XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.21.2

Summary of Significant Accounting Policies | 9 Months Ended
--- | ---
Sep. 30, 2021
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | 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 September 30, 2021, the results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine-months ended September 30, 2021 and 2020. 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, 2020. There have been no significant changes in significant accounting policies during the nine months ended September 30, 2021 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. 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 agreements, the Company waived $11,629 and $8,575 in fees during the three months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021 and 2020, the Company waived $33,118 and $24,930, respectively, in fees. 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 $332,657 and $347,082 at September 30, 2021 and December 31, 2020, respectively, primarily invested in SEI-sponsored open-ended money market mutual funds. Restricted Cash Restricted cash includes $250 and $3,000 at September 30, 2021 and December 31, 2020, respectively, segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes $101 at September 30, 2021 and December 31, 2020 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 $19,486 and $18,640 of software development costs during the nine months ended September 30, 2021 and 2020, respectively. The Company's software development costs primarily relate to significant enhancements to the SEI Wealth Platform SM (SWP). The Company capitalized $19,387 and $17,208 of software development costs for significant enhancements to SWP during the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, the net book value of SWP was $241,262. The net book value includes $22,702 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 $13,409 as of December 31, 2020. SWP has a weighted average remaining life of 10.0 years. Amortization expense for SWP was $35,834 and $32,576 during the nine months ended September 30, 2021 and 2020, respectively. Earnings per Share The calculations of basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020 are:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net income | $ | 138,045 |  |  | $ | 111,096 |  |  | $ | 401,293 |  |  | $ | 321,404 |
Shares used to compute basic earnings per common share | 140,507,000 |  |  | 145,812,000 |  |  | 141,928,000 |  |  | 147,586,000 |
Dilutive effect of stock options | 1,919,000 |  |  | 2,095,000 |  |  | 2,053,000 |  |  | 2,372,000 |
Shares used to compute diluted earnings per common share | 142,426,000 |  |  | 147,907,000 |  |  | 143,981,000 |  |  | 149,958,000 |
Basic earnings per common share | $ | 0.98 |  |  | $ | 0.76 |  |  | $ | 2.83 |  |  | $ | 2.18 |
Diluted earnings per common share | $ | 0.97 |  |  | $ | 0.75 |  |  | $ | 2.79 |  |  | $ | 2.14 |
During the three months ended September 30, 2021 and 2020, employee stock options to purchase 11,347,000 and 8,813,000 shares of common stock with an average exercise price of $57.80 and $57.98, respectively, were outstanding but not included in the computation of diluted earnings per common share. During the nine months ended September 30, 2021 and 2020, employee stock options to purchase 11,531,000 and 8,342,000 shares of common stock with an average exercise price of $57.78 and $58.18, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three and nine 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. Reclassifications Certain prior year amounts have been reclassified to conform to current year presentation. 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 nine months ended September 30:
| 2021 |  | 2020
Net income | $ | 401,293 |  |  | $ | 321,404 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation | 25,141 |  |  | 23,058 |
Amortization | 43,749 |  |  | 39,417 |
Equity in earnings of unconsolidated affiliate | (103,420) |  |  | (86,488) |
Distributions received from unconsolidated affiliate | 110,559 |  |  | 107,180 |
Stock-based compensation | 31,173 |  |  | 20,458 |
Provision for losses on receivables | 1,569 |  |  | 109 |
Deferred income tax expense | (6,639) |  |  | (7,731) |
Net (gain) loss from investments | (134) |  |  | 1,310 |
Change in other long-term liabilities | 2,103 |  |  | (4,442) |
Change in other assets | 314 |  |  | (965) |
Contract costs capitalized, net of amortization | (482) |  |  | (2,842) |
Other | 921 |  |  | (1,053) |
Change in current assets and liabilities |  |  |
(Increase) decrease in |  |  |
Receivables from investment products | (4,537) |  |  | 2,521 |
Receivables | (58,537) |  |  | (37,921) |
Other current assets | (3,919) |  |  | (6,186) |
Advances due from unconsolidated affiliate | 51,422 |  |  | 12,641 |
(Decrease) increase in |  |  |
Accounts payable | 3,006 |  |  | 8,615 |
Accrued liabilities | (9,851) |  |  | 8,809 |
Deferred revenue | 150 |  |  | (1,370) |
Total adjustments | 82,588 |  |  | 75,120 |
Net cash provided by operating activities | $ | 483,881 |  |  | $ | 396,524 |

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=123372394&loc=d3e18726-107790 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration