AGE Edwards AG

A.G. Edwards, Inc. Announces Fourth-Quarter and Full-Year Results for Fiscal 2004 Fourth-Quarter Earnings Increase 157% Over Year-Ago Quarter; Full-Year Earnings 34% Higher Than Last Year; Four Consecutive Quarters of Higher Earnings ST. LOUIS, March25 /PRNewswire-FirstCall/ -- A.G. Edwards, Inc. today announced results for the fiscal year and fourth quarter ended February 29, 2004. Net earnings for fiscal 2004 were $159 million, or $1.97 diluted earnings per share, on net revenues of $2.5 billion. For the prior fiscal year, net earnings were $119 million, or $1.46 diluted earnings per share, on net revenues of $2.2 billion. For the fourth quarter of fiscal 2004, net earnings were $54 million, or $0.67 diluted earnings per share, on net revenues of $689 million. Net earnings for the fourth quarter last year were $21 million, or $0.26 diluted earnings per share, on net revenues of $514 million. "Earnings growth throughout fiscal 2004 reflects our employees' efforts to help clients benefit from an improved market environment while attracting new investors to our client-first philosophy," said Robert L. Bagby, chairman, chief executive officer and president. "We experienced growth in nearly all of our commission and asset-management revenue categories for the fiscal year. Investment-banking revenues reached a record annual high. Total client assets of $300 billion reached the highest level in more than three years. "On top of these results, we are confident the recent rollout of ournational branding initiative will create greater awareness of our unique business model and aid us in attracting clients to A.G. Edwards. This, in turn, will deliver increasing value to our shareholders." RESULTS OF OPERATIONS Commissions - Commission revenues increased 22 percent ($198 million) in fiscal 2004 and increased 45 percent ($96 million) in the fourth quarter when compared to their respective time periods last year. These results primarily reflect increased client interest in equities and mutual funds. All commission-revenue categories experienced growth in the full year and fourth quarter. Asset Management and Service Fees - For fiscal 2004, asset-management and service-fee revenues increased 9 percent ($59 million) versus fiscal 2003, while these revenues in the fourth quarter increased 36 percent ($53 million) versus last year's fourth quarter. The results for fiscal 2004 reflect growth in all product and service areas except for distribution fees received from certain money funds that reached expense caps due to low money fund yields. The results for the fourth quarter reflect the removal of these expense caps by the money funds, along with growth in all other asset-management and service-fee revenue categories. PrincipalTransactions - Revenues from principal transactions in fiscal 2004 declined 5 percent ($14 million) compared to fiscal 2003. For the fourth quarter this year, principal-transaction revenues declined 3 percent ($2 million) compared to the fourth quarter last year. Both time periods reflect decreased investor interest in fixed-income products partially offset by increased corporate-equity revenue. Investment Banking - For fiscal 2004, A.G. Edwards enjoyed record investment-banking revenues of $322 million, an increase of 28 percent ($71 million) from last year. For the fourth quarter, investment-banking revenues increased 56 percent ($29 million) versus the year-ago quarter. Both time periods largely reflect continued strength in the underwriting of a variety of closed-end funds, and significant growth in follow-on equity underwritings. Net Interest Revenue - Interest revenue net of interest expense declined 7 percent ($8 million) in fiscal 2004 but increased 11 percent ($2 million) in the fourth quarter versus the same periods in fiscal 2003. The full-year results were due to declines in average client-margin balances and in the average interest rates charged on these balances. The fourth-quarter results reflect a change by A.G. Edwards in the base rates charged on client-margin balances along with modestly higher average balances. Other Revenue - For fiscal 2004, other revenue decreased $4 million when compared to fiscal 2003. Other revenue in the fourth quarter decreased $3 millioncompared to the year-ago quarter. Non-Interest Expenses - Non-interest expenses increased 11 percent ($229 million) during fiscal 2004 compared to the prior fiscal year. For the fourth quarter, non-interest expenses increased 26 percent ($125 million) compared to the same quarter a year ago. Compensation and benefits for fiscal 2004 increased 13 percent ($196 million) compared to fiscal 2003. For the fourth quarter, compensation and benefits increased 33 percent ($114 million) versus the same quarter last year. Compensation and benefits in both time periods reflect higher commissions and incentive compensation following increased revenue and earnings. Non-compensation-related expenses increased 6 percent ($33 million) for fiscal 2004 and increased 8 percent ($11 million) during the fourth quarter compared to the same periods last year. Both the full-year and fourth-quarter time periods reflect expenses associated with the branding initiative and increases in legal reserves and professionalservices. ADDITIONAL STOCKHOLDER INFORMATION Total client assets at the end of fiscal year were $300 billion, a 24 percent increase when compared to the end of fiscal 2003. As currently reported, total client assets have been adjusted to include those client assets acquired through A.G. Edwards that are held by other organizations. As of February 29, 2004, stockholders' equity was $1.78 billion, for a book value per share of $22.09. Diluted per-share earnings for fiscal 2004 were based on 81.0 million average common and common equivalent shares outstanding compared to 81.2 million in fiscal 2003. Diluted per share earnings for the fourth quarter were based on 81.3 million average common and common equivalent shares outstanding compared to 81.6 million in the year-ago quarter. ABOUT A.G. EDWARDS, INC. A.G. Edwards, Inc. is a financial services holding company whose primary subsidiary is the national investment firm of A.G. Edwards & Sons, Inc. For more than 117 years, individuals and businesses have turned to A.G. Edwards & Sons to develop strong personal relationships with financial consultants dedicated to a client-first philosophy of providing financial solutions tailored to their clients' individual needs. A.G. Edwards and its affiliates encompass 6,980 financial consultants in 708 offices nationwide and two European locations in London, England and Geneva, Switzerland. For more information on A.G. Edwards, please visit http://www.agedwards.com/ . This material may contain forward-looking statements within the meaning of federal securities laws. Actual results are subject to risks and uncertainties, including both those specific to A.G. Edwards and those to the industry, which could cause results to differ materially from those contemplated. The risks and uncertainties include, but are not limited to, general economic conditions, government monetary and fiscal policy, the actions of competitors, changes in and effects of marketing strategies, regulatory changes and actions, changes in legislation, risk management, legal claims, technology changes, compensation changes, and implementation and effects of expense-reduction strategies. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this release. A.G. Edwards does not undertake any obligation to publicly update any forward-looking statements. A. G. EDWARDS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) (Unaudited) For the Three Months Ended February 29, February 28, Increase/ % 2004 2003 (Decrease) Chg. ----------- ----------- --------- ----- REVENUES: Commissions $310,325 $214,698 $95,627 44.5 Asset management and servicefees 199,945 146,480 53,465 36.5 Principal transactions 71,894 74,328 (2,434) (3.3) Investment banking 81,243 51,913 29,330 56.5 Interest 25,569 23,249 2,320 10.0 Other 723 3,522 (2,799) (79.5) ------- ------- ------- TOTAL REVENUES 689,699 514,190 175,509 34.1 Interest expense 382 507 (125) (24.7) ------- ------- ------- NET REVENUES 689,317 513,683 175,634 34.2 ------- ------- ------- NON-INTEREST EXPENSES: Compensation and benefits 456,581 342,509 114,072 33.3 Communication and technology 68,841 68,112 729 1.1 Occupancy and equipment 31,715 33,712 (1,997) (5.9) Marketing and business development 12,358 9,643 2,715 28.2 Floor brokerage and clearance 6,126 4,820 1,306 27.1 Other 30,000 22,057 7,943 36.0 ------- ------- ------- TOTAL NON-INTEREST EXPENSES 605,621 480,853 124,768 25.9 ------- ------- ------- EARNINGS BEFORE INCOME TAXES 83,696 32,830 50,866 154.9 INCOME TAXES 29,292 11,629 17,663 151.9 ------- ------- ------- NET EARNINGS $54,404 $21,201 $33,203 156.6 ======= ======= ======= EARNINGS PER SHARE: Diluted $0.67 $0.26 $0.41 157.7 Basic $0.68 $0.26 $0.42 161.5 AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Diluted 81,330 81,574 Basic 80,387 80,400 STOCKHOLDERS' EQUITY $1,778,677 $1,688,537 BOOK VALUE PER SHARE $22.09 $20.92 TOTAL SHARES OUTSTANDING (end of period) 80,533 80,726 A. G. EDWARDS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) (Unaudited) For the Twelve Months Ended February 29, February 28, Increase/ % 2004 2003 (Decrease) Chg. ------------ ------------ -------- ------ REVENUES: Commissions $1,093,222 $895,019 $198,203 22.1 Asset management and service fees 684,729 625,626 59,103 9.4 Principal transactions 296,886 311,124 (14,238) (4.6) Investment banking 321,861 251,180 70,681 28.1 Interest 95,792 106,027 (10,235) (9.7) Other 6,384 10,239 (3,855) (37.7) ------- ------- ------- TOTAL REVENUES 2,498,874 2,199,215 299,659 13.6 Interest expense 2,519 5,214 (2,695)(51.7) ------- ------- ------- NET REVENUES 2,496,355 2,194,001 302,354 13.8 ------- ------- ------- NON-INTEREST EXPENSES: Compensation and benefits 1,649,408 1,453,671 195,737 13.5 Communication and technology 272,047 282,603 (10,556) (3.7) Occupancy and equipment 137,617134,149 3,468 2.6 Marketing and business development 46,853 40,177 6,676 16.6 Floor brokerage and clearance 22,495 22,464 31 0.1 Other 122,661 89,503 33,158 37.0 ------- ------- ------- TOTAL NON-INTEREST EXPENSES 2,251,081 2,022,567 228,514 11.3 ------- ------- ------- EARNINGS BEFORE INCOME TAXES 245,274 171,434 73,840 43.1 INCOME TAXES 85,789 52,606 33,183 63.1 -------------- ------- NET EARNINGS $159,485 $118,828 $40,657 34.2 ======== ======== ======= EARNINGS PER SHARE: Diluted $1.97 $1.46 $0.51 34.9 Basic $1.99 $1.48 $0.51 34.5 AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Diluted 80,990 81,177 Basic 80,031 80,133 STOCKHOLDERS' EQUITY $1,778,677 $1,688,537 BOOK VALUE PER SHARE $22.09 $20.92 TOTAL SHARES OUTSTANDING (end of period) 80,533 80,726 A. G. EDWARDS, INC. QUARTERLY CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) (Unaudited) For the Three Months Ended February November August May February 29, 30, 31, 31, 28, 2004 2003 2003 2003 2003 REVENUES: Commissions $310,325 $272,704 $268,393$241,800 $214,698 Asset management and service fees 199,945 174,587 161,762 148,435 146,480 Principal transactions 71,894 72,418 82,178 70,396 74,328 Investment banking 81,243 76,377 94,557 69,684 51,913 Interest 25,569 22,051 23,986 24,186 23,249 Other 723 4,765 2,515 (1,619) 3,522 ------- ------- ------- ------- ------- TOTAL REVENUES 689,699 622,902 633,391 552,882 514,190 Interest expense 382 403 950 784 507 ------- ------- ------- ------- ------- NET REVENUES 689,317 622,499 632,441 552,098 513,683 ------- ------- ------- ------- ------- NON-INTEREST EXPENSES: Compensation and benefits 456,581 400,878 419,094 372,855 342,509 Communication and technology 68,841 69,892 68,795 64,519 68,112 Occupancy and equipment 31,715 37,391 36,269 32,242 33,712 Marketing and business development 12,358 13,604 11,099 9,792 9,643 Floor brokerage and clearance 6,126 5,720 5,989 4,660 4,820 Other 30,000 34,166 33,800 24,695 22,057 ------- ------- ------- ------- ------- TOTAL NON-INTEREST EXPENSES 605,621 561,651 575,046 508,763 480,853 ------- ------- ------- ------- ------- EARNINGS BEFORE INCOME TAXES 83,696 60,848 57,395 43,335 32,830 INCOME TAXES 29,292 21,131 19,907 15,459 11,629 ------- ------- ------- ------- ------- NET EARNINGS $54,404 $39,717 $37,488 $27,876 $21,201 ======= ======= ======= ======= ======= EARNINGS PER SHARE: Diluted $0.67 $0.49 $0.46 $0.35 $0.26 Basic $0.68 $0.49 $0.47 $0.35 $0.26 AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Diluted 81,330 81,401 80,488 80,738 81,574 Basic 80,387 80,047 79,394 80,337 80,400 STOCKHOLDERS' EQUITY $1,778,677 $1,734,603 $1,666,738 $1,674,808 $1,688,537 BOOK VALUE PER SHARE $22.09 $21.58 $21.13 $20.99 $20.92 A.G.EDWARDS, INC. QUARTERLY STATISTICAL INFORMATION (Dollars in thousands, except per share amounts) (Unaudited) 4Q FY04 3Q FY04 2Q FY04 1Q FY04 4Q FY03 ------- ------- ------- ------- ------- Net Revenues $689,317 $622,499 $632,441 $552,098 $513,683 Earnings Before Income Taxes $83,696 $60,848 $57,395 $43,335 $32,830 Net Earnings $54,404 $39,717 $37,488 $27,876 $21,201 Net Earnings as a Percent of Net Revenues 7.9% 6.4% 5.9% 5.0% 4.1% Average Diluted Shares- (000's Omitted) 81,330 81,401 80,488 80,738 81,574 Earnings Per Share (Diluted) $0.67 $0.49 $0.46 $0.35 $0.26 Dividends Per Share $0.16 $0.16 $0.16 $0.16$0.16 Stockholders' Equity $1,778,677 $1,734,603 $1,666,738 $1,674,808 $1,688,537 Book Value Per Share $22.09 $21.58 $21.13 $20.99 $20.92 Return On Average Equity- (Quarter Results Annualized) 12.4% 9.3% 9.0% 6.6% 5.1% Total Assets $4,435,418 $4,180,205 $4,066,745 $3,921,934 $3,980,094 Financial Consultants 6,980 6,956 7,024 7,121 7,222 Full-time Employees 15,931 15,887 15,948 16,079 16,181 Locations 710 708 706 707 709 Total Client As- sets * $300,000,000 $283,000,000 $270,000,000 $264,000,000 $242,000,000 Assets In Fee-based Acc- ounts $27,275,000 $24,732,000 $23,405,000 $21,769,000 $19,973,000 * Prior periods have been adjusted to include client assets acquired through A.G. Edwards that are held by other organizations. DATASOURCE: A.G. Edwards, Inc. CONTACT: Media Relations, Margaret Welch, +1-314-955-5912, , or Investor Relations, Justin Gioia, +1-314-955-2379, , both of A.G. Edwards, Inc. Web site: http://www.agedwards.com/

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