SOURCE: SEI

SEI

January 25, 2012 08:30 ET

SEI Reports Fourth-Quarter 2011 Financial Results

OAKS, PA--(Marketwire - Jan 25, 2012) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for fourth-quarter 2011. Diluted earnings per share were $.25 in fourth-quarter 2011 compared to $.33 in fourth-quarter 2010.

Consolidated Overview For the Three Months For the Twelve Months
(In thousands, except earnings per share) Ended December 31, Ended December 31,
2011 2010 % 2011 2010 %
Revenues $ 226,247 $ 231,399 (2 %) $ 929,727 $ 900,835 3 %
Net Income attributable to SEI 44,396 62,400 (29 %) 204,959 231,687 (12 %)
Diluted Earnings Per Share $ 0.25 $ 0.33 (24 %) $ 1.11 $ 1.22 (9 %)

"While the headwinds created by third-quarter 2011 market performance had a dampening effect on fourth-quarter results, we continued to make progress in our business development initiatives that will drive long-term growth," said Alfred P. West, Jr., SEI Chairman and CEO.

"As we enter 2012, we continue to operate in challenging and dynamic markets. We are confident that the solutions we offer and the investments we have made will allow us to succeed in growing our company. In the short-term, we will continue to focus on improving productivity, maintaining a strong and talented workforce and producing strong sales results. In the long-term increasing shareholder value, through strong profit growth, remains our number one goal."

Summary of Fourth-Quarter and Year to Date Results by Business Segment
(In thousands) For the Three Month Period For the Twelve Month Period
Ended December 31, Ended December 31,
2011 2010 % 2011 2010 %
Private Banks:
Revenues $ 85,843 $ 85,938 0 % $ 348,122 $ 346,668 0 %
Expenses 84,769 80,959 5 % 339,339 310,633 9 %
Operating Profit $ 1,074 $ 4,979 (78 %) $ 8,783 $ 36,035 (76 %)
Operating Margin 1 % 6 % 3 % 10 %
Investment Advisors:
Revenues 45,106 48,095 (6 %) 189,780 183,378 3 %
Expenses 27,613 28,259 (2 %) 110,438 110,388 0 %
Operating Profit 17,493 19,836 (12 %) 79,342 72,990 9 %
Operating Margin 39 % 41 % 42 % 40 %
Institutional Investors:
Revenues 49,895 53,710 (7 %) 210,027 206,531 2 %
Expenses 26,702 28,038 (5 %) 106,585 106,934 0 %
Operating Profit 23,193 25,672 (10 %) 103,442 99,597 4 %
Operating Margin 46 % 48 % 49 % 48 %
Investment Managers:
Revenues 44,497 42,561 5 % 177,975 160,159 11 %
Expenses 29,270 27,503 6 % 115,963 103,421 12 %
Operating Profit 15,227 15,058 1 % 62,012 56,738 9 %
Operating Margin 34 % 35 % 35 % 35 %
Investments in New Businesses:
Revenues 906 1,095 (17 %) 3,823 4,099 (7 %)
Expenses 3,085 3,196 (3 %) 11,559 12,676 (9 %)
Operating Loss (2,179 ) (2,101 ) 4 % (7,736 ) (8,577 ) (10 %)
Operating Margin N/A N/A N/A N/A
Totals:
Revenues $ 226,247 $ 231,399 (2 %) $ 929,727 $ 900,835 3 %
Expenses 171,439 167,955 2 % 683,884 644,052 6 %
Corporate overhead expenses 10,875 12,076 (10 %) 43,398 40,715 7 %
Noncontrolling interest reflected in segments (442 ) (509 ) N/A (1,620 ) (1,465 ) N/A
Income from operations $ 44,375 $ 51,877 (14 %) $ 204,065 $ 217,533 (6 %)

Fourth-Quarter Business Commentary:

  • Revenues declined in fourth-quarter 2011 as compared to fourth-quarter 2010 and to third-quarter 2011 due to a decrease in Asset management, administration, and distribution fee revenues from the market decline experienced at the end of third-quarter 2011. Although ending assets increased during the fourth-quarter 2011, SEI's average assets under management (which SEI uses to calculate revenue) decreased during fourth-quarter 2011 compared to fourth-quarter 2010 as well as to third-quarter 2011 (See attached Ending and Average Asset Balances schedules for further details).

  • Revenues in fourth-quarter 2011 compared to fourth-quarter 2010 also declined due to lower information processing fees due to a decline in one-time revenues.

  • Sales events, net of client losses, during fourth-quarter 2011 totaled approximately $20.0 million and are expected to generate net annualized recurring revenues of approximately $16.0 million when contract values are fully realized.

  • Net income attributable to SEI includes losses from SIV securities of $0.7 million in fourth-quarter 2011 compared to gains of $14.3 million in fourth-quarter 2010. In addition fourth-quarter 2010 included gains of $3.8 million relating to sales of other assets.

  • Diluted earnings per share in fourth-quarter 2011 declined versus third-quarter 2011 due mainly to the revenue decreases mentioned above. Diluted earnings per share declined versus fourth-quarter 2010 due to the revenue decreases above, in addition to SIV and other gains recorded on investments in fourth-quarter 2010.

  • The effective tax rates were 34.7 percent in the fourth-quarter 2011 as well as in the fourth-quarter 2010. The tax rate in the fourth-quarter 2011 benefited from tax planning strategies while fourth-quarter 2010 benefited from a year-to-date adjustment to reflect the reinstatement of the research and development tax credit.

  • In the fourth-quarter 2011, SEI purchased 3.2 million shares of its common stock for $52.5 million.

  • In the fourth-quarter 2011, SEI made a $20.0 million payment on its outstanding debt. As of December 31, 2011, SEI no longer carries any debt.

Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on January 25, 2012. Investors may listen to the call at www.seic.com/investors or listen at www.earnings.com, a service of Thomson Streetevents. The call may also be accessed at numerous financial services web sites including AOL and Yahoo. Investors may also listen to replays at these web sites, or by telephone at (USA) 1-866-206-5917; (International) 703-639-1106, access code 234129.

About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2011, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $404 billion in mutual fund and pooled or separately managed assets, including $172 billion in assets under management and $232 billion in client assets under administration. For more information, visit www.seic.com.

Many of the statements in this release may be considered "forward-looking statements" and include discussions about future operations, strategies and financial results. Forward-looking statements are based upon estimates and assumptions that involve risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe our assumptions are reasonable, they could be inaccurate. Our actual future revenues and income could differ materially from our expected results. We have no obligation to publicly update or revise any forward-looking statements.

SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
2011 2010
Asset management, admin. and distribution fees $ 162,126 $ 165,024
Information processing and software servicing fees 54,882 56,381
Transaction-based and trade execution fees 9,239 9,994
Total revenues 226,247 231,399
Subadvisory, distribution and other asset mgmt costs 25,921 26,302
Software royalties and other information processing costs 6,529 5,923
Brokerage commissions 6,816 6,221
Compensation, benefits and other personnel 74,609 70,243
Stock-based compensation 3,146 10,380
Consulting, outsourcing and professional fees 27,592 23,783
Data processing and computer related 11,774 10,552
Facilities, supplies and other costs 13,105 14,455
Amortization 7,257 6,153
Depreciation 5,123 5,510
Total expenses 181,872 179,522
Income from operations 44,375 51,877
Net (loss) gain on investments (552 ) 18,098
Interest and dividend income 1,449 1,503
Interest expense (100 ) (256 )
Other expense, net - (1,660 )
Equity in earnings of unconsolidated affiliate 23,431 26,618
Net income before income taxes 68,603 96,180
Income taxes 23,750 33,278
Net income 44,853 62,902
Less: Net income attributable to the noncontrolling interest (457 ) (502 )
Net income attributable to SEI $ 44,396 $ 62,400
Diluted earnings per common share $ 0.25 $ 0.33
Shares used to calculate diluted
earnings per common share 178,412 189,200
Basic earnings per common share $ 0.25 $ 0.33
Shares used to calculate basic
earnings per common share 178,098 186,602
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended December 31,
2011 2010
Asset management, admin. and distribution fees $ 669,788 $ 628,535
Information processing and software servicing fees 222,417 231,529
Transaction-based and trade execution fees 37,522 40,771
Total revenues 929,727 900,835
Subadvisory, distribution and other asset mgmt costs 103,134 101,722
Software royalties and other information processing costs 27,437 24,419
Brokerage commissions 27,022 28,882
Compensation, benefits and other personnel 289,445 269,165
Stock-based compensation 14,112 26,783
Consulting, outsourcing and professional fees 113,171 89,033
Data processing and computer related 47,003 41,064
Facilities, supplies and other costs 55,579 56,284
Amortization 27,288 24,048
Depreciation 21,471 21,902
Total expenses 725,662 683,302
Income from operations 204,065 217,533
Net gain on investments 3,360 48,533
Interest and dividend income 5,829 6,326
Interest expense (585 ) (1,478 )
Other expense, net - (590 )
Equity in earnings of unconsolidated affiliate 105,818 99,457
Net income before income taxes 318,487 369,781
Income taxes 111,837 136,461
Net income 206,650 233,320
Less: Net income attributable to the noncontrolling interest (1,691 ) (1,633 )
Net income attributable to SEI $ 204,959 $ 231,687
Diluted earnings per common share $ 1.11 $ 1.22
Shares used to calculate diluted
earnings per common share 184,127 190,321
Basic earnings per common share $ 1.12 $ 1.23
Shares used to calculate basic
earnings per common share 182,547 188,468
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, December 31,
2011 2010
Assets
Cash and short-term investments $ 420,986 $ 496,292
Restricted cash 6,000 4,000
Receivables, net 167,909 165,772
Securities owned 20,949 -
Other current assets 19,107 17,655
Total current assets 634,951 683,719
Property and equipment, net 129,548 140,568
Marketable securities 139,333 179,364
Capitalized software, net 309,133 294,332
Investment in unconsolidated affiliate 60,954 64,409
Other assets, net 20,640 14,831
Total assets $ 1,294,559 $ 1,377,223
Liabilities
Current liabilities $ 151,073 $ 127,600
Long-term debt - 95,000
Deferred income taxes 93,751 92,253
Other Long-term liabilities 8,276 5,645
Total SEI Investments Company shareholders' equity 1,025,316 1,041,570
Noncontrolling interest 16,143 15,155
Total Equity 1,041,459 1,056,725
Total liabilities and equity $ 1,294,559 $ 1,377,223
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
Dec. 31, Mar. 31, Jun. 30, Sept. 30, Dec. 31,
2010 2011 2011 2011 2011
Private Banks:
Equity/Fixed Income prgms. $ 13,512 $ 14,809 $ 16,720 $ 15,442 $ 16,435
Collective Trust Fund prgms. 626 576 504 476 450
Liquidity funds 5,120 5,217 4,918 5,529 5,553
Total assets under mgmt. $ 19,258 $ 20,602 $ 22,142 $ 21,447 $ 22,438
Client assets under admin. 10,672 11,227 10,994 9,845 10,355
Total assets $ 29,930 $ 31,829 $ 33,136 $ 31,292 $ 32,793
Investment Advisors:
Equity/Fixed Income prgms. $ 27,680 $ 28,296 $ 28,410 $ 24,757 $ 26,639
Collective Trust Fund prgms. 1,820 1,618 1,499 1,392 1,298
Liquidity funds 1,641 1,551 1,651 2,653 2,505
Total assets under mgmt. $ 31,141 $ 31,465 $ 31,560 $ 28,802 $ 30,442
Institutional Investors:
Equity/Fixed Income prgms. $ 48,699 $ 51,287 $ 51,180 $ 46,259 $ 49,051
Collective Trust Fund prgms. 623 608 482 510 492
Liquidity funds 3,382 3,202 3,146 3,356 3,888
Total assets under mgmt. $ 52,704 $ 55,097 $ 54,808 $ 50,125 $ 53,431
Investment Managers:
Equity/Fixed Income prgms. $ 1 $ 37 $ 50 $ 64 $ 57
Collective Trust Fund prgms. 8,177 8,841 10,372 10,896 11,255
Liquidity funds 313 139 179 195 152
Total assets under mgmt. $ 8,491 $ 9,017 $ 10,601 $ 11,155 $ 11,464
Client assets under admin. (A) 233,079 238,335 238,432 223,620 221,198
Total assets $ 241,570 $ 247,352 $ 249,033 $ 234,775 $ 232,662
Investments in New Businesses:
Equity/Fixed Income prgms. $ 569 $ 598 $ 558 $ 490 $ 515
Liquidity funds 65 56 41 41 37
Total assets under mgmt. $ 634 $ 654 $ 599 $ 531 $ 552
LSV Asset Management
Equity/Fixed Income prgms. $ 60,058 $ 62,369 $ 60,626 $ 49,444 $ 53,712
Consolidated:
Equity/Fixed Income prgms (B) $ 150,519 $ 157,396 $ 157,544 $ 136,456 $ 146,409
Collective Trust Fund prgms. 11,246 11,643 12,857 13,274 13,495
Liquidity funds 10,521 10,165 9,935 11,774 12,135
Total assets under mgmt. $ 172,286 $ 179,204 $ 180,336 $ 161,504 $ 172,039
Client assets under admin. (C) 243,751 249,562 249,426 233,465 231,553
Total assets $ 416,037 $ 428,766 $ 429,762 $ 394,969 $ 403,592

(A) Client assets under administration in the Investment Managers segment include $39.5 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of December 31, 2011).
(B) Equity/Fixed Income programs include $2.3 billion of assets invested in various asset allocation funds at December 31, 2011.
(C) In addition to the numbers presented, SEI also administers an additional $4.4 billion in Funds of Funds assets (as of December 31, 2011) on which SEI does not earn an administration fee.

SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2010 2011 2011 2011 2011
Private Banks:
Equity/Fixed Income prgms. $ 13,200 $ 14,170 $ 16,176 $ 16,592 $ 16,624
Collective Trust Fund prgms. 618 593 543 505 464
Liquidity funds 4,966 5,058 4,909 5,210 5,401
Total assets under mgmt. $ 18,784 $ 19,821 $ 21,628 $ 22,307 $ 22,489
Client assets under admin. 10,749 10,921 11,114 10,364 10,290
Total assets $ 29,533 $ 30,742 $ 32,742 $ 32,671 $ 32,779
Investment Advisors:
Equity/Fixed Income prgms. $ 27,121 $ 27,841 $ 28,502 $ 26,658 $ 26,094
Collective Trust Fund prgms. 1,893 1,687 1,544 1,442 1,314
Liquidity funds 1,729 1,580 1,576 2,224 2,499
Total assets under mgmt. $ 30,743 $ 31,108 $ 31,622 $ 30,324 $ 29,907
Institutional Investors:
Equity/Fixed Income prgms. $ 48,310 $ 50,392 $ 51,567 $ 49,115 $ 48,504
Collective Trust Fund prgms. 638 608 554 505 500
Liquidity funds 3,450 3,418 3,515 3,416 3,461
Total assets under mgmt. $ 52,398 $ 54,418 $ 55,636 $ 53,036 $ 52,465
Investment Managers:
Equity/Fixed Income prgms. $ 1 $ 1 $ 38 $ 52 $ 65
Collective Trust Fund prgms. 7,986 8,288 9,560 11,292 10,773
Liquidity funds 406 210 165 200 219
Total assets under mgmt. $ 8,393 $ 8,499 $ 9,763 $ 11,544 $ 11,057
Client assets under admin. 233,680 237,376 241,423 236,953 224,633
Total assets $ 242,073 $ 245,875 $ 251,186 $ 248,497 $ 235,690
Investments in New Businesses:
Equity/Fixed Income prgms. $ 551 $ 579 $ 561 $ 525 $ 515
Liquidity funds 70 61 42 42 42
Total assets under mgmt. $ 621 $ 640 $ 603 $ 567 $ 557
LSV Asset Management
Equity/Fixed Income prgms. $ 57,523 $ 62,212 $ 63,000 $ 54,679 $ 54,021
Consolidated:
Equity/Fixed Income prgms $ 146,706 $ 155,195 $ 159,844 $ 147,621 $ 145,823
Collective Trust Fund prgms. 11,135 11,176 12,201 13,744 13,051
Liquidity funds 10,621 10,327 10,207 11,092 11,622
Total assets under mgmt. $ 168,462 $ 176,698 $ 182,252 $ 172,457 $ 170,496
Client assets under admin. 244,429 248,297 252,537 247,317 234,923
Total assets $ 412,891 $ 424,995 $ 434,789 $ 419,774 $ 405,419

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