It's been a busy day for Legg Mason
The Baltimore-based asset manager reported a 2 percent decrease in AUM in the month of August, to $644.5 billion. In a statement, Legg attributed the decline to "primarily due to unfavorable markets and outflows in both equity and fixed income."
The firm helmed by Joe Sullivan
also announced, via SEC 8K filing
, that it will "provide two measures of financial results that we have not previously released and are based on a methodology other than generally accepted accounting principles (“non-GAAP”)."
According to the filing, the measures are “Adjusted earnings before interest, taxes, depreciation and amortization” (“Adjusted EBITDA”) for the quarter ended June 30, 2013 and “EBITDA, Bank Defined” for the fiscal year ended March 31, 2013.
In the filing, Legg had this to say about the change:
We define Adjusted EBITDA, a performance measure, as Net income attributable to Legg Mason, Inc. (“Net income”) plus (i) interest expense, (ii) income tax provision, (iii) depreciation and amortization, (iv) amortization of intangible assets and (v) closed-end fund launch costs. EBITDA, Bank Defined, a liquidity measure, which is the measure of EBITDA that is used in the financial covenants of our bank credit agreement, is defined as Cash provided by operating activities plus (minus) (i) allocation of the repurchase prepayment of 2.5% convertible senior notes, (ii) interest expense, net of non-cash items, (iii) current income tax expense, (iv) gains/(losses) on investments and (v) net change of other assets and liabilities.
We believe that Adjusted EBITDA is useful to investors because it is based on a performance measure that is widely used as an estimate of the cash income from a business, as adjusted to exclude closed-end fund launch costs, which occur only from time to time upon the launch of funds. We believe that EBITDA, Bank Defined, is useful to investors as a refined liquidity measure that adds back certain cash items. These measures are provided in addition to Net income and Cash provided by operating activities and may not be comparable to non-GAAP performance measures, including measures of EBITDA or cash flow measures, of other companies. Further, Adjusted EBITDA and EBITDA, Bank Defined are not to be confused with Net income, Cash provided by operating activities or other measures of earnings or cash flows under GAAP, and are provided as a supplement to, and not in replacement of, such GAAP measures.
In the same filing, Legg also announced that it will see $20 million of severances costs in the quarters ending September 30, 2013 and December 31, 2013.
The company explained that the costs were "in connection with several initiatives, including closing down or reorganizing certain businesses and its ongoing initiative to increase the efficiency of its global distribution and corporate operations. As a result of the changes that will give rise to the aggregate charges, Legg Mason expects to realize approximately $2.5 million in net increases in pre-tax earnings (including reduced costs and the elimination of losses at closed or reorganized businesses based on the losses incurred by the businesses in the quarter ended June 30, 2013) per quarter beginning with the fourth quarter of fiscal year 2014."
Stay ahead of the news ... Sign up for our email alerts now