Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

July 23, 2014


Exhibit 99.1



Investor Contact:                         Media Contact:
Nicole Vattimo                            Dana Grosser
SEI    SEI
+1 610-676-4385                        +1 610-676-2459
nvattimo@seic.com                         dgrosser@seic.com
Pages:        8

FOR IMMEDIATE RELEASE

SEI REPORTS SECOND-QUARTER 2014 FINANCIAL RESULTS
Revenues Increase 16 Percent, Strong Growth in Income From Operations

OAKS, Pa., July 23, 2014 -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the second-quarter 2014. Diluted earnings per share were $.48 in second-quarter 2014 compared to $.47 in second-quarter 2013. Diluted earnings per share in the second-quarter 2013 reflect pre-tax gains of $.16 per share from a litigation settlement payment related to a structured investment vehicle (SIV) security. Net of this item, diluted earnings per share were $.31 in second-quarter 2013 and diluted earnings per share growth was 55 percent.
Consolidated Overview
 
For the Three Months Ended June 30,
 
 
 
For the Six Months Ended June 30,
 
 
(In thousands, except earnings per share)
 
 
 
 
 
 
 
 
2014
 
2013
 
%
 
2014
 
2013
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$318,815

 

$274,574

 
16
 %
 
$
621,201

 
$
546,453

 
14
%
Net income attributable to SEI
 
82,813

 
83,494

 
(1
)%
 
157,633

 
155,414

 
1
%
Diluted earnings per share
 

$0.48

 

$0.47

 
2
 %
 

$0.91

 

$0.88

 
3
%
"Our strong second-quarter results reflect progress across all of our business segments," said Alfred P. West, Jr., SEI Chairman and CEO. "The results are evidence that what we are building and delivering into our markets is being accepted and that our commitment to long-term, sustainable growth and increased shareholder value is paying off.
"These results affirm our strategic business model of a diversified portfolio of offerings that provide leveraged and scalable solutions to our markets."






Summary of Second-Quarter Results by Business Segment
(In thousands)
 
For the Three Months Ended June 30,
 
 
 
For the Six Months Ended June 30,
 
 
 
 
2014
 
2013
 
%
 
2014
 
2013
 
%
Private Banks:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 

$114,182

 

$95,142

 
20
 %
 

$219,361

 

$193,888

 
13
 %
   Expenses
 
98,957

 
97,755

 
1
 %
 
199,147

 
194,053

 
3
 %
   Operating Profit
 
15,225

 
(2,613
)
 
NM
 
20,214

 
(165
)
 
NM
   Gain on sale of subsidiary
 

 

 
 %
 
5,582

 
22,112

 
(75
)%
   Total Profit
 
15,225

 
(2,613
)
 
NM
 

$25,796

 

$21,947

 
18
 %
   Operating Margin (A)
 
13
%
 
(3
)%
 
 
 
9
%
 
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Advisors:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
70,046

 
59,284

 
18
 %
 
136,470

 
114,475

 
19
 %
   Expenses
 
35,679

 
32,898

 
8
 %
 
70,256

 
64,523

 
9
 %
   Operating Profit
 
34,367

 
26,386

 
30
 %
 
66,214

 
49,952

 
33
 %
   Operating Margin
 
49
%
 
45
 %
 
 
 
49
%
 
44
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional Investors:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
70,994

 
63,684

 
11
 %
 
139,651

 
126,846

 
10
 %
   Expenses
 
35,025

 
33,028

 
6
 %
 
69,120

 
64,537

 
7
 %
   Operating Profit
 
35,969

 
30,656

 
17
 %
 
70,531

 
62,309

 
13
 %
   Operating Margin
 
51
%
 
48
 %
 
 
 
51
%
 
49
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Managers:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
62,451

 
55,456

 
13
 %
 
123,459

 
109,276

 
13
 %
   Expenses
 
39,449

 
36,507

 
8
 %
 
78,633

 
71,669

 
10
 %
   Operating Profit
 
23,002

 
18,949

 
21
 %
 
44,826

 
37,607

 
19
 %
   Operating Margin
 
37
%
 
34
 %
 
 
 
36
%
 
34
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in New Businesses:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
1,142

 
1,008

 
13
 %
 
2,260

 
1,968

 
15
 %
   Expenses
 
4,451

 
3,890

 
14
 %
 
8,700

 
7,628

 
14
 %
   Operating Loss
 
(3,309
)
 
(2,882
)
 
NM
 
(6,440
)
 
(5,660
)
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
Totals:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 

$318,815

 

$274,574

 
16
 %
 

$621,201

 

$546,453

 
14
 %
   Expenses
 
213,561

 
204,078

 
5
 %
 
425,856

 
402,410

 
6
 %
   Corporate overhead expenses
 
11,624

 
12,523

 
(7
)%
 
23,323

 
26,317

 
(11
)%
   NCI reflected in segments
 

 

 
 %
 

 
(289
)
 
NM
   Income from operations
 

$93,630

 

$57,973

 
62
 %
 

$172,022

 

$118,015

 
46
 %

(A) Percentages determined exclusive of gain on sale of subsidiary.

2



Second-Quarter Business Highlights:

Revenues increased in second-quarter 2014 as compared to both second-quarter 2013 and first-quarter 2014. Revenue growth was primarily driven by higher Asset management, administration, and distribution fees from market appreciation and improved cash flows from new and existing clients.
Revenue growth was also driven by increased information processing fees in our Private Banks segment. The increase was primarily attributable to higher fees from the growth in assets processed on the SEI Wealth PlatformSM and $6.0 million, or $.02 diluted earnings per share, in non-recurring professional services fees from a single project.
Sales events, net of client losses, during second-quarter 2014 totaled approximately $23.1 million and are expected to generate net annualized recurring revenues of approximately $17.0 million when contract values are fully realized.
Our average assets under management, excluding LSV, increased $23.5 billion, or 17 percent, to $164.3 billion in the second-quarter 2014, as compared to $140.9 billion during the second-quarter 2013, and increased $6.8 billion, or four percent, as compared to $157.6 billion during the first-quarter 2014.
Our average assets under administration increased $49.2 billion, or 16 percent, to $348.4 billion in the second-quarter 2014, as compared to $299.2 billion during the second-quarter 2013, and increased $12.4 billion, or four percent, as compared to $336.0 billion during the first-quarter 2014 (see attached Ending and Average Asset Balances schedules for further details).
All four core business segments realized revenue and profit margin growth as compared to second-quarter 2013 results. Operating margins in all four core business segments improved primarily from increased recurring revenues generated from the higher levels of assets under management and administration.
Income from LSV increased $6.7 million, or 24 percent, to $34.5 million in second-quarter 2014 as compared to $27.8 million in second-quarter 2013 due to an increase in assets under management from market appreciation and an increase in performance fees earned by LSV.
Stock-based compensation expense during the second-quarter 2014 decreased by $7.7 million due to the acceleration of expense recognition during the comparable period of 2013 for stock options that achieved performance vesting targets earlier than originally estimated.
Amortization expense related to capitalized software increased to $9.5 million during the second-quarter 2014 as compared to $8.4 million during the second-quarter 2013 due to continued releases of the SEI Wealth PlatformSM.
Net income attributable to SEI in the second-quarter 2013 reflects income of $43.4 million, or approximately $.16 diluted earnings per share, from a settlement payment received pertaining to litigation related to the purchase of securities of Cheyne Finance LLC, a SIV security.
The effective tax rates were 35.7 percent in second-quarter 2014, 35.5 percent in second-quarter 2013, and 35.9 percent in first-quarter 2014.
In second-quarter 2014, we repurchased 2.2 million shares of our common stock for $71.6 million.

3



Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on July 23, 2014. Investors may listen to the call at www.seic.com/investors. The call may also be accessed at many financial services websites, including Google Finance and Yahoo Finance. Investors may also listen to replays at these websites, or by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 332277.

About SEI
SEI (NASDAQ:SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of June 30, 2014, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $602 billion in mutual fund and pooled or separately managed assets, including $249 billion in assets under management and $353 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.




4



SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Asset management, admin. and distribution fees
 

$236,191

 

$203,722

 

$461,262

 

$402,355

Information processing and software servicing fees
 
75,828

 
62,468

 
145,006

 
127,000

Transaction–based and trade execution fees
 
6,796

 
8,384

 
14,933

 
17,098

 
 
 
 
 
 
 
 
 
Total revenues
 
318,815

 
274,574

 
621,201

 
546,453

 
 
 
 
 
 
 
 
 
Subadvisory, distribution and other asset mgmt costs
 
37,244

 
29,652

 
71,256

 
57,586

Software royalties and other information processing costs
 
8,417

 
7,884

 
16,970

 
15,371

Brokerage commissions
 
5,119

 
6,260

 
11,098

 
12,772

Compensation, benefits and other personnel
 
92,470

 
86,715

 
186,894

 
175,325

Stock-based compensation
 
2,872

 
10,607

 
5,695

 
15,900

Consulting, outsourcing and professional fees
 
33,404

 
33,451

 
68,337

 
65,300

Data processing and computer related
 
13,378

 
12,316

 
25,998

 
24,374

Facilities, supplies and other costs
 
17,366

 
15,559

 
33,218

 
33,707

Amortization
 
9,584

 
8,427

 
18,798

 
16,669

Depreciation
 
5,331

 
5,730

 
10,915

 
11,434

 
 
 
 
 
 
 
 
 
Total expenses
 
225,185

 
216,601

 
449,179

 
428,438

 
 
 
 
 
 
 
 
 
Income from operations
 
93,630

 
57,973

 
172,022

 
118,015

 
 
 
 
 
 
 
 
 
Net gain (loss) on investments
 
391

 
(177
)
 
527

 
103

Interest and dividend income
 
721

 
688

 
1,498

 
1,741

Interest expense
 
(114
)
 
(114
)
 
(227
)
 
(227
)
Equity in earnings of unconsolidated affiliates
 
34,226

 
27,588

 
66,117

 
55,176

Gain on sale of subsidiary
 

 

 
5,582

 
22,112

Other income
 

 
43,429

 

 
43,429

 
 
 
 
 
 
 
 
 
Income before income taxes
 
128,854

 
129,387

 
245,519

 
240,349

 
 
 
 
 
 
 
 
 
Income taxes
 
46,041

 
45,893

 
87,886

 
84,585

 
 
 
 
 
 
 
 
 
Net income
 
82,813

 
83,494

 
157,633

 
155,764

 
 
 
 
 
 
 
 
 
Less: Net income attributable to the noncontrolling interest
 

 

 

 
(350
)
 
 
 
 
 
 
 
 
 
Net income attributable to SEI
 

$82,813

 

$83,494

 

$157,633

 

$155,414

 
 
 
 
 
 
 
 
 
Basic earnings per common share
 

$0.49

 

$0.48

 

$0.93

 

$0.90

 
 
 
 
 
 
 
 
 
Shares used to calculate basic earnings per share
 
168,606

 
172,223

 
168,956

 
172,411

 
 
 
 
 
 
 
 
 
Diluted earnings per common share
 

$0.48

 

$0.47

 

$0.91

 

$0.88

 
 
 
 
 
 
 
 
 
Shares used to calculate diluted earnings per share
 
172,304

 
176,058

 
173,066

 
176,032





5



SEI INVESTMENTS COMPANY
BALANCE SHEETS
(In thousands)
(Unaudited)

 
 
June 30,
 
December 31,
 
 
2014
 
2013
Assets
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
 

$532,167

 

$578,273

Restricted cash
 
5,500

 
5,500

Receivables from regulated investment companies
 
44,044

 
39,364

Receivables, net
 
207,682

 
186,664

Securities owned
 
21,158

 
21,133

Other current assets
 
21,558

 
16,166

Total Current Assets
 
832,109

 
847,100

 
 
 
 
 
Property and Equipment, net
 
126,685

 
118,995

Capitalized software, net
 
312,193

 
312,615

Investments available for sale
 
85,504

 
83,323

Trading securities
 
5,270

 
4,849

Investment in unconsolidated affiliates
 
60,017

 
61,370

Other assets, net
 
13,328

 
10,917

Total Assets
 

$1,435,106

 

$1,439,169

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
 

$8,470

 

$16,235

Accrued liabilities
 
138,022

 
188,123

Deferred income taxes, net
 
1,847

 
1,653

Deferred revenue
 
1,338

 
1,977

Total Current Liabilities
 
149,677

 
207,988

 
 
 
 
 
Deferred income taxes
 
72,367

 
66,572

Other long-term liabilities
 
9,720

 
8,607

Total Liabilities
 
231,764

 
283,167

 
 
 
 
 
Shareholders' Equity:
 
 
 
 
Common stock
 
1,677

 
1,692

Capital in excess of par value
 
772,386

 
721,219

Retained earnings
 
425,458

 
431,604

Accumulated other comprehensive income, net
 
3,821

 
1,487

Total Shareholders' Equity
 
1,203,342

 
1,156,002

Total Liabilities and Shareholders' Equity
 

$1,435,106

 

$1,439,169




6



SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
 
 
Jun. 30,
 
Sept. 30,
 
Dec 31,
 
Mar. 31,
 
Jun. 30,
 
 
 
2013
 
2013
 
2013
 
2014
 
2014
Private Banks:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$12,876

 

$14,305

 

$15,472

 

$16,918

 

$18,679

Collective Trust Fund programs
 
 
10

 
11

 
14

 
14

 
12

Liquidity funds
 
 
5,048

 
5,167

 
5,685

 
5,670

 
5,274

Total assets under management
 
 

$17,934

 

$19,483

 

$21,171

 

$22,602

 

$23,965

Client assets under administration
 
 
13,122

 
14,101

 
15,272

 
15,641

 
15,347

Total assets
 
 

$31,056

 

$33,584

 

$36,443

 

$38,243

 

$39,312

 
 
 
 
 
 
 
 
 
 
 
 
Investment Advisors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$34,447

 

$36,203

 

$38,574

 

$39,981

 

$42,125

Collective Trust Fund programs
 
 
14

 
14

 
11

 
13

 
13

Liquidity funds
 
 
2,145

 
2,779

 
2,846

 
2,802

 
2,696

Total assets under management
 
 

$36,606

 

$38,996

 

$41,431

 

$42,796

 

$44,834

 
 
 
 
 
 
 
 
 
 
 
 
Institutional Investors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$61,927

 

$64,429

 

$66,548

 

$69,194

 

$71,598

Collective Trust Fund programs
 
 
106

 
107

 
109

 
102

 
100

Liquidity funds
 
 
2,901

 
3,125

 
2,644

 
2,505

 
2,414

Total assets under management
 
 

$64,934

 

$67,661

 

$69,301

 

$71,801

 

$74,112

 
 
 
 
 
 
 
 
 
 
 
 
Investment Managers:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$75

 

$75

 

$69

 

$68

 

$64

Collective Trust Fund programs
 
 
18,197

 
19,868

 
22,377

 
22,633

 
22,598

Liquidity funds
 
 
542

 
678

 
718

 
782

 
802

Total assets under management
 
 

$18,814

 

$20,621

 

$23,164

 

$23,483

 

$23,464

Client assets under administration (A)
 
 
289,807

 
295,959

 
311,992

 
326,735

 
337,492

Total assets
 
 

$308,621

 

$316,580

 

$335,156

 

$350,218

 

$360,956

 
 
 
 
 
 
 
 
 
 
 
 
Investments in New Businesses:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$572

 

$594

 

$619

 

$632

 

$659

Liquidity funds
 
 
29

 
26

 
46

 
49

 
38

Total assets under management
 
 

$601

 

$620

 

$665

 

$681

 

$697

 
 
 
 
 
 
 
 
 
 
 
 
LSV Asset Management:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$65,417

 

$71,149

 

$76,189

 

$77,973

 

$82,026

 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs (B)
 
 

$175,314

 

$186,755

 

$197,471

 

$204,766

 

$215,151

Collective Trust Fund programs
 
 
18,327

 
20,000

 
22,511

 
22,762

 
22,723

Liquidity funds
 
 
10,665

 
11,775

 
11,939

 
11,808

 
11,224

Total assets under management
 
 

$204,306

 

$218,530

 

$231,921

 

$239,336

 

$249,098

 
 
 
 
 
 
 
 
 
 
 
 
Client assets under administration (C)
 
 
302,929

 
310,060

 
327,264

 
342,376

 
352,839

Total assets
 
 

$507,235

 

$528,590

 

$559,185

 

$581,712

 

$601,937

(A)
Client assets under administration in the Investment Managers segment include $50.7 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of June 30, 2014).
(B)
Equity/Fixed Income programs include $5.0 billion of assets invested in various asset allocation funds at June 30, 2014.
(C)
In addition to the numbers presented, SEI also administers an additional $6.5 billion in Funds of Funds assets (as of
June 30, 2014) on which SEI does not earn an administration fee.



7



SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
 
 
 
2nd Qtr.
 
3rd Qtr.
 
4th Qtr.
 
1st Qtr.
 
2nd Qtr.
 
 
 
2013
 
2013
 
2013
 
2014
 
2014
Private Banks:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$12,959

 

$13,696

 

$14,901

 

$16,114

 

$17,829

Collective Trust Fund programs
 
 
10

 
11

 
11

 
14

 
12

Liquidity funds
 
 
5,093

 
5,142

 
5,218

 
5,757

 
5,429

Total assets under management
 
 

$18,062

 

$18,849

 

$20,130

 

$21,885

 

$23,270

Client assets under administration
 
 
13,183

 
13,760

 
14,702

 
15,366

 
15,069

Total assets
 
 

$31,245

 

$32,609

 

$34,832

 

$37,251

 

$38,339

 
 
 
 
 
 
 
 
 
 
 
 
Investment Advisors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$34,831

 

$35,618

 

$37,520

 

$39,005

 

$40,887

Collective Trust Fund programs
 
 
14

 
14

 
13

 
13

 
13

Liquidity funds
 
 
2,028

 
2,520

 
2,785

 
2,806

 
2,637

Total assets under management
 
 

$36,873

 

$38,152

 

$40,318

 

$41,824

 

$43,537

 
 
 
 
 
 
 
 
 
 
 
 
Institutional Investors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$63,466

 

$63,153

 

$65,750

 

$67,697

 

$70,706

Collective Trust Fund programs
 
 
105

 
107

 
110

 
103

 
134

Liquidity funds
 
 
2,975

 
3,091

 
2,720

 
2,571

 
2,664

Total assets under management
 
 

$66,546

 

$66,351

 

$68,580

 

$70,371

 

$73,504

 
 
 
 
 
 
 
 
 
 
 
 
Investment Managers:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$75

 

$76

 

$75

 

$68

 

$68

Collective Trust Fund programs
 
 
18,205

 
19,259

 
21,345

 
22,004

 
22,447

Liquidity funds
 
 
500

 
613

 
592

 
738

 
824

Total assets under management
 
 

$18,780

 

$19,948

 

$22,012

 

$22,810

 

$23,339

Client assets under administration
 
 
286,018

 
292,627

 
303,131

 
320,644

 
333,373

Total assets
 
 

$304,798

 

$312,575

 

$325,143

 

$343,454

 

$356,712

 
 
 
 
 
 
 
 
 
 
 
 
Investments in New Businesses:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$567

 

$584

 

$613

 

$623

 

$640

Liquidity funds
 
 
34

 
27

 
33

 
46

 
43

Total assets under management
 
 

$601

 

$611

 

$646

 

$669

 

$683

 
 
 
 
 
 
 
 
 
 
 
 
LSV Asset Management:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$66,781

 

$69,463

 

$75,240

 

$76,306

 

$79,866

 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$178,679

 

$182,590

 

$194,099

 

$199,813

 

$209,996

Collective Trust Fund programs
 
 
18,334

 
19,391

 
21,479

 
22,134

 
22,606

Liquidity funds
 
 
10,630

 
11,393

 
11,348

 
11,918

 
11,597

Total assets under management
 
 

$207,643

 

$213,374

 

$226,926

 

$233,865

 

$244,199

 
 
 
 
 
 
 
 
 
 
 
 
Client assets under administration
 
 
299,201

 
306,387

 
317,833

 
336,010

 
348,442

Total assets
 
 

$506,844

 

$519,761

 

$544,759

 

$569,875

 

$592,641





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