OAKS, Pa., April 28 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for first-quarter 2010, reporting an increase in net income attributable to SEI, and diluted earnings per share compared to first-quarter 2009. Diluted earnings per share were $0.31. Earnings were positively affected as a result of an increase in value of Structured Investment Vehicle (SIV) securities held on the company's balance sheet due to cash flow from, and market appreciation of, the securities. First-quarter 2010 results reflect the deconsolidation of LSV Asset Management (LSV) returning to the equity method of accounting. This change in accounting treatment had no impact on net income attributable to SEI. Without LSV, revenues grew $13 million or six percent compared to first-quarter 2009.
Consolidated Overview |
For the Three Months |
|||
(In thousands, except earnings per share) |
Ended March 31, |
|||
2010 |
2009 |
% |
||
Revenues |
$221,535 |
$248,611 |
(11%) |
|
Net Income attributable to SEI |
59,420 |
34,200 |
74% |
|
Diluted Earnings Per Share |
$0.31 |
$0.18 |
72% |
|
"Compared to a year ago, our first-quarter results reflect improving capital markets, the effects of last year's cost reduction initiatives, and cash and non-cash enhancements to the value of the SIVs on our balance sheet," said Alfred P. West, Jr., SEI Chairman and CEO.
"Our new sales activities are beginning to show results in a healthier economic climate, and we believe there are opportunities in all our segments to achieve growth in new business. In addition, we continue to make key investments in our company that will create long-term growth opportunities for us and for our clients."
The table below provides a proforma comparison as if LSV was reported under the equity method beginning January 2009.
Proforma Consolidated Overview |
For the Three Months |
|||
(In thousands, except earnings per share) |
Ended March 31, |
|||
2010 |
2009 |
% |
||
(Actual) |
(Proforma) |
|||
Revenues |
$221,535 |
$208,421 |
6% |
|
Net Income attributable to SEI |
59,420 |
34,200 |
74% |
|
Diluted Earnings Per Share |
$0.31 |
$0.18 |
72% |
|
Summary of First-Quarter Results by Business Segment |
||||
(In thousands) |
For the Three Month Period Ended March 31, |
|||
2010 |
2009 |
% |
||
Private Banks: |
||||
Revenues |
$87,121 |
$96,948 |
(10%) |
|
Expenses |
77,599 |
78,798 |
(2%) |
|
Operating Profit |
$9,522 |
$18,150 |
(48%) |
|
Operating Margin |
11% |
19% |
||
Investment Advisors: |
||||
Revenues |
45,463 |
37,508 |
21% |
|
Expenses |
27,583 |
27,109 |
2% |
|
Operating Profit |
17,880 |
10,399 |
72% |
|
Operating Margin |
39% |
28% |
||
Institutional Investors: |
||||
Revenues |
50,339 |
39,379 |
28% |
|
Expenses |
26,380 |
24,170 |
9% |
|
Operating Profit |
23,959 |
15,209 |
58% |
|
Operating Margin |
48% |
39% |
||
Investment Managers: |
||||
Revenues |
37,610 |
33,332 |
13% |
|
Expenses |
24,559 |
22,867 |
7% |
|
Operating Profit |
13,051 |
10,465 |
25% |
|
Operating Margin |
35% |
31% |
||
Investments in New Businesses: |
||||
Revenues |
1,002 |
1,254 |
(20%) |
|
Expenses |
2,661 |
3,293 |
(19%) |
|
Operating Loss |
(1,659) |
(2,039) |
19% |
|
Operating Margin |
N/A |
N/A |
||
LSV: |
||||
Revenues |
- |
40,190 |
N/A |
|
Expenses (1) |
- |
26,446 |
N/A |
|
Operating Profit |
- |
13,744 |
N/A |
|
Operating Margin |
- |
34% |
||
Totals: |
||||
Revenues |
$221,535 |
$248,611 |
(11%) |
|
Expenses |
158,782 |
182,683 |
(13%) |
|
Corporate overhead expenses |
9,717 |
9,641 |
1% |
|
Noncontrolling interest reflected in segments |
(309) |
(19,063) |
N/A |
|
LSV Employee Group expenses |
- |
1,820 |
N/A |
|
$ 53,345 |
$ 73,530 |
(27%) |
||
(1) Includes 18,862 for the three-month period ended March 31, 2009 of noncontrolling interest to the other partners of LSV. |
||||
First-Quarter Business Commentary:
- In January 2010, LSV was deconsolidated due to the adoption of newly issued accounting guidance. Our ownership interest in LSV was unchanged and our proportionate share in the earnings of LSV is reflected in "Equity in earnings of unconsolidated affiliate" on our Consolidated Statements of Operations. The deconsolidation of LSV had no impact on net income attributable to SEI or diluted earnings per share.
- Revenues in first-quarter 2009 include $40.2 million from LSV. Excluding these revenues, revenues in first-quarter 2010 increased $13.1 million or six percent compared to first-quarter 2009. This increase was due to higher asset balances under management and administration from existing clients because of improved capital markets.
- Revenues in fourth-quarter 2009 include $62.5 million from LSV. Excluding these revenues, revenues in first-quarter 2010 were essentially flat versus fourth-quarter 2009.
- First-quarter 2010 revenues in the Private Banks segment decreased compared to first-quarter 2009 due to lower trade-execution fees from reduced trading activity as well as lower investment processing fees from bank clients previously reported to be involved in mergers and acquisitions.
- Expenses in the Private Banks segment during the first-quarter 2010 include a one-time charge of $1.8 million related to a reduction in workforce.
- The first-quarter 2010 net income attributable to SEI and diluted earnings per share results include gains of $17.3 million associated with SIV-related issues, of which $10.7 million is from cash distributions received for note principal payments, whereas results in first-quarter 2009 included losses of $14.4 million. SEI has recognized cumulative losses of $171.7 million associated with these SIV-related issues through March 31, 2010. Additional information pertaining to SIV-related issues involving SEI-sponsored money market funds is contained in SEI's 2009 Form 10-K filed February 25, 2010.
- Assets under management increased by $3.0 billion during the first-quarter 2010 to $161.9 billion, primarily due to market appreciation.
- In the first quarter, SEI purchased 1,020,000 shares of its common stock for $19.5 million.
Proforma Consolidated Statement of Operations
The following proforma Consolidated Statements of Operations presents first quarter 2009 for comparative purposes only as if LSV and LSV Employee Group was deconsolidated on January 1, 2009. This report is being provided for informational purposes only and is not a restatement or reclassification of previously filed reports. Our interest in LSV is presented as a single line item in the Consolidated Statements of Operations titled "Equity in earnings of unconsolidated affiliate." For additional information, we refer you to Note 2 to the Consolidated Financial Statements included in our 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2010.
SEI INVESTMENTS COMPANY |
||||||
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
(In thousands, except per share data) |
||||||
(Unaudited) |
||||||
Three Months Ended March 31, |
||||||
As Reported |
Proforma |
|||||
SEI |
SEI without |
|||||
Consolidated |
LSV and LSVEG |
|||||
2010 |
2009 |
% |
||||
Total revenues |
$221,535 |
$208,421 |
6% |
|||
Total expenses |
168,190 |
165,677 |
2% |
|||
Income from operations |
53,345 |
42,744 |
25% |
|||
Net gain (loss) from investments |
17,479 |
(14,450) |
N/A |
|||
Interest, net |
1,229 |
1,318 |
(7%) |
|||
Equity in earnings of unconsolidated affiliate |
24,074 |
13,754 |
75% |
|||
Net income before taxes |
96,127 |
43,366 |
122% |
|||
Income taxes |
36,269 |
8,929 |
306% |
|||
Net income |
59,858 |
34,437 |
74% |
|||
Less Net Income attributable to the noncontrolling interest |
(438) |
(237) |
85% |
|||
Net income attributable to SEI |
$59,420 |
$34,200 |
74% |
|||
Diluted earnings per share |
$0.31 |
$0.18 |
72% |
|||
Diluted shares outstanding |
191,062 |
191,409 |
-- |
|||
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on April 28, 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 154929.
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, 2010, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $394 billion in mutual fund and pooled assets and manages $162 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 OPERATIONS |
||||
(In thousands, except per share data) |
||||
(Unaudited) |
||||
Three Months Ended March 31, |
||||
2010 |
2009 |
|||
Asset management, admin. and distribution fees |
$152,938 |
$169,364 |
||
Information processing and software servicing fees |
58,626 |
62,217 |
||
Transaction–based and trade execution fees |
9,971 |
17,030 |
||
Total revenues |
221,535 |
248,611 |
||
Subadvisory, distribution and other asset mgmt costs |
23,255 |
19,823 |
||
Brokerage commissions and royalties |
13,373 |
17,730 |
||
Compensation, benefits and other personnel |
67,216 |
73,438 |
||
Stock based compensation |
6,657 |
3,430 |
||
Consulting, outsourcing and professional fees |
20,707 |
21,150 |
||
Data processing and computer related |
9,928 |
11,515 |
||
Facilities, supplies and other costs |
15,948 |
15,433 |
||
Amortization |
5,900 |
7,053 |
||
Depreciation |
5,206 |
5,509 |
||
Total expenses |
168,190 |
175,081 |
||
Income from operations |
53,345 |
73,530 |
||
Net gain (loss) on investments |
17,479 |
(14,450) |
||
Interest and dividend income |
1,700 |
1,711 |
||
Interest expense |
(471) |
(799) |
||
Equity in earnings of unconsolidated affiliate |
24,074 |
- |
||
Income before taxes |
96,127 |
59,992 |
||
Income taxes |
36,269 |
8,929 |
||
Net income |
59,858 |
51,063 |
||
Less: Net income attributable to the noncontrolling interest |
(438) |
(16,863) |
||
Net income attributable to SEI |
$59,420 |
$34,200 |
||
Diluted earnings per common share |
$0.31 |
$0.18 |
||
Shares used to calculate diluted |
||||
earnings per common share |
191,062 |
191,409 |
||
Basic earnings per common share |
$0.31 |
$0.18 |
||
Shares used to calculate basic |
||||
earnings per common share |
189,948 |
191,084 |
||
SEI INVESTMENTS COMPANY |
||||
CONDENSED BALANCE SHEETS |
||||
(In thousands) |
||||
(Unaudited) |
||||
March 31, 2010 |
December, 31 2009 |
|||
Assets |
||||
Cash and short-term investments |
$500,661 |
$590,877 |
||
Restricted cash |
22,000 |
20,000 |
||
Receivables |
166,016 |
212,451 |
||
Other current assets |
19,436 |
18,075 |
||
Total current assets |
708,113 |
841,403 |
||
Property and equipment, net |
143,018 |
146,053 |
||
Marketable securities |
187,374 |
181,897 |
||
Capitalized software, net |
281,412 |
278,656 |
||
Investment in unconsolidated affiliate |
60,595 |
- |
||
Goodwill |
- |
22,842 |
||
Intangible assets, net |
- |
44,859 |
||
Other assets, net |
18,211 |
18,098 |
||
Total assets |
$1,398,723 |
$1,533,808 |
||
Liabilities |
||||
Current liabilities |
$127,993 |
$163,055 |
||
Long-term debt |
200,000 |
247,152 |
||
Deferred income taxes |
88,494 |
86,257 |
||
Long-term liabilities |
5,328 |
5,726 |
||
Total SEI Investments Company shareholders’ equity |
963,140 |
909,723 |
||
Noncontrolling interest |
13,768 |
121,895 |
||
Total Equity |
976,908 |
1,031,618 |
||
Total liabilities and equity |
$1,398,723 |
$1,533,808 |
||
SEI INVESTMENTS COMPANY |
||||||
ASSET BALANCES |
||||||
(In millions) |
||||||
(Unaudited) |
||||||
Mar. 31, |
Jun. 30, |
Sep. 30, |
Dec. 31, |
Mar. 31, |
||
2009 |
2009 |
2009 |
2009 |
2010 |
||
Private Banks: |
||||||
Equity/Fixed Income prgms. |
$9,679 |
$10,892 |
$12,479 |
$12,690 |
$12,635 |
|
Collective Trust Fund prgm. |
1,198 |
1,176 |
1,098 |
1,067 |
1,023 |
|
Liquidity funds |
8,929 |
7,581 |
6,524 |
6,035 |
5,329 |
|
Total assets under mgmt. |
$19,806 |
$19,649 |
$20,101 |
$19,792 |
$18,987 |
|
Client assets under admin. |
9,920 |
10,143 |
10,941 |
11,213 |
11,429 |
|
Total assets |
$29,726 |
$29,792 |
$31,042 |
$31,005 |
$30,416 |
|
Investment Advisors: |
||||||
Equity/Fixed Income prgms. |
$18,832 |
$21,705 |
$24,739 |
$25,392 |
$26,222 |
|
Collective Trust Fund prgm. |
2,716 |
2,621 |
2,521 |
2,423 |
2,284 |
|
Liquidity funds |
3,458 |
2,469 |
2,243 |
1,929 |
1,731 |
|
Total assets under mgmt. |
$25,006 |
$26,795 |
$29,503 |
$29,744 |
$30,237 |
|
Institutional Investors: |
||||||
Equity/Fixed Income prgms. |
$32,565 |
$36,955 |
$43,672 |
$44,322 |
$45,891 |
|
Collective Trust Fund prgm. |
791 |
755 |
707 |
684 |
657 |
|
Liquidity funds |
3,802 |
3,462 |
4,624 |
3,370 |
3,198 |
|
Total assets under mgmt. |
$37,158 |
$41,172 |
$49,003 |
$48,376 |
$49,746 |
|
Investment Managers: |
||||||
Equity/Fixed Income prgms. |
$3 |
$3 |
$4 |
$4 |
$2 |
|
Collective Trust Fund prgm. |
6,917 |
6,794 |
7,075 |
7,428 |
7,639 |
|
Liquidity funds |
898 |
505 |
528 |
412 |
447 |
|
Total assets under mgmt. |
$7,818 |
$7,302 |
$7,607 |
$7,844 |
$8,088 |
|
Client assets under admin. (A) |
221,798 |
213,930 |
216,222 |
221,680 |
220,807 |
|
Total assets |
$229,616 |
$221,232 |
$223,829 |
$229,524 |
$228,895 |
|
Investments in New Businesses: |
||||||
Equity/Fixed Income prgms. |
$472 |
$473 |
$473 |
$520 |
$534 |
|
Liquidity funds |
157 |
133 |
93 |
75 |
72 |
|
Total assets under mgmt. |
$629 |
$606 |
$566 |
$595 |
$606 |
|
LSV Asset Management |
||||||
Equity/Fixed Income prgms. |
$32,308 |
$40,210 |
$49,349 |
$52,488 |
$54,189 |
|
Consolidated: |
||||||
Equity/Fixed Income prgms (B) |
$93,859 |
$110,238 |
$130,716 |
$135,416 |
$139,473 |
|
Collective Trust Fund prgm. |
11,622 |
11,346 |
11,401 |
11,602 |
11,603 |
|
Liquidity funds |
17,244 |
14,150 |
14,012 |
11,821 |
10,777 |
|
Total assets under mgmt. |
$122,725 |
$135,734 |
$156,129 |
$158,839 |
$161,853 |
|
Client assets under admin. (C ) |
231,718 |
224,073 |
227,163 |
232,893 |
232,236 |
|
Total assets |
$354,443 |
$359,807 |
$383,292 |
$391,732 |
$394,089 |
|
(A) Client assets under administration in the Investment Managers segment include $59,033 of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2010). (B) Equity/Fixed Income programs include $2,455 of assets invested in various asset allocation funds at March 31, 2010. (C ) In addition to the numbers presented, SEI also administers an additional $9,040 in Funds of Funds assets (as of March 31, 2010) on which SEI does not earn an administration fee. |
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SOURCE SEI Investments Company
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