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| LM > SEC Filings for LM > Form 8-K on 13-Dec-2012 | All Recent SEC Filings |
13-Dec-2012
Material Impairments, Other Events, Financial Statements and Exhibits
As part of Legg Mason's annual testing process and considering aspects of the
transactions noted below, on December 12, 2012, Legg Mason, Inc. (the "Company")
concluded that it will take aggregate non-cash impairment charges in the range
of $650 million to $750 million ($460 million to $550 million after net tax
benefits) for impairment of our two significant indefinite-life fund management
contract intangible assets more fully described in Item 7 of our Report on Form
10-K for the year ended March 31, 2012 under the heading "Critical Accounting
Policies and Estimates-Indefinite-Life Intangible Assets." The impairment
charges result from a number of current trends and factors, including (i) a
decrease in near-term margin projections; (ii) an increase in the rate used to
discount projected future cash flows primarily due to company specific factors
including continued market and regulatory influences, continued stock price
uncertainty and the ongoing search for a permanent Chief Executive Officer;
(iii) recent outflows and related reductions in assets under management; and
(iv) reduction in the near-term projected growth rates. These changes resulted
in a reduction of the projected cash flows and our overall assessment of fair
value of the assets. None of the impairment charges will result in current or
future cash expenditures.
On December 13, 2012, the Company announced that it had entered into a Sale and Purchase Agreement to purchase all of the outstanding share capital of Fauchier Partners Management Limited. The press release announcing that transaction is attached to this Report as Exhibit 99 and is incorporated herein by reference.
On December 12, 2012, the Company modified its employment and other arrangements with the management of its Permal Group investment management affiliate. These modifications included the Company investing in the Permal business including by sharing certain compensation and other costs that result in lower margins from the business at current revenue levels in exchange for higher margins at higher revenue levels, and key Permal employees entering into new 3-year employment contracts. In addition, the Company and Permal are engaged in implementing a profits interest management equity plan for key employees that will entitle them to participate in 15% of growth in value of the Permal business from the implementation date. As a result of these modifications, the Company expects to incur approximately $6 million of incremental expenses ($4 million of which will not recur) in the quarter ended December 31, 2012.
(d) Exhibits
99 Press release of Legg Mason dated December 13, 2012
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