Legg Mason Reports Results for Fiscal Quarter and Fiscal Year Ended March 31, 2009



    - Fourth Quarter Loss of $325 Million or $2.29 per Diluted Share,
Primarily Driven by Elimination of SIV Exposure -
    

    - Board Reduces Quarterly Dividend to $0.03 per Share of Common Stock -

    - Assets Under Management of $632 Billion -

    
    BALTIMORE, May 5 /PRNewswire-FirstCall/ -- Legg Mason, Inc. (NYSE:   LM)
today reported its operating results for the fourth fiscal quarter and fiscal
year ended March 31, 2009.  For the quarter, revenues were $617.2 million,
down 42% from $1.07 billion in the fourth quarter of fiscal 2008.  The Company
reported a net loss of $325.1 million, or $2.29 per diluted share, compared to
$255.5 million, or $1.81 per diluted share, in the fourth quarter of fiscal
2008. The cash loss, as adjusted was $744.7 million, or $5.25 per diluted
share, compared to cash income, as adjusted, of $178.5 million, or $1.25 per
diluted share in the prior fiscal quarter.
    

    The fourth quarter was affected by four events:


    --  The previously announced elimination of all remaining Structured
        Investment Vehicle securities (SIVs) from our money market funds and
        balance sheet, resulting in losses totaling $367.4 million after
income
        taxes and operating expense reductions, or $2.59 per diluted share.
    --  Non-cash impairment charges on certain intangible assets, totaling
        $82.9 million, or $50.9 million ($0.36 per diluted share) after income
        taxes.

    --  A charge of $38.2 million, $23.5 million net of taxes, or $0.17 per
        diluted share for real estate lease losses.

    --  Tax benefits of $102.0 million, or $0.72 per diluted share, related to
        a restructuring of our Canadian business and the effect of finalizing
        the fiscal year income tax provision.

    
    For the full fiscal year 2009, the Company achieved revenues of $3.4
billion, down 28% from $4.6 billion in fiscal 2008. The net loss for fiscal
2009 was $1.9 billion, or $13.85 per diluted share, compared to income of
$267.6 million, or $1.86 per diluted share, for the prior year. The cash loss,
as adjusted, for the year was $1.2 billion, or $8.56 per diluted share,
compared to cash income, as adjusted, of $877.0 million, or $6.09 per diluted
share, for fiscal 2008.

    The Board of Directors declared a regular quarterly cash dividend on Legg
Mason Inc. common stock in the amount of $0.03 per share. The dividend is
payable on July 13, 2009 to shareholders of record at the close of business on
June 16, 2009.

    Assets Under Management ("AUM") at the end of fiscal 2009 were $632.4
billion, down 9% from $698.2 billion at December 31, 2008, and down 33% from
$950.1 billion at the end of fiscal 2008.
    

    Comments on the Fourth Fiscal Quarter and Fiscal Year 2009 Results
    
    Mark R. Fetting, Chairman and CEO, said, "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. We realized significant losses in the
quarter, but we eliminated our entire SIV exposure and we managed our balance
sheet without external assistance. Overall, shareholders deserve better
results, and we are determined to pick up the pace of our own recovery,
through better, more sustained investment performance and continued operating
discipline.

    "During this past fiscal year, we have undertaken a number of key
initiatives to increase our financial strength and flexibility in the current
environment and to position Legg Mason for the future. We achieved several
important milestones during the quarter. First, we completed several
transactions in March to eliminate all SIVs from both our money market funds
and our balance sheet. Since the SIV market became illiquid in the fall of
2007, we have systematically reduced our total exposure from over $10 billion
to zero today. This was a difficult but necessary process for us, and we
protected the Legg Mason franchise by seeing this through to closure. We also
modified our bank debt covenants and paid down debt, protecting our balance
sheet and giving us more strategic optionality as we move forward. And we
continued to make solid progress on reducing our structural costs, in line
with a lower asset base, which should improve our margins and generate more
operating efficiency over time. We took these actions while maintaining a high
level of client service and continuing to expand our distribution
capabilities.

    "While we have made strides in fortifying our business, there is still
more to be done. Ultimately, Legg Mason should be judged on investment
performance and resulting inflows. We have a strong group of affiliates who
represent a diversified spectrum of asset classes and strategies that can meet
virtually any investment mandate. Through the affiliates' investment
expertise, it is our collective job to generate excess returns for our clients
and shareholders. This is job #1, and we have to do better.

    "In the quarter, our outflows declined by 44% compared to last quarter. 
Some of our largest equity managers improved when compared to their
benchmarks, but we still need to demonstrate sustained improvement across the
board. Our fund-of-hedge-funds business maintained strong relative
performance, despite pressures on that sector. Our fixed income franchise did
not perform in line with its historical track record for most of the quarter;
given its importance to Legg Mason, it is a priority for us to reverse this
trend, building on the momentum from mid-March through the end of April. We
announced several important and innovative new products, and we will continue
to look at new ways to meet the changing needs of investors, across any and
all market conditions.

    "We believe we are well positioned for improved performance and we are
committed to work this process as hard as anything we have done, so that we
can put our challenges behind us and accelerate the progress of our company
onto the path of sustainable, profitable growth."
    

    Assets Under Management Decreased to $632 Billion
    
    AUM were $632.4 billion as of March 31, 2009, down $65.8 billion, or 9%,
from $698.2 billion at December 31, 2008, primarily as a result of net client
cash outflows of $43.5 billion and market depreciation of $21.7 billion in the
fourth quarter. Fixed income outflows were approximately $24 billion,
liquidity outflows were approximately $10 billion and equity outflows were
approximately $9 billion.

    Average AUM during the quarter were $657 billion, compared to $745
billion in the third quarter of fiscal 2009 and $975 billion in the fourth
quarter of fiscal 2008.  At March 31, 2009, equity products represented 20% of
AUM, fixed income represented 57% and liquidity represented 23%.

    During the quarter, we re-organized our business into two divisions,
Americas and International.  These divisions reflect our desire to expand our
multi-channel distribution capabilities and to better align our resources to
access new growth opportunities. The Americas Division consists of our
U.S.-domiciled fund families, the separate account businesses of our
U.S.-based investment affiliates and the domestic distribution organization. 
Similarly, the International Division consists of our fund complexes,
distribution teams and investment affiliates located outside the U.S.  By
business division, 71% of total AUM were in the Americas and 29% in the
International division.

    For the fiscal year 2009, total AUM declined by $317.7 billion, or 33%,
from $950.1 billion at March 31, 2008.
    

    Comparison to the Third Quarter of Fiscal Year 2009
    
    Revenues of $617.2 million decreased 14% from $720.0 million in the prior
quarter ended December 31, 2008 on lower AUM and performance fees.  There was
a loss of $325.1 million in the quarter, compared to $1.5 billion in the prior
quarter.  The elimination of the SIVs from our money market funds and balance
sheet resulted in losses totaling $606.4 million, $367.4 million after income
tax and operating expense reductions.  Intangible impairment was $82.9
million, or $50.9 million after income taxes.  Delays in sub-leasing
properties and lower rental rates in certain real estate markets resulted in a
charge of $38.2 million, or $23.5 million after taxes.  We recorded $102.0
million of tax benefits related to a restructuring of our Canadian business
and the finalization of the fiscal year income tax provision. The cash loss
was $352.0 million, or $2.48 per diluted share, compared to $1.8 billion, or
$12.88 per diluted share, in the third quarter of fiscal 2009.  The cash loss,
as adjusted, was a loss of $744.7 million, or $5.25 per diluted share, and
represented a decrease of 2% and 3%, respectively, from the third quarter of
fiscal 2009.
    

    Comparison to the Fourth Quarter of Fiscal Year 2008
    
    Revenues decreased 42% from the prior year quarter, reflecting lower
investment advisory fees from lower average assets under management and as a
result of year-over-year changes in the mix of our assets. Operating expenses
decreased by 29% from the prior year quarter. This was primarily due to lower
distribution and servicing fees on a lower asset base and decreased variable
compensation linked to revenue. Our cost saving efforts resulted in further
decreases in compensation, communications and technology and other operating
expenses. For the quarter, we incurred a net loss of $325.1 million, or $2.29
per diluted share, down from $255.5 million, or $1.81 per diluted share, in
the fourth quarter of fiscal 2008.  Our cash loss was $352.0 million, or $2.48
per diluted share, compared to a cash loss of $263.5 million, or $1.87 per
diluted share, in the fourth quarter of fiscal 2008. The cash loss, as
adjusted, was $744.7 million, or $5.25 per diluted share, compared to cash
income, as adjusted, of $178.5 million, or $1.25 per diluted share, in the
comparable period last fiscal year.
    

    Results for Fiscal Year 2009
    
    Total revenues for fiscal 2009 were $3.4 billion, down 28% from the prior
fiscal year, primarily driven by a decrease in advisory fees of 27%, resulting
from reduced average assets under management and lower performance fees.
Compensation and distribution and servicing costs were down 28% and 24%,
respectively, while higher goodwill and intangible impairments resulted in a
12% increase in operating expenses. The net loss was $1.9 billion, down from
net income of $267.6 million in fiscal 2008. The net loss per diluted share
was $13.85 compared to earnings per diluted share of $1.86 in fiscal 2008. 
The cash loss for the year was $2.2 billion, or $15.74 per diluted share,
compared to cash income of $412.3 million, or $2.86 per diluted share, in
fiscal 2008.  The cash loss, as adjusted, was $1.2 billion, or $8.56 per
diluted share, compared to cash income, as adjusted, of $877.0 million, or
$6.09 per diluted share, for the corresponding previous fiscal year.
    

    Business Developments

    
    The Company completed several major new product launches and announced
plans for another new investment solution:
    


    --  Western Asset raised $250.5 million (including the underwriters'
        over-allotment option) in a common share offering for a new closed-end
        fund, the Western Asset Municipal Defined Opportunity Trust (NYSE:  
        MTT). This was the largest closed-end fund Initial Public Offering
        (IPO) since November 2007. The fund's primary investment objectives
are
        to provide high tax-exempt current income and to seek total return,
        utilizing Western Asset's deep capabilities in municipal bonds,
        relative value investing and sector rotation.


    --  The Legg Mason Permal Tactical Asset Allocation Fund became the first
        U.S.-domiciled Legg Mason open-end mutual fund that gives individual
        investors access to Permal's recognized expertise in multi-asset
class,
        multi-strategy global allocation. The fund seeks to outperform a
        traditional 60/30/10 equities/fixed income/liquidity portfolio by
        identifying relative value opportunities in a constantly changing
        environment, unconstrained by geography or investment style. Permal
        will invest in both actively and passively managed vehicles, as well
as
        cash equivalents and alternative investments.


    --  Western Asset also announced the pending launch of a blue-chip
        corporate bond strategy in Europe which aims to address client
concerns
        by putting investment constraints on financial institution exposure.
        The fund will invest in high quality, financially-sound names, and
will
        impose a cap of 10 percent on debt holdings of financial institutions.
        The product will take advantage of the opportunity presented by large
        spreads over treasuries, and expected interest from conservative
        clients seeking higher returns than those offered by government bonds.

    
    Also in the quarter, the U.S.-based Western Asset portfolio teams who
manage the Western Asset New York and Pennsylvania Municipal Debt Funds, and
the Singapore-based Western Asset team that manages the Legg Mason Singapore
Bond Fund, both received "Best Fund 3-Year Performance" at the 2009 Lipper
Awards.
    

    Balance Sheet
    
    At March 31, 2009, Legg Mason's cash position was $1.1 billion, total
debt was $3.2 billion and stockholders' equity was $4.5 billion.  The ratio of
total debt to total capital (total equity plus total debt) was 42%.
    

    Conference Call to Discuss Results

    
    A conference call to discuss the Company's results, hosted by Mr.
Fetting, will be held at 8:30 a.m. E.D.T. today. The call will be open to the
general public. Interested participants should access the call by dialing
1-866-802-4364 (or for international calls 1-703-639-1325) at least 10 minutes
prior to the scheduled start to ensure connection.

    The presentation slides that will be reviewed during the conference call
will be available on the Investor Relations section of the Legg Mason website
(www.leggmason.com/about/investor_relations.aspx) shortly after the release of
the quarter and fiscal year ended March 31, 2009 financial results.

    A replay or transcript of the live broadcast will be available on the
Legg Mason website, in the investor relations section, or by dialing
1-888-266-2081 (or for international calls 1-703-925-2533), access Pin Number
1356532, after completion of the call.  Please note that the replay will be
available beginning at 2:00 p.m., E.D.T. on May 5, 2009 and ending on May 19,
2009.
    

    About Legg Mason
    
    Legg Mason is a global asset management firm, with $632 billion in assets
under management as of March 31, 2009.  The Company provides active asset
management in many major investment centers throughout the world. Legg Mason
is headquartered in Baltimore, Maryland, and its common stock is listed on the
New York Stock Exchange (symbol: LM).

    This release contains forward-looking statements subject to risks,
uncertainties and other factors that may cause actual results to differ
materially. For a discussion of these risks and uncertainties, see "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Legg Mason's Annual Report on Form 10-K for the
fiscal year ended March 31, 2008 and its subsequent quarterly reports on Form
10-Q.
    


    Use of Supplemental Data as Non-GAAP Performance Measures
    Cash Income (Loss) and Cash Income (Loss), as Adjusted

    
    As supplemental information, we are providing performance measures that
are based on methodologies other than generally accepted accounting principles
("non-GAAP") for "cash income" and "cash income, as adjusted" that management
uses as benchmarks in evaluating and comparing the period-to-period operating
performance of Legg Mason, Inc. and its subsidiaries.

    We define "cash income" as net income (loss) plus amortization and
deferred taxes related to intangible assets and goodwill less deferred income
taxes on goodwill and intangible asset impairment.  We define "cash income, as
adjusted" as cash income plus net money market fund support losses and
impairment charges less net realized losses on the sale of the underlying SIV
securities.

    We believe that cash income and cash income, as adjusted, provide good
representations of our operating performance adjusted for non-cash acquisition
related items and other items that facilitate comparison of our results to the
results of other asset management firms that have not engaged in money market
fund support transactions or significant acquisitions, including any related
goodwill or intangible asset impairments.

    We also believe that cash income and cash income, as adjusted, are
important metrics in estimating the value of an asset management business.
These measures are provided in addition to net income, but are not a
substitute for net income and may not be comparable to non-GAAP performance
measures, including measures of cash earnings or cash income, of other
companies. Further, cash income and cash income, as adjusted, are not
liquidity measures and should not be used in place of cash flow measures
determined under GAAP.  Legg Mason considers cash income and cash income, as
adjusted, to be useful to investors because they are important metrics in
measuring the economic performance of asset management companies, as
indicators of value, and because they facilitate comparisons of Legg Mason's
operating results with the results of other asset management firms that have
not engaged in money market fund support transactions or significant
acquisitions.

    In calculating cash income, we add the impact of the amortization of
intangible assets from acquisitions, such as management contracts, to net
income to reflect the fact that these non-cash expenses distort comparisons of
Legg Mason's operating results with the results of other asset management
firms that have not engaged in significant acquisitions.  Deferred taxes on
indefinite-life intangible assets and goodwill represent actual tax benefits
that are not realized under GAAP absent an impairment charge or the
disposition of the related business.  Because we actually receive these tax
benefits on indefinite-life intangibles and goodwill over time, we add them to
net income in the calculation of cash income.  Conversely, we subtract the
income tax benefits on these impairment charges that have been recognized
under GAAP. In calculating cash income, as adjusted, we add net money market
fund support losses less net realized losses on the sale of the underlying SIV
securities and impairment charges to cash income to reflect that these charges
distort comparisons of Legg Mason's operating results to prior periods and the
results of other asset management firms that have not engaged in money market
fund support transactions or significant acquisitions, including any related
impairments.

    Should a disposition or impairment charge for indefinite-life intangibles
or goodwill occur, its impact on cash income and cash income, as adjusted, may
distort actual changes in the operating performance or value of our firm.
Also, realized losses on money market fund support transactions are reflective
of changes in the operating performance and value of our firm. Accordingly, we
monitor these items and their related impact, including taxes, on cash income
and cash income, as adjusted, to ensure that appropriate adjustments and
explanations accompany such disclosures.

    Although depreciation and amortization of fixed assets are non-cash
expenses, we do not add these charges in calculating cash income or cash
income, as adjusted, because these charges are related to assets that will
ultimately require replacement.

    A reconciliation of net income (loss) to non-GAAP cash income (loss) and
cash income (loss), as adjusted, is presented below.

    Pre-Tax Profit Margin, As Adjusted for Distribution and Servicing
Expense, Money Market Fund Support Losses and Impairment Charges

    Legg Mason believes that pre-tax profit margin adjusted for distribution
and servicing expense, money market fund support losses and impairment charges
is a useful measure of our performance because it indicates what our margins
would have been without the distribution revenue that are passed through to
third parties as a direct cost of selling our products, money market fund
support losses and impairment charges that we do not consider part of our core
business metrics, and thus it shows the effects of these items on our margins.
This measure is provided in addition to the Company's pre-tax profit margin
calculated under GAAP, but is not a substitute for calculations of margin
under GAAP and may not be comparable to non-GAAP performance measures,
including measures of adjusted margins, of other companies. A reconciliation
of consolidated pre-tax profit margin, as adjusted, to pre-tax profit margin
under GAAP, is presented below.
    


    

    LEGG MASON, INC. AND SUBSIDIARIES

    
                          CONSOLIDATED STATEMENTS OF OPERATIONS
                    (Amounts in thousands, except per share amounts)
                                     (Unaudited)
    


    
                              Quarters Ended                 Years Ended
                     -------------------------------       ----------------
                     Mar.          Dec.        Mar.        Mar.       Mar.
                     2009          2008        2008        2009       2008
                     ----          ----        ----        ----       ----
    Operating
     Revenues:
      Investment
       advisory
       fees:
        Separate
         accounts $192,248      $225,156    $341,797    $1,017,195 $1,464,512
        Funds      336,596       389,367     558,382     1,836,350  2,319,788
        Performance
         fees          937         2,910       3,258        17,429    132,740
      Distribution
       and service
       fees         85,718        99,990     158,721       475,003    692,277
      Other          1,712         2,565       6,965        11,390     24,769
                     -----         -----       -----        ------     ------
       Total
        operating
        revenues   617,211       719,988   1,069,123     3,357,367  4,634,086
                   -------       -------   ---------     ---------  ---------
    

    
    Operating
     Expenses:
      Compensation
       and
       benefits    237,127       195,238     326,899     1,132,216  1,569,517
      Distribution
       and
       servicing   180,620       202,502     304,674       969,964  1,273,986
      Communications
       and
       technology   43,801        45,140      52,326       188,312    192,821
      Occupancy     70,982        70,656      32,896       209,537    129,425
      Amortization
       of intangible
       assets        8,013         9,252      13,686        36,488     57,271
      Impairment
       charges      82,870     1,225,100     151,000     1,307,970    151,000
      Other         39,133        45,105      50,038       182,060    209,890
                    ------        ------      ------       -------    -------
       Total
        operating
        expenses   662,546     1,792,993     931,519     4,026,547  3,583,910
                   -------     ---------     -------     ---------  ---------
    

    
    Operating
     Income        -------    ----------     -------      --------  ---------
     (Loss)        (45,335)   (1,073,005)    137,604      (669,180) 1,050,176
                   -------    ----------     -------      --------  ---------
    

    
    Other Income
     (Expense)
      Interest
       income        3,511         8,468      22,922        56,272     76,923
      Interest
       expense     (38,601)      (37,485)    (28,073)     (150,465)   (82,681)
      Fund
       support    (606,426)   (1,085,296)   (516,787)   (2,283,236)  (607,276)
      Other          3,696       (75,604)     (8,554)     (109,248)     6,729
                     -----       -------      ------      --------      -----
       Total other
        income
        (expense) (637,820)   (1,189,917)   (530,492)   (2,486,677)  (606,305)
                  --------    ----------    --------    ----------   --------
    

    
    Income (Loss)
     from Operations
     before Income
     Tax Provision
     (Benefit)
     and Minority
     Interests    (683,155)   (2,262,922)   (392,888)   (3,155,857)   443,871
    

    
      Income tax
       provision
       (benefit)  (361,354)     (774,951)   (137,488)   (1,210,853)   175,995
                  --------      --------    --------    ----------    -------
    

    
    Income (Loss)
     from Operations
     before
     Minority
     Interests    (321,801)   (1,487,971)   (255,400)   (1,945,004)   267,876
    

    
      Minority
       interests,
       net of tax   (3,280)          148         (51)       (2,924)      (266)
                    ------           ---         ---        ------       ----
    

    
    Net Income
     (Loss)      $(325,081)  $(1,487,823)  $(255,451)  $(1,947,928)  $267,610
                 =========   ===========   =========   ===========   ========
    

    
    Net Income
     (Loss) per
     share:
      Basic         $(2.29)      $(10.55)     $(1.81)      $(13.85)     $1.88
                    ======       =======      ======       =======      =====
    

    
      Diluted       $(2.29)      $(10.55)     $(1.81)      $(13.85)     $1.86
                    ======       =======      ======       =======      =====
    

    
    Weighted average
     number of shares
     outstanding:
      Basic        141,709       141,019     141,132       140,669    142,018
      Diluted (1)  141,709       141,019     141,132       140,669    143,976
    


    (1)  Diluted shares are the same as basic shares for periods with a loss



    
                              LEGG MASON, INC. AND SUBSIDIARIES
                                      SUPPLEMENTAL DATA
    

    
                RECONCILIATION OF NET INCOME (LOSS) TO CASH INCOME (LOSS),
                             AND CASH INCOME (LOSS), AS ADJUSTED
                      (Amounts in thousands, except per share amounts)
                                         (Unaudited)
    

    
                                 Quarters Ended              Years Ended
                         ----------------------------     -------------------
                         Mar.        Dec.       Mar.        Mar.       Mar.
                         2009        2008       2008        2009       2008
                         ----        ----       ----        ----       ----
    Net Income
     (Loss)          $(325,081) $(1,487,823) $(255,451) $(1,947,928) $267,610
    

    
      Plus:
        Amortization
         of intangible
         assets          8,013        9,252     13,686       36,488    57,271
        Deferred income
         taxes on
         intangible
         assets         35,379       37,260     34,475      142,494   143,600
        Deferred income
         taxes on
         impairment
         charges       (70,265)    (374,353)   (56,187)    (444,618)  (56,187)
                       -------     --------    -------     --------   -------
    Cash Income
     (Loss)           (351,954)  (1,815,664)  (263,477)  (2,213,564)  412,294
                      --------   ----------   --------   ----------   -------
    

    
      Plus:
        Net money
         market fund
         support (1)   367,449      662,577    290,954    1,376,579   313,726
        Impairment
         charges        82,870    1,225,100    151,000    1,307,970   151,000
      Less:
        Net realized
         loss on sale
         of SIV
         securities
         (1)          (843,025)    (831,699)         -   (1,674,724)        -
                      --------     --------    -------   ----------   -------
    Cash Income
     (Loss), as
     adjusted        $(744,660)   $(759,686)  $178,477  $(1,203,739) $877,020
                     ---------    ---------   --------  -----------  --------
    


    
    Net Income (Loss)
     per Diluted
     Share              $(2.29)     $(10.55)    $(1.81)     $(13.85)    $1.86
    

    
      Plus:
        Amortization
         of intangible
         assets           0.06         0.07       0.10         0.26      0.40
        Deferred income
         taxes on
         intangible
         assets           0.25         0.26       0.24         1.01      0.99
        Deferred income
         taxes on
         impairment
         charges         (0.50)       (2.66)     (0.40)       (3.16)    (0.39)
                         -----        -----      -----        -----      ----
    Cash Income (Loss)
     per Diluted
     Share               (2.48)      (12.88)     (1.87)      (15.74)     2.86
                         -----       ------      -----       ------      ----
    

    
      Plus:
        Net money
         market fund
         support (1)      2.59         4.70       2.06         9.79      2.18
        Impairment
         charges          0.59         8.69       1.06         9.30      1.05
      Less:
        Net realized
         loss on sale
         of SIV
         securities (1)  (5.95)       (5.90)         -       (11.91)        -
                         -----        -----      -----       ------     -----
    Cash Income (Loss)
     per Diluted Share,
     as adjusted        $(5.25)      $(5.39)     $1.25       $(8.56)    $6.09
                        ------       ------      -----       ------     -----
    

    
    (1) Includes related adjustments to operating expenses and income tax
        benefits
    



    
                        LEGG MASON, INC. AND SUBSIDIARIES
                              SUPPLEMENTAL DATA
    

    
              PRE-TAX PROFIT MARGIN ADJUSTED FOR DISTRIBUTION
       AND SERVICING EXPENSE, MONEY MARKET FUND SUPPORT AND IMPAIRMENT
                            (Amounts in thousands)
                                  (Unaudited)
    


    
                               Quarters Ended                 Years Ended
                       -----------------------------        ----------------
    

    
                       Mar.         Dec.       Mar.         Mar.       Mar.
                       2009         2008       2008         2009       2008
                       ----         ----       ----         ----       ----
    Operating
     Revenues,
     GAAP basis      $617,211     $719,988  $1,069,123   $3,357,367 $4,634,086
    

    
      Less:
        Distribution
         and
         servicing
         expense      180,620      202,502     304,674      969,964  1,273,986
                      -------      -------     -------      -------  ---------
    

    
    Operating
     Revenues, as
     adjusted        $436,591     $517,486    $764,449   $2,387,403 $3,360,100
                     --------     --------    --------   ---------- ----------
    

    
    Income (Loss)
     from Operations
     before Income
     Tax Provision
     (Benefit) and
     Minority
     Interests,
     GAAP Basis     $(683,155) $(2,262,922)  $(392,888) $(3,155,857)  $443,871
                    ---------  -----------   ---------  -----------   --------
    

    
      Plus:
        Net money
         market fund
         support
         (1)          591,426    1,070,296     471,871    2,223,213    508,304
        Impairment
         charges       82,870    1,225,100     151,000    1,307,970    151,000
                       ------    ---------     -------    ---------    -------
    

    
    Income (Loss)
     from Operations
     before Income
     Tax Provision and
     Minority
     Interests,
     as adjusted      $(8,859)     $32,474    $229,983     $375,326 $1,103,175
                      -------      -------    --------     -------- ----------
    


    
    Pre-tax profit
     margin, GAAP
     basis             (110.7)%     (314.3)%     (36.7)%      (94.0)%     9.6%
    Pre-tax profit
     margin, as
     adjusted            (2.0)         6.3        30.1         15.7      32.8
    


    (1) Includes related adjustments to operating expenses



    
                          LEGG MASON, INC. AND SUBSIDIARIES
                               (Amounts in billions)
                                   (Unaudited)
    

    
    Assets Under Management
                                              Quarters Ended
                              ----------------------------------------------
                               Mar.      Dec.      Sept.     Jun.      Mar.
                               2009      2008      2008      2008      2008
                              ------    ------    ------    ------    ------
    By asset class:
      Equity                  $126.9    $148.4    $214.8    $253.4    $271.6
      Fixed Income             357.6     392.1     451.8     493.4     508.2
      Liquidity                147.9     157.7     175.3     176.0     170.3
                               -----     -----     -----     -----     -----
        Total                 $632.4    $698.2    $841.9    $922.8    $950.1
                              ======    ======    ======    ======    ======
    

    
    By asset class (average):
      Equity                  $134.2    $169.6    $239.9    $270.9    $292.5
      Fixed Income             370.0     408.3     476.7     502.9     514.4
      Liquidity                153.2     167.2     181.8     174.7     168.4
                               -----     -----     -----     -----     -----
        Total                 $657.4    $745.1    $898.4    $948.5    $975.3
                              ======    ======    ======    ======    ======
    

    
    By division:
      Americas                $446.5    $490.3    $591.2    $650.3    $671.2
      International            185.9     207.9     250.7     272.5     278.9
                               -----     -----     -----     -----     -----
        Total                 $632.4    $698.2    $841.9    $922.8    $950.1
                              ======    ======    ======    ======    ======
    



    Component Changes in Assets Under Management

    
                                   Quarters Ended                Years Ended
                        -------------------------------------   -------------
                        Mar.    Dec.    Sept.   Jun.    Mar.    Mar.    Mar.
                        2009    2008    2008    2008    2008    2009    2008
                        -----   ----    -----   ----    -----   -----   -----
    Beginning of
     period            $698.2  $841.9  $922.8  $950.1  $998.5  $950.1  $968.5
    Net client cash
     flows              (43.5)  (77.0)  (20.0)  (18.4)  (19.2) (158.9)  (26.3)
    Market performance
     and other          (21.7)  (66.7)  (60.9)   (8.4)  (28.5) (157.7)    9.9
     Acquisitions
     (Dispositions),
     net                 (0.6)      -       -    (0.5)   (0.7)   (1.1)   (2.0)
                         ----    ----    ----    ----    ----    ----    ----
End of period      $632.4  $698.2  $841.9  $922.8  $950.1  $632.4  $950.1
                       ======  ======  ======  ======  ======  ======  ======
    

    BY DIVISION

    
    Americas
      Beginning of
       period          $490.3  $591.2  $650.3  $671.2  $712.0  $671.2  $693.8
      Net client cash
       flows            (28.3)  (47.4)  (20.9)  (12.7)   (8.9) (109.3)   (8.7)
      Market performance
       and other        (14.9)  (53.5)  (38.2)   (7.7)  (31.9) (114.3)  (12.6)
      Acquisitions
       (Dispositions),
       net               (0.6)      -       -    (0.5)      -    (1.1)   (1.3)
                         ----    ----    ----    ----    ----    ----    ----
      End of period    $446.5  $490.3  $591.2  $650.3  $671.2  $446.5  $671.2
                       ======  ======  ======  ======  ======  ======  ======
    

    
    International
      Beginning of
       period          $207.9  $250.7  $272.5  $278.9  $286.5  $278.9  $274.7
      Net client cash
       flows            (15.2)  (29.6)    0.9    (5.7)  (10.3)  (49.6)  (17.6)
      Market performance
       and other         (6.8)  (13.2)  (22.7)   (0.7)    3.4   (43.4)   22.5
      Acquisitions
       (Dispositions),
       net                  -       -       -       -    (0.7)      -    (0.7)
                         ----    ----    ----    ----    ----    ----    ----
      End of period    $185.9  $207.9  $250.7  $272.5  $278.9  $185.9  $278.9
                       ======  ======  ======  ======  ======  ======  ======



    




For further information:

For further information: Investor Relations, F. Barry Bilson,
+1-410-539-0000, fbbilson@leggmason.com, or Media, Mary Athridge,
+1-212-454-4421, mkathridge@leggmason.com, both of Legg Mason, Inc. Web Site:
http://www.leggmason.com

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