Investment in Unconsolidated Affiliate

The Company has an investment in the general partnership LSV Asset Management (LSV). LSV is a registered investment advisor that provides investment advisory services to institutions, including pension plans and investment companies. LSV is currently an investment sub-advisor for a small number of SEI-sponsored mutual funds. The Company accounts for its interest in LSV using the equity method because of its less than 50 percent 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.

As of December 31, 2011, the Company's total partnership interest in LSV was approximately 41.2 percent. In March 2009, certain partners (the Contributing partners) of LSV, including the Company, designated a portion of their partnership interest for the purpose of providing an interest in the partnership to a select group of key employees. Until such time an interest in the partnership is issued to a key employee, all profits, losses, distributions and other rights and obligations relating to such unissued interests remains with the Contributing partners. Each issuance must be authorized by unanimous vote of all Contributing partners. In April 2012, the Contributing partners agreed to provide certain key employees an interest in LSV, thereby reducing the Company’s interest in LSV to approximately 39.8 percent.

At June 30, 2012, the Company’s total investment in LSV was $63,553. The investment in LSV exceeded the underlying equity in the net assets of LSV by $3,499, of which $3,062 is considered goodwill embedded in the investment. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distribution payments from LSV for $47,443 and $50,760 in the six months ended June 30, 2012 and 2011, respectively.

The Company’s proportionate share in the earnings of LSV was $22,712 and $29,530 during the three months ended June 30, 2012 and 2011, respectively. During the six months ended June 30, 2012 and 2011, the Company's proportionate share in the earnings of LSV was $50,042 and $58,479, respectively.

The following table contains the condensed statements of operations of LSV for the three months ended June 30, 2012 and 2011:



	Three Months Ended
	June 30,
	2012		2011
Revenues	$	69,189	$	81,748
Net income	57,372		72,018

The following table contains the condensed statements of operations of LSV for the six months ended June 30, 2012 and 2011:



	Six Months Ended
	June 30,
	2012		2011
Revenues	$	146,654	$	161,150
Net income	124,045		141,964

Guaranty Agreement

In April 2011, LSV Employee Group II, LLC agreed to purchase a partnership interest of an existing LSV employee for $4,300, of which $3,655 was financed through a term loan with Bank of America, N.A. (Bank of America). The Company provided an unsecured guaranty to the lenders of all the obligations of LSV Employee Group II, LLC. The lenders have the right to seek payment from the Company in the event of a default by LSV Employee Group II, LLC. The term loan has a four year term and will be repaid from the quarterly distributions of LSV. LSV Employee Group II made principal payments of $468 during the six months ended June 30, 2012. As of June 30, 2012, the remaining unpaid principal balance of the term loan was $2,729. This amount is not reflected, nor is it required to be reflected, in the Company’s Consolidated Balance Sheet at June 30, 2012.

The Company’s direct interest in LSV is unchanged as a result of this transaction. The Company has determined that LSV Employee Group II is a variable interest entity (VIE); however, the Company is not considered the primary beneficiary because it does not have the power to direct the activities that most significantly impact the economic performance of LSV Employee Group II either directly or through any financial responsibility from the guaranty.

In July 2012, LSV Employee Group II made a principal payment of $272. As of July 31, 2012, the remaining unpaid principal balance of the term loan was $2,457. The Company, in its capacity as guarantor, currently has no obligation of payment relating to the term loan of LSV Employee Group II and, furthermore, fully expects that LSV Employee Group II will meet all of their future obligations regarding the term loan.