SEI Reports Fourth-Quarter 2010 Financial Results
OAKS, Pa., Jan. 26, 2011 /PRNewswire/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for fourth-quarter 2010, reporting an increase in net income attributable to SEI and diluted earnings per share compared to fourth-quarter 2009. Diluted earnings per share were $0.33. Effective January 1, 2010, company results reflect the deconsolidation of LSV Asset Management (LSV), returning to the equity method of accounting. This change in accounting treatment had no impact on net income attributable to SEI. Without LSV, revenues grew $9.9 million or four percent compared to fourth-quarter 2009 (see Proforma Consolidated Overview below).
Consolidated Overview For the Three Months For the Twelve Months
(In thousands, except
earnings per share) Ended December 31, Ended December 31,
2010 2009 % 2010 2009 %
Revenues $231,399 $283,995 (19%) $900,835 $1,060,548 (15%)
Net Income attributable to
SEI 62,400 45,837 36% 231,687 174,335 33%
Diluted Earnings Per Share $0.33 $0.24 38% $1.22 $0.91 34%
"Compared to a year ago, our fourth-quarter and 2010 results reflect improved capital markets, improved markets for our services, and the ongoing management of our costs," said Alfred P. West, Jr., SEI Chairman and CEO. "As always, our focus is on servicing and growing our existing clients while generating new client sales. Despite continuing uncertain markets, we believe the investments we are making position us well for long-term growth."
Proforma Consolidated Overview For the Three Months For the Twelve Months
(In thousands, except earnings
per share) Ended December 31, Ended December 31,
2010 2009 % 2010 2009 %
(Actual) (Proforma) (Actual) (Proforma)
Revenues $231,399 $221,462 4% $900,835 $848,587 6%
Net Income attributable to SEI 62,400 45,837 36% 231,687 174,335 33%
Diluted Earnings Per Share $0.33 $0.24 38% $1.22 $0.91 34%
Summary of Fourth-Quarter and Year to Date Results by Business Segment
(In thousands) For the Three Month Period For the Twelve Month Period
Ended December 31, Ended December 31,
2010 2009 % 2010 2009 %
Private Banks:
Revenues $85,938 $89,119 (4%) $346,668 $361,273 (4%)
Expenses 80,959 80,192 1% 310,633 309,300 -
Operating Profit $4,979 $8,927 (44%) $36,035 $51,973 (31%)
Operating Margin 6% 10% 10% 14%
Investment Advisors:
Revenues 48,095 45,540 6% 183,378 166,097 10%
Expenses 28,259 28,369 - 110,388 109,418 1%
Operating Profit 19,836 17,171 16% 72,990 56,679 29%
Operating Margin 41% 38% 40% 34%
Institutional
Investors:
Revenues 53,710 48,720 10% 206,531 177,721 16%
Expenses 28,038 25,121 12% 106,934 99,924 7%
Operating Profit 25,672 23,599 9% 99,597 77,797 28%
Operating Margin 48% 48% 48% 44%
Investment Managers:
Revenues 42,561 37,093 15% 160,159 139,004 15%
Expenses 27,503 24,915 10% 103,421 93,074 11%
Operating Profit 15,058 12,178 24% 56,738 45,930 24%
Operating Margin 35% 33% 35% 33%
Investments in New
Businesses:
Revenues 1,095 990 11% 4,099 4,492 (9%)
Expenses 3,196 2,836 13% 12,676 11,625 9%
Operating Loss (2,101) (1,846) (14%) (8,577) (7,133) (20%)
Operating Margin N/A N/A N/A N/A
LSV:
Revenues - 62,533 N/A - 211,961 N/A
Expenses (1) - 39,497 N/A - 136,580 N/A
Operating Profit - 23,036 N/A - 75,381 N/A
Operating Margin - 37% - 36%
Totals:
Revenues $231,399 $283,995 (19%) $900,835 $1,060,548 (15%)
Expenses (1) 167,955 200,930 (16%) 644,052 759,921 (15%)
Corporate overhead
expenses 12,076 9,294 30% 40,715 36,529 11%
Noncontrolling interest
reflected in segments (509) (32,937) N/A (1,465) (106,905) N/A
LSV Employee Group
expenses - 1,820 N/A - 7,296 N/A
Income from operations $ 51,877 $104,888 (51%) $217,533 $ 363,707 (40%)
(1) Includes $32,350 and $105,471 for the three and twelve month periods ended
December 31, 2009, of
noncontrolling interest to the other partners of LSV.
Fourth-Quarter Business Commentary:
-- In January 2010, LSV was deconsolidated due to the adoption of newly
issued accounting guidance. Our ownership interest in LSV was unchanged
and our proportionate share in the earnings of LSV is reflected in
"Equity in earnings of unconsolidated affiliate" on our Consolidated
Statements of Operations. The deconsolidation of LSV had no impact on
net income attributable to SEI or diluted earnings per share.
-- Revenues in fourth-quarter 2009 include $62.5 million from LSV.
Excluding these revenues, revenues in fourth-quarter 2010 increased $9.9
million or four percent compared to fourth-quarter 2009. This increase
was primarily due to higher average asset balances under management and
administration from existing clients because of improved capital
markets.
-- The fourth-quarter 2010 net income attributable to SEI and diluted
earnings per share results include gains of $14.3 million associated
with SIVs, whereas results in fourth-quarter 2009 included losses of
$4.0 million. Additional information pertaining to SIVs is contained in
SEI's 2009 Form 10-K filed February 25, 2010.
-- Stock-based compensation costs in fourth-quarter 2010 include $7.8
million associated with stock options that vested during the
fourth-quarter 2010. Included in this amount is $3.6 million due to the
acceleration of stock-based compensation costs resulting from a change
in management's estimates determined in third-quarter 2010 of the
attainment of certain performance vesting targets.
-- Assets under management increased by $8.3 billion during the
fourth-quarter 2010 to $172.3 billion at December 31, 2010, as compared
to $164.0 billion at September 30, 2010, primarily due to market driven
appreciation.
-- The tax rate in the fourth-quarter 2010 decreased to 34.7 percent mainly
due to a year-to-date adjustment to reflect the reinstatement of the
research and development tax credit.
-- In fourth-quarter 2010, SEI recognized $3.1 million in gains due to the
sale of its entire ownership interest in a small company that was
involved in a merger. This gain, together with the SIV gain, is
reflected in Net gain (loss) on investments on the Consolidated
Statements of Operations.
-- The fourth-quarter 2009 results include $7.7 million of amortization
expense associated with a change in the useful life of previously
capitalized software development costs for some components related to
the Global Wealth Platform (GWP). This charge was due to the replacement
of these components with components contained in the release of GWP that
occurred in fourth-quarter 2009. The bulk of this expense was recognized
in the Private Banks segment ($5 million) and the Investment Advisors
segment ($1.9 million).
-- In the fourth-quarter 2010, SEI purchased 1,405,000 shares of its common
stock for $32.7 million.
Proforma Consolidated Statement of Operations
The following proforma Consolidated Statements of Operations presents fourth quarter 2009 and Year to Date December 2009 for comparative purposes only as if LSV and LSV Employee Group was deconsolidated on January 1, 2009. This report is being provided for informational purposes only and is not a restatement or reclassification of previously filed reports. Our interest in LSV is presented as a single line item in the Consolidated Statements of Operations titled "Equity in earnings of unconsolidated affiliate." For additional information, we refer you to Note 2 to the Consolidated Financial Statements included in our 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2010.
SEI INVESTMENTS COMPANY
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
As Reported Proforma
SEI SEI without
Consolidated LSV and LSVEG
2010 2009 %
Total revenues 231,399 221,462 4%
Total expenses 179,522 170,140 6%
Income from operations 51,877 51,322 1%
Net gain (loss) from investments 18,098 (3,559) N/A
Interest, net 1,247 1,218 2%
Other expense (1,660) - N/A
Equity in earnings of unconsolidated
affiliate 26,618 23,045 16%
Income before taxes 96,180 72,026 34%
Income taxes 33,278 25,636 30%
Net income 62,902 46,390 36%
Less Net Income attributable to
noncontrolling interest (502) (553) 9%
Net income attributable to SEI $62,400 $45,837 36%
Diluted earnings per share $0.33 $0.24 38%
Diluted shares outstanding 189,200 191,414 (1%)
SEI INVESTMENTS COMPANY
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended December 31,
As Reported Proforma
SEI SEI without
Consolidated LSV and LSVEG
2010 2009 %
Total revenues 900,835 848,587 6%
Total expenses 683,302 658,434 4%
Income from operations 217,533 190,153 14%
Net gain (loss) from investments 48,533 (4,926) N/A
Interest, net 4,848 5,013 (3%)
Other expense, net (590) - N/A
Equity in earnings of unconsolidated
affiliate 99,457 75,415 32%
Income before taxes 369,781 265,655 39%
Income taxes 136,461 89,886 52%
Net income 233,320 175,769 33%
Less Net Income attributable to
noncontrolling interest (1,633) (1,434) 14%
Net income attributable to SEI $231,687 $174,335 33%
Diluted earnings per share $1.22 $0.91 34%
Diluted shares outstanding 190,321 191,783 (1%)
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on January 26, 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) 1-800-288-8968; (International) 612-234-9960, access code 189688.
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 December 31, 2010, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $416 billion in mutual fund and pooled assets and manages $172 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.
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
2010 2009
Asset management, admin. and distribution fees $165,024 $214,378
Information processing and software servicing
fees 56,381 58,655
Transaction–based and trade execution fees 9,994 10,962
Total revenues 231,399 283,995
Subadvisory, distribution and other asset mgmt
costs 22,920 23,344
Brokerage commissions and royalties 11,862 14,090
Compensation, benefits and other personnel 70,243 67,363
Stock based compensation 10,380 4,294
Consulting, outsourcing and professional fees 23,783 21,660
Data processing and computer related 10,552 11,476
Facilities, supplies and other costs 18,119 16,429
Amortization 6,153 15,115
Depreciation 5,510 5,336
Total expenses 179,522 179,107
Income from operations 51,877 104,888
Net gain (loss) on investments 18,098 (3,559)
Interest and dividend income 1,503 1,736
Interest expense (256) (860)
Other expense (1,660) -
Equity in earnings of unconsolidated affiliate 26,618 -
Income before taxes 96,180 102,205
Income taxes 33,278 25,636
Net income 62,902 76,569
Less: Net income attributable to noncontrolling
interest (502) (30,732)
Net income attributable to SEI $62,400 $45,837
Diluted earnings per common share $0.33 $0.24
Shares used to calculate diluted
earnings per common share 189,200 191,414
Basic earnings per common share $0.33 $0.24
Shares used to calculate basic
earnings per common share 186,602 190,329
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended December 31,
2010 2009
Asset management, admin. and distribution fees $628,535 $773,186
Information processing and software servicing
fees 231,529 231,807
Transaction–based and trade execution fees 40,771 55,555
Total revenues 900,835 1,060,548
Subadvisory, distribution and other asset mgmt
costs 89,746 85,810
Brokerage commissions and royalties 52,609 61,735
Compensation, benefits and other personnel 269,165 274,675
Stock based compensation 26,783 14,503
Consulting, outsourcing and professional fees 89,033 81,694
Data processing and computer related 41,064 45,403
Facilities, supplies and other costs 68,952 66,882
Amortization 24,048 44,608
Depreciation 21,902 21,531
Total expenses 683,302 696,841
Income from operations 217,533 363,707
Net gain (loss) on investments 48,533 (4,926)
Interest and dividend income 6,326 7,281
Interest expense (1,478) (3,744)
Other expense, net (590) -
Equity in earnings of unconsolidated affiliate 99,457 -
Income before taxes 369,781 362,318
Income taxes 136,461 89,886
Net income 233,320 272,432
Less: Net income attributable to the
noncontrolling interest (1,633) (98,097)
Net income attributable to SEI $231,687 $174,335
Diluted earnings per common share $1.22 $0.91
Shares used to calculate diluted
earnings per common share 190,321 191,783
Basic earnings per common share $1.23 $0.91
Shares used to calculate basic
earnings per common share 188,468 190,821
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, December 31,
2010 2009
Assets
Cash and short-term investments $496,292 $590,877 (a)
Restricted cash 4,000 20,000
Receivables 165,772 212,451 (a)
Other current assets 17,655 18,075
Total current assets 683,719 841,403
Property and equipment, net 140,568 146,053
Marketable securities 179,364 181,897
Capitalized software, net 294,332 278,656
Investment in unconsolidated affiliate 64,409 -
Goodwill - 22,842
Intangible assets, net - 44,859
Other assets, net 14,831 18,098
Total assets $1,377,223 $1,533,808
Liabilities
Current liabilities $127,600 $163,055 (b)
Long-term debt 95,000 247,152 (b)
Deferred income taxes 92,253 86,257
Long-term liabilities 5,645 5,726
Total SEI Investments Company shareholders’
equity 1,041,570 909,723
Noncontrolling interest 15,155 121,895
Total Equity
1,056,725 1,031,618
Total liabilities and equity $1,377,223 $1,533,808
(a) Includes $57,061 of cash and cash equivalents and $66,392 of receivables
of LSV Asset Management.
(b) Includes $20,552 of debt of LSV Employee Group of which $6,400 is
included in Current liabilities and the
remaining $14,152 is included in Long-term debt.
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31,
2009 2010 2010 2010 2010
Private Banks:
Equity/Fixed Income prgms. $12,690 $12,635 $11,769 $12,842 $13,512
Collective Trust Fund prgm. 1,067 1,023 640 615 626
Liquidity funds 6,035 5,329 5,175 5,034 5,120
Total assets under mgmt. $19,792 $18,987 $17,584 $18,491 $19,258
Client assets under admin. 11,213 11,429 10,335 10,557 10,672
Total assets $31,005 $30,416 $27,919 $29,048 $29,930
Investment Advisors:
Equity/Fixed Income prgms. $25,392 $26,222 $23,699 $26,091 $27,680
Collective Trust Fund prgm. 2,423 2,284 2,066 2,028 1,820
Liquidity funds 1,929 1,731 2,635 2,253 1,641
Total assets under mgmt. $29,744 $30,237 $28,400 $30,372 $31,141
Institutional Investors:
Equity/Fixed Income prgms. $44,322 $45,891 $43,506 $47,667 $48,699
Collective Trust Fund prgm. 684 657 643 641 623
Liquidity funds 3,370 3,198 2,558 3,475 3,382
Total assets under mgmt. $48,376 $49,746 $46,707 $51,783 $52,704
Investment Managers:
Equity/Fixed Income prgms. $4 $2 $1 $1 $1
Collective Trust Fund prgm. 7,428 7,639 7,366 7,781 8,177
Liquidity funds 412 447 428 423 313
Total assets under mgmt. $7,844 $8,088 $7,795 $8,205 $8,491
Client assets under admin. (A) 221,680 220,807 220,459 227,777 233,079
Total assets $229,524 $228,895 $228,254 $235,982 $241,570
Investments in New Businesses:
Equity/Fixed Income prgms. $520 $534 $496 $533 $569
Liquidity funds 75 72 74 82 65
Total assets under mgmt. $595 $606 $570 $615 $634
LSV Asset Management
Equity/Fixed Income prgms. $52,488 $54,189 $47,822 $54,492 $60,058
Consolidated:
Equity/Fixed Income prgms (B) $135,416 $139,473 $127,293 $141,626 $150,519
Collective Trust Fund prgm. 11,602 11,603 10,715 11,065 11,246
Liquidity funds 11,821 10,777 10,870 11,267 10,521
Total assets under mgmt. $158,839 $161,853 $148,878 $163,958 $172,286
Client assets under admin. (C) 232,893 232,236 230,794 238,334 243,751
Total assets $391,732 $394,089 $379,672 $402,292 $416,037
(A) Client assets under administration in the Investment Managers segment
include $59.0 billion of assets balances that require limited services and
therefore are at fee levels below our normal full service assets (as of
December 31, 2010).
(B) Equity/Fixed Income programs include $2,304 million of assets invested
in various asset allocation funds at December 31, 2010.
(C) In addition to the numbers presented, SEI also administers an
additional $5,019 million in Funds of Funds assets (as of December 31,
2010) on which SEI does not earn an administration fee.
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SOURCE SEI Investments Company
Released January 26, 2011