[NUVEEN LOGO]
FOR IMMEDIATE RELEASE CONTACT: CHRIS ALLEN
ATTN: BUSINESS/FINANCIAL EDITORS (312) 917-8331
CHRISTOPHER.ALLEN@NUVEEN.COM
KATHLEEN CARDOZA
(312) 917-7813
KATHLEEN.CARDOZA@NUVEEN.COM
NUVEEN INVESTMENTS REPORTS RECORD 3RD QUARTER EARNINGS WITH
ASSETS UNDER MANAGEMENT OF $154 BILLION
CHICAGO, IL, OCTOBER 18, 2006 -- Nuveen Investments, Inc. (NYSE: JNC), a leading
provider of diversified investment services, today reported third quarter net
income of $46.2 million, or $0.56 per share (diluted), compared with net income
of $43.5 million or $0.54 per share (diluted) in the third quarter of 2005. The
Company's third-quarter operating revenues of $181.9 million increased 15% over
the prior year. Advisory fee income increased 25% year over year. Gross
performance fees were lower by $12.5 million versus the prior year.
This quarter's results were lowered by several significant items netting to $5.0
million in expense before taxes, including a $4.3 million structuring fee on a
closed-end fund that was launched during the quarter and $6.4 million of
"catch-up" expense related to a performance-based equity plan established in
early 2005. These two expense items were partly offset by a $5.8 million gain
from the Company's disposition of a minority interest in Institutional Capital
Corporation, which was acquired by New York Life. These items reduced reported
net income by $3.0 million and adversely affected earnings per share by $0.04 on
a fully-diluted basis.
Third quarter gross sales were $6.7 billion, with positive net flows of $2.4
billion. Gross sales of high-net-worth managed accounts during the third quarter
were $2.5 billion and gross sales of institutional separate accounts were $2.4
billion. Third quarter gross sales of mutual funds were $1.4 billion and sales
of closed-end funds were $0.4 billion.
Year-to-date net income and earnings per share (diluted) were up 8% and 14%,
respectively, over the prior year. Gross sales for the first nine months were
$26.0 billion, with positive net flows of $13.4 billion.
Total assets under management increased to $154 billion at September 30, 2006,
from $128 billion a year ago and $136 billion at the beginning of the year. The
20% increase in assets under management over the prior year was driven by $17
billion of positive net flows, $6 billion of market appreciation and $3 billion
of assets from the acquisition of Santa Barbara Asset Management in October
2005.
Commenting on the Company's results, Tim Schwertfeger, Chairman & CEO of Nuveen
Investments, said, "We are very pleased to report another quarter of
high-quality, consistent operating results. We are on track with our plans to
expand our business to include more traditional mutual fund and institutional
categories. Our sales of institutional separate accounts were more than twice
the level reported in the third quarter of 2005, with
-more-
NUVEEN INVESTMENTS REPORTS RECORD 3RD QUARTER EARNINGS -- PAGE 2
net flows of $1.6 billion -- driven by continued strength in Tradewinds' global
and international strategies. Our increased focus on mutual funds resulted in
$886 million of net flows into our mutual funds in the third quarter, an
increase of 50% over the prior year, led by our value equity funds and our
municipal high-yield fund. Both of these product categories remain in an early
phase of their growth and development. The effects of these successes were
partly offset by the lower level of performance fees we earned on our Symphony
hedge funds versus the prior year. While Symphony continues to post positive
performance, they did not match the outsized performance they delivered in the
third quarter of last year.
"As anticipated, both retail managed account sales and flows slowed versus the
prior year and the prior quarter as a result of our decision to close our
Tradewinds international offering in April. Third quarter retail managed account
sales were $2.5 billion with net outflows of $454 million. Inflows into Santa
Barbara, Symphony and Nuveen municipals only partially offset normal outflows at
NWQ and Tradewinds as well as improved outflows at Rittenhouse. We know that the
closure of our most popular Tradewinds and NWQ offerings in retail managed
accounts has reduced our near-term asset growth in this segment; however, we
believe that closing these products positions us best to meet the long-term
performance expectations of our customers. Moreover, we have new products that
should be starting to ramp up over the next several quarters," added
Schwertfeger.
"As we look to the future, we continue to broaden and diversify our business
platform while migrating our asset mix toward higher fee opportunities. We ended
the quarter with equity assets accounting for 50% of our total assets and
municipal and taxable income-oriented portfolios comprising 40% and 10% of total
assets, respectively. We remain focused on securing the long-term financial
goals of investors and the financial advisors who serve them. Our high-quality
investment capabilities and our excellent sales and service platforms position
us well for continued growth."
Nuveen Investments will host a conference call to discuss its third quarter
results today at 10 a.m. central time. To access this call live or listen to an
audio replay, visit the investor relations section of the Company's website at
www.nuveen.com.
Nuveen Investments provides high-quality investment services designed to help
secure the long-term goals of institutions and high-net-worth investors as well
as the consultants and financial advisors who serve them. Nuveen Investments
markets its highly specialized investment teams, each with its own brand-name
and area of expertise: NWQ, specializing in value-style equities; Nuveen,
focused on fixed-income investments; Santa Barbara, committed to growth
equities; Tradewinds, specializing in global value equities; Rittenhouse,
dedicated to "blue-chip" growth equities; and Symphony, with expertise in
alternative investments as well as equity and credit strategies. The Company
manages $154 billion in assets. Nuveen Investments is listed on The New York
Stock Exchange and trades under the symbol "JNC."
Certain statements made by the Company in this release are forward-looking
statements. The Company's actual future results may differ significantly from
those anticipated in any forward-looking statements due to numerous factors.
These include, but are not limited to, the effects of the substantial
competition in the investment management business, including competition for
access to brokerage firms' retail distribution systems, the Company's reliance
on revenues from investment management contracts which renew annually,
regulatory developments, accounting pronouncements, and other additional risks
and uncertainties as set forth in the Company's filings with the SEC. The
Company undertakes no responsibility to update publicly or revise any
forward-looking statements. Earnings before interest and taxes presented in this
press release is a non-GAAP financial measure. See the attached Consolidated
Statements of Income for a reconciliation of earnings before interest and taxes
to net income, the most closely comparable GAAP measure.
###
Financial Table Follows
NUVEEN INVESTMENTS
CONSOLIDATED STATEMENTS OF INCOME
For the Year Ended December 31, 2005
and the Quarter Ended September 30, 2006
In thousands, except share data
2005
1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL
REVENUES:
Investment advisory fees
from assets under
management (1) $ 131,209 135,363 141,136 151,955 559,663
Product distribution 2,803 2,440 1,233 1,880 8,356
Performance fees/other revenue 856 1,088 15,882 3,284 21,110
Total operating revenues 134,868 138,890 158,252 157,119 589,130
EXPENSES:
Compensation and benefits 43,038 44,034 55,881 52,242 195,194
Advertising and promotional
costs 2,669 3,070 3,596 3,160 12,495
Occupancy and equipment
costs 5,400 5,181 5,539 5,528 21,648
Amortization of intangible
assets 1,273 1,273 1,273 1,673 5,492
Travel and entertainment 1,686 2,095 1,871 2,706 8,357
Outside and professional
services 5,829 6,477 6,302 6,394 25,002
Minority interest expense 1,406 1,406 1,406 1,591 5,809
Other operating expenses 4,544 7,490 6,119 7,089 25,242
Total operating expenses 65,845 71,025 81,987 80,382 299,239
OTHER INCOME/(EXPENSE) 1,858 2,826 688 2,515 7,887
INCOME BEFORE NET INTEREST
AND TAXES 70,881 70,692 76,953 79,252 297,778
NET INTEREST EXPENSE (989) (4,418) (5,583) (7,949) (18,939)
INCOME BEFORE TAXES 69,892 66,274 71,371 71,302 278,839
INCOME TAXES:
Federal 22,941 21,753 23,214 23,123 91,032
State 3,758 3,563 4,672 4,659 16,652
Total income taxes 26,699 25,317 27,886 27,782 107,684
NET INCOME $ 43,193 40,957 43,484 43,520 171,156
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Basic 93,757 78,238 76,294 77,369 81,356
Diluted 98,913 82,580 81,190 81,998 86,111
EARNINGS PER SHARE:
Basic $ 0.46 0.52 0.57 0.56 2.10
Diluted $ 0.44 0.50 0.54 0.53 1.99
GROSS SALES (in millions):
Mutual funds $ 702 697 923 868 3,191
Managed accounts--retail 3,684 3,376 3,981 4,562 15,603
Managed accounts
-institutional 1,882 1,823 957 1,635 6,297
Closed-end funds 1,414 560 13 315 2,302
Total funds and accounts $ 7,682 6,456 5,875 7,380 27,393
NET FLOWS (in millions):
Mutual funds $ 350 352 594 538 1,835
Managed accounts-retail 1,195 1,248 1,739 2,380 6,562
Managed accounts
-institutional 1,328 1,270 (329) 561 2,830
Closed-end funds 1,424 576 32 327 2,359
Total funds and accounts $ 4,297 3,447 2,035 3,806 13,585
MANAGED FUNDS AND ACCOUNTS
(in millions):
ASSETS UNDER MANAGEMENT:
Beginning of period $ 115,453 118,505 124,018 128,172 115,453
Acquisition of SBAM accts - - - 3,379 3,379
Sales -- funds and accounts 7,682 6,456 5,875 7,380 27,393
Dividend reinvestments 61 92 105 187 445
Redemptions and
withdrawals (3,447) (3,101) (3,944) (3,761) (14,253)
Total net flows into
funds and accounts 4,297 3,447 2,035 3,806 13,585
Appreciation/
(depreciation)of
managed assets (1,244) 2,066 2,119 758 3,699
End of period $ 118,505 124,018 128,172 136,117 136,117
RECAP BY PRODUCT TYPE:
Mutual funds $ 12,887 13,505 14,050 14,495
Closed-end funds 51,050 52,534 52,094 51,997
Managed accounts-retail 37,715 39,695 43,222 47,675
Managed accounts
-institutional 16,853 18,284 18,807 21,950
Total assets
under management $ 118,505 124,018 128,172 136,117
RECAP BY STYLE:
Equity-based $ 46,109 49,395 53,808 61,399
Municipals 57,894 60,069 60,058 60,421
Taxable income-oriented 14,503 14,554 14,307 14,297
Total assets
under management $ 118,505 124,018 128,172 136,117
2006
1ST QTR 2ND QTR 3RD QTR 4TH QTR TOTAL
REVENUES:
Investment advisory fees
from assets under
management (1) $ 156,275 168,923 176,925 - 502,123
Product distribution 1,237 733 1,697 - 3,668
Performance fees/other revenue 2,635 2,519 3,284 - 8,437
Total operating revenues 160,146 172,175 181,906 - 514,228
EXPENSES:
Compensation and benefits 53,821 59,646 72,911 - 186,378
Advertising and promotional
costs 2,670 2,676 3,728 - 9,073
Occupancy and equipment
costs 5,931 5,975 6,032 - 17,938
Amortization of intangible
assets 1,673 2,798 1,995 - 6,466
Travel and entertainment 2,108 2,677 2,290 - 7,076
Outside and professional
services 7,144 7,543 7,411 - 22,098
Minority interest expense 1,481 1,607 1,398 - 4,485
Other operating expenses 5,758 9,083 9,324 - 24,165
Total operating expenses 80,586 92,004 105,089 - 277,679
OTHER INCOME/(EXPENSE) 2,329 3,286 6,721 - 12,335
INCOME BEFORE NET INTEREST
AND TAXES 81,889 83,457 83,537 - 248,883
NET INTEREST EXPENSE (8,345) (7,389) (6,678) - (22,412)
INCOME BEFORE TAXES 73,544 76,068 76,859 - 226,471
INCOME TAXES:
Federal 24,122 24,950 24,901 - 73,974
State 4,560 4,716 5,775 - 15,050
Total income taxes 28,682 29,666 30,676 - 89,024
NET INCOME $ 44,862 46,402 46,183 - 137,447
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Basic 77,804 78,028 77,669 - 77,833
Diluted 83,044 83,069 82,934 - 83,029
EARNINGS PER SHARE:
Basic $ 0.58 0.59 0.59 - 1.77
Diluted $ 0.54 0.56 0.56 - 1.66
GROSS SALES (in millions):
Mutual funds $ 1,347 1,505 1,374 - 4,226
Managed accounts--retail 7,230 4,875 2,500 - 14,605
Managed accounts
-institutional 1,532 2,581 2,450 - 6,564
Closed-end funds - 226 369 - 595
Total funds and accounts $ 10,109 9,187 6,694 - 25,990
NET FLOWS (in millions):
Mutual funds $ 864 856 886 - 2,607
Managed accounts-retail 4,114 2,178 (454) - 5,837
Managed accounts
-institutional 932 1,811 1,590 - 4,332
Closed-end funds (6) 228 380 - 602
Total funds and accounts $ 5,903 5,072 2,402 - 13,378
MANAGED FUNDS AND ACCOUNTS
(in millions):
ASSETS UNDER MANAGEMENT:
Beginning of period $ 136,117 145,017 148,994 - 136,117
Acquisition of SBAM accts - - - - -
Sales -- funds and accounts 10,109 9,187 6,694 - 25,990
Dividend reinvestments 64 86 102 - 251
Redemptions and
withdrawals (4,269) (4,200) (4,394) - (12,863)
Total net flows into
funds and accounts 5,903 5,072 2,402 - 13,378
Appreciation/
(depreciation)of
managed assets 2,997 (1,096) 2,771 - 4,672
End of period $ 145,017 148,994 154,167 - 154,167
RECAP BY PRODUCT TYPE:
Mutual funds $ 15,398 16,133 17,407 -
Closed-end funds 51,813 51,388 52,791 -
Managed accounts-retail 53,651 55,277 55,633 -
Managed accounts
- institutional 24,154 26,195 28,335 -
Total assets
under management $ 145,017 148,994 154,167 -
RECAP BY STYLE:
Equity-based $ 69,964 73,636 76,773 -
Municipals 60,585 60,643 62,765 -
Taxable income-oriented 14,468 14,715 14,629 -
Total assets
under management $ 145,017 148,994 154,167 -
(1) Advisory fee revenue will fluctuate based on the number of days in the
quarter. In 2006, Q1 has 90 days, Q2 has 91 days, Q3 and Q4 have 92 days. Note:
Income before net interest and taxes (EBIT) is not a Generally Accepted
Accounting Principle (GAAP) disclosure and should not be considered in
isolation. In addition to net income, EBIT will be reported over the next
several quarters to help the reader in assessing the results from business
operations relative to prior periods given the increased debt on our balance
sheet -- and the accompanying higher interest expense -- as a result of a $600
million share repurchase in April 2005.