SOURCE: SEI

SEI

July 21, 2011 08:00 ET

SEI Reports Second-Quarter 2011 Financial Results

OAKS, PA--(Marketwire - Jul 21, 2011) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for second-quarter 2011. Diluted earnings per share were $.29 in second-quarter 2011 compared to $.28 in second-quarter 2010.

Consolidated Overview For the Three Months For the Six Months
(In thousands, except earnings per share) Ended June 30, Ended June 30,
2011 2010 % 2011 2010 %
Revenues $ 237,760 $ 228,388 4 % $ 470,253 $ 449,923 5 %
Net Income attributable to SEI 53,603 53,478 - % 111,331 112,898 (1 %)
Diluted Earnings Per Share $ 0.29 $ 0.28 4 % $ 0.59 $ 0.59 - %

"Our second-quarter results came in essentially flat versus both year-ago and first-quarter levels," said Alfred P. West, Jr., SEI Chairman and CEO. "These results reflect the increased Global Wealth Platform spending, which is preparing us to launch GWP in the US for our bank and advisor segments. While we're excited about the opportunity that GWP provides, we are not satisfied with short-term performance. We are working hard to increase revenues and control costs. While we believe our accelerated spending will continue to put pressure on financial results in the short-term, particularly in the banking segment, we are confident that we are well-positioned for long-term growth in all of our business segments."

Summary of Second-Quarter and Year to Date Results by Business Segment

(In thousands) For the Three Month Period For the Six Month Period
Ended June 30, Ended June 30,
2011 2010 % 2011 2010 %
Private Banks:
Revenues $ 87,873 $ 90,091 (2 %) $ 174,582 $ 177,212 (1 %)
Expenses 86,274 78,612 10 % 168,677 156,211 8 %
Operating Profit $ 1,599 $ 11,479 (86 %) $ 5,905 $ 21,001 (72 %)
Operating Margin 2 % 13 % 3 % 12 %
Investment Advisors:
Revenues 49,768 46,398 7 % 97,876 91,861 7 %
Expenses 27,734 28,120 (1 %) 54,774 55,703 (2 %)
Operating Profit 22,034 18,278 21 % 43,102 36,158 19 %
Operating Margin 44 % 39 % 44 % 39 %
Institutional Investors:
Revenues 54,731 51,446 6 % 107,916 101,785 6 %
Expenses 27,406 26,576 3 % 54,359 52,956 3 %
Operating Profit 27,325 24,870 10 % 53,557 48,829 10 %
Operating Margin 50 % 48 % 50 % 48 %
Investment Managers:
Revenues 44,452 39,440 13 % 87,893 77,050 14 %
Expenses 29,282 25,596 14 % 57,281 50,155 14 %
Operating Profit 15,170 13,844 10 % 30,612 26,895 14 %
Operating Margin 34 % 35 % 35 % 35 %
Investments in New Businesses:
Revenues 936 1,013 (8 %) 1,986 2,015 (1 %)
Expenses 2,920 2,739 7 % 6,045 5,400 12 %
Operating Loss (1,984 ) (1,726 ) 15 % (4,059 ) (3,385 ) 20 %
Operating Margin N/A N/A N/A N/A
Totals:
Revenues $ 237,760 $ 228,388 4 % $ 470,253 $ 449,923 5 %
Expenses 173,616 161,643 7 % 341,136 320,425 6 %
Corporate overhead expenses 10,720 9,941 8 % 21,368 19,658 9 %
Noncontrolling interest reflected in segments (533 ) (368 ) N/A (805 ) (677 ) N/A
Income from operations $ 53,957 $ 57,172 (6 %) $ 108,554 $ 110,517 (2 %)

Second-Quarter Business Commentary:

  • Asset management, administration, and distribution fee revenues increased, primarily due to higher asset balances under management and administration from existing clients as a result of improved capital markets.
  • Assets under management increased $1.1 billion to $180.3 billion at June 30, 2011, as compared to $179.2 billion at March 31, 2011.
  • Sales events, net of client losses, during second-quarter 2011 totaled $9.0 million and are expected to generate net annualized recurring revenues of approximately $8.4 million.
  • Total consolidated expenses in second-quarter 2011 reflect increased spending on the Global Wealth Platform. During the second-quarter 2011, we incurred additional costs related to system enhancements to meet new and existing client requirements as well as production and maintenance costs to run the platform. These costs mainly include personnel, consulting, and outsourcing and are the primary cause for the expense increase in the Private Banks segment.
  • Prior-year Private Banks segment revenues and profits include $5.0 million of one-time contract termination fees from a bank client lost as a result of an acquisition.
  • Net income attributable to SEI includes losses from SIV securities of $1.9 million in second-quarter 2011 compared to gains of $3.9 million in second-quarter 2010.
  • The effective tax rates were 34.7 percent for the second-quarter 2011 as compared to 37.8 percent for the second-quarter 2010. The decrease in the tax rate was due to tax planning strategies.
  • In the second-quarter 2011, SEI purchased 2.5 million shares of its common stock for $55.7 million.
  • In the second-quarter 2011, we made a $20.0 million payment on our long-term debt. As of June 30, 2011, the remaining balance on our debt is $40.0 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on July 21, 2011. 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) 1-866-847-7860; (International) 703-639-1427, access code 210438.

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 June 30, 2011, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $430 billion in mutual fund and pooled assets or separately managed assets, including $180 billion in assets under management and $250 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 June 30,
2011 2010
Asset management, admin. and distribution fees $ 172,331 $ 154,774
Information processing and software servicing fees 56,035 61,296
Transaction-based and trade execution fees 9,394 12,318
Total revenues 237,760 228,388
Subadvisory, distribution and other asset mgmt costs 26,304 24,600
Software royalties and other information processing costs 7,188 6,374
Brokerage commissions 6,599 8,666
Compensation, benefits and other personnel 72,613 67,012
Stock-based compensation 3,810 6,278
Consulting, outsourcing and professional fees 29,398 22,702
Data processing and computer related 11,610 10,417
Facilities, supplies and other costs 14,098 13,586
Amortization 6,792 5,997
Depreciation 5,391 5,584
Total expenses 183,803 171,216
Income from operations 53,957 57,172
Net (loss) gain on investments (1,948 ) 3,594
Interest and dividend income 1,436 1,502
Interest expense (155 ) (415 )
Other income, net - 1,070
Equity in earnings of unconsolidated affiliate 29,530 23,519
Income before taxes 82,820 86,442
Income taxes 28,707 32,603
Net income 54,113 53,839
Less: Net income attributable to noncontrolling interest (510 ) (361 )
Net income attributable to SEI $ 53,603 $ 53,478
Diluted earnings per common share $ 0.29 $ 0.28
Shares used to calculate diluted earnings per common share 187,020 191,500
Basic earnings per common share $ 0.29 $ 0.28
Shares used to calculate basic earnings per common share 184,585 189,356
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Six Months Ended June 30,
2011 2010
Asset management, admin. and distribution fees $ 339,835 $ 307,712
Information processing and software servicing fees 111,859 119,922
Transaction-based and trade execution fees 18,559 22,289
Total revenues 470,253 449,923
Subadvisory, distribution and other asset mgmt costs 52,600 50,183
Software royalties and other information processing costs 14,205 12,448
Brokerage commissions 13,180 16,091
Compensation, benefits and other personnel 143,638 134,228
Stock-based compensation 7,542 12,935
Consulting, outsourcing and professional fees 55,396 43,409
Data processing and computer related 22,913 20,345
Facilities, supplies and other costs 28,200 27,080
Amortization 13,023 11,897
Depreciation 11,002 10,790
Total expenses 361,699 339,406
Income from operations 108,554 110,517
Net gain on investments 5,330 21,073
Interest and dividend income 2,980 3,202
Interest expense (359 ) (886 )
Other income, net - 1,070
Equity in earnings of unconsolidated affiliate 58,479 47,593
Income before taxes 174,984 182,569
Income taxes 62,831 68,872
Net income 112,153 113,697
Less: Net income attributable to the noncontrolling interest (822 ) (799 )
Net income attributable to SEI $ 111,331 $ 112,898
Diluted earnings per common share $ 0.59 $ 0.59
Shares used to calculate diluted earnings per common share 187,757 191,281
Basic earnings per common share $ 0.60 $ 0.60
Shares used to calculate basic earnings per common share 185,186 189,652
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
2011 2010
Assets
Cash and short-term investments $ 442,311 $ 496,292
Restricted cash 4,000 4,000
Receivables, net 180,660 165,772
Securities owned 21,032 -
Other current assets 17,130 17,655
Total current assets 665,133 683,719
Property and equipment, net 136,543 140,568
Marketable securities 138,479 179,364
Capitalized software, net 302,337 294,332
Investment in unconsolidated affiliate 72,439 64,409
Other assets, net 15,874 14,831
Total assets $ 1,330,805 $ 1,377,223
Liabilities
Current liabilities $ 104,551 $ 127,600
Long-term debt 40,000 95,000
Deferred income taxes 91,643 92,253
Long-term liabilities 7,549 5,645
Total SEI Investments Company shareholders' equity 1,070,160 1,041,570
Noncontrolling interest 16,902 15,155
Total Equity 1,087,062 1,056,725
Total liabilities and equity $ 1,330,805 $ 1,377,223
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30,
2010 2010 2010 2011 2011
Private Banks:
Equity/Fixed Income prgms. $ 11,769 $ 12,842 $ 13,512 $ 14,809 $ 16,720
Collective Trust Fund prgms. 640 615 626 576 504
Liquidity funds 5,175 5,034 5,120 5,217 4,918
Total assets under mgmt. $ 17,584 $ 18,491 $ 19,258 $ 20,602 $ 22,142
Client assets under admin. 10,335 10,557 10,672 11,227 10,994
Total assets $ 27,919 $ 29,048 $ 29,930 $ 31,829 $ 33,136
Investment Advisors:
Equity/Fixed Income prgms. $ 23,699 $ 26,091 $ 27,680 $ 28,296 $ 28,410
Collective Trust Fund prgms. 2,066 2,028 1,820 1,618 1,499
Liquidity funds 2,635 2,253 1,641 1,551 1,651
Total assets under mgmt. $ 28,400 $ 30,372 $ 31,141 $ 31,465 $ 31,560
Institutional Investors:
Equity/Fixed Income prgms. $ 43,506 $ 47,667 $ 48,699 $ 51,287 $ 51,180
Collective Trust Fund prgms. 643 641 623 608 482
Liquidity funds 2,558 3,475 3,382 3,202 3,146
Total assets under mgmt. $ 46,707 $ 51,783 $ 52,704 $ 55,097 $ 54,808
Investment Managers:
Equity/Fixed Income prgms. $ 1 $ 1 $ 1 $ 37 $ 50
Collective Trust Fund prgms. 7,366 7,781 8,177 8,841 10,372
Liquidity funds 428 423 313 139 179
Total assets under mgmt. $ 7,795 $ 8,205 $ 8,491 $ 9,017 $ 10,601
Client assets under admin. (A) 220,459 227,777 233,079 238,335 238,432
Total assets $ 228,254 $ 235,982 $ 241,570 $ 247,352 $ 249,033
Investments in New Businesses:
Equity/Fixed Income prgms. $ 496 $ 533 $ 569 $ 598 $ 558
Liquidity funds 74 82 65 56 41
Total assets under mgmt. $ 570 $ 615 $ 634 $ 654 $ 599
LSV Asset Management
Equity/Fixed Income prgms. $ 47,822 $ 54,492 $ 60,058 $ 62,370 $ 60,626
Consolidated:
Equity/Fixed Income prgms (B) $ 127,293 $ 141,626 $ 150,519 $ 157,397 $ 157,544
Collective Trust Fund prgms. 10,715 11,065 11,246 11,643 12,857
Liquidity funds 10,870 11,267 10,521 10,165 9,935
Total assets under mgmt. $ 148,878 $ 163,958 $ 172,286 $ 179,205 $ 180,336
Client assets under admin. (C) 230,794 238,334 243,751 249,562 249,426
Total assets $ 379,672 $ 402,292 $ 416,037 $ 428,767 $ 429,762

(A) Client assets under administration in the Investment Managers segment include $52.2 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of June 30, 2011).
(B) Equity/Fixed Income programs include $2.4 billion of assets invested in various asset allocation funds at June 30, 2011.
(C) In addition to the numbers presented, SEI also administers an additional $4.7 billion in Funds of Funds assets (as of June 30, 2011) on which SEI does not earn an administration fee.

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