Legg Mason said the quarter was greatly impacted by the elimination of all remaining structured investment vehicle securities from its money market funds, resulting in losses of $367.4 million, after income taxes and operating expense reductions. The firm also took a charge of $38.2 million for real estate lease losses. Legg Mason originally had an exposure to SIVs totaling more than $10 billion.
Additionally, Legg Mason modified its own bank debt covenants, paid down debt and reduced overhead.
For the full fiscal year, Legg Mason earned $3.4 billion, 28% less than its profits of $4.6 billion in fiscal 2008, primarily due to a 27% decrease in advisory fees due to fewer assets under management. Assets under management decreased 33% to $632.4 billion at the end of the 2009 fiscal year, down from $950.1 billion a year ago.
During the quarter, economic fundamentals continued to deteriorate. The equity and fixed income markets declined harshly in January and February, but began to improve in March, a trend that continued through April, said Mark R. Fetting, chairman and CEO of Legg Mason. We realized significant losses in the quarter, but we eliminated our entire SIV exposure, and we managed our balance sheet without external assistance.
Legg Mason is determined to deliver stronger, more consistent performance, by assuming stronger discipline, Fetting said. The firm is also committed to expand its multi-channel distribution capabilties.
It was also notable that outflows in the quarter declined by 44% to $43.5 billion, Fetting noted.
