This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Legg Mason Inc (LM: chart) on May 9, 2007.

Chairman and Chief Executive Officer: Raymond A. Mason

President and Chief Operating Officer: James W. Hirschmann III

Senior Vice President of Finance: F. Barry Bilson

Key Investors Issues

- Earnings per share increased to $1.19 from $1.03 in the prior year quarter.
- Revenue grew marginally to $1.14 billion from $1.13 billion in the sequential quarter.
- For fiscal 2007, revenues from continuing operations were $4.3 billion, up 64% from the $2.6 billion in fiscal 2006.

Fourth Quarter Fiscal 2007 Financial Highlights

The company had revenues of $1.14 billion compared to $1.05 billion in Q4 of fiscal 2006 and $1.13 billion in Q3 of fiscal 2007.

The increase in revenues reflected higher recurring advisory revenues due to higher average assets under management, despite a decline of performance fees from the seasonally high level reported in the third fiscal quarter of 2007.

Net income was $172.5 million, or $1.19 per diluted share, compared to $150.1 million, or $1.03 per diluted share in the fourth fiscal quarter of fiscal year 2006 and $174.6 million, or $1.21 per diluted share for the third fiscal quarter of 2007.

Cash income from continuing operations was $222.4 million, or $1.54 per diluted share, compared to $199.1 million, or $1.37 per diluted share a year ago and $227.4 million, or $1.58 per diluted share during the third quarter of fiscal 2007.

In the fourth quarter of fiscal 2007, expenses were substantially unchanged from the third fiscal quarter at $869.3 million.

Decreases in compensation and benefits expenses, and reduced expenses due to the completion of certain integration activities, were offset by increases in distribution and occupancy costs. The company expects to complete the majority of its office relocations in calendar year 2007.

Pre-tax profit margin from continuing operations declined sequentially to 24% from 24.5% in the third quarter of fiscal 2007.

The pre-tax profit margin from continuing operations, as adjusted for distribution and servicing expenses, was 33.3% in the fourth quarter of fiscal 2007 and 33.5% in the third quarter of fiscal 2007.

Total assets under management grew to a record $968.5 billion, up $23.7 billion, or 3%, from $944.8 billion at December 31, 2006.

Net client cash flows were $13.6 billion during the fourth fiscal quarter. Net client cash flows in liquidity of $12 billion and fixed income of $5 billion were in part offset by negative client cash flows in equity of $3 billion.

Average assets under management during the quarter were $958.9 billion, compared to $925 billion in the third quarter of fiscal 2007, representing a 4% increase.

During the fourth quarter of fiscal 2007, all three divisions experienced increased assets under management.

The Managed Investments division had the strongest growth in assets, primarily driven by liquidity fund flows, which were partially offset by equity outflows. For fiscal year 2007, the Managed Investments and Institutional Divisions grew by 13% and 12% respectively, driven by strong liquidity fund and fixed income flows.