10-Q 1 seic-20220331.htm FORM 10-Q seic-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________
FORM 10-Q
________________________________________
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________to ________
Commission File Number: 0-10200
________________________________________ 
seic-20220331_g1.jpg
________________________________________
SEI INVESTMENTS COMPANY
(Exact Name of Registrant as Specified in its Charter)
________________________________________ 
Pennsylvania 23-1707341
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer Identification No.)
1 Freedom Valley Drive, Oaks, Pennsylvania 19456-1100
(Address of Principal Executive Offices) (Zip Code)
(610) 676-1000
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareSEICThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  x    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes      No  x
The number of shares outstanding of the registrant’s common stock, as of the close of business on April 21, 2022:
Common Stock, $0.01 par value137,265,550 





SEI INVESTMENTS COMPANY

TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
Item 1.Financial Statements.
Consolidated Balance Sheets (Unaudited) -- March 31, 2022 and December 31, 2021
Consolidated Statements of Operations (Unaudited) -- For the Three Months Ended March 31, 2022 and 2021
Consolidated Statements of Comprehensive Income (Unaudited) -- For the Three Months Ended March 31, 2022 and 2021
Consolidated Statements of Changes in Equity (Unaudited) -- For the Three Months Ended March 31, 2022 and 2021
Consolidated Condensed Statements of Cash Flows (Unaudited) -- For the Three Months Ended March 31, 2022 and 2021
Notes to Consolidated Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
Item 4.Controls and Procedures.
PART II - OTHER INFORMATION
Item 1.Legal Proceedings.
Item 1A.Risk Factors.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6.Exhibits.
Signatures






1


PART I.        FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements.

SEI Investments Company
Consolidated Balance Sheets
(unaudited)
(In thousands, except par value)
March 31, 2022December 31, 2021
Assets
Current Assets:
Cash and cash equivalents$907,831 $831,407 
Restricted cash351 351 
Receivables from investment products57,584 59,036 
Receivables, net of allowance for doubtful accounts of $1,388 and $1,602
437,844 441,609 
Securities owned31,258 28,267 
Other current assets46,115 43,559 
Total Current Assets1,480,983 1,404,229 
Property and Equipment, net of accumulated depreciation of $417,041 and $409,248
180,458 178,869 
Operating Lease Right-of-Use Assets31,024 33,614 
Capitalized Software, net of accumulated amortization of $558,861 and $545,307
236,481 243,446 
Available for Sale and Equity Securities134,717 129,541 
Investments in Affiliated Funds, at fair value7,270 6,916 
Investment in Unconsolidated Affiliate52,778 107,918 
Goodwill117,434 117,232 
Intangible Assets, net of accumulated amortization of $20,969 and $17,716
65,339 68,782 
Deferred Contract Costs35,847 36,236 
Deferred Income Taxes2,706 2,983 
Other Assets, net27,569 24,936 
Total Assets$2,372,606 $2,354,702 
The accompanying notes are an integral part of these consolidated financial statements.





2


SEI Investments Company
Consolidated Balance Sheets
(unaudited)
(In thousands, except par value)
March 31, 2022December 31, 2021
Liabilities and Equity
Current Liabilities:
Accounts payable$8,037 $10,312 
Accrued liabilities250,468 324,382 
Current portion of long-term operating lease liabilities11,219 11,328 
Deferred revenue15,422 9,721 
Total Current Liabilities285,146 355,743 
Borrowings Under Revolving Credit Facility30,000 40,000 
Long-term Income Taxes Payable803 803 
Deferred Income Taxes36,561 48,876 
Long-term Operating Lease Liabilities24,997 27,639 
Other Long-term Liabilities22,016 20,878 
Total Liabilities399,523 493,939 
Commitments and Contingencies
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 137,219 and 138,449 shares issued and outstanding
1,372 1,384 
Capital in excess of par value1,266,320 1,246,608 
Retained earnings733,572 632,614 
Accumulated other comprehensive loss, net(28,181)(19,843)
Total Shareholders' Equity1,973,083 1,860,763 
Total Liabilities and Shareholders' Equity$2,372,606 $2,354,702 
The accompanying notes are an integral part of these consolidated financial statements.




3


SEI Investments Company
Consolidated Statements of Operations
(unaudited)
(In thousands, except per share data)
 
 Three Months Ended March 31,
 20222021
Revenues:
Asset management, administration and distribution fees
$394,097 $367,646 
Information processing and software servicing fees
187,346 88,040 
Total revenues581,443 455,686 
Expenses:
Subadvisory, distribution and other asset management costs
53,128 50,164 
Software royalties and other information processing costs
7,547 5,742 
Compensation, benefits and other personnel
160,484 137,221 
Stock-based compensation
10,566 9,752 
Consulting, outsourcing and professional fees
62,491 54,340 
Data processing and computer related
29,816 25,721 
Facilities, supplies and other costs
17,627 17,248 
Amortization
16,887 14,352 
Depreciation
8,098 8,309 
Total expenses366,644 322,849 
Income from operations214,799 132,837 
Net (loss) gain from investments(489)332 
Interest and dividend income848 945 
Interest expense(250)(123)
Equity in earnings of unconsolidated affiliate32,459 33,350 
Income before income taxes247,367 167,341 
Income taxes57,059 37,871 
Net income$190,308 $129,470 
Basic earnings per common share$1.38 $0.90 
Shares used to compute basic earnings per share137,935 143,201 
Diluted earnings per common share$1.36 $0.89 
Shares used to compute diluted earnings per share139,712 145,306 
The accompanying notes are an integral part of these consolidated financial statements.




4


SEI Investments Company
Consolidated Statements of Comprehensive Income
(unaudited)
(In thousands)
 
 Three Months Ended March 31,
 20222021
Net income$190,308 $129,470 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(4,558)1,685 
Unrealized loss on investments:
Unrealized losses during the period, net of income taxes of $1,186 and $160
(3,969)(543)
Reclassification adjustment for losses realized in net income, net of income taxes of $(57) and $(74)
189 253 
Total other comprehensive (loss) income, net of tax(8,338)1,395 
Comprehensive income$181,970 $130,865 
The accompanying notes are an integral part of these consolidated financial statements.




5


SEI Investments Company
Consolidated Statements of Changes in Equity
(unaudited)
(In thousands)
Shares of Common StockCommon StockCapital In Excess of Par ValueRetained EarningsAccumulated Other Comprehensive LossTotal Equity
For the Three Months Ended March 31, 2022
Balance, January 1, 2022138,449 $1,384 $1,246,608 $632,614 $(19,843)$1,860,763 
Net income— — — 190,308 — 190,308 
Other comprehensive loss— — — — (8,338)(8,338)
Purchase and retirement of common stock(1,713)(17)(10,723)(89,350)— (100,090)
Issuance of common stock under employee stock purchase plan23 — 1,168 — — 1,168 
Issuance of common stock upon exercise of stock options460 5 18,701 — — 18,706 
Stock-based compensation— — 10,566 — — 10,566 
Balance, March 31, 2022137,219 $1,372 $1,266,320 $733,572 $(28,181)$1,973,083 
Shares of Common StockCommon StockCapital In Excess of Par ValueRetained EarningsAccumulated Other Comprehensive LossTotal Equity
For the Three Months Ended March 31, 2021
Balance, January 1, 2021143,396 $1,434 $1,190,001 $565,270 $(16,798)$1,739,907 
Net income— — — 129,470 — 129,470 
Other comprehensive income— — — — 1,395 1,395 
Purchase and retirement of common stock(1,152)(11)(6,839)(60,089)— (66,939)
Issuance of common stock under employee stock purchase plan24 — 1,139 — — 1,139 
Issuance of common stock upon exercise of stock options433 4 14,380 — — 14,384 
Stock-based compensation— — 9,752 — — 9,752 
Balance, March 31, 2021142,701 $1,427 $1,208,433 $634,651 $(15,403)$1,829,108 
The accompanying notes are an integral part of these consolidated financial statements.





6


SEI Investments Company
Consolidated Condensed Statements of Cash Flows
(unaudited)
(In thousands)
 Three Months Ended
March 31,
 20222021
Cash flows from operating activities:
Net income$190,308 $129,470 
Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)70,119 7,103 
Net cash provided by operating activities260,427 136,573 
Cash flows from investing activities:
Additions to property and equipment(9,283)(4,218)
Additions to capitalized software(6,589)(6,360)
Purchases of marketable securities(49,333)(51,524)
Prepayments and maturities of marketable securities35,397 42,446 
Sales of marketable securities48  
Other investing activities(2,000)(11,000)
Net cash used in investing activities(31,760)(30,656)
Cash flows from financing activities:
Repayments under revolving credit facility(10,000) 
Payment of contingent consideration(868)(702)
Purchase and retirement of common stock(100,155)(71,206)
Proceeds from issuance of common stock19,874 15,523 
Payment of dividends(55,503)(53,127)
Net cash used in financing activities(146,652)(109,512)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(5,591)1,551 
Net increase (decrease) in cash, cash equivalents and restricted cash76,424 (2,044)
Cash, cash equivalents and restricted cash, beginning of period831,758 787,727 
Cash, cash equivalents and restricted cash, end of period$908,182 $785,683 
The accompanying notes are an integral part of these consolidated financial statements.




7


Notes to Consolidated Financial Statements
(all figures are in thousands except share and per share data)
 
Note 1.    Summary of Significant Accounting Policies
Nature of Operations
SEI Investments Company (the Company), a Pennsylvania corporation, provides comprehensive platforms, services and infrastructure–encompassing technology, operational, and investment management services–to help wealth managers, financial advisors, investment managers, family offices, institutional and private investors create and manage wealth.
Investment processing platforms provide technologies and business process outsourcing services for wealth managers and investment advisors. These solutions include investment advisory, client relationship, and other technology-enabled capabilities for the front office; administrative and investment services for the middle office; and accounting and processing services for the back office. Revenues from investment processing platforms are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.
Investment operations platforms provide business process outsourcing services for investment managers and asset owners. These platforms support a broad range of traditional and alternative investments and provide technology-enabled information analytics and investor capabilities for the front office; administrative and investment services for the middle office; and fund administration and accounting services for the back office. Revenues from investment operations platforms are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.
Investment management platforms provide comprehensive solutions for managing personal and institutional wealth. These platforms include goals-based investment strategies; SEI-sponsored investment products, including mutual funds, collective investment products, alternative investment portfolios and separately managed accounts (SMA); and other market-specific advice, technology and operational components. These platforms are offered to wealth managers as part of a complete goals-based investment program for their end-investors. For institutional investors, the Company provides Outsourced Chief Investment Officer (OCIO) solutions that include investment management programs, as well as advisory and administrative services. Revenues from investment management platforms are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.
Basis of Presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Certain financial information and accompanying note disclosure normally included in the Company’s Annual Report on Form 10-K have been condensed or omitted. The interim financial information is unaudited but reflects all adjustments (consisting of only normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of financial position of the Company as of March 31, 2022, the results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three-months ended March 31, 2022 and 2021. These interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
There have been no significant changes in significant accounting policies during the three months ended March 31, 2022 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
Variable Interest Entities
The Company or its affiliates have created numerous investment products for its clients in various types of legal entity structures. The Company serves as the Manager, Administrator and Distributor for these investment products and may also serve as the Trustee for some of the investment products. The Company receives asset management, distribution, administration and custodial fees for these services. Clients are the equity investors and participate in proportion to their ownership percentage in the net income or loss and net capital gains or losses of the products, and, on liquidation, will participate in proportion to their ownership percentage in the remaining net assets of the products after satisfaction of outstanding liabilities. The Company has concluded that it is not the primary beneficiary of the entities and, therefore, is not required to consolidate any of the pooled investment vehicles for which it receives asset management, distribution, administration and custodial fees under the VIE model.
The Company is a party to expense limitation agreements with certain SEI-sponsored money market funds subject to Rule 2a-7 of the Investment Company Act of 1940 which establish a maximum level of ordinary operating expenses incurred by the fund in any fiscal year including, but not limited to, fees of the administrator or its affiliates. Under the terms of these




8


agreements, the Company waived $11,185 and $10,233 in fees during the three months ended March 31, 2022 and 2021, respectively.
Revenue Recognition
Revenue is recognized when the transfer of control of promised goods or services under the terms of a contract with customers are satisfied in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those promised goods or services. Certain portions of the Company’s revenues involve a third party in providing goods or services to its customers. In such circumstances, the Company must determine whether the nature of its promise to the customer is to provide the underlying goods or services (the Company is the principal in the transaction and reports the transaction gross) or to arrange for a third party to provide the underlying goods or services (the entity is the agent in the transaction and reports the transaction net). See Note 13 for related disclosures regarding revenue recognition.
Cash and Cash Equivalents
Cash and cash equivalents includes $299,843 and $290,256 at March 31, 2022 and December 31, 2021, respectively, primarily invested in SEI-sponsored open-ended money market mutual funds.
Restricted Cash
Restricted cash includes $250 at March 31, 2022 and December 31, 2021 segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes $101 at March 31, 2022 and December 31, 2021 segregated in special reserve accounts for the benefit of customers of the Company’s broker-dealer subsidiary, SEI Investments Distribution Co. (SIDCO), in accordance with certain rules established by the Securities and Exchange Commission (SEC) for broker-dealers.
Capitalized Software
The Company capitalized $6,589 and $6,360 of software development costs during the three months ended March 31, 2022 and 2021, respectively. The Company's software development costs primarily relate to significant enhancements to the SEI Wealth PlatformSM (SWP). As of March 31, 2022, the net book value of SWP was $230,363. The net book value includes $31,108 of capitalized software development costs in-progress associated with future releases of SWP. Capitalized software development costs in-progress associated with future releases of SWP were $29,253 as of December 31, 2021. SWP has a weighted average remaining life of 10.2 years. Amortization expense for SWP was $12,104 and $11,923 during the three months ended March 31, 2022 and 2021, respectively.
Earnings per Share
The calculations of basic and diluted earnings per share for the three months ended March 31, 2022 and 2021 are:
 Three Months Ended March 31,
 20222021
Net income$190,308 $129,470 
Shares used to compute basic earnings per common share137,935,000 143,201,000 
Dilutive effect of stock options1,777,000 2,105,000 
Shares used to compute diluted earnings per common share139,712,000 145,306,000 
Basic earnings per common share$1.38 $0.90 
Diluted earnings per common share$1.36 $0.89 
During the three months ended March 31, 2022 and 2021, employee stock options to purchase 12,218,000 and 11,715,000 shares of common stock with an average exercise price of $60.28 and $57.99, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three month periods were not included in the computation of diluted earnings per common share because either the performance conditions have not been satisfied or would not have been satisfied if the reporting date was the end of the contingency period or the options' exercise price was greater than the average market price of the Company’s common stock and the effect on diluted earnings per common share would have been anti-dilutive.
Recently Adopted Accounting Pronouncements
In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments (ASU 2021-05) which requires a lessor to classify a lease with entirely or partially variable payments that do not depend on an index or rate as an operating lease if a different classification would result in a commencement date selling loss (Day 1 loss). The Company adopted ASU 2021-05 on January 1, 2022. There was no material impact to the Company's consolidated financial statements from the implementation of ASU 2021-05.




9


Statements of Cash Flows
For purposes of the Consolidated Statements of Cash Flows, the Company considers investment instruments purchased with an original maturity of three months or less to be cash equivalents.
The following table provides the details of the adjustments to reconcile net income to net cash provided by operating activities for the three months ended March 31:
20222021
Net income$190,308 $129,470 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation8,098 8,309 
Amortization16,887 14,352 
Equity in earnings of unconsolidated affiliate(32,459)(33,350)
Distributions received from unconsolidated affiliate32,961 28,774 
Stock-based compensation10,566 9,752 
Provision for losses on receivables(214)1,207 
Deferred income tax expense(10,908)(3,915)
Net loss (gain) from investments489 (332)
Change in other long-term liabilities1,138 1,043 
Change in other assets(706)507 
Contract costs capitalized, net of amortization389 351 
Other1,228 992 
Change in current assets and liabilities
(Increase) decrease in
Receivables from investment products1,452 (2,020)
Receivables3,979 (22,016)
Other current assets(2,556)(4,113)
Advances due from unconsolidated affiliate54,636 51,266 
(Decrease) increase in
Accounts payable(2,273)(2,237)
Accrued liabilities(18,078)(41,717)
Deferred revenue5,490 250 
Total adjustments70,119 7,103 
Net cash provided by operating activities$260,427 $136,573 

Note 2.    Investment in Unconsolidated Affiliate
LSV Asset Management
The Company has an investment in LSV Asset Management (LSV), a registered investment advisor that provides investment advisory services primarily to institutions, including pension plans and investment companies. LSV is currently an investment sub-advisor for a limited number of SEI-sponsored investment products. The Company's partnership interest in LSV as of March 31, 2022 was 38.7%. The Company accounts for its interest in LSV using the equity method because of its less than 50% ownership. The Company’s interest in the net assets of LSV is reflected in Investment in unconsolidated affiliate on the accompanying Consolidated Balance Sheets and its interest in the earnings of LSV is reflected in Equity in earnings of unconsolidated affiliate on the accompanying Consolidated Statements of Operations.
At March 31, 2022, the Company’s total investment in LSV was $52,778. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distributions from LSV of $32,961 and $28,774 in the three months ended March 31, 2022 and 2021, respectively. As such, the Company considers these distribution payments as returns on investment rather than returns of the Company's original investment in LSV and has therefore classified the associated cash inflows as an operating activity on the Consolidated Statements of Cash Flows.




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The Company’s proportionate share in the earnings of LSV was $32,459 and $33,350 during the three months ended March 31, 2022 and 2021, respectively.
These tables contain condensed financial information of LSV:
Condensed Statement of OperationsThree Months Ended March 31,
 20222021
Revenues$108,450 $110,837 
Net income83,791 85,920 
Condensed Balance SheetsMarch 31, 2022December 31, 2021
Current assets$128,362 $171,058 
Non-current assets5,028 4,792 
Total assets$133,390 $175,850 
Current liabilities$41,767 $82,858 
Non-current liabilities3,665 3,863 
Partners’ capital87,958 89,129 
Total liabilities and partners’ capital$133,390 $175,850 
On April 1, 2022, LSV provided an interest in the partnership to select key employees which reduced the ownership percentage of each existing partner on a pro-rata basis. As a result, the Company's total partnership interest in LSV was reduced slightly to approximately 38.6% from approximately 38.7%.

Note 3.    Composition of Certain Financial Statement Captions
Receivables
Receivables on the accompanying Consolidated Balance Sheets consist of: 
March 31, 2022December 31, 2021
Trade receivables$101,117 $111,209 
Fees earned, not billed330,678 315,255 
Other receivables7,437 16,747 
439,232 443,211 
Less: Allowance for doubtful accounts(1,388)(1,602)
$437,844 $441,609 
Fees earned, not billed represents receivables from contracts with customers earned but unbilled and results from timing differences between services provided and contractual billing schedules. These billing schedules generally provide for fees to be billed on a quarterly basis. In addition, certain fees earned from investment operations services are calculated based on assets under administration that have an extended valuation process. Billings to these clients occur once the asset valuation processes are completed.
Receivables from investment products on the accompanying Consolidated Balance Sheets primarily represent fees receivable for distribution, investment advisory, and administration services to various regulated investment companies and other investment products sponsored by SEI.





11


Property and Equipment
Property and Equipment on the accompanying Consolidated Balance Sheets consists of:
March 31, 2022December 31, 2021
Buildings$209,834 $209,766 
Equipment161,426 153,158 
Land25,825 24,651 
Purchased software156,529 156,387 
Furniture and fixtures21,328 21,254 
Leasehold improvements21,564 21,946 
Construction in progress993 955 
597,499 588,117 
Less: Accumulated depreciation(417,041)(409,248)
Property and Equipment, net$180,458 $178,869 
The Company recognized $8,098 and $8,309 in depreciation expense related to property and equipment for the three months ended March 31, 2022 and 2021, respectively.
Deferred Contract Costs
Deferred contract costs, which primarily consist of deferred sales commissions, were $35,847 and $36,236 as of March 31, 2022 and December 31, 2021, respectively. The Company deferred expenses related to contract costs of $3,519 and $2,372 during the three months ended March 31, 2022 and 2021, respectively. Amortization expense related to deferred contract costs were $3,908 and $2,723 during the three months ended March 31, 2022 and 2021, respectively. Amortization expense during the three months ended March 31, 2022 includes $1,784 in expense accelerated as a result of the termination of a contractual agreement with a significant client (See Note 13). Amortization expense related to deferred contract costs is included in Compensation, benefits and other personnel on the accompanying Consolidated Statements of Operations. There was no impairment loss in relation to deferred contract costs during the three months ended March 31, 2022.
Accrued Liabilities
Accrued liabilities on the accompanying Consolidated Balance Sheets consist of: 
March 31, 2022December 31, 2021
Accrued employee compensation$42,053 $107,933 
Accrued employee benefits and other personnel7,117 13,951 
Accrued consulting, outsourcing and professional fees44,175 36,411 
Accrued sub-advisory, distribution and other asset management fees58,087 58,661 
Accrued dividend payable 55,452 
Accrued income taxes55,278  
Other accrued liabilities43,758 51,974 
Total accrued liabilities$250,468 $324,382 

Note 4.    Fair Value Measurements
The fair value of the Company’s financial assets and liabilities, except for the Company's investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the Company’s Level 1 financial assets consist mainly of investments in open-ended mutual funds that are quoted daily. Level 2 financial assets consist of GNMA mortgage-backed securities held by the Company's wholly-owned limited purpose federal thrift subsidiary, SEI Private Trust Company (SPTC), Federal Home Loan Bank (FHLB) and other U.S. government agency short-term notes held by SIDCO. The financial assets held by SIDCO were purchased as part of a cash management program requiring only short term, top-tier investment grade government and corporate securities. The financial assets held by SPTC are debt securities issued by GNMA and are backed by the full faith and credit of the U.S. government. These securities were purchased for the sole purpose of satisfying applicable regulatory requirements and have maturity dates which range from 2023 to 2041.




12


The fair value of the Company's investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient. The NAVs of the funds are calculated by the funds' independent custodian and are derived from the fair values of the underlying investments as of the reporting date. The funds allow for investor redemptions at the end of each calendar month. This investment has not been classified in the fair value hierarchy but is presented in the tables below to permit reconciliation to the amounts presented on the accompanying Consolidated Balance Sheets.
The valuation of the Company's Level 2 financial assets held by SIDCO and SPTC are based upon securities pricing policies and procedures utilized by third-party pricing vendors.
The pricing policies and procedures applied for our Level 1 and Level 2 financial assets during the three months ended March 31, 2022 were consistent with those as described in the Company's Annual Report on Form 10-K at December 31, 2021. The Company had no Level 3 financial assets at March 31, 2022 or December 31, 2021 that were required to be measured at fair value on a recurring basis. Level 3 financial liabilities at March 31, 2022 and December 31, 2021 consist entirely of the estimated contingent consideration resulting from an acquisition (See Note 12). The fair value of the contingent consideration was determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model include expected revenues, expected volatility, risk-free rate and other factors. There were no transfers of financial assets between levels within the fair value hierarchy during the three months ended March 31, 2022.
The fair value of certain financial assets of the Company was determined using the following inputs:
 Fair Value Measurements at the End of the Reporting Period Using
AssetsMarch 31, 2022Quoted Prices in
Active  Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Equity securities$11,903 $11,903 $ 
Available-for-sale debt securities122,814  122,814 
Fixed-income securities owned31,258  31,258 
Investment funds sponsored by LSV (1)7,270 
$173,245 $11,903 $154,072 
 Fair Value Measurements at the End of the Reporting Period Using
AssetsDecember 31, 2021Quoted Prices in
Active  Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Equity securities$12,406 $12,406 $ 
Available-for-sale debt securities117,135  117,135 
Fixed-income securities owned28,267  28,267 
Investment funds sponsored by LSV (1)6,916 
$164,724 $12,406 $145,402 
(1) The fair value amounts presented in the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the accompanying Consolidated Balance Sheets (See Note 5).





13


Note 5.    Marketable Securities
Marketable securities include investments in money market funds and commercial paper classified as cash equivalents, available-for-sale debt securities, investments in SEI-sponsored and non-SEI-sponsored mutual funds, equities, investments in funds sponsored by LSV and securities owned by SIDCO.
Cash Equivalents
Investments in money market funds and commercial paper classified as cash equivalents had a fair value of $422,635 and $422,838 at March 31, 2022 and December 31, 2021, respectively. There were no material unrealized or realized gains or losses from these investments during the three months ended March 31, 2022 and 2021. Investments in money market funds and commercial paper are Level 1 assets.
Available for Sale and Equity Securities
Available For Sale and Equity Securities on the accompanying Consolidated Balance Sheets consist of: 
 At March 31, 2022
 Cost
Amount
Gross
Unrealized
Gains
Gross
Unrealized
(Losses)
Fair
Value
Available-for-sale debt securities$127,804 $ $(4,990)$122,814 
SEI-sponsored mutual funds6,353 505 (21)6,837 
Equities and other mutual funds4,837 229  5,066 
$138,994 $734 $(5,011)$134,717 
 At December 31, 2021
 Cost
Amount
Gross
Unrealized
Gains
Gross
Unrealized
(Losses)
Fair
Value
Available-for-sale debt securities$117,215 $ $(80)$117,135 
SEI-sponsored mutual funds6,748 463  7,211 
Equities and other mutual funds4,935 260  5,195 
$128,898 $723 $(80)$129,541 
Net unrealized losses at March 31, 2022 of available-for-sale debt securities were $3,842 (net of income tax benefit of $1,148). Net unrealized losses at December 31, 2021 of available-for-sale debt securities were $62 (net of income tax benefit of $18). These unrealized losses are associated with the Company’s investments in mortgage-backed securities issued by GNMA and were caused by interest rate increases (See Note 4). The contractual cash flows of these securities are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost bases of the Company's investments. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. These net unrealized losses are reported as a separate component of Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets.
There were gross realized losses of $246 and $327 from available-for-sale debt securities during the three months ended March 31, 2022 and 2021, respectively. There were no gross realized gains from available-for-sale debt securities during the three months ended March 31, 2022 and 2021. Realized losses from available-for-sale debt securities, including amounts reclassified from accumulated comprehensive loss, are reflected in Net (loss) gain from investments on the accompanying Consolidated Statements of Operations.
There were gross realized gains of $5 and gross realized losses of $579 from mutual funds and equities during the three months ended March 31, 2022. Gains and losses from mutual funds and equities are reflected in Net (loss) gain from investments on the accompanying Consolidated Statements of Operations.
Investments in Affiliated Funds
The Company has an investment in funds sponsored by LSV. The Company records this investment on the accompanying Consolidated Balance Sheets at fair value. Unrealized gains and losses from the change in fair value of these funds are recognized in Net (loss) gain from investments on the accompanying Consolidated Statements of Operations.
The funds had a fair value of $7,270 and $6,916 at March 31, 2022 and December 31, 2021, respectively. The Company recognized unrealized gains of $354 and $457 during the three months ended March 31, 2022 and 2021, respectively, from the change in fair value of the funds.




14


Securities Owned
The Company’s broker-dealer subsidiary, SIDCO, has investments in U.S. government agency securities with maturity dates less than one year. These investments are reflected as Securities owned on the accompanying Consolidated Balance Sheets. Due to specialized accounting practices applicable to investments by broker-dealers, the securities are reported at fair value and changes in fair value are recorded in current period earnings. The securities had a fair value of $31,258 and $28,267 at March 31, 2022 and December 31, 2021, respectively. There were no material net gains or losses related to the securities during the three months ended March 31, 2022 and 2021.

Note 6.    Line of Credit
The Company has a five-year $325,000 Credit Agreement (the Credit Facility) with Wells Fargo Bank, N.A., and a syndicate of other lenders. The Credit Facility is scheduled to expire in April 2026, at which time any aggregate principal amount of loans outstanding becomes payable in full. Any borrowings made under the Credit Facility will accrue interest at rates that, at the Company's option, are based on a base rate (the Base Rate) plus a premium that can range from 0.25% to 1.00% or the London InterBank Offered Rate (LIBOR) plus a premium that can range from 1.25% to 2.00% depending on the Company’s Leverage Ratio (a ratio of consolidated indebtedness to consolidated EBITDA for the four preceding fiscal quarters, all as defined in the related agreement). The Base Rate is defined as the highest of a) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 0.50%, b) the prime commercial lending rate of Wells Fargo, c) the applicable LIBOR plus 1.00%, or d) 0%. The Credit Facility includes fallback language clearly defining an alternative reference rate which provides for specified replacement rates upon a LIBOR cessation event. At the time of a LIBOR cessation event, the replacement rate, the Secured Overnight Financing Rate (SOFR), self-executes without the need for negotiations or a formal amendment process.
The Company also pays quarterly commitment fees based on the unused portion of the Credit Facility. The quarterly fees for the Credit Facility can range from 0.15% of the amount of the unused portion to 0.30%, depending on the Company’s Leverage Ratio. Certain wholly-owned subsidiaries of the Company have guaranteed the obligations of the Company under the agreement. The aggregate amount of the Credit Facility may be increased by an additional $100,000 under certain conditions set forth in the agreement. The Company may issue up to $15,000 in letters of credit under the terms of the Credit Facility. The Company pays a periodic commission fee of 1.25% plus an issuance fee of 0.200% of the aggregate face amount of the outstanding letters of credit issued under the Credit Facility.
The Credit Facility contains covenants with restrictions on the ability of the Company to do transactions with affiliates other than wholly-owned subsidiaries or to incur liens or certain types of indebtedness as defined in the agreement. In the event of a default under the Credit Facility, the Company would also be restricted from paying dividends on, or repurchasing, its common stock without the approval of the lenders. Upon the occurrence of certain financial or economic events, significant corporate events, or certain other events of default constituting an event of default under the Credit Facility, all loans outstanding may be declared immediately due and payable and all commitments under the agreement may be terminated.
In November 2021, the Company borrowed $40,000 under the Credit Facility for the funding of an acquisition (See Note 12). In February 2022, the Company made a principal payment of $10,000 against the outstanding balance of the Credit Facility. As of March 31, 2022, the outstanding balance of the Credit Facility was $30,000 and is included in Borrowings Under Revolving Credit Facility on the accompanying Consolidated Balance Sheets.
As of April 21, 2022, the Company had outstanding letters of credit of $6,264 under the Credit Facility. These letters of credit were issued primarily for the expansion of the Company's headquarters and are scheduled to expire during 2022. The amount of the Credit Facility that is available for general corporate purposes as of April 21, 2022 was $288,736.
The Company considers the book value of long-term debt related to the borrowing through the Credit Facility to be representative of its fair value.
The Company was in compliance with all covenants of the credit facilities during the three months ended March 31, 2022.

Note 7.    Shareholders’ Equity
Stock-Based Compensation
The Company has only non-qualified stock options and restricted stock units outstanding under its equity compensation plans. All outstanding stock options have performance-based vesting provisions specific to each option grant that tie the vesting of the applicable stock options to the Company’s financial performance. The Company’s stock options vest at a rate of 50% when a specified financial vesting target is achieved, and the remaining 50% when a second, higher specified financial vesting target is achieved. Options vest as a result of achievement of the financial vesting targets. Options




15


granted in December 2017 and thereafter include a service condition which requires a minimum two or four year waiting period from the grant date along with the attainment of the applicable financial vesting target. The targets are measured annually on December 31. The amount of stock-based compensation expense recognized in the period is based upon management’s estimate of when the financial vesting targets may be achieved. Any change in management’s estimate could result in the remaining amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect the Company’s earnings. The Company's restricted stock units outstanding vest ratably over four years commencing March 31, 2022.
The Company recognized stock-based compensation expense in its Consolidated Financial Statements in the three months ended March 31, 2022 and 2021, respectively, as follows: 
Three Months Ended March 31,
 20222021
Stock-based compensation expense$10,566 $9,752 
Less: Deferred tax benefit(2,096)(1,854)
Stock-based compensation expense, net of tax$8,470 $7,898 
As of March 31, 2022, there was approximately $92,057 of unrecognized compensation cost remaining related to unvested employee stock options that management expects will vest and is being amortized.
The Company issues new common shares associated with the exercise of stock options. The total intrinsic value of options exercised during the three months ended March 31, 2022 was $8,966. The total options exercisable as of March 31, 2022 had an intrinsic value of $103,527. The total intrinsic value for options exercisable is calculated as the difference between the market value of the Company’s common stock as of March 31, 2022 and the weighted average exercise price of the options. The market value of the Company’s common stock as of March 31, 2022 was $60.21 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of March 31, 2022 was $49.16. Total options that were outstanding as of March 31, 2022 were 18,467,000. Total options that were exercisable as of March 31, 2022 were 8,153,000.
Common Stock Buyback
The Company’s Board of Directors, under multiple authorizations, has authorized the repurchase of common stock on the open market or through private transactions. The Company purchased 1,713,000 shares at a total cost of $100,090 during the three months ended March 31, 2022, which reduced the total shares outstanding of common stock. The cost of stock purchases during the period includes the cost of certain transactions that settled in the following quarter. As of March 31, 2022, the Company had approximately $131,203 of authorization remaining for the purchase of common stock under the program.
The Company immediately retires its common stock when purchased. Upon retirement, the Company reduces Capital in excess of par value for the average capital per share outstanding and the remainder is charged against Retained earnings. If the Company reduces its Retained earnings to zero, any subsequent purchases of common stock will be charged entirely to Capital in excess of par value.

Note 8.    Accumulated Other Comprehensive Loss
The components of Accumulated other comprehensive loss, net of tax, are as follows: 
Foreign
Currency
Translation
Adjustments
Unrealized
Gains (Losses)
on Investments
Accumulated Other Comprehensive Loss
Balance, January 1, 2022$(19,781)$(62)$(19,843)
Other comprehensive loss before reclassifications(4,558)(3,969)(8,527)
Amounts reclassified from accumulated other comprehensive loss 189 189 
Net current-period other comprehensive loss(4,558)(3,780)(8,338)
Balance, March 31, 2022$(24,339)$(3,842)$(28,181)





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Note 9.    Business Segment Information
The Company’s reportable business segments are:
Private Banks – Provides outsourced investment processing and investment management platforms to banks and trust institutions, independent wealth advisers and financial advisors worldwide;
Investment Advisors – Provides investment management and investment processing platforms to affluent investors through a network of independent registered investment advisors, financial planners and other investment professionals in the United States;
Institutional Investors – Provides OCIO solutions, including investment management and administrative outsourcing platforms to retirement plan sponsors, healthcare systems, higher education and other not-for-profit organizations worldwide;
Investment Managers – Provides investment operations outsourcing platforms to fund companies, banking institutions, traditional and non-traditional investment managers worldwide and family offices in the United States; and
Investments in New Businesses – Focuses on providing investment management solutions to ultra-high-net-worth families residing in the United States; developing network and data protection services; modularizing larger technology platforms into stand-alone components; entering new markets; and conducting other research and development activities.
The information in the following tables is derived from internal financial reporting used for corporate management purposes. There are no inter-segment revenues for the three months ended March 31, 2022 and 2021. Assets are not allocated to segments for internal reporting purposes. The accounting policies of the reportable business segments are the same as those described in Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
The following tables highlight certain financial information about each of the business segments for the three months ended March 31, 2022 and 2021:
Private
Banks
Investment
Advisors
Institutional
Investors
Investment
Managers
Investments
In New
Businesses
Total
 For the Three Months Ended March 31, 2022
Revenues$213,548 $119,230 $86,839 $156,901 $4,925 $581,443 
Expenses121,955 64,520 45,358 98,837 11,950 342,620 
Operating profit (loss)$91,593 $54,710 $41,481 $58,064 $(7,025)$238,823 
Private
Banks
Investment
Advisors
Institutional
Investors
Investment
Managers
Investments
In New
Businesses
Total
 For the Three Months Ended March 31, 2021
Revenues$117,608 $113,294 $84,499 $136,419 $3,866 $455,686 
Expenses110,724 55,027 39,158 83,020 13,404 301,333 
Operating profit (loss)$6,884 $58,267 $45,341 $53,399 $(9,538)$154,353 




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A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 is as follows:
20222021
Total operating profit from segments$238,823 $154,353 
Corporate overhead expenses(24,024)(21,516)
Income from operations$214,799 $132,837 
The following tables provide additional information for the three months ended March 31, 2022 and 2021 pertaining to the business segments:
 Capital Expenditures (1)Depreciation
 2022202120222021
Private Banks$7,222 $5,829 $5,106 $4,132 
Investment Advisors