UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________
FORM 10-Q

 
(Mark One)*
ýQuarterly report pursuant to SectionQUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934
forFor the quarterly period ended SeptemberJune 30, 20182019
or
¨Transition report pursuant to SectionTRANSITION REPORT PURSUANT TO SECTION 13 orOF 15(d) of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934
forFor the transition period from_________to ________
0-10200
(Commission File Number)Number: 0-10200
________________________________________ 
 
seinwnaka20.jpg
________________________________________
SEI INVESTMENTS COMPANY
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Charter)
________________________________________ 
Pennsylvania 23-1707341
(State or other jurisdictionOther Jurisdiction of
incorporationIncorporation or organization)Organization)
 
(IRSI.R.S. Employer
Identification Number)
No.)
1 Freedom Valley Drive, Oaks, Pennsylvania 19456-110019456-1100
(Address of principal executive offices)
(ZipPrincipal Executive Offices) (Zip Code)
(610) (610) 676-1000
(Registrant’s telephone number, including area code)Telephone Number, Including Area Code)
N/A
(Former name, former addressName, Former Address and former fiscal year,Former Fiscal Year, if changed since last report)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  ýYes    No¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ýYes  No  ¨No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerýAccelerated filer¨
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company¨

     
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 Exchange Act).  Yes¨  No  ýNo
The number of shares outstanding of the registrant’s common stock, as of Octoberthe close of business on July 18, 2018 was 155,540,268.2019:
Common Stock, $0.01 par value151,023,802





SEI Investments CompanyINVESTMENTS COMPANY

TABLE OF CONTENTS
     
     
PART I - FINANCIAL INFORMATION  
    Page
Item 1.Financial Statements.  
 Consolidated Balance Sheets (Unaudited) -- SeptemberJune 30, 20182019 and December 31, 20172018 
 Consolidated Statements of Operations (Unaudited) -- For the Three and NineSix Months Ended SeptemberJune 30, 20182019 and 20172018 
 Consolidated Statements of Comprehensive Income (Unaudited) -- For the Three and NineSix Months Ended SeptemberJune 30, 20182019 and 20172018 
 Consolidated Statements of Changes in Equity (Unaudited) -- For the Three and Six Months Ended June 30, 2019 and 2018
Consolidated Condensed Statements of Cash Flows (Unaudited) -- For the NineSix Months Ended SeptemberJune 30, 20182019 and 20172018 
 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 



Page 1 of 4347





PART I.        FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements.

SEI Investments Company
Consolidated Balance Sheets
(unaudited)
(In thousands, except par value)

September 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Assets      
Current Assets:      
Cash and cash equivalents$741,965
 $744,247
$682,266
 $754,525
Restricted cash3,511
 3,505
3,520
 3,514
Receivables from investment products54,403
 56,666
52,407
 49,869
Receivables, net of allowance for doubtful accounts of $666 and $695327,614
 282,706
Receivables, net of allowance for doubtful accounts of $1,101 and $718335,144
 315,336
Securities owned28,945
 21,526
32,289
 30,892
Other current assets37,113
 31,158
31,915
 36,676
Total Current Assets1,193,551
 1,139,808
1,137,541
 1,190,812
Property and Equipment, net of accumulated depreciation of $331,138 and $309,955145,865
 146,428
Capitalized Software, net of accumulated amortization of $383,675 and $350,045310,146
 310,405
Property and Equipment, net of accumulated depreciation of $352,293 and $338,206150,045
 145,863
Operating Lease Right-of-Use Assets42,940
 
Capitalized Software, net of accumulated amortization of $418,675 and $395,171305,184
 309,500
Investments Available for Sale84,298
 87,983
106,671
 111,901
Investments in Affiliated Funds, at fair value5,736
 6,034
5,434
 4,887
Investment in Unconsolidated Affiliate44,682
 59,492
50,203
 52,342
Goodwill64,489
 52,990
64,489
 64,489
Intangible Assets, net of accumulated amortization of $4,169 and $1,55232,591
 28,578
Intangible Assets, net of accumulated amortization of $6,932 and $5,09029,828
 31,670
Deferred Contract Costs22,104
 
25,132
 24,007
Deferred Income Taxes2,224
 2,767
1,571
 2,042
Other Assets, net33,642
 18,884
33,761
 34,155
Total Assets$1,939,328
 $1,853,369
$1,952,799
 $1,971,668
The accompanying notes are an integral part of these consolidated financial statements.


Page 2 of 4347





SEI Investments Company
Consolidated Balance Sheets
(unaudited)
(In thousands, except par value)

September 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Liabilities and Equity      
Current Liabilities:      
Accounts payable$9,161
 $5,268
$5,494
 $10,920
Accrued liabilities207,675
 265,058
178,473
 279,634
Short-term operating lease liabilities8,259
 
Deferred revenue5,054
 4,723
4,705
 5,154
Total Current Liabilities221,890
 275,049
196,931
 295,708
Borrowings Under Revolving Credit Facility
 30,000
Long-term Income Taxes Payable

770
 10,629
803
 803
Deferred Income Taxes60,158
 48,472
55,793
 57,795
Long-term Operating Lease Liabilities39,427
 
Other Long-term Liabilities26,000
 12,380
25,344
 24,215
Total Liabilities308,818
 376,530
318,298
 378,521
Commitments and Contingencies

 


 

Shareholders' Equity:      
Common stock, $.01 par value, 750,000 shares authorized; 155,475 and 157,069 shares issued and outstanding1,555
 1,571
Common stock, $0.01 par value, 750,000 shares authorized; 150,955 and 153,634 shares issued and outstanding1,509
 1,536
Capital in excess of par value1,101,237
 1,027,709
1,122,068
 1,106,641
Retained earnings556,581
 467,467
541,664
 517,970
Accumulated other comprehensive loss, net(28,863) (19,908)(30,740) (33,000)
Total Shareholders' Equity1,630,510
 1,476,839
1,634,501
 1,593,147
Total Liabilities and Shareholders' Equity$1,939,328
 $1,853,369
$1,952,799
 $1,971,668
The accompanying notes are an integral part of these consolidated financial statements.

Page 3 of 4347





SEI Investments Company
Consolidated Statements of Operations
(unaudited)
(In thousands, except per share data)
 
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 20172019 2018 2019 2018
Revenues:              
Asset management, administration and distribution fees$322,778
 $300,417
 $955,495
 $869,560
$324,925
 $316,508
 $638,869
 $632,717
Information processing and software servicing fees85,904
 85,601
 263,615
 248,773
84,661
 88,322
 171,537
 177,711
Total revenues408,682
 386,018
 1,219,110
 1,118,333
409,586
 404,830
 810,406
 810,428
Expenses:              
Subadvisory, distribution and other asset management costs45,276
 46,014
 135,690
 133,073
46,177
 45,209
 89,982
 90,414
Software royalties and other information processing costs7,767
 11,005
 24,462
 34,295
7,393
 7,977
 15,521
 16,695
Compensation, benefits and other personnel127,480
 118,421
 379,132
 336,919
125,999
 127,375
 256,334
 251,652
Stock-based compensation5,878
 7,088
 16,396
 19,527
5,064
 5,323
 10,102
 10,518
Consulting, outsourcing and professional fees51,758
 46,507
 150,906
 137,991
45,330
 50,441
 95,536
 99,148
Data processing and computer related21,754
 19,792
 63,478
 57,107
22,184
 21,133
 43,176
 41,724
Facilities, supplies and other costs16,689
 17,261
 52,085
 50,761
17,100
 17,783
 35,845
 35,396
Amortization12,405
 13,745
 36,420
 38,332
12,781
 12,161
 25,460
 24,015
Depreciation7,255
 6,948
 21,515
 20,347
7,422
 7,138
 14,753
 14,260
Total expenses296,262
 286,781
 880,084
 828,352
289,450
 294,540
 586,709
 583,822
Income from operations112,420
 99,237
 339,026
 289,981
120,136
 110,290
 223,697
 226,606
Net gain (loss) from investments89
 645
 (460) 1,036
231
 (139) 1,510
 (549)
Interest and dividend income3,482
 1,899
 9,146
 4,928
4,313
 3,162
 8,570
 5,664
Interest expense(122) (345) (511) (571)(166) (132) (323) (389)
Equity in earnings of unconsolidated affiliate41,726
 39,333
 123,406
 109,213
37,832
 41,073
 75,149
 81,680
Income before income taxes157,595
 140,769
 470,607
 404,587
162,346
 154,254
 308,603
 313,012
Income taxes29,276
 39,030
 80,773
 122,342
35,806
 32,577
 68,082
 51,497
Net income$128,319
 $101,739
 $389,834
 $282,245
$126,540
 $121,677
 $240,521
 $261,515
Basic earnings per common share$0.82
 $0.64
 $2.48
 $1.78
$0.83
 $0.77
 $1.58
 $1.66
Shares used to compute basic earnings per share156,283
 157,902
 157,086
 158,439
151,863
 157,542
 152,587
 157,488
Diluted earnings per common share$0.80
 $0.63
 $2.41
 $1.74
$0.82
 $0.75
 $1.54
 $1.61
Shares used to compute diluted earnings per share160,511
 161,148
 162,053
 161,866
155,165
 162,225
 155,853
 162,825
Dividends declared per common share$
 $
 $0.30
 $0.28
$0.33
 $0.30
 $0.33
 $0.30
The accompanying notes are an integral part of these consolidated financial statements.

Page 4 of 4347





SEI Investments Company
Consolidated Statements of Comprehensive Income
(unaudited)
(In thousands)
 
 Three Months Ended September 30, Nine Months Ended September 30,
 2018 2017 2018 2017
Net income  $128,319
   $101,739
   $389,834
   $282,245
Other comprehensive (loss) gain, net of tax:               
Foreign currency translation adjustments  (435)   7,318
   (7,261)   17,028
Unrealized (loss) gain on investments:               
Unrealized (losses) gains during the period, net of income taxes of $91, $(116), $463 and $(148)(337)   294
   (1,662)   435
  
Less: reclassification adjustment for losses (gains) realized in net income, net of income taxes of $(29), $(41), $(75) and $(84)130
 (207) 105
 399
 (32) (1,694) 194
 629
Total other comprehensive (loss) gain, net of tax  (642)   7,717
   (8,955)   17,657
Comprehensive income  $127,677
   $109,456
   $380,879
   $299,902
 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Net income  $126,540
   $121,677
   $240,521
   $261,515
Other comprehensive (loss) income, net of tax:               
Foreign currency translation adjustments  (2,877)   (10,203)   520
   (6,826)
Unrealized gain (loss) on investments:               
Unrealized gains (losses) during the period, net of income taxes of $(230), $(52), $(470) and $372765
   32
   1,562
   (1,325)  
Less: reclassification adjustment for losses (gains) realized in net income, net of income taxes of $(26), $(31), $(50) and $(46)92
 857
 111
 143
 178
 1,740
 (162) (1,487)
Total other comprehensive (loss) income, net of tax  (2,020)   (10,060)   2,260
   (8,313)
Comprehensive income  $124,520
   $111,617
   $242,781
   $253,202
The accompanying notes are an integral part of these consolidated financial statements.

Page 5 of 4347





SEI Investments Company
Consolidated Statements of Changes in Equity
(unaudited)
(In thousands)

 Shares of Common Stock Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Equity
 For the Three Months Ended June 30, 2019
Balance, April 1, 2019152,276
 $1,523
 $1,111,366
 $552,381
 $(28,720) $1,636,550
Net income
 
 
 126,540
 
 126,540
Other comprehensive loss
 
 
 
 (2,020) (2,020)
Purchase and retirement of common stock(1,825) (18) (9,737) (87,273) 
 (97,028)
Issuance of common stock under employee stock purchase plan24
 
 1,071
 
 
 1,071
Issuance of common stock upon exercise of stock options480
 4
 14,304
 
 
 14,308
Stock-based compensation
 
 5,064
 
 
 5,064
Dividends declared ($0.33 per share)
 
 
 (49,984) 
 (49,984)
Balance, June 30, 2019150,955
 $1,509
 $1,122,068
 $541,664
 $(30,740) $1,634,501

 Shares of Common Stock Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Equity
 For the Three Months Ended June 30, 2018
Balance, April 1, 2018157,990
 $1,580
 $1,085,312
 $544,923
 $(18,161) $1,613,654
Net income
 
 
 121,677
 
 121,677
Other comprehensive loss
 
 
 
 (10,060) (10,060)
Purchase and retirement of common stock(1,629) (16) (7,929) (96,697) 
 (104,642)
Issuance of common stock under employee stock purchase plan20
 
 1,146
 
 
 1,146
Issuance of common stock upon exercise of stock options419
 4
 10,919
 
 
 10,923
Stock-based compensation
 
 5,323
 
 
 5,323
Dividends declared ($0.30 per share)
 
 
 (47,139) 
 (47,139)
Balance, June 30, 2018156,800
 $1,568
 $1,094,771
 $522,764
 $(28,221) $1,590,882
The accompanying notes are an integral part of these consolidated financial statements.

Page 6 of 47





SEI Investments Company
Consolidated Statements of Changes in Equity
(unaudited)
(In thousands)
 Shares of Common Stock Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Equity
 For the Six Months Ended June 30, 2019
Balance, January 1, 2019153,634
 $1,536
 $1,106,641
 $517,970
 $(33,000) $1,593,147
Net income
 
 
 240,521
 
 240,521
Other comprehensive income
 
 
 
 2,260
 2,260
Purchase and retirement of common stock(3,550) (35) (18,939) (166,843) 
 (185,817)
Issuance of common stock under employee stock purchase plan56
 
 2,393
 
 
 2,393
Issuance of common stock upon exercise of stock options815
 8
 21,871
 
 
 21,879
Stock-based compensation
 
 10,102
 
 
 10,102
Dividends declared ($0.33 per share)
 
 
 (49,984) 
 (49,984)
Balance, June 30, 2019150,955
 $1,509
 $1,122,068
 $541,664
 $(30,740) $1,634,501

 Shares of Common Stock Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total Equity
 For the Six Months Ended June 30, 2018
Balance, January 1, 2018157,069
 $1,571
 $1,027,709
 $467,467
 $(19,908) $1,476,839
Cumulative effect upon adoption of ASC 606
 
 
 14,402
 
 14,402
Net income
 
 
 261,515
 
 261,515
Other comprehensive loss
 
 
 
 (8,313) (8,313)
Purchase and retirement of common stock(2,751) (27) (13,390) (173,481) 
 (186,898)
Issuance of common stock under employee stock purchase plan36
 
 2,151
 
 
 2,151
Issuance of common stock upon exercise of stock options2,446
 24
 67,783
 
 
 67,807
Stock-based compensation
 
 10,518
 
 
 10,518
Dividends declared ($0.30 per share)
 
 
 (47,139) 
 (47,139)
Balance, June 30, 2018156,800
 $1,568
 $1,094,771
 $522,764
 $(28,221) $1,590,882
The accompanying notes are an integral part of these consolidated financial statements.


Page 7 of 47





SEI Investments Company
Consolidated Condensed Statements of Cash Flows
(unaudited)
(In thousands)
 
Nine Months Ended September 30,Six Months Ended June 30,
2018 20172019 2018
Cash flows from operating activities:      
Net income$389,834
 $282,245
$240,521
 $261,515
Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)28,064
 34,142
(22,876) 1,361
Net cash provided by operating activities417,898
 316,387
217,645
 262,876
Cash flows from investing activities:      
Additions to property and equipment(21,652) (20,318)(18,239) (12,671)
Additions to capitalized software(33,371) (48,573)(19,188) (24,613)
Purchases of marketable securities(122,259) (50,235)(77,891) (74,957)
Prepayments and maturities of marketable securities116,568
 52,644
85,012
 64,626
Cash paid for acquisition, net of cash acquired(5,794) (80,131)
 (5,794)
Other investing activities

(10,900) (1,450)
 (10,500)
Net cash used in investing activities(77,408) (148,063)(30,306) (63,909)
Cash flows from financing activities:      
Borrowings under revolving credit facility


 40,000
Repayments under revolving credit facility(30,000) 

 (30,000)
Purchase and retirement of common stock(290,563) (186,494)(183,396) (189,372)
Proceeds from issuance of common stock78,667
 41,626
24,272
 69,958
Payment of dividends(94,318) (88,862)(100,745) (94,318)
Net cash used in financing activities(336,214) (193,730)(259,869) (243,732)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(6,552) 14,679
277
 (6,036)
Net decrease in cash, cash equivalents and restricted cash(2,276) (10,727)(72,253) (50,801)
Cash, cash equivalents and restricted cash, beginning of period747,752
 699,201
758,039
 747,752
Cash, cash equivalents and restricted cash, end of period$745,476
 $688,474
$685,786
 $696,951
   
Non-cash operating activities:   
Operating lease right-of-use assets and lease liabilities recorded upon adoption of ASC 842$44,169
 $
The accompanying notes are an integral part of these consolidated financial statements.

Page 68 of 4347





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 investment processing, investment management, and investment operations platforms to financial institutions, financial advisors, institutional investors, investment managers and ultra-high-net-worth families in the United States, Canada, the United Kingdom, continental Europe and various other locations throughout the world.
Investment processing platforms consist of application and business process outsourcing services, professional services and transaction-based services. Revenues from investment processing platforms are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.
Investment management programs consist of mutual funds, alternative investments and separate accounts. These include a series of money market, equity, fixed-income and alternative investment portfolios, primarily in the form of registered investment companies. The Company serves as the administrator and investment advisor for many of these products. Revenues from investment management programs are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.
Investment operations platforms consist of outsourcing services including fund and investment accounting, administration, reconciliation, investor servicing and client reporting. Revenues from investment operations 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 SeptemberJune 30, 2018,2019, the results of operations for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, and cash flows for the nine-monthsix-month periods ended SeptemberJune 30, 20182019 and 2017.2018. 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, 2017.2018.
The Company adopted the requirements of the Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers2016-2 Leases (Topic 606)842) (Accounting Standards CodificationCodifications (ASC) 606842 (ASC 606)842)) using the modified retrospective method during the ninesix months ended SeptemberJune 30, 2018.2019. As a result of the adoption of ASC 606,842, the Company recorded a cumulative effect adjustmentadditional lease assets and net lease liabilities of $14,402 to retained earnings$44,169 as of January 1, 2018. Prior period information has2019. Upon implementation, the Company elected the package of practical expedients permitted under the transition guidance within the new standard which allowed the Company to carryforward the historical lease identification, classification and initial direct cost. ASC 842 did not been restatedmaterially impact the Company’s consolidated net income or consolidated cash flows (see following caption "Revenue Recognition""Leases"). With the exception of the adoption of ASC 842, there have been no significant changes in significant accounting policies during the six months ended June 30, 2019 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
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 adopted ASU No. 2016-01, Recognitionserve as the Trustee for some of the investment products. The Company receives asset management, distribution, administration and Measurementcustodial 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 Financial Assetsthe products, and, Financial Liabilities (see Note 6)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 ASU No. 2016-18, Statementcustodial fees under the VIE model. The entities either do not meet the definition of Cash Flows, Restricted Cash (Topic 230) (see following caption "Statements of Cash Flows"). All amountsa VIE or the Company does not hold a variable interest in the entities. The entities either qualify for the money market scope exception, or are entities in which the Company’s asset management, distribution, administration and disclosures set forth in this Form 10-Q have been updated to complycustodial fees are commensurate with the new standards.services

Page 9 of 47





provided and include fair terms and conditions, or are entities that are limited partnerships which have substantive kick-out rights. The Company acts as a fiduciary and does not hold any other interests other than insignificant seed money investments in the pooled investment vehicles. For this reason, the Company also concluded that it is not required to consolidate the pooled investment vehicles under the voting interest entity (VOE) 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 $6,796 and $6,372 in fees during the three months ended June 30, 2019 and 2018, respectively. During the six months ended June 30, 2019 and 2018, the Company waived $14,701 and $13,026, 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).
ASC 606 did not change the accounting for the majority of the Company’s revenue arrangements and did not have a material impact to the Company’s consolidated financial statements. The following is a summary of the impact from the adoption of ASC 606:
The majority of the Company’s services are bundled together, and provided and completed for the client on a monthly basis. For these revenue arrangements, the Company continues to recognize revenue on a monthly basis as the client consumes the benefits continuously over time. The timing and recognition of revenues from these arrangements did not change.

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Contracts with new clients or with existing clients for new services generally include implementation fees. These fees are recognized in Information processing and software servicing fees when in connection with investment processing platforms and are recognized in Asset management, administration and distribution fees when in connection with investment operations platforms. The Company concluded that most of the current arrangements for implementation services are a distinct and separate performance obligation from the monthly recurring services. The timing and recognition of fees for most of these arrangements have not changed. However, each new revenue arrangement for implementation fees is analyzed to determine whether or not it is a distinct performance obligation. Implementation fees determined not to be a distinct performance obligation would be required to be recognized over the expected life of the client relationship along with the costs relating directly to satisfying such performance obligation. The Company will evaluate each contract in accordance with the requirements of ASC 606.
Research services provided by SIDCO, the Company’s broker-dealer subsidiary, to customers in soft-dollar arrangements were determined to be a separate performance obligation. Research services provided by a broker-dealer may be internally generated or provided by a third party and paid directly by the broker-dealer on the customer’s behalf. It was determined that SIDCO is considered an agent since it does not control the research services before they are transferred to the customer. Therefore, fees received for research services should be recorded in revenues net of amounts paid for the soft-dollar arrangement. These amounts paid by the Company were previously recorded gross as an expense and, beginning January 1, 2018, are recorded net of any revenue recognized. The amounts related to soft-dollar arrangements during the three months ended September 30, 2018 and 2017 were $3,265 and $3,297, respectively. The amounts related to soft-dollar arrangements during the nine months ended September 30, 2018 and 2017 were $10,497 and $10,799, respectively.
Incremental contract acquisition costs related to information processing contracts in the Private Banks segment and investment operations contracts in the Investment Managers segment will be deferred and recognized over the expected client life. These costs primarily consist of sales compensation payments to the Company's sales personnel. As a result, incremental contract acquisition costs are capitalized and subsequently amortized. The Company recorded a cumulative effect adjustment to retained earnings associated with the capitalization of contract costs. For the Company's other sales compensation payments, the Company either applies the practical expedient permitting the expensing of costs to obtain a contract when the expected amortization period is one year or less or there are no contract acquisition costs required to be deferred under the requirements of ASC 606. The Company amortizes deferred contract acquisition costs using the straight-line method.
Cash and Cash Equivalents
Cash and cash equivalents includes $286,824$272,986 and $401,292$315,840 at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively, primarily invested in SEI-sponsored open-ended money market mutual funds. The SEI-sponsored mutual funds are Level 1 assets.
Restricted Cash
Restricted cash includes $3,000 at SeptemberJune 30, 20182019 and December 31, 20172018 segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes $511$520 and $505$514 at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively, 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 $33,371$19,188 and $48,573$24,613 of software development costs during the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively. The Company's software development costs primarily relate to the continued development ofsignificant enhancements to the SEI Wealth PlatformSM (the Platform)(SWP). The Company capitalized $32,526$18,693 and $40,604$23,768 of software development costs for significant enhancements to the PlatformSWP during the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively. As of SeptemberJune 30, 2018,2019, the net book value of the PlatformSWP was $288,010$286,459. The net book value includes $38,552$49,374 of capitalized software development costs in-progress associated with future releases. The PlatformCapitalized software development costs in-progress associated with future releases of SWP were $42,238 as of December 31, 2018. SWP has a weighted average remaining life of 8.48.5 years. Amortization expense for the PlatformSWP was $29,723$20,900 and $37,324$19,599 during the ninesix months ended SeptemberJune 30, 2019 and 2018, and 2017, respectively.
The Company also capitalized $845 and $7,969 of software development costs during the nine months ended September 30, 2018 and 2017, respectively, related to an application for the Investment Managers segment. The application was placed into service during the first quarter 2018 with an estimated useful life of 5 years. The net book value of the application at September 30, 2018 was $22,136. Amortization expense for the application was $3,907 during the nine months ended September 30, 2018.

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Earnings per Share
The calculations of basic and diluted earnings per share for the three and ninesix months ended SeptemberJune 30, 2019 and 2018 and 2017are:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 20172019 2018 2019 2018
Net income$128,319
 $101,739
 $389,834
 $282,245
$126,540
 $121,677
 $240,521
 $261,515
Shares used to compute basic earnings per common share156,283,000
 157,902,000
 157,086,000
 158,439,000
151,863,000
 157,542,000
 152,587,000
 157,488,000
Dilutive effect of stock options4,228,000
 3,246,000
 4,967,000
 3,427,000
3,302,000
 4,683,000
 3,266,000
 5,337,000
Shares used to compute diluted earnings per common share160,511,000
 161,148,000
 162,053,000
 161,866,000
155,165,000
 162,225,000
 155,853,000
 162,825,000
Basic earnings per common share$0.82
 $0.64
 $2.48
 $1.78
$0.83
 $0.77
 $1.58
 $1.66
Diluted earnings per common share$0.80
 $0.63
 $2.41
 $1.74
$0.82
 $0.75
 $1.54
 $1.61

During the three months ended SeptemberJune 30,, 2018 2019 and 2017,2018, employee stock options to purchase 6,183,0006,244,000 and 11,324,0006,221,000 shares of common stock with an average exercise price of $53.38$54.79 and $37.81,$53.33, respectively, were outstanding but not

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included in the computation of diluted earnings per common share. During the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, employee stock options to purchase 6,153,0006,284,000 and 11,286,0006,138,000 shares of common stock with an average exercise price of $53.15$54.80 and $37.73,$53.03, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three and ninesix 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 option’soptions' 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.
Leases
The Company determines if an arrangement is a lease at the inception of the contract. The Company's operating leases are included in Operating lease right-of-use (ROU) assets, Short-term operating lease liabilities, and Long-term operating lease liabilities on the accompanying Consolidated Balance Sheet.
The operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit interest rate, the Company utilizes an estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. In determining the discount rate used in the present value calculation, the Company has elected to apply the portfolio approach for leases of equipment provided the leases commenced at or around the same time. This election allows the Company to account for leases at a portfolio level provided that the resulting accounting at this level would not differ materially from the accounting at the individual lease level. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
The Company has elected to account for lease and non-lease components separately. Operating lease ROU assets include all contractual lease payments and initial direct costs incurred less any lease incentives. Facility leases generally only contain lease expense and non-component items such as taxes and pass through charges. Only the lease components are included in the ROU assets and lease liabilities. Additionally, the Company has elected not to apply the recognition requirements of ASC 842 to leases which have a lease term of less than one year at the commencement date.
The majority of the Company's leases for corporate facilities and equipment contain terms for renewal and extension of the lease agreement. The exercise of lease renewal options is generally at the Company’s sole discretion. The Company includes the lease extensions when it is reasonably certain the Company will exercise the extension. The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or any material restrictive covenants. The Company does not currently have any finance leases.
See Note 15 for information on related disclosures regarding leases.
Reclassifications
Certain prior year amounts have been reclassified to conform to current year presentation.
New Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), as amended, requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will be classified as either operating or finance leases, with the classification affecting the pattern and classification of expense recognition in the income statement. The updated standard is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (i) its effective date or (ii) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company expects to adopt the new standard on January 1, 2019 and use the effective date as the date of initial application. As a result, financial information will not be updated and the disclosures required under the new standard will not be provided for periods prior to January 1, 2019.
The new standard provides a number of optional practical expedients in transition. The Company expects to elect the package of practical expedients which permits the Company to not reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.
As part of its project plan’s preliminary assessment and design implementation phases for the adoption of ASU 2016-02, the Company has adopted implementation controls that allow it to properly and timely adopt ASU 2016-02 on the effective date. While the Company continues to assess all of the effects of adoption, the Company believes the most significant effects relate to the recognition of right-of-use assets and lease liabilities on the balance sheet for office space and certain office equipment and providing significant new disclosures about leasing arrangements. The Company owns its corporate headquarters and leases office space in other locations. The Company has completed the process of cataloging existing lease agreements and is currently calculating the right-of-use asset and lease liability. The Company will make updates to the year-end disclosures, with a focus on both status and internal controls over financial reporting.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13) which requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. ASU 2016-13 becomes effective for the Company during the first quarter of 2020. Early adoption is permitted. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

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In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04). The objective of ASU 2017-04 is to simplify the subsequent measurement of goodwill by entities performing their annual goodwill impairment tests by comparing the fair value of a reporting unit, including income tax effects from any tax-deductible goodwill, with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds fair value. ASU 2017-04 is effective for the Company beginning in the first quarter of 2020. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2017-04 on its consolidated financial statements and related disclosures.
In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07) which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU 2018-07 is effective for the Company beginning in the first quarter of 2019. The Company does not believe the adoption of ASU 2018-07 will have a material impact on its consolidated financial statements and related disclosures.    
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for the Company beginning in the first quarter of 2020. The

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Company is currently evaluating the impact of adopting ASU 2018-13 on its consolidated financial statements and related disclosures.
In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (ASU 2018-17). The new standard changes how entities evaluate decision-making fees under the variable interest entity guidance. ASU 2018-17 is effective for the Company beginning in the first quarter of 2020. The Company is currently evaluating the impact of adopting ASU 2018-17 on its consolidated financial statements and related disclosures.
In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (ASU 2019-04), which provided certain improvements to ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) and ASU 2016-13. As the Company adopted ASU 2016-01 on January 1, 2018, the improvements in ASU 2019-04 are effective in the first quarter of 2020. Early adoption is permitted. The Company expects to adopt ASU 2016-13 in the first quarter of 2020, as described above, and the improvements in ASU 2019-04 will be adopted concurrently. The Company is currently evaluating the impact of adopting ASU 2019-04 on its consolidated financial statements and related disclosures.
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 Company adopted ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) (ASU 2016-18) on January 1, 2018 which requires that a statement of cash flows explain the change during the period for the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The prior period was retrospectively adjusted to conform to the current period’s presentation. There was no material impact to net cash flows for the nine months ended September 30, 2017 as a result of including restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on the accompanying Consolidated Condensed Statement of Cash Flows in accordance with ASU 2016-18.

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The following table provides the details of the adjustments to reconcile net income to net cash provided by operating activities for the ninesix months ended SeptemberJune 30:
2018 20172019 2018
Net income$389,834
 $282,245
$240,521
 $261,515
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation21,515
 20,347
14,753
 14,260
Amortization36,420
 38,332
25,460
 24,015
Equity in earnings of unconsolidated affiliate(123,406) (109,213)(75,149) (81,680)
Distributions received from unconsolidated affiliate138,216
 117,447
77,288
 89,362
Stock-based compensation16,396
 19,527
10,102
 10,518
Provision for losses on receivables(29) 176
383
 (90)
Deferred income tax expense8,378
 1,143
(2,050) 4,893
Net loss (gain) from investments460
 (1,036)
Net (gain) loss from investments(1,510) 549
Change in long-term income taxes payable(9,859) 

 (1,000)
Change in other long-term liabilities1,930
 106
1,129
 1,222
Change in other assets(4,214) 79
249
 (4,713)
Contract costs capitalized, net of amortization(3,463) 
(1,125) (2,880)
Other(99) 1,070
122
 (326)
Change in current assets and liabilities      
Decrease (increase) in   
(Increase) decrease in   
Receivables from investment products2,263
 10,800
(2,538) 3,280
Receivables(44,878) (43,661)(20,192) (31,835)
Other current assets(5,955) (2,962)3,708
 (5,090)
Increase (decrease) in   
(Decrease) increase in   
Accounts payable3,893
 (1,748)(5,426) 2,251
Accrued liabilities(9,717) (15,856)(47,631) (22,121)
Deferred revenue213
 (409)(449) 746
Total adjustments28,064
 34,142
(22,876) 1,361
Net cash provided by operating activities$417,898
 $316,387
$217,645
 $262,876



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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 SeptemberJune 30, 20182019 was 38.9 percent. 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.
At SeptemberJune 30, 2018,2019, the Company’s total investment in LSV was $44,682.$50,203. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distributions from LSV of $138,216$77,288 and $117,447$89,362 in the ninesix months ended SeptemberJune 30,, 2018 2019 and 2017,2018, 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.
The Company’s proportionate share in the earnings of LSV was $41,726$37,832 and $39,333$41,073 during the three months ended SeptemberJune 30,, 2018 2019 and 2017,2018, respectively. During the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, the Company’s proportionate share in the earnings of LSV was $123,406$75,149 and $109,213,$81,680, respectively.

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These tables contain condensed financial information of LSV:
Condensed Statement of Operations Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017 2019 2018 2019 2018
Revenues $133,921
 $126,723
 $397,750
 $355,996
 $123,017
 $132,111
 $243,932
 $263,829
Net income 107,284
 101,130
 317,295
 280,717
 97,271
 105,605
 193,219
 210,011


Condensed Balance Sheets

 September 30, 2018 December 31, 2017 June 30, 2019 December 31, 2018
Current assets $150,183
 $155,239
 $147,554
 $138,083
Non-current assets 1,383
 1,407
 4,777
 1,165
Total assets $151,566
 $156,646
 $152,331
 $139,248
        
Current liabilities $79,052
 $46,486
 $61,823
 $47,874
Non-current liabilities 4,881
 
Partners’ capital 72,514
 110,160
 85,627
 91,374
Total liabilities and partners’ capital $151,566
 $156,646
 $152,331
 $139,248


Note 3.    Variable Interest Entities – Investment Products
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 entities either do not meet the definition of a VIE or the Company does not hold a variable interest in the entities. The entities either qualify for the money market scope exception, or are entities in which the Company’s asset management, distribution, administration and custodial fees are commensurate with the services provided and include fair terms and conditions, or are entities that are limited partnerships which have substantive kick-out rights. The Company acts as a fiduciary and does not hold any other interests other than insignificant seed money investments in the pooled investment vehicles. For this reason, the Company also concluded that it is not required to consolidate the pooled investment vehicles under the voting interest entity (VOE) 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 $6,525 and $6,942 in fees during the three months ended September 30, 2018 and 2017, respectively. During the nine months ended September 30, 2018 and 2017, the Company waived $19,551 and $20,620, respectively, in fees.

Note 4.3.Composition of Certain Financial Statement Captions
Receivables
Receivables on the accompanying Consolidated Balance Sheets consist of: 
September 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Trade receivables$77,239
 $76,760
$77,063
 $76,362
Fees earned, not billed240,538
 194,331
242,712
 226,001
Other receivables10,503
 12,310
16,470
 13,691
328,280
 283,401
336,245
 316,054
Less: Allowance for doubtful accounts(666) (695)(1,101) (718)
$327,614
 $282,706
$335,144
 $315,336


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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

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based on assets under administration that have a prolongedan extended valuation process which delays billingsprocess. Billings to clients.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.
Property and Equipment
Property and Equipment on the accompanying Consolidated Balance Sheets consists of:
September 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Buildings$154,723
 $153,961
$162,449
 $160,796
Equipment125,867
 115,546
130,486
 126,954
Land10,557
 10,030
10,772
 10,772
Purchased software138,565
 134,610
140,887
 139,245
Furniture and fixtures17,971
 18,114
18,429
 18,103
Leasehold improvements18,816
 18,017
20,024
 18,959
Construction in progress10,504
 6,105
19,291
 9,240
477,003
 456,383
502,338
 484,069
Less: Accumulated depreciation(331,138) (309,955)(352,293) (338,206)
Property and Equipment, net$145,865
 $146,428
$150,045
 $145,863

The Company recognized $21,515$14,753 and $20,347$14,260 in depreciation expense related to property and equipment for the ninesix months ended SeptemberJune 30, 2019 and 2018, respectively.
Deferred Contract Costs
Deferred contract costs, which primarily consist of deferred sales commissions, were $25,132 and $24,007 as of June 30, 2019 and December 31, 2018, respectively. The Company deferred expenses related to contract costs of $1,950 and $2,267 during the three months ended June 30, 2019 and 2018, respectively. During the six months ended June 30, 2019,and 2018, the Company deferred expenses related to contract costs of $3,076 and 2017,$4,083, respectively. Amortization expense related to deferred contract costs were $1,951 and $1,201 during the six months ended June 30, 2019 and 2018, respectively. There was no impairment loss in relation to deferred contract costs during the six months ended June 30, 2019.
Accrued Liabilities
Accrued liabilities on the accompanying Consolidated Balance Sheets consist of: 
September 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Accrued employee compensation$68,371
 $88,960
$55,188
 $97,603
Accrued consulting, outsourcing and professional fees28,322
 29,658
30,155
 31,000
Accrued sub-advisory, distribution and other asset management fees49,452
 42,365
46,611
 42,583
Accrued dividend payable
 47,179

 50,761
Accrued income taxes11,164
 5,583
Other accrued liabilities50,366
 51,313
46,519
 57,687
Total accrued liabilities$207,675
 $265,058
$178,473
 $279,634


Note 5.4.    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 Government National Mortgage Association (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

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U.S. government. These securities were purchased for the sole purpose of satisfying applicable regulatory requirements and have maturity dates which range from 2021 to 2041.
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.

Page 13 of 43





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 ninesix months ended SeptemberJune 30,, 2018 2019 were consistent with those as described in our Annual Report on Form 10-K at December 31, 2017.2018. The Company had no Level 3 financial assets at SeptemberJune 30, 20182019 or December 31, 20172018 that were required to be measured at fair value on a recurring basis. The Company's Level 3 financial liabilities at SeptemberJune 30, 2019 and December 31, 2018 consist entirely of the estimated contingent consideration of $12,120 resulting from an acquisition (See Note 13)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 correlation coefficient. The Company had no Level 3 financial liabilities as of December 31, 2017 that were required to be measured at fair value on a recurring basis. There were no transfers of financial assets between levels within the fair value hierarchy during the ninesix months ended SeptemberJune 30,, 2018. 2019.
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   Fair Value Measurements at the End of the Reporting Period Using
Assets September 30, 2018 
Quoted Prices
in
Active  Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 June 30, 2019 
Quoted Prices
in
Active  Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
Equity available-for-sale securities $11,326
 $11,326
 $
 $11,342
 $11,342
 $
Fixed-income available-for-sale securities 72,972
 
 72,972
 95,329
 
 95,329
Fixed-income securities owned 28,945
 
 28,945
 32,289
 
 32,289
Investment funds sponsored by LSV (1) 5,736
     5,434
    
 $118,979
 $11,326
 $101,917
 $144,394
 $11,342
 $127,618

   Fair Value Measurements at the End of the Reporting Period Using   Fair Value Measurements at the End of the Reporting Period Using
Assets December 31, 2017 
Quoted Prices
in
Active  Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 December 31, 2018 
Quoted Prices
in
Active  Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
Equity available-for-sale securities $11,250
 $11,250
 $
 $10,218
 $10,218
 $
Fixed-income available-for-sale securities 76,733
 
 76,733
 101,683
 
 101,683
Fixed-income securities owned 21,526
 
 21,526
 30,892
 
 30,892
Investment funds sponsored by LSV (1) 6,034
     4,887
    
 $115,543
 $11,250
 $98,259
 $147,680
 $10,218
 $132,575

(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 6)5).


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Note 6.5.    Marketable Securities
Investments Available for Sale
Investments available for sale classified as non-current assets consist of: 
 At September 30, 2018
 
Cost
Amount
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
SEI-sponsored mutual funds$7,392
 $107
 $(304) $7,195
Equities and other mutual funds3,479
 652
 
 4,131
Debt securities75,673
 
 (2,701) 72,972
 $86,544
 $759
 $(3,005) $84,298

 At June 30, 2019
 
Cost
Amount
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
SEI-sponsored mutual funds$7,464
 $108
 $(341) $7,231
Equities and other mutual funds3,477
 634
 
 4,111
Debt securities94,905
 424
 
 95,329
 $105,846
 $1,166
 $(341) $106,671
Page 14 of 43





At December 31, 2017At December 31, 2018
Cost
Amount
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
Cost
Amount
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
SEI-sponsored mutual funds$7,369
 $110
 $(143) $7,336
$7,446
 $
 $(788) $6,658
Equities and other mutual funds3,456
 458
 
 3,914
3,434
 126
 
 3,560
Debt securities77,745
 
 (1,012) 76,733
103,518
 
 (1,835) 101,683
$88,570
 $568
 $(1,155) $87,983
$114,398
 $126
 $(2,623) $111,901

The Company prospectively adopted ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) on January 1, 2018 which requires the Company to recognize all changes in fair value of available-for-sale equity securities in current period earnings. Previously, these changes in fair value were recognized as a separate component of comprehensive income. The adoption of ASU 2016-01 did not have a material impact to the Company's consolidated financial statements.
Net unrealized lossesgains at SeptemberJune 30, 2018 and December 31, 20172019 of the Company's available-for-sale debt securities were $2,080$327 (net of income tax expense of $97). Net unrealized losses at December 31, 2018 of the Company's available-for-sale debt securities were $1,413 (net of income tax benefit of $621) and $779 (net of income tax benefit of $233), respectively.$422). These net unrealized gains and losses are reported as a separate component of Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets.
There were gross realized gains of $1,031$1,004 and gross realized losses of $1,520$1,310 during the six months ended June 30, 2018. Gross realized gains and losses from available-for-sale securities during the ninesix months ended SeptemberJune 30,, 2018. There 2019 were gross realized gains of $428 and gross realized losses of $706 during the nine months ended September 30, 2017.immaterial. Gains and losses from available-for-sale securities, including amounts reclassified from accumulated comprehensive loss, are reflected in Net gain (loss) 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 gain (loss) gain from investments on the accompanying Consolidated Statements of Operations.
The investment primarily consists of U.S. dollar denominated funds that invest primarily in securities of Canadian, Australian and Japanese companies as well as various other global securities. The underlying securities held by the funds are translated into U.S. dollars within the funds. The funds had a fair value of $5,736$5,434 and $6,034$4,887 at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively. The Company recognized losses of $298 and gains of $880$95 and $205 during the ninethree months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, from the change in fair value of the funds. There were no materialThe Company recognized gains orof $547 and losses of $295 during the threesix months ended SeptemberJune 30, 2019 and 2018, and 2017respectively, from the change in fair value of the funds.
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 $28,945$32,289 and $21,526$30,892 at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively. There were no material net gains or losses related to the securities during the three and ninesix months ended SeptemberJune 30, 20182019 and 2017.2018.

Note 7.6.    Line of Credit
The Company has a five-year $300,000 Credit Agreement (the Credit Facility) with Wells Fargo Bank, National Association, and a syndicate of other lenders. The Credit Facility is scheduled to expire in June 2021, at which time any aggregate principal amount of loans outstanding becomes payable in full. Any borrowings made under the Credit Facility

Page 16 of 47





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 percent to 1.00 percent or the London InterBank Offered Rate (LIBOR) plus a premium that can range from 1.25 percent to 2.00 percent 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 percent, b) the prime commercial lending rate of Wells Fargo, c) the applicable LIBOR plus 1.00 percent, or d) 0 percent. 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 percent of the amount of the unused portion to 0.30 percent, 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

Page 15 of 43





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 percent plus a fronting fee of 0.175 percent of the aggregate face amount of the outstanding letters of credit issued under the Credit Facility.
The Credit Facility contains covenants that restrict the ability of the Company to engage in mergers, consolidations, asset sales, investments, transactions with affiliates, or to incur liens, 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. None of the covenants of the Credit Facility negatively affect the Company’s liquidity or capital resources. 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 July 2017,As of June 30, 2019, the Company borrowed $40,000had outstanding letters of credit of $11,713 under the Credit FacilityFacility. These letters of credit were issued primarily for the fundingexpansion of an acquisition. In October 2017, the Company made a principal paymentCompany's headquarters and are scheduled to expire during the remainder of $10,000. During the nine months ended September 30, 2018, the Company made additional principal payments of $30,000 to fully repay the remaining outstanding balance2019. The amount of the Credit Facility. Facility that is available for general corporate purposes as of June 30, 2019 was $288,287.
The Company was in compliance with all covenants of the Credit Facility during the ninesix months ended SeptemberJune 30, 2018. As of October 18, 2018, the amount of the Credit Facility that is available for general corporate purposes was $300,000.2019.

Note 8.7.    Shareholders’ Equity
Stock-Based Compensation
The Company has only non-qualified stock options 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 percent when a specified diluted earnings per share target is achieved, and the remaining 50 percent when a second, higher specified diluted earnings per share target is achieved. Options do not vest due to the passage of time but solely as a result of achievement of the financial vesting targets. Options 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. Earnings per share targets are established at time of grant and exclude the impact of stock-based compensation and for earnings per share targets for the options granted in December 2017, also exclude income tax expense.are established at time of grant. 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 earnings per share 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 recognized stock-based compensation expense in its Consolidated Financial Statements in the three and ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, as follows: 
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 20172019 2018 2019 2018
Stock-based compensation expense$5,878
 $7,088
 $16,396
 $19,527
$5,064
 $5,323
 $10,102
 $10,518
Less: Deferred tax benefit(1,311) (2,517) (3,556) (6,859)(971) (1,142) (1,917) (2,245)
Stock-based compensation expense, net of tax$4,567
 $4,571
 $12,840
 $12,668
$4,093
 $4,181
 $8,185
 $8,273
As of SeptemberJune 30, 2018,2019, there was approximately $47,131$55,538 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 ninesix months ended SeptemberJune 30,, 2018 2019 was $123,365.$21,816. The total options exercisable as of SeptemberJune 30, 2018

Page 17 of 47





2019 had an intrinsic value of $247,517.$192,595. The total intrinsic value for options exercisable is calculated as the difference between the market value of the Company’s common stock as of SeptemberJune 30, 20182019 and the weighted average exercise price of the options. The market value of the Company’s common stock as of SeptemberJune 30, 20182019 was $61.10$56.10 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of SeptemberJune 30, 20182019 was $29.60.$33.55. Total options that were outstanding as of SeptemberJune 30, 20182019 were 14,040,000.14,784,000. Total options that were exercisable as of SeptemberJune 30, 20182019 were 7,857,000.8,540,000.
Common Stock Buyback
The Company’s Board of Directors, under multiple authorizations, has authorized the repurchase of the Company’s common stock on the open market or through private transactions. The Company purchased 4,419,0003,550,000 shares at a total cost of $289,536$185,817 during the ninesix months ended SeptemberJune 30,, 2018, 2019, 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

Page 16 of 43





September June 30, 2018,2019, the Company had approximately $81,102$30,061 of authorization remaining for the purchase of common stock under the program. On July 23, 2019, the Company's Board of Directors approved an increase in the stock repurchase program by an additional $250,000, increasing the available authorization to approximately $280,061.
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.
Cash Dividend
On May 30, 2018,29, 2019, the Board of Directors declared a cash dividend of $0.30$0.33 per share on the Company's common stock, which was paid on June 22, 2018,20, 2019, to shareholders of record on June 14, 2018.12, 2019. Cash dividends declared during the ninesix months ended SeptemberJune 30, 2019 and 2018 were $49,984 and 2017 were $47,139, and $44,264, respectively.

Note 9.8.    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, 2018$(19,522) $(386) $(19,908)
      
Other comprehensive loss before reclassifications(7,261) (1,662) (8,923)
Amounts reclassified from accumulated other comprehensive loss
 (32) (32)
Net current-period other comprehensive loss(7,261) (1,694) (8,955)
      
Balance, September 30, 2018$(26,783) $(2,080) $(28,863)
 
Foreign
Currency
Translation
Adjustments
 
Unrealized
Gains (Losses)
on Investments
 Accumulated Other Comprehensive Loss
Balance, January 1, 2019$(31,587) $(1,413) $(33,000)
      
Other comprehensive income before reclassifications520
 1,562
 2,082
Amounts reclassified from accumulated other comprehensive loss
 178
 178
Net current-period other comprehensive income520
 1,740
 2,260
      
Balance, June 30, 2019$(31,067) $327
 $(30,740)


Note 10.9.    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 investment management and administrative outsourcing platforms to retirement plan sponsors, healthcare systems and not-for-profit organizations worldwide;
Investment Managers – provides investment operations outsourcing platforms to fund companies, banking institutions, and both traditional and non-traditional investment managers worldwide;worldwide and family offices in the United States; and

Page 18 of 47





Investments in New Businesses – focuses on providing investment management programssolutions to ultra-high-net-worth families residing in the United States; developing internet-based investment services and advice platforms; entering new markets; and conducting other research and development activities.
The information in the following tables is derived from the Company’s internal financial reporting used for corporate management purposes. There are no inter-segment revenues for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017.2018. Management evaluates Company assets on a consolidated basis during interim periods. 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, 2017.2018.

Page 17 of 43





The following tables highlight certain financial information about each of the Company’s business segments for the three months ended SeptemberJune 30, 20182019 and 2017.2018:
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
For the Three Months Ended September 30, 2018For the Three Months Ended June 30, 2019
Revenues$118,449
 $102,550
 $83,466
 $101,275
 $2,942
 $408,682
$116,092
 $100,122
 $81,109
 $109,202
 $3,061
 $409,586
Expenses116,471
 53,287
 40,497
 65,296
 5,769
 281,320
107,790
 50,558
 39,361
 68,371
 6,797
 272,877
Operating profit (loss)$1,978
 $49,263
 $42,969
 $35,979
 $(2,827) $127,362
$8,302
 $49,564
 $41,748
 $40,831
 $(3,736) $136,709
 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
 For the Three Months Ended June 30, 2018
Revenues$121,126
 $99,890
 $83,434
 $97,566
 $2,814
 $404,830
Expenses114,842
 53,052
 40,871
 63,321
 5,940
 278,026
Operating profit (loss)$6,284
 $46,838
 $42,563
 $34,245
 $(3,126) $126,804

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 June 30, 2019 and 2018 is as follows:
 2019 2018
Total operating profit from segments$136,709
 $126,804
Corporate overhead expenses(16,573) (16,514)
Income from operations$120,136
 $110,290

The following tables provide additional information for the three months ended June 30, 2019 and 2018 pertaining to our business segments:
 Capital Expenditures (1) Depreciation
 2019 2018 2019 2018
Private Banks$8,761
 $9,529
 $3,585
 $3,323
Investment Advisors4,558
 4,284
 1,165
 1,105
Institutional Investors1,049
 997
 414
 452
Investment Managers4,875
 3,370
 1,820
 1,806
Investments in New Businesses344
 240
 110
 155
Total from business segments$19,587
 $18,420
 $7,094
 $6,841
Corporate overhead586
 366
 328
 297
 $20,173
 $18,786
 $7,422
 $7,138
(1) Capital expenditures include additions to property and equipment and capitalized software.

 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
 For the Three Months Ended September 30, 2017
Revenues$118,499
 $94,318
 $80,411
 $91,020
 $1,770
 $386,018
Expenses115,806
 50,585
 40,003
 59,831
 5,063
 271,288
Operating profit (loss)$2,693
 $43,733
 $40,408
 $31,189
 $(3,293) $114,730
Page 19 of 47





 Amortization
 2019 2018
Private Banks$7,217
 $6,747
Investment Advisors2,550
 2,401
Institutional Investors427
 427
Investment Managers2,346
 2,345
Investments in New Businesses185
 184
Total from business segments$12,725
 $12,104
Corporate overhead56
 57
 $12,781
 $12,161

The following tables highlight certain financial information about each of the Company’s business segments for the six months ended June 30, 2019 and 2018:
 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
 For the Six Months Ended June 30, 2019
Revenues$234,351
 $194,883
 $161,222
 $213,851
 $6,099
 $810,406
Expenses218,752
 103,060
 78,115
 137,437
 12,737
 550,101
Operating profit (loss)$15,599
 $91,823
 $83,107
 $76,414
 $(6,638) $260,305
 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
 For the Six Months Ended June 30, 2018
Revenues$243,290
 $199,082
 $168,925
 $194,421
 $4,710
 $810,428
Expenses227,044
 105,505
 82,120
 126,659
 11,038
 552,366
Operating profit (loss)$16,246
 $93,577
 $86,805
 $67,762
 $(6,328) $258,062

A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the threesix months ended SeptemberJune 30,, 2018 2019 and 20172018 is as follows: 
2018 20172019 2018
Total operating profit from segments$127,362
 $114,730
$260,305
 $258,062
Corporate overhead expenses(14,942) (15,493)(36,608) (31,456)
Income from operations$112,420
 $99,237
$223,697
 $226,606


The following tables provide additional information for the threesix months ended SeptemberJune 30,, 2018 2019 and 20172018 pertaining to our business segments: 
Capital Expenditures (1) DepreciationCapital Expenditures (1) Depreciation
2018 2017 2018 20172019 2018 2019 2018
Private Banks$7,999
 $14,671
 $3,427
 $4,374
$17,222
 $19,768
 $7,134
 $6,642
Investment Advisors3,927
 5,421
 1,168
 759
8,505
 8,544
 2,344
 2,210
Institutional Investors962
 1,260
 410
 248
1,920
 1,964
 819
 900
Investment Managers4,104
 3,450
 1,796
 1,197
8,224
 5,890
 3,591
 3,615
Investments in New Businesses287
 173
 137
 162
585
 444
 201
 305
Total from business segments$17,279
 $24,975
 $6,938
 $6,740
$36,456
 $36,610
 $14,089
 $13,672
Corporate overhead460
 377
 317
 208
Corporate Overhead971
 674
 664
 588
$17,739
 $25,352
 $7,255
 $6,948
$37,427
 $37,284
 $14,753
 $14,260
(1) Capital expenditures include additions to property and equipment and capitalized software.
 Amortization
 2018 2017
Private Banks$6,943
 $9,125
Investment Advisors2,445
 2,973
Institutional Investors427
 425
Investment Managers2,346
 1,132
Investments in New Businesses186
 40
Total from business segments$12,347
 $13,695
Corporate overhead58
 50
 $12,405
 $13,745


Page 1820 of 4347





The following tables highlight certain financial information about each of the Company’s business segments for the nine months ended September 30, 2018 and 2017.
 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
 For the Nine Months Ended September 30, 2018
Revenues$361,739
 $301,632
 $252,391
 $295,696
 $7,652
 $1,219,110
Expenses343,515
 158,792
 122,617
 191,955
 16,807
 833,686
Operating profit (loss)$18,224
 $142,840
 $129,774
 $103,741
 $(9,155) $385,424
 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
 For the Nine Months Ended September 30, 2017
Revenues$347,317
 $275,302
 $235,483
 $255,123
 $5,108
 $1,118,333
Expenses336,709
 147,504
 117,499
 165,743
 15,067
 782,522
Operating profit (loss)$10,608
 $127,798
 $117,984
 $89,380
 $(9,959) $335,811

A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the nine months ended September 30, 2018 and 2017 is as follows:
 2018 2017
Total operating profit from segments$385,424
 $335,811
Corporate overhead expenses(46,398) (45,830)
Income from operations$339,026
 $289,981
 Amortization
 2019 2018
Private Banks$14,358
 $13,374
Investment Advisors5,073
 4,758
Institutional Investors860
 854
Investment Managers4,685
 4,690
Investments in New Businesses370
 224
Total from business segments$25,346
 $23,900
Corporate Overhead114
 115
 $25,460
 $24,015


The following tables provide additional information for the nine months ended September 30, 2018 and 2017 pertaining to our business segments:
 Capital Expenditures (1) Depreciation
 2018 2017 2018 2017
Private Banks$27,767
 $37,000
 $10,069
 $12,956
Investment Advisors12,471
 13,651
 3,378
 2,294
Institutional Investors2,926
 3,157
 1,310
 719
Investment Managers9,994
 13,730
 5,411
 3,141
Investments in New Businesses731
 432
 442
 701
Total from business segments$53,889
 $67,970
 $20,610
 $19,811
Corporate Overhead1,134
 921
 905
 536
 $55,023
 $68,891
 $21,515
 $20,347
(1) Capital expenditures include additions to property and equipment and capitalized software.
 Amortization
 2018 2017
Private Banks$20,317
 $26,464
Investment Advisors7,203
 8,720
Institutional Investors1,281
 1,174
Investment Managers7,036
 1,623
Investments in New Businesses410
 200
Total from business segments$36,247
 $38,181
Corporate Overhead173
 151
 $36,420
 $38,332



Page 19 of 43





Note 11.10.    Income Taxes
The gross liability for unrecognized tax benefits at SeptemberJune 30, 20182019 and December 31, 20172018 was $14,342$15,479 and $14,480,$14,367, respectively, exclusive of interest and penalties, of which $13,670$15,126 and $13,737$13,774 would affect the effective tax rate if the Company were to recognize the tax benefit.
The Company classifies interest and penalties on unrecognized tax benefits as income tax expense. As of SeptemberJune 30, 20182019 and December 31, 2017,2018, the combined amount of accrued interest and penalties related to tax positions taken on tax returns was $1,366$1,677 and $1,175,$1,289, respectively.
September 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Gross liability for unrecognized tax benefits, exclusive of interest and penalties$14,342
 $14,480
$15,479
 $14,367
Interest and penalties on unrecognized benefits1,366
 1,175
1,677
 1,289
Total gross uncertain tax positions$15,708
 $15,655
$17,156
 $15,656
Amount included in Current liabilities$1,398
 $3,275
$2,964
 $3,131
Amount included in Other long-term liabilities14,310
 12,380
14,192
 12,525
$15,708
 $15,655
$17,156
 $15,656

The Company's effective income tax rate for the three and ninesix months ended SeptemberJune 30, 20182019 and 20172018 differs from the federal income tax statutory rate due to the following:
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017 2019 2018 2019 2018
Statutory rate 21.0 % 35.0 % 21.0 % 35.0 % 21.0 % 21.0 % 21.0 % 21.0 %
State taxes, net of federal tax benefit 2.3
 1.7
 2.3
 1.7
 2.6
 2.3
 2.6
 2.3
Foreign tax expense and tax rate differential (0.2) (1.0) (0.2) (1.0) (0.1) (0.1) (0.1) (0.1)
Tax benefit from stock option exercises (1.4) (4.5) (4.8) (3.9) (1.1) (2.0) (1.1) (6.5)
Expiration of the statute of limitations (1.0) (2.6) (0.3) (0.9)
Provision-to-return adjustment (2.3) 
 (0.8) 
Other, net 0.2
 (0.9) 
 (0.7) (0.3) (0.1) (0.3) (0.2)
 18.6 % 27.7 % 17.2 % 30.2 % 22.1 % 21.1 % 22.1 % 16.5 %

The decreaseincrease in the Company's effective tax ratesrate for the three and ninesix months ended SeptemberJune 30, 20182019 was primarily due to reduced tax benefits related to the tax changes enacted in the 2017 Tax Cut and Jobs Act (The Tax Act). The Tax Act was enacted on December 22, 2017 and included a permanent reduction in the corporate tax rate from 35.0 percentlower volume of stock option exercises as compared to 21.0 percent.
The Company's effective tax rates for the three and ninesix months ended SeptemberJune 30, 2018 were favorably impacted by the reduction of the estimated one-time transition tax enacted by The Tax Act and a provision-to-return adjustment on the Company's 2017 federal income tax return. These adjustments to the one-time transition tax and the Company's deferred taxes represent what the Company believes are its final liabilities under the changes enacted in The Tax Act.
The Tax Act also imposed a territorial rather than worldwide system which requires a one-time transition tax on the repatriation of previously deferred foreign earnings. The Company's one-time transition tax as of the filing of the Company's 2017 Federal Tax Return was $10,711. After the Company made a payment of $1,000 and its estimated tax payments relating to its 2017 tax liability, the IRS issued guidance informing taxpayers that they may not receive a refund or credit of any portion of properly applied 2017 tax payments unless and until the amount of payments exceeds the entire unpaid 2017 repatriation tax liability, including all amounts to be paid in installments in subsequent years. In accordance with this guidance, the Company was required to apply $8,941 from an overpayment of federal taxes against the transition tax payable during the nine months ended September 30, 2018. The remaining amount payable related to the transition tax of $770 is included in Long-term income taxes payable on the accompanying Consolidated Balance Sheet.
The Company files income tax returns in the United States on a consolidated basis and in many U.S. state and foreign jurisdictions. The Company is subject to examination of income tax returns by the Internal Revenue Service (IRS) and other domestic and foreign tax authorities. The Company is no longer subject to U.S. federal income tax examination for years before 2015 and is no longer subject to state, local or foreign income tax examinations by authorities for years before 2013.2014.
The Company estimates it will recognize $1,398$2,964 of gross unrecognized tax benefits. This amount is expected to be paid within one year or to be removed at the expiration of the statute of limitations and resolution of income tax audits and is netted against the current payable account. These unrecognized tax benefits are related to tax positions taken on certain federal, state, and foreign tax returns. However, the timing of the resolution of income tax examinations is highly uncertain, and the amounts

Page 20 of 43





ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ

Page 21 of 47





materially from the amounts accrued for each year. While it is reasonably possible that some issues under examination could be resolved in the next twelve months, based upon the current facts and circumstances, the Company cannot reasonably estimate the timing of such resolution or the total range of potential changes as it relates to the current unrecognized tax benefits that are recorded as part of the Company’s financial statements.

Note 12.11.    Commitments and Contingencies
In the normal course of business, theStanford Trust Company is party to various claims and legal proceedings.Litigation
SEI has been named in seven lawsuits filed in Louisiana courts; four of the cases also name SPTC as a defendant. The underlying allegations in all actions relate to the purported role of SPTC in providing back-office services to Stanford Trust Company. The complaints allege that SEI and SPTC participated in some manner in the sale of “certificates of deposit” issued by Stanford International Bank so as to be a “seller” of the certificates of deposit for purposes of primary liability under the Louisiana Securities Law or so as to be secondarily liable under that statute for sales of certificates of deposit made by Stanford Trust Company. Two of the actions also include claims for violations of the Louisiana Racketeering Act and possibly conspiracy, and a third also asserts claims of negligence, breach of contract, breach of fiduciary duty, violations of the uniform fiduciaries law, negligent misrepresentation, detrimental reliance, violations of the Louisiana Racketeering Act, and conspiracy.
The procedural status of the seven cases varies. The Lilliecase, filed originally in the 19th Judicial District Court for the Parish of East Baton Rouge, was brought as a class action and is procedurally the most advanced of the cases. SEI and SPTC filed exceptions, which the Court granted in part, dismissing claims under the Louisiana Unfair Trade Practices Act and permitting the claims under the Louisiana Securities Law to go forward. On March 11, 2013, newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. On August 7, 2013, the Judicial Panel on Multidistrict Litigation transferred the matter to the Northern District of Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“the Stanford MDL”), is pending. On September 22, 2015, the District Court on the motion of SEI and SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss plaintiffs’ claims for secondary liability under Section 714(B) of the Louisiana Securities Law based on the allegations pled by plaintiffs. On November 4, 2015, the District Court granted SEI and SPTC's motion to dismiss plaintiffs' claims under Section 712(D) of the Louisiana Securities Law. Consequently, the only claims of plaintiffs still pending before the District Courtremaining in Lillie are plaintiffs' claims for secondary liability against SEI and SPTC under Section 714(B) of the Louisiana Securities Law. On May 2, 2016, the District Court certified the class as being "all persons for whom Stanford Trust Company purchased or renewed Stanford Investment Bank Limited certificates of deposit in Louisiana between January 1, 2007 and February 13, 2009". Notice of the pendency of the class action was mailed to potential class members on October 4, 2016.
On December 1, 2016, a group of plaintiffs who opted out of the Lillieclass filed a complaint against SEI and SPTC in the United States District Court in the Middle District of Louisiana (“Ahders Complaint”), alleging claims essentially the same as those in Lillie. In January 2017, the Judicial Panel on Multidistrict Litigation transferred the Ahders proceeding to the Northern District of Texas and the Stanford MDL. During February 2017, SEI filed its response to the Ahders Complaint, and in March 2017 the District Court for the Northern District of Texas approved the stipulated dismissal of all claims in this complaintComplaint predicated on Section 712(D) or Section 714(A) of the Louisiana Securities Law. In both cases, as a resultof the proceedings in the Northern District of Texas, only the plaintiffs’ secondary liability claims under Section 714(B) of the Louisiana Securities Law remain. Limited discovery and motions practice have occurred, including SEI and SPTC’s filing of a dispositive summary judgment motion in the Lillie proceeding. On January 31, 2019, the Judicial Panel on Multidistrict Litigation remanded the Lillie and Ahders proceedings to the Middle District of Louisiana.
On July 9, 2019, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim in the Lillie proceeding and denying Plaintiffs’ Motion for Continuance of SEI and SPTC’s Motion for Summary Judgment pursuant to Rule 56(d).
On July 16, 2019, SEI and SPTC filed a Motion for Summary Judgment pursuant to Rule 56(d) in the Ahders proceeding to have the remaining Section 714(B) claim dismissed.
On July 17, 2019, Plaintiffs filed a Motion for Reconsideration and/or New Trial as to the July 9, 2019 Ruling and Order (ECF 146) by the Honorable Brian A. Jackson denying a continuance of SEI’s Motion for Summary Judgment pursuant to Rule 56(d). SEI and SPTC expect to file an answer to Plaintiffs’ Motion for Reconsideration on or before the deadline for responding of August 8, 2019.
Another one of the cases,case, filed in the 23rd Judicial District Court for the Parish of Ascension, also was removed to federal court and transferred by the Judicial Panel on Multidistrict Litigation to the Northern District of Texas and the Stanford MDL. The schedule for responding to that Complaint has not yet been established.
The plaintiffs in two
Page 22 of the47





Two additional cases remainingremain in the Parish of East Baton RougeRouge. Plaintiffs filed petitions in 2010 and have granted SEI and SPTC indefinite extensions to respond to the petitions.respond. No material activity has taken place since.
In the two additional cases, filed in East Baton Rouge and brought by the same counsel who filed the Lillieaction, virtually all of the litigation to date has involved motions practice and appellate litigation regarding the existence of federal subjectionsubject matter jurisdiction under the federal Securities Litigation Uniform Standards Act (SLUSA). After the matter wasThe matters were removed to the United States District Court for the Northern District of Texas thatand consolidated. The court then dismissed the action under SLUSA. The Court of Appeals for the Fifth Circuit reversed that order, and the Supreme Court of the United States affirmed the Court of Appeals judgment on February 26, 2014. The matter wasmatters were remanded to state court and no material activity has taken place since that date.
While the outcome of this litigation remains uncertain, SEI and SPTC believe that they have valid defenses to plaintiffs' claims and intend to defend the lawsuits vigorously. Because of uncertainty in the make-up of the Lillie class, the specific theories of liability that may survive a motion for summary judgment or other dispositive motion, the relative lack of discovery regarding damages, causation, mitigation and other aspects that may ultimately bear upon loss, the Company is not reasonably able to provide an estimate of loss, if any, with respect to the foregoing lawsuits.

SEI Capital Accumulation Plan Litigation
Page 21On September 28, 2018, a class action complaint was filed in the United States District Court for the Eastern District of 43





In October 2018,Pennsylvania by Gordon Stevens, individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) naming the Company and its affiliated and/or related entities SEI Investments Management Corporation, SEI Capital Accumulation Plan Design Committee, SEI Capital Accumulation Plan Investment Committee, SEI Capital Accumulation Plan Administration Committee, and John Does 1-30 have been named as defendants in a class action complaint in the United States District Court for the Eastern District of Pennsylvania filed by Gordon(the “Stevens Complaint”). The Stevens individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) seekingCompliant seeks unspecified damages for defendants’ breach of fiduciary duties under ERISA with respect to selecting and monitoring the Plan’s investment options and by retaining affiliated investment products in the Plan (the “Stevens Complaint”). WhilePlan.
On May 14, 2019, Plaintiff and SEI filed notice with the Company believescourt of their collective intent to settle the allegationsStevens Litigation. As of the date of this report, the terms of the settlement have not yet been finalized, and will be subject to court review and approval. Although SEI has agreed to settle this matter in the Stevens Complaint are without merit,very early stages of the litigation in order to avoid the high cost of protracted class-action litigation and internal distractions such cases bring, SEI believes its defenses against the plaintiff’s allegations remain valid.
While the outcome of this litigation remains uncertain. Theuncertain, the defendants intend to answer the Stevens Complaint, believe that they have valid defenses to plaintiffs’ claims and intend to defend the allegations contained in the Stevens Complaint vigorously. Because of uncertainty in the make-up of the purported class named in the Stevens Complaint, the specific theories of liability that may survive a motion for summary judgment or other dispositive motion, the lack of specificity or discovery regarding damages, causation, mitigation and other aspects that may ultimately bear upon loss, the Company is not reasonably able to provide an estimate of loss, if any, with respect to the matters set forth in the Stevens Complaint.
Other Matters
The Company is also a party to various other actions and claims arising in the normal course of business that the Company does not believe are material. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company's financial position or the manner in which the Company conducts its business. Currently, the Company does not believe the amount of losses associated with these matters can be estimated. While the Company does not believe that the amount of such losses will, when liquidated or estimable, be material to its financial position, the assumptions may be incorrect and any such loss could have a material adverse effect on the Company's results of operations or the manner in which the Company conducts its business in the period(s) during which the underlying matters are resolved.

Note 13.12.    Business Acquisition
On April 2, 2018, the Company acquired all ownership interests of Huntington Steele, LLC (Huntington Steele), a registered investment advisor based in Seattle, Washington servicing the ultra-high-net-worth market, to enhance the Company's business development and research efforts in an additional geographic region. Under the acquisition method of accounting, the total purchase price was allocated to Huntington Steele's net tangible and intangible assets based upon their estimated fair values as of April 2, 2018 based on management’s best estimates and assumptions as of the reporting date and are considered preliminary pending finalization of valuation analyses pertaining to the intangible assets acquired and the contingent consideration.market. The total purchase price for Huntington Steele was $17,914, which includes $5,794 in cash consideration, net of $125 in cash acquired, and a contingent purchase price of $12,120. The contingent purchase price consists of amounts payable to the sellers upon the attainment of specified financial measures determined at various intervals overoccurring between 2019 and 2023. The Company made a payment of $433 to the next five years. Thesellers during the three months ended June 30, 2019. As of June 30, 2019, the current portion of the contingent purchase price of $430$535 is included in Accrued liabilities on the accompanying Balance

Page 23 of 47





Sheet. The long-term portion of the contingent consideration of $11,690$11,152 is included in Other long-term liabilities on the accompanying Balance Sheet.
The purchase price allocation is as follows:
  Estimated Fair Value Estimated Useful Life
Cash $125
  
Goodwill 11,499
  
Identifiable intangible assets    
Client relationships 6,180
 12.0 years
Trade names 450
 7.0 years
Other assets 15
  
Current liabilities (230)  
Contingent consideration (12,120)  
Net cash consideration $5,794
  

The results of operations of Huntington Steele, as well as all tangible and intangible assets resulting from the transaction, are included in the Investments in New Businesses segment. Any goodwill generated from the acquisition is fully deductible for income tax purposes.
Pro forma information has not been presented because the effect of the Huntington Steele acquisition is not material to the Company's consolidated financial results.


Page 22 of 43





Note 14.13.    Goodwill and Intangible Assets
The changes in the carrying amount of the Company's goodwill by segment are as follows:
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Balance, January 1, 2018$52,990
 $
 $52,990
Business acquisition
 11,499
 11,499
Balance, September 30, 2018$52,990
 $11,499
 $64,489

On April 2, 2018, the Company acquired all ownership interests of Huntington Steele (See Note 13)12). The total purchase price was allocated to Huntington Steele’s net tangible and intangible assets based upon their estimated fair values at the date of purchase. The excess purchase price over the value of the identifiable intangible assets was preliminarily allocatedrecorded as goodwill. The total amount of goodwill from this transaction amounted to goodwill$11,499 and is included on the accompanying Consolidated Balance Sheet.Sheets.
In July 2017, the Company acquired all ownership interests of Archway Technology Partners, LLC, Archway Finance & Operations, Inc. and Keystone Capital Holdings, LLC (collectively, Archway), a provider of operating technologies and services to the family office industry. The total purchase price was allocated to Archway’s net tangible and intangible assets based upon their estimated fair values at the date of purchase. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. The total amount of goodwill from this transaction amounted to $52,990 and is included on the accompanying Consolidated Balance Sheets.
TheThere were no changes to the Company's intangible assets consist of:
 September 30, 2018 Weighted Average Estimated Useful Life December 31, 2017 Weighted Average Estimated Useful Life
Acquired technology$13,510
 10.0 years $13,510
 10.0 years
Client relationships16,940
 13.9 years 10,760
 15.0 years
Non-competition agreements3,470
 5.0 years 3,470
 5.0 years
Trade name2,840
 7.0 years 2,390
 7.0 years
 36,760
   30,130
  
Less: Accumulated amortization(4,169)   (1,552)  
Intangible assets, net$32,591
   $28,578
  

goodwill during the six months ended June 30, 2019.
The Company recognized $2,617$1,842 and $857$1,696 of amortization expense related to the intangible assets acquired through the acquisitions of Huntington Steele and Archway during the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively.

Note 15.14.    Revenues from Contracts with Customers
The Company’s principal sources of revenues are: (1) asset management, administration and distribution fees primarily earned based upon a contractual percentage of net assets under management or administration; and (2) information processing and software servicing fees that are either recurring and primarily earned based upon the number of trust accounts being serviced or a percentage of the total average daily market value of the clients' assets processed on the Company's platforms, or non-recurring and based upon project-oriented contractual agreements related to client implementations.
Disaggregation of Revenue
The following tables provide additional information pertaining to our revenues disaggregated by major product line and primary geographic market based on the location of the use of the products or services for each of the Company’s business segments for the three and nine months ended SeptemberJune 30, 2019 and 2018:

Page 2324 of 4347





Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Major Product Lines:For the Three Months Ended September 30, 2018For the Three Months Ended June 30, 2019
Investment management fees from pooled investment products$34,897
 $73,663
 $14,614
 $206
 $267
 $123,647
$33,451
 $70,087
 $13,799
 $184
 $325
 $117,846
Investment management fees from investment management agreements197
 24,525
 68,318
 79
 2,641
 95,760
283
 25,448
 67,076
 
 2,713
 95,520
Investment operations fees381
 
 
 92,185
 
 92,566
362
 
 
 99,932
 
 100,294
Investment processing fees - PaaS44,836
 
 
 624
 
 45,460
43,156
 
 
 
 
 43,156
Investment processing fees - SaaS32,925
 
 
 2,417
 
 35,342
34,776
 
 
 2,593
 
 37,369
Professional services fees3,408
 
 
 1,792
 
 5,200
2,586
 
 
 1,548
 
 4,134
Account fees and other1,805
 4,362
 534
 3,972
 34
 10,707
1,478
 4,587
 234
 4,945
 23
 11,267
Total revenues$118,449
 $102,550
 $83,466
 $101,275
 $2,942
 $408,682
$116,092
 $100,122
 $81,109
 $109,202
 $3,061
 $409,586
                      
Primary Geographic Markets:                      
United States$73,188
 $102,550
 $64,601
 $95,132
 $2,942
 $338,413
$74,889
 $100,122
 $63,653
 $101,794
 $3,061
 $343,519
United Kingdom28,647
 
 13,817
 
 
 42,464
25,695
 
 13,140
 
 
 38,835
Canada11,730
 
 1,895
 
 
 13,625
10,882
 
 1,708
 
 
 12,590
Ireland4,884
 
 2,828
 6,143
 
 13,855
4,626
 
 2,356
 7,408
 
 14,390
Other
 
 325
 
 
 325

 
 252
 
 
 252
Total revenues$118,449
 $102,550
 $83,466
 $101,275
 $2,942
 $408,682
$116,092
 $100,122
 $81,109
 $109,202
 $3,061
 $409,586

Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Major Product Lines:For the Nine Months Ended September 30, 2018For the Three Months Ended June 30, 2018
Investment management fees from pooled investment products$105,251
 $218,562
 $45,819
 $445
 $729
 $370,806
$35,164
 $72,481
 $15,347
 $239
 $237
 $123,468
Investment management fees from investment management agreements609
 70,678
 205,202
 242
 6,824
 283,555
214
 23,389
 67,608
 80
 2,549
 93,840
Investment operations fees1,138
 
 
 267,951
 
 269,089
375
 
 
 88,311
 
 88,686
Investment processing fees - PaaS133,336
 
 
 1,749
 
 135,085
43,915
 
 
 642
 
 44,557
Investment processing fees - SaaS102,980
 
 
 7,152
 
 110,132
35,453
 
 
 2,370
 
 37,823
Professional services fees13,022
 
 
 5,660
 
 18,682
4,195
 
 
 1,981
 
 6,176
Account fees and other5,403
 12,392
 1,370
 12,497
 99
 31,761
1,810
 4,020
 479
 3,943
 28
 10,280
Total revenues$361,739
 $301,632
 $252,391
 $295,696
 $7,652
 $1,219,110
$121,126
 $99,890
 $83,434
 $97,566
 $2,814
 $404,830
                      
Primary Geographic Markets:                      
United States$226,990
 $301,632
 $193,417
 $279,736
 $7,652
 $1,009,427
$75,669
 $99,890
 $64,048
 $92,845
 $2,814
 $335,266
United Kingdom85,177
 
 42,498
 
 
 127,675
29,005
 
 13,894
 
 
 42,899
Canada34,847
 
 6,700
 
 
 41,547
11,516
 
 2,134
 
 
 13,650
Ireland14,725
 
 8,282
 15,960
 
 38,967
4,936
 
 3,027
 4,721
 
 12,684
Other
 
 1,494
 
 
 1,494

 
 331
 
 
 331
Total revenues$361,739
 $301,632
 $252,391
 $295,696
 $7,652
 $1,219,110
$121,126
 $99,890
 $83,434
 $97,566
 $2,814
 $404,830


Page 25 of 47





The following tables provide additional information pertaining to our revenues disaggregated by major product line and primary geographic market based on the location of the use of the products or services for each of the Company’s business segments for the six months ended June 30, 2019 and 2018:
 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Major Product Lines:For the Six Months Ended June 30, 2019
Investment management fees from pooled investment products$66,424
 $136,710
 $27,460
 $389
 $634
 $231,617
Investment management fees from investment management agreements985
 49,286
 133,247
 
 5,411
 188,929
Investment operations fees738
 
 
 194,799
 
 195,537
Investment processing fees - PaaS87,067
 
 
 
 
 87,067
Investment processing fees - SaaS69,484
 
 
 5,142
 
 74,626
Professional services fees6,363
 
 
 2,965
 
 9,328
Account fees and other3,290
 8,887
 515
 10,556
 54
 23,302
Total revenues$234,351
 $194,883
 $161,222
 $213,851
 $6,099
 $810,406
            
Primary Geographic Markets:           
United States$152,343
 $194,883
 $125,978
 $199,852
 $6,099
 $679,155
United Kingdom51,045
 
 26,606
 
 
 77,651
Canada21,542
 
 3,435
 
 
 24,977
Ireland9,421
 
 4,667
 13,999
 
 28,087
Other
 
 536
 
 
 536
Total revenues$234,351
 $194,883
 $161,222
 $213,851
 $6,099
 $810,406

Page 26 of 47





 
Private
Banks
 
Investment
Advisors
 
Institutional
Investors
 
Investment
Managers
 
Investments
In New
Businesses
 Total
Major Product Lines:For the Six Months Ended June 30, 2018
Investment management fees from pooled investment products$70,354
 $144,899
 $31,205
 $239
 $462
 $247,159
Investment management fees from investment management agreements412
 46,153
 136,884
 163
 4,183
 187,795
Investment operations fees757
 
 
 175,766
 
 176,523
Investment processing fees - PaaS88,500
 
 
 1,125
 
 89,625
Investment processing fees - SaaS70,055
 
 
 4,735
 
 74,790
Professional services fees9,614
 
 
 3,868
 
 13,482
Account fees and other3,598
 8,030
 836
 8,525
 65
 21,054
Total revenues$243,290
 $199,082
 $168,925
 $194,421
 $4,710
 $810,428
            
Primary Geographic Markets:           
United States$153,802
 $199,082
 $128,816
 $184,604
 $4,710
 $671,014
United Kingdom56,530
 
 28,681
 
 
 85,211
Canada23,117
 
 4,805
 
 
 27,922
Ireland9,841
 
 5,454
 9,817
 
 25,112
Other
 
 1,169
 
 
 1,169
Total revenues$243,290
 $199,082
 $168,925
 $194,421
 $4,710
 $810,428

Investment management fees from pooled investment products - Revenues associated with clients' assets invested in Company-sponsored pooled investment products. Contractual fees are stated as a percentage of the average market value of assets under management and collected on a monthly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Page 24 of 43





Investment management fees from investment management agreements - Revenues based on assets of clients of the Institutional Investors segment primarily invested in Company-sponsored products. Each client is charged an investment management fee that is stated as a percentage of the average market value of all assets under management. The client is billed directly on a quarterly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.
Revenues associated with the separately managed account program offered through registered investment advisors located throughout the United States. The contractual fee is stated as a percentage of the average market value of all assets invested in the separately managed account and collected on a quarterly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.
Investment operations fees - Revenues earned from accounting and administrative services, distribution support services and regulatory and compliance services to investment management firms and family offices. The Company contracts directly with the investment management firm or family office. The contractual fees are stated as a percentage of net assets under administration and billed when asset valuations are finalized. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.
Investment processing fees - Software as a Service - Revenues associated with clients that outsource investment processing technology software and computer processing by accessing our proprietary software and data center remotely but retain responsibility for all investment operations, client administration and other back-office trust operations. The contractual fee is based on a monthly fee plus additional fees determined on a per-account or per-transaction basis. The client is billed directly on a monthly basis. Revenues are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.
Investment processing fees - Platform as a Service - Revenues associated with clients that outsource their entire investment operation and back-office processing functions. Through the use of the Company's proprietary platforms, the Company assumes all back-office investment processing services including investment processing, custody and safekeeping of assets, income collections, securities settlement and other related trust activities. The contractual fee is based on a monthly fee plus additional fees determined on a per-account or per-transaction basis. Contractual fees can

Page 27 of 47





also be stated as a percentage of the value of assets processed on the Company's platforms each month as long as the fee is in excess of a monthly contractual minimum. The client is billed directly on a monthly basis. Revenues are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.
Professional services fees - Revenues associated with the business services migration for investment processing clients of the Private Banks segment and investment operations clients of the Investment Managers segment. In addition, Professional services include other services such as business transformation consulting. Typically, fees are stated as a contractual fixed fee. The client is billed directly and fees are collected according to the terms of the agreement.
Other - Revenues associated with custody account servicing, account terminations, reimbursements received for out-of-pocket expenses, and other fees for the provision of ancillary services.
Revenue is recognized by the Company when the performance obligations are satisfied and transfer of control to the client is completed. The majority of the Company’s performance obligations are satisfied and control is transferred to the client continuously. Therefore, revenue is recognized on a monthly basis. The amount of revenue recognized reflects the amount of consideration expected to be received by the Company in exchange for satisfied performance obligations.
Deferred Contract Costs
Deferred contract costs, which primarily consist of deferred sales commissions, were $22,104 as of September 30, 2018. The Company recorded a cumulative effect adjustmentdoes not disclose the value of unsatisfied performance obligations as the majority of its contracts relate to: 1) contracts with an original term of one year or less; 2) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed; and 3) contracts that are based on January 1, 2018the value of $18,641 associated with the capitalization of contract costs upon the adoption of ASC 606 (See assets under management or administration.

Note 1). 15.    Leases
The Company deferred expenseshas operating leases for corporate facilities and equipment. The Company's expense related to contract costs of $1,400 and $5,483leases during the three and ninesix months ended SeptemberJune 30, 2018, respectively. Amortization expense2019 was $2,529 and $5,097, respectively, and is included in Facilities, supplies and other costs on the accompanying Consolidated Statement of Operations.
The Company's future minimum lease payments under non-cancelable leases as of June 30, 2019 are as follows:
2019 (excluding the six months ended June 30, 2019) $2,328
2020 8,929
2021 7,618
2022 7,326
2023 7,326
Thereafter 17,530
Total future minimum lease payments 51,057
Less: Imputed interest (3,371)
Total $47,686

The following table provides supplemental Consolidated Balance Sheet information related to deferred contract costs were $819the Company's leases:
  June 30, 2019
Short-term operating lease liabilities $8,259
Long-term operating lease liabilities 39,427
Total operating lease liabilities $47,686
   
Weighted average remaining lease term 6.8 years
   
Weighted average discount rate 2.78%

The following table provides supplemental cash flow information related to the Company's leases:
  For the Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities $5,405
   
Right-of-use assets obtained in exchange for lease obligations 2,810


Page 28 of 47





As of June 30, 2019, the Company has additional operating lease exposure that have not yet commenced of $1,291. These operating leases will have a commencement date occurring in the remainder of 2019 and $2,020 during the three and nine months ended September 30, 2018, respectively. There was no impairment loss in relation to deferred contract costs during the nine months ended September 30, 2018.have a lease term of five years.


Page 2529 of 4347





Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(In thousands, except asset balances and per share data)
This discussion reviews and analyzes the consolidated financial condition, the consolidated results of operations and other key factors that may affect future performance. This discussion should be read in conjunction with the Consolidated Financial Statements, the Notes to the Consolidated Financial Statements and the Annual Report on Form 10-K for the year ended December 31, 2017.2018.

Overview
Consolidated Summary
We are a leading global provider of investment processing, investment management and investment operations platforms. We help corporations, financial institutions, financial advisors and ultra-high-net-worth families create and manage wealth by providing comprehensive, innovative, investment and investment-business platforms. Investment processing fees are earned as monthly fees for contracted services, including computer processing services, software licenses and investment operations services, as well as transaction-based fees for providing securities valuation and trade-execution. Investment operations and investment management fees are earned as a percentage of average assets under management, administration or advised assets. As of SeptemberJune 30, 2018,2019, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer $919.9$970.2 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $339.2$335.3 billion in assets under management and $575.8$630.5 billion in client assets under administration. Our affiliate, LSV Asset Management (LSV), manages $109.4$103.6 billion of assets which are included as assets under management.
Our Condensed Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 2019 and 2018 and 2017 were:
Three Months Ended September 30, Percent Change* Nine Months Ended September 30, Percent Change*Three Months Ended June 30, Percent Change* Six Months Ended June 30, Percent Change*
2018 2017 2018 2017 2019 2018 2019 2018 
Revenues$408,682
 $386,018
 6% $1,219,110
 $1,118,333
 9%$409,586
 $404,830
 1% $810,406
 $810,428
 —%
Expenses296,262
 286,781
 3% 880,084
 828,352
 6%289,450
 294,540
 (2)% 586,709
 583,822
 —%
Income from operations112,420
 99,237
 13% 339,026
 289,981
 17%120,136
 110,290
 9% 223,697
 226,606
 (1)%
Net gain (loss) from investments89
 645
 NM (460) 1,036
 NM231
 (139) NM 1,510
 (549) NM
Interest income, net of interest expense3,360
 1,554
 116% 8,635
 4,357
 98%4,147
 3,030
 37% 8,247
 5,275
 56%
Equity in earnings from unconsolidated affiliate41,726
 39,333
 6% 123,406
 109,213
 13%37,832
 41,073
 (8)% 75,149
 81,680
 (8)%
Income before income taxes157,595
 140,769
 12% 470,607
 404,587
 16%162,346
 154,254
 5% 308,603
 313,012
 (1)%
Income taxes29,276
 39,030
 (25)% 80,773
 122,342
 (34)%35,806
 32,577
 10% 68,082
 51,497
 32%
Net income128,319
 101,739
 26% 389,834
 282,245
 38%126,540
 121,677
 4% 240,521
 261,515
 (8)%
Diluted earnings per common share$0.80
 $0.63
 27% $2.41
 $1.74
 39%$0.82
 $0.75
 9% $1.54
 $1.61
 (4)%
* Variances noted "NM" indicate the percent change is not meaningful.
The following items had a significant impact on our financial results for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017:2018:
Revenue growth was primarily driven by higher Asset management, administration and distribution fees from market appreciation and positive cash flows from new and existing clients. Our average assets under management, excluding LSV, increased $19.3 billion, or 9 percent, to $229.4 billion in the first nine months of 2018 as compared to $210.1 billion during the first nine months of 2017. Our average assets under administration increased $55.4 billion, or 11 percent, to $546.6 billion in the first nine months of 2018 as compared to $491.2 billion during the first nine months of 2017.
Revenue from Asset management, administration and distribution fees increased primarily from higher assets under administration in our Investment Managers segment. Our average assets under administration increased $71.1 billion, or 13 percent, to $608.9 billion in the first six months of 2019 as compared to $537.8 billion during the first six months of 2018. Our average assets under management, excluding LSV, decreased $4.4 billion, or two percent, to $225.9 billion in the first six months of 2019 as compared to $230.3 billion during the first six months of 2018.
Information processing and software servicing fees in our Private Banks segment increased $9.8decreased by $5.5 million during the first ninesix months of 2018 primarily2019 due to increased assets from newdecreased non-recurring fees and existing clients processed on the SEI Wealth Platform.
Asset administration fees in our Investment Managers segment increased $12.0 million during the first nine months of 2018 from our acquisition of SEI Archway during the third quarter 2017.previously announced client losses.
Our proportionate share in the earnings of LSV increaseddecreased to $123.4$75.1 million in the first ninesix months of 20182019 as compared to $109.2$81.7 million in the first ninesix months of 20172018 primarily due to increasedlower assets under management from LSV's existing clients due tofrom the significant market depreciation in late 2018, lower performance fees and negative cash flows. Market appreciation and cash inflows from new clients.during the first six months of 2019 partially offset the decline in LSV's assets under management.

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Our operating expenses, primarily personnel costs, increased across allin the first six months of our business segments. These expenses2019 and decreased in the second quarter as compared to the prior year periods. The decline in the second quarter was primarily consist of operational, technologydue to cost containment measures implemented in late 2018 and marketing costs and are mainly related to servicing existing clients and acquiring new clients. In addition, our Investment Managers segment includes personnel costs related to SEI Archway.early 2019. These operating expenses are included in Compensation, benefits and other personnel costs on the accompanying Consolidated Statements of Operations.
The direct costs associated with our investment management programs increased in our Private Banks, Investment Advisors and Institutional Investors segments. These costs primarily relate to fees charged by investment advisory firms for day-to-day portfolio management of SEI-sponsored investment products. These costs are included in Sub-advisory, distribution and other asset management costs on the accompanying Consolidated Statements of Operations.
We capitalized $32.5$18.7 million in the first ninesix months of 20182019 for the SEI Wealth Platform as compared to $40.6$23.8 million in the first ninesix months of 2017.2018. Amortization expense related to the Platform decreasedSWP increased to $29.7$20.9 million during the first ninesix months of 20182019 as compared to $37.3$19.6 million during the first ninesix months of 20172018 due to significant enhancements.
Our effective tax rate during the adjustmentsecond quarter of 2019 was 22.1 percent as compared to 21.1 percent during the estimated useful lifesecond quarter of 2018. Our tax rate was 22.1 percent during the Platformfirst six months of 2019 as compared to 16.5 percent during the first six months of 2018. The increase in our effective tax rate for both periods was primarily due to reduced tax benefits from a lower volume of stock option exercise activity (See the caption "Income Taxes" later in this discussion for more information).
We continued our stock repurchase program during 2019 and purchased 3.6 million shares for $185.8 million in the fourth quarter 2017.
During the first nine months of 2018, we placed into service an application developed for the Investment Managers segment. This new offering includes components that leverage upon the current infrastructure and add significant enhancements designed to aggregate, transact and process data. Amortization expense related to the application was $3.9 million during the first nine months of 2018.
As we continue the development of new elements of the Platform, our expenses related to maintenance and support have increased. These costs are primarily recognized in personnel and consulting costs and are not eligible for capitalization. These increased costs primarily impacted the Private Banks and Investment Advisors business segments.
Our effective tax rate during the third quarter of 2018 was 18.6 percent as compared to 27.7 percent during the third quarter of 2017. Our effective tax rate was 17.2 percent during the first nine months of 2018 as compared to 30.2 percent during the first nine months of 2017. The decline in our effective tax rate was primarily due to the tax changes enacted in the 2017 Tax Cut and Jobs Act (The Tax Act). In addition, the rate for both periods were favorably impacted by tax benefits from stock option exercise activity (See the caption "Income Taxes" later in this discussion for more information).
We continued our stock repurchase program during 2018 and purchased 4.4 million shares for $289.5 million in the ninesix month period.
Impact of Adopting Revenue Recognition Guidance
On January 1, 2018, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (Accounting Standards Codification 606 (ASC 606), which provides accounting guidance on the recognition of revenues from contracts with customers and impacts the presentation of certain revenues and expenses in our consolidated financial statements. ASC 606 is applied prospectively from January 1, 2018 and reported financial results from the prior comparable period have not been revised.
ASC 606 did not change the accounting for the majority of our revenue arrangements and did not have a material impact to our consolidated financial statements. The impact from the adoption of ASC 606 to our financial results during the three and nine months ended September 30, 2018 is primarily related to research services provided to customers in soft-dollar arrangements by SIDCO, our broker-dealer subsidiary, and the deferral of incremental contract acquisition costs. Under the new revenue standard, fees received for research services by SIDCO are recorded net of amounts paid for the soft dollar arrangement. The amounts we paid under these arrangements were previously recorded as an expense. The impact of this change in presentation was a decline in both revenues and expenses of $3.3 million and $10.5 million during the three and nine months ended September 30, 2018, respectively. There was no impact to our net income as a result of this change. Also under the new revenue standard, costs incurred to acquire client contracts are deferred and recognized over the expected client life. During the three and nine months ended September 30, 2018, we deferred $1.4 million and $5.5 million, respectively, in expenses related to contract acquisition costs (See Note 1 to the Notes to Consolidated Financial Statements).


Page 2731 of 4347





Ending Asset Balances
(In millions)
As of September 30, Percent ChangeAs of June 30, Percent Change
2018 2017 2019 2018 
Private Banks:        
Equity and fixed-income programs$22,739
 $21,196
 7%$22,563
 $22,448
 1%
Collective trust fund programs4
 4
 —%4
 4
 —%
Liquidity funds3,142
 3,345
 (6)%3,322
 3,471
 (4)%
Total assets under management$25,885
 $24,545
 5%$25,889
 $25,923
 —%
Client assets under administration23,394
 22,107
 6%23,387
 22,435
 4%
Total assets$49,279
 $46,652
 6%$49,276
 $48,358
 2%
Investment Advisors:        
Equity and fixed-income programs63,958
 59,455
 8%$64,591
 $62,227
 4%
Collective trust fund programs5
 5
 —%6
 5
 20%
Liquidity funds3,182
 2,327
 37%2,618
 3,101
 (16)%
Total assets under management$67,145
 $61,787
 9%$67,215
 $65,333
 3%
Institutional Investors:        
Equity and fixed-income programs85,248
 85,763
 (1)%$82,335
 $83,687
 (2)%
Collective trust fund programs74
 82
 (10)%78
 73
 7%
Liquidity funds2,544
 3,699
 (31)%2,173
 2,594
 (16)%
Total assets under management$87,866
 $89,544
 (2)%$84,586
 $86,354
 (2)%
Advised assets4,131
 3,626
 14%
Client assets under advisement3,598
 4,544
 (21)%
Total assets91,997
 93,170
 (1)%$88,184
 $90,898
 (3)%
Investment Managers:        
Equity and fixed-income programs99
 93
 6%$
 $95
 NM
Collective trust fund programs46,934
 46,087
 2%51,838
 45,213
 15%
Liquidity funds580
 799
 (27)%472
 496
 (5)%
Total assets under management$47,613
 $46,979
 1%$52,310
 $45,804
 14%
Client assets under administration (A)552,411
 493,538
 12%607,086
 522,700
 16%
Total assets$600,024
 $540,517
 11%$659,396
 $568,504
 16%
Investments in New Businesses:        
Equity and fixed-income programs1,179
 1,052
 12%$1,566
 $1,120
 40%
Liquidity funds162
 71
 128%141
 106
 33%
Total assets under management$1,341
 $1,123
 19%$1,707
 $1,226
 39%
Advised assets730
 54
 NM
Client assets under advisement887
 807
 10%
Total assets2,071
 1,177
 76%$2,594
 $2,033
 28%
LSV:        
Equity and fixed-income programs (B)$109,363
 $102,901
 6%$103,575
 $106,505
 (3)%
Total:        
Equity and fixed-income programs (C)282,586
 270,460
 4%$274,630
 $276,082
 (1)%
Collective trust fund programs47,017
 46,178
 2%51,926
 45,295
 15%
Liquidity funds9,610
 10,241
 (6)%8,726
 9,768
 (11)%
Total assets under management$339,213
 $326,879
 4%$335,282
 $331,145
 1%
Advised assets4,861
 3,680
 32%
Client assets under advisement4,485
 5,351
 (16)%
Client assets under administration (D)575,805
 515,645
 12%630,473
 545,135
 16%
Total assets under management, advisement and administration$919,879
 $846,204
 9%$970,240
 $881,631
 10%

Page 2832 of 4347





(A)Client assets under administration in the Investment Managers segment include $61.4$57.1 billion of assets that are at fee levels below our normal full service assets (as of SeptemberJune 30, 2018)2019).
(B)Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. The ending value of these assets as of SeptemberJune 30, 20182019 was $2.4$2.8 billion.
(C)Equity and fixed-income programs include $5.7$5.5 billion of assets invested in various asset allocation funds at SeptemberJune 30, 2018.2019.
(D)In addition to the numbers presented, SEI also administers an additional $10.1$11.6 billion in Funds of Funds assets (as of SeptemberJune 30, 2018)2019) on which SEI does not earn an administration fee.

Page 2933 of 4347





Average Asset Balances
(In millions)
Three Months Ended September 30, Percent Change Nine Months Ended September 30, Percent ChangeThree Months Ended June 30, Percent Change Six Months Ended June 30, Percent Change
2018 2017 2018 2017 2019 2018 2019 2018 
Private Banks:                
Equity and fixed-income programs$22,516
 $20,699
 9% $22,933
 $19,602
 17%$22,088
 $22,870
 (3)% $21,960
 $23,141
 (5)%
Collective trust fund programs4
 4
 —% 4
 4
 —%4
 4
 —% 4
 4
 —%
Liquidity funds3,376
 3,555
 (5)% 3,537
 3,761
 (6)%3,388
 3,516
 (4)% 3,547
 3,618
 (2)%
Total assets under management$25,896
 $24,258
 7% $26,474
 $23,367
 13%$25,480
 $26,390
 (3)% $25,511
 $26,763
 (5)%
Client assets under administration23,175
 21,441
 8% 23,059
 20,943
 10%23,124
 22,605
 2% 22,611
 23,002
 (2)%
Total assets$49,071
 $45,699
 7% $49,533
 $44,310
 12%$48,604
 $48,995
 (1)% $48,122
 $49,765
 (3)%
Investment Advisors:                
Equity and fixed-income programs63,399
 58,406
 9% 62,980
 56,390
 12%$62,419
 $62,890
 (1)% $60,576
 $62,770
 (3)%
Collective trust fund programs5
 5
 —% 5
 5
 —%6
 5
 20% 6
 5
 20%
Liquidity funds2,958
 2,335
 27% 2,559
 2,428
 5%3,465
 2,429
 43% 4,382
 2,360
 86%
Total assets under management$66,362
 $60,746
 9% $65,544
 $58,823
 11%$65,890
 $65,324
 1% $64,964
 $65,135
 —%
Institutional Investors:                
Equity and fixed-income programs84,885
 84,520
 —% 85,712
 80,978
 6%$82,597
 $85,045
 (3)% $82,161
 $86,126
 (5)%
Collective trust fund programs74
 80
 (8)% 74
 85
 (13)%78
 72
 8% 79
 75
 5%
Liquidity funds2,469
 3,177
 (22)% 2,665
 2,976
 (10)%2,342
 2,621
 (11)% 2,359
 2,763
 (15)%
Total assets under management$87,428
 $87,777
 —% $88,451
 $84,039
 5%$85,017
 $87,738
 (3)% $84,599
 $88,964
 (5)%
Advised assets4,263
 3,552
 20% 4,316
 3,455
 25%
Client assets under advisement3,641
 4,301
 (15)% 3,568
 4,342
 (18)%
Total assets91,691
 91,329
 —% 92,767
 87,494
 6%$88,658
 $92,039
 (4)% $88,167
 $93,306
 (6)%
Investment Managers:                
Equity and fixed-income programs95
 92
 3% 100
 84
 19%$
 $109
 NM $
 $103
 NM
Collective trust fund programs45,856
 44,824
 2% 46,915
 41,840
 12%50,108
 45,646
 10% 48,715
 47,445
 3%
Liquidity funds555
 952
 (42)% 679
 916
 (26)%497
 649
 (23)% 528
 742
 (29)%
Total assets under management$46,506
 $45,868
 1% $47,694
 $42,840
 11%$50,605
 $46,404
 9% $49,243
 $48,290
 2%
Client assets under administration (A)541,063
 486,158
 11% 523,564
 470,208
 11%600,509
 522,679
 15% 586,287
 514,815
 14%
Total assets$587,569
 $532,026
 10% $571,258
 $513,048
 11%$651,114
 $569,083
 14% $635,530
 $563,105
 13%
Investments in New Businesses:                
Equity and fixed-income programs1,148
 1,016
 13% 1,114
 960
 16%$1,436
 $1,090
 32% $1,415
 $1,098
 29%
Liquidity funds146
 55
 165% 104
 61
 70%178
 95
 87% 190
 83
 129%
Total assets under management$1,294
 $1,071
 21% $1,218
 $1,021
 19%$1,614
 $1,185
 36% $1,605
 $1,181
 36%
Advised assets777
 73
 NM 547
 76
 NM
Client assets under advisement917
 813
 13% 813
 432
 88%
Total assets2,071
 1,144
 81% 1,765
 1,097
 61%$2,531
 $1,998
 27% $2,418
 $1,613
 50%
LSV:                
Equity and fixed-income programs (B)$109,527
 $100,244
 9% $109,270
 $95,135
 15%$102,919
 $108,380
 (5)% $103,718
 $109,142
 (5)%
Total:                
Equity and fixed-income programs (C)281,570
 264,977
 6% 282,109
 253,149
 11%$271,459
 $280,384
 (3)% $269,830
 $282,380
 (4)%
Collective trust fund programs45,939
 44,913
 2% 46,998
 41,934
 12%50,196
 45,727
 10% 48,804
 47,529
 3%
Liquidity funds9,504
 10,074
 (6)% 9,544
 10,142
 (6)%9,870
 9,310
 6% 11,006
 9,566
 15%
Total assets under management$337,013
 $319,964
 5% $338,651
 $305,225
 11%$331,525
 $335,421
 (1)% $329,640
 $339,475
 (3)%
Advised assets5,040
 3,625
 39% 4,863
 3,531
 38%
Client assets under advisement4,558
 5,114
 (11)% 4,381
 4,774
 (8)%
Client assets under administration (D)564,238
 507,599
 11% 546,623
 491,151
 11%623,633
 545,284
 14% 608,898
 537,817
 13%
Total assets under management, advisement and administration$906,291
 $831,188
 9% $890,137
 $799,907
 11%$959,716
 $885,819
 8% $942,919
 $882,066
 7%

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(A) Average client assets under administration in the Investment Managers segment for the three and nine months ended SeptemberJune 30, 20182019 include $59.6$56.7 billion and $48.2 billion, respectively, that are at fee levels below our normal full service assets.
(B) Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. The average value of these assets for the three and nine months ended SeptemberJune 30, 20182019 was $2.4 billion and $2.3 billion, respectively.$2.8 billion.
(C)Equity and fixed-income programs include $5.6 billion and $5.7 billion of average assets invested in various asset allocation funds for the three and nine months ended SeptemberJune 30, 2018, respectively.2019.
(D)In addition to the numbers presented, SEI also administers an additional $10.1 billion and $10.5$11.5 billion of average assets in Funds of Funds assets for the three and nine months ended SeptemberJune 30, 2018, respectively,2019 on which SEI does not earn an administration fee.

In the preceding tables, assets under management are total assets of our clients or their customers invested in our equity and fixed-income investment programs, collective trust fund programs, and liquidity funds for which we provide asset management services through our subsidiaries and partnerships in which we have a significant interest. Advised assetsAssets under advisement include assets for which we provide advisory services through a subsidiary to the accounts but do not manage the underlying assets. Assets under administration include total assets of our clients or their customers for which we provide administrative services, including client fund balances for which we provide administration and/or distribution services through our subsidiaries and partnerships in which we have a significant interest. The assets presented in the preceding tables do not include assets processed on the SEI Wealth PlatformSWP and are not included in the accompanying Consolidated Balance Sheets because we do not own them.

Business Segments
Revenues, Expenses and Operating Profit (Loss) for our business segments for the three and ninesix months ended SeptemberJune 30, 20182019 compared to the three and ninesix months ended SeptemberJune 30, 20172018 were as follows:
 Three Months Ended September 30, 
Percent
Change
 Nine Months Ended September 30, 
Percent
Change
 2018 2017  2018 2017 
Private Banks:           
Revenues$118,449
 $118,499
 —% $361,739
 $347,317
 4%
Expenses116,471
 115,806
 1% 343,515
 336,709
 2%
Operating Profit$1,978
 $2,693
 (27)% $18,224
 $10,608
 72%
Operating Margin2% 2%   5% 3%  
Investment Advisors:           
Revenues$102,550
 $94,318
 9% $301,632
 $275,302
 10%
Expenses53,287
 50,585
 5% 158,792
 147,504
 8%
Operating Profit$49,263
 $43,733
 13% $142,840
 $127,798
 12%
Operating Margin48% 46%   47% 46%  
Institutional Investors:           
Revenues$83,466
 $80,411
 4% $252,391
 $235,483
 7%
Expenses40,497
 40,003
 1% 122,617
 117,499
 4%
Operating Profit$42,969
 $40,408
 6% $129,774
 $117,984
 10%
Operating Margin51% 50%   51% 50%  
Investment Managers:           
Revenues$101,275
 $91,020
 11% $295,696
 $255,123
 16%
Expenses65,296
 59,831
 9% 191,955
 165,743
 16%
Operating Profit$35,979
 $31,189
 15% $103,741
 $89,380
 16%
Operating Margin36% 34%   35% 35%  
Investments in New Businesses:           
Revenues$2,942
 $1,770
 66% $7,652
 $5,108
 50%
Expenses5,769
 5,063
 14% 16,807
 15,067
 12%
Operating Loss$(2,827) $(3,293) NM $(9,155) $(9,959) NM

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 Three Months Ended June 30, 
Percent
Change
 Six Months Ended June 30, 
Percent
Change
 2019 2018  2019 2018 
Private Banks:           
Revenues$116,092
 $121,126
 (4)% $234,351
 $243,290
 (4)%
Expenses107,790
 114,842
 (6)% 218,752
 227,044
 (4)%
Operating Profit$8,302
 $6,284
 32% $15,599
 $16,246
 (4)%
Operating Margin7% 5%   7% 7%  
Investment Advisors:           
Revenues$100,122
 $99,890
 —% $194,883
 $199,082
 (2)%
Expenses50,558
 53,052
 (5)% 103,060
 105,505
 (2)%
Operating Profit$49,564
 $46,838
 6% $91,823
 $93,577
 (2)%
Operating Margin50% 47%   47% 47%  
Institutional Investors:           
Revenues$81,109
 $83,434
 (3)% $161,222
 $168,925
 (5)%
Expenses39,361
 40,871
 (4)% 78,115
 82,120
 (5)%
Operating Profit$41,748
 $42,563
 (2)% $83,107
 $86,805
 (4)%
Operating Margin51% 51%   52% 51%  
Investment Managers:           
Revenues$109,202
 $97,566
 12% $213,851
 $194,421
 10%
Expenses68,371
 63,321
 8% 137,437
 126,659
 9%
Operating Profit$40,831
 $34,245
 19% $76,414
 $67,762
 13%
Operating Margin37% 35%   36% 35%  
Investments in New Businesses:           
Revenues$3,061
 $2,814
 9% $6,099
 $4,710
 29%
Expenses6,797
 5,940
 14% 12,737
 11,038
 15%
Operating Loss$(3,736) $(3,126) NM $(6,638) $(6,328) NM
For additional information pertaining to our business segments, see Note 109 to the Consolidated Financial Statements.

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Private Banks
Three Months Ended September 30, 
Percent
Change
 Nine Months Ended September 30, 
Percent
Change
Three Months Ended June 30, 
Percent
Change
 Six Months Ended June 30, 
Percent
Change
2018 2017 2018 2017 2019 2018 2019 2018 
Revenues:                
Information processing and software servicing fees$82,921
 $82,768
 —% $254,764
 $244,948
 4%$82,045
 $85,398
 (4)% $166,347
 $171,843
 (3)%
Asset management, administration & distribution fees35,528
 35,731
 (1)% 106,975
 102,369
 4%34,047
 35,728
 (5)% 68,004
 71,447
 (5)%
Total revenues$118,449
 $118,499
 —% $361,739
 $347,317
 4%$116,092
 $121,126
 (4)% $234,351
 $243,290
 (4)%
Revenues decreased slightly $5.0 million, or four percent, in the three month period and increased $14.4decreased $8.9 million, or four percent, in the ninesix month period ended SeptemberJune 30, 20182019 and were primarily affected by:
Increased recurringDecreased investment processing fees from the growth inloss of clients offset by new andclient conversions;
Decreased non-recurring professional services fees from existing client assets processed on the SEI Wealth Platform;clients as well as clients scheduled for implementation;
IncreasedDecreased investment management fees from existing U.S. and international clients due to negative cash flows; and
The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations.
Operating margins increased net cash flowsto seven percent compared to five percent in the three month period and higher average assets under managementremained at seven percent in the six month period. Operating income increased by $2.0 million, or 32 percent, in the three month period and decreased $600 thousand, or four percent, in the six month period and was primarily affected by:
A decrease in revenues;
Increased amortization expense related to SWP due to market appreciation;continued enhancements; and
The positivenet negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations; partially offset by
The reclassification ofDecreased non-capitalized costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to SWP; and
Decreased direct expenses related to trade executionassociated with decreased investment management fees of $3.3from existing international clients.

Investment Advisors
 Three Months Ended June 30, 
Percent
Change
 Six Months Ended June 30, 
Percent
Change
 2019 2018  2019 2018 
Revenues:           
Investment management fees-SEI fund programs$70,087
 $73,451
 (5)% $136,710
 $146,786
 (7)%
Separately managed account fees25,448
 22,419
 14% 49,286
 44,267
 11%
Other fees4,587
 4,020
 14% 8,887
 8,029
 11%
Total revenues$100,122
 $99,890
 —% $194,883
 $199,082
 (2)%
Revenues increased slightly in the three month period and decreased $4.2 million, and $10.5 million duringor two percent, in the third quarter and ninesix month period ended SeptemberJune 30, 2018, respectively, due to the adoption of ASC 606;2019 and were primarily affected by:
Decreased investment processingmanagement fees as favorable market conditions were more than offset by negative cash flows and a decrease in average basis points earned on assets due to client-directed shifts into lower fee investment products including SEI liquidity products and ETF programs; partially offset by
Increased separately managed account program fees from positive cash flows into SEI’s ETF programs; and
Increase in account fees due to an increase in the lossnumber of TRUST 3000® clients.advisor accounts on the SEI Wealth Platform.


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Operating margins remained at twomargin increased to 50 percent compared to 47 percent in the three month period and increased to five percent compared to threeremained at 47 percent in the ninesix month period. Operating income decreased by $0.7increased $2.7 million,, or 27six percent, in the three month period and increased $7.6decreased $1.8 million, or 72two percent, in the ninesix month period and was primarily affected by:
An increaseA decrease in revenues;
DecreasedIncreased personnel costs for marketing to and servicing new advisors;
Increased direct expenses associated with increased assets into our investment products; and
Increased amortization expense related to the SEI Wealth PlatformSWP due to the adjustmentcontinued enhancements; partially offset by
Decreased non-capitalized costs, mainly personnel and consulting costs, related to the estimated useful life effective in the fourth quarter 2017;maintenance, support and client migrations to SWP;
Decreased sales compensation expenseexpense; and
Decreased costs associated with accounts formerly processed on TRUST 3000® due to client migrations to SWP partially offset by approximately $400 thousand of remaining fixed costs during second quarter 2019.

Institutional Investors
Revenues decreased $2.3 million, or three percent, in the three month period and decreased $7.7 million, or five percent, in the six month period ended June 30, 2019 and were primarily affected by:
Defined benefit client losses, mainly resulting from the deferral of sales commissions costs due to the adoption of ASC 606;acquisitions and plan curtailments; and
The net positivenegative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations; partially offset by
Increased direct expenses associated with increased investment management fees from existing U.S. and international clients; and
Increased non-capitalized costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to the SEI Wealth Platform.

Investment Advisors
 Three Months Ended September 30, 
Percent
Change
 Nine Months Ended September 30, 
Percent
Change
 2018 2017  2018 2017 
Revenues:           
Investment management fees-SEI fund programs$74,624
 $70,640
 6% $221,410
 $205,609
 8%
Separately managed account fees23,564
 19,789
 19% 67,831
 57,697
 18%
Other fees4,362
 3,889
 12% 12,391
 11,996
 3%
Total revenues$102,550
 $94,318
 9% $301,632
 $275,302
 10%
Revenues increased $8.2 million, or nine percent, in the three month period and increased $26.3 million, or ten percent, in the nine month period ended September 30, 2018 and were primarily affected by:
Increased investment management fees and separately managed account program fees due to higher assets under management caused by market appreciation and positive cash flows from new and existing advisors.

Page 33 of 43





Operating margin increased to 48 percent compared to 46 percent in the three month period and increased to 47 percent compared to 46 percent in the nine month period. Operating income increased $5.5 million, or 13 percent, in the three month period and increased $15.0 million, or 12 percent, in the nine month period and was primarily affected by:
An increase in revenues; and
Decreased amortization expense related to the SEI Wealth Platform due to the adjustment to the estimated useful life effective in the fourth quarter 2017; partially offset by
Increased direct expenses associated with increased assets in our investment management programs;
Increased personnel costs for marketing to and servicing new advisors; and
Increased non-capitalized costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to the SEI Wealth Platform.

Institutional Investors
Revenues increased $3.1 million, or four percent, in the three month period and increased $16.9 million, or seven percent, in the nine month period ended September 30, 2018 and were primarily affected by:
Asset funding from new sales of our investment management platforms; and
Increased investment management fees from existing clients due to higher assets under management caused by market appreciation;appreciation.
Operating margin remained at 51 percent in the three and six month periods. Operating income decreased $800 thousand, or two percent, in the three month period and decreased $3.7 million, or four percent, in the six month period and was primarily affected by:
A decrease in revenues; and
The positivenet negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations; partially offset by
Client losses.Decreased direct expenses associated with investment management fees.
Operating margins
Investment Managers
Revenues increased to 51 percent compared to 50 percent in each of the three and nine month periods. Operating income increased $2.6$11.6 million, or six12 percent, in the three month period and increased $11.8$19.4 million, or ten10 percent, in the nine month period and was primarily affected by:
An increase in revenues; and
The positive impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations; partially offset by
Increased direct expenses associated with investment management fees; and
Increased personnel compensation costs, mainly salary.

Investment Managers
Revenues increased $10.3 million, or 11 percent, in the three month period and increased $40.6 million, or 16 percent, in the ninesix month period ended SeptemberJune 30, 20182019 and were primarily affected by:
Positive cash flows into alternative, traditional and separately managed account offerings from new and existing clients;
Higher valuations of existing client assets from improved capital markets; and
Added revenues from the acquisition of Archway during the third quarter 2017; partially offset by
Client losses and fund closures.
Operating margin increased to 3637 percent compared to 34 percent in the three month period and remained at 35 percent in the nine month period. Operating income increased $4.8 million, or 15 percent in the three month period and increased $14.4 million, or 16to 36 percent compared to 35 percent in the ninesix month period. Operating income increased $6.6 million, or 19 percent, in the three month period and increased $8.7 million, or 13 percent, in the six month period and was primarily affected by:
An increase in revenues; and
Decreased sales compensation expenseThe net positive impact from foreign currency exchange rate fluctuations between the deferral of sales commissions costs due toU.S. dollar and the adoption of ASC 606;Euro on our foreign operations; partially offset by
Increased personnel expenses, technology and other operational costs to service new and existing clients;
Increased personnel and amortization expense related to the Archway acquisition;
Increased non-capitalized investment spending, mainly consulting costs; and
Increased amortization expense related to the Investment Manager platform placed into service during the first quarter 2018.costs.

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Other
Corporate overhead expenses
Corporate overhead expenses primarily consist of general and administrative expenses and other costs not directly attributable to a reportable business segment. Corporate overhead expenses were $14.9$16.6 million and $15.5$16.5 million in the

Page 37 of 47





three months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, and $46.4$36.6 million and $45.8$31.5 million in the ninesix months ended SeptemberJune 30, 2019 and 2018, and 2017, respectively. The increase in corporate overhead expenses is primarily due to increased non-recurring personnel-related costs, primarily severance costs.
Other income and expense
Other income and expense items on the accompanying Consolidated Statements of Operations consists of: 
Three Months Ended September 30,
Nine Months Ended September 30,Three Months Ended June 30,
Six Months Ended June 30,
2018
2017
2018
20172019
2018
2019
2018
Net gain (loss) from investments$89
 $645
 $(460) $1,036
$231
 $(139) $1,510
 $(549)
Interest and dividend income3,482
 1,899
 9,146
 4,928
4,313
 3,162
 8,570
 5,664
Interest expense(122) (345) (511) (571)(166) (132) (323) (389)
Equity in earnings of unconsolidated affiliate41,726
 39,333
 123,406
 109,213
37,832
 41,073
 75,149
 81,680
Total other income and expense items, net$45,175
 $41,532
 $131,581
 $114,606
$42,210
 $43,964
 $84,906
 $86,406
Interest and dividend income
Interest and dividend income is earned based upon the amount of cash that is invested daily. The increase in interest and dividend income in the three and ninesix months ended SeptemberJune 30, 20182019 was due to higher cash balances and an overall increase in interest rates.
Equity in earnings of unconsolidated affiliate
Equity in earnings of unconsolidated affiliate reflects our less than 50 percent ownership in LSV. As of SeptemberJune 30, 2018,2019, our total partnership interest in LSV was 38.9 percent. The table below presents the revenues and net income of LSV and our proportionate share in LSV's earnings.
Three Months Ended September 30, Percent Change Nine Months Ended September 30, Percent ChangeThree Months Ended June 30, Percent Change Six Months Ended June 30, Percent Change
2018 2017 2018 2017 2019 2018 2019 2018 
Revenues of LSV$133,921
 $126,723
 6% $397,750
 $355,996
 12%$123,017
 $132,111
 (7)% $243,932
 $263,829
 (8)%
Net income of LSV107,284
 101,130
 6% 317,295
 280,717
 13%97,271
 105,605
 (8)% 193,219
 210,011
 (8)%
                
SEI's proportionate share in earnings of LSV$41,726
 $39,333
 6% $123,406
 $109,213
 13%$37,832
 $41,073
 (8)% $75,149
 $81,680
 (8)%
The increasedecline in our earnings from LSV in the three and ninesix months ended SeptemberJune 30, 20182019 was primarily due to increaseddecreased assets under management from LSV's existing clients due to the significant market depreciation in late 2018, lower performance fees and negative cash flows. Market appreciation and cash inflows from new clients.during the first six months of 2019 partially offset the decline in LSV's assets under management. Average assets under management by LSV increased $14.1decreased $5.4 billion to $109.3$103.7 billion during the ninesix months ended SeptemberJune 30, 20182019 as compared to $95.1$109.1 billion during the ninesix months ended SeptemberJune 30, 2017, an increase2018, a decrease of 15five percent.
Income Taxes
Our effective income tax rates for the three and ninesix months ended SeptemberJune 30, 20182019 and 20172018 differs from the federal income tax statutory rate due to the following:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 20172019 2018 2019 2018
Statutory rate21.0 % 35.0 % 21.0 % 35.0 %21.0 % 21.0 % 21.0 % 21.0 %
State taxes, net of federal tax benefit2.3
 1.7
 2.3
 1.7
2.6
 2.3
 2.6
 2.3
Foreign tax expense and tax rate differential(0.2) (1.0) (0.2) (1.0)(0.1) (0.1) (0.1) (0.1)
Tax benefit from stock option exercises(1.4) (4.5) (4.8) (3.9)(1.1) (2.0) (1.1) (6.5)
Expiration of the statute of limitations(1.0) (2.6) (0.3) (0.9)
Provision-to-return adjustment(2.3) 
 (0.8) 
Other, net0.2
 (0.9) 
 (0.7)(0.3) (0.1) (0.3) (0.2)
18.6 % 27.7 % 17.2 % 30.2 %22.1 % 21.1 % 22.1 % 16.5 %
The increase in our effective tax rate for the three and six months ended June 30, 2019 was primarily due to reduced tax benefits due to a lower volume of stock option exercise activity as compared to the prior year periods.

Page 3538 of 4347





The decrease in our effective tax rates for the three and nine months ended September 30, 2018 was primarily due to the tax changes enacted in The Tax Act. The Tax Act was enacted in December 2017 and included a permanent reduction in the corporate tax rate from 35.0 percent to 21.0 percent. Our tax rates for the three and nine months ended September 30, 2018 were also favorably impacted by the reduction of the estimated one-time transition tax enacted by The Tax Act and a provision-to-return adjustment on our 2017 federal income tax return. These adjustments to the one time transition tax and our deferred taxes represent what we believe are the final liabilities under the changes enacted in The Tax Act. Our effective tax rates in both periods of 2018 and 2017 were favorably impacted by tax benefits due to stock option exercise activity.
Fair Value Measurements
The fair value of our financial assets and liabilities, except for the investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient. The fair value of all other financial assets are determined using Level 1 or Level 2 inputs and consist mainly of investments in equity or fixed-income mutual funds that are quoted daily and Government National Mortgage Association (GNMA) and other U.S. government agency securities that are single issuer pools that are valued based on current market data of similar assets. The Company's Level 3 financial liabilities at SeptemberJune 30, 20182019 consist entirely of the estimated contingent consideration of $12,120$12.1 million resulting from an acquisition (See Note 1312 to the Notes to Consolidated Financial Statements). We did not have any financial liabilities at December 31, 20172018 that were required to be measured at fair value on a recurring basis (See Note 54 to the Notes to Consolidated Financial Statements).
Regulatory Matters
Like many firms operating within the financial services industry, we are experiencing a difficult and increasingly complex regulatory environment across our markets. Our current scale and reach as a provider to the financial services industry, the introduction and implementation of new platforms for our financial services industry clients, the increased regulatory oversight of the financial services industry generally, new laws and regulations affecting the financial services industry and ever-changing regulatory interpretations of existing laws and regulations, and a greater propensity of regulators to pursue enforcement actions and other sanctions against regulated entities, have made this an increasingly challenging and costly regulatory environment in which to operate.
SEI and our regulated subsidiaries have undergone or been scheduled to undergo a range of periodic or thematic reviews, examinations or investigations by numerous regulatory authorities around the world, including the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, Inc., the Financial Conduct Authority of the United Kingdom, the Central Bank of Ireland and others. These regulatory activities typically result in the identification of matters or practices to be addressed by us or our subsidiaries and, in certain circumstances, the regulatory authorities require remediation activities or pursue enforcement proceedings against us or our subsidiaries. From time to time, the regulators in different jurisdictions will elevate their level of scrutiny of our operations as our business expands or is deemed critical to the operations of the relevant financial markets. As described under the caption “Regulatory Considerations” in our Annual Report on Form 10-K, the range of possible sanctions that are available to regulatory authorities include limitations on our ability to engage in business for specified periods of time, the revocation of registration, censures and fines. The direct and indirect costs of responding to these regulatory activities, implementation of any remediation actions, and of complying with new or modified regulations, as well as the potential financial costs and potential reputational impact against us of any enforcement proceedings that might result, is uncertain but could have a material adverse impact on our operating results or financial position.
Liquidity and Capital Resources 
Nine Months Ended September 30,Six Months Ended June 30,
2018 20172019 2018
Net cash provided by operating activities$417,898
 $316,387
$217,645
 $262,876
Net cash used in investing activities(77,408) (148,063)(30,306) (63,909)
Net cash used in financing activities(336,214) (193,730)(259,869) (243,732)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(6,552) 14,679
277
 (6,036)
Net decrease in cash, cash equivalents and restricted cash(2,276) (10,727)(72,253) (50,801)
Cash, cash equivalents and restricted cash, beginning of period747,752
 699,201
758,039
 747,752
Cash, cash equivalents and restricted cash, end of period$745,476
 $688,474
$685,786
 $696,951

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Cash requirements and liquidity needs are primarily funded through our cash flow from operations and our capacity for additional borrowing. At SeptemberJune 30, 2018,2019, our unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility. We adopted ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) (ASU 2016-18) on January 1, 2018 which requires the statement of cash flows to explain the change during the period for the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The prior period was retrospectively adjusted to conform to the current period’s presentation. There was no material impact to net cash flows for the nine months ended September 30, 2017 as a result of including restricted cash with cash and cash equivalents.
Our credit facility provides for borrowings of up to $300.0 million and is scheduled to expire in June 2021 (See Note 76 to the Consolidated Financial Statements). As of July 18, 2019, we had outstanding letters of credit of $11.7 million which reduced our amount available under the credit facility to $288.3 million. These letters of credit were primarily issued for the expansion of our corporate headquarters and are due to expire during the remainder of 2019.

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The availability of the credit facility is subject to compliance with certain covenants set forth in the agreement. The credit facility contains covenants which restrict our ability to engage in mergers, consolidations, asset sales, investments, transactions with affiliates, or to incur liens, as defined in the agreement. In the event of a default under the credit facility, we would also be restricted from paying dividends on, or repurchasing, our common stock. Currently, our ability to borrow from the credit facility is not limited by any covenant of the agreement. As of October 18, 2018, the full amount of $300.0 million of the credit facility was available for corporate purposes.
The majority of our excess cash reserves are primarily placed in accounts located in the United States that invest entirely in SEI-sponsored money market mutual funds denominated in the U.S. dollar. We also utilize demand deposit accounts or money market accounts at several well-established financial institutions located in the United States. Accounts used to manage these excess cash reserves do not impose any restrictions or limitations that would prevent us from being able to access such cash amounts immediately. As of OctoberJuly 18, 2018,2019, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was $385.1$328.2 million.
Our cash and cash equivalents include accounts managed by our subsidiaries that are used in their operations or to cover specific business and regulatory requirements. The availability of this cash for other purposes beyond the operations of these subsidiaries may be limited. We therefore do not include accounts of our foreign subsidiaries in our calculation of free and immediately accessible cash for other general corporate purposes. With the enactment of the Tax Act, a portion of the undistributed earnings of our foreign subsidiaries are deemed repatriated. Any subsequent transfer of available cash related to the repatriated earnings of our foreign subsidiaries could significantly increase our free and immediately accessible cash.
Cash flows from operations increased $101.5decreased $45.2 million in the first ninesix months of 20182019 compared to the first ninesix months of 20172018 primarily from the increasedecrease in our net income, and higherlower distribution payments received from our unconsolidated affiliate, LSV.LSV, and the negative impact from the change in our working capital accounts.
Net cash used in investing activities includes:
•Purchases, sales and maturities of marketable securities. Our purchases, sales and maturities of marketable securities in the first ninesix months of 20182019 and 20172018 were as follows:
Nine Months Ended September 30,Six Months Ended June 30,
2018 20172019 2018
Purchases$(122,259) $(50,235)$(77,891) $(74,957)
Sales and maturities116,568
 52,644
85,012
 64,626
Net investing activities from marketable securities$(5,691) $2,409
$7,121
 $(10,331)
The capitalization of costs incurred in developing computer software. We capitalized $33.4$19.2 million of software development costs in the first ninesix months of 20182019 as compared to $48.6$24.6 million in the first ninesix months of 2017.2018. The majority of our software development costs are related to significant enhancements for the expanded functionality of the SEI Wealth Platform.
Capital expenditures. Our capital expenditures in the first ninesix months of 20182019 were $21.7$18.2 million as compared to $20.3$12.7 million in the first ninesix months of 2017.2018. Our expenditures in 20182019 and 20172018 primarily include purchased software, equipment for our data center operations and the expansion of our corporate headquarters.
Cash paid for acquisition, net of cash received. We completed the acquisition of Huntington Steele on April 2, 2018. The purchase price paid included $5.9 million in cash consideration; however, we acquired $125 thousand in cash during the transaction for a net cash payment of $5.8 million (See Note 13 to the Consolidated Financial Statements).
Net cash used in financing activities includes:
Principal repayments on revolving credit facility. In July 2017, we borrowed $40.0 million for the funding of an acquisition. We made a principal payment of $10.0 million in October 2017 and additional payments of $30.0 million during 2018 to repay the entire outstanding balance (See Note 7 to the Consolidated Financial Statements).

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The repurchase of our common stock. Our Board of Directors has authorized the repurchase of our common stock through multiple authorizations. Currently, there is no expiration date for our common stock repurchase program. We had total capital outlays of $290.6$183.4 million during the first ninesix months of 20182019 and $186.5$189.4 million during the first ninesix months of 20172018 for the repurchase of our common stock.
Proceeds from the issuance of our common stock. We received $78.7$24.3 million in proceeds from the issuance of our common stock during the first ninesix months of 20182019 as compared to $41.6$70.0 million during the first ninesix months of 2017.2018. The increasedecrease in proceeds is primarily attributable to a higherlower level of stock option exercise activity.
Dividend payments. Cash dividends paid were $94.3 million in the first nine months of 2018 as compared to $88.9$100.7 million in the first ninesix months of 2017.2019 as compared to $94.3 million in the first six months of 2018.
Principal repayments on revolving credit facility. In July 2017, we borrowed $40.0 million for the funding of an acquisition. We made principal payments of $10.0 million each during October 2017 and March 2018 and a final payment of $20.0 million in April 2018 to repay the entire outstanding balance.

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We believe our operating cash flow, available borrowing capacity, and existing cash and cash equivalents should provide adequate funds for ongoing operations; continued investment in new products and equipment; our common stock repurchase program, expansion of our corporate headquarters and future dividend payments.
Forward-Looking Information and Risk Factors
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained in this discussion is or may be considered forward-looking. Forward-looking statements relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates and assumptions that involve certain 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.
Among the risks and uncertainties which may affect our future operations, strategies, financial results or other developments are those risks described in our latest Annual Report on Form 10-K in Part I, Item 1A. These risks include the following:
changes in capital markets that may affect our revenues and earnings;
product development risk;
risk of failure by a third-party service provider;
data and cyber security risks;
operational risks associated with the processing of investment transactions;
systems and technology risks;
pricing pressure from increased competition, disruptive technology and poor investment performance;
the affect on our earnings and cashflows from the performance of LSV Asset Management;
third party pricing services for the valuation of securities invested in our investment products;
external factors affecting the fiduciary management market;
the affect of extensive governmental regulation;
litigation and regulatory examinations and investigations;
our ability to capture the expected value from acquisitions, divestitures, joint ventures, minority stakes or strategic alliances;
increased costs and regulatory risks from the growth of our business;
consolidation within our target markets, including consolidations between banks andmarkets;
our ability to receive dividends or other financial institutions;payments in needed amounts from our subsidiaries;
the exit by the United Kingdom from the European Union;
third party approval of our investment products with advisors affiliated with independent broker-dealers or other networks;
the effectiveness of our risk management and business continuity strategies, models and processes;
financial and non-financial covenants which may restrict our ability to manage liquidity needs;
changes in, or interpretation of, accounting principles or tax rules and regulations;
fluctuations in foreign currency exchange rates;
fluctuations in interest rates affecting the value of our fixed-income investment securities;
our ability to hire and retain qualified employees;
stockholder activism efforts;
retention of executive officers and senior management personnel.personnel; and
Ourunforeseen or catastrophic events, including the emergence of pandemic, terrorist attacks, extreme weather events or other natural disasters.
We conduct our operations through several regulated wholly-owned subsidiaries. These subsidiaries include are:
SEI Investments Distribution Co., or SIDCO, SEI Investments Management Corporation, or SIMC, SEI Private Trust Company, or SPTC, SEI Trust Company, or STC, SEI Investments (Europe) Limited, or SIEL, SEI Investments Canada Company, or SEI Canada, SEI Investments Global, Limited, or SIGL, SEI Investments - Global Fund Services, Ltd., or GFSL, and SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C. SIDCO is a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority, Inc. (FINRA)., or FINRA;

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SEI Investments Management Corporation, or SIMC, is an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and with the Commodity Futures Trading Commission, (CFTC)or CFTC, under the Commodity Exchange Act.Act;

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SEI Private Trust Company, or SPTC, is a limited purpose federal thrift chartered and regulated by the Office of the Comptroller of the Currency.Currency;
SEI Trust Company, or STC, is a Pennsylvania trust company, regulated by the Pennsylvania Department of Banking and Securities.Securities;
SEI Investments (Europe) Limited, or SIEL, is an investment manager and financial institution subject to regulation by the Financial Conduct Authority of the United Kingdom.Kingdom;
SEI Investments Canada Company, or SEI Canada, an investment fund manager that has various other capacities that is regulated by the Ontario Securities Commission and various provincial authorities as an investment fund manager and in various other capacities.authorities;
SEI Investments Global, Limited, or SIGL, is primarily regulated by the Central Bank of Ireland (CBI) as a management company for Undertakings for Collective Investment in Transferable Securities, or UCITS, and for Alternative Investment Funds, or AIFs. GFSLAIFs, that is regulated primarily by the CBI andCentral Bank of Ireland, or CBI;
SEI Investments - Global Fund Services, Ltd., or GFSL, an authorized to provideprovider of administration services for Irish and non-Irish collective investment schemes. D&Cschemes that is regulated by the CBICBI; and
SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C, an authorized to provideprovider of depositary and custodial services. services that is regulated by the CBI.
In addition various SEIto the regulatory authorities listed above, our subsidiaries are subject to the jurisdiction of regulatory authorities in other foreign countries. The Company hasIn addition to our wholly-owned subsidiaries, we also own a minority ownership interest of approximately 38.9 percent in LSV, which is also an investment advisor registered with the SEC.
The Company, its regulated subsidiaries, their regulated services and platformssolutions and their customers are all subject to extensive legislation, regulation and supervision that recently has been subject to, and continues to experience, significant change and increased regulatory activity. These changes and regulatory activities could have a material adverse effect on us and our clients.
The various governmental agencies and self-regulatory authorities that regulate or supervise the Company and its subsidiaries have broad administrative powers. In the event of a failure to comply with laws, regulations and requirements of these agencies and authorities, the possible business process changes required or sanctions that may be imposed include the suspension of individual employees, limitations on our ability to engage in business for specified periods of time, the revocation of applicable registration as a broker-dealer, investment advisor or other regulated entity, and, as the case may be, censures and fines. Additionally, certain securities and banking laws applicable to us and our subsidiaries provide for certain private rights of action that could give rise to civil litigation. Any litigation could have significant financial and non-financial consequences including monetary judgments and the requirement to take action or limit activities that could ultimately affect our business.
Governmental scrutiny from regulators, legislative bodies and law enforcement agencies with respect to matters relating to our regulated subsidiaries and their activities, services and platforms,solutions, our business practices, our past actions and other matters has increased dramatically in the past several years. Responding to these examinations, investigations, actions and lawsuits, regardless of the ultimate outcome of the proceeding, is time consuming and expensive and can divert the time and effort of our senior management from our business. Penalties, fines and fineschanges to business processes sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions or to advance or support legislation targeted at the financial services industry. We continue to be subject to inquiries from examinations and investigations by supervisory and enforcement divisions of regulatory authorities and expect this to continue in the future. We believe this is also the case with many of our regulated clients. Governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation, our relationship with clients and prospective clients, and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.
We are subject to the USA PATRIOT Act of 2001, which contains anti-money laundering and financial transparency laws and requires implementation of regulations applicable to financial services companies, including standards for verifying client identification and monitoring client transactions and detecting and reporting suspicious activities. Anti-money laundering laws outside the United States contain similar requirements. We offer investment and banking platformssolutions that also are subject to regulation by the federal and state securities and banking authorities, as well as foreign regulatory authorities, where applicable. Existing or future regulations that affect these platformssolutions could lead to a reduction in sales of these platformssolutions or require modifications of these platforms.solutions.

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Compliance with existing and future regulations and responding to and complying with recent increased regulatory activity affecting broker-dealers, investment advisors, investment companies, financial institutions and their service providers could have a significant impact on us. We periodically undergo regulatory examinations and respond to regulatory inquiries and document requests. In addition, recent and continuing legislative activity in the United States and in other jurisdictions (including the European Union and the United Kingdom) have made and continue to make extensive changes to the laws regulating financial services firms. Recent changes include the effectiveness of the Markets in Financial Instruments Directive (MiFID II) and pending effectiveness of the General Data Protection Regulation in the European Union and the U.S. Department of Labor's Fiduciary Rule. As a result of these examinations, inquiries and requests, as a result of increased civil litigation activity, and as a result of these new laws and regulations, we engage legal counsel and other subject matter experts, review our compliance procedures, platformsolution and service offerings, and business operations, and make changes as we deem necessary.necessary or as may be required by the applicable authority. These additional activities and required changes may result in increased expense or may reduce revenues.
Our bank clients are subject to supervision by federal, state and foreign banking and financial services authorities concerning the manner in which such clients purchase and receive our products and services. Our plan sponsor clients and our subsidiaries providing services to those clients are subject to supervision by the Department of Labor and compliance with employee

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benefit regulations. Investment advisor and broker-dealer clients are regulated by the SEC, state securities authorities, or FINRA. Existing or future regulations applicable to our clients may affect our clients’ purchase of our products and services.
In addition, see the discussion of governmental regulations in Item 1A “Risk Factors” in our latest Annual Report on Form 10-K for a description of the risks that proposed regulatory changes may present for our business.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.
Information required by this item is set forth under the captions "Our revenues and earnings are affected by changes in capital markets" and "Changes in interest rates may affect the value of our fixed-income investment securities" in Item 1A "Risk Factors" and under the caption "Sensitivity of our revenues and earnings to capital market fluctuations"fluctuations and client portfolio strategy" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2017.2018. There have been no material changes to this information as it is disclosed in our Annual Report on Form 10-K for 2017.2018.

Item 4.    Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective in ensuring that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
(b) Change in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during the quarter ended SeptemberJune 30, 20182019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We implemented internal controls to ensure we adequately evaluated our leases and properly assessed the impact of the new accounting standard related to leases on our consolidated financial statements to facilitate the adoption of this standard on January 1, 2019 as well as the ongoing accounting under the new standard. There were no significant changes to our internal control over financial reporting during 2019 as a result of the ongoing accounting under the new accounting standard.

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PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings.
Stanford Trust Company Litigation
SEI has been named in seven lawsuits filed in Louisiana courts; four of the cases also name SPTC as a defendant. The underlying allegations in all actions relate to the purported role of SPTC in providing back-office services to Stanford Trust Company. The complaints allege that SEI and SPTC participated in some manner in the sale of “certificates of deposit” issued by Stanford International Bank so as to be a “seller” of the certificates of deposit for purposes of primary liability under the Louisiana Securities Law or so as to be secondarily liable under that statute for sales of certificates of deposit made by Stanford Trust Company. Two of the actions also include claims for violations of the Louisiana Racketeering Act and possibly conspiracy, and a third also asserts claims of negligence, breach of contract, breach of fiduciary duty, violations of the uniform fiduciaries law, negligent misrepresentation, detrimental reliance, violations of the Louisiana Racketeering Act, and conspiracy.
The procedural status of the seven cases varies. The Lilliecase, filed originally in the 19th Judicial District Court for the Parish of East Baton Rouge, was brought as a class action and is procedurally the most advanced of the cases. SEI and SPTC filed exceptions, which the Court granted in part, dismissing claims under the Louisiana Unfair Trade Practices Act and permitting the claims under the Louisiana Securities Law to go forward. On March 11, 2013, newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. On August 7, 2013, the Judicial Panel on Multidistrict Litigation transferred the matter to the Northern District of Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“the Stanford MDL”), is pending. On September 22, 2015, the District Court on the motion of SEI and SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss plaintiffs’ claims for secondary liability under Section 714(B) of the Louisiana Securities Law based on the allegations pled by plaintiffs. On November 4, 2015, the District Court granted SEI and SPTC's motion to dismiss plaintiffs' claims under Section 712(D) of the Louisiana Securities Law. Consequently, the only claims of plaintiffs still pending before the District Courtremaining in Lillie are plaintiffs' claims for secondary liability against SEI and SPTC under Section 714(B) of the Louisiana Securities Law. On May 2, 2016, the District Court certified the class as being "all persons for whom Stanford Trust Company purchased or renewed Stanford Investment Bank Limited certificates of deposit in Louisiana between January 1, 2007 and February 13, 2009". Notice of the pendency of the class action was mailed to potential class members on October 4, 2016.
On December 1, 2016, a group of plaintiffs who opted out of the Lillieclass filed a complaint against SEI and SPTC in the United States District Court in the Middle District of Louisiana (“Ahders Complaint”), alleging claims essentially the same as those in Lillie. In January 2017, the Judicial Panel on Multidistrict Litigation transferred the Ahders proceeding to the Northern District of Texas and the Stanford MDL. During February 2017, SEI filed its response to the Ahders Complaint, and in March 2017 the District Court for the Northern District of Texas approved the stipulated dismissal of all claims in this complaintComplaint predicated on Section 712(D) or Section 714(A) of the Louisiana Securities Law. In both cases, as a resultof the proceedings in the Northern District of Texas, only the plaintiffs’ secondary liability claims under Section 714(B) of the Louisiana Securities Law remain. Limited discovery and motions practice have occurred, including SEI and SPTC’s filing of a dispositive summary judgment motion in the Lillie proceeding. On January 31, 2019, the Judicial Panel on Multidistrict Litigation remanded the Lillie and Ahders proceedings to the Middle District of Louisiana.
On July 9, 2019, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim in the Lillie proceeding and denying Plaintiffs’ Motion for Continuance of SEI and SPTC’s Motion for Summary Judgment pursuant to Rule 56(d).
On July 16, 2019, SEI and SPTC filed a Motion for Summary Judgment pursuant to Rule 56(d) in the Ahders proceeding to have the remaining Section 714(B) claim dismissed.
On July 17, 2019, Plaintiffs filed a Motion for Reconsideration and/or New Trial as to the July 9, 2019 Ruling and Order (ECF 146) by the Honorable Brian A. Jackson denying a continuance of SEI’s Motion for Summary Judgment pursuant to Rule 56(d). SEI and SPTC expect to file an answer to Plaintiffs’ Motion for Reconsideration on or before the deadline for responding of August 8, 2019.
Another one of the cases,case, filed in the 23rd Judicial District Court for the Parish of Ascension, also was removed to federal court and transferred by the Judicial Panel on Multidistrict Litigation to the Northern District of Texas and the Stanford MDL. The schedule for responding to that Complaint has not yet been established.
The plaintiffs in two of theTwo additional cases remainingremain in the Parish of East Baton RougeRouge. Plaintiffs filed petitions in 2010 and have granted SEI and SPTC indefinite extensions to respond to the petitions.respond. No material activity has taken place since.

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In the two additional cases, filed in East Baton Rouge and brought by the same counsel who filed the Lillieaction, virtually all of the litigation to date has involved motions practice and appellate litigation regarding the existence of federal subjectionsubject matter jurisdiction under the federal Securities Litigation Uniform Standards Act (SLUSA). After the matter wasThe matters were removed to the United States District Court for the Northern District of Texas thatand consolidated. The court then dismissed the action under SLUSA. The Court of Appeals for the Fifth Circuit reversed that order, and the Supreme Court of the United States affirmed the Court of Appeals judgment on February 26, 2014. The matter wasmatters were remanded to state court and no material activity has taken place since that date.
While the outcome of this litigation remains uncertain, SEI and SPTC believe that they have valid defenses to plaintiffs' claims and intend to defend the lawsuits vigorously. Because of uncertainty in the make-up of the Lillie class, the specific theories of liability that may survive a motion for summary judgment or other dispositive motion, the relative lack of discovery regarding damages, causation, mitigation and other aspects that may ultimately bear upon loss, the Company is not reasonably able to provide an estimate of loss, if any, with respect to the foregoing lawsuits.
In OctoberSEI Capital Accumulation Plan Litigation
On September 28, 2018, a class action complaint was filed in the United States District Court for the Eastern District of Pennsylvania by Gordon Stevens, individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) naming the Company and its affiliated and/or related entities SEI Investments Management Corporation, SEI Capital Accumulation Plan Design Committee, SEI Capital Accumulation Plan Investment Committee, SEI Capital Accumulation Plan Administration Committee, and John Does 1-30 have been named as defendants in a class action complaint in the United States District Court for the Eastern District of Pennsylvania filed by Gordon(the “Stevens Complaint”). The Stevens individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) seeking

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Compliant seeks unspecified damages for defendants’ breach of fiduciary duties under ERISA with respect to selecting and monitoring the Plan’s investment options and by retaining affiliated investment products in the Plan (the “Stevens Complaint”). WhilePlan.
On May 14, 2019, Plaintiff and SEI filed notice with the Company believescourt of their collective intent to settle the allegationsStevens Litigation. As of the date of this report, the terms of the settlement have not yet been finalized, and will be subject to court review and approval. Although SEI has agreed to settle this matter in the Stevens Complaint are without merit,very early stages of the litigation in order to avoid the high cost of protracted class-action litigation and internal distractions such cases bring, SEI believes its defenses against the plaintiff’s allegations remain valid.
While the outcome of this litigation remains uncertain. Theuncertain, the defendants intend to answer the Stevens Complaint, believe that they have valid defenses to plaintiffs’ claims and intend to defend the allegations contained in the Stevens Complaint vigorously. Because of uncertainty in the make-up of the purported class named in the Stevens Complaint, the specific theories of liability that may survive a motion for summary judgment or other dispositive motion, the lack of specificity or discovery regarding damages, causation, mitigation and other aspects that may ultimately bear upon loss, the Company is not reasonably able to provide an estimate of loss, if any, with respect to the matters set forth in the Stevens Complaint.
Other Matters
The Company is also a party to various other actions and claims arising in the normal course of business that the Company does not believe are material. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company's financial position or the manner in which the Company conducts its business. Currently, the Company does not believe the amount of losses associated with these matters can be estimated. While the Company does not believe that the amount of such losses will, when liquidated or estimable, be material to its financial position, the assumptions may be incorrect and any such loss could have a material adverse effect on the Company's results of operations or the manner in which the Company conducts its business in the period(s) during which the underlying matters are resolved.

Item 1A.     Risk Factors.
Information regarding risk factors appears in Part I – Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.2018. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for 2017.2018.


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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

(e)
Our Board of Directors has authorized the repurchase of up to $3.678$3.928 billion worth of our common stock through multiple authorizations. Currently, there is no expiration date for our common stock repurchase program.
On July 23, 2019, our Board of Directors approved an increase in the stock repurchase program by an additional $250.0 million, increasing the available authorization to approximately $280.1 million.
Information regarding the repurchase of common stock during the three months ended SeptemberJune 30, 20182019 is as follows:
Period
Total Number
of Shares
Purchased
 
Average
Price Paid
per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
 
Approximate Dollar
Value of Shares that
May Yet Be
Purchased
Under the Program
July 2018330,000
 $60.95
 330,000
 $163,625,000
August 2018587,000
 60.73
 587,000
 127,951,000
September 2018750,000
 62.44
 750,000
 81,102,000
Total1,667,000
 $61.54
 1,667,000
  
Period
Total Number
of Shares
Purchased
 
Average
Price Paid
per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
 
Approximate Dollar
Value of Shares that
May Yet Be
Purchased
Under the Program
April 2019275,000
 $53.60
 275,000
 $112,348,000
May 2019825,000
 51.99
 825,000
 69,459,000
June 2019725,000
 54.34
 725,000
 30,061,000
Total1,825,000
 $53.17
 1,825,000
  

Item 6.    Exhibits.
The following is a list of exhibits filed as part of the Form 10-Q. 
  
  
  
  
  
  
 
   
101.INS  XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
  
101.SCH  XBRL Taxonomy Extension Schema Document
  
101.CAL  XBRL Taxonomy Extension Calculation Linkbase Document
  
101.DEF  XBRL Taxonomy Extension Definition Linkbase Document
  
101.LAB  XBRL Taxonomy Extension Label Linkbase Document
  
101.PRE  XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    SEI INVESTMENTS COMPANY
    
Date: OctoberJuly 25, 20182019 By: 
/s/ Dennis J. McGonigle

      Dennis J. McGonigle
      Chief Financial Officer


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