UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 25, 2007
Date of report (Date of earliest event reported)
SEI Investments Company
(Exact name of registrant as specified in its charter)
| Pennsylvania | 0-10200 | 23-1707341 | ||
| (State or other jurisdiction of incorporation) |
(Commission File No.) | (I.R.S. Employer Identification No.) |
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
(Address of principal executive offices) (Zip Code)
(610) 676-1000
(Registrants’ telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On Wednesday, April 25, 2007, SEI Investments Company issued a press release announcing its financial and operating results for the first quarter ended March 31, 2007. A copy of the press release is furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference.
As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02 and in Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing with the Securities and Exchange Commission, except as shall be expressly provided by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 99.1 | Press Release dated April 25, 2007 of SEI Investments Company. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SEI Investments Company | ||||
| Date: April 25, 2007 | By: | /s/ Dennis J. McGonigle | ||
| Dennis J. McGonigle | ||||
| Chief Financial Officer | ||||
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Press Release dated April 25, 2007 of SEI Investments Company. |
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 | |||
| msamuels@seic.com | mlouis@seic.com | lwexler@seic.com | ||||
| Pages: | Seven |
SEI Investments Reports First-Quarter 2007 Results
Net Income up 15%
OAKS, Pa., April 25, 2007 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for first-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 March 31, |
||||||||
| 2007 | 2006 | % | |||||||
| Revenues |
$ | 322,725 | $ | 277,133 | 16 | % | |||
| Net Income Before Taxes |
100,919 | 86,740 | 16 | % | |||||
| Net Income |
63,377 | 54,906 | 15 | % | |||||
| Diluted Earnings Per Share |
$ | .62 | $ | .54 | 15 | % | |||
"We are satisfied with our quarterly results, especially since we are shifting into the execution stage of our new strategies,” said Alfred P. West, Jr., SEI Chairman and CEO.
“We continue to be encouraged by the successful beta of the global wealth platform. The investments we are making are on schedule and our transformation is well underway. In the long run, we remain firm in our belief that what we are doing will help us provide our clients with increased opportunities for success and allow us to grow our future revenues and profits more rapidly.”
Summary of First-Quarter Results by Business Segment
| For the Three Month Period Ended March 31, |
|||||||||||
| (In thousands) |
2007 | 2006 | % | ||||||||
| Private Banks: |
|||||||||||
| Revenues |
$ | 97,738 | $ | 88,302 | 11 | % | |||||
| Expenses |
77,993 | 64,532 | 21 | % | |||||||
| Operating Profit |
$ | 19,745 | $ | 23,770 | (17 | %) | |||||
| Operating Margin |
20 | % | 27 | % | |||||||
| Investment Advisors: |
|||||||||||
| Revenues |
61,563 | 55,297 | 11 | % | |||||||
| Expenses |
29,374 | 26,217 | 12 | % | |||||||
| Operating Profit |
32,189 | 29,080 | 11 | % | |||||||
| Operating Margin |
52 | % | 53 | % | |||||||
| Institutional Investors: |
|||||||||||
| Revenues |
46,629 | 38,528 | 21 | % | |||||||
| Expenses |
28,173 | 24,450 | 15 | % | |||||||
| Operating Profit |
18,456 | 14,078 | 31 | % | |||||||
| Operating Margin |
40 | % | 37 | % | |||||||
| Investment Managers: |
|||||||||||
| Revenues |
33,994 | 27,285 | 25 | % | |||||||
| Expenses |
24,902 | 22,473 | 11 | % | |||||||
| Operating Profit |
9,092 | 4,812 | 89 | % | |||||||
| Operating Margin |
27 | % | 18 | % | |||||||
| Investments in New Businesses: |
|||||||||||
| Revenues |
1,630 | 1,687 | (3 | %) | |||||||
| Expenses |
4,852 | 5,560 | (13 | %) | |||||||
| Operating Loss |
(3,222 | ) | (3,873 | ) | 17 | % | |||||
| Operating Margin |
n/a | n/a | |||||||||
| LSV: |
|||||||||||
| Revenues |
81,171 | 66,034 | 23 | % | |||||||
| Expenses (1) |
49,897 | 40,938 | 22 | % | |||||||
| Operating Profit |
31,274 | 25,096 | 25 | % | |||||||
| Operating Margin |
39 | % | 38 | % | |||||||
| Consolidated Segment Totals: |
|||||||||||
| Revenues |
$ | 322,725 | $ | 277,133 | 16 | % | |||||
| Expenses |
215,191 | 184,170 | 17 | % | |||||||
| Operating Profit |
$ | 107,534 | $ | 92,963 | 16 | % | |||||
| Operating Margin |
33 | % | 34 | % | |||||||
| (1) | Includes $42,672 and $34,293 for the three month period ended March 31, 2007 and 2006, respectively, of minority interest to the other partners of LSV. |
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, 2007 and 2006 are as follows:
| Three months ended March 31, | ||||||||
| 2007 | 2006 | |||||||
| Total operating profit from business segments |
$ | 107,534 | $ | 92,963 | ||||
| Corporate overhead expenses |
(10,127 | ) | (9,922 | ) | ||||
| Minority interest reflected in segments |
43,592 | 35,616 | ||||||
| LSV Employee Group Expenses (1) |
(1,820 | ) | (1,806 | ) | ||||
| Income from operations |
$ | 139,179 | $ | 116,851 | ||||
| (1) | Includes $1,805 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. |
First-Quarter Business Commentary:
| • | First-quarter results reflect the consolidation of all of SEI’s banking business into the Private Banks segment. This consolidation has a positive effect on revenue growth rates and a negative effect on operating margins when compared to the Private Bank and Trust segment as reported in prior years. |
| • | For the first time, year over year revenue comparisons reflect the consolidation of LSV in both reporting periods; resulting in more normal year over year revenue growth for the company. |
| • | The company’s percentage ownership in LSV remained at 43 percent. In the first-quarter 2007, the company recognized $31.3 million as its portion of the earnings from LSV versus $25.1 million in first-quarter 2006. |
| • | All other major business segments reported double digit revenue gains versus year ago. |
| • | The Investment Advisors, Institutional Investors, Investment Managers and LSV segments all realized double digit operating profit growth versus year ago levels. |
| • | The tax rate for the first-quarter 2007 was just over 37%. |
| • | Assets under management grew by $8.5 billion during first-quarter 2007 to $190.0 billion. |
| • | In the first-quarter 2007, SEI purchased 743,400 shares of its common stock for $45.3 million. |
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM EDT on April 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 870768.
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, 2007, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $382.4 billion in mutual fund and pooled assets and manages $190.0 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.
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
| Three Months Ended March 31, | ||||||||
| 2007 | 2006 | |||||||
| Asset Management, admin. and distribution fees |
$ | 256,398 | $ | 213,712 | ||||
| Information processing and software servicing fees |
54,232 | 50,246 | ||||||
| Transaction–based and trade execution fees |
12,095 | 13,175 | ||||||
| Total Revenues |
322,725 | 277,133 | ||||||
| Commissions and Fees |
42,637 | 35,638 | ||||||
| Compensation, benefits and other personnel |
84,278 | 75,679 | ||||||
| Consulting, outsourcing and professional fees |
20,879 | 18,078 | ||||||
| Data processing and computer related |
10,767 | 8,598 | ||||||
| Facilities, supplies and other costs |
17,560 | 15,035 | ||||||
| Depreciation and amortization |
7,425 | 7,254 | ||||||
| Total Expenses |
183,546 | 160,282 | ||||||
| Income from operations |
139,179 | 116,851 | ||||||
| Minority Interest |
(40,734 | ) | (32,956 | ) | ||||
| Net loss on investments |
(316 | ) | (242 | ) | ||||
| Interest income |
4,051 | 2,654 | ||||||
| Interest expense |
(1,261 | ) | (1,155 | ) | ||||
| Other income |
— | 1,588 | ||||||
| Income before taxes |
100,919 | 86,740 | ||||||
| Income taxes |
37,542 | 31,834 | ||||||
| Net income |
$ | 63,377 | $ | 54,906 | ||||
| Diluted earnings per common share |
$ | .62 | $ | .54 | ||||
| Shares used to calculate diluted earnings per common share |
102,351 | 101,311 | ||||||
| Basic earnings per common share |
$ | .64 | $ | .56 | ||||
| Shares used to calculate basic earnings per common share |
98,957 | 98,758 | ||||||
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
| (unaudited) March 31, |
December 31, 2006 | |||||
| Assets |
||||||
| Cash and short-term investments |
$ | 271,485 | $ | 286,948 | ||
| Restricted Cash |
10,250 | 10,250 | ||||
| Receivables |
250,869 | 244,599 | ||||
| Securities owned |
16,558 | 16,431 | ||||
| Other current assets |
30,293 | 28,245 | ||||
| Total current assets |
579,455 | 586,473 | ||||
| Property and Equipment, net |
134,435 | 130,732 | ||||
| Investments available for sale |
75,560 | 71,690 | ||||
| Capitalized Software, net |
197,044 | 180,014 | ||||
| Goodwill |
22,842 | 22,842 | ||||
| Intangible asset |
65,922 | 67,836 | ||||
| Other assets |
21,456 | 20,118 | ||||
| Total assets |
$ | 1,096,714 | $ | 1,079,705 | ||
| Liabilities |
||||||
| Current liabilities |
$ | 148,355 | $ | 196,127 | ||
| Long-term debt |
62,719 | 67,538 | ||||
| Deferred income taxes |
79,871 | 76,148 | ||||
| Other long term liabilities |
10,091 | — | ||||
| Minority Interest |
117,269 | 109,380 | ||||
| Shareholders’ Equity |
678,409 | 630,512 | ||||
| Total liabilities and shareholders’ equity |
$ | 1,096,714 | $ | 1,079,705 | ||
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
| Mar. 31, 2006 |
Jun. 30, 2006 |
Sep. 30, 2006 |
Dec. 31, 2006 |
Mar. 31, 2007 | |||||||||||
| Private Banks: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 14,322 | $ | 14,517 | $ | 15,055 | $ | 16,806 | $ | 18,196 | |||||
| Collective Trust Fund prgm. |
1,581 | 1,459 | 1,460 | 1,251 | 1,148 | ||||||||||
| Liquidity funds |
7,139 | 7,627 | 7,707 | 8,513 | 8,241 | ||||||||||
| Total assets under mgmt. |
$ | 23,042 | $ | 23,603 | $ | 24,222 | $ | 26,570 | $ | 27,585 | |||||
| Client assets under admin. |
19,775 | 19,210 | 15,001 | 14,738 | 14,864 | ||||||||||
| Total assets |
$ | 42,817 | $ | 42,813 | $ | 39,223 | $ | 41,308 | $ | 42,449 | |||||
| Investment Advisors: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 31,815 | $ | 30,948 | $ | 32,205 | $ | 34,096 | $ | 35,225 | |||||
| Collective Trust Fund prgm. |
2,482 | 2,473 | 2,425 | 2,480 | 2,491 | ||||||||||
| Liquidity funds |
1,017 | 1,306 | 1,263 | 1,421 | 1,404 | ||||||||||
| Total assets under mgmt. |
$ | 35,314 | $ | 34,727 | $ | 35,893 | $ | 37,997 | $ | 39,120 | |||||
| Institutional Investors: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 32,083 | $ | 32,709 | $ | 34,674 | $ | 37,720 | $ | 39,504 | |||||
| Collective Trust Fund prgm. |
1,157 | 1,147 | 1,150 | 1,081 | 1,078 | ||||||||||
| Liquidity funds |
4,076 | 3,823 | 4,167 | 3,371 | 5,072 | ||||||||||
| Total assets under mgmt. |
$ | 37,316 | $ | 37,679 | $ | 39,991 | $ | 42,172 | $ | 45,654 | |||||
| Investment Managers: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 33 | $ | 34 | $ | 34 | $ | 30 | $ | 29 | |||||
| Collective Trust Fund prgm. |
9,096 | 8,923 | 9,009 | 8,675 | 8,300 | ||||||||||
| Liquidity funds |
505 | 363 | 253 | 215 | 178 | ||||||||||
| Total assets under mgmt. |
$ | 9,634 | $ | 9,320 | $ | 9,296 | $ | 8,920 | $ | 8,507 | |||||
| Client assets under admin. |
151,688 | 153,406 | 161,000 | 170,344 | 177,520 | ||||||||||
| Total assets |
$ | 161,322 | $ | 162,726 | $ | 170,296 | $ | 179,264 | $ | 186,027 | |||||
| Investments in New Businesses: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 617 | $ | 626 | $ | 685 | $ | 805 | $ | 843 | |||||
| Liquidity funds |
67 | 49 | 64 | 53 | 43 | ||||||||||
| Total assets under admin |
$ | 684 | $ | 675 | $ | 749 | $ | 858 | $ | 886 | |||||
| LSV Asset Management |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 54,128 | $ | 55,687 | $ | 58,785 | $ | 64,970 | $ | 68,225 | |||||
| Consolidated: |
|||||||||||||||
| Equity/Fixed Income prgms (A,B) |
$ | 132,998 | $ | 134,521 | $ | 141,438 | $ | 154,427 | $ | 162,022 | |||||
| Collective Trust Fund prgm. |
14,316 | 14,002 | 14,044 | 13,487 | 13,017 | ||||||||||
| Liquidity funds (B) |
12,804 | 13,168 | 13,454 | 13,573 | 14,938 | ||||||||||
| Total assets under mgmt. |
$ | 160,118 | $ | 161,691 | $ | 168,936 | $ | 181,487 | $ | 189,977 | |||||
| Client assets under admin. |
171,463 | 172,616 | 176,001 | 185,082 | 192,384 | ||||||||||
| Total assets |
$ | 331,581 | $ | 334,307 | $ | 344,937 | $ | 366,569 | $ | 382,361 | |||||
| (A) | Equity/Fixed Income programs include $3,646 of assets invested in SEI’s Asset Allocation Funds at 3/31/07 |
| (B) | In addition to the numbers presented, SEI also administers an additional $9,115 in Funds of Funds assets (as of March 31, 2007) on which SEI does not earn an administration fee. |