Investment in Unconsolidated Affiliates

LSV Asset Management

The Company has an investment in the general partnership 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 mutual funds. As of December 31, 2015, the Company's total partnership interest in LSV was approximately 39.2 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 affiliates on the accompanying Consolidated Balance Sheets and its interest in the earnings of LSV is reflected in Equity in earnings of unconsolidated affiliates on the accompanying Consolidated Statements of Operations.

At December 31, 2015, the Company’s total investment in LSV was $49,580. The Company’s proportionate share in the earnings of LSV was $138,407, $140,211 and $118,983 in 2015, 2014 and 2013, respectively. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distribution payments from LSV of $141,767, $137,866 and $137,104 in 2015, 2014 and 2013, respectively. The Company received an additional partnership distribution payment from LSV during 2013 due to a change in the payment schedule.

These tables contain condensed financial information of LSV:



Condensed Statement of Operations Year ended December 31,	2015		2014		2013
Revenues	$	427,653	$	422,064	$	354,094
Net income	$	352,845	$	356,824	$	302,316



Condensed Balance Sheets December 31,	2015		2014
Current assets	$	127,225	$	133,657
Non-current assets	2,375		2,269
Total assets	$	129,600	$	135,926

Current liabilities	$	40,876	$	35,208
Partners’ capital	88,724		100,718
Total liabilities and partners’ capital	$	129,600	$	135,926

Guaranty Agreement with LSV Employee Group III

In October 2012, a group of existing employees of LSV formed a new limited liability company called LSV Employee Group III and agreed to purchase a portion of the partnership interest of existing LSV employees for $77,700, of which $69,930 was financed through syndicated term loan facilities contained in a credit agreement with The PrivateBank and Trust Company. LSV Employee Group III owns the purchased partnership interest. The Company provided an unsecured guaranty for $45,000 of the obligations of LSV Employee Group III to the lenders through a guaranty agreement. In addition, LSV agreed to provide an unsecured guaranty for the remaining $24,930 of the obligations of LSV Employee Group III to the lenders through a separate guaranty agreement. In September 2014, LSV Employee Group III made the final principal payment related to the term loan guaranteed by LSV.

With regard to the loan facility guaranteed by the Company, the lenders will have the right to seek payment from the Company in the event of a default by LSV Employee Group III. The loan facility has a five year term and will be repaid from the quarterly distributions of LSV. No principal payments were made by LSV Employee Group III on the loan facility guaranteed by the Company until the separate loan facility guaranteed by LSV was fully repaid.

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

As of January 29, 2016, the remaining unpaid principal balances of the term loan guaranteed by the Company was $21,468. The Company, in its capacity as guarantor, currently has no obligation of payment relating to the term loan of LSV Employee Group III and, furthermore, fully expects that LSV Employee Group III will meet all of their future obligations regarding the term loan.

Investment in Gao Fu Limited

The Company had an investment in Gao Fu, a wealth services firm based in Shanghai, China. The Company accounted for its interest in Gao Fu using the equity method. The Company's interest in the losses of Gao Fu is reflected in Equity in earnings of unconsolidated affiliates on the accompanying Consolidated Statements of Operations. The Company's interest in the net assets of Gao Fu as of December 31, 2014 is reflected in Investment in unconsolidated affiliates on the accompanying Consolidated Balance Sheet.

The Company's proportionate share in the losses of Gao Fu was $1,350, $1,159 and $907 in 2015, 2014 and 2013, respectively. The Company's investment in Gao Fu resulted from a series of cash purchases of common stock between 2011 and 2013 which, in total, amounted to $13,000. In June and December of 2014, the Company funded an aggregate of $3,000 of convertible loans to Gao Fu. The June 2014 convertible loan agreement contains specific revenue and net income targets for Gao Fu to achieve by December 31, 2014. In December 2014, the Company conducted a review of the financial statements of Gao Fu and determined that the achievement of such performance targets as stipulated in the June 2014 convertible loan agreement was unlikely. As a result, the Company wrote down its investment in Gao Fu to its net realizable value based on its ownership percentage of the remaining net assets of the firm and recognized an impairment charge of $11,266 during the three months ended December 31, 2014. The impairment charge is reflected in Equity in earnings of unconsolidated affiliates on the accompanying Consolidated Statements of Operations. During the three months ended June 30, 2015, the Company wrote off the remaining carrying value of its investment and currently has no remaining interest in Gao Fu.