Nuveen Investments Reports Record Fourth Quarter and Full Year 2004 Ea

    Business Editors

    CHICAGO--(BUSINESS WIRE)--Jan. 19, 2005--Nuveen Investments, Inc. (NYSE:JNC), a leading provider of diversified investment services for institutional and high-net-worth investors served by financial advisors, today reported record earnings for the fourth quarter and the full year of 2004. Fourth quarter net income of $43.5 million increased 15% over the fourth quarter of 2003. Earnings per share (diluted) of $0.45 for the quarter also rose 15% from the same period last year. For the full year the Company reported record net income of $156.4 million and earnings per share (diluted) of $1.63, both up 16% over 2003.
    Fourth quarter gross sales were $8.1 billion, with positive net flows of $5.2 billion, an increase of 140% over the prior year. Gross sales for the full year were a record $25.9 billion, an increase of 43%, with positive net flows of $15.0 billion, up almost 60%. Net flows were positive across all product lines for both the quarter and the full year. Gross sales of managed accounts totaled $21.4 billion. Sales of closed-end exchange-traded funds were $2.9 billion and sales of mutual funds were $1.6 billion.
    Total assets under management increased to $115 billion at December 31, 2004, from $95 billion a year ago. The 21% increase in assets under management from a year ago was driven by $15 billion in positive net flows and $5 billion of stock and bond market appreciation. Strong asset growth drove advisory fee revenue to $476 million, up 18% over the prior year, with total operating revenues up 12%.
    Commenting on the Company's results, Tim Schwertfeger, Chairman & CEO of Nuveen Investments, said, "We are very pleased with the consistency of our growth and the quality of our results as we report record sales, net flows and earnings for the year, along with strong asset growth. Our results reflect Nuveen's 10th consecutive year of record earnings and highlight the stability and quality of our assets as well as our success in expanding our investment and distribution capabilities and the breadth of our product offerings. This year, 70% of our gross sales were in equity products with the remainder in municipal and taxable fixed income products. Municipal assets now account for just half of our assets under management, even as we've continued raising new municipal assets in the last several years.
    "Momentum in managed accounts, which includes customized NWQ value equity portfolios, Rittenhouse growth equity portfolios, Nuveen fixed-income portfolios and Symphony alternative investments, accounted for much of the double-digit growth across sales, flows, revenues, assets and earnings this year. In particular, strength at NWQ drove strong growth in managed accounts. Total managed account sales in 2004 were $21.4 billion with flows of $11.8 billion - four times prior year levels.
    "Our continued focus on product innovation also contributed to our success in 2004. In the 4th quarter we raised more than $700 million with our first closed-end exchange-traded fund that pursues an integrated equity index option strategy supported by a portfolio of common stock. This fund appeals to equity investors looking for attractive tax-advantaged dividend income with reduced volatility and the potential for more stable returns. Innovation and our leadership in the closed-end exchange-traded fund arena enabled us to raise $2.9 billion in new assets in 2004 despite an environment of rising interest rates.
    "We are pleased with the quality and diversity of our current asset base, as equity-based portfolios are approaching 40% of our total assets under management," concluded Schwertfeger. "We continue to believe our success reflects our ongoing commitment to helping investors secure their long-term goals with core long-term investment disciplines, conservatively-oriented product innovation and strong relationships with leading advisors and institutional clients."
    Nuveen Investments, Inc. will host a conference call to discuss its fourth quarter and full year results today, January 19, at 10:00 am 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 secure long-term client goals. The Company serves institutional clients, financial advisors and high-net-worth investors. The firm's asset management capabilities are marketed through four distinct brands, each with an independent investment team and area of expertise: Nuveen, focused on fixed-income investments; NWQ, specializing in value-style equities; Rittenhouse, dedicated to conservative growth-style equities; and Symphony, with expertise in alternative investment portfolios. In total, the Company manages over $115 billion in assets. Nuveen Investments, Inc. (NYSE:JNC) is an affiliate of The St. Paul Travelers Companies, Inc. (NYSE:STA).

    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.

NUVEEN INVESTMENTS CONSOLIDATED STATEMENTS OF INCOME (1) For the Years Ended December 31, 2003 and December 31, 2004 In thousands, except share data

2003 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total REVENUES:

Investment advisory fees from assets under management (2) $95,244 99,047 103,479 107,077 404,847 Product distribution 1,584 3,278 2,169 2,175 9,206 Performance fees/other revenue 4,719 3,772 15,179 14,306 37,976 Total operating revenues 101,547 106,097 120,827 123,557 452,028

EXPENSES:

Compensation and benefits 32,063 32,860 40,440 38,827 144,189 Advertising and promotional costs 2,555 3,096 2,834 3,143 11,627 Occupancy and equipment costs 4,902 4,922 4,732 4,765 19,321 Amortization of intangible assets 1,302 1,302 1,302 1,302 5,208 Travel and entertainment 1,781 1,956 1,955 2,035 7,726 Outside and professional services 4,545 4,994 5,170 5,623 20,331 Other operating expenses 3,278 4,278 5,248 4,495 17,299 Total operating expenses 50,425 53,407 61,681 60,189 225,702

OPERATING INCOME 51,122 52,690 59,146 63,368 226,326

INTEREST EXPENSE AND OTHER (981) (916) (1,816)(1,458) (5,171)

INCOME BEFORE TAXES 50,141 51,774 57,330 61,910 221,155

INCOME TAXES:

Federal 16,598 16,851 18,683 20,317 72,449 State 2,908 3,379 3,658 3,755 13,701 Total income taxes 19,506 20,231 22,341 24,072 86,150

NET INCOME $30,635 31,544 34,989 37,837 135,005

AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING:

Basic 92,566 92,473 92,773 92,632 92,612 Diluted 95,687 95,787 96,296 96,005 95,944

EARNINGS PER SHARE:

Basic $ 0.33 0.34 0.38 0.41 1.46 Diluted $ 0.32 0.33 0.36 0.39 1.41

GROSS SALES (in millions):

Mutual funds $ 385 446 348 357 1,536 Managed accounts-retail 1,546 1,703 2,205 2,490 7,943 Managed accounts -institutional 538 477 552 769 2,336 Exchange-traded funds-common 1,306 2,104 353 341 4,105 Total funds and accounts excluding Muni/Fund Preferred(TM) 3,774 4,730 3,458 3,956 15,920 Exchange-traded funds- Muni/Fund Preferred(TM) 422 694 946 117 2,179 Total funds and accounts $ 4,196 5,424 4,404 4,074 18,098

MANAGED FUNDS AND ACCOUNTS (in millions):

Assets under management: Beginning of period $79,719 81,360 88,258 90,059 79,719 Sales - funds and accounts 4,196 5,424 4,404 4,074 18,098 Dividend and defined portfolio reinvestments 74 96 102 141 413 Redemptions and withdrawals (2,165) (2,432) (2,421) (2,054) (9,073) Total net flows into funds and accounts 2,105 3,088 2,085 2,161 9,438 Appreciation/ (depreciation)of managed assets (463) 3,810 (284) 3,136 6,199 End of period $ 81,360 88,258 90,059 95,356 95,356

Recap by product type: Mutual funds $ 11,889 12,228 12,043 12,285 Exchange-traded funds 41,565 45,315 46,131 47,094 Managed accounts-retail 19,321 21,692 22,985 25,676 Managed accounts - institutional 8,585 9,023 8,900 10,300 Total assets under management $ 81,360 88,258 90,059 95,356

2004 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total REVENUES:

Investment advisory fees from assets under management (2) $112,355 115,345 120,989 127,125 475,814 Product distribution 2,427 1,833 2,290 2,409 8,959 Performance fees/other revenue 4,912 3,235 8,338 4,379 20,864 Total operating revenues 119,694 120,413 131,617 133,913 505,637

EXPENSES:

Compensation and benefits 36,651 39,233 45,380 44,057 165,321 Advertising and promotional costs 3,019 3,121 3,460 2,557 12,158 Occupancy and equipment costs 4,813 4,776 5,018 5,133 19,740 Amortization of intangible assets 1,299 1,273 1,273 1,273 5,118 Travel and entertainment 1,863 2,089 1,730 2,299 7,981 Outside and professional services 5,446 5,800 5,507 5,464 22,216 Other operating expenses 4,874 5,418 4,793 5,144 20,229 Total operating expenses 57,965 61,709 67,161 65,927 252,762

OPERATING INCOME 61,729 58,704 64,457 67,985 252,875

INTEREST EXPENSE AND OTHER 199 42 (626) 16 (369)

INCOME BEFORE TAXES 61,928 58,746 63,831 68,001 252,506

INCOME TAXES:

Federal 20,183 19,197 20,835 22,781 82,996 State 3,868 3,571 3,935 1,730 13,103 Total income taxes 24,051 22,767 24,769 24,511 96,099

NET INCOME $ 37,877 35,979 39,062 43,490 156,408

AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING:

Basic 92,867 92,609 92,435 92,776 92,671 Diluted 96,305 95,494 95,415 97,269 96,121

EARNINGS PER SHARE:

Basic $ 0.41 0.39 0.42 0.47 1.69 Diluted $ 0.39 0.38 0.41 0.45 1.63

GROSS SALES (in millions):

Mutual funds $ 391 282 407 545 1,625 Managed accounts-retail 3,716 3,466 3,576 4,740 15,497 Managed accounts -institutional 963 1,728 1,128 2,120 5,939 Exchange-traded funds-common 871 77 405 713 2,066 Total funds and accounts excluding Muni/Fund Preferred(TM) 5,941 5,553 5,516 8,118 25,127 Exchange-traded funds- Muni/Fund Preferred(TM) 152 435 235 - 822 Total funds and accounts 6,092 5,988 5,751 8,118 25,949

MANAGED FUNDS AND ACCOUNTS (in millions):

Assets under management: Beginning of period $ 95,356 100,923 101,857 106,891 95,356 Sales - funds and accounts 6,092 5,988 5,751 8,118 25,949 Dividend and defined portfolio reinvestments 72 82 87 148 389 Redemptions and withdrawals (2,367) (2,962) (2,947) (3,041)(11,316) Total net flows into funds and accounts 3,797 3,108 2,891 5,226 15,022 Appreciation/ (depreciation)of managed assets 1,771 (2,175) 2,144 3,336 5,076 End of period $ 100,923 101,857 106,891 115,453 115,453

Recap by product type: Mutual funds $ 12,438 11,873 12,293 12,680 Exchange-traded funds 48,620 47,262 49,226 50,216 Managed accounts-retail 28,587 30,302 32,265 36,975 Managed accounts - institutional 11,278 12,419 13,107 15,581 Total assets under management $100,923 101,857 106,891 115,453

(1) The Company began expensing the cost of stock options on April 1, 2004. All historical financial information has been restated. (2) Advisory fee revenue will fluctuate based on the number of days in the quarter. In 2004, Q1 has 91 days, Q2 has 91 days, Q3 and Q4 have 92 days.

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CONTACT: Nuveen Investments, Inc. Laurel O'Brien (Media Relations), 312-917-8254

KEYWORD: ILLINOIS INDUSTRY KEYWORD: BANKING EARNINGS CONFERENCE CALLS SOURCE: Nuveen Investments, Inc.

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