SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): April 14, 2000
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LEGG MASON, INC.
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(Exact Name of Registrant as Specified in its Charter)
Maryland 1-8529 52-1200960
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
100 Light Street, Baltimore, Maryland 21202
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(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 539-0000
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On April 14, 2000, Unaudited Pro Forma Combined Financial Statements of
Legg Mason, Inc. (the "Company") giving effect to the proposed acquisition of
Perigee Inc. and utilizing previously reported Legg Mason information were
included in an information circular that was distributed to Perigee stockholders
in accordance with Canadian requirements. The Company is filing this report
containing those Unaudited Pro Forma Combined Financial Statements in the United
States solely for informational purposes.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
99 Unaudited Pro Forma Combined Financial Statements
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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: April 14, 2000 By: /s/ Robert F. Price
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Robert F. Price
Senior Vice President
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EXHIBIT INDEX
Exhibit
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99 Unaudited Pro Forma Combined Financial Statements
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Statement of Financial
Condition combines the historical financial position of Legg Mason as of
December 31, 1999 and the historical financial position of Perigee as of
December 31, 1999, giving effect to the Arrangement as if it had been
consummated on December 31, 1999.
The following Unaudited Pro Forma Combined Statements of Earnings
combine the historical results of operations of Legg Mason for the year ended
March 31, 1999 and the historical results of operations of Perigee for the year
ended December 31, 1998 and the historical results of operations of Legg Mason
for the nine months ended December 31, 1999 and the historical results of
operations of Perigee for the nine months ended December 31, 1999, in each case,
after giving effect to the Arrangement as if it had been consummated on April 1,
1998.
These Unaudited Pro Forma Combined Financial Statements have been
prepared by Legg Mason with the assistance of Perigee. These Unaudited Pro Forma
Combined Financial Statements are not necessarily indicative of the operating
results and financial position that might have been achieved had the Arrangement
occurred as of the beginning of the earliest period presented nor are they
necessarily indicative of operating results and financial position which may
occur in the future.
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PRO FORMA COMBINED STATEMENT OF EARNINGS (UNAUDITED)
Year Ended March 31, 1999
(U.S. dollars in thousands, except per share amounts)
<TABLE>
<S> <C> <C> <C>
Legg Mason Perigee
As Reported As Reported Pro Forma
March 31, 1999 December 31, 1998 Combined
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Revenues
Investment advisory and related fees $ 390,216 $ 23,726 $ 413,942
Commissions 279,136 - 279,136
Principal transactions 94,105 - 94,105
Investment banking 76,118 - 76,118
Interest 160,292 269 160,561
Other 46,139 - 46,139
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Total revenues 1,046,006 23,995 1,070,001
Interest expense 94,910 60 94,970
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Net revenues 951,096 23,935 975,031
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Non-Interest Expenses
Compensation and benefits 584,830 - 584,830
Occupancy and equipment rental 64,289 311 64,600
Communications 47,963 - 47,963
Floor brokerage and clearing fees 6,677 - 6,677
Non-cash deferred compensation 10,352 - 10,352
Other 88,210 - 88,210
General and administrative - 10,107 15,544
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Total non-interest expenses 802,321 10,418 818,176
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Earnings Before Income Taxes 148,775 13,517 156,855
Income tax provision 59,441 6,083 63,536
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Net Earnings $ 89,334 $ 7,434 $ 93,319
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Earnings Per Common Share
Basic $ 1.64 $ 1.57
Diluted $ 1.55 $ 1.49
See Notes to Pro Forma Combined Financial Statements (Unaudited)
</TABLE>
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PRO FORMA COMBINED STATEMENT OF EARNINGS (UNAUDITED)
Nine Months Ended December 31, 1999
(U.S. dollars in thousands, except per share amounts)
<TABLE>
<S> <C> <C> <C>
Legg Mason Perigee
As Reported As Reported Pro Forma
December 31, 1999 December 31, 1999 Combined
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Revenues
Investment advisory and related fees $ 385,890 $ 21,114 $ 407,004
Commissions 248,250 - 248,250
Principal transactions 86,636 - 86,636
Investment banking 47,327 - 47,327
Interest 156,359 174 156,533
Other 34,484 - 34,484
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Total revenues 958,946 21,288 980,234
Interest expense 93,101 44 93,145
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Net revenues 865,845 21,244 887,089
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Non-Interest Expenses
Compensation and benefits 533,513 - 533,513
Occupancy and equipment rental 58,415 247 58,662
Communications 39,600 - 39,600
Floor brokerage and clearing fees 5,796 - 5,796
Non-cash deferred compensation (1,063) - (1,063)
Other 71,330 - 71,330
General and administrative - 8,359 9,239
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Total non-interest expenses 707,591 8,606 717,077
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Earnings Before Income Taxes 158,254 12,638 170,012
Income tax provision 63,770 5,687 69,456
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Net Earnings $ 94,484 $ 6,951 $ 100,556
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Earnings Per Common Share:
Basic $ 1.67 $ 1.63
Diluted $ 1.56 $ 1.53
See Notes to Pro Forma Combined Financial Statements (Unaudited)
</TABLE>
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PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
December 31, 1999
(U.S. dollars in thousands)
<TABLE>
<S> <C> <C> <C>
Legg Mason Perigee
As Reported As Reported Pro Forma
December 31, 1999 December 31, 1999 Combined
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Assets
Cash and cash equivalents $ 583,730 $ 4,165 $ 587,895
Cash and securities segregated for regulatory purposes 1,421,657 - 1,421,657
Resale agreements 85,401 - 85,401
Receivables:
Customers 1,205,781 7,056 1,212,837
Brokers, dealers and clearing organizations 173,055 - 173,055
Others 64,935 - 64,935
Securities borrowed 468,108 - 468,108
Securities inventory, at market value 55,342 - 55,342
Investment securities, at market value 18,852 - 18,852
Investments of finance subsidiaries 244,212 - 244,212
Equipment and leasehold improvements, net 62,037 695 62,732
Intangible assets, net 130,250 - 145,976
Other 108,602 453 109,055
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$ 4,621,962 $ 12,369 $ 4,650,057
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Liabilities and Stockholders' Equity
Liabilities
Payable:
Customers $ 2,634,830 $ - $ 2,634,830
Brokers and dealers 8,659 - 8,659
Securities loaned 508,735 - 508,735
Short-term borrowings 152,583 - 152,583
Securities sold, but not yet purchased, at market value 9,730 - 9,730
Accrued compensation 140,450 - 140,450
Other 135,465 7,250 146,366
Notes payable of finance subsidiaries 245,106 - 245,106
Senior notes 99,711 - 99,711
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3,935,269 7,250 3,946,170
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Stockholders' Equity
Common stock 5,741 1,551 6,261
Additional paid-in capital 236,603 - 255,603
Deferred compensation and employee note receivable (5,265) - (5,265)
Employee stock trust (26,394) - (26,394)
Deferred compensation employee stock trust 26,394 - 26,394
Retained earnings 450,283 3,568 447,957
Accumulated other comprehensive income, net (669) - (669)
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686,693 5,119 703,887
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$ 4,621,962 $ 12,369 $ 4,650,057
=================================================================================================================
See Notes to Pro Forma Combined Financial Statements (Unaudited)
</TABLE>
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NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation
The Merger Agreement provides for the combination of Legg Mason and Perigee in
an Arrangement in which each Perigee Shareholder will receive 0.387 of an
Exchangeable Share for each Perigee Share held. Each Exchangeable Share will be
exchangeable at any time at the option of the holder, on a one-for-one basis,
for a Legg Mason Share. The Arrangement is expected to be accounted for as a
"pooling-of-interests", and accordingly Legg Mason's historical consolidated
financial statements presented in future reports will be restated to include the
accounts and results of Perigee.
The pro forma statement of financial condition gives effect to the Arrangement
as if it had been consummated on December 31, 1999. The pro forma statements of
earnings give effect to the Arrangement as if it had been consummated on April
1, 1998.
In the pro forma financial statements, Perigee's financial position as of its
fiscal period-end and its results of operations for its fiscal periods are
deemed indicative of its financial position at Legg Mason's respective fiscal
period-end and its results of operations for Legg Mason's respective fiscal
periods.
Perigee's financial position and results of operations have been
translated into United States dollars based on the period-end and average
exchange rates reported by Bloomberg, respectively.
Note 2. Accounting Policy Adjustments
Certain adjustments to conform Perigee accounting policies to those of Legg
Mason have been reflected in the pro forma financial statements. These
adjustments pertain to differences between Canadian and U.S. GAAP with respect
to business combinations and the related recognition and amortization of
intangible assets; and treatment of shareholder distributions made prior to
Perigee's initial public offering. These adjustments had the effect of reducing
net earnings by U.S.$3.4 million and U.S.$0.9 million in the year ended March
31, 1999 and for the nine months ended December 31, 1999, respectively, and
increasing intangible assets by U.S.$16.0 million and stockholders' equity by
U.S.$15.7 million. Both companies are completing reviews of their respective
accounting policies and differences between U.S. GAAP and Canadian GAAP and do
not expect any further adjustments that would be significant to the pro forma
combined financial position or results of operations.
Note 3. Merger Adjustments
Upon consummation of the Arrangement, Legg Mason Canada will issue approximately
5.2 million Exchangeable Shares, subject to possible adjustment in certain
circumstances.
Estimated after-tax merger costs of U.S. $3.6 million (U.S.$4.0 million on a
pre-tax basis) have been included as an adjustment to the pro forma statement of
financial condition.
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Note 4. Earnings Per Common Share
The pro forma basic and diluted earnings per common share for the periods
presented is based on the weighted average common shares and share equivalents
of Legg Mason and Perigee. The number of Perigee Shares and share equivalents
are based on the Exchangeable Shares (each having economic rights equivalent to
a Legg Mason Share) that Shareholders would have received had the Arrangement
been effected April 1, 1998.
Note 5. Post-Arrangement Events
The pro forma financial statements do not include integration costs, or other
transactions or events that the combined entity may undertake or experience as a
result of the Arrangement. As such, any restructuring charges, anticipated
increase in revenues, or unexpected cost savings are not presented in the pro
forma financial statements.
