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
October 23, 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 Number) | (IRS Employer Identification Number) |
1 Freedom Valley Drive
Oaks, Pennsylvania 19456
(Address of principal executive offices) (Zip code)
(610) 676-1000
(Registrant’s 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, October 25, 2007, SEI Investments Company issued a press release announcing its financial and operating results for the third quarter ended September 30, 2007. A copy of the press release is furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference.
| Item 8.01. | Other Events. |
On Tuesday, October 23, 2007, the Company issued a press release announcing the Company’s Board of Directors has approved an increase in the Company’s stock repurchase program by an additional $100 million. A copy of the press release is furnished as Exhibit 99.2 and incorporated in this Item 8.01 by reference.
As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 2.02, Item 8.01, Exhibit 99.1 and Exhibit 99.2 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 October 25, 2007 of SEI Investments Company announcing its financial and operating results for the third quarter ended September 30, 2007. | |
| 99.2 | Press Release dated October 23, 2007 of SEI Investments Company announcing an increase in the Company’s stock repurchase program by an additional $100 million. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SEI INVESTMENTS COMPANY | ||||
| Date: October 25, 2007 | By: | /s/ Dennis J. McGonigle | ||
| Dennis J. McGonigle | ||||
| Chief Financial Officer | ||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release dated October 25, 2007 of SEI Investments Company announcing its financial and operating results for the third quarter ended September 30, 2007. | |
| 99.2 | Press Release dated October 23, 2007 of SEI Investments Company announcing an increase in the Company’s stock repurchase program by an additional $100 million. | |
Exhibit 99.1
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: | Eight |
SEI Reports Third-Quarter 2007 Results
Net Income Up 21% on Revenue Gains of 17%
OAKS, Pa., October 25, 2007 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for third-quarter 2007, reporting increases in revenues, net income and earnings per share, compared to the corresponding period for the prior year.
Consolidated Overview
| For the Three Months | For the Nine Months | |||||||||||||||||
| (In thousands, except earnings per share) | Ended September 30, | Ended September 30, | ||||||||||||||||
| 2007 | 2006 | % | 2007 | 2006 | % | |||||||||||||
| Revenues |
$ | 349,636 | $ | 298,084 | 17 | % | $ | 1,015,619 | $ | 860,235 | 18 | % | ||||||
| Net Income Before Taxes |
111,727 | 88,724 | 26 | % | 324,748 | 260,702 | 25 | % | ||||||||||
| Net Income |
73,299 | 60,549 | 21 | % | 206,177 | 173,366 | 19 | % | ||||||||||
| Diluted Earnings Per Share |
$ | .37 | $ | .30 | 23 | % | $ | 1.02 | $ | .85 | 20 | % | ||||||
“We continue to be satisfied with our quarterly results,” said Alfred P. West, Jr., SEI Chairman and CEO.
“We are beginning to realize increased contributions to growth from our core businesses. Our first installation of the global wealth platform continues to meet our expectations and, we continue to make steady progress on our other key investments. In the long run, we remain firm in our belief that what we are doing will provide our clients with increased opportunities for success and allow us to grow our future revenues and profits more rapidly.”
Summary of Third-Quarter and Year to Date Results by Business Segment
| (In thousands) | For the Three Month Period Ended September 30, |
For the Nine Month Period Ended September 30, |
||||||||||||||||||||
| 2007 | 2006 | % | 2007 | 2006 | % | |||||||||||||||||
| Private Banks: |
||||||||||||||||||||||
| Revenues |
$ | 104,280 | $ | 94,058 | 11 | % | $ | 302,108 | $ | 273,176 | 11 | % | ||||||||||
| Expenses |
82,846 | 71,512 | 16 | % | 241,668 | 204,666 | 18 | % | ||||||||||||||
| Operating Profit |
$ | 21,434 | $ | 22,546 | (5 | )% | $ | 60,440 | $ | 68,510 | (12 | )% | ||||||||||
| Operating Margin |
21 | % | 24 | % | 20 | % | 25 | % | ||||||||||||||
| Investment Advisors: |
||||||||||||||||||||||
| Revenues |
65,715 | 55,117 | 19 | % | 192,724 | 165,646 | 16 | % | ||||||||||||||
| Expenses |
31,257 | 27,535 | 14 | % | 91,550 | 82,745 | 11 | % | ||||||||||||||
| Operating Profit |
34,458 | 27,582 | 25 | % | 101,174 | 82,901 | 22 | % | ||||||||||||||
| Operating Margin |
52 | % | 50 | % | 52 | % | 50 | % | ||||||||||||||
| Institutional Investors: |
||||||||||||||||||||||
| Revenues |
51,275 | 42,115 | 22 | % | 146,815 | 119,166 | 23 | % | ||||||||||||||
| Expenses |
30,980 | 27,210 | 14 | % | 89,334 | 77,814 | 15 | % | ||||||||||||||
| Operating Profit |
20,295 | 14,905 | 36 | % | 57,481 | 41,352 | 39 | % | ||||||||||||||
| Operating Margin |
40 | % | 35 | % | 39 | % | 35 | % | ||||||||||||||
| Investment Managers: |
||||||||||||||||||||||
| Revenues |
35,844 | 29,802 | 20 | % | 105,131 | 86,138 | 22 | % | ||||||||||||||
| Expenses |
25,445 | 22,131 | 15 | % | 74,649 | 67,158 | 11 | % | ||||||||||||||
| Operating Profit |
10,399 | 7,671 | 36 | % | 30,482 | 18,980 | 61 | % | ||||||||||||||
| Operating Margin |
29 | % | 26 | % | 29 | % | 22 | % | ||||||||||||||
| Investments in New Businesses: |
||||||||||||||||||||||
| Revenues |
1,881 | 1,914 | (2 | )% | 5,347 | 5,346 | — | |||||||||||||||
| Expenses |
5,020 | 6,118 | (18 | )% | 14,597 | 16,843 | (13 | )% | ||||||||||||||
| Operating Loss |
(3,139 | ) | (4,204 | ) | 25 | % | (9,250 | ) | (11,497 | ) | 20 | % | ||||||||||
| Operating Margin |
n/a | n/a | n/a | n/a | ||||||||||||||||||
| LSV |
||||||||||||||||||||||
| Revenues |
90,641 | 75,078 | 21 | % | 263,494 | 210,763 | 25 | % | ||||||||||||||
| Expenses (1) |
56,252 | 45,990 | 22 | % | 162,411 | 129,768 | 25 | % | ||||||||||||||
| Operating profit |
34,389 | 29,088 | 18 | % | 101,083 | 80,995 | 25 | % | ||||||||||||||
| Operating Margin |
38 | % | 39 | % | 38 | % | 38 | % | ||||||||||||||
| Consolidated Segment Totals: |
||||||||||||||||||||||
| Revenues |
$ | 349,636 | $ | 298,084 | 17 | % | $ | 1,015,619 | $ | 860,235 | 18 | % | ||||||||||
| Expenses |
231,800 | 200,496 | 16 | % | 674,209 | 578,994 | 16 | % | ||||||||||||||
| Operating Profit |
$ | 117,836 | $ | 97,588 | 21 | % | $ | 341,410 | $ | 281,241 | 21 | % | ||||||||||
| Operating Margin |
34 | % | 33 | % | 34 | % | 33 | % | ||||||||||||||
| (1) | Includes $47,671 and $39,653 for the three month period ended September 30, 2007 and 2006, respectively, and $139,204 and $110,519 for the nine month period ended September 30, 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 and nine month periods ended September 30, 2007 and 2006 are as follows:
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Total operating profit from business segments |
$ | 117,836 | $ | 97,588 | $ | 341,410 | $ | 281,241 | ||||||||
| Corporate overhead expenses |
(9,754 | ) | (9,772 | ) | (30,459 | ) | (28,621 | ) | ||||||||
| Minority interest reflected in segments |
49,016 | 40,749 | 142,641 | 114,564 | ||||||||||||
| LSV Employee Group Expenses (1) |
(1,820 | ) | (1,806 | ) | (5,460 | ) | (5,417 | ) | ||||||||
| Income from operations |
$ | 155,278 | $ | 126,759 | $ | 448,132 | $ | 361,767 | ||||||||
| (1) | Includes $1,805 for the three month period ending September 30, 2007 and 2006, and $5,416 for the nine month period ending September 30, 2007 and 2006 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. |
Third-Quarter Business Commentary:
| • | All four core business segments (Private Banks, Investment Advisors, Institutional Investors and Investment Managers) reported double-digit revenue gains versus a year ago. |
| • | The Investment Advisors, Institutional Investors, Investment Managers and LSV segments all realized substantial operating profit growth versus year ago levels. |
| • | The Global Wealth Platform was placed into service during the third-quarter 2007. Expenses reflect an increase of $3.2 million for amortization. The amortization is primarily recognized in the Private Banks and Investment Advisors segments. |
| • | The company’s percentage ownership in LSV remained at approximately 43 percent. In the third-quarter 2007, the company recognized $34.4 million as its portion of the earnings from LSV versus $29.1 million in the third-quarter 2006. |
| • | The tax rate for the third-quarter 2007 was approximately 34% vs. 32% for the third-quarter 2006 and approximately 38% for second-quarter 2007. |
| • | Assets under management grew by almost $3 billion during third-quarter 2007 to $202 billion. |
| • | In the third-quarter 2007, SEI purchased 2,285,800 shares of its common stock for $59.2 million. |
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM EDT on October 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 889135.
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, 2007, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $423 billion in mutual fund and pooled assets and manages $202 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 September 30, | ||||||||
| 2007 | 2006 | |||||||
| Asset management, admin. and distribution fees |
$ | 280,287 | $ | 232,251 | ||||
| Information processing and software servicing fees |
58,485 | 56,717 | ||||||
| Transaction–based and trade execution fees |
10,864 | 9,116 | ||||||
| Total revenues |
349,636 | 298,084 | ||||||
| Commissions and fees |
44,184 | 36,487 | ||||||
| Compensation, benefits and other personnel |
88,463 | 80,900 | ||||||
| Consulting, outsourcing and professional fees |
23,703 | 19,061 | ||||||
| Data processing and computer related |
10,410 | 9,508 | ||||||
| Facilities, supplies and other costs |
16,607 | 18,050 | ||||||
| Depreciation and amortization |
10,991 | 7,319 | ||||||
| Total expenses |
194,358 | 171,325 | ||||||
| Income from operations |
155,278 | 126,759 | ||||||
| Minority interest |
(46,463 | ) | (37,731 | ) | ||||
| Net loss on investments |
(202 | ) | (2,226 | ) | ||||
| Interest and dividend income |
4,381 | 3,397 | ||||||
| Interest expense |
(1,267 | ) | (1,475 | ) | ||||
| Income before taxes |
111,727 | 88,724 | ||||||
| Income taxes |
38,428 | 28,175 | ||||||
| Net income |
$ | 73,299 | $ | 60,549 | ||||
| Diluted earnings per common share |
$ | .37 | $ | .30 | ||||
| Shares used to calculate diluted earnings per common share |
200,321 | 203,260 | ||||||
| Basic earnings per common share |
$ | .38 | $ | .31 | ||||
| Shares used to calculate basic earnings per common share |
194,930 | 197,144 | ||||||
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2007 | 2006 | |||||||
| Asset management, admin. and distribution fees |
$ | 813,338 | $ | 668,332 | ||||
| Information processing and software servicing fees |
168,131 | 159,373 | ||||||
| Transaction–based and trade execution fees |
34,150 | 32,530 | ||||||
| Total revenues |
1,015,619 | 860,235 | ||||||
| Commissions and fees |
129,857 | 107,898 | ||||||
| Compensation, benefits and other personnel |
261,293 | 231,374 | ||||||
| Consulting, outsourcing and professional fees |
67,199 | 56,926 | ||||||
| Data processing and computer related |
31,404 | 27,436 | ||||||
| Facilities, supplies and other costs |
51,867 | 52,985 | ||||||
| Depreciation and amortization |
25,867 | 21,849 | ||||||
| Total expenses |
567,487 | 498,468 | ||||||
| Income from operations |
448,132 | 361,767 | ||||||
| Minority interest |
(134,439 | ) | (105,858 | ) | ||||
| Net loss on investments |
(1,515 | ) | (1,866 | ) | ||||
| Interest and dividend income |
13,314 | 9,149 | ||||||
| Interest expense |
(3,696 | ) | (4,078 | ) | ||||
| Other income |
2,952 | 1,588 | ||||||
| Income before taxes |
324,748 | 260,702 | ||||||
| Income taxes |
118,571 | 87,336 | ||||||
| Net income |
$ | 206,177 | $ | 173,366 | ||||
| Diluted earnings per common share |
$ | 1.02 | $ | .85 | ||||
| Shares used to calculate diluted earnings per common share |
202,875 | 202,802 | ||||||
| Basic earnings per common share |
$ | 1.05 | $ | .88 | ||||
| Shares used to calculate basic earnings per common share |
196,720 | 197,218 | ||||||
| Dividends declared per common share |
$ | .07 | $ | .06 | ||||
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
| (Unaudited) September 30, |
December 31, 2006 | |||||
| Assets |
||||||
| Cash and short-term investments |
$ | 297,194 | $ | 286,948 | ||
| Restricted cash |
10,250 | 10,250 | ||||
| Receivables |
282,807 | 244,599 | ||||
| Securities owned |
16,456 | 16,431 | ||||
| Other current assets |
38,255 | 28,245 | ||||
| Total current assets |
644,962 | 586,473 | ||||
| Property and equipment, net |
138,508 | 130,732 | ||||
| Investments available for sale |
78,808 | 71,690 | ||||
| Capitalized software, net |
224,643 | 180,014 | ||||
| Goodwill |
22,842 | 22,842 | ||||
| Intangible asset |
62,093 | 67,836 | ||||
| Other assets |
21,332 | 20,118 | ||||
| Total assets |
$ | 1,193,188 | $ | 1,079,705 | ||
| Liabilities | ||||||
| Current liabilities |
$ | 186,825 | $ | 196,127 | ||
| Long-term debt |
49,943 | 67,538 | ||||
| Deferred income taxes |
90,785 | 76,148 | ||||
| Long term liabilities |
11,910 | — | ||||
| Minority interest |
138,549 | 109,380 | ||||
| Shareholders’ Equity | 715,176 | 630,512 | ||||
| Total liabilities and shareholders’ equity |
$ | 1,193,188 | $ | 1,079,705 | ||
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
| Sep. 30, 2006 |
Dec. 31, 2006 |
Mar. 31, 2007 |
Jun. 30, 2007 |
Sep. 30, 2007 | |||||||||||
| Private Banks: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 15,055 | $ | 16,806 | $ | 18,196 | $ | 20,666 | $ | 21,816 | |||||
| Collective Trust Fund prgm. |
1,460 | 1,251 | 1,148 | 1,078 | 1,056 | ||||||||||
| Liquidity funds |
7,707 | 8,513 | 8,241 | 8,224 | 8,836 | ||||||||||
| Total assets under mgmt. |
$ | 24,222 | $ | 26,570 | $ | 27,585 | $ | 29,968 | $ | 31,708 | |||||
| Client assets under admin. |
15,001 | 14,738 | 14,864 | 15,019 | 15,655 | ||||||||||
| Total assets |
$ | 39,223 | $ | 41,308 | $ | 42,449 | $ | 44,987 | $ | 47,363 | |||||
| Investment Advisors: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 32,205 | $ | 34,096 | $ | 35,225 | $ | 36,923 | $ | 37,751 | |||||
| Collective Trust Fund prgm. |
2,425 | 2,480 | 2,491 | 2,334 | 2,325 | ||||||||||
| Liquidity funds |
1,263 | 1,421 | 1,404 | 1,400 | 1,619 | ||||||||||
| Total assets under mgmt. |
$ | 35,893 | $ | 37,997 | $ | 39,120 | $ | 40,657 | $ | 41,695 | |||||
| Institutional Investors: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 34,674 | $ | 37,720 | $ | 39,504 | $ | 40,771 | $ | 43,504 | |||||
| Collective Trust Fund prgm. |
1,150 | 1,081 | 1,078 | 895 | 907 | ||||||||||
| Liquidity funds |
4,167 | 3,371 | 5,072 | 4,128 | 4,342 | ||||||||||
| Total assets under mgmt. |
$ | 39,991 | $ | 42,172 | $ | 45,654 | $ | 45,794 | $ | 48,753 | |||||
| Investment Managers: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 34 | $ | 30 | $ | 29 | $ | 32 | $ | 24 | |||||
| Collective Trust Fund prgm. |
9,009 | 8,675 | 8,300 | 7,990 | 6,814 | ||||||||||
| Liquidity funds |
253 | 215 | 178 | 271 | 360 | ||||||||||
| Total assets under mgmt. |
$ | 9,296 | $ | 8,920 | $ | 8,507 | $ | 8,293 | $ | 7,198 | |||||
| Client assets under admin. |
161,000 | 170,344 | 180,745 | 192,931 | 205,251 | ||||||||||
| Total assets |
$ | 170,296 | $ | 179,264 | $ | 189,252 | $ | 201,224 | $ | 212,449 | |||||
| Investments in New Businesses: |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 685 | $ | 805 | $ | 843 | $ | 887 | $ | 907 | |||||
| Liquidity funds |
64 | 53 | 43 | 43 | 40 | ||||||||||
| Total assets under mgmt. |
$ | 749 | $ | 858 | $ | 886 | $ | 930 | $ | 947 | |||||
| LSV Asset Management |
|||||||||||||||
| Equity/Fixed Income prgms. |
$ | 58,785 | $ | 64,970 | $ | 68,225 | $ | 73,100 | $ | 71,349 | |||||
| Consolidated: |
|||||||||||||||
| Equity/Fixed Income prgms (A) |
$ | 141,438 | $ | 154,427 | $ | 162,022 | $ | 172,379 | $ | 175,351 | |||||
| Collective Trust Fund prgm. |
14,044 | 13,487 | 13,017 | 12,297 | 11,102 | ||||||||||
| Liquidity funds |
13,454 | 13,573 | 14,938 | 14,066 | 15,197 | ||||||||||
| Total assets under mgmt. |
$ | 168,936 | $ | 181,487 | $ | 189,977 | $ | 198,742 | $ | 201,650 | |||||
| Client assets under admin. (B) |
176,001 | 185,082 | 195,609 | 207,950 | 220,906 | ||||||||||
| Total assets |
$ | 344,937 | $ | 366,569 | $ | 385,586 | $ | 406,692 | $ | 422,556 | |||||
| (A) | Equity/Fixed Income programs include $3,859 of assets invested in SEI’s Asset Allocation Funds at September 30, 2007. |
| (B) | In addition to the numbers presented, SEI also administers an additional $5,692 in Funds of Funds assets (as of September 30, 2007) on which SEI does not earn an administration fee. |
Exhibit 99.2
| Contact: | Larry Wexler | Murray A. Louis, V.P. | ||||||
| Voice: | 610.676.1440 | 610.676.1932 | ||||||
| E-Mail: | lwexler@seic.com | mlouis@seic.com | ||||||
| Pages: | 1 | |||||||
For Immediate Release
SEI Investments Announces Increase in
Stock Repurchase Program
Oaks, PA – October 23, 2007 – SEI Investments Company (NASDAQ:SEIC) announced today that its Board of Directors has approved an increase in its stock repurchase program by an additional $100 million.
Since the beginning of calendar year 2007, the Company repurchased approximately 6,455,400 shares at a cost of $183.9 million.
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 June 30, 2007, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $407 billion in mutual fund and pooled assets and manages $199 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.