SEI Reports Fourth-Quarter 2009 Financial Results

Jan 27, 2010, 08:05 ET from SEI Investments Company

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





(In thousands)

For the Three Month Period Ended  December 31,


For the Twelve Month Period Ended  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



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