ABOUT SEI

Press Contacts

Larry Wexler
SEI
+1 610 676-1440
lwexler@seic.com

Murray Louis
SEI, VP
+1 610 676-1932
mlouis@seic.com

Dana Grosser
SEI
+1 610 676-2459
dgrosser@seic.com

Press

Apr
23
2009

SEI Reports First-Quarter 2009 Financial Results

Download the PDF version

 

OAKS, Pa., April 23, 2009 -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for first-quarter 2009, reporting decreases in revenues, net income and earnings per share compared to first-quarter 2008. Net income attributable to SEI during the first-quarter 2009 was negatively affected by a $14.4 million pre-tax charge (approximately $.05 per share post-tax) for previously disclosed structured investment vehicle-related issues.

Consolidated Overview
(In thousands, except earnings per share)
For the Three Months Ended March 31,
  2009 2008  % 
Revenues $248,611 $333,908 (26%)
Net Income 34,200 48,946 (30%)
Diluted Earnings Per Share $.18 $.25 (28%)

“The severe downturn in the capital markets continues to make business conditions challenging and had a significant negative impact on our first-quarter financial results,” said Alfred P. West, Jr., SEI Chairman and CEO.

“In addition to the resizing and cost reductions we accomplished in the first-quarter, we are continuing our efforts to improve overall productivity through process re-engineering. At the same time, our positive cash flow allows us to maintain a strong capital base and balance sheet while we implement our longer term strategies.

“In these times, it is especially important to focus on our clients’ well-being and success. We are firm in our belief that what we are doing today will significantly benefit our clients and SEI both today and in the future.”

 Summary of First-Quarter and Year to Date Results by Business Segment
(In thousands)
   For the Three Month Period Ended March 31, 
  2009 2008 %
Private Banks
Revenues $96,948 $107,054 (9%)
Expenses 78,798 86,167 (9%)
Operating Profit $18,150 $20,887 (13%)
Operating Margin 19% 20%  
Investment Advisors
Revenues 37,508 60,519 (38%)
Expenses 27,109 31,376 (14%) 
Operating Profit 10,399 29,143 (64%)
Operating Margin 28% 48%  
Institutional Investors
Revenues 39,379 50,689 (22%)
Expenses 24,170 30,140 (20%)
Operating Profit 15,209 20,549 (26%)
Operating Margin 39% 41%  
Investment Managers
Revenues 33,332 36,493 (9%)
Expenses 22,867 25,964 (12%)
Operating Profit 10,465 10,529 (1%)
Operating Margin 31% 29%  
Investments in New Business
Revenues 1,254 1,834 (32%)
Expenses 3,293 4,652 (29%)
Operating Loss (2,039) (2,818) 28%
Operating Margin n/a n/a  
LSV
Revenues 40,190 77,319 (48%)
Expenses (1) 26,446 47,356 (44%)
Operating Profit 13,744 29,963 (54%)
Operating Margin 34% 39%  
Consolidated Segment Totals
Revenues $248,611 $333,908 (26%)
Expenses 182,683 225,655 (19%)
Operating Profit $65,928 $108,253 (39%)
Operating Margin 27% 32%  

(1) Includes $18,862 and $41,238 for the three-month period ended March 31, 2009 and 2008, of noncontrolling 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-month periods ended March 31, 2009 and 2008 is as follows:

  Three Months Ended
March 31,
  2009 2008 
 Total operating profit from business segments $65,928 $108,253
 Corporate overhead expenses (9,641) (10,109)
 Noncontrolling interest reflected in segments 19,063 42,188
 LSV Employee Group Expenses (1) (1,820)  (1,821) 
 Income from operations $73,530 $138,511

(1) Includes $1,805 for the three-month period ending March 31, 2009 and 2008 of amortization expense related to intangible assets owned by LSV Employee Group LLC. The amortization is offset through noncontrolling interest since SEI does not have any ownership in LSV Employee Group LLC.

First-Quarter Business Commentary:

  • Revenues were down across all segments due to the continued decline in the capital markets. The Institutional Investors and Investment Managers segments partially offset the negative capital market impact with new business growth. 
  • The first-quarter 2009 results include losses of $14.4 million associated with SIV-related issues involving SEI-sponsored money market funds. SEI has recognized cumulative losses of $197.7 million associated with SIV-related issues involving SEI-sponsored money market funds. Additional information related to this, and about the capital support agreements, is contained in SEI’s 2008 Form 10-K filed February 25, 2009. 
  • In March 2009, SEI purchased the remaining Gryphon notes held by SEI-sponsored money market funds for $194.9 million. SEI borrowed $195.0 million on its credit facility in order to finance the purchase of the Gryphon notes. As a result of this purchase, SEI’s obligation under the Capital Support Agreements was reduced by $116.0 million to $57.9 million as of March 31, 2009. 
  • SEI recognized $6.3 million of one-time employee termination costs in the first-quarter 2009 associated with a reduction in workforce.
  • In the first-quarter 2009, the Private Banks segment recognized $7.0 million of one-time contractual buyout fees from existing clients involved in bank mergers. 
  • Assets under management declined by $11.6 billion during the first-quarter 2009 to $122.7 billion, primarily due to market depreciation. 
  • In the first-quarter 2009, SEI’s effective tax rate was approximately 21 percent. The effective tax rate was affected by the recognition of certain tax benefits resulting from the conclusion of federal and state income tax audits. 
  • In the first-quarter, SEI purchased 527,000 shares of its common stock for $5.9 million.

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on April 23, 2009. Investors may listen to the call at www.seic.com (Investor Information section), 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 996579.

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, 2009, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $354 billion in mutual fund and pooled assets and manages $123 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
March 31,
   2009  2008
Asset management, admin. and distribution fees $169,364 $260,059
Information processing and software servicing fees 62,217 60,139
Transaction–based and trade execution fees 17,030 13,710
Total revenues 248,611 333,908
Commissions and fees 37,553 45,295
Compensation, benefits and other personnel 76,868 83,892
Consulting, outsourcing and professional fees 21,150 26,757
Data processing and computer related 11,515 10,548
Facilities, supplies and other costs 15,433 17,385
Depreciation and amortization 12,562 11,520
Total expenses 175,081 195,397
Income from operations 73,530 138,511
Net loss on investments (14,450) (24,046)
Interest and dividend income 1,711 4,138
Interest expense (799) (967)
Income before taxes 59,992 117,636
Income taxes 8,929 29,175
Net income 51,063 88,461
Less Net Income attributable to the noncontrolling interest (16,863) (39,515)
Net income attributable to SEI $34,200 $48,946
Diluted earnings per common share $.18 $.25
Shares used to calculate diluted earnings per common share 191,409 198,211
Basic earnings per common share $.18 $.25
Shares used to calculate basic earnings per common share 191,084 193,629

Note: Effective January 1, 2009 the company adopted the provisions of SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements. Prior period information has been reclassified to conform with current period presentation.

 SEI Investments Company Condensed Balance Sheets
(In Thousands) 

  (Unaudited)
March 31, 2009
December
31, 2008
 Assets
Cash and short-term investments $428,084 $416,643
Restricted cash 16,400 14,000
Receivables 188,882 208,209
Other current assets 88,188 100,819
Total current assets 721,554 739,671
Property and equipment, net 145,551 148,124
Marketable securities 146,133 86,693
Capitalized software, net 279,368 270,606
Goodwill 22,842 22,842
Intangible assets, net 50,604 52,518
Other assets, net 20,219 21,261
Total assets  $1,386,271 $1,341,715
Liabilities
Current liabilities (1) $169,677 $329,894
long-term debt 216,286 24,332
Deferred income taxes 96,118 104,548
Long term liabilities 4,752 4,067
Total SEI Investments Company shareholders' equity 797,544 766,004
Noncontrolling interest 101,894 112,870
Total Equity 899,438 878,874
Total liabilities and shareholders' equity $1,386,271 $1,341,715

(1) Includes $57,945 and $173,983 at March 31, 2009 and December 31, 2008, respectively, of an accrual related to money market funds support agreements.

SEI Investments Company Asset Balances
(In millions) (Unaudited)
  Mar. 31,
2008

Jun. 30,
2008

Sep. 30,
2008 
Dec. 31,
2008 
Mar. 31,
2009 
Private Banks 
Equity/Fixed Income prgms. $18,904 $18,163 $14,436 $10,573 $9,679
Collective Trust Fund prgm. 1,008 955 1,028 1,145 1,198
Liquidity funds 9,198 8,345 9,253 9,194 8,929 
Total assets under mgmt. $29,110 $27,463 $24,717 $20,912 $19,806
Client assets under admin. 13,897 13,242 12,301 10,622 9,920
Total assets $43,007 $40,705 $37,018 $31,534 $29,726
Investment Advisors
Equity/Fixed Income prgms. $32,736 $31,938 $27,817 $21,631 $18,832
Collective Trust Fund prgm. 2,310 2,259 2,471 2,606 2,716
Liquidity funds 2,461 2,410 2,859 3,436 3,458
Total assets under mgmt. $37,507 $36,607 $33,147  $27,673 $25,006
Institutional Investors
Equity/Fixed Income prgms. $43,134 $43,608 $39,775 $34,966 $32,565
Collective Trust Fund prgm. 924 947 1,001 942 791
Liquidity funds 4,077 3,950 3,930

4,582

3,802
Total assets under mgmt. $48,135 $48,505 $44,706 $40,490 $37,158
Investment Managers
Equity/Fixed Income prgms. $20 $19 $10 $8 $3
Collective Trust Fund prgm. 6,571 6,572 6,453 5,974 6,917
Liquidity funds 571 438 699 869 898
Total assets under mgmt. $7,162 $7,029 $7,162 $6,851 $7,818
Client assets under admin. (C) 225,005 228,722 256,553 234,628 221,798
Total assets $232,167 $235,751 $263,715 $241,479 $229,616
Investments in New Businesses
Equity/Fixed Income prgms. $869 $838 $704 $519 $472
Liquidity funds 77 98 115 153 157
Total assets under mgmt. $946 $936 $819 $672 $629
LSV Asset Management
Equity/Fixed Income prgms. $61,765 $57,692 $51,296 $37,714 $32,308
Consolidated
Equity/Fixed Income prgms (A) $157,428 $152,258 $134,038 $105,411 $93,859
Collective Trust Fund prgm. 10,813 10,733 10,953 10,667 11,622
Liquidity funds 16,384 15,241 16,856 18,234 17,244
Total assets under mgmt. $184,625 $178,232 $161,847 $134,312 $122,725
Client assets under admin. (B) 238,902 241,964 268,854 245,250 231,718
Total assets $423,527 $420,196 $430,701 $379,562 $354,443

(A) Equity/Fixed Income programs include $1,855 of assets invested in various asset allocation funds at March 31, 2009.

(B) In addition to the numbers presented, SEI also administers an additional $6,902 in Funds of Funds assets (as of March 31, 2009) on which SEI does not earn an administration fee.

(C) Client assets under administration in the Investment Managers segment include $78.3 billion of assets balances that require limited services and therefore are at fee levels below our normal service assets.