SEI Reports Third-Quarter 2010 Financial Results

OAKS, Pa., Oct. 20 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for third-quarter 2010, reporting an increase in net income attributable to SEI and diluted earnings per share compared to third-quarter 2009.  Diluted earnings per share were $0.30.  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 $3.7 million or two percent compared to third-quarter 2009 (see Proforma Consolidated Overview below).




Consolidated Overview          For the Three Months     For the Nine Months

(In thousands, except earnings
per share)                     Ended September 30,      Ended September 30,

                               2010     2009     %      2010     2009     %



Revenues                       $219,513 $275,933 (20%)  $669,436 $776,553 (14%)

Net Income attributable to SEI 56,389   52,727   7%     169,287  128,498  32%

Diluted Earnings Per Share     $0.30    $0.27    11%    $0.89    $0.67    33%





"Compared to a year ago, our third-quarter 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.

"While our new sales activities are yielding positive results, lengthy sales and installation cycles remain a challenge for the short term.  Longer term, we believe we are well positioned in all business segments to achieve growth.  We continue to make key investments that will create growth opportunities for us and for our clients."




Proforma Consolidated Overview For the Three Months     For the Nine Months

(In thousands, except earnings
per share)                     Ended September 30,      Ended September 30,

                               2010     2009       %    2010     2009       %

                               (Actual) (Proforma)      (Actual) (Proforma)



Revenues                       $219,513 $215,773   2%   $669,436 $627,125   7%

Net Income attributable to SEI 56,389   52,727     7%   169,287  128,498    32%

Diluted Earnings Per Share     $0.30    $0.27      11%  $0.89    $0.67      33%






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



(In thousands)           For the Three Month Period  For the Nine Month Period

                         Ended September 30,         Ended September 30,

                         2010     2009     %         2010      2009      %

Private Banks:

Revenues                 $83,518  $88,561  (6%)      $260,730  $272,154  (4%)

Expenses                 73,463   79,549   (8%)      229,674   229,108   -

Operating Profit         $10,055  $9,012   12%       $31,056   $43,046   (28%)

Operating Margin         12%      10%                12%       16%



Investment Advisors:

Revenues                 43,422   43,467   -         135,283   120,557   12%

Expenses                 26,426   28,001   (6%)      82,129    81,049    1%

Operating Profit         16,996   15,466   10%       53,154    39,508    35%

Operating Margin         39%      36%                39%       33%



Institutional Investors:

Revenues                 51,036   47,458   8%        152,821   129,001   18%

Expenses                 25,940   27,369   (5%)      78,896    74,803    5%

Operating Profit         25,096   20,089   25%       73,925    54,198    36%

Operating Margin         49%      42%                48%       42%



Investment Managers:

Revenues                 40,548   35,208   15%       117,598   101,911   15%

Expenses                 25,763   23,047   12%       75,918    68,159    11%

Operating Profit         14,785   12,161   22%       41,680    33,752    23%

Operating Margin         36%      35%                35%       33%



Investments in New
Businesses:

Revenues                 989      1,079    (8%)      3,004     3,502     (14%)

Expenses                 4,080    3,171    29%       9,480     8,789     8%

Operating Loss           (3,091)  (2,092)  (48%)     (6,476)   (5,287)   (22%)

Operating Margin         N/A      N/A                N/A       N/A



LSV:

Revenues                 -        60,160   N/A       -         149,428   N/A

Expenses (1)             -        38,928   N/A       -         97,083    N/A

Operating Profit         -        21,232   N/A       -         52,345    N/A

Operating Margin         -        35%                -         35%



Totals:

Revenues                 $219,513 $275,933 (20%)     $669,436  $776,553  (14%)

Expenses                 155,672  200,065  (22%)     476,097   558,991   (15%)

Corporate overhead
expenses                 8,981    8,897    1%        28,639    27,235    5%

Noncontrolling interest
reflected in segments    (279)    (30,168) N/A       (956)     (73,968)  N/A

LSV Employee Group
expenses                 -        1,836    N/A       -         5,476     N/A

Income from operations   $ 55,139 $ 95,303 (42%)     $ 165,656 $ 258,819 (36%)



(1) Includes $29,829 and $73,120 for the three and nine month periods ended
September 30, 2009, of noncontrolling interest to the other partners of LSV.





Third-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 third-quarter 2009 include $60.2 million from LSV. Excluding
        these revenues, revenues in third-quarter 2010 increased $3.7 million or
        two percent compared to third-quarter 2009. This increase was primarily
        due to higher average asset balances under management and administration
        from existing clients because of improved capital markets.
    --  Stock-based compensation costs in third-quarter 2010 reflect the
        reversal of $6.3 million of previously recognized stock-based
        compensation costs and the acceleration of $3.1 million of stock-based
        compensation costs due to a change in management's estimates of the
        attainment of certain performance vesting targets. The net effect of
        these two items was a reduction of $3.2 million of stock-based
        compensation costs in third-quarter 2010.
    --  Third-quarter 2010 includes $2.1 million in costs associated with
        operational errors, of which, approximately $1.0 million is recognized
        in the Investment Advisors segment and $900K is recognized in the
        Investments in New Businesses segment. Also, third-quarter 2009 includes
        $2.2 million in costs associated with operational errors which was
        recognized in the Institutional Investors segment.
    --  The third-quarter 2010 net income attributable to SEI and diluted
        earnings per share results include gains of $8.7 million associated with
        SIVs, whereas results in third-quarter 2009 included gains of $14.9
        million. Additional information pertaining to SIVs is contained in SEI's
        2009 Form 10-K filed February 25, 2010.
    --  Assets under management increased by $15.1 billion during the
        third-quarter 2010 to $164.0 billion at September 30, 2010, as compared
        to $148.9 billion at June 30, 2010, primarily due to market driven
        appreciation.
    --  In the third-quarter 2010, SEI purchased 1,989,000 shares of its common
        stock for $38.6 million.


Proforma Consolidated Statement of Operations

The following proforma Consolidated Statements of Operations presents third quarter 2009 and Year to Date September 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 September 30,

                                     As Reported   Proforma

                                     SEI           SEI without

                                     Consolidated  LSV and LSVEG

                                     2010          2009           %



Total revenues                       219,513       215,773        2%

Total expenses                       164,374       169,694        (3%)



Income from operations               55,139        46,079         20%



Net gain from investments            9,362         15,616         (40%)

Interest, net                        1,285         1,219          5%

Equity in earnings of unconsolidated
affiliate                            25,246        21,240         19%



Income before taxes                  91,032        84,154         8%



Income taxes                         34,311        31,109         10%



Net income                           56,721        53,045         7%



Less Net Income attributable to
noncontrolling interest              (332)         (318)          4%



Net income attributable to SEI       $56,389       $52,727        7%



Diluted earnings per share           $0.30         $0.27          11%



Diluted shares outstanding           189,521       192,325        (1%)






SEI INVESTMENTS COMPANY

PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

                                     Nine Months Ended September 30,

                                     As Reported   Proforma

                                     SEI           SEI without

                                     Consolidated  LSV and LSVEG

                                     2010          2009           %



Total revenues                       669,436       627,125        7%

Total expenses                       503,780       488,294        3%



Income from operations               165,656       138,831        19%



Net gain (loss) from investments     30,435        (1,367)        N/A

Interest, net                        3,601         3,795          (5%)

Other income                         1,070         -              N/A

Equity in earnings of unconsolidated
affiliate                            72,839        52,370         39%



Income before taxes                  273,601       193,629        41%



Income taxes                         103,183       64,250         61%



Net income                           170,418       129,379        32%



Less Net Income attributable to
noncontrolling interest              (1,131)       (881)          28%



Net income attributable to SEI       $169,287      $128,498       32%



Diluted earnings per share           $0.89         $0.67          33%



Diluted shares outstanding           190,694       191,905        (1%)





Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on October 20, 2010.  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) 1-800-475-6701; (International) 320-365-3844, access code 174401.

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 September 30, 2010, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $402 billion in mutual fund and pooled assets and manages $164 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 September 30,

                                               2010      2009



Asset management, admin. and distribution fees $155,799  $206,235

Information processing and software servicing
fees                                           55,226    56,241

Transaction–based and trade execution fees   8,488     13,457



Total revenues                                 219,513   275,933



Subadvisory, distribution and other asset mgmt
costs                                          21,900    21,998

Brokerage commissions and royalties            12,402    14,421

Compensation, benefits and other personnel     64,694    70,204

Stock based compensation                       3,468     3,418

Consulting, outsourcing and professional fees  21,841    20,173

Data processing and computer related           10,167    11,235

Facilities, supplies and other costs           18,302    18,817

Amortization                                   5,998     15,042

Depreciation                                   5,602     5,322



Total expenses                                 164,374   180,630



Income from operations                         55,139    95,303



Net gain on investments                        9,362     15,616

Interest and dividend income                   1,621     1,897

Interest expense                               (336)     (1,034)

Equity in earnings of unconsolidated affiliate 25,246    -



Income before taxes                            91,032    111,782



Income taxes                                   34,311    31,109



Net income                                     56,721    80,673



Less: Net income attributable to
noncontrolling interest                        (332)     (27,946)



Net income attributable to SEI                 $56,389   $52,727



Diluted earnings per common share              $0.30     $0.27



Shares used to calculate diluted

earnings per common share                      189,521   192,325



Basic earnings per common share                $0.30     $0.28



Shares used to calculate basic

earnings per common share                      187,964   190,850






SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)



                                               Nine Months Ended September 30,

                                               2010      2009



Asset management, admin. and distribution fees $463,511  $558,808

Information processing and software servicing
fees                                           175,148   173,152

Transaction–based and trade execution fees   30,777    44,593



Total revenues                                 669,436   776,553



Subadvisory, distribution and other asset mgmt
costs                                          66,826    62,466

Brokerage commissions and royalties            40,747    47,645

Compensation, benefits and other personnel     198,922   207,312

Stock based compensation                       16,403    10,209

Consulting, outsourcing and professional fees  65,250    60,034

Data processing and computer related           30,512    33,927

Facilities, supplies and other costs           50,833    50,453

Amortization                                   17,895    29,493

Depreciation                                   16,392    16,195



Total expenses                                 503,780   517,734



Income from operations                         165,656   258,819



Net gain (loss) on investments                 30,435    (1,367)

Interest and dividend income                   4,823     5,545

Interest expense                               (1,222)   (2,884)

Other income                                   1,070     -

Equity in earnings of unconsolidated affiliate 72,839    -



Income before taxes                            273,601   260,113



Income taxes                                   103,183   64,250



Net income                                     170,418   195,863



Less: Net income attributable to the
noncontrolling interest                        (1,131)   (67,365)



Net income attributable to SEI                 $169,287  $128,498



Diluted earnings per common share              $0.89     $0.67



Shares used to calculate diluted

earnings per common share                      190,694   191,905



Basic earnings per common share                $0.90     $0.67



Shares used to calculate basic

earnings per common share                      189,090   190,986






SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)





                                              (Unaudited)

                                              September 30,  December, 31

                                              2010           2009

Assets



Cash and short-term investments               $451,778       $590,877     (a)

Restricted cash                               19,000         20,000

Receivables                                   171,709        212,451      (a)

Other current assets                          19,930         18,075



Total current assets                          662,417        841,403



Property and equipment, net                   144,026        146,053

Marketable securities                         177,889        181,897

Capitalized software, net                     289,604        278,656

Investment in unconsolidated affiliate        63,096         -

Goodwill                                      -              22,842

Intangible assets, net                        -              44,859

Other assets, net                             16,993         18,098



Total assets                                  $1,354,025     $1,533,808







Liabilities



Current liabilities                           $116,340       $163,055     (b)

Long-term debt                                120,000        247,152      (b)

Deferred income taxes                         91,108         86,257

Long-term liabilities                         5,836          5,726



Total SEI Investments Company shareholders’
equity                                        1,006,391      909,723

Noncontrolling interest                       14,350         121,895

Total Equity                                  1,020,741      1,031,618



Total liabilities and equity                  $1,354,025     $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)







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

                               2009     2009     2010     2010     2010

Private Banks:

Equity/Fixed Income prgms.     $12,479  $12,690  $12,635  $11,769  $12,842

Collective Trust Fund prgm.    1,098    1,067    1,023    640      615

Liquidity funds                6,524    6,035    5,329    5,175    5,034

Total assets under mgmt.       $20,101  $19,792  $18,987  $17,584  $18,491



Client assets under admin.     10,941   11,213   11,429   10,335   10,557

Total assets                   $31,042  $31,005  $30,416  $27,919  $29,048



Investment Advisors:

Equity/Fixed Income prgms.     $24,739  $25,392  $26,222  $23,699  $26,091

Collective Trust Fund prgm.    2,521    2,423    2,284    2,066    2,028

Liquidity funds                2,243    1,929    1,731    2,635    2,253

Total assets under mgmt.       $29,503  $29,744  $30,237  $28,400  $30,372



Institutional Investors:

Equity/Fixed Income prgms.     $43,672  $44,322  $45,891  $43,506  $47,667

Collective Trust Fund prgm.    707      684      657      643      641

Liquidity funds                4,624    3,370    3,198    2,558    3,475

Total assets under mgmt.       $49,003  $48,376  $49,746  $46,707  $51,783



Investment Managers:

Equity/Fixed Income prgms.     $4       $4       $2       $1       $1

Collective Trust Fund prgm.    7,075    7,428    7,639    7,366    7,781

Liquidity funds                528      412      447      428      423

Total assets under mgmt.       $7,607   $7,844   $8,088   $7,795   $8,205



Client assets under admin. (A) 216,222  221,680  220,807  220,459  227,777

Total assets                   $223,829 $229,524 $228,895 $228,254 $235,982



Investments in New Businesses:

Equity/Fixed Income prgms.     $473     $520     $534     $496     $533

Liquidity funds                93       75       72       74       82

Total assets under mgmt.       $566     $595     $606     $570     $615



LSV Asset Management

Equity/Fixed Income prgms.     $49,349  $52,488  $54,189  $47,822  $54,492



Consolidated:

Equity/Fixed Income prgms (B)  $130,716 $135,416 $139,473 $127,293 $141,626

Collective Trust Fund prgm.    11,401   11,602   11,603   10,715   11,065

Liquidity funds                14,012   11,821   10,777   10,870   11,267

Total assets under mgmt.       $156,129 $158,839 $161,853 $148,878 $163,958



Client assets under admin. (C) 227,163  232,893  232,236  230,794  238,334

Total assets                   $383,292 $391,732 $394,089 $379,672 $402,292



(A) Client assets under administration in the Investment Managers segment
include $59.6 billion of assets balances that require limited services and
therefore are at fee levels below our normal full service assets (as of
September 30, 2010).

(B) Equity/Fixed Income programs include $2,386 million of assets invested
in various asset allocation funds at September 30, 2010.

(C) In addition to the numbers presented, SEI also administers an
additional $4,534 million in Funds of Funds assets (as of September 30,
2010) on which SEI does not earn an administration fee.





SOURCE SEI Investments Company