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

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8-K - FORM 8-K - SEI INVESTMENTS CO	form8-k7x18x2013.htm

Investor Contact: Media Contact:

Murray Louis Dana Grosser

SEI SEI

+1 610-676-1932 +1 610-676-2459

mlouis@seic.com dgrosser@seic.com

Pages: 9

FOR IMMEDIATE RELEASE

SEI REPORTS SECOND-QUARTER 2013 FINANCIAL RESULTS

OAKS, Pa., July 18, 2013 -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for second-quarter 2013. Diluted earnings per share were $.47 in second-quarter 2013 compared to $.28 in second-quarter 2012. Second-quarter 2013 includes income of $.16 diluted earnings per share from a litigation settlement payment related to a structured investment vehicle (SIV) security.



Consolidated Overview	For the Three Months						For the Six Months
(In thousands, except earnings per share)	Ended June 30,						Ended June 30,
	2013		2012		%		2013		2012		%

Revenues	$	274,574	$	241,237	14	%	$	546,453	$	479,135	14	%
Net Income attributable to SEI	83,494		49,555		68	%	155,414		99,520		56	%
Diluted Earnings Per Share		$0.47		$0.28	68	%		$0.88		$0.56	57	%

"During the second quarter of 2013, the Company continued to make strides in the development and successful implementation of our business strategies across all of our units. Our financial results reflect continued improvement in overall asset flows, implementation of new clients, and a continuation of solid sales activity," said Alfred P. West, Jr., SEI Chairman and CEO.

"Despite our profit challenges in the Private Banks segment, we continue to be encouraged by our progress as we build and enhance our solutions for our markets. Our strong financial condition, the acceptance of our business solutions, and the overall size of our market opportunity bode well for our future. As always, we are committed to enhancing shareholder value over the long term."

Summary of Second-Quarter Results by Business Segment



(In thousands)	For the Three Months								For the Six Months
	Ended June 30,								Ended June 30,
	2013			2012			%		2013			2012			%
Private Banks:
Revenues		$95,142			$88,303		8	%		$193,888			$176,291		10	%
Expenses	97,755			84,886			15	%	194,053			172,403			13	%
Operating (Loss) Profit	(2,613		)	3,417			(176	)%	(165		)	3,888			(104	)%
Gain on sale of subsidiary	—			—			N/M		22,112			—			N/M
Total (Loss) Profit		($2,613	)		$3,417		N/M			$21,947			$3,888		N/M
Operating Margin (A)	(3		)%	4		%			—		%	2		%

Investment Advisors:
Revenues	59,284			49,375			20	%	114,475			98,843			16	%
Expenses	32,898			29,025			13	%	64,523			58,326			11	%
Operating Profit	26,386			20,350			30	%	49,952			40,517			23	%
Operating Margin	45		%	41		%			44		%	41		%

Institutional Investors:
Revenues	63,684			55,895			14	%	126,846			109,212			16	%
Expenses	33,028			28,740			15	%	64,537			56,840			14	%
Operating Profit	30,656			27,155			13	%	62,309			52,372			19	%
Operating Margin	48		%	49		%			49		%	48		%

Investment Managers:
Revenues	55,456			46,713			19	%	109,276			92,924			18	%
Expenses	36,507			30,163			21	%	71,669			60,589			18	%
Operating Profit	18,949			16,550			14	%	37,607			32,335			16	%
Operating Margin	34		%	35		%			34		%	35		%

Investments in New Businesses:
Revenues	1,008			951			6	%	1,968			1,865			6	%
Expenses	3,890			3,684			6	%	7,628			7,382			3	%
Operating Loss	(2,882		)	(2,733		)	N/M		(5,660		)	(5,517		)	N/M

Totals:
Revenues	$	274,574		$	241,237		14	%	$	546,453		$	479,135		14	%
Expenses	204,078			176,498			16	%	402,410			355,540			13	%
Corporate overhead expenses	12,523			11,080			13	%	26,317			22,162			19	%
NCI reflected in segments	—			(139		)	N/M		(289		)	(454		)	N/M
Income from operations	$	57,973		$	53,798		8	%	$	118,015		$	101,887		16	%

(A) Percentage determined exclusive of gain on sale of subsidiary.

Second-Quarter Business Commentary:


•	Revenues increased in second-quarter 2013 as compared to both second-quarter 2012 and first-quarter 2013. Revenue growth was primarily driven by higher Asset management, administration, and distribution fees from improved cash flows from new and existing clients and market appreciation.

•

Our average assets under management, excluding LSV, increased $14.2 billion, or 11 percent, to $140.9 billion in the second-quarter 2013, as compared to $126.6 billion during the second-quarter 2012, and decreased $4.1 billion, or three percent, as compared to $145.0 billion during the first-quarter 2013. Average asset balances for the second-quarter 2013 do not include assets related to SEI Asset Korea (see attached Ending and Average Asset Balances schedules for further details).


•	Net income attributable to SEI reflects income of $43.4 million, or approximately $.16 diluted earnings per share, from a settlement payment received pertaining to litigation related to the purchase of securities of Cheyne Finance LLC, a SIV security. SEI holds no SIV securities.


•	Sales events, net of client losses, during second-quarter 2013 totaled approximately $21.7 million and are expected to generate net annualized recurring revenues of approximately $19.8 million when contract values are fully realized.

•

During the second-quarter 2013 the Company recognized an incremental $5.3 million of stock-based compensation expense compared to the first-quarter 2013. This incremental expense reflects a change in the timing of vesting assumptions for previously issued equity options due to the earnings per share impact of the $43.4 million litigation settlement previously mentioned. The Private Banks segment recognized $1.6 million of this incremental expense. The Investment Advisors, Institutional Investors, and Investment Managers segments each recognized approximately $1.0 million.

•

Second-quarter 2013 results for Private Banks as compared to first-quarter 2013 and second-quarter 2012 reflect the sale of SEI Asset Korea at the end of first-quarter 2013. The Private Banks segment's results reflect a reduction in revenue, expense, and profit, as compared to first-quarter 2013 of $2.9 million, $2.5 million, and $0.4 million, respectively. The Private Banks segment's results reflect a reduction in revenue, expense, and profit, as compared to second-quarter 2012 of $2.7 million, $2.5 million, and $0.2 million, respectively.


•	Income from LSV increased in second-quarter 2013 to $27.8 million as compared to $22.7 million in second-quarter 2012 due to an increase in assets under management. Our ownership interest in LSV was approximately 39.3 percent in second-quarter 2013 and 39.8 percent in second-quarter 2012.


•	The effective tax rates were 35.5 percent in second-quarter 2013, 36.6 percent in second-quarter 2012, and 34.9 percent in first-quarter 2013. The second-quarter 2013 tax rate compared to the second-quarter 2012 tax rate was benefited by the reinstatement of the research and development tax credit in 2013 as well as the closure of prior year tax audits.


•	In second-quarter 2013, we repurchased 1.7 million shares of our common stock for $50.5 million.

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on July 18, 2013. 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 297755.

About SEI

SEI (NASDAQ:SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of June 30, 2013, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $507 billion in mutual fund and pooled or separately managed assets, including $204 billion in assets under management and $303 billion in client assets under administration. 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)



	For the Three Months Ended June 30,
	2013			2012

Asset management, admin. and distribution fees		$203,722			$176,613
Information processing and software servicing fees	62,468			57,254
Transaction–based and trade execution fees	8,384			7,370

Total revenues	274,574			241,237

Subadvisory, distribution and other asset mgmt costs	29,652			25,417
Software royalties and other information processing costs	7,884			5,695
Brokerage commissions	6,260			5,634
Compensation, benefits and other personnel	86,715			80,531
Stock-based compensation	10,607			3,865
Consulting, outsourcing and professional fees	33,451			26,329
Data processing and computer related	12,316			11,659
Facilities, supplies and other costs	15,559			15,272
Amortization	8,427			7,407
Depreciation	5,730			5,630

Total expenses	216,601			187,439

Income from operations	57,973			53,798

Net (loss) gain on investments	(177		)	664
Interest and dividend income	688			1,440
Interest expense	(114		)	(113		)
Equity in earnings of unconsolidated affiliates	27,588			22,712
Other income	43,429			—

Net income before income taxes	129,387			78,501

Income taxes	45,893			28,762

Net income	83,494			49,739

Less: Net income attributable to the noncontrolling interest	—			(184		)

Net income attributable to SEI		$83,494			$49,555

Diluted earnings per common share		$0.47			$0.28

Shares used to calculate diluted earnings per share	176,058			175,913

Basic earnings per common share		$0.48			$0.28

Shares used to calculate basic earnings per share	172,223			174,830

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



	For the Six Months Ended June 30,
	2013			2012

Asset management, admin. and distribution fees		$402,355			$349,567
Information processing and software servicing fees	127,000			113,454
Transaction–based and trade execution fees	17,098			16,114

Total revenues	546,453			479,135

Subadvisory, distribution and other asset mgmt costs	57,586			53,420
Software royalties and other information processing costs	15,371			12,636
Brokerage commissions	12,772			11,941
Compensation, benefits and other personnel	175,325			159,074
Stock-based compensation	15,900			7,898
Consulting, outsourcing and professional fees	65,300			53,284
Data processing and computer related	24,374			23,124
Facilities, supplies and other costs	33,707			29,780
Amortization	16,669			15,029
Depreciation	11,434			11,062

Total expenses	428,438			377,248

Income from operations	118,015			101,887

Net gain on investments	103			3,869
Interest and dividend income	1,741			2,927
Interest expense	(227		)	(274		)
Equity in earnings of unconsolidated affiliates	55,176			50,042
Gain on sale of subsidiary	22,112			—
Other income	43,429			—

Net income before income taxes	240,349			158,451

Income taxes	84,585			58,477

Net income	155,764			99,974

Less: Net income attributable to the noncontrolling interest	(350		)	(454		)

Net income attributable to SEI		$155,414			$99,520

Diluted earnings per common share		$0.88			$0.56

Shares used to calculate diluted earnings per share	176,032			176,791

Basic earnings per common share		$0.90			$0.57

Shares used to calculate basic earnings per share	172,411			175,589

SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)



	June 30,		December 31,
	2013		2012
Assets

Cash and short-term investments		$487,059		$452,247
Restricted cash	5,500		6,000
Receivables, net	220,828		202,818
Securities owned	21,103		20,088
Other current assets	18,886		20,251

Total current assets	753,376		701,404

Property and equipment, net	119,195		127,581
Marketable securities	69,692		81,778
Capitalized software, net	313,121		307,490
Investment in unconsolidated affiliates	81,777		77,398
Other assets, net	10,707		14,173

Total assets		$1,347,868		$1,309,824



Liabilities

Current liabilities		$131,247		$152,005
Deferred income taxes	82,269		93,458
Other Long-term liabilities	7,857		7,032

Total SEI Investments Company shareholders’ equity	1,126,495		1,038,180
Noncontrolling interest	—		19,149
Total Equity	1,126,495		1,057,329

Total liabilities and equity		$1,347,868		$1,309,824

SEI INVESTMENTS COMPANY

ENDING ASSET BALANCES

(In millions)

(Unaudited)



	Jun. 30,		Sept. 30,		Dec. 31,		Mar. 31,		Jun. 30,
	2012		2012		2012		2013		2013
Private Banks:
Equity/Fixed Income prgms.		$16,848		$17,960		$18,862		$12,446		$12,876
Collective Trust Fund prgms.	335		147		11		9		10
Liquidity funds	5,063		5,342		6,008		5,143		5,048
Total assets under mgmnt.		$22,246		$23,449		$24,881		$17,598		$17,934
Client assets under admin.	10,719		11,611		12,178		12,970		13,122
Total assets		$32,965		$35,060		$37,059		$30,568		$31,056

Investment Advisors:
Equity/Fixed Income prgms.		$29,153		$30,864		$31,220		$34,166		$34,447
Collective Trust Fund prgms.	705		370		14		15		14
Liquidity funds	1,880		1,868		2,514		2,094		2,145
Total assets under mgmnt.		$31,738		$33,102		$33,748		$36,275		$36,606

Institutional Investors:
Equity/Fixed Income prgms.		$55,548		$59,852		$62,160		$64,214		$61,927
Collective Trust Fund prgms.	415		153		102		101		106
Liquidity funds	2,958		3,272		2,454		2,810		2,901
Total assets under mgmnt.		$58,921		$63,277		$64,716		$67,125		$64,934

Investment Managers:
Equity/Fixed Income prgms.		$61		$65		$67		$73		$75
Collective Trust Fund prgms.	13,004		15,433		16,197		17,656		18,197
Liquidity funds	226		396		408		522		542
Total assets under mgmnt.		$13,291		$15,894		$16,672		$18,251		$18,814
Client assets under admin. (A)	231,549		240,965		244,671		275,632		289,807
Total assets		$244,840		$256,859		$261,343		$293,883		$308,621

Investments in New Businesses:
Equity/Fixed Income prgms.		$551		$534		$513		$552		$572
Liquidity funds	30		29		43		42		29
Total assets under mgmnt.		$581		$563		$556		$594		$601

LSV Asset Management:
Equity/Fixed Income prgms. (E)		$54,922		$58,886		$60,947		$64,958		$65,417

Total:
Equity/Fixed Income prgms (B) (D)		$157,083		$168,161		$173,769		$176,409		$175,314
Collective Trust Fund prgms.	14,459		16,103		16,324		17,781		18,327
Liquidity funds	10,157		10,907		11,427		10,611		10,665
Total assets under mgmnt.		$181,699		$195,171		$201,520		$204,801		$204,306

Client assets under admin. (C)	242,268		252,576		256,849		288,602		302,929
Total assets		$423,967		$447,747		$458,369		$493,403		$507,235


(A)	Client assets under administration in the Investment Managers segment include $55.2 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of June 30, 2013).


(B)	Equity/Fixed Income programs include $3.5 billion of assets invested in various asset allocation funds at June 30, 2013.


(C)	In addition to the numbers presented, SEI also administers an additional $5.2 billion in Funds of Funds assets (as of

June 30, 2013) on which SEI does not earn an administration fee.


(D)	Equity/Fixed Income programs in the Private Banks segment for 2012 included assets related to SEI Asset Korea which was sold in first-quarter 2013. Assets for SEI Asset Korea at June 30, Sept. 30, and Dec. 31 2012 were $6.3 billion, $6.6 billion and $7.0 billion respectively.


(E)	Ending asset balances for LSV Asset Management as of Mar. 31, 2013 were revised from $66.3 billion to $65 billion.

SEI INVESTMENTS COMPANY

AVERAGE ASSET BALANCES

(In millions)

(Unaudited)



	2nd Qtr.		3rd Qtr.		4th Qtr.		1st Qtr.		2nd Qtr.
	2012		2012		2012		2013		2013
Private Banks:
Equity/Fixed Income prgms.		$16,794		$17,527		$18,301		$19,197		$12,959
Collective Trust Fund prgms.	396		230		66		11		10
Liquidity funds	5,115		5,401		5,229		5,556		5,093
Total assets under mgmnt.		$22,305		$23,158		$23,596		$24,764		$18,062
Client assets under admin.	10,631		10,867		11,783		12,860		13,183
Total assets		$32,936		$34,025		$35,379		$37,624		$31,245

Investment Advisors:
Equity/Fixed Income prgms.		$29,103		$30,032		$30,881		$33,189		$34,831
Collective Trust Fund prgms.	984		532		158		14		14
Liquidity funds	1,806		1,886		2,176		2,085		2,028
Total assets under mgmnt.		$31,893		$32,450		$33,215		$35,288		$36,873

Institutional Investors:
Equity/Fixed Income prgms.		$54,998		$57,763		$61,304		$63,642		$63,466
Collective Trust Fund prgms.	418		284		120		101		105
Liquidity funds	3,147		3,253		3,493		2,960		2,975
Total assets under mgmnt.		$58,563		$61,300		$64,917		$66,703		$66,546

Investment Managers:
Equity/Fixed Income prgms.		$63		$62		$68		$68		$75
Collective Trust Fund prgms.	12,991		14,797		15,719		17,129		18,205
Liquidity funds	235		287		395		511		500
Total assets under mgmnt.		$13,289		$15,146		$16,182		$17,708		$18,780
Client assets under admin.	229,873		237,155		240,520		263,054		286,018
Total assets		$243,162		$252,301		$256,702		$280,762		$304,798

Investments in New Businesses:
Equity/Fixed Income prgms.		$550		$530		$518		$542		$567
Liquidity funds	33		35		33		38		34
Total assets under mgmnt.		$583		$565		$551		$580		$601

LSV Asset Management:
Equity/Fixed Income prgms. (B)		$55,994		$57,164		$59,383		$63,997		$66,781

Total:
Equity/Fixed Income prgms (A)		$157,502		$163,078		$170,455		$180,635		$178,679
Collective Trust Fund prgms.	14,789		15,843		16,063		17,255		18,334
Liquidity funds	10,336		10,862		11,326		11,150		10,630
Total assets under mgmnt.		$182,627		$189,783		$197,844		$209,040		$207,643

Client assets under admin.	240,504		248,022		252,303		275,914		299,201
Total assets		$423,131		$437,805		$450,147		$484,954		$506,844


(A)	Equity/Fixed Income programs in the Private Banks segment for 2012 and first-quarter 2013 included average assets related to SEI Asset Korea which was sold in first-quarter 2013. Average assets for SEI Asset Korea for the second, third and fourth quarters of 2012 were $6.4 billion, $6.5 billion and $6.8 billion respectively and $7.0 billion for the first-quarter 2013.


(B)	Average asset balances for LSV Asset Management for first-quarter 2013 were revised from $64.4 billion to $64 billion.

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