Form: 8-K

Current report filing

July 26, 2007

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 Second-Quarter 2007 Results

Revenues and Net Income up 20%

OAKS, Pa., July 25, 2007 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for second-quarter 2007, 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 June 30,

     

For the Six Months

Ended June 30,

  
     2007    2006    %      2007    2006    %  

Revenues

    $ 343,258    $ 285,018    20 %    $ 665,983    $ 562,151    18 %

Net Income Before Taxes

      112,102      85,238    32 %      213,021      171,978    24 %

Net Income

      69,501      57,911    20 %      132,878      112,817    18 %

Diluted Earnings Per Share

    $ .34    $ .29    17 %    $ .65    $ .56    16 %

“We are satisfied with our quarterly results, especially since we have shifted into the execution stage of our new strategies,” said Alfred P. West, Jr., SEI Chairman and CEO.

“We are excited about the successful implementation this month of the first broad application of our global wealth platform. The platform is now in production and has surpassed our expectations both in the installation and early operating phases. All other key investments continue to be on schedule as we make steady progress in our transformation. In the long run, we remain firm in our belief that what we are doing will provide our clients with increased opportunities for success and allow us to grow our future revenues and profits more rapidly.”

 

1

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

 

(In thousands)    For the Three Month Period
Ended June 30,		     For the Six Month Period
Ended June 30,		  
     2007     2006     %     2007     2006     %  

Private Banks

             

Revenues

    $ 100,090     $ 90,816     10 %   $ 197,828     $ 179,118     10 %

Expenses

      80,829       68,622     18 %     158,822       133,154     19 %
                                    

Operating Profit

    $ 19,261     $ 22,194     (13 %)   $ 39,006     $ 45,964     (15 %)

Operating Margin

      19 %     24 %       20 %     26 %  

Investment Advisors:

             

Revenues

      65,446       55,232     18 %     127,009       110,529     15 %

Expenses

      30,919       28,993     7 %     60,293       55,210     9 %
                                    

Operating Profit

      34,527       26,239     32 %     66,716       55,319     21 %

Operating Margin

      53 %     48 %       53 %     50 %  

Institutional Investors:

             

Revenues

      48,911       38,523     27 %     95,540       77,051     24 %

Expenses

      30,181       26,154     15 %     58,354       50,604     15 %
                                    

Operating Profit

      18,730       12,369     51 %     37,186       26,447     41 %

Operating Margin

      38 %     32 %       39 %     34 %  

Investment Managers:

             

Revenues

      35,293       29,051     21 %     69,287       56,336     23 %

Expenses

      24,302       22,554     8 %     49,204       45,027     9 %
                                    

Operating Profit

      10,991       6,497     69 %     20,083       11,309     78 %

Operating Margin

      31 %     22 %       29 %     20 %  

Investments in New Businesses:

             

Revenues

      1,836       1,745     5 %     3,466       3,432     1 %

Expenses

      4,725       5,165     (9 %)     9,577       10,725     (11 %)
                                    

Operating Loss

      (2,889 )     (3,420 )   16 %     (6,111 )     (7,293 )   16 %

Operating Margin

      n/a       n/a         n/a       n/a    

LSV

             

Revenues

      91,682       69,651     32 %     172,853       135,685     27 %

Expenses (1)

      56,262       42,840     31 %     106,159       83,778     27 %
                                    

Operating profit

      35,420       26,811     32 %     66,694       51,907     28 %

Operating Margin

      39 %     38 %       39 %     38 %  

Consolidated Segment Totals:

             

Revenues

    $ 343,258     $ 285,018     20 %   $ 665,983     $ 562,151     18 %

Expenses

      227,218       194,328     17 %     442,409       378,498     17 %
                                    

Operating Profit

    $ 116,040     $ 90,690     28 %   $ 223,574     $ 183,653     22 %

Operating Margin

      34 %     32 %       34 %     33 %  
(1) Includes $48,861 and $36,573 for the three month period ended June 30, 2007 and 2006, respectively, and $91,533 and $70,866 for the six month period ended June 30, 2007 and 2006, respectively, of minority interest to the other partners of LSV.

 

2

A reconciliation of the totals reported for the business segments to the applicable line items in the Consolidated Statements of Income for the three and six month periods ended June 30, 2007 and 2006 are as follows:

 

     Three months ended June 30,     Six months ended June 30,  
     2007     2006     2007     2006  

Total operating profit from business segments

    $ 116,040     $ 90,690     $ 223,574     $ 183,653  

Corporate overhead expenses

      (10,578 )     (8,927 )     (20,705 )     (18,849 )

Minority interest reflected in segments

      50,033       38,199       93,625       73,815  

LSV Employee Group Expenses (1)

      (1,820 )     (1,805 )     (3,640 )     (3,611 )
                                

Income from operations

    $ 153,675     $ 118,157     $ 292,854     $ 235,008  
(1) Includes $1,806 for the three month period ending June 30, 2007 and 2006, and $3,611 for the six month period ending June 30, 2007 and 2006 of Amortization expense related to intangible assets. The amortization is offset through Minority interest since SEI does not have any ownership in LSV Employee Group LLC.

Second-Quarter Business Commentary:

 

  •  

All major business segments reported double digit revenue gains versus year ago.

 

  •  

The Investment Advisors, Institutional Investors, Investment Managers and LSV segments all realized substantial operating profit growth versus year ago levels.

 

  •  

The company’s percentage ownership in LSV remained at approximately 43 percent. In the second-quarter 2007, the company recognized $35.4 million as its portion of the earnings from LSV versus $26.8 million in second-quarter 2006.

 

  •  

In the second-quarter 2007, SEI recognized a one-time pre-tax gain of $3.0 million from the sale of its remaining ownership in a joint venture.

 

  •  

The tax rate for the second-quarter 2007 was approximately 38% vs. 32% for the second-quarter 2006.

 

  •  

Assets under management grew by $9 billion during second-quarter to $199 billion.

 

  •  

In the second-quarter 2007, SEI purchased 2,682,800 shares of its common stock for $79.4 million.

 

  •  

In the second-quarter 2007, SEI declared and paid a 2 for 1 stock split. All per-share information has been adjusted to reflect the split.

 

3

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM EDT on July 25, 2007. Investors may listen to the call at www.seic.com, 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) 1-800-475-6701; (International) 320-365-3844, access code 879867.

About SEI

SEI (NASDAQ:SEIC) is a leading global provider of outsourced asset management, investment processing and investment operations solutions. The company’s innovative solutions help corporations, financial institutions, financial advisors, and affluent families create and manage wealth. As of June 30, 2007, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $407 billion in mutual fund and pooled assets and manages $199 billion in assets. SEI serves clients, conducts or is registered to conduct business and/or operations, from more than 20 offices in over a dozen 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.

 

4

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(unaudited)

 

     Three Months Ended June 30,  
     2007     2006  

Asset Management, admin. and distribution fees

    $ 276,653     $ 222,369  

Information processing and software servicing fees

      55,414       52,410  

Transaction–based and trade execution fees

      11,191       10,239  
                

Total Revenues

      343,258       285,018  

Commissions and Fees

      43,036       35,773  

Compensation, benefits and other personnel

      88,552       74,795  

Consulting, outsourcing and professional fees

      22,617       19,787  

Data processing and computer related

      10,227       9,330  

Facilities, supplies and other costs

      17,700       19,900  

Depreciation and amortization

      7,451       7,276  
                

Total Expenses

      189,583       166,861  

Income from operations

      153,675       118,157  

Minority Interest

      (47,242 )     (35,171 )

Net (loss) gain on investments

      (997 )     602  

Interest income

      4,882       3,098  

Interest expense

      (1,168 )     (1,448 )

Other income

      2,952       —    
                

Income before taxes

      112,102       85,238  

Income taxes

      42,601       27,327  
                

Net income

    $ 69,501     $ 57,911  
                

Diluted earnings per common share

    $ .34     $ .29  
                

Shares used to calculate diluted earnings per common share

      203,604       202,526  
                

Basic earnings per common share

    $ .35     $ .29  
                

Shares used to calculate basic earnings per common share

      197,314       196,990  
                

 

5

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(unaudited)

 

     Six Months Ended June 30,  
     2007     2006  

Asset Management, admin. and distribution fees

    $ 533,051     $ 436,081  

Information processing and software servicing fees

      109,646       102,656  

Transaction–based and trade execution fees

      23,286       23,414  
                

Total Revenues

      665,983       562,151  

Commissions and Fees

      85,673       71,411  

Compensation, benefits and other personnel

      172,830       150,474  

Consulting, outsourcing and professional fees

      43,496       37,865  

Data processing and computer related

      20,994       17,928  

Facilities, supplies and other costs

      35,260       34,935  

Depreciation and amortization

      14,876       14,530  
                

Total Expenses

      373,129       327,143  

Income from operations

      292,854       235,008  

Minority Interest

      (87,976 )     (68,127 )

Net (loss) gain on investments

      (1,313 )     360  

Interest income

      8,933       5,752  

Interest expense

      (2,429 )     (2,603 )

Other income

      2,952       1,588  
                

Income before taxes

      213,021       171,978  

Income taxes

      80,143       59,161  
                

Net income

    $ 132,878     $ 112,817  
                

Diluted earnings per common share

    $ .65     $ .56  
                

Shares used to calculate diluted earnings per common share

      204,153       202,574  
                

Basic earnings per common share

    $ .67     $ .57  
                

Shares used to calculate basic earnings per common share

      197,614       197,254  
                

 

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SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)

 

     (Unaudited)     
     June 30,
2007		    December 31,
2006

Assets

      

Cash and short-term investments

    $ 246,292    $ 286,948

Restricted Cash

      10,250      10,250

Receivables

      272,965      244,599

Securities owned

      16,302      16,431

Other current assets

      35,092      28,245
             

Total current assets

      580,901      586,473

Property and Equipment, net

      136,267      130,732

Investments available for sale

      79,463      71,690

Capitalized Software, net

      214,154      180,014

Goodwill

      22,842      22,842

Intangible asset

      64,007      67,836

Other assets

      21,130      20,118
             

Total assets

    $ 1,118,764    $ 1,079,705
             

Liabilities

      

Current liabilities

    $ 146,469    $ 196,127

Long-term debt

      57,822      67,538

Deferred income taxes

      90,333      76,148

Other long-term liabilities

      11,619      —  

Minority Interest

      127,513      109,380

Shareholders’ Equity

      685,008      630,512
             

Total liabilities and shareholders’ equity

    $ 1,118,764    $ 1,079,705
             

 

7

SEI INVESTMENTS COMPANY

ASSET BALANCES

(In millions)

(unaudited)

 

     Jun. 30,
2006		    Sep. 30,
2006		    Dec. 31,
2006		    Mar. 31,
2007		    Jun. 30,
2007

Private Banks:

               

Equity/Fixed Income prgms.

    $ 14,517    $ 15,055    $ 16,806    $ 18,196    $ 20,666

Collective Trust Fund prgm.

      1,459      1,460      1,251      1,148      1,078

Liquidity funds

      7,627      7,707      8,513      8,241      8,224
                                  

Total assets under mgmt.

    $ 23,603    $ 24,222    $ 26,570    $ 27,585    $ 29,968

Client assets under admin.

      19,210      15,001      14,738      14,864      15,019
                                  

Total assets

    $ 42,813    $ 39,223    $ 41,308    $ 42,449    $ 44,987

Investment Advisors:

               

Equity/Fixed Income prgms.

    $ 30,948    $ 32,205    $ 34,096    $ 35,225    $ 36,923

Collective Trust Fund prgm.

      2,473      2,425      2,480      2,491      2,334

Liquidity funds

      1,306      1,263      1,421      1,404      1,400
                                  

Total assets under mgmt.

    $ 34,727    $ 35,893    $ 37,997    $ 39,120    $ 40,657

Institutional Investors:

               

Equity/Fixed Income prgms.

    $ 32,709    $ 34,674    $ 37,720    $ 39,504    $ 40,771

Collective Trust Fund prgm.

      1,147      1,150      1,081      1,078      895

Liquidity funds

      3,823      4,167      3,371      5,072      4,128
                                  

Total assets under mgmt.

    $ 37,679    $ 39,991    $ 42,172    $ 45,654    $ 45,794

Investment Managers:

               

Equity/Fixed Income prgms.

    $ 34    $ 34    $ 30    $ 29    $ 32

Collective Trust Fund prgm.

      8,923      9,009      8,675      8,300      7,990

Liquidity funds

      363      253      215      178      271
                                  

Total assets under mgmt.

    $ 9,320    $ 9,296    $ 8,920    $ 8,507    $ 8,293

Client assets under admin.

      153,406      161,000      170,344      180,745      192,931
                                  

Total assets

    $ 162,726    $ 170,296    $ 179,264    $ 189,252    $ 201,224

Investments in New Businesses:

               

Equity/Fixed Income prgms.

    $ 626    $ 685    $ 805    $ 843    $ 887

Liquidity funds

      49      64      53      43      43
                                  

Total assets under mgmt.

    $ 675    $ 749    $ 858    $ 886    $ 930

LSV Asset Management

               

Equity/Fixed Income prgms.

    $ 55,687    $ 58,785    $ 64,970    $ 68,225    $ 73,100

Consolidated:

               

Equity/Fixed Income prgms (A)

    $ 134,521    $ 141,438    $ 154,427    $ 162,022    $ 172,379

Collective Trust Fund prgm.

      14,002      14,044      13,487      13,017      12,297

Liquidity funds

      13,168      13,454      13,573      14,938      14,066
                                  

Total assets under mgmt.

    $ 161,691    $ 168,936    $ 181,487    $ 189,977    $ 198,742

Client assets under admin. (B)

      172,616      176,001      185,082      195,609      207,950
                                  

Total assets

    $ 334,307    $ 344,937    $ 366,569    $ 385,586    $ 406,692
(A) Equity/Fixed Income programs include $3,821 of assets invested in SEI’s Asset Allocation Funds at June 30, 2007.
(B) In addition to the numbers presented, SEI also administers an additional $5,872 in Funds of Funds assets (as of June 30, 2007) on which SEI does not earn an administration fee.

 

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