Form: 8-K

Current report filing

April 24, 2009

Documents

Exhibit 99.1

NEWS FROM SEI

For Immediate Release

 

Contact:        

    Larry Wexler, Corp Comm    Murray Louis, VP    Dana Grosser, Corp PR

Voice:

    610.676.1440    610.676.1932    610.676.2459

E-mail

    lwexler@seic.com    mlouis@seic.com    dgrosser@seic.com

Pages:

    Seven      

SEI Reports First-Quarter 2009 Financial Results

OAKS, Pa., April 23, 2009 – SEI Investments Company (NASDAQ:SEIC) today announced financial results for first-quarter 2009, reporting decreases in revenues, net income and earnings per share compared to first-quarter 2008. Net income attributable to SEI during the first-quarter 2009 was negatively affected by a $14.4 million pre-tax charge (approximately $.05 per share post-tax) for previously disclosed structured investment vehicle-related issues.

 

     For the Three Months
Ended March 31,

Consolidated Overview

(In thousands, except earnings per share)

    2009    2008    %

Revenues

    $ 248,611    $ 333,908    (26%)

Net Income attributable to SEI

      34,200      48,946    (30%)

Diluted Earnings Per Share

    $ .18    $ .25    (28%)

“The severe downturn in the capital markets continues to make business conditions challenging and had a significant negative impact on our first-quarter financial results,” said Alfred P. West, Jr., SEI Chairman and CEO.

“In addition to the resizing and cost reductions we accomplished in the first-quarter, we are continuing our efforts to improve overall productivity through process re-engineering. At the same time, our positive cash flow allows us to maintain a strong capital base and balance sheet while we implement our longer term strategies.

“In these times, it is especially important to focus on our clients’ well-being and success. We are firm in our belief that what we are doing today will significantly benefit our clients and SEI both today and in the future.”

 

1

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

 

     For the Three Month Period
Ended March 31,
(In thousands)    2009    2008    %

Private Banks:

         

Revenues

    $ 96,948    $ 107,054    (9%)

Expenses

      78,798      86,167    (9%)
                

Operating Profit

    $ 18,150    $ 20,887    (13%)

Operating Margin

      19%      20%   

Investment Advisors:

         

Revenues

      37,508      60,519    (38%)

Expenses

      27,109      31,376    (14%)
                

Operating Profit

      10,399      29,143    (64%)

Operating Margin

      28%      48%   

Institutional Investors:

         

Revenues

      39,379      50,689    (22%)

Expenses

      24,170      30,140    (20%)
                

Operating Profit

      15,209      20,549    (26%)

Operating Margin

      39%      41%   

Investment Managers:

         

Revenues

      33,332      36,493    (9%)

Expenses

      22,867      25,964    (12%)
                

Operating Profit

      10,465      10,529    (1%)

Operating Margin

      31%      29%   

Investments in New Businesses:

         

Revenues

      1,254      1,834    (32%)

Expenses

      3,293      4,652    (29%)
                

Operating Loss

      (2,039)      (2,818)    28%

Operating Margin

      n/a      n/a   

LSV:

         

Revenues

      40,190      77,319    (48%)

Expenses (1)

      26,446      47,356    (44%)
                

Operating Profit

      13,744      29,963    (54%)

Operating Margin

      34%      39%   

Consolidated Segment Totals:

         

Revenues

    $ 248,611    $ 333,908    (26%)

Expenses

      182,683      225,655    (19%)
                

Operating Profit

    $ 65,928    $ 108,253    (39%)

Operating Margin

      27%      32%   

 

(1) Includes $18,862 and $41,238 for the three-month period ended March 31, 2009 and 2008, of noncontrolling 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-month periods ended March 31, 2009 and 2008 is as follows:

 

     Three Months Ended
March 31,		  
     2009     2008  

Total operating profit from business segments

    $ 65,928     $ 108,253  

Corporate overhead expenses

      (9,641 )     (10,109 )

Noncontrolling interest reflected in segments

      19,063       42,188  

LSV Employee Group Expenses (1)

      (1,820 )     (1,821 )
                

Income from operations

    $ 73,530     $ 138,511  

 

(1) Includes $1,805 for the three-month period ending March 31, 2009 and 2008 of amortization expense related to intangible assets owned by LSV Employee Group LLC. The amortization is offset through noncontrolling interest since SEI does not have any ownership in LSV Employee Group LLC.

First-Quarter Business Commentary:

  •  

Revenues were down across all segments due to the continued decline in the capital markets. The Institutional Investors and Investment Managers segments partially offset the negative capital market impact with new business growth.

  •  

The first-quarter 2009 results include losses of $14.4 million associated with SIV-related issues involving SEI-sponsored money market funds. SEI has recognized cumulative losses of $197.7 million associated with SIV-related issues involving SEI-sponsored money market funds. Additional information related to this, and about the capital support agreements, is contained in SEI’s 2008 Form 10-K filed February 25, 2009.

  •  

In March 2009, SEI purchased the remaining Gryphon notes held by SEI-sponsored money market funds for $194.9 million. SEI borrowed $195.0 million on its credit facility in order to finance the purchase of the Gryphon notes. As a result of this purchase, SEI’s obligation under the Capital Support Agreements was reduced by $116.0 million to $57.9 million as of March 31, 2009.

  •  

SEI recognized $6.3 million of one-time employee termination costs in the first-quarter 2009 associated with a reduction in workforce.

  •  

In the first-quarter 2009, the Private Banks segment recognized $7.0 million of one-time contractual buyout fees from existing clients involved in bank mergers.

  •  

Assets under management declined by $11.6 billion during the first-quarter 2009 to $122.7 billion, primarily due to market depreciation.

  •  

In the first-quarter 2009, SEI’s effective tax rate was approximately 21 percent. The effective tax rate was affected by the recognition of certain tax benefits resulting from the conclusion of federal and state income tax audits.

  •  

In the first-quarter, SEI purchased 527,000 shares of its common stock for $5.9 million.

 

3

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on April 23, 2009. Investors may listen to the call at www.seic.com (Investor Information section), 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 996579.

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 March 31, 2009, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $354 billion in mutual fund and pooled assets and manages $123 billion in assets. SEI serves clients, conducts or is registered to conduct business and/or operations, from numerous offices worldwide. 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.

 

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SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

     Three Months Ended March 31,  
     2009      2008  

Asset management, admin. and distribution fees

    $ 169,364      $ 260,059  

Information processing and software servicing fees

      62,217        60,139  

Transaction–based and trade execution fees

      17,030        13,710  
                 

Total revenues

      248,611        333,908  

Commissions and fees

      37,553        45,295  

Compensation, benefits and other personnel

      76,868        83,892  

Consulting, outsourcing and professional fees

      21,150        26,757  

Data processing and computer related

      11,515        10,548  

Facilities, supplies and other costs

      15,433        17,385  

Depreciation and amortization

      12,562        11,520  
                 

Total expenses

      175,081        195,397  

Income from operations

      73,530        138,511  

Net loss on investments

      (14,450 )      (24,046 )

Interest and dividend income

      1,711        4,138  

Interest expense

      (799 )      (967 )
                 

Income before taxes

      59,992        117,636  

Income taxes

      8,929        29,175  
                 

Net income

      51,063        88,461  
                 

Less Net Income attributable to the noncontrolling interest

      (16,863 )      (39,515 )
                 

Net income attributable to SEI

    $ 34,200      $ 48,946  
                 

Diluted earnings per common share

    $ .18      $ .25  
                 

Shares used to calculate diluted earnings per common share

      191,409        198,211  
                 

Basic earnings per common share

    $ .18      $ .25  
                 

Shares used to calculate basic earnings per common share

      191,084        193,629  
                 

Note: Effective January 1, 2009 the company adopted the provisions of SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements. Prior period information has been reclassified to conform with current period presentation.

 

5

SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)

 

     (Unaudited)
March 31,
2009		    December 31,
2008
Assets          

Cash and short-term investments

    $ 428,084    $ 416,643

Restricted cash

      16,400      14,000

Receivables

      188,882      208,209

Other current assets

      88,188      100,819
             

Total current assets

      721,554      739,671

Property and equipment, net

      145,551      148,124

Marketable securities

      146,133      86,693

Capitalized software, net

      279,368      270,606

Goodwill

      22,842      22,842

Intangible assets, net

      50,604      52,518

Other assets, net

      20,219      21,261
             

Total assets

    $ 1,386,271    $ 1,341,715
             

Liabilities

      

Current liabilities (1)

    $ 169,677    $ 329,894

Long-term debt

      216,286      24,332

Deferred income taxes

      96,118      104,548

Long term liabilities

      4,752      4,067

Total SEI Investments Company shareholders’ equity

      797,544      766,004

Noncontrolling interest

      101,894      112,870
             

Total Equity

      899,438      878,874

Total liabilities and shareholders’ equity

    $ 1,386,271    $ 1,341,715
             

 

(1) Includes $57,945 and $173,983 at March 31, 2009 and December 31, 2008, respectively, of an accrual related to money market funds support agreements.

 

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SEI INVESTMENTS COMPANY

ASSET BALANCES

(In millions)

(Unaudited)

 

     Mar. 31,
2008		      Jun. 30,
2008		      Sep. 30,
2008		      Dec. 31,
2008		      Mar. 31,
2009

Private Banks:

                       

Equity/Fixed Income prgms.

    $ 18,904      $ 18,163      $ 14,436      $ 10,573      $ 9,679

Collective Trust Fund prgm.

      1,008        955        1,028        1,145        1,198

Liquidity funds

      9,198        8,345        9,253        9,194        8,929
                                          

Total assets under mgmt.

    $ 29,110      $ 27,463      $ 24,717      $ 20,912      $ 19,806

Client assets under admin.

      13,897        13,242        12,301        10,622        9,920
                                          

Total assets

    $ 43,007      $ 40,705      $ 37,018      $ 31,534      $ 29,726

Investment Advisors:

                       

Equity/Fixed Income prgms.

    $ 32,736      $ 31,938      $ 27,817      $ 21,631      $ 18,832

Collective Trust Fund prgm.

      2,310        2,259        2,471        2,606        2,716

Liquidity funds

      2,461        2,410        2,859        3,436        3,458
                                          

Total assets under mgmt.

    $ 37,507      $ 36,607      $ 33,147      $ 27,673      $ 25,006

Institutional Investors:

                       

Equity/Fixed Income prgms.

    $ 43,134      $ 43,608      $ 39,775      $ 34,966      $ 32,565

Collective Trust Fund prgm.

      924        947        1,001        942        791

Liquidity funds

      4,077        3,950        3,930        4,582        3,802
                                          

Total assets under mgmt.

    $ 48,135      $ 48,505      $ 44,706      $ 40,490      $ 37,158

Investment Managers:

                       

Equity/Fixed Income prgms.

    $ 20      $ 19      $ 10      $ 8      $ 3

Collective Trust Fund prgm.

      6,571        6,572        6,453        5,974        6,917

Liquidity funds

      571        438        699        869        898
                                          

Total assets under mgmt.

    $ 7,162      $ 7,029      $ 7,162      $ 6,851      $ 7,818

Client assets under admin. (C)

      225,005        228,722        256,553        234,628        221,798
                                          

Total assets

    $ 232,167      $ 235,751      $ 263,715      $ 241,479      $ 229,616

Investments in New Businesses:

                       

Equity/Fixed Income prgms.

    $ 869      $ 838      $ 704      $ 519      $ 472

Liquidity funds

      77        98        115        153        157
                                          

Total assets under mgmt.

    $ 946      $ 936      $ 819      $ 672      $ 629

LSV Asset Management

                       

Equity/Fixed Income prgms.

    $ 61,765      $ 57,692      $ 51,296      $ 37,714      $ 32,308

Consolidated:

                       

Equity/Fixed Income prgms (A)

    $ 157,428      $ 152,258      $ 134,038      $ 105,411      $ 93,859

Collective Trust Fund prgm.

      10,813        10,733        10,953        10,667        11,622

Liquidity funds

      16,384        15,241        16,856        18,234        17,244
                                          

Total assets under mgmt.

    $ 184,625      $ 178,232      $ 161,847      $ 134,312      $ 122,725

Client assets under admin. (B)

      238,902        241,964        268,854        245,250        231,718
                                          

Total assets

    $ 423,527      $ 420,196      $ 430,701      $ 379,562      $ 354,443

 

(A) Equity/Fixed Income programs include $1,855 of assets invested in various asset allocation funds at March 31, 2009.
(B) In addition to the numbers presented, SEI also administers an additional $6,902 in Funds of Funds assets (as of March 31, 2009) on which SEI does not earn an administration fee.
(C) Client assets under administration in the Investment Managers segment include $78.3 billion of assets balances that require limited services and therefore are at fee levels below our normal service assets.

 

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