AGE Edwards AG

A.G. Edwards Announces First-Quarter Results for Fiscal 2005 Firm Posts 63 Percent Earnings-Per-Share Increase Over Last Year's First Quarter ST. LOUIS, June 24 /PRNewswire-FirstCall/ -- A.G. Edwards, Inc. (NYSE:AGE) today announced results for the first quarter of fiscal 2005, which ended May 31, 2004. Net earnings for the quarter were $46 million, or $0.57 per diluted share, on net revenues of $661 million. For the same quarter last year, net earnings were $28 million, or $0.35 per diluted share, on net revenues of $556 million. For the fourth quarter of fiscal 2004, net earnings were $54 million, or $0.67 per diluted share, on net revenues of $693 million. "With the exception of a strong fourth quarter last year, our earnings results for the first quarter of fiscal 2005 marked our best quarterly performance in three and a half years. We were pleased with these results when you consider how uncertainties about interest rates, oil prices and Iraq affected investor activity in the latter half of the quarter," said Robert L. Bagby, chairman and chief executive officer. "During the quarter, we also began a full launch of national advertising as part of our branding initiative. We are confident that we are building greater awareness of the A.G. Edwards brand and that this effort is a long-term positive for our shareholders. "We are also proud to note that Training magazine named A.G. Edwards University to its list of the nation's top 100 corporate training programs for the fourth consecutive year. We believe our investment in training is helping us develop the industry's best-educated financial consultants, who are better prepared to add value to the full-service relationships with their clients." RESULTS OF OPERATIONS Commissions - Commission revenues during the first quarter increased 18 percent ($43 million) versus the same quarter a year ago as clients increased their activities across nearly all commission-revenue categories, with particular strength in listed equities and mutual funds. Asset management and service fees - Compared to the first quarter last year, asset management and service fee revenues increased 38 percent ($58 million). The results for the first quarter reflect increased asset values in mutual funds and continuing client interest in fee-based accounts. Additionally, first-quarter results reflect increased revenue from money fund distribution fees after the removal last November of expense caps previously imposed by certain money funds. Principal transactions - Revenues from principal transactions decreased 1 percent ($1 million) compared to a year ago. These results reflect reduced client activity in municipal and corporate fixed-income products, which was partially offset by increased corporate-equity revenue. Investment banking - Investment-banking revenues decreased 13 percent ($9 million) versus the first quarter of fiscal 2004, reflecting lower volume in many interest-rate-sensitive sectors. Net interest revenue - Interest revenue net of interest expense in the first quarter increased 20 percent ($5 million) from the same three-month period last year. These results reflect a change by A.G. Edwards in the base rates charged on client-margin balances along with slightly higher average balances. Other revenue - A September 11, 2001 business-interruption settlement and a net increase in private equity valuations were primarily responsible for $9 million in other revenue during the first quarter this year versus a $2 million loss in the same quarter a year ago. Non-interest expenses - Total non-interest expenses during the first quarter of fiscal 2005 increased 15 percent ($76 million) versus the first quarter last year. Compensation and benefits in the first quarter increased 16 percent ($60 million) from the same quarter in fiscal 2004 mainly due to an increase in commissionable revenue. Non-compensation-related expenses increased 11 percent ($15 million) from the same quarter last year primarily resulting from the firm launching its nationwide branding initiative, which began in February. ADDITIONAL INFORMATION Total client assets at the end of the first quarter were $294 billion, an 11 percent increase when compared to the end of the first quarter of fiscal 2004. As of May 31, 2004, stockholders' equity was $1.78 billion, for a book value per share of $22.38. Diluted per-share earnings for the first quarter were based on 81.0 million average common and common equivalent shares outstanding compared to 80.7 million in the prior year. 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 6,899 financial consultants in 711 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 May 31, May 31, Increase/ % 2004 2003 (Decrease) Chg. ------ ------ -------- ---- REVENUES: Commissions $284,873 $241,800 $43,073 17.8 Asset management and service fees 209,467 151,906 57,561 37.9 Principal transactions 69,401 70,396 (995) (1.4) Investment banking 60,441 69,684 (9,243) (13.3) Interest 28,773 24,186 4,587 19.0 Other 8,926 (1,619) 10,545 n.m. -------- -------- ------- TOTAL REVENUES 661,881 556,353 105,528 19.0 Interest expense 583 784 (201) (25.6) -------- -------- ------- NET REVENUES 661,298 555,569 105,729 19.0 -------- -------- ------- NON-INTEREST EXPENSES: Compensation and benefits 433,191 372,855 60,336 16.2 Communication and technology 66,131 64,519 1,612 2.5 Occupancy and equipment 34,776 32,242 2,534 7.9 Marketing and business development 20,863 9,792 11,071 113.1 Floor brokerage and clearance 5,200 4,660 540 11.6 Other 27,811 28,166 (355) (1.3) -------- -------- ------- TOTAL NON-INTEREST EXPENSES 587,972 512,234 75,738 14.8 -------- -------- ------- EARNINGS BEFORE INCOME TAXES 73,326 43,335 29,991 69.2 INCOME TAXES 27,062 15,459 11,603 75.1 -------- -------- ------- NET EARNINGS $46,264 $27,876 $18,388 66.0 ======== ======== ======= EARNINGS PER SHARE: Diluted $0.57 $0.35 $0.22 62.9 Basic $0.58 $0.35 $0.23 65.7 AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Diluted 80,951 80,738 Basic 80,183 80,337 STOCKHOLDERS' EQUITY $1,782,281 $1,674,808 BOOK VALUE PER SHARE $22.38 $20.99 TOTAL SHARES OUTSTANDING (end of period) 79,640 79,788 A. G. EDWARDS, INC. QUARTERLY CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) (Unaudited) For the Three Months Ended -------------------------------------------------------- May 31, February 29, November 30, August 31, May 31, 2004 2004 2003 2003 2003 ------- ----------- ---------- ---------- ------- REVENUES: Commissions $284,873 $310,325 $272,704 $268,393 $241,800 Asset management and service fees 209,467 203,371 178,068 165,268 151,906 Principal transactions 69,401 71,894 72,418 82,178 70,396 Investment banking 60,441 81,243 76,377 94,557 69,684 Interest 28,773 25,569 22,051 23,986 24,186 Other 8,926 723 4,765 2,515 (1,619) ------- ------- ------- ------- ------- TOTAL REVENUES 661,881 693,125 626,383 636,897 556,353 Interest expense 583 382 403 950 784 ------- ------- ------- ------- ------- NET REVENUES 661,298 692,743 625,980 635,947 555,569 ------- ------- ------- ------- ------- NON-INTEREST EXPENSES: Compensation and benefits 433,191 456,581 400,878 419,094 372,855 Communication and technology 66,131 68,841 69,892 68,795 64,519 Occupancy and equipment 34,776 31,715 37,391 36,269 32,242 Marketing and business development 20,863 12,358 13,604 11,099 9,792 Floor brokerage and clearance 5,200 6,126 5,720 5,989 4,660 Other 27,811 33,426 37,647 37,306 28,166 ------- ------- ------- ------- ------- TOTAL NON-INTEREST EXPENSES 587,972 609,047 565,132 578,552 512,234 ------- ------- ------- ------- ------- EARNINGS BEFORE INCOME TAXES 73,326 83,696 60,848 57,395 43,335 ------- ------- ------- ------- ------- INCOME TAXES 27,062 29,292 21,131 19,907 15,459 NET EARNINGS $46,264 $54,404 $39,717 $37,488 $27,876 ======= ======= ======= ======= ======= EARNINGS PER SHARE: Diluted $0.57 $0.67 $0.49 $0.46 $0.35 Basic $0.58 $0.68 $0.49 $0.47 $0.35 AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Diluted 80,951 81,329 81,401 80,488 80,738 Basic 80,183 80,385 80,047 79,394 80,337 STOCKHOLDERS' EQUITY $1,782,281 $1,778,319 $1,734,603 $1,666,738 $1,674,808 BOOK VALUE PER SHARE $22.38 $22.08 $21.58 $21.13 $20.99 A.G. EDWARDS, INC. QUARTERLY STATISTICAL INFORMATION (Dollars in thousands, except per share amounts) (Unaudited) 1Q FY05 4Q FY04 3Q FY04 2Q FY04 1Q FY04 ------- ------- -------- ------- -------- Net Revenues $661,298 $692,743 $625,980 $635,947 $555,569 Earnings Before Income Taxes $73,326 $83,696 $60,848 $57,395 $43,335 Net Earnings $46,264 $54,404 $39,717 $37,488 $27,876 Net Earnings as a Percent of Net Revenues 7.0% 7.9% 6.3% 5.9% 5.0% Average Diluted Shares-(000's Omitted) 80,951 81,329 81,401 80,488 80,738 Earnings Per Share (Diluted) $0.57 $0.67 $0.49 $0.46 $0.35 Dividends Per Share $0.16 $0.16 $0.16 $0.16 $0.16 Stockholders' Equity $1,782,281 $1,778,319 $1,734,603 $1,666,738 $1,674,808 Book Value Per Share $22.38 $22.08 $21.58 $21.13 $20.99 Return On Average Equity- (Quarter Results Annualized) 10.4% 12.4% 9.3% 9.0% 6.6% Total As- sets $4,110,942 $4,435,059 $4,180,205 $4,066,745 $3,921,934 Financial Consultants 6,899 6,980 6,956 7,024 7,121 Full-time Employees 15,392 15,931 15,887 15,948 16,079 Locations 713 710 708 706 707 Total Client As- sets $294,000,000 $300,000,000 *$283,000,000 *$270,000,000 *$264,000,000 Assets In Fee-based Acc- ounts $27,164,000 $27,275,000 $24,732,000 $23,405,000 $21,769,000 * Prior periods have been adjusted to include client assets acquired through the company that are held by other institutions. 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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