SEI INVESTMENTS CO - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - SEI INVESTMENTS CO	d8k.htm

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: 10

FOR IMMEDIATE RELEASE

SEI REPORTS FOURTH-QUARTER 2010 FINANCIAL RESULTS

OAKS, Pa., January 26, 2011 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for fourth-quarter 2010, reporting an increase in net income attributable to SEI and diluted earnings per share compared to fourth-quarter 2009. Diluted earnings per share were $0.33. Effective January 1, 2010, company 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 $9.9 million or four percent compared to fourth-quarter 2009 (see Proforma Consolidated Overview below).


Consolidated Overview	For the Three Months							For the Twelve Months
(In thousands, except earnings per share)	Ended December 31,							Ended December 31,
	2010		2009		%			2010		2009		%

Revenues	$	231,399	$	283,995		(19	%)	$	900,835	$	1,060,548		(15	%)
Net Income attributable to SEI		62,400		45,837		36	%		231,687		174,335		33	%
Diluted Earnings Per Share	$	0.33	$	0.24		38	%	$	1.22	$	0.91		34	%

“Compared to a year ago, our fourth-quarter and 2010 results reflect improved capital markets, improved markets for our services, and the ongoing management of our costs,” said Alfred P. West, Jr., SEI Chairman and CEO. “As always, our focus is on servicing and growing our existing clients while generating new client sales. Despite continuing uncertain markets, we believe the investments we are making position us well for long-term growth.”


Proforma Consolidated Overview	For the Three Months							For the Twelve Months
(In thousands, except earnings per share)	Ended December 31,							Ended December 31,
	2010		2009		%			2010		2009		%
	(Actual)		(Proforma)					(Actual)		(Proforma)

Revenues	$	231,399	$	221,462		4	%	$	900,835	$	848,587		6	%
Net Income attributable to SEI		62,400		45,837		36	%		231,687		174,335		33	%
Diluted Earnings Per Share	$	0.33	$	0.24		38	%	$	1.22	$	0.91		34	%

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


(In thousands)	For the Three Month Period									For the Twelve Month Period
	Ended December 31,									Ended December 31,
	2010			2009			%			2010			2009			%
Private Banks:
Revenues	$	85,938		$	89,119			(4	%)	$	346,668		$	361,273			(4	%)
Expenses		80,959			80,192			1	%		310,633			309,300			—

Operating Profit	$	4,979		$	8,927			(44	%)	$	36,035		$	51,973			(31	%)
Operating Margin		6	%		10	%					10	%		14	%

Investment Advisors:
Revenues		48,095			45,540			6	%		183,378			166,097			10	%
Expenses		28,259			28,369			—			110,388			109,418			1	%

Operating Profit		19,836			17,171			16	%		72,990			56,679			29	%
Operating Margin		41	%		38	%					40	%		34	%

Institutional Investors:
Revenues		53,710			48,720			10	%		206,531			177,721			16	%
Expenses		28,038			25,121			12	%		106,934			99,924			7	%

Operating Profit		25,672			23,599			9	%		99,597			77,797			28	%
Operating Margin		48	%		48	%					48	%		44	%

Investment Managers:
Revenues		42,561			37,093			15	%		160,159			139,004			15	%
Expenses		27,503			24,915			10	%		103,421			93,074			11	%

Operating Profit		15,058			12,178			24	%		56,738			45,930			24	%
Operating Margin		35	%		33	%					35	%		33	%

Investments in New Businesses:
Revenues		1,095			990			11	%		4,099			4,492			(9	%)
Expenses		3,196			2,836			13	%		12,676			11,625			9	%

Operating Loss		(2,101	)		(1,846	)		(14	%)		(8,577	)		(7,133	)		(20	%)
Operating Margin		N/A			N/A						N/A			N/A

LSV:
Revenues		—			62,533			N/A			—			211,961			N/A
Expenses (1)		—			39,497			N/A			—			136,580			N/A

Operating Profit		—			23,036			N/A			—			75,381			N/A
Operating Margin		—			37	%					—			36	%

Totals:
Revenues	$	231,399		$	283,995			(19	%)	$	900,835		$	1,060,548			(15	%)
Expenses (1)		167,955			200,930			(16	%)		644,052			759,921			(15	%)
Corporate overhead expenses		12,076			9,294			30	%		40,715			36,529			11	%
Noncontrolling interest reflected in segments		(509	)		(32,937	)		N/A			(1,465	)		(106,905	)		N/A
LSV Employee Group expenses		—			1,820			N/A			—			7,296			N/A

Income from operations	$	51,877		$	104,888			(51	%)	$	217,533		$	363,707			(40	%)

(1)	Includes $32,350 and $105,471 for the three and twelve month periods ended December 31, 2009, of noncontrolling interest to the other partners of LSV.

Fourth-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 fourth-quarter 2009 include $62.5 million from LSV. Excluding these revenues, revenues in fourth-quarter 2010 increased $9.9 million or four percent compared to fourth-quarter 2009. This increase was primarily due to higher average asset balances under management and administration from existing clients because of improved capital markets.

•

The fourth-quarter 2010 net income attributable to SEI and diluted earnings per share results include gains of $14.3 million associated with SIVs, whereas results in fourth-quarter 2009 included losses of $4.0 million. Additional information pertaining to SIVs is contained in SEI’s 2009 Form 10-K filed February 25, 2010.

•

Stock-based compensation costs in fourth-quarter 2010 include $7.8 million associated with stock options that vested during the fourth-quarter 2010. Included in this amount is $3.6 million due to the acceleration of stock-based compensation costs resulting from a change in management’s estimates determined in third-quarter 2010 of the attainment of certain performance vesting targets.

•

Assets under management increased by $8.3 billion during the fourth-quarter 2010 to $172.3 billion at December 31, 2010, as compared to $164.0 billion at September 30, 2010, primarily due to market driven appreciation.

•

The tax rate in the fourth-quarter 2010 decreased to 34.7 percent mainly due to a year-to-date adjustment to reflect the reinstatement of the research and development tax credit.

•

In fourth-quarter 2010, SEI recognized $3.1 million in gains due to the sale of its entire ownership interest in a small company that was involved in a merger. This gain, together with the SIV gain, is reflected in Net gain (loss) on investments on the Consolidated Statements of Operations.

•

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 the Global Wealth Platform (GWP). This charge was due to the replacement of these components with components contained in the release of GWP that occurred in fourth-quarter 2009. The bulk of this expense was recognized in the Private Banks segment ($5 million) and the Investment Advisors segment ($1.9 million).

•

In the fourth-quarter 2010, SEI purchased 1,405,000 shares of its common stock for $32.7 million.

Proforma Consolidated Statement of Operations

The following proforma Consolidated Statements of Operations presents fourth quarter 2009 and Year to Date December 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 December 31,
	As Reported SEI Consolidated 2010			Proforma SEI without LSV and LSVEG 2009			%



Total revenues		231,399			221,462			4	%
Total expenses		179,522			170,140			6	%


Income from operations		51,877			51,322			1	%

Net gain (loss) from investments		18,098			(3,559	)		N/A
Interest, net		1,247			1,218			2	%
Other expense		(1,660	)		—			N/A
Equity in earnings of unconsolidated affiliate		26,618			23,045			16	%


Income before taxes		96,180			72,026			34	%

Income taxes		33,278			25,636			30	%


Net income		62,902			46,390			36	%


Less Net Income attributable to noncontrolling interest		(502	)		(553	)		9	%


Net income attributable to SEI	$	62,400		$	45,837			36	%


Diluted earnings per share	$	0.33		$	0.24			38	%


Diluted shares outstanding		189,200			191,414			(1	%)

SEI INVESTMENTS COMPANY

PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Twelve Months Ended December 31,
	As Reported SEI Consolidated 2010			Proforma SEI without LSV and LSVEG 2009			%



Total revenues		900,835			848,587			6	%
Total expenses		683,302			658,434			4	%


Income from operations		217,533			190,153			14	%

Net gain (loss) from investments		48,533			(4,926	)		N/A
Interest, net		4,848			5,013			(3	%)
Other expense, net		(590	)		—			N/A
Equity in earnings of unconsolidated affiliate		99,457			75,415			32	%


Income before taxes		369,781			265,655			39	%

Income taxes		136,461			89,886			52	%


Net income		233,320			175,769			33	%


Less Net Income attributable to noncontrolling interest		(1,633	)		(1,434	)		14	%


Net income attributable to SEI	$	231,687		$	174,335			33	%


Diluted earnings per share	$	1.22		$	0.91			34	%


Diluted shares outstanding		190,321			191,783			(1	%)

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on January 26, 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) 1-800-288-8968; (International) 612-234-9960, access code 189688.

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, 2010, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $416 billion in mutual fund and pooled assets and manages $172 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 December 31,
	2010			2009
Asset management, admin. and distribution fees	$	165,024		$	214,378
Information processing and software servicing fees		56,381			58,655
Transaction–based and trade execution fees		9,994			10,962


Total revenues		231,399			283,995

Subadvisory, distribution and other asset mgmt costs		22,920			23,344
Brokerage commissions and royalties		11,862			14,090
Compensation, benefits and other personnel		70,243			67,363
Stock based compensation		10,380			4,294
Consulting, outsourcing and professional fees		23,783			21,660
Data processing and computer related		10,552			11,476
Facilities, supplies and other costs		18,119			16,429
Amortization		6,153			15,115
Depreciation		5,510			5,336


Total expenses		179,522			179,107

Income from operations		51,877			104,888

Net gain (loss) on investments		18,098			(3,559	)
Interest and dividend income		1,503			1,736
Interest expense		(256	)		(860	)
Other expense		(1,660	)		—
Equity in earnings of unconsolidated affiliate		26,618			—

Income before taxes		96,180			102,205
Income taxes		33,278			25,636

Net income		62,902			76,569

Less: Net income attributable to noncontrolling interest		(502	)		(30,732	)

Net income attributable to SEI	$	62,400		$	45,837

Diluted earnings per common share	$	0.33		$	0.24

Shares used to calculate diluted earnings per common share		189,200			191,414

Basic earnings per common share	$	0.33		$	0.24

Shares used to calculate basic earnings per common share		186,602			190,329

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Twelve Months Ended December 31,
	2010			2009
Asset management, admin. and distribution fees	$	628,535		$	773,186
Information processing and software servicing fees		231,529			231,807
Transaction–based and trade execution fees		40,771			55,555


Total revenues		900,835			1,060,548

Subadvisory, distribution and other asset mgmt costs		89,746			85,810
Brokerage commissions and royalties		52,609			61,735
Compensation, benefits and other personnel		269,165			274,675
Stock based compensation		26,783			14,503
Consulting, outsourcing and professional fees		89,033			81,694
Data processing and computer related		41,064			45,403
Facilities, supplies and other costs		68,952			66,882
Amortization		24,048			44,608
Depreciation		21,902			21,531


Total expenses		683,302			696,841

Income from operations		217,533			363,707

Net gain (loss) on investments		48,533			(4,926	)
Interest and dividend income		6,326			7,281
Interest expense		(1,478	)		(3,744	)
Other expense, net		(590	)		—
Equity in earnings of unconsolidated affiliate		99,457			—

Income before taxes		369,781			362,318
Income taxes		136,461			89,886

Net income		233,320			272,432

Less: Net income attributable to the noncontrolling interest		(1,633	)		(98,097	)

Net income attributable to SEI	$	231,687		$	174,335

Diluted earnings per common share	$	1.22		$	0.91

Shares used to calculate diluted earnings per common share		190,321			191,783

Basic earnings per common share	$	1.23		$	0.91

Shares used to calculate basic earnings per common share		188,468			190,821

SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)


	(Unaudited) December 31, 2010		December 31, 2009
Assets

Cash and short-term investments	$	496,292	$	590,877	(a)
Restricted cash		4,000		20,000
Receivables		165,772		212,451	(a)
Other current assets		17,655		18,075


Total current assets		683,719		841,403

Property and equipment, net		140,568		146,053
Marketable securities		179,364		181,897
Capitalized software, net		294,332		278,656
Investment in unconsolidated affiliate		64,409		—
Goodwill		—		22,842
Intangible assets, net		—		44,859
Other assets, net		14,831		18,098


Total assets	$	1,377,223	$	1,533,808


Liabilities

Current liabilities	$	127,600	$	163,055	(b)
Long-term debt		95,000		247,152	(b)
Deferred income taxes		92,253		86,257
Long-term liabilities		5,645		5,726

Total SEI Investments Company shareholders’ equity		1,041,570		909,723
Noncontrolling interest		15,155		121,895

Total Equity		1,056,725		1,031,618

Total liabilities and equity	$	1,377,223	$	1,533,808

(a)	Includes $57,061 of cash and cash equivalents and $66,392 of receivables of LSV Asset Management.

(b)	Includes $20,552 of debt of LSV Employee Group of which $6,400 is included in Current liabilities and the remaining $14,152 is included in Long-term debt.

SEI INVESTMENTS COMPANY

ASSET BALANCES

(In millions)

(Unaudited)


	Dec. 31,		Mar. 31,		Jun. 30,		Sep. 30,		Dec. 31,
	2009		2010		2010		2010		2010
Private Banks:
Equity/Fixed Income prgms.	$	12,690	$	12,635	$	11,769	$	12,842	$	13,512
Collective Trust Fund prgm.		1,067		1,023		640		615		626
Liquidity funds		6,035		5,329		5,175		5,034		5,120

Total assets under mgmt.	$	19,792	$	18,987	$	17,584	$	18,491	$	19,258

Client assets under admin.		11,213		11,429		10,335		10,557		10,672

Total assets	$	31,005	$	30,416	$	27,919	$	29,048	$	29,930

Investment Advisors:
Equity/Fixed Income prgms.	$	25,392	$	26,222	$	23,699	$	26,091	$	27,680
Collective Trust Fund prgm.		2,423		2,284		2,066		2,028		1,820
Liquidity funds		1,929		1,731		2,635		2,253		1,641

Total assets under mgmt.	$	29,744	$	30,237	$	28,400	$	30,372	$	31,141

Institutional Investors:
Equity/Fixed Income prgms.	$	44,322	$	45,891	$	43,506	$	47,667	$	48,699
Collective Trust Fund prgm.		684		657		643		641		623
Liquidity funds		3,370		3,198		2,558		3,475		3,382

Total assets under mgmt.	$	48,376	$	49,746	$	46,707	$	51,783	$	52,704

Investment Managers:
Equity/Fixed Income prgms.	$	4	$	2	$	1	$	1	$	1
Collective Trust Fund prgm.		7,428		7,639		7,366		7,781		8,177
Liquidity funds		412		447		428		423		313
Total assets under mgmt.	$	7,844	$	8,088	$	7,795	$	8,205	$	8,491

Client assets under admin. (A)		221,680		220,807		220,459		227,777		233,079

Total assets	$	229,524	$	228,895	$	228,254	$	235,982	$	241,570

Investments in New Businesses:
Equity/Fixed Income prgms.	$	520	$	534	$	496	$	533	$	569
Liquidity funds		75		72		74		82		65

Total assets under mgmt.	$	595	$	606	$	570	$	615	$	634

LSV Asset Management
Equity/Fixed Income prgms.	$	52,488	$	54,189	$	47,822	$	54,492	$	60,058

Consolidated:
Equity/Fixed Income prgms (B)	$	135,416	$	139,473	$	127,293	$	141,626	$	150,519
Collective Trust Fund prgm.		11,602		11,603		10,715		11,065		11,246
Liquidity funds		11,821		10,777		10,870		11,267		10,521

Total assets under mgmt.	$	158,839	$	161,853	$	148,878	$	163,958	$	172,286

Client assets under admin. (C)		232,893		232,236		230,794		238,334		243,751

Total assets	$	391,732	$	394,089	$	379,672	$	402,292	$	416,037

(A)	Client assets under administration in the Investment Managers segment include $59.0 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of December 31, 2010).

(B)	Equity/Fixed Income programs include $2,304 million of assets invested in various asset allocation funds at December 31, 2010.

(C)	In addition to the numbers presented, SEI also administers an additional $5,019 million in Funds of Funds assets (as of December 31, 2010) on which SEI does not earn an administration fee.

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