SEC Filing

SEI

View:

Download DOC

Download PDF

Download XLS

Form 8-K

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

July 21, 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 Thursday, July 21, 2011, SEI Investments Company issued a press release announcing its financial and operating results for the second quarter ended June 30, 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 July 21, 2011 of SEI Investments Company related to the Company’s financial and operating results for the second quarter ended June 30, 2011.

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: July 21, 2011	By:	/s/ Dennis J. McGonigle
		Dennis J. McGonigle
		Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description

99.1		Press Release dated July 21, 2011 of SEI Investments Company related to the Company’s financial and operating results for the second quarter ended June 30, 2011.

Press Release

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: 8

FOR IMMEDIATE RELEASE

SEI REPORTS SECOND-QUARTER 2011 FINANCIAL RESULTS

OAKS, Pa., July 21, 2011 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for second-quarter 2011. Diluted earnings per share were $.29 in second-quarter 2011 compared to $.28 in second-quarter 2010.


Consolidated Overview	For the Three Months							For the Six Months
(In thousands, except earnings per share)	Ended June 30,							Ended June 30,
	2011		2010		%			2011		2010		%

Revenues	$	237,760	$	228,388		4	%	$	470,253	$	449,923		5	%
Net Income attributable to SEI		53,603		53,478		—	%		111,331		112,898		(1	%)
Diluted Earnings Per Share	$	0.29	$	0.28		4	%	$	0.59	$	0.59		—	%

“Our second-quarter results came in essentially flat versus both year-ago and first-quarter levels,” said Alfred P. West, Jr., SEI Chairman and CEO. “These results reflect the increased Global Wealth Platform spending, which is preparing us to launch GWP in the US for our bank and advisor segments. While we’re excited about the opportunity that GWP provides, we are not satisfied with short-term performance. We are working hard to increase revenues and control costs. While we believe our accelerated spending will continue to put pressure on financial results in the short-term, particularly in the banking segment, we are confident that we are well-positioned for long-term growth in all of our business segments.”

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


(In thousands)	For the Three Month Period									For the Six Month Period
	Ended June 30,									Ended June 30,
	2011			2010			%			2011			2010			%
Private Banks:
Revenues	$	87,873		$	90,091			(2	%)	$	174,582		$	177,212			(1	%)
Expenses		86,274			78,612			10	%		168,677			156,211			8	%

Operating Profit	$	1,599		$	11,479			(86	%)	$	5,905		$	21,001			(72	%)
Operating Margin		2	%		13	%					3	%		12	%

Investment Advisors:
Revenues		49,768			46,398			7	%		97,876			91,861			7	%
Expenses		27,734			28,120			(1	%)		54,774			55,703			(2	%)

Operating Profit		22,034			18,278			21	%		43,102			36,158			19	%
Operating Margin		44	%		39	%					44	%		39	%

Institutional Investors:
Revenues		54,731			51,446			6	%		107,916			101,785			6	%
Expenses		27,406			26,576			3	%		54,359			52,956			3	%

Operating Profit		27,325			24,870			10	%		53,557			48,829			10	%
Operating Margin		50	%		48	%					50	%		48	%

Investment Managers:
Revenues		44,452			39,440			13	%		87,893			77,050			14	%
Expenses		29,282			25,596			14	%		57,281			50,155			14	%

Operating Profit		15,170			13,844			10	%		30,612			26,895			14	%
Operating Margin		34	%		35	%					35	%		35	%

Investments in New Businesses:
Revenues		936			1,013			(8	%)		1,986			2,015			(1	%)
Expenses		2,920			2,739			7	%		6,045			5,400			12	%

Operating Loss		(1,984	)		(1,726	)		15	%		(4,059	)		(3,385	)		20	%
Operating Margin		N/A			N/A						N/A			N/A

Totals:
Revenues	$	237,760		$	228,388			4	%	$	470,253		$	449,923			5	%
Expenses		173,616			161,643			7	%		341,136			320,425			6	%
Corporate overhead expenses		10,720			9,941			8	%		21,368			19,658			9	%
Noncontrolling interest reflected in segments		(533	)		(368	)		N/A			(805	)		(677	)		N/A

Income from operations	$	53,957		$	57,172			(6	%)	$	108,554		$	110,517			(2	%)

Second-Quarter Business Commentary:

•

Asset management, administration, and distribution fee revenues increased, primarily due to higher asset balances under management and administration from existing clients as a result of improved capital markets.

•

Assets under management increased $1.1 billion to $180.3 billion at June 30, 2011, as compared to $179.2 billion at March 31, 2011.

•

Sales events, net of client losses, during second-quarter 2011 totaled $9.0 million and are expected to generate net annualized recurring revenues of approximately $8.4 million.

•

Total consolidated expenses in second-quarter 2011 reflect increased spending on the Global Wealth Platform. During the second-quarter 2011, we incurred additional costs related to system enhancements to meet new and existing client requirements as well as production and maintenance costs to run the platform. These costs mainly include personnel, consulting, and outsourcing and are the primary cause for the expense increase in the Private Banks segment.

•

Prior-year Private Banks segment revenues and profits include $5.0 million of one-time contract termination fees from a bank client lost as a result of an acquisition.

•

Net income attributable to SEI includes losses from SIV securities of $1.9 million in second-quarter 2011 compared to gains of $3.9 million in second-quarter 2010.

•

The effective tax rates were 34.7 percent for the second-quarter 2011 as compared to 37.8 percent for the second-quarter 2010. The decrease in the tax rate was due to tax planning strategies.

•

In the second-quarter 2011, SEI purchased 2.5 million shares of its common stock for $55.7 million.

•

In the second-quarter 2011, we made a $20.0 million payment on our long-term debt. As of June 30, 2011, the remaining balance on our debt is $40.0 million.

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on July 21, 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) 1-866-847-7860; (International) 703-639-1427, access code 210438.

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 June 30, 2011, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $430 billion in mutual fund and pooled assets or separately managed assets, including $180 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.

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,
	2011			2010

Asset management, admin. and distribution fees	$	172,331		$	154,774
Information processing and software servicing fees		56,035			61,296
Transaction–based and trade execution fees		9,394			12,318


Total revenues		237,760			228,388

Subadvisory, distribution and other asset mgmt costs		26,304			24,600
Software royalties and other information processing costs		7,188			6,374
Brokerage commissions		6,599			8,666
Compensation, benefits and other personnel		72,613			67,012
Stock-based compensation		3,810			6,278
Consulting, outsourcing and professional fees		29,398			22,702
Data processing and computer related		11,610			10,417
Facilities, supplies and other costs		14,098			13,586
Amortization		6,792			5,997
Depreciation		5,391			5,584


Total expenses		183,803			171,216

Income from operations		53,957			57,172

Net (loss) gain on investments		(1,948	)		3,594
Interest and dividend income		1,436			1,502
Interest expense		(155	)		(415	)
Other income, net		—			1,070
Equity in earnings of unconsolidated affiliate		29,530			23,519


Income before taxes		82,820			86,442

Income taxes		28,707			32,603


Net income		54,113			53,839


Less: Net income attributable to noncontrolling interest		(510	)		(361	)


Net income attributable to SEI	$	53,603		$	53,478


Diluted earnings per common share	$	0.29		$	0.28


Shares used to calculate diluted earnings per common share		187,020			191,500


Basic earnings per common share	$	0.29		$	0.28


Shares used to calculate basic earnings per common share		184,585			189,356

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Six Months Ended June 30,
	2011			2010

Asset management, admin. and distribution fees	$	339,835		$	307,712
Information processing and software servicing fees		111,859			119,922
Transaction–based and trade execution fees		18,559			22,289


Total revenues		470,253			449,923

Subadvisory, distribution and other asset mgmt costs		52,600			50,183
Software royalties and other information processing costs		14,205			12,448
Brokerage commissions		13,180			16,091
Compensation, benefits and other personnel		143,638			134,228
Stock-based compensation		7,542			12,935
Consulting, outsourcing and professional fees		55,396			43,409
Data processing and computer related		22,913			20,345
Facilities, supplies and other costs		28,200			27,080
Amortization		13,023			11,897
Depreciation		11,002			10,790


Total expenses		361,699			339,406

Income from operations		108,554			110,517

Net gain on investments		5,330			21,073
Interest and dividend income		2,980			3,202
Interest expense		(359	)		(886	)
Other income, net		—			1,070
Equity in earnings of unconsolidated affiliate		58,479			47,593


Income before taxes		174,984			182,569

Income taxes		62,831			68,872


Net income		112,153			113,697


Less: Net income attributable to the noncontrolling interest		(822	)		(799	)


Net income attributable to SEI	$	111,331		$	112,898


Diluted earnings per common share	$	0.59		$	0.59


Shares used to calculate diluted earnings per common share		187,757			191,281


Basic earnings per common share	$	0.60		$	0.60


Shares used to calculate basic earnings per common share		185,186			189,652

SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)


	(Unaudited) June 30, 2011		December 31, 2010
Assets

Cash and short-term investments	$	442,311	$	496,292
Restricted cash		4,000		4,000
Receivables, net		180,660		165,772
Securities owned		21,032		—
Other current assets		17,130		17,655


Total current assets		665,133		683,719

Property and equipment, net		136,543		140,568
Marketable securities		138,479		179,364
Capitalized software, net		302,337		294,332
Investment in unconsolidated affiliate		72,439		64,409
Other assets, net		15,874		14,831


Total assets	$	1,330,805	$	1,377,223


Liabilities

Current liabilities	$	104,551	$	127,600
Long-term debt		40,000		95,000
Deferred income taxes		91,643		92,253
Long-term liabilities		7,549		5,645

Total SEI Investments Company shareholders’ equity		1,070,160		1,041,570
Noncontrolling interest		16,902		15,155

Total Equity		1,087,062		1,056,725

Total liabilities and equity	$	1,330,805	$	1,377,223

SEI INVESTMENTS COMPANY

ASSET BALANCES

(In millions)

(Unaudited)


	Jun. 30, 2010		Sep. 30, 2010		Dec. 31, 2010		Mar. 31, 2011		Jun. 30, 2011
Private Banks:
Equity/Fixed Income prgms.	$	11,769	$	12,842	$	13,512	$	14,809	$	16,720
Collective Trust Fund prgms.		640		615		626		576		504
Liquidity funds		5,175		5,034		5,120		5,217		4,918

Total assets under mgmt.	$	17,584	$	18,491	$	19,258	$	20,602	$	22,142

Client assets under admin.		10,335		10,557		10,672		11,227		10,994

Total assets	$	27,919	$	29,048	$	29,930	$	31,829	$	33,136

Investment Advisors:
Equity/Fixed Income prgms.	$	23,699	$	26,091	$	27,680	$	28,296	$	28,410
Collective Trust Fund prgms.		2,066		2,028		1,820		1,618		1,499
Liquidity funds		2,635		2,253		1,641		1,551		1,651

Total assets under mgmt.	$	28,400	$	30,372	$	31,141	$	31,465	$	31,560

Institutional Investors:
Equity/Fixed Income prgms.	$	43,506	$	47,667	$	48,699	$	51,287	$	51,180
Collective Trust Fund prgms.		643		641		623		608		482
Liquidity funds		2,558		3,475		3,382		3,202		3,146

Total assets under mgmt.	$	46,707	$	51,783	$	52,704	$	55,097	$	54,808

Investment Managers:
Equity/Fixed Income prgms.	$	1	$	1	$	1	$	37	$	50
Collective Trust Fund prgms.		7,366		7,781		8,177		8,841		10,372
Liquidity funds		428		423		313		139		179

Total assets under mgmt.	$	7,795	$	8,205	$	8,491	$	9,017	$	10,601

Client assets under admin. (A)		220,459		227,777		233,079		238,335		238,432

Total assets	$	228,254	$	235,982	$	241,570	$	247,352	$	249,033

Investments in New Businesses:
Equity/Fixed Income prgms.	$	496	$	533	$	569	$	598	$	558
Liquidity funds		74		82		65		56		41

Total assets under mgmt.	$	570	$	615	$	634	$	654	$	599

LSV Asset Management
Equity/Fixed Income prgms.	$	47,822	$	54,492	$	60,058	$	62,370	$	60,626

Consolidated:
Equity/Fixed Income prgms (B)	$	127,293	$	141,626	$	150,519	$	157,397	$	157,544
Collective Trust Fund prgms.		10,715		11,065		11,246		11,643		12,857
Liquidity funds		10,870		11,267		10,521		10,165		9,935

Total assets under mgmt.	$	148,878	$	163,958	$	172,286	$	179,205	$	180,336

Client assets under admin. (C)		230,794		238,334		243,751		249,562		249,426

Total assets	$	379,672	$	402,292	$	416,037	$	428,767	$	429,762

(A)	Client assets under administration in the Investment Managers segment include $52.2 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of June 30, 2011).

(B)	Equity/Fixed Income programs include $2.4 billion of assets invested in various asset allocation funds at June 30, 2011.

(C)	In addition to the numbers presented, SEI also administers an additional $4.7 billion in Funds of Funds assets (as of June 30, 2011) on which SEI does not earn an administration fee.