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 27, 2011
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 27, 2011, SEI Investments Company issued a press release announcing its financial and operating results for the first quarter ended March 31, 2011. 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 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 27, 2011 of SEI Investments Company related to the Company’s financial and operating results for the first quarter ended March 31, 2011. | |
2
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 27, 2011 | By: | /s/ Dennis J. McGonigle | ||||
| Dennis J. McGonigle | ||||||
| Chief Financial Officer | ||||||
3
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release dated April 27, 2011 of SEI Investments Company related to the Company’s financial and operating results for the first quarter ended March 31, 2011. | |
4
Exhibit 99.1
NEWS FROM SEI
| Investor Contact: | Media Contact: | |
| Murray Louis | Dana Grosser | |
| SEI | SEI | |
| (610) 676-1932 | (610) 676-2459 | |
| mlouis@seic.com | dgrosser@seic.com | |
| Pages: 7 |
FOR IMMEDIATE RELEASE
SEI REPORTS FIRST-QUARTER 2011 FINANCIAL RESULTS
OAKS, Pa., April 27, 2011 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for first-quarter 2011. Diluted earnings per share were $.31 in first-quarter 2011 and first-quarter 2010. These results include gains from Structured Investment Vehicles (SIV) securities of $6.9 million or approximately $.02 diluted earnings per share in first quarter 2011 compared to $17.3 million or approximately $.05 diluted earnings per share in first-quarter 2010.
| Consolidated Overview | For the Three Months | |||||||||||
| (In thousands, except earnings per share) |
Ended March 31, | |||||||||||
| 2011 | 2010 | % | ||||||||||
| Revenues |
$ | 232,493 | $ | 221,535 | 5 | % | ||||||
| Net Income attributable to SEI |
57,728 | 59,420 | (3 | %) | ||||||||
| Diluted Earnings Per Share |
$ | 0.31 | $ | 0.31 | — | |||||||
“Compared to a year ago, our first-quarter results reflect improved capital markets and growing acceptance for all of our services,” said Alfred P. West, Jr., SEI Chairman and CEO. “First-quarter profits were impacted by increased spending on both development and operational support for the Global Wealth Platform as we increased development for U.S. entry and enhanced our U.K. services. We are confident we are well-positioned for long-term growth in both of these markets.”
1
Summary of First-Quarter Results by Business Segment
| (In thousands) |
For the Three Month Period | |||||||||||
| Ended March 31, | ||||||||||||
| 2011 | 2010 | % | ||||||||||
| Private Banks: |
||||||||||||
| Revenues |
$ | 86,709 | $ | 87,121 | — | |||||||
| Expenses |
82,403 | 77,599 | 6 | % | ||||||||
| Operating Profit |
$ | 4,306 | $ | 9,522 | (55 | %) | ||||||
| Operating Margin |
5 | % | 11 | % | ||||||||
| Investment Advisors: |
||||||||||||
| Revenues |
48,108 | 45,463 | 6 | % | ||||||||
| Expenses |
27,040 | 27,583 | (2 | %) | ||||||||
| Operating Profit |
21,068 | 17,880 | 18 | % | ||||||||
| Operating Margin |
44 | % | 39 | % | ||||||||
| Institutional Investors: |
||||||||||||
| Revenues |
53,185 | 50,339 | 6 | % | ||||||||
| Expenses |
26,953 | 26,380 | 2 | % | ||||||||
| Operating Profit |
26,232 | 23,959 | 9 | % | ||||||||
| Operating Margin |
49 | % | 48 | % | ||||||||
| Investment Managers: |
||||||||||||
| Revenues |
43,441 | 37,610 | 16 | % | ||||||||
| Expenses |
27,999 | 24,559 | 14 | % | ||||||||
| Operating Profit |
15,442 | 13,051 | 18 | % | ||||||||
| Operating Margin |
36 | % | 35 | % | ||||||||
| Investments in New Businesses: |
||||||||||||
| Revenues |
1,050 | 1,002 | 5 | % | ||||||||
| Expenses |
3,125 | 2,661 | 17 | % | ||||||||
| Operating Loss |
(2,075 | ) | (1,659 | ) | N/A | |||||||
| Operating Margin |
N/A | N/A | ||||||||||
| Totals: |
||||||||||||
| Revenues |
$ | 232,493 | $ | 221,535 | 5 | % | ||||||
| Expenses |
167,520 | 158,782 | 6 | % | ||||||||
| Corporate overhead expenses |
10,648 | 9,717 | 10 | % | ||||||||
| Noncontrolling interest reflected in segments |
(272 | ) | (309 | ) | N/A | |||||||
| Income from operations |
$ | 54,597 | $ | 53,345 | 2 | % | ||||||
2
First-Quarter Business Commentary:
| • | Sales events, net of client losses, during first-quarter 2011 totaled $13.8 million and are expected to generate net annualized recurring revenues of approximately $12.5 million. |
| • | Asset management, administration, and distribution fee revenues increased primarily due to higher asset balances under management and administration from existing clients because of improved capital markets. |
| • | Assets under management increased $6.9 billion to $179.2 billion at March 31, 2011, as compared to $172.3 billion at December 31, 2010. |
| • | Total consolidated expenses in first-quarter 2011 reflect increased spending on the Global Wealth Platform (GWP). During the first-quarter 2011, we incurred additional costs related to production and maintenance to run the platform as well as additional costs associated with the ongoing development of GWP. We estimate these additional costs to be approximately $3.0 million above fourth-quarter 2010 levels. |
| • | Net income attributable to SEI and diluted earnings per share results include gains from SIV securities of $6.9 million or approximately $.02 diluted earnings per share in first-quarter 2011 compared to $17.3 million or approximately $.05 diluted earnings per share in first-quarter 2010. Excluding the gains from SIV securities, diluted earnings per share were $.29 in first-quarter 2011 compared to $.26 in first-quarter 2010. |
| • | In the first-quarter 2011, SEI purchased 1,725,000 shares of its common stock for $39.5 million. |
3
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on April 27, 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) 1-800-475-6701; (International) 320-365-3844, access code 199003.
About SEI
SEI (NASDAQ:SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of March 31, 2011, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $429 billion in mutual fund and pooled assets or separately managed assets, including $179 billion in assets under management and $250 billion in client assets under administration. 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.
4
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| Asset management, admin. and distribution fees |
$ | 167,504 | $ | 152,938 | ||||
| Information processing and software servicing fees |
55,824 | 58,626 | ||||||
| Transaction–based and trade execution fees |
9,165 | 9,971 | ||||||
| Total revenues |
232,493 | 221,535 | ||||||
| Subadvisory, distribution and other asset mgmt costs |
26,296 | 25,583 | ||||||
| Software royalties and other information processing costs |
7,017 | 6,074 | ||||||
| Brokerage commissions |
6,581 | 7,425 | ||||||
| Compensation, benefits and other personnel |
71,025 | 67,216 | ||||||
| Stock based compensation |
3,732 | 6,657 | ||||||
| Consulting, outsourcing and professional fees |
25,998 | 20,707 | ||||||
| Data processing and computer related |
11,303 | 9,928 | ||||||
| Facilities, supplies and other costs |
14,102 | 13,494 | ||||||
| Amortization |
6,231 | 5,900 | ||||||
| Depreciation |
5,611 | 5,206 | ||||||
| Total expenses |
177,896 | 168,190 | ||||||
| Income from operations |
54,597 | 53,345 | ||||||
| Net gain on investments |
7,278 | 17,479 | ||||||
| Interest and dividend income |
1,544 | 1,700 | ||||||
| Interest expense |
(204 | ) | (471 | ) | ||||
| Equity in earnings of unconsolidated affiliate |
28,949 | 24,074 | ||||||
| Income before taxes |
92,164 | 96,127 | ||||||
| Income taxes |
34,124 | 36,269 | ||||||
| Net income |
58,040 | 59,858 | ||||||
| Less: Net income attributable to noncontrolling interest |
(312 | ) | (438 | ) | ||||
| Net income attributable to SEI |
$ | 57,728 | $ | 59,420 | ||||
| Diluted earnings per common share |
$ | 0.31 | $ | 0.31 | ||||
| Shares used to calculate diluted earnings per common share |
188,495 | 191,062 | ||||||
| Basic earnings per common share |
$ | 0.31 | $ | 0.31 | ||||
| Shares used to calculate basic earnings per common share |
185,787 | 189,948 | ||||||
5
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
| (Unaudited) | ||||||||
| March 31, 2011 |
December 31, 2010 |
|||||||
| Assets |
||||||||
| Cash and short-term investments |
$ | 498,039 | $ | 496,292 | ||||
| Restricted cash |
4,000 | 4,000 | ||||||
| Receivables, net |
162,186 | 165,772 | ||||||
| Securities owned |
20,009 | — | ||||||
| Other current assets |
18,513 | 17,655 | ||||||
| Total current assets |
702,747 | 683,719 | ||||||
| Property and equipment, net |
142,333 | 140,568 | ||||||
| Marketable securities |
148,384 | 179,364 | ||||||
| Capitalized software, net |
299,006 | 294,332 | ||||||
| Investment in unconsolidated affiliate |
69,237 | 64,409 | ||||||
| Other assets, net |
16,328 | 14,831 | ||||||
| Total assets |
$ | 1,378,035 | $ | 1,377,223 | ||||
| Liabilities |
||||||||
| Current liabilities |
$ | 125,066 | $ | 127,600 | ||||
| Long-term debt |
60,000 | 95,000 | ||||||
| Deferred income taxes |
94,074 | 92,253 | ||||||
| Long-term liabilities |
5,939 | 5,645 | ||||||
| Total SEI Investments Company shareholders’ equity |
1,077,069 | 1,041,570 | ||||||
| Noncontrolling interest |
15,887 | 15,155 | ||||||
| Total Equity |
1,092,956 | 1,056,725 | ||||||
| Total liabilities and equity |
$ | 1,378,035 | $ | 1,377,223 | ||||
6
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
| Mar. 31, 2010 |
Jun. 30, 2010 |
Sep. 30, 2010 |
Dec. 31, 2010 |
Mar. 31, 2011 |
||||||||||||||||
| Private Banks: |
||||||||||||||||||||
| Equity/Fixed Income prgms. |
$ | 12,635 | $ | 11,769 | $ | 12,842 | $ | 13,512 | $ | 14,809 | ||||||||||
| Collective Trust Fund prgm. |
1,023 | 640 | 615 | 626 | 576 | |||||||||||||||
| Liquidity funds |
5,329 | 5,175 | 5,034 | 5,120 | 5,217 | |||||||||||||||
| Total assets under mgmt. |
$ | 18,987 | $ | 17,584 | $ | 18,491 | $ | 19,258 | $ | 20,602 | ||||||||||
| Client assets under admin. |
11,429 | 10,335 | 10,557 | 10,672 | 11,227 | |||||||||||||||
| Total assets |
$ | 30,416 | $ | 27,919 | $ | 29,048 | $ | 29,930 | $ | 31,829 | ||||||||||
| Investment Advisors: |
||||||||||||||||||||
| Equity/Fixed Income prgms. |
$ | 26,222 | $ | 23,699 | $ | 26,091 | $ | 27,680 | $ | 28,296 | ||||||||||
| Collective Trust Fund prgm. |
2,284 | 2,066 | 2,028 | 1,820 | 1,618 | |||||||||||||||
| Liquidity funds |
1,731 | 2,635 | 2,253 | 1,641 | 1,551 | |||||||||||||||
| Total assets under mgmt. |
$ | 30,237 | $ | 28,400 | $ | 30,372 | $ | 31,141 | $ | 31,465 | ||||||||||
| Institutional Investors: |
||||||||||||||||||||
| Equity/Fixed Income prgms. |
$ | 45,891 | $ | 43,506 | $ | 47,667 | $ | 48,699 | $ | 51,287 | ||||||||||
| Collective Trust Fund prgm. |
657 | 643 | 641 | 623 | 608 | |||||||||||||||
| Liquidity funds |
3,198 | 2,558 | 3,475 | 3,382 | 3,202 | |||||||||||||||
| Total assets under mgmt. |
$ | 49,746 | $ | 46,707 | $ | 51,783 | $ | 52,704 | $ | 55,097 | ||||||||||
| Investment Managers: |
||||||||||||||||||||
| Equity/Fixed Income prgms. |
$ | 2 | $ | 1 | $ | 1 | $ | 1 | $ | 37 | ||||||||||
| Collective Trust Fund prgm. |
7,639 | 7,366 | 7,781 | 8,177 | 8,841 | |||||||||||||||
| Liquidity funds |
447 | 428 | 423 | 313 | 139 | |||||||||||||||
| Total assets under mgmt. |
$ | 8,088 | $ | 7,795 | $ | 8,205 | $ | 8,491 | $ | 9,017 | ||||||||||
| Client assets under admin. (A) |
220,807 | 220,459 | 227,777 | 233,079 | 238,335 | |||||||||||||||
| Total assets |
$ | 228,895 | $ | 228,254 | $ | 235,982 | $ | 241,570 | $ | 247,352 | ||||||||||
| Investments in New Businesses: |
||||||||||||||||||||
| Equity/Fixed Income prgms. |
$ | 534 | $ | 496 | $ | 533 | $ | 569 | $ | 598 | ||||||||||
| Liquidity funds |
72 | 74 | 82 | 65 | 56 | |||||||||||||||
| Total assets under mgmt. |
$ | 606 | $ | 570 | $ | 615 | $ | 634 | $ | 654 | ||||||||||
| LSV Asset Management |
||||||||||||||||||||
| Equity/Fixed Income prgms. |
$ | 54,189 | $ | 47,822 | $ | 54,492 | $ | 60,058 | $ | 62,370 | ||||||||||
| Consolidated: |
||||||||||||||||||||
| Equity/Fixed Income prgms (B) |
$ | 139,473 | $ | 127,293 | $ | 141,626 | $ | 150,519 | $ | 157,397 | ||||||||||
| Collective Trust Fund prgm. |
11,603 | 10,715 | 11,065 | 11,246 | 11,643 | |||||||||||||||
| Liquidity funds |
10,777 | 10,870 | 11,267 | 10,521 | 10,165 | |||||||||||||||
| Total assets under mgmt. |
$ | 161,853 | $ | 148,878 | $ | 163,958 | $ | 172,286 | $ | 179,205 | ||||||||||
| Client assets under admin. (C) |
232,236 | 230,794 | 238,334 | 243,751 | 249,562 | |||||||||||||||
| Total assets |
$ | 394,089 | $ | 379,672 | $ | 402,292 | $ | 416,037 | $ | 428,767 | ||||||||||
| (A) | Client assets under administration in the Investment Managers segment include $54.0 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2011). |
| (B) | Equity/Fixed Income programs include $2.3 billion of assets invested in various asset allocation funds at March 31, 2011. |
| (C) | In addition to the numbers presented, SEI also administers an additional $5.1 billion in Funds of Funds assets (as of March 31, 2011) on which SEI does not earn an administration fee. |
7