible assets...................... 60,556 61,423
Other.................................. 169,201 118,741
---------- ----------
$2,214,292 $1,878,968
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Payable to customers................... $1,066,606 $ 960,646
Payable to brokers and dealers......... 7,028 7,112
Securities loaned...................... 371,580 250,804
Short-term borrowings.................. 96,557 13,400
Securities sold, but not yet purchased,
at market value....................... 25,835 12,507
Accrued compensation................... 48,153 58,893
Other.................................. 65,012 57,396
Senior notes........................... 99,593 99,581
---------- ----------
1,780,364 1,460,339
---------- ----------
Stockholders' equity:
Common stock........................... 1,834 1,827
Additional paid-in capital............. 194,620 192,817
Retained earnings...................... 237,158 223,752
Net unrealized appreciation on
investment securities................. 316 233
---------- ----------
433,928 418,629
---------- ----------
$2,214,292 $1,878,968
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 3
LEGG MASON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1997 1996
<S> <C> <C>
Revenues:
Commissions......................... $ 51,609 $ 47,586
Principal transactions.............. 22,050 18,344
Investment advisory and related fees 55,403 42,483
Investment banking.................. 14,921 14,141
Interest............................ 26,805 17,958
Other............................... 8,452 8,325
-------- --------
179,240 148,837
-------- --------
Expenses:
Compensation and benefits........... 100,832 84,447
Occupancy and equipment rental...... 11,834 10,125
Communications...................... 9,242 7,131
Floor brokerage and clearing fees... 1,185 1,533
Interest............................ 14,675 9,462
Other............................... 14,524 14,153
-------- --------
152,292 126,851
-------- --------
Earnings Before Income Taxes......... 26,948 21,986
Income taxes........................ 11,158 9,086
-------- --------
Net Earnings......................... $ 15,790 $ 12,900
======== ========
Earnings per common share:
Primary............................. $ .82 $ .80
Fully diluted....................... $ .81 $ .71
Average number of common shares
outstanding:
Primary............................. 19,366 16,050
Fully diluted....................... 19,494 18,728
Dividends declared per common share.. $ .13 $ .12
Book value per common share.......... $ 23.66 $ 20.15
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4
LEGG MASON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.................................... $ 15,790 $ 12,900
Noncash items included in earnings:
Depreciation and amortization................. 4,141 3,734
-------- --------
19,931 16,634
(Increase) decrease in assets:
Cash and securities segregated for regulatory
purposes..................................... (49,662) 29,559
Receivable from customers...................... (48,646) (51,845)
Securities borrowed............................ (155,144) (38,524)
Securities owned............................... (40,993) (13,908)
Other.......................................... (50,488) (66,106)
Increase(decrease) in liabilities:
Payable to customers........................... 105,960 15,749
Payable to brokers and dealers................. (84) 1,741
Securities loaned.............................. 120,776 19,421
Securities sold, but not yet purchased......... 13,328 12,858
Accrued compensation........................... (10,740) (6,421)
Other.......................................... 7,553 3,588
-------- --------
CASH USED FOR OPERATING ACTIVITIES............... (88,209) (77,254)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for:
Office equipment and leaseholds................ (8,983) (2,679)
Intangible assets.............................. (585) (13)
Net decrease in resale agreements............... 55,006 9,471
Purchases of investment securities.............. (33,473) (38,589)
Proceeds from maturities of investment securities 48,567 46,720
-------- --------
CASH PROVIDED BY INVESTING ACTIVITIES............ 60,532 14,910
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term borrowings........... 83,157 127,077
Issuance of common stock........................ 1,810 669
Dividends paid.................................. (2,375) (1,846)
-------- --------
CASH PROVIDED BY FINANCING ACTIVITIES............ 82,592 125,900
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS........ 54,915 63,556
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD. 150,976 89,378
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....... $205,891 $152,934
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
LEGG MASON, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars)
June 30, 1997
(Unaudited)
1. Interim Basis of Reporting:
The accompanying unaudited condensed consolidated financial
statements of Legg Mason, Inc. and its wholly-owned subsidiaries
(the "Company")have been prepared in accordance with the instructions
for Form 10-Q and, therefore, do not include all information and notes
required by generally accepted accounting principles for complete
financial statements. The interim financial statements have been
prepared utilizing the interim basis of reporting and, as such, reflect
all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
presentation of the results for the periods presented. The nature
of the Company's business is such that the results of any interim
period are not necessarily indicative of results for a full year.
2. Net Capital Requirements:
The Company's broker-dealer subsidiaries are subject to the
Securities and Exchange Commission's Uniform Net Capital Rule. The
Rule provides that equity capital may not be withdrawn or cash
dividends paid if resulting net capital would fall below specified
levels. As of June 30, 1997, the broker-dealer subsidiaries had
aggregate net capital, as defined, of $134,650 which exceeded
required net capital by $121,408.
3. Legal Proceedings:
The Company and its subsidiaries have been named as defendants
in various legal actions arising primarily from securities and
investment banking activities, including certain class actions
which primarily allege violations of securities laws and seek
unspecified damages which could be substantial. While the ultimate
resolution of these actions cannot be currently determined, in the
opinion of management, after consultation with legal counsel, the
actions will be resolved with no material adverse effect on the
consolidated financial statements of the Company.
4. Supplemental Cash Flow Information:
Interest payments were $12,865 in 1997 and $8,573 in 1996. Income
tax payments were $941 in 1997 and $3,515 in 1996.
<PAGE> 6
5. Subsequent Event:
On July 24, 1997, the Company declared a four-for-three stock split,
payable September 24, 1997 to shareholders of record on September 8, 1997.
Pro forma earnings per share data assuming restatement based on the
four-for-three stock split is as follows:
For the Three Months Ended June 30,
1997 1996
Earnings Per Share:
Primary
As Reported $.82 $.80
Restated $.61 $.60
Fully Diluted
As Reported $.81 $.71
Restated $.61 $.53
Weighted Average Common
and Common Equivalent
Shares Outstanding:
Primary
As Reported 19,366 16,050
Restated 25,814 21,395
Fully Diluted
As Reported 19,494 18,728
Restated 25,986 24,964
6. Recent Accounting Developments:
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130, "Reporting Comprehensive Income" effective for
fiscal years beginning after December 15, 1997. SFAS 130 establishes
standards for reporting and display of comprehensive income and its
components (revenues, expenses, gains, and losses) in a full set of
general-purpose financial statements. This Statement requires the
disclosure of an amount that represents total comprehensive income
and the components of comprehensive income in a financial statement.
The Company has not yet determined the impact on the financial statements
from adopting Statement No. 130.
<PAGE> 7
In June 1997, Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information" was issued and is effective for
financial statements for periods beginning after December 15, 1997.
This Statement establishes standards for determining an entity's operating
segments and the type and level of financial information to be disclosed
in both annual and interim financial statements. It also establishes
standards for related disclosures about products and services, geographic
areas and major customers. The Company has not yet determined the impact
on the financial statements from adopting Statement No. 131.
<PAGE> 8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
During its first fiscal quarter ended June 30, 1997, Legg Mason, Inc. and
its subsidiaries (the "Company") continued to benefit from favorable conditions
in the securities markets. Rising equity markets and higher securities
transaction volume contributed to record revenues, net earnings and fully
diluted earnings per share.
Quarter Ended June 30, 1997 Compared to Quarter Ended
June 30, 1996
In the first fiscal quarter ended June 30, 1997, the Company's net earnings
increased 22% to $15.8 million from $12.9 million in the corresponding
quarter of the prior year. Revenues rose 20% to $179.2 million from $148.8
million. Fully diluted earnings per share increased 14% to $.81 from $.71.
Primary earnings per share were $.82, up 3% from $.80.
Commission revenues were $51.6 million, up 8% from $47.6 million in the
prior year's quarter, reflecting an increased volume of listed securities
transactions.
Revenues from principal transactions rose 20% to $22.0 million, as a
result of improved trading results, principally with respect to energy-
related equity positions and municipal securities.
Investment advisory and related fees increased for the 29th consecutive
quarter and were 30% higher than in the corresponding quarter of the prior
year as a result of growth in assets under management in Company-sponsored
mutual funds, fee-based brokerage accounts and the Company's fixed-income
investment advisory subsidiary. Company subsidiaries now serve as investment
advisors to individual and institutional accounts and mutual funds with
assets of $48.2 billion, up from $36.1 billion at June 30, 1996.
Investment banking revenues were $14.9 million, 6% higher than in the
corresponding quarter of the prior year, primarily because of an increase in
fees from managed municipal finance offerings. Corporate finance revenues rose
modestly, despite a decline in revenues from public offerings of energy-
related securities.
Other revenues increased 2% to $8.5 million because of higher fees from
increased investor activity.
Compensation and benefits increased 19% to $100.8 million, reflecting
higher sales and profitability-based compensation and an increase in the
average number of full-time employees as a result of business expansion.
Occupancy and equipment rental increased 17% to $11.8 million as a result
of increased technology-related expenditures.
Communications expense rose 30% to $9.2 million as a result of higher
telephone, printing and quote service costs related to increased business
activity.
<PAGE> 9
Although transaction volume rose, floor brokerage and clearing fees
declined 23% to $1.2 million, reflecting lower execution expenses from more
efficient order routing and execution systems and procedures.
Other expense increased 3% to $14.5 million, primarily because of higher
promotional and litigation-related expenses, substantially offset by lower
programming and intangible amortization expenses.
Interest revenue increased 49% to $26.8 million because of larger firm
investment, customer margin account, and conduit stock loan balances.
Interest expense increased 55% to $14.7 million as a result of larger,
interest-bearing customer credit balances.
Income taxes rose 23% to $11.2 million because of an increase in pre-tax
earnings. The effective tax rate was 41.4% compared with 41.3% in the prior
year's quarter.
<PAGE> 10
Liquidity and Capital Resources
There has been no material change in the Company's financial position
since March 31, 1997. A substantial portion of the Company's assets is
liquid, consisting mainly of cash and assets readily convertible into cash.
These assets are financed principally by free credit balances, equity capital,
bank lines of credit, senior notes and other payables.
During the three months ended June 30, 1997, cash and cash equivalents
increased $54.9 million. Cash flows from financing activities contributed
$82.6 million, attributable to higher short-term borrowings by the Company's
mortgage banking affiliates, primarily for the funding of multi-family
residential mortgages for pre-committed resale to the Federal Home Loan
Mortgage Corporation ("Freddie Mac"). The mortgages were sold to Freddie Mac
and the loans repaid by August 1997. Cash flows from investing activities
provided $60.5 million, principally from reduced levels of investments in
resale agreements. The Company used $88.2 million of cash in operating
activities, principally to fund increased regulatory cash requirements,
the aforementioned multi-family residential mortgages and securities
holdings, partially offset by higher net customer payables.
<PAGE> 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Stock option agreement granted
under the Legg Mason, Inc. 1996
Equity Incentive Plan to an
executive officer of Legg Mason, Inc.,
dated May 8, 1997*
11. Statements re: computation of
per share earnings
27. Statements re: financial data
schedules
(b) No reports on Form 8-K were filed during the
quarter ended June 30, 1997.
* This exhibit is a management contract or compensatory plan or
arrangement.
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
LEGG MASON, INC.
(Registrant)
DATE: August 14, 1997 /s/ John F. Curley, Jr.
John F. Curley, Jr.
Vice Chairman of the Board
DATE: August 14, 1997 /s/ F. Barry Bilson
F. Barry Bilson
Vice President - Finance
<PAGE> 13
INDEX TO EXHIBITS
PAGE
10.1 Stock option agreement granted
under the Legg Mason, Inc.
1996 Equity Incentive Plan to
an executive officer of Legg
Mason, Inc., dated May 8,
1997*
11. Statement re: computation of per
share earnings
27. Statement re: financial data
schedules
* This exhibit is a management contract or compensatory plan or
arrangement.
EXHIBIT 10.1
LEGG MASON, INC.
1996 Equity Incentive Plan
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR
Raymond A. Mason
To: Raymond A. Mason
We are pleased to advise you that Legg Mason, Inc. (the
"Company") hereby grants to you, subject to your acceptance which
shall be indicated by your execution of this Agreement below, an
option to purchase, pursuant to the 1996 Equity Incentive Plan (the
"Plan"), 100,000 shares of the Company's Common Stock, $.10 par
value each (the "Shares"), at $47.25 per share. The date of grant
of the option provided hereby shall for all purposes be May 8,
1997. This option is intended to be a non-qualified stock option
for purposes of the Internal Revenue Code.
This option is subject in all respects to the applicable
provisions of the Plan, a complete copy of which has been furnished
to you and receipt of which you acknowledge by acceptance of this
option. Such provisions are incorporated herein by reference and
made a part hereof.
In addition to the terms, conditions and restrictions set
forth in the Plan, all terms, conditions and restrictions set forth
in this Agreement, including the following, are applicable to the
option granted as evidenced hereby:
(1) The Company may postpone the issuance and delivery of any
Shares until the completion or amendment of any registration or
qualification of the Shares, under any federal or state law, rule
or regulation which the Company may determine to be necessary or
advisable.
(2) Subject to the provisions of Section (1), in the event
that, at the time of issuance of the Shares to you pursuant to
exercise of the option provided by this Agreement, there shall not
be in effect a current registration statement under the Securities
Act of 1933 (the "Act") with respect to such issuance, you shall,
prior to issuance of the Shares to you, (a) represent to the
Company, in form satisfactory to counsel for the Company, that you
are acquiring the Shares for your own account and not with a view
to the resale or distribution thereof, and (b) agree that none of
the Shares issued to you pursuant to exercise of the option
provided hereby may be sold, transferred or otherwise disposed of
unless: (i) a registration statement under the Act shall be
effective at the time of disposition with respect to the Shares
sold, transferred or otherwise disposed of; (ii) the Company shall
<PAGE> 2
have received an opinion of counsel or other information
and representations, satisfactory to it to the effect that registration
under the Act is not required by reason of Rule 144 under the Act
or otherwise; or (iii) a "no-action" letter shall have been
received from the staff of the Securities and Exchange Commission
to the effect that such sale, transfer or other disposition may be
made without registration.
(3) This option may not be exercised prior to May 8, 2000.
Thereafter, the option shall be exercisable only as follows:
(i) During the period of 12 months beginning May 8, 2000, the
option may be exercised to the extent of 33,000 Shares.
(ii) During the next 12 month period, beginning May 8, 2001,
the option may be exercised to the extent of an additional 33,000
Shares, and to the extent the right to exercise the option
theretofore has accrued and has not been exercised.
(iii) At any time on and after May 8, 2002, the option shall be
exercisable in full except to the extent it theretofore shall have
been exercised.
(iv) To the extent not exercised, installments shall
accumulate and be exercisable by you, in whole or in part, in any
subsequent period but not after the expiration of the option. The
option will expire at the close of business on May 7, 2004.
(v) The Committee may, in its sole discretion, accelerate, to
a date not earlier than May 8, 1998, the time at which any of the
deferred installments referred to in this Section (3) may be
exercised in whole or in part.
(vi) Notwithstanding any other provision contained in this
Agreement, the option shall become immediately exercisable in full
upon the happening of any of the following events: (1) the
approval by shareholders of the Company of an agreement to merge or
consolidate the Company with or into another corporation (with the
Company not surviving) or to sell or otherwise dispose of all or
substantially all of its assets and the satisfaction or waiver of
all conditions precedent to the closing thereunder; (2) a
determination by the Board of Directors of the Company that in
connection with any proposed tender or exchange offer for voting
securities of the Company, any person has become the direct or
indirect beneficial owner of securities representing 40% or more of
the combined voting power of the Company's then outstanding
securities; provided, however, that clauses (1) and (2) of this
Section (3)(vi) shall not apply in the event that any such proposed
merger, consolidation, sale of assets or tender or exchange offer
is approved by the affirmative vote of 75% or more of the directors
who are members of the Company's Board of Directors prior to the
proposal of such merger, consolidation, sale of assets or tender or
<PAGE> 3
exchange offer; or (3) the termination of your employment by reason
of retirement at or after age 62.
(4) The following provisions shall apply in the event of
termination of your employment with the Company or a subsidiary of
the Company:
(i) Except as expressly provided hereinafter in this
Section (4), this option may be exercised only if, at all times
during the period beginning with the date of grant of the option
and ending on the date of such exercise, you were an employee of
the Company or a subsidiary of the Company. For purposes of this
Section (4), your employment shall not be considered terminated by
reason of sick leave or other bona fide leave of absence for a
period of 90 days or less. Further, your employment shall not be
considered terminated by reason of sick leave or other bona fide
leave of absence for a period longer than 90 days if, and for so
long as, your right to continued employment with the Company or any
subsidiary is guaranteed by any applicable statute or by contract.
(ii) Upon the termination of your employment for cause,
as determined in the sole discretion of the Committee, your option
rights shall expire immediately upon the delivery to you of the
notice of your termination.
(iii) Upon a termination of your employment by reason of
permanent and total disability within the meaning of Section
105(d)(4) of the Internal Revenue Code of 1986, as amended, your
option rights shall be limited to the option shares which were
immediately purchasable by you on the date of your termination, and
such option rights shall expire unless exercised prior to the first
to occur of (A) the expiration of a period of twelve months
beginning on the date of your termination, or (B) the option
expiration date established in Section (3)(iv) of this Agreement.
In the event of your death during the period provided for the
exercise of your option rights pursuant to this Subsection (iii),
your option rights shall be exercisable for the period provided by
Subsection (iv) hereof.
(iv) Upon the termination of your employment by reason of
death, your option rights shall be limited to the option shares
which were immediately purchasable by you on the date of your
death, and such option rights shall expire unless exercised (by the
executor or administrator of your estate or by a person who
acquired the right to exercise such option by bequest or
inheritance or by reason of your death) prior to the first to occur
of (A) the expiration of a period of twelve months beginning on the
date of your death, or (B) the option expiration date established
in Section (3)(iv) of this Agreement.
(v) Upon a termination of your employment by reason of
retirement at or after age 62, your option rights shall expire
<PAGE> 4
unless exercised prior to the first to occur of (A) the expiration
of a period of twelve months beginning on the date of your
termination, or (B) the option expiration date established in
Section (3)(iv) of this Agreement. In the event of your death
during the period provided for the exercise of your option rights
pursuant to this Subsection (v), your option rights shall be
exercisable for the period provided by Subsection (iv) hereof.
(5) Nothing contained in this Agreement shall restrict the
right of the Company or any of its subsidiaries to terminate your
employment at any time, with or without cause.
(6) During your lifetime, this option shall be exercisable
only by you and shall not be transferable except as provided in
Subsection (4)(iv) hereof. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, this option, contrary to
the provisions of this Agreement and the Plan, shall be void and of
no effect; shall give no right to the purported transferee; and
shall result in forfeiture of the option involved in such attempt.
(7) This option is exercisable solely by written notice to
the Company. Each such notice shall:
(a) state the election to exercise the option and the
number of shares in respect of which it is being exercised;
(b) be signed by you or, in the event of your death or
disability, by the party entitled to exercise the option;
(c) be accompanied by (i) cash, check, bank draft or
money order in the amount of the option price payable to the order
of the Company or (ii) certificates for Shares (together with duly
executed stock powers) with an aggregate value equal to the option
price of the Shares being acquired and/or the amount of federal
and/or state income tax withholding if you are electing to deliver
shares in satisfaction of the option price and/or your withholding
obligation or (iii) a combination of the foregoing; and
(d) state, if the employee so elects, that the Company
shall pay federal and/or state income tax withholding due as a
result of the exercise by retaining Shares with an aggregate value
equal to the amount of such withholding.
The value of any shares of the Corporation's Common Stock
delivered in full or partial payment of the option price and/or
federal and/or state income tax withholding, or retained by the
Company to satisfy the federal and/or state income tax withholding
obligation shall, unless otherwise determined by the Committee
subsequent to the date of this Agreement, be determined on the
basis of the mean between the high and low prices per share on the
<PAGE> 5
New York Stock Exchange on the date preceding the date of delivery
or retention, as the case may be, of the shares.
For the purposes of the Plan the date of exercise shall be the
date on which notice and any required payment shall have been
delivered to the Company. You shall not have any of the rights of a
stockholder with respect to any of the shares subject to this
option until the shares have been issued to you upon the exercise
of the option.
(8) Any notice to be given to the Company (including notice
of exercise of all or part of this option) shall be in writing and
either hand delivered or mailed to the office of the Secretary of
the Company. If mailed, it shall be addressed to the Secretary of
the Company at 100 Light Street, Baltimore, Maryland 21202. Any
notice given to you shall be addressed to you at your address as
reflected on the personnel records of the Company. Either party
hereto may hereafter designate a different address by notice to the
other. Notice shall be deemed to have been duly delivered when
hand delivered or, if mailed, on the day such notice is postmarked.
LEGG MASON, INC.
By:/s/Theodore S. Kaplan
Theodore S. Kaplan
Senior Vice President
In order to indicate your agreement to such cancellation and
your acceptance of the stock option granted by this Agreement
subject to the restrictions and upon the terms and conditions set
forth above and in the Plan, please execute and immediately return
to the Secretary of the Company the enclosed duplicate original of
this Agreement. The grant shall be deemed to have been withdrawn
if your acceptance has not been received at the office of the
Secretary of the Company by 5:00 p.m. on August 11, 1997.
ACCEPTED AND AGREED TO:
/s/Raymond A. Mason
Employee's Signature
DATE: July 22, 1997
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
For The Three Months Ended June 30,
1997 1996
Fully Fully
Primary Diluted Primary Diluted
Weighted average shares
outstanding:
Common stock 18,308 18,308 15,399 15,399
Shares available under
options 1,058 1,168 651 693
Issuable upon conversion
of debentures - 18 - 2,636
------- ------- ------- -------
Weighted average common
and common equivalent
shares outstanding 19,366 19,494 16,050 18,728
======= ======= ======= =======
Net earnings $15,790 $15,790 $12,900 $12,900
Interest expense, net,
on debentures - 5 - 428
------- ------- ------- -------
Net earnings applicable
to common stock $15,790 $15,795 $12,900 $13,328
======= ======= ======= =======
Per share $ .82 $ .81 $ .80 $ .71
======= ======= ======= =======
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AND CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000704051
<NAME> LEGG MASON, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> $205,891,000
<RECEIVABLES> $576,102,000
<SECURITIES-RESALE> $77,795,000
<SECURITIES-BORROWED> $418,756,000
<INSTRUMENTS-OWNED> $119,855,000
<PP&E> $42,141,000
<TOTAL-ASSETS> $2,214,292,000
<SHORT-TERM> $96,557,000
<PAYABLES> $1,073,634,000
<REPOS-SOLD> $0
<SECURITIES-LOANED> $371,580,000
<INSTRUMENTS-SOLD> $25,835,000
<LONG-TERM> $99,593,000
$0
$0
<COMMON> $1,834,000
<OTHER-SE> $432,094,000
<TOTAL-LIABILITY-AND-EQUITY> $2,214,292,000
<TRADING-REVENUE> $22,050,000
<INTEREST-DIVIDENDS> $26,805,000
<COMMISSIONS> $51,609,000
<INVESTMENT-BANKING-REVENUES> $14,921,000
<FEE-REVENUE> $55,403,000
<INTEREST-EXPENSE> $14,675,000
<COMPENSATION> $100,832,000
<INCOME-PRETAX> $26,948,000
<INCOME-PRE-EXTRAORDINARY> $26,948,000
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $15,790,000
<EPS-PRIMARY> $.82
<EPS-DILUTED> $.81
</TABLE>
