Form: 8-K

Current report filing

February 1, 2006

Documents

Exhibit 99.1

 

NEWS FROM SEI

 

For Immediate Release

 

Contact:    Mark Samuels, SVP    Murray Louis, VP    Larry Wexler, Corp. PR     
Voice:    610.676.2024    610.676.1932    610.676.1440     
E-mail    msamuels@seic.com    mlouis@seic.com    lwexler@seic.com     
Pages:    Eight               

 

SEI Reports Fourth-Quarter 2005 Results

 

Net Income up 19%, Revenues Increase 11%

 

OAKS, Pa., February 1, 2006 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for fourth-quarter 2005, reporting increases in revenues, net income and earnings per share, compared to the corresponding period for the prior year.

 

Consolidated Overview

(In thousands, except earnings per share)

 

    

For the Three Months Ended

December 31,

    

For the Twelve Months Ended

December 31,

  
     2005
    2004
    %
     2005
    2004
    %
  

Revenues

    $ 203,587    $ 182,968    11 %   $ 773,007    $ 692,269    12 %

Net Income Before Taxes

      80,335      67,453    19 %     295,209      265,131    11 %

Net Income

      51,255      43,001    19 %     188,344      169,021    11 %

Diluted Earnings Per Share

    $ .50    $ .41    22 %   $ 1.83    $ 1.60    14 %

 

“We are satisfied with the results for both the quarter and the year, especially since we are in the heart of the build phase of our new strategies,” said Alfred P. West, Jr., SEI Chairman and CEO.

 

“These investments promise to both transform our company, giving us even larger markets for growth, as well as provide our clients with increased opportunities for success. In the long run, we remain firm in our belief that what we are doing will position us to grow future revenues and profits more rapidly.”

 

1

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

 

(In thousands)

    For the Three Month Period
Ended December 31,
     For the Twelve Month Period
Ended December 31,
  
     2005
     2004
     %
     2005
     2004
     %
  

Private Banking and Trust:

                                             

Revenues

    $ 70,089     $ 72,468     (3 %)   $ 281,810     $ 290,605     (3 %)

Operating Profit

    $ 23,920     $ 27,722     (14 %)   $ 100,093     $ 114,527     (13 %)

Operating Margin

      34 %     38 %           36 %     39 %      

Investment Advisors:

                                             

Revenues

      54,447       48,153     13 %     205,652       180,351     14 %

Operating Profit

      29,724       26,379     13 %     110,544       98,684     12 %

Operating Margin

      55 %     55 %           54 %     55 %      

Enterprises:

                                             

Revenues

      24,738       19,199     29 %     87,677       69,816     26 %

Operating Profit

      12,044       8,880     36 %     40,491       32,048     26 %

Operating Margin

      49 %     46 %           46 %     46 %      

Money Managers:

                                             

Revenues

      23,514       20,436     15 %     87,595       76,907     14 %

Operating Profit

      4,233       4,206     1 %     14,456       14,663     (1 %)

Operating Margin

      18 %     21 %           17 %     19 %      

Investments in New Businesses:

                                             

Revenues

      30,799       22,712     36 %     110,273       74,590     48 %

Operating Loss

      (4,729 )     (6,559 )   28 %     (19,733 )     (20,319 )   3 %

Operating Margin

      (15 %)     (29 %)           (18 %)     (27 %)      

Consolidated Segment Totals:

                                             

Revenues

    $ 203,587     $ 182,968     11 %   $ 773,007     $ 692,269     12 %

Operating Profit

    $ 65,192     $ 60,628     8 %   $ 245,851     $ 239,603     3 %

Operating Margin

      32 %     33 %           32 %     35 %      

 

Fourth-Quarter Business Commentary:

 

  •   Private Banking & Trust lagged year-ago levels on revenues and profits.

 

  •   The Investment Advisors, Enterprises, Money Managers and Investments in New Businesses segments reported revenue gains versus year-ago levels. This was fueled by stronger capital markets and, in most segments, new sales.

 

  •   Consolidated operating margins lagged year-ago levels, due primarily to increased rate of investment and operational spending necessary to deliver new company strategies and solutions, as well as costs directly associated with new revenue.

 

  •   During Fourth Quarter 2005, SEI recognized $4.25 million in expense as part of a previously disclosed litigation settlement. This affected all five Business Segments with approximately $1.8 million allocated to Private Banking, $1.0 million to both Advisors and Investments in New Business with the remainder spread between Enterprise and Money Managers.

 

2

  •   Assets under management grew by $10.0 billion during the Fourth Quarter to $148.5 billion. This growth included $4.6 billion from the unconsolidated affiliate and $5.4 billion from the business segments.

 

  •   In the Fourth quarter, SEI purchased 910,000 shares of its common stock for $35.1 million.

 

Earnings Conference Call

 

A conference call to review earnings is scheduled for 2:00 PM EST on February 1, 2006. Investors may listen to the call at www.seic.com, or listen at www.earnings.com, a service of CCBN. The call may also be accessed at numerous financial services web sites including AOL, Motley Fool and Yahoo. Investors may also listen to replays at these web sites, or by telephone at (USA) 1-800-475-6701; (International) 320-365-3844, access code 815520.

 

About SEI

 

SEI (NASDAQ:SEIC) is a leading global provider of asset management services and investment technology solutions. The company’s innovative solutions help corporations, financial institutions, financial advisors, and affluent families create and manage wealth. As of the period ending December 31, 2005, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $312.1 billion in mutual fund and pooled assets, manages $148.5 billion in assets, and operates 22 offices in 12 countries. For more information, visit www.seic.com.

 

Many of our responses 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.

 

3

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

     Three Months Ended
December 31,
  
     2005
     2004
  

Revenues

    $ 203,587     $ 182,968  

Operating and development expenses

      102,814       89,009  

Sales and marketing expenses

      35,581       33,331  

General and administrative expenses

      8,567       7,502  
    
 

Income before interest and taxes

      56,625       53,126  

Equity in earnings of unconsolidated affiliate

      21,000       14,169  

Net loss on investments

      (132 )     (882 )

Interest income

      2,628       1,524  

Interest expense

      (353 )     (484 )

Other income

      567       —    
    
 

Income before taxes

      80,335       67,453  

Income taxes

      29,080       24,452  
    
 

Net income

    $ 51,255     $ 43,001  
    
 

Diluted earnings per common share

    $ .50     $ .41  
    
 

Shares used to calculate diluted earnings per common share

      101,872       105,340  
    
 

Basic earnings per common share

    $ .52     $ .42  
    
 

Shares used to calculate basic earnings per common share

      99,105       102,391  
    
 

 

4

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

     Twelve Months Ended
December 31,
  
     2005
     2004
  

Revenues

    $ 773,007     $ 692,269  

Operating and development expenses

      393,954       321,298  

Sales and marketing expenses

      133,202       131,368  

General and administrative expenses

      33,898       30,153  
    
 

Income before interest and taxes

      211,953       209,450  

Equity in earnings of unconsolidated affiliate

      74,818       45,711  

Net gain on investments

      87       3,848  

Interest income

      8,367       4,545  

Interest expense

      (1,524 )     (2,112 )

Other income

      1,508       3,689  
    
 

Income before taxes

      295,209       265,131  

Income taxes

      106,865       96,110  
    
 

Net income

    $ 188,344     $ 169,021  
    
 

Diluted earnings per common share

    $ 1.83     $ 1.60  
    
 

Shares used to calculate diluted earnings per common share

      103,138       105,866  
    
 

Basic earnings per common share

    $ 1.88     $ 1.63  
    
 

Shares used to calculate basic earnings per common share

      100,371       103,399  
    
 

 

5

SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)

 

    

December 31,

2005

    December 31,
2004

Assets

              

Cash and short-term investments

    $ 130,378    $ 216,966

Restricted Cash

      10,000      14,386

Receivables

      128,545      108,795

Other current assets

      37,053      15,532
    
  

Total current assets

      305,976      355,679

Property and Equipment, net

      114,505      113,640

Investments available for sale

      54,632      39,817

Capitalized Software, net

      116,670      55,830

Other assets

      65,364      50,509
    
  

Total assets

    $ 657,147    $ 615,475
    
  

Liabilities

              

Current liabilities

    $ 167,470    $ 163,569

Long-term debt

      9,000      14,389

Long-term deferred gain

      —        1,472

Deferred income taxes

      58,989      32,103

Shareholders’ Equity

      421,688      403,942
    
  

Total liabilities and shareholders’ equity

    $ 657,147    $ 615,475
    
  

 

6

SEI Investments Business Segments

(In thousands)

 

     Three Months ended Dec. 31,
     Twelve Months ended Dec. 31,
  
     2005
     2004
     2005
     2004
  

Private Banking and Trust:

                                 

Revenues

                                 

Investment processing fees

      57,511       58,627       230,179       225,229  

Fund processing fees

      3,928       4,889       17,295       30,177  

Investment management fees

      8,650       8,952       34,336       35,199  
    
 
 
 

Total Revenues

      70,089       72,468       281,810       290,605  

Operating and development expenses

      37,191       34,165       145,846       135,465  

Sales and marketing expenses

      8,978       10,581       35,871       40,613  
    
 
 
 

Operating Profit

      23,920       27,722       100,093       114,527  

Operating Margin

      34 %     38 %     36 %     39 %

Investment Advisors:

                                 

Revenues

      54,447       48,153       205,652       180,351  

Operating and development expenses

      18,760       15,729       70,371       53,853  

Sales and marketing expenses

      5,963       6,045       24,737       27,814  
    
 
 
 

Operating Profit

      29,724       26,379       110,544       98,684  

Operating Margin

      55 %     55 %     54 %     55 %

Enterprises:

                                 

Revenues

      24,738       19,199       87,677       69,816  

Operating and development expenses

      6,568       5,582       25,578       19,333  

Sales and marketing expenses

      6,126       4,737       21,608       18,435  
    
 
 
 

Operating Profit

      12,044       8,880       40,491       32,048  

Operating Margin

      49 %     46 %     46 %     46 %

Money Managers:

                                 

Revenues

      23,514       20,436       87,595       76,907  

Operating and development expenses

      15,341       12,394       58,774       47,885  

Sales and marketing expenses

      3,940       3,836       14,365       14,359  
    
 
 
 

Operating Profit

      4,233       4,206       14,456       14,663  

Operating Margin

      18 %     21 %     17 %     19 %

Investments in New Businesses:

                                 

Revenues

      30,799       22,712       110,273       74,590  

Operating and development expenses

      24,954       21,139       93,385       64,762  

Sales and marketing expenses

      10,574       8,132       36,621       30,147  
    
 
 
 

Operating Loss

      (4,729 )     (6,559 )     (19,733 )     (20,319 )

Operating Margin

      (15 %)     (29 %)     (18 %)     (27 %)

Consolidated Segment Totals:

                                 

Revenues

    $ 203,587     $ 182,968     $ 773,007     $ 692,269  

Operating and development expenses

      102,814       89,009       393,954       321,298  

Sales and marketing expenses

      35,581       33,331       133,202       131,368  
    
 
 
 

Operating Profit

    $ 65,192     $ 60,628     $ 245,851     $ 239,603  

Operating Margin

      32 %     33 %     32 %     35 %

General and Administrative expenses

      8,567       7,502       33,898       30,153  

Income from Operations

    $ 56,625     $ 53,126     $ 211,953     $ 209,450  

Operating Margin

      28 %     29 %     27 %     30 %

 

7

SEI INVESTMENTS COMPANY

ASSET BALANCES

(In millions)

 

    

Dec. 31,

2004

    Mar. 31,
2005
    Jun. 30,
2005
    Sep. 30,
2005
    Dec. 31,
2005

Private Banking and Trust:

                                   

Equity/Fixed Income prgms.

    $ 2,780    $ 2,427    $ 2,495    $ 2,504    $ 2,363

Collective Trust Fund prgm.

      1,518      1,574      1,700      1,704      1,657

Liquidity funds

      7,503      7,406      7,442      7,668      7,485
    
  
  
  
  

Total assets under mgmt.

    $ 11,801    $ 11,407    $ 11,637    $ 11,876    $ 11,505

Client assets under admin.

      35,986      33,703      33,837      28,304      27,106
    
  
  
  
  

Total assets under admin.

    $ 47,787    $ 45,110    $ 45,474    $ 40,180    $ 38,611

Investment Advisors:

                                   

Equity/Fixed Income prgms.

    $ 27,706    $ 27,371    $ 27,883    $ 29,219    $ 29,800

Collective Trust Fund prgm.

      2,521      2,513      2,610      2,623      2,479

Liquidity funds

      1,026      1,113      1,018      1,047      1,139
    
  
  
  
  

Total assets under mgmt.

    $ 31,253    $ 30,997    $ 31,511    $ 32,889    $ 33,418

Enterprises:

                                   

Equity/Fixed Income prgms.

    $ 17,283    $ 17,926    $ 18,273    $ 19,266    $ 21,377

Collective Trust Fund prgm.

      1,023      994      1,001      1,013      1,172

Liquidity funds

      3,406      2,976      2,836      2,389      3,153
    
  
  
  
  

Total assets under mgmt.

    $ 21,712    $ 21,896    $ 22,110    $ 22,668    $ 25,702

Money Managers:

                                   

Equity/Fixed Income prgms.

    $ 18    $ 12    $ 12    $ 13    $ 11

Collective Trust Fund prgm.

      7,097      7,634      8,108      8,524      8,770

Liquidity funds

      208      182      167      185      412
    
  
  
  
  

Total assets under mgmt.

    $ 7,323    $ 7,828    $ 8,287    $ 8,722    $ 9,193

Client assets under admin.

      124,648      127,638      141,199      150,707      130,526
    
  
  
  
  

Total assets under admin.

    $ 131,971    $ 135,466    $ 149,486    $ 159,429    $ 139,719

Investments in New Businesses:

                                   

Equity/Fixed Income prgms.

    $ 15,566    $ 17,774    $ 19,137    $ 18,873    $ 20,627

Liquidity funds

      179      228      255      318      312
    
  
  
  
  

Total assets under mgmt.

    $ 15,745    $ 18,002    $ 19,392    $ 19,191    $ 20,939

Client assets under admin.

      7,003      6,253      7,296      6,841      5,894
    
  
  
  
  

Total assets under admin.

    $ 22,748    $ 24,255    $ 26,688    $ 26,032    $ 26,833

Unconsolidated Affiliate:

                                   

Equity/Fixed Income prgms.

    $ 32,556    $ 33,781    $ 37,740    $ 43,192    $ 47,781

Consolidated:

                                   

Equity/Fixed Income prgms (A,B)

    $ 95,909    $ 99,291    $ 105,540    $ 113,067    $ 121,959

Collective Trust Fund prgm.

      12,159      12,715      13,419      13,864      14,078

Liquidity funds (B)

      12,322      11,905      11,718      11,607      12,501
    
  
  
  
  

Total assets under mgmt.

    $ 120,390    $ 123,911    $ 130,677    $ 138,538    $ 148,538

Client assets under admin.

      167,637      167,594      182,332      185,852      163,526
    
  
  
  
  

Total assets

    $ 288,027    $ 291,505    $ 313,009    $ 324,390    $ 312,064

 

(A) Equity/Fixed Income programs include $2,635 of assets invested in SEI’s Asset Allocation Funds at 12/31/05

 

(B) In addition to the numbers presented, SEI also administers an additional $11,118 in Funds of Funds assets (as of December 31, 2005) on which SEI does not earn an administration fee.

 

8