SEI Reports Fourth-Quarter 2009 Financial Results
OAKS, Pa., Jan. 27 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for fourth-quarter 2009, reporting increases in revenues and net income attributable to SEI, and diluted earnings per share compared to fourth-quarter 2008. Diluted earnings per share were $0.24. Earnings were negatively affected by Structured Investment Vehicle (SIV)-related and accelerated Global Wealth Platform (GWP) amortization charges of approximately $0.04.
Consolidated Overview For the Three Months For the Twelve Months
(In thousands, except
earnings per share) Ended December 31, Ended December 31,
2009 2008 % 2009 2008 %
Revenues $283,995 $268,402 6% $1,060,548 $1,247,919 (15%)
Net Income attributable to
SEI 45,837 9,649 375% 174,335 139,254 25%
Diluted Earnings Per Share $0.24 $0.05 380% $0.91 $0.71 28%
"Our fourth-quarter results reflect both the improving capital markets and the cost reduction initiatives we put in place earlier in the year," said Alfred P. West, Jr., SEI Chairman and CEO.
"As the economic climate continues to improve, we believe we will have opportunities in all our segments to achieve growth in new business. At the same time, we are continuing to make key investments to give us even greater opportunities to grow. During these turbulent times we maintain our belief that what we are doing will significantly benefit our clients and SEI both today and in the future."
Summary of Fourth-Quarter and Year to Date Results
For the Three Month Period For the Twelve Month Period Ended
(In thousands) Ended December 31, December 31,
2009 2008 % 2009 2008 %
Private Banks:
Revenues $89,119 $97,962 (9%) $361,273 $408,500 (12%)
Expenses 80,192 75,582 6% 309,300 326,661 (5%)
Operating
Profit $8,927 $22,380 (60%) $51,973 $81,839 (36%)
Operating
Margin 10% 23% 14% 20%
Investment
Advisors:
Revenues 45,540 41,951 9% 166,097 223,164 (26%)
Expenses 28,369 28,529 (1%) 109,418 122,231 (10%)
Operating
Profit 17,171 13,422 28% 56,679 100,933 (44%)
Operating
Margin 38% 32% 34% 45%
Institutional
Investors:
Revenues 48,720 43,408 12% 177,721 198,154 (10%)
Expenses 25,121 22,873 10% 99,924 112,866 (11%)
Operating
Profit 23,599 20,535 15% 77,797 85,288 (9%)
Operating
Margin 48% 47% 44% 43%
Investment
Managers:
Revenues 37,093 35,966 3% 139,004 147,968 (6%)
Expenses 24,915 23,536 6% 93,074 101,078 (8%)
Operating
Profit 12,178 12,430 (2%) 45,930 46,890 (2%)
Operating
Margin 33% 35% 33% 32%
Investments in
New
Businesses:
Revenues 990 1,356 (27%) 4,492 6,865 (35%)
Expenses 2,836 2,973 (5%) 11,625 15,795 (26%)
Operating Loss (1,846) (1,617) 14% (7,133) (8,930) (20%)
Operating
Margin n/a n/a n/a n/a
LSV:
Revenues 62,533 47,759 31% 211,961 263,268 (19%)
Expenses (1) 39,497 30,833 28% 136,580 164,783 (17%)
Operating
Profit 23,036 16,926 36% 75,381 98,485 (23%)
Operating
Margin 37% 35% 36% 37%
Totals:
Revenues $283,995 $268,402 6% $1,060,548 $1,247,919 (15%)
Expenses 200,930 184,326 9% 759,921 843,414 (10%)
Corporate
overhead
expenses 9,294 8,079 15% 36,529 38,955 (6%)
Noncontrolling
interest
reflected in
segments (32,937) (23,518) 40% (106,905) (138,079) (23%)
LSV Employee
Group Expenses 1,820 1,820 0% 7,296 7,280 0%
$ 104,888 $ 97,695 7% $ 363,707 $ 496,349 (27%)
(1) Includes $32,350 and $23,200 for the three-month period ended December 31, 2009 and 2008, respectively, and $105,471 and $135,251 for the twelve-month period ended December 31, 2009 and 2008, respectively, of noncontrolling interest to the other partners of LSV.
Fourth-Quarter Business Commentary:
-- Fourth-quarter revenue results improved on a sequential quarter basis
for all major segments, due primarily to improved capital markets.
-- 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
GWP. This charge was due to the replacement of these components with
components contained in the most recent release of GWP that occurred in
Q4 2009. The bulk of this expense is contained in the Private Banks
segment ($5 million) and the Investment Advisors segment ($1.9 million),
depressing fourth-quarter 2009 margins. This is the second half of
charges first reported in third-quarter, 2009.
-- The fourth-quarter 2009 results include losses of $4.0 million
associated with SIV-related issues, whereas results in fourth-quarter
2008 included losses of $64.3 million. SEI has recognized cumulative
losses of $189.1 million associated with these SIV-related issues
through December 31, 2009. As previously reported, SEI has now purchased
all SIVs owned by its money market funds and has no capital support
agreements left in place. Additional information pertaining to
SIV-related issues involving SEI-sponsored money market funds is
contained in SEI's 2008 Form 10-K filed February 25, 2009 and SEI's 2009
third-quarter Form 10-Q filed November 3, 2009.
-- Assets under management increased by $2.7 billion during the
fourth-quarter 2009 to $158.8 billion, primarily due to market
appreciation.
-- In the fourth-quarter, SEI purchased 1,243,000 shares of its common
stock for $22.1 million.
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on January 27, 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 143992.
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, 2009, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $392 billion in mutual fund and pooled assets and manages $158 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 INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
2009 2008
Asset management, admin. and distribution fees $214,378 $191,247
Information processing and software servicing
fees 58,655 56,003
Transaction–based and trade execution fees 10,962 21,152
Total revenues 283,995 268,402
Commissions and fees 37,434 41,296
Compensation, benefits and other personnel 71,657 61,517
Consulting, outsourcing and professional fees 21,660 24,208
Data processing and computer related 11,476 11,500
Facilities, supplies and other costs 16,429 19,920
Depreciation 5,336 5,932
Amortization 15,115 6,334
Total expenses 179,107 170,707
Income from operations 104,888 97,695
Net loss on investments (3,559) (64,631)
Interest and dividend income 1,736 2,995
Interest expense (860) (740)
Other income - 5,577
Income before taxes 102,205 40,896
Income taxes 25,636 9,961
Net income 76,569 30,935
Less: Net income attributable to the
noncontrolling interest (30,732) (21,286)
Net income attributable to SEI $45,837 $9,649
Diluted earnings per common share $0.24 $0.05
Shares used to calculate diluted
earnings per common share 191,414 192,030
Basic earnings per common share $0.24 $0.05
Shares used to calculate basic
earnings per common share 190,329 190,858
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended December 31,
2009 2008
Asset management, admin. and distribution fees $773,186 $955,399
Information processing and software servicing
fees 231,807 229,807
Transaction–based and trade execution fees 55,555 62,713
Total revenues 1,060,548 1,247,919
Commissions and fees 147,545 171,972
Compensation, benefits and other personnel 289,178 309,870
Consulting, outsourcing and professional fees 81,694 103,789
Data processing and computer related 45,403 44,602
Facilities, supplies and other costs 66,882 74,378
Depreciation 21,531 22,032
Amortization 44,608 24,927
Total expenses 696,841 751,570
Income from operations 363,707 496,349
Net loss on investments (4,926) (158,018)
Interest and dividend income 7,281 13,740
Interest expense (3,744) (3,418)
Other income - 5,577
Income before taxes 362,318 354,230
Income taxes 89,886 86,703
Net income 272,432 267,527
Less: Net income attributable to the
noncontrolling interest (98,097) (128,273)
Net income attributable to SEI $174,335 $139,254
Diluted earnings per common share $0.91 $0.71
Shares used to calculate diluted
earnings per common share 191,783 195,233
Basic earnings per common share $0.91 $0.73
Shares used to calculate basic
earnings per common share 190,821 192,057
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, 2009 December, 31 2008
Assets
Cash and short-term investments $590,877 $416,643
Restricted cash 20,000 14,000
Receivables 212,451 208,209
Other current assets 18,075 100,819
Total current assets 841,403 739,671
Property and equipment, net 146,053 148,124
Marketable securities 181,897 86,693
Capitalized software, net 278,656 270,606
Goodwill 22,842 22,842
Intangible assets, net 44,859 52,518
Other assets, net 18,098 21,261
Total assets $1,533,808 $1,341,715
Liabilities
Current liabilities (1) $163,055 $329,894
Long-term debt 247,152 24,332
Deferred income taxes 86,257 104,548
Long-term liabilities 5,726 4,067
Total SEI Investments Company
shareholders’ equity 909,723 769,152
Noncontrolling interest 121,895 109,722
Total Equity 1,031,618 878,874
Total liabilities and equity $1,533,808 $1,341,715
(1) Includes at December 31, 2008, an accrual of $173,983 related to money market funds support agreements.
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31,
2008 2009 2009 2009 2009
Private Banks:
Equity/Fixed Income prgms. $10,573 $9,679 $10,892 $12,479 $12,690
Collective Trust Fund prgm. 1,145 1,198 1,176 1,098 1,067
Liquidity funds 9,194 8,929 7,581 6,524 6,035
Total assets under mgmt. $20,912 $19,806 $19,649 $20,101 $19,792
Client assets under admin. 10,622 9,920 10,143 10,941 11,213
Total assets $31,534 $29,726 $29,792 $31,042 $31,005
Investment Advisors:
Equity/Fixed Income prgms. $21,631 $18,832 $21,705 $24,739 $25,392
Collective Trust Fund prgm. 2,606 2,716 2,621 2,521 2,423
Liquidity funds 3,436 3,458 2,469 2,243 1,929
Total assets under mgmt. $27,673 $25,006 $26,795 $29,503 $29,744
Institutional Investors:
Equity/Fixed Income prgms. $34,966 $32,565 $36,955 $43,672 $44,322
Collective Trust Fund prgm. 942 791 755 707 684
Liquidity funds 4,582 3,802 3,462 4,624 3,370
Total assets under mgmt. $40,490 $37,158 $41,172 $49,003 $48,376
Investment Managers:
Equity/Fixed Income prgms. $8 $3 $3 $4 $4
Collective Trust Fund prgm. 5,974 6,917 6,794 7,075 7,428
Liquidity funds 869 898 505 528 412
Total assets under mgmt. $6,851 $7,818 $7,302 $7,607 $7,844
Client assets under admin. (A) 234,628 221,798 213,930 216,222 221,680
Total assets $241,479 $229,616 $221,232 $223,829 $229,524
Investments in New Businesses:
Equity/Fixed Income prgms. $519 $472 $473 $473 $520
Liquidity funds 153 157 133 93 75
Total assets under mgmt. $672 $629 $606 $566 $595
LSV Asset Management
Equity/Fixed Income prgms. $37,714 $32,308 $40,210 $49,349 $52,488
Consolidated:
Equity/Fixed Income prgms (B) $105,411 $93,859 $110,238 $130,716 $135,416
Collective Trust Fund prgm. 10,667 11,622 11,346 11,401 11,602
Liquidity funds 18,234 17,244 14,150 14,012 11,821
Total assets under mgmt. $134,312 $122,725 $135,734 $156,129 $158,839
Client assets under admin. (C) 245,250 231,718 224,073 227,163 232,893
Total assets $379,562 $354,443 $359,807 $383,292 $391,732
(A) Client assets under administration in the Investment Managers segment include $59,169 of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of December 31, 2009).
(B) Equity/Fixed Income programs include $2,339 of assets invested in various asset allocation funds at December 31, 2009.
(C) In addition to the numbers presented, SEI also administers an additional $8,473 in Funds of Funds assets (as of December 31, 2009) on which SEI does not earn an administration fee.
SOURCE SEI Investments Company
Released January 27, 2010