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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): June 3, 1999
LEGG MASON, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland 1-8529 52-1200960
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
100 Light Street, Baltimore, Maryland 21202
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 539-0000
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
On June 3, 1999, Legg Mason, Inc. (the "Company") issued a press release
regarding revisions to its fiscal 1999 earnings and stockholders' equity. A
copy of the press release is attached hereto as Exhibit 99 and is incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
99 Press Release of Legg Mason, Inc. dated June 3, 1999.
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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 hereunto duly authorized.
LEGG MASON, INC.
Date: June 3, 1999 By: /s/ Robert F. Price
Robert F. Price
Senior Vice President
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EXHIBIT INDEX
Exhibit
99 Press Release of Legg Mason, Inc. dated June 3, 1999
<PAGE> 1
EXHIBIT 99
FOR IMMEDIATE RELEASE For further information:
Barry Bilson
- or -
Timothy C. Scheve
410-539-0000
LEGG MASON REVISES FISCAL 1999 EARNINGS
AND STOCKHOLDERS' EQUITY, WHICH REMAIN AT RECORD LEVELS
Baltimore, MD - June 3, 1999 - Legg Mason, Inc. (NYSE: LM) announced
today that, as a result of a change in rules relating to the accounting
treatment of the Company's deferred compensation stock plan (the "Plan"), it
is revising its earnings and stock-holders' equity for the quarter and fiscal
year ended March 31, 1999 and is restating its earnings and stockholders'
equity for the quarters ended September 30 and December 31, 1998. For the
fiscal year ended March 31, 1999, the changes reduce net earnings from
$95,545,000 to $89,334,000; diluted earnings by $0.07 per share, from $1.62 to
$1.55 per share; and stockholders' equity from $590 million to $554 million.
All remain the highest in the Company's history.
The changes have been made to conform to an FASB Emerging Issues Task
Force pronouncement (No. 97-14) which became effective on September 30, 1998
and which requires that increases or decreases in the value of the Company's
stock held by a trust established in connection with the Plan be treated as
non-cash decreases or increases in the Company's earnings. It also requires
that the deferred compensation obligation be recorded on the Company's
balance sheet as a liability and that stockholders' equity be reduced by the
net amount of the liability. The pronouncement applies to the Plan even
though the Company has fully funded its obligations under the Plan and
related compensation arrangements. While the changes reduce reported
earnings, they represent a non-cash item with no effect on operating cash
flow.
The Company has amended the Plan so that after the fiscal first quarter
which ends on June 30, 1999, changes in the value of the stock held by the
Plan trust will no longer affect the Company's earnings and stockholders'
equity will be substantially restored.
During the first two months of the current fiscal year, the Company has
continued its record of growth in assets under management and has recorded
strong revenues in its securities brokerage business.
A summary of original and revised financial information is attached.
Legg Mason, Inc., headquartered in Baltimore, is a holding company that
provides investment advisory, securities brokerage, investment banking and
related financial services through its wholly owned subsidiaries.
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Legg Mason, Inc.
Statements of Earnings
Quarter Ended March 31, 1999
(in 000's, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Quarters ended
As % Change
Reported EITF 97-14 Restated Prior Year From Prior
Mar. 99 Adjustment Mar. 99 Mar. 98 Year
Revenues
Investment advisory
and related fees $111,106 $- $111,106 $85,002 30.7
Commissions 78,007 - 78,007 64,958 20.1
Principal
transactions 26,482 - 26,482 23,869 10.9
Investment banking 18,878 - 18,878 23,672 (20.3)
Interest 40,905 - 40,905 36,115 13.3
Other 13,768 - 13,768 12,729 8.2
289,146 - 289,146 246,345 17.4
Expenses
Compensation and
benefits 162,578 - 162,578 136,465 19.1
Occupancy and
equipment rental 16,951 - 16,951 16,058 5.6
Communications 12,502 - 12,502 12,192 2.5
Floor brokerage and
clearing fees 1,763 - 1,763 1,433 23.0
Interest 23,981 - 23,981 21,753 10.2
Non-cash deferred
compensation
adjustment - 3,110 3,110 - N/M
Other 28,302 - 28,302 19,281 46.8
246,077 3,110 249,187 207,182 20.3
Earnings before
income taxes 43,069 (3,110) 39,959 39,163 2.0
Income taxes 16,412 (1,244) 15,168 15,642 (3.0)
Net earnings $26,657 $(1,866) $24,791 $23,521 5.4
Earnings per share
Basic $0.47 $(0.02) $0.45 $0.43 4.7
Diluted $0.45 $(0.02) $0.43 $0.40 7.5
Shares outstanding
Basic 56,189 (1,392) 54,797 54,926 (0.2)
Diluted 59,355 (1,392) 57,963 58,728 (1.3)
Book Value per Share $10.47 (0.39) $10.08 $9.08 11.0
</TABLE>
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Legg Mason, Inc.
Statements of Earnings
Fiscal Year Ended March 31, 1999
(in 000's, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fiscal year ended
As % Change
Reported EITF 97-14 Restated Prior Year From Prior
Mar. 99 Adjustment Mar. 99 Mar. 98 Year
Revenues
Investment advisory
and related fees $390,216 $- $390,216 $ 295,645 32.0
Commissions 279,136 - 279,136 241,284 15.7
Principal
transactions 94,105 - 94,105 86,748 8.5
Investment banking 76,118 - 76,118 97,138 (21.6)
Interest 160,292 - 160,292 127,268 25.9
Other 46,139 - 46,139 40,977 12.6
1,046,006 - 1,046,006 889,060 17.7
Expenses
Compensation and
benefits 584,830 - 584,830 511,413 14.4
Occupancy and
equipment rental 64,289 - 64,289 56,740 13.3
Communications 47,963 - 47,963 42,726 12.3
Floor brokerage and
clearing fees 6,677 - 6,677 5,464 22.2
Interest 94,910 - 94,910 73,706 28.8
Non-cash deferred
compensation
adjustment - 10,352 10,352 - N/M
Other 88,210 - 88,210 70,632 24.9
886,879 10,352 897,231 760,681 18.0
Earnings before
income taxes 159,127 (10,352) 148,775 128,379 15.9
Income taxes 63,582 (4,141) 59,441 52,258 13.7
Net earnings $95,545 $(6,211) $89,334 $76,121 17.4
Earnings per share
Basic $1.72 $(0.08) $1.64 $1.40 17.1
Diluted $1.62 $(0.07) $1.55 $1.31 18.3
Shares outstanding
Basic 55,664 (1,327) 54,337 54,431 (0.2)
Diluted 58,984 (1,327) 57,657 58,007 (0.6)
Book Value per Share $10.47 (0.39) $10.08 $9.08 11.0
</TABLE>
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Legg Mason, Inc.
Consolidated Statements of Financial Condition
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, 1999
AS DISCUSSED RESTATED
ASSETS
Cash and cash equivalents $207,562 $208,142
Cash and securities segregated
for regulatory purposes 1,374,255 1,374,255
Resale agreements 141,016 141,016
Receivable from customers 921,267 921,267
Securities borrowed 308,719 308,719
Securities inventory, at market value 143,998 143,998
Investment securities, at market value 17,230 17,230
Equipment and leasehold improvements, net 55,807 55,807
Intangible assets, net 56,127 56,127
Other 234,876 247,126
$3,460,857 $3,473,687
LIABILITIES
Payable to customers $2,170,588 $2,170,588
Payable to brokers and dealers 10,430 10,430
Securities loaned 311,818 311,818
Short-term borrowings 49,262 49,262
Securities sold, but not yet
purchased, at market value 11,822 11,822
Accrued compensation 115,480 115,480
Deferred compensation trust - 48,986
Other 101,448 101,448
Senior notes 99,676 99,676
$2,870,524 $2,919,510
STOCKHOLDERS' EQUITY
Common stock 5,638 5,638
Additional paid-in capital 215,387 215,387
Deferred compensation &
employee note receivable (5,362) (5,362)
Employee stock trust - (18,475)
Appreciation of employee stock trust, net - (11,470)
Retained earnings 374,843 368,632
Accumulated other
comprehensive income, net (173) (173)
$590,333 $554,177
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,460,857 $3,473,687
Book Value per Share $10.47 $10.08
</TABLE>
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Legg Mason, Inc.
Statements of Earnings
Quarter Ended December 31, 1998
(in 000's, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Quarters ended
As % Change
Reported EITF 97-14 Restated Prior Year From Prior
Dec. 98 Adjustment Dec. 98 Dec. 97 Year
Revenues
Investment
advisory and
related fees $95,389 $- $95,389 $76,704 24.4
Commissions 70,212 - 70,212 60,847 15.4
Principal
transactions 23,169 - 23,169 19,989 15.9
Investment
banking 20,061 - 20,061 33,313 (39.8)
Interest 39,243 - 39,243 33,776 16.2
Other 12,440 - 12,440 10,583 17.5
260,514 - 260,514 235,212 10.8
Expenses
Compensation
and benefits 146,967 - 146,967 142,231 3.3
Occupancy and
equipment
rental 16,498 - 16,498 14,401 14.6
Communications 10,868 - 10,868 10,369 4.8
Floor
brokerage and
clearing fees 1,652 - 1,652 1,346 22.7
Interest 23,324 - 23,324 19,348 20.5
Non-cash
deferred
compensation
adjustment - 7,482 7,482 - N/M
Other 22,759 - 22,759 18,907 20.4
222,068 7,482 229,550 206,602 11.1
Earnings before
income taxes 38,446 (7,482) 30,964 28,610 8.2
Income taxes 15,622 (2,993) 12,629 11,574 9.1
Net earnings $22,824 $(4,489) $18,335 $17,036 7.6
Earnings per share
Basic $0.41 $(0.07) $0.34 $0.31 9.7
Diluted $0.39 $(0.07) $0.32 $0.29 10.3
Shares outstanding
Basic 55,841 (1,364) 54,477 54,596 (0.2)
Diluted 58,863 (1,364) 57,499 58,402 (1.5)
Book Value
per Share $10.07 (0.34) $9.73 $8.72 11.6
</TABLE>
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Legg Mason, Inc.
Consolidated Statements of Financial Condition
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1998
AS REPORTED RESTATED
ASSETS
Cash and cash equivalents $263,564 $264,017
Cash and securities segregated
for regulatory purposes 1,259,438 1,259,438
Resale agreements 230,884 230,884
Receivable from customers 858,314 858,314
Securities borrowed 169,106 169,106
Securities inventory, at market value 126,904 126,904
Investment securities, at market value 27,590 27,590
Equipment and leasehold improvements, net 54,201 54,201
Intangible assets, net 57,508 57,508
Other 173,192 184,230
$3,220,701 $3,232,192
LIABILITIES
Payable to customers $2,111,772 $2,111,772
Payable to brokers and dealers 8,022 8,022
Securities loaned 172,070 172,070
Short-term borrowings 55,581 55,581
Securities sold, but not yet
purchased, at market value 6,646 6,646
Accrued compensation 107,808 107,808
Deferred compensation trust - 44,341
Other 93,264 93,264
Senior notes 99,664 99,664
$2,654,827 $2,699,168
STOCKHOLDERS' EQUITY
Common stock 5,617 5,617
Additional paid-in capital 213,900 213,900
Employee stock transactions (5,631) (5,631)
Employee stock trust - (16,773)
Appreciation of employee stock trust, net - (11,732)
Retained earnings 351,875 347,530
Accumulated other
comprehensive income, net 113 113
$565,874 $533,024
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,220,701 $3,232,192
Book Value per Share $10.07 $9.73
</TABLE>
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Legg Mason, Inc.
Statements of Earnings
Quarter Ended September 30, 1998
(in 000's, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Quarters ended
As % Change
Reported EITF 97-14 Restated Prior Year From Prior
Sept. 98 Adjustment Sept. 98 Sept. 97 Year
Revenues
Investment advisory
and related fees $93,318 $- $93,318 $ 71,222 31.0
Commissions 65,956 - 65,956 63,870 3.3
Principal
transactions 22,044 - 22,044 20,840 5.8
Investment banking 16,244 - 16,244 25,232 (35.6)
Interest 39,959 - 39,959 30,546 30.8
Other 10,082 - 10,082 9,213 9.4
247,603 - 247,603 220,923 12.1
Expenses
Compensation and
benefits 138,136 - 138,136 126,655 9.1
Occupancy and
equipment rental 15,004 - 15,004 14,204 5.6
Communications 12,589 - 12,589 10,682 17.9
Floor brokerage and
clearing fees 1,758 - 1,758 1,500 17.2
Interest 23,377 - 23,377 17,929 30.4
Non-cash deferred
compensation
adjustment - (240) (240) - N/M
Other 20,066 - 20,066 17,089 17.4
210,930 (240) 210,690 188,059 12.0
Earnings before
income taxes 36,673 240 36,913 32,864 12.3
Income taxes 14,973 96 15,069 13,559 11.1
Net earnings $21,700 $144 $21,844 $19,305 13.2
Earnings per share
Basic $0.39 $- $0.39 $0.36 8.3
Diluted $0.37 $- $0.37 $0.33 12.1
Shares outstanding
Basic 55,497 (59) 55,438 54,238 2.2
Diluted 58,861 - 58,861 57,901 1.7
Book Value per Share $9.76 (0.25) $9.51 $8.46 12.4
</TABLE>
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Legg Mason, Inc.
Consolidated Statements of Financial Condition
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, 1998
AS REPORTED RESTATED
ASSETS
Cash and cash equivalents $238,628 $238,991
Cash and securities segregated
for regulatory purposes 949,620 949,620
Resale agreements 217,487 217,487
Receivable from customers 855,906 855,906
Securities borrowed 274,164 274,164
Securities inventory, at market value 102,405 102,405
Investment securities, at market value 30,228 30,228
Equipment and leasehold improvements, net 53,482 53,482
Intangible assets, net 58,822 58,822
Other 152,326 160,369
$2,933,068 $2,941,474
LIABILITIES
Payable to customers $1,731,642 $1,731,642
Payable to brokers and dealers 8,152 8,152
Securities loaned 289,449 289,449
Short-term borrowings 90,322 90,322
Securities sold, but not yet
purchased, at market value 8,415 8,415
Accrued compensation 82,944 82,944
Deferred compensation trust - 35,107
Other 78,981 78,981
Senior notes 99,652 99,652
$2,389,557 $2,424,664
STOCKHOLDERS' EQUITY
Common stock 5,566 5,566
Additional paid-in capital 205,389 205,389
Employee stock trust - (15,113)
Appreciation of employee stock trust, net - (11,732)
Retained earnings 332,668 332,812
Accumulated other
comprehensive income, net (112) (112)
$543,511 $516,810
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,933,068 $2,941,474
Book Value per Share $9.76 $9.51
</TABLE>
